-----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, PimHvHMeAu65obf3zuxiMPpgSDyNAPRdibe7z0XOt6R8XKtyweKRrzUuIgIwvWzn cWr4qCD690qRMI3poRmSsQ== 0000793074-99-000011.txt : 19990510 0000793074-99-000011.hdr.sgml : 19990510 ACCESSION NUMBER: 0000793074-99-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990507 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: 99613426 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 March 31, 1999 0-14690 WERNER ENTERPRISES, INC. (Exact name of registrant as specified in its charter) NEBRASKA 47-0648386 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 14507 FRONTIER ROAD POST OFFICE BOX 45308 OMAHA, NEBRASKA 68145-0308 (402) 895-6640 (Address of principal (Zip Code) (Registrant's telephone number) executive offices) _________________________________ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] As of April 30, 1999, 47,347,492 shares of the registrant's common stock, par value $.01 per share, were outstanding. PART I FINANCIAL INFORMATION Item 1. Financial Statements. The interim consolidated financial statements contained herein reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the financial condition and results of operations for the periods presented. They have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Operating results for the three-month period ended March 31, 1999, are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. 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, 1998). Consolidated Statements of Income for the Three Months Ended March 31, 1999 and 1998 Page 3 Consolidated Condensed Balance Sheets as of March 31, 1999 and December 31, 1998 Page 4 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1999 and 1998 Page 5 Notes to Consolidated Financial Statements as of March 31, 1999 Page 6 2 WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended (In thousands) March 31 - ---------------------------------------------------------------------------- 1999 1998 - ---------------------------------------------------------------------------- (Unaudited) Operating revenues $ 240,980 $ 199,707 ---------------------------- Operating expenses: Salaries, wages and benefits 89,321 74,303 Fuel 14,008 14,698 Supplies and maintenance 20,138 17,509 Taxes and licenses 19,766 15,852 Insurance and claims 9,390 6,645 Depreciation 23,535 19,459 Rent and purchased transportation 42,327 33,377 Communications and utilities 3,099 2,559 Other (1,847) (2,838) ---------------------------- Total operating expenses 219,737 181,564 ---------------------------- Operating income 21,243 18,143 ---------------------------- Other expense (income): Interest expense 1,198 1,006 Interest income (330) (420) Other 17 20 ---------------------------- Total other expense 885 606 ---------------------------- Income before income taxes 20,358 17,537 Income taxes 7,736 6,664 ---------------------------- Net income $ 12,622 $ 10,873 ============================ Average common shares outstanding 47,327 47,820 ============================ Earnings per share $ .27 $ .23 ============================ Diluted shares outstanding 47,570 48,164 ============================ Diluted earnings per share $ .27 $ .23 ============================ Dividends declared per share $ .025 $ .020 ============================
3 WERNER ENTERPRISES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands) March 31 December 31 - ---------------------------------------------------------------------------- 1999 1998 - ---------------------------------------------------------------------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 14,367 $ 15,913 Accounts receivable, net 107,258 94,329 Prepaid taxes, licenses and permits 9,143 10,792 Other current assets 23,887 24,231 ---------------------------- Total current assets 154,655 145,265 ---------------------------- Property and equipment 882,541 829,461 Less - accumulated depreciation 219,772 205,530 ---------------------------- Property and equipment, net 662,769 623,931 ---------------------------- $ 817,424 $ 769,196 ============================ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 52,210 $ 48,146 Short-term debt (Note 1) 20,000 - Insurance and claims accruals 26,487 23,250 Accrued payroll 10,574 10,051 Income taxes payable 4,223 471 Other current liabilities 11,697 9,989 ---------------------------- Total current liabilities 125,191 91,907 ---------------------------- Long-term debt 100,000 100,000 Insurance, claims and other long-term accruals 30,801 30,801 Deferred income taxes 109,055 105,900 Stockholders' equity 452,377 440,588 ---------------------------- $ 817,424 $ 769,196 ============================
4 WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended (In thousands) March 31 - --------------------------------------------------------------------------------- 1999 1998 - --------------------------------------------------------------------------------- (Unaudited) Cash flows from operating activities: Net income $ 12,622 $ 10,873 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 23,535 19,459 Deferred income taxes 3,155 2,446 Gain on disposal of operating equipment (2,191) (3,142) Insurance, claims and other long-term accruals - (28) Tax benefit from exercise of stock options 77 247 Changes in certain working capital items: Accounts receivable, net (12,929) 8,071 Prepaid expenses and other current assets 1,993 130 Accounts payable 4,064 (15,306) Other current liabilities 9,220 5,538 --------------------------- Net cash provided by operating activities 39,546 28,288 --------------------------- Cash flows from investing activities: Additions to property and equipment (75,943) (56,260) Proceeds from sales of property and equipment 15,761 20,686 --------------------------- Net cash used in investing activities (60,182) (35,574) --------------------------- Cash flows from financing activities: Proceeds from issuance of long-term debt - 10,000 Proceeds from issuance of short-term debt 20,000 - Dividends on common stock (1,183) (958) Stock options exercised 273 874 --------------------------- Net cash provided by financing activities 19,090 9,916 --------------------------- Net increase (decrease) in cash and cash equivalents (1,546) 2,630 Cash and cash equivalents, beginning of period 15,913 22,294 --------------------------- Cash and cash equivalents, end of period $ 14,367 $ 24,924 =========================== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 1,589 $ 821 Income taxes $ 752 $ 3,424
5 WERNER ENTERPRISES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Committed Credit Facilities The Company has 364-day committed credit facilities with two financial institutions totaling $30 million. Borrowings under these credit facilities, which mature in September 1999, bear variable interest based on the London Interbank Offered Rate (LIBOR) or, at the Company's option, the financial institutions' base lending rates. The Company expects to extend these credit facilities for another 364-day period or refinance this debt prior to September 1999. The Company had borrowings of $20 million outstanding under these credit facilities as of March 31, 1999. (2) Commitments As of March 31, 1999, the Company has commitments for capital expenditures of approximately $82,400,000. 6 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, 1998. Year 2000 Readiness Disclosure: In January 1997, the Company began conducting a comprehensive review of its Year 2000 issue 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 licensed 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 100% 0% Vendor-supplied IT systems 80% 20% Non-IT systems 70% 30%
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 remaining 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 cannot 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 three months ended March 31, 1999, the Company generated cash flow from operations of $39.5 million. The Company received proceeds from the issuance of short-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 $60.2 million and pay common stock dividends of $1.2 million. If the Company continues to grow at its current rate (as described below), additional financing activities may occur. Based on the Company's strong financial position, management foresees no significant barriers to obtaining sufficient financing, if necessary, to continue with its growth plans. 7 The Company's debt to equity ratio at March 31, 1999 was 26.5%, compared with 22.7% at December 31, 1998. The Company's debt to total capitalization ratio (total capitalization equals total debt plus total stockholders' equity) was 21.0% at March 31, 1999 compared to 18.5% at December 31, 1998. Results of Operations: Three Months Ended March 31, 1999 and 1998 - ------------------------------------------ Operating revenues increased 20.7% for the three months ended March 31, 1999, compared to the same period of the prior year, primarily due to a 18.5% increase in the average number of tractors in service. Average tractors in service increased from 5,360 in first quarter 1998 to 6,354 in first quarter 1999. Revenue per mile, excluding fuel surcharges, increased 1.5% compared to first quarter of 1998 due to rate increases and a shift in the mix of freight between fleets in the truckload division which decreased the average trip length by 5%. A $5.2 million increase in revenues from logistics and other non-trucking transportation services also contributed to the overall increase in operating revenues. Operating expenses, expressed as a percentage of operating revenues, were 91.2% for the three months ended March 31, 1999, compared to 90.9% for the three months ended March 31, 1998. The Company's increase in logistics and other non-trucking transportation services contributed to a shift in costs to the rent and purchased transportation expense category from several other expense categories, as described below. Salaries, wages and benefits decreased from 37.2% to 37.1% of revenues due primarily to the increase in logistics and other non-trucking revenues, partially offset by an increase in driver pay for drivers in training due to an 80% increase in the number of drivers in the training program. At times, there have been shortages of drivers in the trucking industry, particularly the medium-to-long haul segment. The Company anticipates that the competition for qualified drivers will continue to be high, and cannot predict whether it will experience shortages in the future. If such a shortage was to occur and increases in driver pay rates became necessary to attract and retain drivers, the Company's results of operations would be negatively impacted to the extent that corresponding freight rate increases were not obtained. Fuel decreased from 7.4% to 5.8% of revenues, due mainly to significantly lower average fuel prices during the quarter compared to the same quarter of the prior year. In mid-March 1999, fuel prices increased and prices as of the end of March 1999 were comparable, or slightly higher, than prices as of the end of March 1998. Supplies and maintenance decreased from 8.8% to 8.3% of revenues primarily due to a change in classification of repairs and sales expenses for equipment sales from supplies and maintenance to the other operating expense category to offset gains on revenue equipment sales, partially offset by the increase in logistics and other non-trucking revenues. Taxes and licenses increased from 7.9% to 8.2% of revenues due to the impact of favorable development of state tax issues on the prior year period, partially offset by the increase in logistics and other non-trucking revenues. Insurance and claims increased from 3.3% to 3.9% of revenues due to unfavorable claims experience contributed to by more severe winter weather conditions during the current quarter. Rent and purchased transportation increased from 16.7% to 17.6% of revenues due primarily to the Company's increase in logistics and other non-trucking transportation services. Other operating expenses changed from (1.4%) to (0.8%) of revenues due to the change in classification of repairs on equipment sales from supplies and maintenance to other operating expenses to offset gains on revenue equipment sales. Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company is exposed to market risk from changes in interest rates and commodity prices. 8 Interest Rate Risk The Company had $70 million of variable rate debt at March 31, 1999. The interest rates on the variable rate debt are based on the London Interbank Offered Rate (LIBOR). Assuming this level of borrowings, a hypothetical one percentage point increase in the LIBOR interest rate would increase the Company's annual interest expense by $700,000. Commodity Price Risk The price and availability of diesel fuel are subject to fluctuations due to changes in the level of global oil production, seasonality, weather, and other market factors. Historically, the Company has been able to recover a portion of short-term fuel price increases from customers in the form of fuel surcharges. The Company cannot predict whether high fuel price levels will occur in the future or the extent to which fuel surcharges could be collected to offset such increases. As of March 31, 1999, the Company had no derivative financial instruments to reduce its exposure to fuel price fluctuations. 9 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit Incorporated Number Description by Reference to ------- ----------- --------------- 11 Statement Re: Computation of Per Share Earnings Filed herewith 27 March 31, 1999 Financial Data Schedule Filed herewith (b) Reports on Form 8-K. A report on Form 8-K, filed January 21, 1999, regarding a news release on January 21, 1999, announcing the Company's operating revenues and earnings for the fourth quarter and year ended December 31, 1998. 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WERNER ENTERPRISES, INC. Date: May 7, 1999 By: /s/ John J. Steele ------------------ ---------------------------------- John J. Steele Vice President, Treasurer and Chief Financial Officer Date: May 7, 1999 By: /s/ James L. Johnson ------------------ ---------------------------------- James L. Johnson Corporate Secretary and Controller 11 EX-11 2 EXHIBIT 11 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS ------------------------------------------------ (in thousands, except per share amounts)
Three Months Ended March 31 --------------------- 1999 1998 --------------------- Net income $12,622 $10,873 ===================== Average common shares outstanding 47,327 47,820 Common stock equivalents (1) 243 344 --------------------- Diluted shares outstanding 47,570 48,164 ===================== Earnings per share $ .27 $ .23 ===================== Diluted earnings per share $ .27 $ .23 =====================
(1) Common stock equivalents represent the dilutive effect of outstanding stock options for all periods presented. EX-27 3 MARCH 31, 1999 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 14,367 0 107,258 0 0 154,655 882,541 219,772 817,424 125,191 0 0 0 483 451,894 817,424 240,980 240,980 0 219,737 (313) 0 1,198 20,358 7,736 12,622 0 0 0 12,622 .27 .27
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