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, 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)
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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, 1996, 25,193,627 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, 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 March 31, 1996 and 1995........................Page 3
Consolidated Condensed Balance Sheets as of
March 31, 1996 and December 31, 1995..............................Page 4
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1996 and 1995........................Page 5
Notes to Consolidated Financial Statements
as of March 31, 1996..............................................Page 6
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WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(Amounts in thousands, except per share data) March 31
1996 1995
(Unaudited)
Operating revenues $147,903 $132,434
Operating expenses:
Salaries, wages and benefits 52,377 47,361
Fuel 13,368 10,841
Supplies and maintenance 12,723 12,795
Taxes and licenses 12,402 12,129
Insurance and claims 5,287 4,493
Depreciation 15,616 15,271
Rent and purchased transportation 22,930 16,451
Communications and utilities 1,876 2,082
Other (911) (1,587)
Total operating expenses 135,668 119,836
Operating income 12,235 12,598
Other expense (income):
Interest expense 649 493
Interest income (396) (241)
Other 36 31
Total other expense 289 283
Income before income taxes 11,946 12,315
Income taxes 4,658 4,803
Net income $ 7,288 $ 7,512
Average common shares outstanding 25,185 25,198
Earnings per share $ .29 $ .30
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WERNER ENTERPRISES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands) March 31 December 31
1996 1995
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 23,570 $ 16,227
Accounts receivable, net 56,214 57,871
Prepaid taxes, licenses and permits 6,426 7,752
Other current assets 18,228 19,145
Total current assets 104,438 100,995
Property and equipment 527,430 526,208
Less - accumulated depreciation 122,754 119,524
Property and equipment, net 404,676 406,684
$509,114 $507,679
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 16,226 $ 15,719
Insurance and claims accruals 20,735 19,073
Accrued payroll 8,523 7,718
Income taxes payable 2,297 3,226
Other current liabilities 9,103 8,455
Total current liabilities 56,884 54,191
Long-term debt 30,000 40,000
Insurance and claims accruals 26,000 26,000
Other long-term liabilities 2,736 2,736
Deferred income taxes 77,790 75,700
Stockholders' equity 315,704 309,052
$509,114 $507,679
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WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
(In thousands) March 31
1996 1995
(Unaudited)
Cash flows from operating activities:
Net income $ 7,288 $ 7,512
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 15,616 15,271
Deferred income taxes 2,090 2,155
Gain on disposal of operating equipment (1,300) (1,909)
Long-term liabilities - (1,000)
Changes in certain working capital items:
Accounts receivable, net 1,657 3,897
Prepaid expenses and other current assets 2,243 1,214
Accounts payable 507 (4,801)
Accrued payroll 805 (1,001)
Other current liabilities 1,381 1,181
Net cash provided by operating activities 30,287 22,519
Cash flows from investing activities:
Additions to property and equipment (19,491) (34,866)
Retirements of property and equipment 7,183 10,304
Net cash used in investing activities (12,308) (24,562)
Cash flows from financing activities:
Repayments of long-term debt (10,000) -
Dividends on common stock (755) (630)
Repurchases of common stock - (923)
Stock options exercised 119 7
Net cash used in financing activities (10,636) (1,546)
Net increase (decrease) in cash and cash equivalents 7,343 (3,589)
Cash and cash equivalents, beginning of period 16,227 11,660
Cash and cash equivalents, end of period $23,570 $ 8,071
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 703 $ 460
Income taxes 3,458 2,812
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WERNER ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Commitments
As of March 31, 1996, the Company has committed to capital expenditures
of approximately $42,000,000 (net cost, after revenue equipment trade-in
allowances of approximately $16,000,000).
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Financial Condition:
During the three months ended March 31, 1996, the Company generated
cash flow from operations of $30.3 million. After the Company made net
property additions, primarily revenue equipment, of $12.3 million, repaid
long-term debt of $10.0 million and paid common stock dividends of $.8
million, cash and cash equivalents increased by $7.3 million.
The Company's long-term debt to equity ratio at March 31, 1996 was
9.5%, compared with 12.9% at December 31, 1995.
Results of Operations:
Three Months Ended March 31, 1996 and 1995
Operating revenues increased 12% for the three months ended March 31,
1996, compared to the same period of the prior year. The average number of
tractors increased by 7%, primarily due to expansion in the long-haul van
fleet during the last nine months of 1995. Revenue per mile was comparable
to the same period of the previous year. Loaded miles per tractor during
the three months ended March 31, 1996 increased 4% due to an increased
emphasis on team freight (tractors operated with two drivers) and
management focus on maximizing equipment utilization. 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 91.7% for the three months ended March 31, 1996, compared to 90.5% for
the three months ended March 31, 1995. Owner-operator tractors represented
a larger percentage of total tractors during the quarter ended March 31,
1996 (17.2%), compared to the same period of 1995 (14.5%), 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 increased
use of logistics transportation services also contributed to the shift in
costs to the rent and purchased transportation category.
Salaries, wages and benefits decreased from 35.8% to 35.4% of revenues
due primarily to the increase in the percentage of owner-operator tractors,
partially offset by the effect of a $2,400,000 reduction in the estimated
liability for accrued driver payroll during the first quarter of 1995.
7
Fuel increased from 8.2% to 9.0% of revenues, due mainly to increased
average fuel prices during the first quarter of 1996, partially offset by
the increase in the percentage of owner-operator tractors. If the higher
fuel prices continue, future operating results could be adversely affected.
During April 1996, the Company began collecting a fuel surcharge from
customers which will partially offset the increased fuel prices. However,
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 9.7% to 8.6% of revenues due
primarily to the increased percentage of owner-operator tractors, increased
use of logistics transportation services, and decreased general
administrative costs. Taxes and licenses decreased from 9.1% to 8.4% of
revenues due primarily to the increased percentage of owner-operators,
increased use of logistics services, and refunds of state sales taxes.
Depreciation decreased from 11.5% to 10.5% 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 1, 1995. Other operating expenses
increased from (1.2%) 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 three month periods ended
March 31, 1996 and 1995.
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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
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 10 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: May 10, 1996 By: /s/Robert E. Synowicki, Jr.
Robert E. Synowicki, Jr.
Executive Vice President and
Chief Financial Officer
Date: May 10, 1996 By: /s/John J. Steele
John J. Steele
Vice President - Controller and
Secretary
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