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
June 30, 1995 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 July 31, 1995, 25,158,616 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 six-month periods ended June 30,
1995 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1995. 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, 1994).
Consolidated Statements of Income for the
Three Months Ended June 30, 1995 and 1994 ...................... Page 3
Consolidated Statements of Income for the
Six Months Ended June 30, 1995 and 1994 ........................ Page 4
Consolidated Condensed Balance Sheets as of
June 30, 1995 and December 31, 1994 ............................ Page 5
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1995 and 1994 ........................ Page 6
Notes to Consolidated Financial Statements
as of June 30, 1995 ............................................ Page 7
2
WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(Amounts in thousands, except per share data) June 30
1995 1994
(Unaudited)
Operating revenues $143,325 $129,623
Operating expenses:
Salaries, wages and benefits 54,238 46,391
Fuel 11,791 10,456
Supplies and maintenance 12,468 10,837
Taxes and licenses 12,326 11,050
Insurance and claims 4,709 4,534
Depreciation 14,906 12,974
Rent and purchased transportation 17,935 15,942
Communications and utilities 2,136 2,462
Other (1,564) (459)
Total operating expenses 128,945 114,187
Operating income 14,380 15,436
Other expense (income):
Interest expense 496 124
Interest income (212) (124)
Other 34 53
Total other expense 318 53
Income before income taxes 14,062 15,383
Income taxes 5,484 5,999
Net income $ 8,578 $ 9,384
Average common shares outstanding 25,161 25,334
Earnings per share $ .34 $ .37
<FN>
3
WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended
(Amounts in thousands, except per share data) June 30
1995 1994
(Unaudited)
Operating revenues $275,759 $245,616
Operating expenses:
Salaries, wages and benefits 101,599 87,785
Fuel 22,632 20,033
Supplies and maintenance 25,263 21,173
Taxes and licenses 24,455 21,899
Insurance and claims 9,202 8,834
Depreciation 30,177 25,328
Rent and purchased transportation 34,386 29,608
Communications and utilities 4,218 4,833
Other (3,151) (979)
Total operating expenses 248,781 218,514
Operating income 26,978 27,102
Other expense (income):
Interest expense 989 252
Interest income (453) (264)
Other 65 83
Total other expense 601 71
Income before income taxes 26,377 27,031
Income taxes 10,287 10,469
Net income $ 16,090 $ 16,562
Average common shares outstanding 25,180 25,333
Earnings per share $ .64 $ .65
<FN>
4
WERNER ENTERPRISES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands) June 30 December 31
1995 1994
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 13,175 $ 11,660
Accounts receivable, net 55,152 52,522
Prepaid expenses and other current assets 20,147 23,994
Total current assets 88,474 88,176
Property and equipment 509,640 479,289
Less - accumulated depreciation 119,316 113,828
Property and equipment, net 390,324 365,461
$478,798 $453,637
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 17,284 $ 18,564
Accrued payroll 11,157 9,888
Income taxes payable 2,802 5,659
Other current liabilities 26,005 23,176
Total current liabilities 57,248 57,287
Long-term debt 40,000 30,000
Insurance and claims accruals 20,700 21,300
Other long-term liabilities 2,736 3,136
Deferred income taxes 68,116 65,500
Stockholders' equity 289,998 276,414
$478,798 $453,637
5
WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
(In thousands) June 30
1995 1994
(Unaudited)
Cash flows from operating activities:
Net income $16,090 $16,562
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 30,177 25,328
Deferred income taxes 2,616 2,831
Gain on disposal of operating equipment (3,750) (1,395)
Tax benefit from exercise of stock options - 98
Long-term liabilities (1,000) 946
Changes in certain working capital items:
Accounts receivable, net (2,630) (7,141)
Prepaid expenses and other current assets 3,847 1,323
Accounts payable (1,280) (1,175)
Accrued payroll 1,269 1,813
Other current liabilities (152) 3,597
Net cash provided by operating activities 45,187 42,787
Cash flows from investing activities:
Additions to property and equipment (70,920) (57,548)
Retirements of property and equipment 19,630 11,637
Net cash used in investing activities (51,290) (45,911)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 10,000 -
Repayments of capitalized lease
obligations - (4,552)
Dividends on common stock (1,385) (1,393)
Repurchases of common stock (1,013) -
Stock options exercised 16 97
Net cash provided by (used in)
financing activities 7,618 (5,848)
Net increase (decrease) in cash and cash equivalents 1,515 (8,972)
Cash and cash equivalents, beginning of period 11,660 9,815
Cash and cash equivalents, end of period $13,175 $ 843
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 1,993 $ 252
Income taxes 9,530 4,775
6
WERNER ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Commitments
As of June 30, 1995, the Company has committed to capital expenditures of
approximately $37,000,000 (net cost, after revenue equipment trade-in
allowances of approximately $33,000,000).
(2) Change in Estimate
The Company periodically reviews its estimates related to the useful lives
and salvage values of its revenue equipment. Effective April 1, 1995, the
Company changed, on a prospective basis, the estimated salvage value for
certain trailers. This change was to reflect market changes in the value of
used equipment and lower trailer utilization due to a higher trailer to tractor
ratio. The change resulted in a decrease in depreciation expense of
approximately $900,000 and an increase in net income of approximately $550,000
($.02 per share) for the three months ended June 30, 1995.
7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Financial Condition:
During the six months ended June 30, 1995, the Company generated cash
flow from operations of $45.2 million and made long-term borrowings of $10
million, which enabled the Company to make net property additions, primarily
revenue equipment, of $51.3 million, pay common stock dividends of $1.4
million and repurchase Company common stock of $1.0 million.
The Company's long-term debt to equity ratio at June 30, 1995 was 13.8%,
compared with 10.9% at December 31, 1994.
Results of Operations:
Three Months Ended June 30, 1995 and 1994
Operating revenues increased 11% in the three months ended June 30,
1995, compared to the same period in the prior year. The average number of
tractors increased by 7%. Revenue per loaded mile increased 3% while tractor
utilization (total miles per tractor) was also somewhat higher. The increase
in the average number of tractors was primarily due to expansion in the long-
haul van and dedicated fleet markets. The revenue per mile increase was
primarily the result of customer rate increases and the continued expansion
into markets where the average revenue per mile is typically higher and the
average miles per trip are normally lower. The increased tractor utilization
was primarily due to increased empty miles resulting from softer freight
demand.
Operating expenses, expressed as a percentage of operating revenues,
were 90.0% for the three months ended June 30, 1995, compared to 88.1% for
the three months ended June 30, 1994. Salaries, wages and benefits increased
from 35.8% of revenues to 37.9% of revenues due primarily to a 2 cent per
mile driver pay increase effective May 1, 1994, the retention of more
experienced, higher paid drivers, and other driver pay increases. Fuel
prices were slightly higher compared to the second quarter of 1994. Supplies
and maintenance increased from 8.4% to 8.7% of revenues due, in part, to
increased costs related to tolls and third-party loadings and unloadings.
Insurance and claims decreased from 3.5% to 3.3% of revenues primarily as a
result of favorable claims development. Depreciation increased from 10.0% to
10.4% of revenues due to the November 1994 purchase of satellite tracking
equipment which was previously leased (and previously included in
communications and utilities), and an increase in the trailer to tractor
ratio from 2.4 to 1 at June 30, 1994 to 2.6 to 1 at June 30, 1995. The
increase in the trailer to tractor ratio is the result of providing
additional trailers to improve customer service and tractor productivity.
The decrease in the average length of haul also contributed to the increased
trailer to tractor ratio. These increases were partly offset by the effect
of a change in the estimated salvage value for certain trailers. (See Note 2
to Consolidated Financial Statements.) Rent and purchased transportation
increased from 12.3% to 12.5% of revenues due primarily to an increase in the
use of intermodal and other third-party transportation services.
Communications and utilities decreased from 1.9% to 1.5% of revenues, due to
the purchase of the satellite tracking equipment which had been leased
previously. Other operating expenses decreased from (.4%) to (1.1%) of
revenues due to an increase in gains realized on the sale of revenue
equipment to third parties.
8
Six Months Ended June 30, 1995 and 1994
Operating revenues increased by 12% for the six months ended June 30, 1995,
compared to the same period of the previous year. The average number of
tractors increased 7%, while revenue per loaded mile increased 3%.
Operating expenses, expressed as a percentage of operating revenues,
increased to 90.2% for the six months ended June 30, 1995, compared to 89.0%
for the same period of 1994. Salaries, wages and benefits increased from
35.7% to 36.8% of revenues, primarily due to the 2 cent per mile driver pay
increase effective May 1, 1994, the retention of more experienced, higher
paid drivers, and other driver pay increases, partially offset by a reduction
in the estimated liability for accrued driver payroll of $2,400,000 during
the first quarter of 1995. Fuel costs were comparable to the 1994 period.
Supplies and maintenance increased from 8.6% to 9.2% of revenues due, in
part, to increased third party loading and unloading, driver advertising and
toll expenses. Insurance and claims decreased from 3.6% to 3.3% of revenues
due primarily to favorable claims development. Depreciation increased from
10.3% to 10.9% of revenues due to the November 1994 purchase of satellite
tracking equipment which had previously been leased, and the increased
trailer to tractor ratio, partially offset by the effect of a change in the
estimated salvage value for certain trailers. (See Note 2 to Consolidated
Financial Statements.) Rent and purchased transportation increased from
12.1% to 12.5% of revenues due primarily to an increase in the use of
intermodal and other third-party transportation services. Communications and
utilities decreased due to the purchase of previously leased satellite
tracking equipment. Other operating expenses decreased from (.4%) to (1.1%)
of revenues due to increased gains realized on the sale of revenue equipment
to third parties.
The Company's effective income tax rate (income tax expense as a percentage
of income before income taxes) was 39.0% for the six months ended June 30,
1995, compared to 38.7% for the same period of 1994.
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of Werner Enterprises, Inc. was held
on May 2, 1995, for the purpose of electing three directors for three-year
terms. Proxies for the meeting were solicited pursuant to Section 14(a) of
the Securities Exchange Act of 1934, and there was no solicitation in
opposition to management's nominees. Each of management's nominees for
director as listed in the Proxy Statement was elected. The voting tabulation
was as follows:
Shares Shares Shares
Voted Voted Voted
"FOR" "AGAINST" "ABSTAIN"
Curtis G. Werner 22,838,811 45,600 642,556
Gerald H. Timmerman 22,884,411 - 642,556
Donald W. Rogert 22,884,411 - 642,556
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Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit Page Number or Incorporated
Number Description by Reference to
10 Amended and Restated Exhibit 10 to the Company's
Stock Option Plan report on Form 10-Q for the
quarter ended May 31, 1994
27 Financial Data Schedule Page 11 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: August 14, 1995 By:/s/Robert E. Synowicki
Robert E. Synowicki
Vice President, Treasurer
and Chief Financial Officer
Date: August 14, 1995 By:/s/John J. Steele
John J. Steele
Vice President - Controller
and Secretary
10