UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 28, 1994
Commission file number 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
incorporation or organization) identification no.)
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)
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K.
----
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 ___
The aggregate market value of the registrant's $.01 par value common stock
held by nonaffiliates of the registrant as of May 5, 1994 was $382,470,353
(based upon $26.875 per share closing price on that date, as reported by
NASDAQ). In making this calculation the registrant has assumed, without
admitting for any purpose, that all executive officers and directors of the
registrant, and no other persons, are affiliates.
As of May 5, 1994, 25,334,016 shares of the registrant's common stock were
outstanding.
Portions of the February 1994 Annual Report to Stockholders are incorporated
in Part I, II and IV of this report. Portions of the Proxy Statement of
Registrant for the annual meeting of stockholders to be held June 21, 1994
are incorporated in Part III of this Report.
<PAGE>
PART I
ITEM 1. BUSINESS
General
Werner Enterprises, Inc. is an irregular-route, truckload carrier of general
commodities in both interstate and intrastate commerce, with its headquarters
in Omaha, Nebraska. References to Werner or the Company are to Werner
Enterprises, Inc. and its wholly-owned subsidiaries. The Company operates
throughout the 48 contiguous states pursuant to operating authority, both
common and contract, granted by the Interstate Commerce Commission and
pursuant to intrastate authority granted by various states. The Company also
has authority to operate in eight provinces of Canada and has through trailer
service in and out of Mexico. The principal types of freight transported
include retail store merchandise, foodstuffs, beverages and beverage
containers, paper products, plastic products, metal products, lumber and
building materials.
Marketing and Operations
Werner's business philosophy is to provide "high service, low cost" truckload
transportation services. The Company achieves this by (1) meeting the
special needs of its customers; (2) careful attention to its quality work
force; and (3) operating premium, modern equipment. The Company has
traditionally operated in the high-service end of the dry van and flatbed
medium-to-long-haul segments of the truckload market which continues to be
the Company's major revenue source. The Company focuses on shippers who
value the broad geographic coverage, customized services and flexibility
available from a larger financially stable carrier. These shippers are
generally less sensitive to rate levels, preferring to have their freight
handled by a few "core" carriers with whom they can establish service-based,
long-term relationships.
In order to strengthen these customer relationships and to provide
opportunities for profitable growth, the Company began expanding into new
markets beginning in 1992. The Company's management carefully analyzed
possible new markets based on the following criteria: market size, cost of
entry, potential long-term profitability and synergy with the Company's
existing business. It was decided to enter into three new truckload markets:
regional short-haul, temperature-controlled and dedicated fleet services.
Regional short-haul consists of dry-van freight with a shorter length of
haul, generally around a major metropolitan area or areas. Temperature-
controlled freight requires specialized van trailers for products which are
sensitive to temperature conditions. Dedicated fleet services involves
assuming total responsibility for the transportation needs of a specific
customer and generally replacing their private fleet. These service
offerings build on the Company's existing strengths in its traditional
markets and strategically position the Company to provide a broad range of
truckload services for its customers. See "Revenue Equipment" for the number
of tractors operated in each of the Company's service divisions.
<PAGE>
The Company continues to improve its operational efficiencies by applying new
technologies and refining its management processes. In May 1993 the Company
completed installation of two-way, satellite-based communications equipment
in the entire fleet. This technology streamlines communication between
drivers and the Company. Customers also benefit from the flexibility and
quick response provided by real-time communications. In addition, the
Company continues to refine its formal quality improvement program to satisfy
customers' needs cost effectively.
The Company also has developed a diversified customer base and is not
dependent on a small group of customers or a specific industry for its
freight. During fiscal 1994, the Company's largest 5, 10 and 25 customers
comprised approximately 17%, 24% and 35% of the Company's revenues,
respectively.
Seasonality
In the trucking industry generally, revenues show a seasonal pattern as
customers reduce shipments during and after the winter holiday season and its
attendant weather variations. The Company's operating expenses have
historically been slightly higher in the winter months due primarily to
decreased fuel efficiency and increased maintenance costs of revenue
equipment in colder weather. However, the Company minimizes the impact of
seasonality through its marketing program which seeks additional freight from
certain customers during traditionally slower shipping periods. Revenue is
also affected by bad weather and holidays, since revenue is directly related
to available working days of shippers.
Employees and Owner-Operator Drivers
As of February 28, 1994, the Company employed 3,913 drivers, 392 mechanics
and maintenance personnel, and 736 management, administrative and support
personnel. The Company also had contracts with independent contractors
(owner-operators) for the services of 514 tractors that provide both a
tractor and a qualified driver or drivers. None of the Company's employees
is represented by a collective bargaining unit, and the Company considers
relations with its employees to be good.
The Company recognizes that its professional driver work force is one of its
most valuable assets. Over the past two years, several driver retention
programs have been introduced by the Company - including creation of a pay
package that more fairly compensates drivers for all work associated with
their job (loading and unloading, extra stops, short trips and layovers, for
example). These extra pay items are in addition to the drivers' mileage
based pay which increases with a driver's length of service and incentive pay
such as a fuel efficiency bonus and a mileage bonus. Effective May 1, 1994,
the Company increased the mileage pay for Company drivers by two cents per
mile. This increase should help the Company to attract and retain qualified
drivers to meet its growth plans. Also, a regular schedule of driver/top
management meetings were initiated over 2 years ago to share information and
<PAGE>
concerns and seek mutually satisfactory solutions. As a result of
management's attention to driver retention, the Company has significantly
reduced its driver turnover over the past three years, to a level below the
industry average.
Occasionally, there are shortages of drivers in the trucking industry,
particularly the long-haul segment. The Company's management believes that
the number of qualified drivers in the industry has been reduced because of
the Federal License Program implemented during 1992, elimination of federal
funding for driving schools, as well as individual drivers' desire to be home
more often. While the Company currently has a sufficient number of qualified
drivers, it can not predict whether it will experience shortages in the
future.
The Company also recognizes that carefully selected owner-operators
complement its Company-employed drivers. Owner-operators supply their own
tractor and driver, and are responsible for their operating expenses in
return for a portion of the revenues generated. Because owner-operators
provide their own tractors, less capital is required for growth. Also,
owner-operators provide the Company with another source of drivers to support
its growth and intends to continue its emphasis on recruiting owner-
operators.
Revenue Equipment
As of February 28, 1994, the Company operated 3,116 Company-owned tractors
and had contracts for 514 tractors owned by owner-operators. The tractors as
of February 28, 1994 were operated in the Company's service divisions as
follows: 2,425 medium-to-long-haul dry vans; 385 medium-to-long-haul
flatbeds; 410 regional short-haul vans; 260 temperature-controlled; and 150
dedicated. Approximately 80% of the Company's tractors are manufactured by
Freightliner. This standardization decreases downtime by simplifying
maintenance. The Company adheres to a comprehensive maintenance program for
both tractors and trailers. By continually upgrading the Company-owned
tractor fleet, the average age was 1.3 years at yearend. Owner-operator
tractors are inspected prior to acceptance by the Company to
insure compliance with operational and safety requirements of the Company and
the Department of Transportation. These tractors are then periodically
inspected, similar to Company-owned tractors, to insure continued compliance.
The Company operated 8,540 trailers at February 28, 1994 in the Company's
service divisions as follows: 7,500 dry vans; 655 flatbed; and 385
temperature controlled. During the year, the Company purchased additional
53-foot van trailers which enabled the Company to position more trailers at
customer locations. This provided customers with more economy and
convenience and increased driver productivity. As of February 28, 1994, 87%
of the Company's fleet of van trailers consisted of 53-foot trailers of which
3,370 of these 53' trailers are the new "plate" trailer design which provides
more capacity. The average age of the trailer fleet was 2.8 years at
yearend.
Fuel
Shortages of fuel, increases in fuel prices or rationing of petroleum
products could have a materially adverse effect on the operations and
profitability of the Company. During portions of the years ended February
<PAGE>
1994 and February 1992, the Company experienced temporary increases in the
cost of fuel. The Company collected a temporary fuel surcharge from its
customers for a majority of these cost increases. The Company can not
predict when future fuel increases will occur or if such fuel surcharges
could be used to offset future fuel increases.
Regulation
The Company is a motor carrier regulated by the Interstate Commerce
Commission (ICC), which has broad powers generally governing matters such as
authority to engage in motor carrier operations, rate changes, accounting
systems, certain mergers, consolidations, acquisitions, and periodic
financial reporting. Motor carrier operations are subject to safety
requirements prescribed by the United States Department of Transportation
governing interstate operation. Such matters as weight and dimensions of
equipment are also subject to federal, state and international regulations.
The federal Motor Carrier Act of 1980 was enacted to increase competition
among motor carriers and limit the level of regulation in the industry
(commonly referred to as deregulation). The Motor Carrier Act of 1980
enabled applicants to obtain ICC operating authority more easily and allowed
interstate motor carriers to change rates without ICC approval. This law
also removed many route and commodity restrictions on the transportation of
freight. As a result, the Company has obtained unlimited authority to carry
general commodities throughout the 48 contiguous states. The Company also
has authority to carry freight on an intrastate basis in 23 states.
Competition
The trucking industry is highly competitive and includes thousands of
trucking companies. The Company competes primarily with other truckload
carriers. Railroads, less-than-truckload carriers and private carriers
generally provide competition, but to a lesser degree. Deregulation of the
trucking industry created an influx of truckload carriers which, with other
factors, created downward pressure on the industry's price structure.
Competition for the freight transported by the Company is based primarily on
service and efficiency and, to a lesser degree, on freight rates alone. Few
other truckload carriers have greater financial resources, own more equipment
or carry a larger volume of freight than the Company. The Company is one of
the five largest truckload carriers in the trucking industry.
ITEM 2. PROPERTIES
Werner's headquarters is located along Interstate 80 just west of Omaha,
Nebraska, on approximately 56 acres, 19 of which are held for future
expansion. The headquarters consist of the Company's recently expanded
103,000 square-foot office building, a 5,000 square-foot computer center, and
72,000 square feet of maintenance and repair facilities containing a central
parts warehouse, frame straightening and alignment machine, truck and trailer
wash areas, equipment safety lanes, body shops for tractors and trailers and
a paint booth. Additionally, the headquarters includes a drivers' lounge,
including a drivers' orientation section and a Company store.
<PAGE>
The Company and its subsidiaries own a 22,000 square-foot terminal in
Springfield, Ohio, a 14,000 square-foot facility in Denver, a 18,000 square-
foot facility in Los Angeles, a 31,000 square-foot terminal in Atlanta, and
a 27,000 square-foot terminal in Dallas. All five locations include office
and maintenance space.
Additionally, the Company leases several small sales offices and/or trailer
parking yards in various locations throughout the country.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to routine litigation incidental to its business,
primarily involving claims for personal injury and property damage incurred
in the transportation of freight. The Company has assumed liability up to
$500,000 per claim and a $1,000,000 aggregate amount of liability between
$500,000 and $1,000,000 for personal injury and property damage claims. The
Company maintains insurance which covers liability in excess of this amount
to coverage levels that management considers adequate. The Company believes
that adverse results in one or more of these cases would not have a material
adverse effect on its results of operations or financial position. The
information set forth in Note (4) "Insurance and Claims" on page 21 of the
Annual Report is incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year ended February 28, 1994, no
matters were submitted to a vote of security holders.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The information set forth under the captions "Price Range of Common Stock"
and "Dividend Policy" on page 24 of the Annual Report, "Consolidated
Statements of Stockholders' Equity" on page 19 of the Annual Report, and Note
(1) "Common Stock and Earnings Per Share" on page 20 of the Annual Report is
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth under the caption "Financial Highlights" on Page 2
of the Annual Report is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information set forth under the caption "Management's Discussion and
Analysis of Results of Operations and Financial Condition" on pages 13
through 15 of the Annual Report is incorporated herein by reference.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information set forth under the captions , "Consolidated Statements of
Income", "Consolidated Balance Sheets", "Consolidated Statements of Cash
Flows", "Consolidated Statements of Stockholders' Equity", "Report of
Independent Public Accountants" and "Notes to Consolidated Financial
Statements", on pages 16 through 23 of the Annual Report is incorporated
herein by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
No reports on Form 8-K have been filed within the twenty-four months prior to
February 28, 1994, involving a change of accountants or disagreements on
accounting and financial disclosure.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the captions "Election of Directors and
Information Regarding Directors", "Executive Officers" and "Compliance with
Section 16(a) of The Exchange Act" on pages 2 through 7 of the Registrant's
Proxy Statement for 1994 annual meeting of stockholders (herein referred to
as Proxy Statement) is incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the caption "Executive Compensation and Other
Information" on pages 8 through 11 of the Proxy Statement is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the caption "Security Ownership of Executive
Officers and Principal Stockholders" on pages 7 through 8 of the Proxy
Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements and Schedules.
<PAGE>
(1) Financial Statements -- The information set forth under the
following captions on pages 16 through 23 of the Annual Report is
incorporated by reference. Page references are to page numbers in the Annual
Report.
Page
Consolidated Statements of Income 16
Consolidated Balance Sheets 17
Consolidated Statements of Cash Flows 18
Consolidated Statements of Stockholders' Equity 19
Report of Independent Public Accountants 19
Notes to Consolidated Financial Statements 20-23
(2) Financial Statement Schedules -- The consolidated financial
statement schedules set forth under the following captions are included
herein. Page references are to the consecutively numbered pages of this
report on Form 10-K.
Page
Report of Independent Public Accountants on
Schedules 12
Schedule V -- Property and Equipment 13
Schedule VI -- Accumulated Depreciation and
Amortization of Property and Equipment 14
Schedule VIII -- Valuation and Qualifying Accounts 15
Schedule X -- Supplementary Income Statement
Information 16
(3) Exhibits -- The response to this portion of Item 14 is submitted as
a separate section of this report on Form 10-K (see Exhibit Index).
(b) Reports on Form 8-K - There were no reports on Form 8-K filed during the
fourth quarter ended February 28, 1994.
FORM 11-K INFORMATION INCLUDED HEREIN RELATED TO
STOCK OPTION AND EMPLOYEE STOCK PURCHASE PLANS
Stock Option Plan
The Company's Stock Option Plan (the Stock Option Plan) is a nonqualified
plan that provides for the grant of options to management employees. Options
are granted at prices equal to the market value of the common stock on the
date the option is granted. The options are exercisable over a period
(determined by the Option Committee of the Board of Directors) not to exceed
ten years and one day from the date of grant. Stock appreciation rights may
also be granted at the same time as participants are awarded stock options.
Stock appreciation rights are exercisable at a time when the related options
may be exercised. The maximum number of shares of common stock that may be
optioned under the Stock Option Plan is 2,000,000 shares. Additionally, the
maximum number of shares which may be optioned to any one person under the
Stock Option Plan is 500,000 shares. Members of the Option Committee are not
eligible to participate in the Stock Option Plan while members of the Option
Committee.
<PAGE>
Current members of the Option Committee are:
Clarence L. Werner Irving B. Epstein Martin F.Thompson
Werner Enterprises, Inc. Epstein & Epstein Cherry County Livestock Auction
P.O. Box 37308 Suite 123 Box 62
Omaha, NE 68137 10050 Regency Cr. Valentine, NE 69201
Omaha, NE 68114
These persons do not receive compensation for their services as members of
the Option Committee, except outside directors, who receive a fee of $1,500
for each meeting of the Option Committee they attend if not held on a day on
which a meeting of the Board of Directors is held.
During the year ended February 1994, options to purchase 356,750 and 83,000
shares of common stock were granted under the Stock Option Plan at exercise
prices of $22.50 and $24.00 respectively. As of February 28, 1994, 969,950
shares were available for granting further options and options for 745,050
shares were outstanding at prices of $6.625 to $24.00 per share, of which
options for 294,200 shares were exercisable. Options granted become
exercisable in installments from six to sixty-six months after the date of
grant. No stock appreciation rights are outstanding. All employees to whom
options were granted were provided with a copy of the Stock Option Plan's
Prospectus, as well as the Company's most recent Annual Report.
Employee Stock Purchase Plan
Any person employed by the Company or any subsidiary at least 90 days and who
is employed at least 20 hours per week on a regular basis may participate in
the Company's Employee Stock Purchase Plan (the Purchase Plan). Eligible
participants designate the amount of regular payroll deductions and/or a
single annual payment, subject to a $1,950 yearly maximum amount, that will
be used to purchase shares of the Company's common stock on the Over-The-
Counter Market subject to the terms of the Purchase Plan. The Company
contributes an amount equal to 15% of each participant's contributions under
the Purchase Plan. Interest accrues on Purchase Plan contributions at a rate
of 5.25%. The broker's commissions and administrative charges related to
purchases of common stock under the Purchase Plan are paid by the Company.
As of February 28, 1994, 384 employees were participating in the Purchase
Plan.
Administrator of the Purchase Plan is John J. Steele, Secretary and
Controller, of the Company, Post Office Box 37308, Omaha, Nebraska 68137.
Mr. Steele has received no compensation for his services as administrator.
The broker utilized by the Company to make purchases under the Purchase Plan
is Smith Barney Shearson Inc., 388 Greenwich Street, New York, New York
10048. The total amount of compensation received by Smith Barney Shearson
Inc. from the Purchase Plan for services in all capacities during the fiscal
year ended February 28, 1994 was $5,285. Participants were provided with a
copy of the Purchase Plan's Prospectus, as well as the Company's most recent
Annual Report and any quarterly reports prepared since the Annual Report.
<PAGE>
Following each purchase under the Purchase Plan, each participant receives a
statement from the broker detailing the number of shares purchased, the
purchase price, and the accumulated number of shares owned by the
participant.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on the 25th day
of May, 1994.
WERNER ENTERPRISES, INC.
By: /s/ Robert E. Synowicki, Jr.
Robert E. Synowicki, Jr.
Vice President, Chief Financial
Officer and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
Signature Position Date
/s/ C. L. Werner Chairman of the Board, May 25, 1994
C. L. Werner Chief Executive Officer
and Director
/s/ Gary L. Werner Vice Chairman, President, May 25, 1994
Gary L. Werner Chief Operating Officer
and Director
/s/ Curtis G. Werner Executive Vice President May 25, 1994
Curtis G. Werner and Director
/s/ Robert E. Synowicki, Jr. Vice President-Finance, May 25, 1994
Robert E. Synowicki, Jr. Chief Financial Officer
and Treasurer
/s/ John J. Steele Secretary and Controller May 25, 1994
John J. Steele
/s/ Irving B. Epstein Director May 25, 1994
Irving B. Epstein
/s/ Martin F. Thompson Director May 25, 1994
Martin F. Thompson
/s/ Gerald H. Timmerman Director May 25, 1994
Gerald H. Timmerman
/s/ Gail M. Werber-Robertson Director May 25, 1994
Gail M. Werner-Robertson
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To the Stockholders and Board of Directors of
Werner Enterprises, Inc.:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in Werner
Enterprises, Inc's annual report to stockholders incorporated by
reference in this Form 10-K, and have issued our report thereon
dated March 24, 1994. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The
schedules listed in Item 14(a)(2) of this Form 10-K are the
responsibility of the Company's management and are presented for
purposes of complying with the Securities and Exchange Commission's
rules and are not part of the basic consolidated financial
statements. These schedules have been subjected to the auditing
procedures applied in the audit of the basic consolidated financial
statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a
whole.
ARTHUR ANDERSEN & CO.
Omaha, Nebraska,
March 24, 1994
<PAGE>
<TABLE> SCHEDULE V
WERNER ENTERPRISES, INC.
PROPERTY AND EQUIPMENT
(In thousands)
<CAPTION>
Balance at Balance at
Beginning Additions End of
Classification of Period at Cost Retirements Period
<S> <C> <C> <C> <C>
Year ended February 28, 1994:
Land $ 5,930 $ 4,994 $ - $ 10,924
Buildings and improvements 16,034 4,680 124 20,590
Revenue equipment 286,192 108,535 52,365 342,362
Service equipment and other 20,983 4,815 545 25,253
$329,139 $123,024 $53,034 $399,129
Year ended February 28, 1993:
Land $ 5,549 $ 381 $ - $ 5,930
Buildings and improvements 13,504 2,530 - 16,034
Revenue equipment 245,660 77,280 36,748 286,192
Service equipment and other 17,687 4,437 1,141 20,983
$282,400 $84,628 $37,889 $329,139
Year ended February 29, 1992:
Land $ 5,549 $ - $ - $ 5,549
Buildings and improvements 12,640 864 - 13,504
Revenue equipment 224,028 43,807 22,175 245,660
Service equipment and other 15,743 2,546 602 17,687
$257,960 $47,217 $22,777 $282,400
<FN>
</TABLE>
<PAGE>
<TABLE> SCHEDULE VI
WERNER ENTERPRISES, INC.
ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY AND EQUIPMENT
(In thousands)
<CAPTION>
Additions
Balance at Charged to Balance at
Beginning Costs and End of
Classification of Period Expenses Retirements Period
<S> <C> <C> <C> <C>
Year ended February 28, 1994:
Buildings and improvements $ 2,161 $ 514 $ 71 $ 2,604
Revenue equipment 72,675 42,231 35,298 79,608
Service equipment and other 12,624 2,695 249 15,070
$87,460 $45,440 $35,618 $97,282
Year ended February 28, 1993:
Buildings and improvements $ 1,687 $ 474 $ - $ 2,161
Revenue equipment 69,308 36,375 33,008 72,675
Service equipment and other 11,193 3,357 1,926 12,624
$82,188 $40,206 $34,934 $87,460
Year ended February 29, 1992:
Buildings and improvements $ 1,266 $ 421 $ - $ 1,687
Revenue equipment 56,010 34,067 20,769 69,308
Service equipment and other 8,384 3,121 312 11,193
$65,660 $37,609 $21,081 $82,188
<FN>
</TABLE>
<PAGE>
<TABLE> SCHEDULE VIII
WERNER ENTERPRISES, INC.
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
<CAPTION>
Balance at Charged to Writeoff Balance at
Beginning Costs and of Doubtful End of
of Period Expenses Accounts Period
<S> <C> <C> <C> <C>
Year ended February 28, 1994:
Allowance for doubtful accounts $2,387 $360 $221 $2,526
Year ended February 28, 1993:
Allowance for doubtful accounts $2,228 $360 $201 $2,387
Year ended February 29, 1992:
Allowance for doubtful accounts $1,564 $820 $156 $2,228
</TABLE>
<PAGE>
SCHEDULE X
<TABLE>
WERNER ENTERPRISES, INC.
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED FEBRUARY 28, 1994 and 1993, AND FEBRUARY 29, 1992
(In thousands)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Maintenance and repairs $11,849 $10,565 $11,451
Taxes, other than payroll and income taxes $31,174 $27,808 $26,644
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit Page Number or Incorporated
Number Description by Reference to
3(i) Revised and Amended Articles Exhibit 3 to Registration
of Incorporation Statement on Form S-1,
Registration No. 33-5245
3(ii) Revised and Amended By-Laws Page 18 of sequentially
numbered pages
9 Voting Trust Agreement Exhibit 9 to Registration
Statement on Form S-1,
Registration No. 33-5245
9.2 Amendment to Voting Trust Exhibit 9.2 to Registration
Agreement Statement on Form S-1,
Registration No. 33-12923
10 Material Contracts of the Exhibits 10.1 to 10.5 to
Company Registration Statements on
Form S-1, Registration Nos.
33-5245 and 33-12923
13 Incorporated by reference Page 30 of sequentially
sections of Annual Report numbered pages
to Stockholders for the
fiscal year ended
February 28, 1994
21 Subsidiaries of the Page 43 of sequentially
Registrant numbered pages
23 Consent of Arthur Andersen Page 44 of sequentially
& Co. numbered pages
<PAGE>
EXHIBIT 3(ii)
REVISED AND AMENDED BY-LAWS
OF
WERNER ENTERPRISES, INC.
(Amended September 14, 1993)
ARTICLE I.
SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the
Shareholders shall be held on the second Tuesday in the month of
June in each year, or such other time on such other day within such
month as shall be fixed by the Board of Directors, for the purpose
of electing Directors and for the transaction of such other
business as may come before the meeting. If the day fixed for the
annual meeting shall be a legal holiday in the State of Nebraska,
such meeting shall be held on the next succeeding business day.
Annual meetings shall be held in the office of the corporation or
at such other place, either within or without the State of
Nebraska, as shall be determined by the Board of Directors. If the
election of Directors shall not be held on the day designated
herein for any annual meeting of the Shareholders, or at any
adjournment thereof, the Board of Directors shall cause the
election to be held at a special meeting of the Shareholders as
soon thereafter as conveniently may be.
Section 2. Special Meetings. Special meetings of the
Shareholders may be called by the Chairman of the Board, the
President or a majority of the Board of Directors. Special
meetings shall be held at such place, either within or without the
State of Nebraska, as shall be stated in the notice.
Section 3. Notice of Meeting. Written or printed notice
stating the place, day and hour of the meeting and, in the case of
a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than ten (10) nor more than
fifty (50) days before the date of the meeting, either personally
or by mail, by or at the direction of the President, the Secretary,
or the officer or persons calling the meeting, to each Shareholder
of record entitled to vote at such meeting.
Section 4. Closing of Transfer Books or Fixing of Record
Date. For the purpose of determining
Shareholders entitled to notice of or to vote at any meeting of
Shareholders or any adjournment thereof, or Shareholders entitled
to receive payment of any dividend, or in order to make a
determination of Shareholders for any other proper purpose, the
Board of Directors of the corporation may provide that the stock
transfer books shall be closed for a stated period but not to
exceed, in any case, fifty (50) days. If the stock transfer books
shall be closed for the purpose of determining Shareholders
entitled to notice of or to vote at a meeting of Shareholders, such
books shall be closed for at least ten (10) days immediately
preceding such meeting. In lieu of closing the stock transfer
<PAGE>
books, the Board of Directors may fix in advance a date as the
record date for any such determination of Shareholders, such date
in any case to be not more than fifty (50) days and, in the case of
a meeting of Shareholders, not less than ten (10) days prior to the
date on which the particular action, requiring such determination
of Shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of
Shareholders entitled to notice of or to vote at a meeting of
Shareholders, or Shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the Board of Directors declaring
such dividend is adopted, as the case may be, shall be the record
date for such determination of Shareholders. When a determination
of Shareholders entitled to vote at any meeting of Shareholders has
been made as provided in this section, such determination shall
apply to any adjournment thereof.
Section 5. Voting Record. The officer or agent having
charge of the stock transfer books for shares of the corporation
shall make, at least ten (10) days before each meeting of
Shareholders, a complete record of the Shareholders entitled to
vote at such meeting, or any adjournment thereof, arranged in
alphabetical order with the address of and the number of shares
held by each. For a period of ten (10) days prior to such meeting,
the list shall be kept on file at the registered office of the
corporation and shall be subject to inspection by any Shareholder
at any time during usual business hours. Such record, or a
duplicate thereof, shall also be produced and kept open at the time
and place of the meeting and shall be subject to the inspection of
any Shareholder during the whole time of the meeting. The original
stock transfer book shall be prima facie evidence as to who are the
Shareholders entitled to examine such record or transfer books or
to vote at any meeting of Shareholders.
Section 6. Quorum. A majority of the outstanding shares
entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of Shareholders. The holders or
their representatives of a majority of the shares present at a
meeting, even though less than a majority of the shares
outstanding, may adjourn the meeting from time to time without
notice other than an announcement at the meeting, until such time
as a quorum is present. At any such adjourned meeting at which a
quorum is present, any business may be transacted which might have
been transacted at the original meeting. If a quorum is present,
the affirmative vote of the majority of the shares represented at
the meeting and entitled to vote on the subject matter shall be the
act of the Shareholders, unless the vote of a greater number is
required by law, by the Articles of Incorporation, or by these By-
Laws.
Section 7. Proxies. At all meetings of the Shareholders,
a Shareholder may vote either in person or by proxy executed in
<PAGE>
writing by a Shareholder or his duly authorized attorney in fact.
Proxies solicited on behalf of the management shall be voted as
directed by the Shareholder or, in the absence of such direction,
as determined by a majority of the Board of Directors. No proxy
shall be valid after eleven (11) months from the date of its
execution unless otherwise provided in the proxy.
Section 8. Voting of Shares. Subject to the provisions of
Sections 9 and 10 of this Article I, each Shareholder entitled to
vote shall be entitled to one (1) vote for each share of stock held
by him upon each matter submitted to a vote at a meeting of
Shareholders.
Section 9. Voting of Shares by Certain Holders. Treasury
shares shall not be voted at any meeting or counted in determining
the total number of outstanding shares at any given time.
Shares standing in the name of another corporation may be
voted by such officer, agent, or proxy as the By-Laws of such
corporation may prescribe, or in the absence of such provision, as
the Board of Directors of such corporation may determine.
Shares held by an administrator, executor, guardian, or
conservator may be voted by him, either in person or by proxy,
without a transfer of such shares into his name. Shares standing
in the name of a trustee may be voted by him, either in person or
by proxy.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may
be voted by such receiver without the transfer thereof into his
name if authority to do so be contained in an appropriate order of
the Court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into the
name of the pledgee and thereafter the pledgee shall be entitled to
vote the shares so transferred.
Section 10. Cumulative Voting. At each election for
directors, every Shareholder entitled to vote at such election
shall have the right to vote, in person or by proxy, the number of
shares owned by him for as many persons as there are directors to
be elected and for whose election he has a right to vote, or to
cumulate said shares and give one candidate as many votes as the
number of directors multiplied by the number of his shares shall
equal, or to distribute them upon the same principle among as many
candidates as he shall think fit.
Section 11. Informal Action by Shareholders. Any action
required to be taken at a meeting of the Shareholders, or any
action which may be taken at a meeting of the Shareholders, may be
<PAGE>
taken without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by all of the Shareholders
entitled to vote with respect to the subject matter thereof. Such
consent shall have the same force and effect as a unanimous vote of
Shareholders and may be stated as such in any articles or document
filed with the Secretary of State under applicable state law.
Section 12. Inspectors of Election. In advance of any
meeting of Shareholders, the Board of Directors may appoint any
persons, other than nominees for office, as inspectors of election
to act at such meeting or any adjournment thereof. The number of
inspectors shall be either one (1) or three (3). If the Board of
Directors so appoints either one (1) or three (3) inspectors, that
appointment shall not be altered at the meeting. If inspectors of
election are not so appointed, the Chairman of the Board of
Directors or the President may make such appointment at the
meeting. In case any person appointed as inspector fails to appear
or fails or refuses to act, the vacancy may be filled by
appointment by the Board of Directors in advance of the meeting or
at the meeting by the Chairman of the Board of Directors or the
President.
Unless otherwise prescribed by applicable regulations, the
duties of such inspectors shall include: determining the number of
shares of stock and the voting power of each share, the shares of
stock represented at the meeting, the existence of a quorum, the
authenticity, validity, and effect of proxies; receiving votes,
ballots, or consents; hearing and determining all challenges and
questions in any way arising in connection with the right to vote;
counting and tabulating all votes or consents; determining the
result; and such acts as may be proper to conduct the election or
vote with fairness to all Shareholders.
Section 13. Nominations. The Board of Directors shall act
as a nominating committee for selecting the management nominees for
election as directors. Except in the case of a nominee substituted
as a result of the death or other incapacity of a management
nominee, the nominating committee shall deliver written nominations
to the Secretary no less than fifteen (15) days prior to the date
of the annual meeting. Provided such committee makes such
nominations, no nominations for directors except those made by the
nominating committee shall be voted upon at the annual meeting
unless other nominations by Shareholders are made in writing and
delivered to the Secretary of the corporation at least ten (10)
days prior to the date of the annual meeting.
Section 14. New Business. Any new business to be taken up
at the annual meeting shall be stated in writing and filed with the
Secretary of the corporation at least twenty (20) days before the
date of the annual meeting, and all business so stated, proposed
and filed shall be considered at the annual meeting, but no other
proposal shall be acted upon at the annual meeting. Any
<PAGE>
Shareholder may make any other proposal at the annual meeting and
the same may be discussed and considered, but, unless stated in
writing and filed with the Secretary at least twenty (20) days
before the meeting, such proposal shall be laid over for action at
an adjourned, special, or annual meeting of the Shareholders taking
place thirty (30) days or more thereafter. This provision shall
not prevent the consideration and approval or disapproval at the
annual meeting of reports of officers, directors and committees,
but, in connection with such reports, no new business shall be
acted upon at such annual meeting unless stated and filed as herein
provided.
ARTICLE II
DIRECTORS
Section 1. Number and Qualifications. The business and
affairs of the corporation shall be managed by a Board of Directors
consisting of not less than seven (7) nor more than nine (9)
directors. The directors need not be residents of the State of
Nebraska, nor Shareholders of the corporation. Although the number
and qualifications of the directors may be changed from time to
time by amendment to these By-Laws, no change shall affect the
incumbent directors during the terms for which they were elected.
Section 2. Election and Tenure. The directors shall be
elected for a term of one (1) year and until their successors are
elected and qualified.
Section 3. Removal and Vacancies. The removal of
directors shall be by vote of the holders of a majority of the
shares then entitled to vote at an election of directors. If less
than the entire board is to be removed, no one of the directors may
be removed if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election
of the entire Board of Directors. The filling of director
vacancies, which may occur for any reason, shall be filled by the
vote of the remaining directors, even if less than a quorum, or by
a sole remaining director. Any directors so chosen shall hold
office until the next election of directors and until their
successors shall be elected and qualified.
Section 4. Quorum. A majority of the number of directors
fixed by the By-Laws shall constitute a quorum for the transaction
of any business at any meeting of the Board of Directors. The act
of a majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors,
unless a greater number is specified by the Articles of
Incorporation or these By-Laws. If less than a quorum is present
at any meeting, the majority of these present may adjourn the
meeting from time to time, without notice other than announcement
at the meeting, until a quorum is present.
<PAGE>
Section 5. Annual Meeting. The annual meeting of the
Board of Directors shall be held without notice other than this By-
Law immediately following adjournment of the annual meeting of
Shareholders and shall be held at the same place as the annual
meeting of Shareholders unless some other place is agreed upon.
Section 6. Special Meetings. Special meetings of the
Board of Directors may be called by the Chairman of the Board or
the President or a majority of the Board of Directors, and shall be
held at the office of the corporation or at such other place,
either within or without the State of Nebraska, as the notice may
state.
Section 7. Notice. Notice of special meetings shall be
mailed to each director at his last known address at least five (5)
days prior to the date of holding said meetings. Any director at
a meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver
of notice of such meeting.
Section 8. Action Without a Meeting. Any action required
to be taken at a meeting of the Board of Directors, or of any
committee, may be taken without a meeting, if a consent in writing,
setting forth the action so taken, shall be signed by all of the
directors, or all of the members of the committee, as the case may
be. Such consent shall have the same effect as a unanimous vote.
The consent may be executed by the directors in counterparts.
Section 9. Voting. At all meetings of the Board of
Directors, each director shall have one (1) vote irrespective of
the number of shares he may hold. Members of the Board of
Directors may vote and participate in meetings by means of
conference telephone or similar communications equipment by which
all persons participating in the meeting can hear each other.
Section 10. Presumption of Assent. A director of the
corporation who is present at a meeting of the Board of Directors
at which action on any corporate matter is taken shall be presumed
to have assented to the action taken unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as the
Secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the Secretary of the
corporation immediately after the adjournment of the meeting. Such
right to dissent shall not apply to a director who voted in favor
of such action.
<PAGE>
Section 11. Compensation. By resolution of the Board of
Directors, the directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors, and may be
paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 12. Committees. The Board of Directors may, by
resolution or resolutions passed by a majority of the whole Board,
appoint an executive committee, an audit committee, and one or more
other committees, each committee to consist of two (2) or more
directors of the corporation, which committees shall, to the extent
permitted by law, have and may exercise such powers of the Board of
Directors in the management of the business and affairs of the
corporation as shall be delegated to them.
Section 13. Advisory Directors. The Board of Directors may
by resolution appoint advisory directors to the Board, who shall
serve as directors emeritus, and shall have such authority and
receive such compensation and reimbursement as the Board of
Directors shall provide. Advisory directors shall not have the
authority to participate by vote in the transaction of business.
ARTICLE III
OFFICERS
Section 1. Number and qualifications. The officers of the
corporation shall be a Chairman of the Board, a President, one or
more Vice-Presidents (as the Board of Directors shall determine),
a Secretary, and a Treasurer and such other officers and agents as
may be deemed necessary by the Board of Directors. Any two (2) or
more offices may be held by the same person.
Section 2. Election and Tenure. The officers of the
corporation shall be elected by the Board of Directors at its
annual meeting. Each officer shall hold office for a term of one
(1) year or until his successor shall have been duly elected and
shall have become qualified, unless his service is specified by an
employment contract of greater length or is terminated sooner
because of death, resignation, or otherwise. The Board of
Directors may authorize the corporation to enter into an employment
contract with any officer in accordance with state law.
Section 3. Removal. Any officer or agent of the
corporation, elected or appointed by the Board of Directors, may be
removed by the Board of Directors whenever in its judgment the best
interests of the corporation should be served thereby, but such
removal shall be without prejudice to the contract rights, if any,
of the person so removed. Election or appointment of an officer or
agent shall not of itself create contract rights.
<PAGE>
Section 4. Vacancies. Vacancies occurring in any office
by reason of death, resignation, or otherwise may be filled by the
Board of Directors at any meeting.
Section 5. Chairman of the Board. The Chairman of the
Board shall be the Chief Executive Officer of the corporation and,
subject to the control of the Board of Directors, shall, in
general, supervise and control all of the business and affairs of
the corporation. He shall, when present, preside at all meetings
of the Shareholders and of the Board of Directors. He may sign,
with the Secretary or any other proper officer of the corporation
thereunto authorized by the Board of Directors, certificates for
shares of the corporation, any deeds, mortgages, bonds, contracts,
or other instruments which the Board of Directors has authorized to
be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or
by the By-Laws to some other officer or agent of the corporation,
or shall be required by law to be otherwise signed or executed; and
in general shall perform all duties incidental to the office of
President and such other duties as may be prescribed by the Board
of Directors from time to time.
Section 6. The President. The President shall be the
principal operating officer of the corporation and, subject to the
control of the Board of Directors and the direction of the Chairman
of the Board, shall in general supervise and control the operation
of the business and affairs of the corporation. He shall, in the
absence of the Chairman of the Board, preside at all meetings of
the Shareholders and of the Board of Directors. He may sign, with
the Secretary or any other proper officer of the corporation,
certificates for shares of the corporation, and deeds, mortgages,
bonds, contracts, or other instruments which the Board of Directors
has authorized to be executed, except in cases where the signing
and execution thereof shall be expressly delegated by the Board of
Directors or by these By-Laws to some other officer or agent of the
corporation, or shall be required by law to be otherwise signed or
executed; and in general, shall perform all duties incident to the
office of President and such other duties as may be prescribed by
the Board of Directors from time to time.
Section 7. The Vice-Presidents. In the absence of the
President or in the event of his death, inability, or refusal to
act, the Vice-President (or in the event there shall be more than
one Vice-President, the Vice-Presidents in the order designated at
the time of their election, or in the absence of any such
designation, then in the order of their election) shall perform the
duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the
President. Any Vice-President may sign with the Secretary or any
other proper officer of the corporation, certificates for shares of
the corporation; and shall perform such other duties as from time
<PAGE>
to time may be assigned to him by the President or by the Board of
Directors.
Section 8. Secretary. The Secretary shall: (a) keep
minutes of the proceedings of the Shareholders and of the Board of
Directors in one or more books provided for that purpose; (b) see
that all notices are duly given in accordance with the provisions
of these By-Laws or as required by law; (c) be the custodian of the
corporate records and of the seal of the corporation and see that
the seal of the corporation is affixed to all documents, the
execution of which on behalf of the corporation under its seal is
duly authorized; (d) keep a register of the post office address of
each Shareholder which shall be furnished to the Secretary by such
Shareholder (e) sign with the Chairman of the Board of Directors,
President or a Vice-President, certificates for shares of the
corporation, the issuance of which shall be authorized by
resolution of the Board of Directors; (f) have general charge of
the stock transfer books of the corporation; and (g) in general
perform all duties incident to the office of Secretary and such
other duties as from time to time may be assigned to him by the
President or by the Board of Directors.
Section 9. The Treasurer. The Treasurer shall: (a) have
charge and custody of and be responsible for all funds and
securities of the corporation; (b) receive and give receipts for
monies due and payable to the corporation from any source
whatsoever, and deposit all such monies in the name of the
corporation in such banks, trust companies, or in other
depositories as shall be selected in accordance with the provisions
of these By-Laws; and (c) in general perform all of the duties
incident to the office of Treasurer and such other duties as from
time to time may be assigned by the President or by the Board of
Directors. If required by the Board of Directors, the Treasurer
shall give a bond for the faithful discharge of his duties in such
sum and with such surety or sureties as the Board of Directors
shall determine.
Section 10. Other Officers. Other officers shall perform
such duties and have such powers as may be assigned to them by the
Board of Directors.
Section 11. Salaries. The salaries of the officers shall
be fixed from time to time by the Board of Directors, and no
officer shall be prevented from receiving such salary by reason of
the fact that he is also a director of the corporation.
<PAGE>
ARTICLE IV
SEAL
The corporate seal of the corporation shall contain the name
of the corporation and shall be in such form as the Board of
Directors shall prescribe.
ARTICLE V
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. The shares of the
corporation shall be represented by certificates signed by the
Chairman of the Board of Directors or by the President or a Vice-
President and by the Treasurer or by the Secretary of the
corporation, and may be sealed with the seal of the corporation or
a facsimile thereof. Any or all of the signatures upon a
certificate may be facsimiles if the certificate is countersigned
by a transfer agent, or registered by a registrar, other than the
corporation itself or an employee of the corporation. If an
officer who has signed or whose facsimile signature has been placed
upon such certificate shall have ceased to be such officer before
the certificate is issued, it may be issued by the corporation with
the same effect as if he were such officer at the date of its
issue.
Section 2. Form of Share Certificates. Each certificate
representing shares shall state upon the face thereof; that the
corporation is organized under the laws of the State of Nebraska;
the name of the person to whom issued; the number and class of
shares; the designation of the series, if any, which such
certificate represents; the par value of each share represented by
such certificate, or a statement that the shares are without par
value. Other matters in regard to the form of the certificates
shall be determined by the Board of Directors.
Section 3. Loss or Destruction. In case of loss or
destruction of a certificate of stock, no new certificate shall be
issued in lieu thereof except upon satisfactory proof to the Board
of Directors of such loss or destruction, and upon the giving of
satisfactory security by bond or otherwise against loss to the
corporation.
Section 4. Transfer of Shares. Transfer of shares of
capital stock of the corporation shall be made only on its stock
transfer books. Authority for such transfer shall be given only by
the holder of record thereof or by his legal representative, who
shall furnish proper evidence of such authority, or by his attorney
thereunto authorized by power of attorney duly executed and filed
with the corporation. Such transfer shall be made only on
surrender for cancellation of the certificate for such shares. The
person in whose name shares of capital stock stand on the books of
the corporation shall be deemed by the corporation to be the owner
thereof for all purposes.
<PAGE>
ARTICLE VI
DIVIDENDS AND BANK ACCOUNT
Section 1. Dividends. In addition to other dividends
authorized by law, the Board of Directors, by resolution, may from
time to time declare dividends to be paid out of the unreserved and
unrestricted earned surplus of the corporation, but no dividend
shall be paid when the corporation is insolvent, when the payment
thereof would render the corporation insolvent or when otherwise
prohibited by law.
Section 2. Bank Account. The funds of the corporation
shall be deposited in such banks, trust funds, or depositories as
the Board of Directors may designate and shall be withdrawn upon
the signature of the President and upon the signatures of such
other person or persons as the directors may by resolution
authorize.
ARTICLE VII
AMENDMENTS
These By-Laws may be altered, amended or repealed and new By-
Laws may be adopted by the Board of Directors at any regular or
special meeting of the Board of Directors.
ARTICLE VIII
WAIVER OF NOTICE
Whenever any notice is required to be given to any Shareholder
or Director of the corporation under the provisions of the Articles
of Incorporation or under the provisions of applicable state law,
a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated
therein, shall be equivalent to the giving of such notice.
ARTICLE IX
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
At the discretion of the Board of Directors, and subject to
the provisions of the Articles of Incorporation, the corporation
may indemnify any person who is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or
other agent of another corporation, partnership, trust, or other
enterprise as permitted by the Nebraska Business Corporation Act,
as amended from time to time.
ARTICLE X
DIRECTORS' INTEREST IN CONTRACTS
In the absence of fraud, no contract or other transaction
between the corporation and any other person, corporation, firm,
syndicate, association, partnership or joint venture shall be
either void or voidable or otherwise affected by reason of the fact
<PAGE>
that one or more directors of the corporation are or become
directors or officers of such other corporation, firm, syndicate or
association or members of such partnership or joint venture, or are
pecuniarily or otherwise interested in such contract or
transaction, provided that (1) the fact such director or directors
of the corporation are so situated or so interested, or both, is
disclosed or known to the Board of Directors or committee which
authorizes, approves, or ratifies the contract or transaction by a
vote or consent sufficient for the purpose without counting the
votes or consents of such interested directors; (2) that such fact
is disclosed or known to the Shareholders entitled to vote and they
authorize, approve, or ratify such contract or transaction by vote
or written consent; or (3) the contract or transaction is fair and
reasonable to the corporation. Any director of the corporation who
is also a director or officer of such other corporation, firm,
syndicate, or association, or a member of such partnership or joint
venture or is pecuniarily or otherwise interested in such contract
or transaction, may be counted for the purpose of determining the
presence of a quorum at any meeting of the Board of Directors which
shall authorize any such contract or transaction.
ARTICLE XI
FISCAL YEAR
Section 1. Fiscal Year. The fiscal year of the
corporation shall begin on the 1st day of March in each year, or at
such other time as may be determined by the Board of Directors.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS EXHIBIT 13
__________________________________________________________________________________________
(Dollars in thousands, except per share amounts) Year Ended February 28
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Operating revenues $432,658 $366,345 $322,749 $305,133 $251,575
Income before cumulative
effect of change in
accounting principle 31,293 23,936 19,695 18,013 16,780
Net income 31,293 23,936 18,641 18,013 16,780
Earnings per share* 1.31 1.05 .87 .78 .72
Cash dividends declared
per share .09 .08 .07 .06 .05
Return on average
stockholders' equity* 15.5% 15.5% 14.6% 15.0% 16.0%
Book value per share* 9.84 7.24 6.25 5.50 4.81
Total assets 380,429 305,872 259,155 247,115 238,915
Long-term obligations 0 16,652 11,149 33,515 52,865
Stockholders' equity 249,311 165,887 145,574 125,211 112,051
</TABLE>
*After giving retroactive effect for the September 1992, two-for-one stock
split (all years presented) and before the cumulative effect of a change in
accounting principle in 1992.
WERNER ENTERPRISES, INC. FEBRUARY 1994 ANNUAL REPORT 2
<PAGE>
WERNER ENTERPRISES, INC.
<TABLE>
<CAPTION>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
_________________________________________________________________________________________
The following table sets forth the percentage relationship of income and expense items to
operating revenues for the years indicated.
Year Ended February 28
1994 1993 1992
<S> <C> <C> <C>
Operating revenues 100.0% 100.0% 100.0%
Operating expenses
Salaries, wages and benefits 35.3 39.0 39.2
Fuel 9.5 10.9 11.6
Supplies and maintenance 8.9 8.7 9.4
Taxes and licenses 9.0 9.3 10.1
Insurance and claims 3.7 4.0 4.2
Depreciation 10.5 11.0 11.6
Rent and purchased transportation 9.4 4.7 1.9
Communications and utilities 1.9 1.4 1.2
Other (.4) - .3
Total operating expenses 87.8 89.0 89.5
Operating income 12.2 11.0 10.5
Net interest expense and other .2 .2 .4
Income before income taxes 12.0 10.8 10.1
Income taxes 4.8 4.3 4.0
Income before cumulative effect of
change in accounting principle 7.2 6.5 6.1
Cumulative effect on prior years of
change in accounting principle - - .3
Net income 7.2% 6.5% 5.8%
</TABLE>
<TABLE>
The following table sets forth certain industry data regarding the freight
revenues and operations of the Company.
<CAPTION> Year Ended February 28
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Operating ratio 87.8% 89.0% 89.5% 89.2% 87.4%
Average revenues per tractor
per week (1) $2,518 $2,511 $2,457 $2,384 $2,331
Average annual miles per
tractor 121,992 123,408 122,664 121,310 121,944
Average miles per trip 874 944 1,026 1,047 1,073
Average revenues per mile (1) $1.071 $1.057 $1.041 $1.021 $ .992
Total tractors operated (at year end)
Company owned 3,116 2,771 2,543 2,436 2,346
Owner-operator owned 514 279 127 24 4
Total tractors 3,630 3,050 2,670 2,460 2,350
Total trailers operated
(at year end) 8,540 6,970 5,740 5,160 4,870
</TABLE>
(1) Net of fuel surcharge revenues
____________________________________________________________
WERNER ENTERPRISES, INC. FEBRUARY 1994 ANNUAL REPORT 13
<PAGE>
WERNER ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
____________________________________________________
____________________________________________
RESULTS OF OPERATIONS
YEAR ENDED FEBRUARY 1994
COMPARED TO 1993
Operating revenues increased 18% due to an 18%
increase in the average number of tractors in
service, rate increases averaging 1.3% and a
1.1% decrease in average annual miles per
tractor. Due to continued expansion into
regional short-haul and dedicated markets, the
average miles per trip decreased by 7% from
944 miles to 874 miles, while the number of
shipments increased 26%. The operating ratio
(operating expenses expressed as a percentage
of operating revenues) decreased from 89.0% to
87.8%, as described below.
The increase in the number of owner-operators
from 279 at February 1993, to 514 at February
1994, caused a shift in expenses as a
percentage of total revenues from the
salaries, wages and benefits; fuel; supplies
and maintenance; taxes and licenses; and
depreciation categories (owner-operators are
independent contractors under contract with
the Company and responsible for these costs;
conversely the Company incurs such costs when
a Company driver is driving a Company-owned
tractor) to the rent and purchased
transportation expense category.
Salaries, wages and benefits costs increased
due to the retention of more experienced,
higher-paid drivers; higher pay for student
drivers; changes in driver pay policies; and
increases in health insurance benefits. These
increases were offset by favorable workers'
compensation claims experience and the shift
in costs from salaries, wages and benefits to
rent and purchased transportation due to the
increase in the percentage of owner-operator
tractors. Effective May 1, 1994, the Company
increased the mileage pay for Company drivers
by two cents per mile. This increase should
help the Company to attract and retain
qualified drivers to meet its growth plans.
The Company is meeting with its customers to
explain the driver pay and other cost
increases in order to obtain rate increases.
Fuel costs decreased due to a decrease in
average fuel prices for the year, an
improvement in the Company's fuel efficiency
and the increase in owner-operators who
purchase their own fuel. Supplies and
maintenance increased partially due to the
Company's conversion, during the quarter ended
November 30, 1993, from less expensive
recapped tires to new or newer tires for its
trailer fleet to reduce the number and cost of
trailer tire failures, offset in part by the
increase in owner-operator tractors. Taxes
and licenses increased due to the Federal
____________________________________________
WERNER ENTERPRISES, INC. FEBRUARY 1994 ANNUAL
diesel fuel tax increase of 4.3 cents per
gallon which became effective October 1, 1993,
offset in part by the increase in owner
operators.
Insurance and claims decreased from 4.0% to
3.7% of operating revenues due to continued
improvement in claims handling and experience.
Depreciation decreased as a percentage of
operating revenues due to the increase in
owner-operator tractors. This decrease was
offset partially by the increase in the ratio
of trailers to tractors from 2.29 to 2.35.
Trailers were added to provide convenience for
customers and to improve tractor productivity.
Communications and utilities increased due to
the installation of satellite communications
devices on the Company's entire fleet.
Installation of the devices began in October
1992, and was substantially completed by May
1993.
Other operating expenses decreased to (.4%) of
operating revenues due to an increase in gains
recognized on the sale of revenue equipment,
primarily tractors.
The Company's effective income tax rate
(income tax expense divided by income before
income taxes) remained constant at 39.5%.
Effective March 1, 1993, the Company adopted
Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes." The
effect of adoption of this standard on the
Company's results of operations was not
material. (See Notes 1 and 5 of the Notes to
Consolidated Financial Statements for a
further discussion of the income tax
accounting standard.)
YEAR ENDED FEBRUARY 1993
COMPARED TO 1992
Operating revenues rose 14% due to an 11%
increase in the average number of tractors in
service, average rate increases of almost 2%,
and a .6% increase in average miles per
tractor. Due to the expansion into regional
short-haul and dedicated markets, the average
miles per trip decreased by 8% from 1,026
miles to 944 miles while the number of loads
increased 22%. The operating ratio decreased
slightly as described below.
The increase in the number of owner-operator
tractors from 127 at February 1992, to 279 at
February 1993, caused a shift in expenses as
a percentage of total revenues from the
salaries, wages and benefits; fuel; supplies
and maintenance; taxes and licenses; and
depreciation categories to the rent and
purchased transportation category.
On a per-mile basis, salaries, wages and
benefits costs increased due to the retention
_____________________________________________
REPORT 14
<PAGE>
WERNER ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
____________________________________________
of more experienced, higher-paid drivers;
changes in driver pay policies; and increases
in workers' compensation and medical benefits.
Due to the increase in the percentage of
owner-operator tractors, these cost increases
are offset by the shift of costs from
salaries, wages and benefits to rent and
purchased transportation.
Fuel prices were stable on a year-to-year
basis. The decrease in fuel expense as a
percentage of operating revenues was caused
primarily by the increase in owner-operators
who purchase their own fuel. Supplies and
maintenance, and taxes and licenses decreased
as a percentage of operating revenues for
similar reasons.
Insurance and claims decreased from 4.2% to
4.0% due to improved claims experience.
Depreciation decreased slightly as a
percentage of operating revenues due to the
increase in owner-operator tractors, offset by
the increase in the ratio of trailers to
tractors.
Communications and utilities costs increased
due to the installation of satellite
communications devices on tractors in the
third and fourth quarters.
Net interest expense decreased due to the
reduction in debt in 1992 and 1993.
The Company's effective income tax rate
(income tax expense divided by income before
income taxes) remained constant at 39.5%.
(See Notes 1 and 8 of the Notes to
Consolidated Financial Statements for a
discussion of the change in accounting
principle in the year ended February 1992,
related to the accounting method for
recognizing operating revenues and related
direct costs.)
____________________________________________
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has relied primarily
on cash generated from operations to fund
working capital requirements.
The growth of the Company's business has
required significant investment in new revenue
equipment. Net capital expenditures in fiscal
1994, 1993 and 1992, were approximately
$102,746,000, $81,241,000 and $45,568,000,
respectively. The fiscal 1994 capital
expenditures were financed with cash generated
from operations and a portion of the net
proceeds from the Company's October 1993
public stock offering. The fiscal 1993 and
fiscal 1992 capital expenditures were financed
principally with cash generated from
operations in fiscal 1993 and 1992. The
Company has committed to fiscal 1995 capital
expenditures of approximately $59,000,000
____________________________________________
WERNER ENTERPRISES, INC. FEBRUARY 1994 ANNUAL
(after trade-in allowances). The Company
expects to fund these expenditures primarily
with cash generated from operations.
The Company's financial position is strong at
February 1994. The current ratio is 1.52.
The Company has no long-term debt and almost
$250 million in stockholders' equity. A
portion of the net proceeds from the Company's
October 1993 public stock offering was used to
repay short-term borrowings and retire long-
term debt.
Based on the Company's strong financial
position, management foresees no barriers to
obtaining sufficient financing, if necessary,
to continue growing at a steady, manageable
rate.
_____________________________________________
REPORT 15
<PAGE>
WERNER ENTERPRISES, INC.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
_______________________________________________________________________________________________
(In thousands, except per share amounts) Year Ended February 28
1994 1993 1992
<S> <C> <C> <C>
Operating revenues (Notes 1 and 8) $432,658 $366,345 $322,749
Operating expenses (Note 8):
Salaries, wages and benefits 152,839 142,920 126,445
Fuel 41,036 39,906 37,385
Supplies and maintenance 38,404 31,740 30,303
Taxes and licenses 38,943 34,194 32,576
Insurance and claims 15,847 14,761 13,518
Depreciation 45,440 40,206 37,609
Rent and purchased transportation 40,778 17,130 6,114
Communications and utilities 8,390 4,961 4,015
Other (1,798) 53 908
Total operating expenses 379,879 325,871 288,873
Operating income 52,779 40,474 33,876
Other expense (income):
Interest expense 1,414 1,269 2,060
Interest income (507) (569) (987)
Other 136 209 249
Total other expense 1,043 909 1,322
Income before income taxes and
cumulative effect of change in
accounting principle 51,736 39,565 32,554
Income taxes (Notes 1 and 5) 20,443 15,629 12,859
Income before cumulative effect of change in
accounting principle 31,293 23,936 19,695
Cumulative effect on prior years of change
in accounting principle (Note 8) - - (1,054)
Net income $ 31,293 $ 23,936 $ 18,641
Average common shares outstanding (Note 1) 23,823 22,826 22,762
Earnings per share (Note 1):
Income before cumulative effect of change
in accounting principle $1.31 $1.05 $ .87
Cumulative effect on prior years of
change in accounting principle (Note 8) - - (.05)
Net income $1.31 $1.05 $ .82
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
_______________________________________________________________
WERNER ENTERPRISES, INC. FEBRUARY 1994 ANNUAL REPORT 16
<PAGE>
WERNER ENTERPRISES, INC.
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
_______________________________________________________________________________________________
(in thousands) February 28
1994 1993
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (Note 1) $ 10,833 $ 6,441
Accounts receivable, less allowance of $2,526 and
$2,387, respectively (Note 8) 45,681 37,420
Prepaid taxes, licenses, and permits 5,628 4,920
Current deferred income taxes (Notes 1 and 5) 5,100 4,272
Other 11,340 11,140
Total current assets 78,582 64,193
Property and equipment, at cost (Notes 1 and 2):
Land 10,924 5,930
Buildings and improvements 20,590 16,034
Revenue equipment 342,362 286,192
Service equipment and other 25,253 20,983
Total property and equipment 399,129 329,139
Less - accumulated depreciation 97,282 87,460
Property and equipment, net 301,847 241,679
$380,429 $305,872
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 13,825 $ 21,363
Current maturities of capitalized
lease obligations (Note 2) 4,310 4,493
Insurance and claims accruals (Note 4) 14,340 12,233
Accrued payroll 9,115 6,876
Income taxes payable 3,189 -
Driver escrow 2,689 2,445
Other 4,214 3,479
Total current liabilities 51,682 50,889
Long-term debt and capitalized lease obligations,
net of current maturities (Notes 2 and 3) - 16,652
Deferred income taxes (Notes 1 and 5) 55,100 48,033
Insurance and claims accruals (Note 4) 21,200 20,800
Other long-term liabilities 3,136 3,611
Commitments (Note 7)
Stockholders' equity (Notes 1 and 6):
Common stock, $.01 par value, 60,000,000 and 25,000,000
shares authorized; 25,771,200 and 23,471,200 shares
issued; 25,334,016 and 22,881,616 shares
outstanding, respectively 258 235
Paid-in capital 100,160 47,016
Retained earnings 151,578 122,420
Less - treasury stock, at cost (2,685) (3,784)
Total stockholders' equity 249,311 165,887
$380,429 $305,872
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
______________________________________________________________________
WERNER ENTERPRISES, INC. FEBRUARY 1994 ANNUAL REPORT 17
<PAGE>
WERNER ENTERPRISES, INC.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
_______________________________________________________________________________________________
(In thousands) Year Ended February 28
1994 1993 1992
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 31,293 $ 23,936 $ 18,641
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 45,440 40,206 37,609
Deferred income taxes 10,693 1,188 4,781
(Gain) loss on disposal of
operating equipment (2,862) (432) 47
Tax benefit from exercise of stock options 998 506 -
Other long-term liabilities (75) 6,860 2,701
Cumulative effect of change in accounting
principle - - 1,054
Changes in certain working capital items:
Accounts receivable, net (8,261) (5,529) (4,191)
Prepaid expenses and other current assets (908) (5,251) 832
Accounts payable (7,538) 8,243 5,785
Other current liabilities 4,060 1,228 2,868
Net cash provided by operating activities 72,840 70,955 70,127
Cash flows from investing activities:
Additions to property and equipment (123,024) (84,628) (47,217)
Retirements of property and equipment 20,278 3,387 1,649
Net cash used in investing activities (102,746) (81,241) (45,568)
Cash flows from financing activities:
Short-term borrowing 20,000 - -
Repayments of short-term borrowing (20,000) - -
Borrowings of long-term debt - 10,000 -
Repayment of long-term debt and capitalized
lease obligations (16,835) (4,799) (21,763)
Proceeds from issuance of common stock,
net of related expenses 52,182 - -
Dividends on common stock (2,135) (1,826) (1,593)
Stock options exercised 1,086 697 315
Net cash provided by (used in) financing
activities 34,298 4,072 (23,041)
Net increase (decrease) in cash and cash
equivalents 4,392 (6,214) 1,518
Cash and cash equivalents, beginning of year 6,441 12,655 11,137
Cash and cash equivalents, end of year $ 10,833 $ 6,441 $ 12,655
______________________________________________________________________________________________
Supplemental disclosures of cash flow information
(in thousands):
Cash paid during the year for:
Interest $ 1,443 $ 1,633 $ 2,133
Income taxes 8,552 14,909 9,174
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
_________________________________________________________________
WERNER ENTERPRISES, INC. FEBRUARY 1994 ANNUAL REPORT 18
<PAGE>
WERNER ENTERPRISES, INC.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
_______________________________________________________________________________________________
(In thousands) (Note 1)
Total
Common Paid-In Retained Treasury Stockholders'
Stock Capital Earnings Stock Equity
<S> <C> <C> <C> <C> <C>
BALANCE, February 28, 1991 $ 117 $ 46,472 $ 83,262 $ (4,640) $125,211
Dividends on common stock
($.07 per share) - - (1,593) - (1,593)
Exercise of stock options,
40,800 shares - 68 - 247 315
Net income - - 18,641 - 18,641
BALANCE, February 28, 1992 117 46,540 100,310 (4,393) 142,574
Dividends on common stock
($.08 per share) - - (1,826) - (1,826)
Exercise of stock options
90,600 shares - 594 - 609 1,203
Net income - - 23,936 - 23,936
Two-for-one stock split 118 (118) - - -
BALANCE, February 28, 1993 235 47,016 122,420 (3,784) 165,887
Dividends on common stock
($.09 per share) - - (2,135) - (2,135)
Exercise of stock options,
152,400 shares - 985 - 1,099 2,084
Proceeds from offering of
2,300,000 shares of common
stock, net of related
expenses 23 52,159 - - 52,182
Net income - - 31,293 - 31,293
BALANCE, February 28, 1994 $ 258 $100,160 $151,578 $ (2,685) $249,311
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of Werner Enterprises, Inc.:
We have audited the accompanying consolidated balance sheets of Werner
Enterprises, Inc. (a Nebraska corporation) and Subsidiaries as of
February 28, 1994 and 1993, and the related consolidated statements of
income, stockholders' equity and cash flows for each of the three years
in the period ended February 28, 1994. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Werner Enterprises, Inc.
and Subsidiaries as of February 28, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the
period ended February 28, 1994, in conformity with generally accepted
accounting principles.
As explained in Note 8 to the consolidated financial statements, the Company
changed its method of accounting for recognizing operating revenues and
related direct costs in the year ended February 28, 1992.
ARTHUR ANDERSEN & CO.
Omaha, Nebraska
March 24, 1994.
_____________________________________________________________________________
WERNER ENTERPRISES, INC. FEBRUARY 1994 ANNUAL REPORT 19
<PAGE>
WERNER ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
____________________________________________
(1) Summary Of Significant
Accounting Policies
NATURE OF BUSINESS
Werner Enterprises, Inc. (the Company) is a
truckload carrier of general commodities
operating under the jurisdiction of the
Interstate Commerce Commission and various
state regulatory commissions. The Company
maintains a diversified freight base with no
one customer or industry making up a large
percentage of the Company's receivables or
revenues.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial
statements include the accounts of Werner
Enterprises, Inc. and its wholly-owned
subsidiaries. All significant inter-company
accounts and transactions relating to these
entities have been eliminated.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid
investments, purchased with a maturity of
three months or less, to be cash equivalents.
PROPERTY, EQUIPMENT AND DEPRECIATION
Additions and improvements to property and
equipment are capitalized at cost, while
maintenance and repair expenditures are
charged to operations as incurred. At the
time of trade-in, the cost of new equipment is
recorded at an amount equal to the monetary
consideration paid plus the net book value of
the traded property.
Depreciation is calculated based on the cost
of the asset, reduced by its estimated salvage
value, using the straight-line method. During
the year ended February 1992, the Company
reduced the salvage valued on tractors to
reflect changes in market conditions.
Accelerated depreciation methods are used for
income tax purposes. The lives and salvage
values assigned to certain assets for
financial reporting purposes are different
than for income tax purposes. For financial
reporting purposes, assets are depreciated
over the estimated useful lives of 30 years
for buildings and improvements, 5 to 7 years
for revenue equipment and 3 to 8 years for
service equipment and other.
TIRES
Tires placed on new revenue equipment are
capitalized as a part of the equipment cost.
Replacement tires are expensed when placed in
service.
____________________________________________
WERNER ENTERPRISES, INC. FEBRUARY 1994 ANNUAL
REVENUE RECOGNITION
The Consolidated Statements of Income for the
year ended February 1992 and all subsequent
years reflect recognition of operating
revenues and related direct costs when the
shipment is delivered. For the year ended
February 1991 and prior years, revenues and
related direct costs were recognized when
freight was picked up for shipment (see Note
8).
During portions of the years ended February
1994 and February 1992, the Company
experienced temporary increases in the cost of
fuel. The Company collected a temporary fuel
surcharge from its customers for a majority of
these cost increases.
INCOME TAXES
Effective March 1, 1993, the Company adopted
Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes."
SFAS No. 109 requires deferred income taxes to
be computed using the enacted income tax rates
for the years in which the taxes will be paid
or refunds received. Prior to adoption of
SFAS No. 109, deferred income tax accounts
reflected the rates in effect when the
deferrals were made. The cumulative effect of
this change as of March 1, 1993, of $200,000,
or $.01 per share, was not material and is
reflected as a reduction of income tax expense
for the year ended February 1994.
COMMON STOCK AND EARNINGS PER SHARE
On September 21, 1992, the Company issued
shares for a two-for-one common stock split
effected in the form of an 100% stock dividend
from authorized and unissued shares to
stockholders of record on September 11, 1992.
All references in the Consolidated Financial
Statements and Notes to 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. The stated par value of common
stock of $.01 per share did not change.
Earnings per share have been computed based on
the weighted average number of common shares
outstanding. (See Note 9).
FISCAL YEARS
The Company's 1992 fiscal year ended on
February 29. To simplify reporting,
references to the 1992 fiscal year are shown
throughout this report as February 28.
____________________________________________
REPORT 20
<PAGE>
WERNER ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
____________________________________________________
____________________________________________
(2) Lease Obligations
______________________________________________
Property and equipment includes the following
amounts related to capitalized lease
obligations (in thousands):
February
1994 1993
Revenue equipment $10,005 $19,982
Less - accumulated
depreciation 5,437 8,016
$ 4,568 $11,966
During the year ended February 1993, the
Company entered into a three-year operating
lease for communications equipment. The
Company has the option of extending the term
of this lease at its expiration or purchasing
the equipment at an established price.
Communications and utilities expense in the
accompanying Consolidated Statements of Income
includes $4,389,000 and $570,000 for lease of
communications equipment during the years
ended February 1994 and 1993, respectively.
At February 1994, future minimum lease
payments under these leases are as follows (in
thousands):
Year Ending February Capitalized Operating
Leases Leases
1995 $ 4,391 $ 5,370
1996 - 4,845
1997 - 852
Total minimum lease
payments 4,391 $11,067
Less - amount
representing interest 81
Present value of
minimum lease
payments $ 4,310
(3) Long-Term Debt
Long-term debt at February 1993, consisted of
a $10,000,000 note payable to a bank which was
repaid prior to February 1994. The note
payable had an interest rate of 3.7% during
the year ended February 1994.
____________________________________________
WERNER ENTERPRISES, INC. FEBRUARY 1994 ANNUAL
____________________________________________
(4) Insurance and Claims
The Company annually renews its public
liability and property damage insurance
coverage in August. Effective August 1992,
the Company assumed responsibility for
liability up to $500,000, plus administrative
expenses, for any single occurrence involving
personal injury or property damage. Effective
August 1993, the Company also assumed
responsibility for a $1,000,000 aggregate
amount of liability between $500,000 and
$1,000,000. Liability in excess of this
amount is assumed by the insurance carriers in
amounts which management considers adequate.
The Company's public liability and property
damage premiums for coverage between $50,000
and $1,000,000 per claim prior to August 1992,
are subject to retrospective adjustments based
on actual incurred losses until all claims are
settled. Management does not expect any
significant adjustment will be made to the
premiums paid or accrued for these policy
years.
The Company has assumed responsibility for
workers' compensation, maintains a $2,000,000
bond, has statutory coverage and has obtained
insurance for individual claims above
$500,000.
Under these insurance arrangements, the
Company maintains $17,200,000 in letters of
credit, as of February 1994.
(5) Income Taxes
Income tax expense consists of the following
(in thousands):
Year Ended February
1994 1993 1992
Current
Federal $ 7,983 $12,734 $ 6,772
State 1,767 1,707 1,306
9,750 14,441 8,078
Deferred
Federal 8,878 (102) 3,620
State 1,815 1,290 1,161
$10,693 $ 1,188 $ 4,781
Total income
tax expense $20,443 $15,629 $12,859
____________________________________________
REPORT 21
<PAGE>
WERNER ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The effective income tax rate differs from the
federal corporate tax rate of 35% in 1994 and
34% in 1993 and 1992, as follows (in
thousands):
Year Ended February
1994 1993 1992
Tax at
statutory rate $18,108 $13,452 $11,068
State income taxes,
net of federal
tax benefits 2,328 1,978 1,628
Effect of tax rate
change on deferred
tax assets and
liabilities 990 - -
Adoption of SFAS
No. 109 (200) - -
Other, net (783) 199 163
$20,443 $15,629 $12,859
Deferred tax assets and liabilities, which
include the effect of the March 1, 1993,
adoption of SFAS No. 109, consisted of the
following (in thousands):
February 1994
Deferred tax assets:
Insurance and claims accruals $14,213
Allowance for uncollectible
accounts 1,008
Other 3,018
$18,239
Deferred tax liabilities:
Property and equipment $64,951
Prepaid taxes, licenses
and insurance 3,002
Other 286
$68,239
Prior year consolidated financial statements
were not restated to reflect the adoption of
SFAS No. 109. This table shows the principal
sources of deferred tax expense in prior years
(in thousands):
Year ended February
1993 1992
Deduction of tires
capitalized for
financial reporting
purposes $2,315 $1,636
Insurance accruals (1,920) (1,735)
Depreciation 3,976 (160)
Deduction of lease
payments which are
capital leases for
financial reporting
purposes 1,896 1,236
Tax gains over book
gains on disposition
of fixed assets (729) (506)
AMT credit carryforward - 3,379
Adjustment between current
and deferred taxes
related to prior years (4,246) 693
Other cash versus
accrual items - (115)
Other (104) 353
$1,188 $4,781
_____________________________________________
WERNER ENTERPRISES, INC. FEBRUARY 1994 ANNUAL
(6) Stock Option and
Employee Benefit Plans
STOCK OPTION PLAN
The Company's Stock Option Plan (the Stock
Option Plan) is a nonqualified plan that
provides for the grant of options to
management employees. Options are granted at
prices equal to the market value of the common
stock on the date the option is granted. The
options are exercisable over a period not to
exceed ten years and one day from the date of
grant. The maximum number of shares of common
stock that may be optioned under the Stock
Option Plan is 2,000,000 shares.
During the year ended February 1994, options
to purchase 356,750 and 83,000 shares of
common stock were granted under the Stock
Option Plan at exercise prices of $22.50 and
$24.00, respectively. At February 1994,
969,950 shares were available for granting
further options and options for 745,050 shares
were outstanding at prices of $6.625 to
$24.00, per share, of which options for
294,200 shares were exercisable. Options
granted become exercisable in installments
from six to sixty-six months after the date of
grant.
EMPLOYEE STOCK PURCHASE PLAN
Employees meeting certain eligibility
requirements may participate in the Company's
Employee Stock Purchase Plan (the Purchase
Plan). Eligible participants designate the
amount of regular payroll deductions and/or
single annual payment, subject to a yearly
maximum amount, that is used to purchase
shares of the Company's common stock on the
Over-The-Counter Market subject to the terms
of the Purchase Plan. The Company contributes
an amount equal to 15% of each participant's
contributions under the Purchase Plan.
Company contributions for the Purchase Plan
were $44,981, $30,849 and $17,558 for the
years ended February 1994, 1993 and 1992,
respectively. Interest accrues on Purchase
Plan contributions at a rate of 5.25%. The
broker's commissions and administrative
charges related to purchases of common stock
under the Purchase Plan are paid by the
Company.
401(k) RETIREMENT SAVINGS PLAN
The Company has an employees' 401(k)
Retirement Savings Plan (the 401(k) Plan).
Employees are eligible to participate in the
401(k) Plan if they have been continuously
employed with the Company or its subsidiaries
for six months or more. The Company matches
a portion of the amount each employee
contributes to the 401(k) Plan. It is the
Company's intention, but not its obligation,
that the Company's total annual contribution
for employees will equal 2 1/2 percent of net
income (exclusive of extraordinary items).
____________________________________________
REPORT 22
<PAGE>
WERNER ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
___________________________________________________________
Salaries, wages and benefits expense in the
accompanying Consolidated Statements of Income
included $801,493, $634,497 and $528,472 of
401(k) Plan contributions and administrative
expenses for the years ended February 1994,
1993 and 1992, respectively.
____________________________________________
(7) Commitments
The Company has committed to capital
expenditures of approximately $59,000,000 (net
cost, after revenue equipment trade-in
allowances of approximately $27,000,000)
during the year ending February 1995.
____________________________________________
(8) Change in Accounting Principle
In accordance with industry practice, the
Company historically recognized operating
revenues and related direct costs when freight
was picked up for shipment. In January 1992,
the Financial Accounting Standards Board
Emerging Issues Task Force (EITF) reached a
consensus on revenue and expense recognition
for freight services in process.
Based on the EITF consensus, the Company began
recognizing both revenues and direct costs
when the shipment is delivered in the year
ended February 1992. The cumulative effect of
this accounting change on fiscal years prior <PAGE>
____________________________________________
to the year ended February 1992, was
$(1,054,000), net of income taxes of $688,000,
or $(.05) per share and was reflected in net
income of the first quarter of the year ended
February 1992.
____________________________________________
(9) Secondary Public Stock Offering
On September 29, 1993, a special meeting of
stockholders was held to vote on the Board of
Directors' resolution to amend the Company's
Articles of Incorporation and increase the
number of authorized shares of common stock
from 25,000,000 shares to 60,000,000 shares.
The resolution was approved by the necessary
affirmative vote of over two-thirds of the
outstanding common stock.
During October 1993, a public offering of the
Company's common stock was successfully
completed. The Company sold a total of
2,300,000 shares and 1,150,000 shares were
sold by Clarence L. Werner, Chairman and Chief
Executive Officer, and members of his family.
The Company used the net proceeds from the
offering of $52,182,000 to repay short-term
borrowings, retire long-term debt and purchase
revenue equipment.
<TABLE>
<CAPTION>
________________________________________________________________________________
(10) Quarterly Results of Operations (Unaudited)
(In thousands,
except per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter
<S> <C> <C> <C> <C>
Year ended February 1994
Operating revenues $101,228 $108,759 $111,932 $110,739
Operating income 12,025 17,032 13,852 9,870
Net income 7,521 9,175 8,492 6,105
Earnings per share .33 .40 .35 .24
Year ended February 1993(a)
Operating revenues $ 89,695 $ 92,976 $ 94,024 $ 89,650
Operating income 10,038 11,906 10,969 7,561
Net income 5,952 7,084 6,486 4,414
Earnings per share .26 .31 .28 .19
</TABLE>
(a) Earnings per share are after giving effect for the two-for-one stock split
(see Note 1).
______________________________________________________________
WERNER ENTERPRISES, INC. FEBRUARY 1994 ANNUAL REPORT 23
<PAGE>
WERNER ENTERPRISES, INC.
CORPORATE INFORMATION
_______________________________________________________
____________________________________________
Price Range of Common Stock
The Company's common stock is traded in the
NASDAQ National Market System under the symbol
WERN. The following table sets forth for the
fiscal quarters indicated the high and low
sale prices per share of the Company's common
stock in the NASDAQ National Market System
from March 1, 1992, through February 28, 1994.
High Low
Fiscal 1994
Quarter ended
May 31, 1993 25 1/2 18 1/2
Quarter ended
August 31, 1993 25 1/4 20 3/4
Quarter ended
November 30, 1993 29 1/2 22 7/8
Quarter ended
February 28, 1994 32 25 7/8
Fiscal 1993
Quarter ended
May 31, 1992* 18 1/8 14 7/8
Quarter ended
August 31, 1992* 18 1/8 14 1/8
Quarter ended
November 30, 1992 20 16 1/2
Quarter ended
February 28, 1993 24 1/2 18 3/4
*After giving retroactive effect for the two-
for-one stock split in September 1992.
As of April 11, 1994, there were 278 holders
of record of the common stock.
______________________________________________
Dividend Policy
The Company has been paying cash dividends on
its common stock following each of its fiscal
quarters since the quarter ended May 31, 1987.
The Company intends to continue payment of
dividends on a quarterly basis and does not
anticipate any restrictions on its future
ability to pay such dividends.
____________________________________________
WERNER ENTERPRISES, INC. FEBRUARY 1994 ANNUAL
________________________________________
Corporate Offices
Werner Enterprises, Inc.
Interstate 80 & Highway 50
P. O. Box 37308
Omaha, Nebraska 68137
Telephone: (402) 895-6640
____________________________________________
Annual Meeting
The Annual Meeting will be held on Tuesday,
June 21, 1994, at 10:00 a.m. in the Peter
Kiewit Conference Center, 1313 Farnam Street,
Omaha, Nebraska.
_____________________________________________
Stock Listing
The Company's common stock is traded in the
NASDAQ National Market System under the symbol
WERN.
_____________________________________________
Independent Public Accountants
Arthur Andersen & Co.
1700 Farnam Street
Omaha, Nebraska 68102
____________________________________________
Stock Transfer Agent and Registrar
Mellon Bank N.A.
111 Founders Plaza
11th Floor
East Hartford, CT 06108
____________________________________________
Form 10-K
A copy of the Company's Annual Report on Form
10-K filed with the Securities and Exchange
Commission may be obtained by calling or
writing the Investor Relations Department,
P.O. Box 37308, Omaha, Nebraska 68137, (402)
895-6640.
____________________________________________
REPORT 24
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF WERNER ENTERPRISES, INC.
SUBSIDIARY STATE OF INCORPORATION
1. Werner Leasing, Inc. Nebraska
2. Werner Aire, Inc. Nebraska
3. Gra-Gar, Inc. Nebraska
4. Drivers Management, Inc. Nebraska
5. Frontier Clinic, Inc. Nebraska
6. Fleet Truck Sales, Inc. Nebraska
7. Professional Truck Drivers School, Inc. Nebraska
8. Werner Transportation, Inc. Nebraska
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTS
As independent public accountants, we hereby consent to the
incorporation of our reports included and incorporated by reference
in this Form 10-K, into the Company's previously filed Registration
Statement File Nos. 33-15894 and 33-15895.
ARTHUR ANDERSEN & CO.
Omaha, Nebraska,
May 25, 1994
