SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended Commission file number
August 31, 1994 0-14690
WERNER ENTERPRISES, INC.
(Exact name of registrant as specified in its charter.)
NEBRASKA 47-0648386
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
INTERSTATE 80 & HIGHWAY 50
POST OFFICE BOX 37308
OMAHA, NEBRASKA 68137 (402)895-6640
(Address of principal (Zip Code) (registrant's telephone number)
executive offices)
Indicate by check mark whether the registrant(1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
As of September 30, 1994, 25,296,916 shares of the registrant's common stock,
par value $.01 per share, were outstanding.
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
The interim consolidated financial statements contained herein reflect all
adjustments which, in the opinion of management, are necessary for a fair
statement of the financial condition and results of operations for the periods
presented. They have been prepared in accordance with the instructions to Form
10-Q and do not include all the information and footnotes required by generally
accepted accounting principles for complete financial statements.
Operating results for the three-month and six-month periods ended August 31,
1994 are not necessarily indicative of the results that may be expected for the
year ending February 28, 1995. In the opinion of management, the information
set forth in the accompanying consolidated condensed balance sheets is fairly
stated in all material respects in relation to the consolidated balance sheets
from which it has been derived.
These interim consolidated financial statements should be read in conjunction
with the Company's latest annual report (which is incorporated by reference in
the Form 10-K for the fiscal year ended February 28, 1994).
Consolidated Statements of Income for the
Three Months Ended August 31, 1994 and 1993 .................... Page 3
Consolidated Statements of Income for the
Six Months Ended August 31, 1994 and 1993 ...................... Page 4
Consolidated Condensed Balance Sheets as of
August 31, 1994 and February 28, 1994 .......................... Page 5
Consolidated Statements of Cash Flows for the
Six Months Ended August 31, 1994 and 1993 ...................... Page 6
Notes to Consolidated Financial Statements
as of August 31, 1994 .......................................... Page 7
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<TABLE>
WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended
(Amounts in thousands, except per share data) August 31
1994 1993
(Unaudited)
<S> <C> <C>
Operating revenues $134,224 $108,759
Operating expenses:
Salaries, wages and benefits 46,867 37,984
Fuel 10,675 9,652
Supplies and maintenance 11,743 9,290
Taxes and licenses 10,999 9,154
Insurance and claims 3,879 3,482
Depreciation 13,414 11,038
Rent and purchased transportation 16,476 9,423
Communications and utilities 2,561 1,987
Other (614) (283)
Total operating expenses 116,000 91,727
Operating income 18,224 17,032
Other expense (income):
Interest expense 114 485
Interest income (141) (75)
Other 42 40
Total other expense 15 450
Income before income taxes 18,209 16,582
Income taxes 7,102 7,407
Net income $ 11,107 $ 9,175
Average common shares outstanding 25,313 22,920
Earnings per share $ .44 $.40
<FN>
</TABLE>
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<TABLE>
WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Six Months Ended
(Amounts in thousands, except per share data) August 31
1994 1993
(Unaudited)
<S> <C> <C>
Operating revenues $261,123 $209,987
Operating expenses:
Salaries, wages and benefits 92,068 74,451
Fuel 20,758 20,069
Supplies and maintenance 22,737 18,494
Taxes and licenses 22,203 18,220
Insurance and claims 8,387 7,233
Depreciation 26,108 21,732
Rent and purchased transportation 31,910 17,291
Communications and utilities 4,996 3,927
Other (1,252) (487)
Total operating expenses 227,915 180,930
Operating income 33,208 29,057
Other expense (income):
Interest expense 250 935
Interest income (279) (156)
Other 99 75
Total other expense 70 854
Income before income taxes 33,138 28,203
Income taxes 12,924 11,507
Net income $ 20,214 $16,696
Average common shares outstanding 25,324 22,903
Earnings per share $ .80 $.73
<FN>
</TABLE>
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<TABLE>
WERNER ENTERPRISES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
(In thousands) August 31 February 28
1994 1994
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,444 $ 10,833
Accounts receivable, net 54,540 45,681
Prepaid expenses and other current assets 21,580 22,068
Total current assets 83,564 78,582
Property and equipment 442,639 399,129
Less - accumulated depreciation 108,665 97,282
Property and equipment, net 333,974 301,847
$417,538 $380,429
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 20,182 $ 13,825
Accrued payroll 9,384 9,115
Short-term borrowing 10,000 -
Current maturities of
capitalized lease obligations - 4,310
Income taxes payable 8,566 3,189
Other current liabilities 20,487 21,243
Total current liabilities 68,619 51,682
Insurance and claims accruals 21,200 21,200
Other long-term liabilities 3,136 3,136
Deferred income taxes 57,586 55,100
Stockholders' equity 266,997 249,311
$417,538 $380,429
</TABLE>
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<TABLE>
WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Six Months Ended
(In thousands) August 31
1994 1993
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $20,214 $16,696
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 26,108 21,732
Deferred income taxes 2,485 2,623
Gain on disposal of operating equipment (1,667) (1,375)
Tax benefit from exercise of stock options - 318
Other long-term liabilities - (500)
Changes in certain working capital items:
Accounts receivable, net (8,859) (5,362)
Prepaid expenses and other current assets 488 2,858
Accounts payable 6,357 (13,496)
Accrued payroll 269 2,167
Other current liabilities 4,621 6,540
Net cash provided by operating activities 50,016 32,201
Cash flows from investing activities:
Additions to property and equipment (69,741) (57,594)
Retirements of property and equipment 13,174 9,911
Net cash used in investing activities (56,567) (47,683)
Cash flows from financing activities:
Short-term borrowing 10,000 20,000
Repayments of capitalized lease
obligations (4,310) (2,816)
Dividends on common stock (1,266) (916)
Repurchase of Company common stock (1,265) -
Stock options exercised 3 389
Net cash provided by financing activities 3,162 16,657
Net increase (decrease) in cash and cash equivalents (3,389) 1,175
Cash and cash equivalents, beginning of period 10,833 6,441
Cash and cash equivalents, end of period $ 7,444 $ 7,616
<FN>
</TABLE>
<TABLE>
Supplemental disclosures of cash flow information:
<CAPTION>
<S> <C> <C>
Cash paid during the period for:
Interest $ 213 $ 892
Income taxes 5,061 1,379
<FN>
</TABLE>
6
<PAGE>
WERNER ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Commitments
As of August 31, 1994, the Company has committed to capital expenditures
of approximately $58,000,000 (net cost, after revenue equipment trade-in
allowances of approximately $33,000,000).
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Financial Condition:
During the six months ended August 31, 1994, cash flow from operations
generated $50.0 million and the Company made a short-term borrowing of $10.0
million, which enabled the Company to make net property additions, primarily
revenue equipment, of $56.6 million, repay capitalized lease obligations of
$4.3 million, pay common stock dividends of $1.3 million and repurchase Company
common stock of $1.3 million.
The Company's long-term debt obligations to equity ratio at February 28,
1994 and at August 31, 1994 was 0%.
Results of Operations:
Three Months Ended August 31, 1994 and 1993
Operating revenues increased 23% in the three months ended August 31,
1994, compared to the same period in the prior year. The average number of
tractors increased by 21%. Revenue per mile increased 4% while tractor
utilization (miles per tractor) was lower. The increase in the average
number of tractors continues to be primarily in the regional, dedicated and
temperature controlled markets due to strong customer demand resulting from
the strong economy. Customer demand for long-haul van and flatbed services
was also good, which resulted in tractor growth of 6% and 17%, respectively,
in these markets. The revenue per mile increase and the tractor utilization
decrease was the result of the Company's continued expansion into markets
where the average revenue per mile is higher and the average miles per trip
are less and as a result of rate increases obtained by the Company.
Operating expenses, expressed as a percentage of operating revenues,
were 86.4% for the three months ended August 31, 1994, compared to 84.3% for
the three months ended August 31, 1993. Salaries, wages and benefits
remained constant at 34.9% of revenues due primarily to an increase in driver
pay due to a 2 cent per mile driver pay increase effective May 1, 1994 and
the retention of more experienced, higher paid drivers, offset by an increase
in the percentage of owner-operator tractors compared to company-owned
tractors. Owner-operators are independent contract contract with the
Company and are responsible for such costs as their own salaries, wages and
benefits, fuel, supplies and maintenance, taxes and licenses and
depreciation. Owner-operator costs are included in the rent and
purchased transportation expense category. Fuel decreased from 8.9%
revenues to 8.0% of revenues as a result of improved fuel efficiency and an
increase in the percentage of owner-operator tractors offset partial
higher fuel prices. Supplies and maintenance increased from 8.5% of revenues
to 8.7% of revenues due to an increase in costs related to driver
advertising, tolls and third-party loadings and unloadings, offset partially
by the increase in the percentage of owner-operator tractors. Taxes and
licenses decreased from 8.4% of revenues to 8.2% of revenues due to an
increase in the percentage of owner-operator tractors, offset by an increase
in the Federal diesel fuel tax rate of 4.3 cents per gallon which became
effective October 1, 1993. Insurance and claims decreased from 3.2% of
revenues to 2.9% of revenues as a result of favorable claims experience,
particularly better claims experience related to severe claims. Depreciation
decreased from 10.1% of revenues to 10.0% of revenues due to the increase in
8
<PAGE>
the percentage of owner-operator tractors, offset partially by an increase in
the trailer to tractor ratio. The increase in the trailer to tractor ratio
is the result of providing additional trailers and improved service for
customers. Other operating expenses decreased from (.3)% of revenues to
(.5)% of revenues due to an increase in gains realized on the sale of revenue
equipment.
Rent and purchased transportation increased from 8.7% of revenues to
12.3% of revenues due primarily to an increase in the percentage of
owner-operator tractors as compared to company-owned. The average number of
owner-operator tractors for the quarter ended August 31, 1994 was 581
compared to an average of 363 for the quarter ended August 31, 1993.
Rent and purchased transportation also increased due to an increase in
the use of intermodal and other third-party transportation services.
Interest expense decreased from $.5 million for the three months ended
August 31, 1993, to $.1 million for the three months ended August 31, 1994,
due primarily to the repayment of $2.1 million of capitalized lease
obligations during the three months ended August 31, 1994. The Company's
effective income tax rate (income tax expense divided by income before income
taxes) decreased to 39.0% for the three months ended August 31, 1994,
compared to 44.7% for the three months ended August 31, 1993. This decrease
in the effective income tax rate was due primarily to the corporate Federal
income tax rate increase enacted August 10, 1993 (retroactive to January 1,
1993), which resulted in an increase in income tax expense during the three
months ended August 31, 1993.
Six Months Ended August 31, 1994 and 1993
Operating revenues increased 24% in the six months ended August 1994,
compared to the same period in the prior year. The average number of
tractors increased by 21%. Revenue per mile increased 4.0% while tractor
utilization decreased slightly.
Operating expenses, expressed as a percentage of operating revenues,
were 87.3% for the six months ended August 31, 1994, compared to 86.2% for
the six months ended August 31, 1993. Salaries, wages and benefits decreased
from 35.5% of revenues to 35.3% due primarily to an increase in driver pay
due to a 2 cent per mile driver pay increase effective May 1, 1994 and the
retention of more experienced, higher paid drivers, offset by an increase in
the percentage of owner-operator tractors compared to company-owned tractors.
Fuel decreased from 9.6% of revenues to 7.9 of revenues as a result of
improved fuel efficiency, slightly lower fuel prices and an increase in
the percentage of owner-operator tractors. Supplies and maintenance
decreased from 8.8% of revenues to 8.7% of revenues due to the increase
in the percentage of owner-operator tractors offset partially increases
in driver advertising, tolls and third-party loadings and unloadings.
Taxes and licenses decreased from 8.7% of revenues to 8.5% of revenues
due to the increase in the percentage of owner-operator tractors offset
partially by the Federal diesel fuel tax rate increase in October 1993.
Insurance and claims decreased from 3.4% of revenues to 3.2% of revenue
as a result of favorable claims experience, particularly better claims
experience related to severe claims. Depreciation decreased from 10.3
revenues to 10.0% of revenues due to the increase in the percentage of owner-
operator tractors, offset partially by an increase in the trailer to tractor
9
<PAGE>
ratio. Other operating expenses decreased from (.2)% of revenues to (.5)% of
revenues due to an increase in gains realized on the sale of revenue
equipment.
Rent and purchased transportation increased from 8.2% of revenues to
12.2% of revenues due to an increase in the percentage of owner-operator
tractors as compared to company-owned tractors and an increase in the use
of intermodal and other third-party transportation services.
Interest expense decreased from $.9 million for the six months end
August 31, 1993 to $.3 million for the six months ended August 31, 1994 due
primarily to the repayment of $4.3 million of capitalized lease obligations
during the six months ended August 31, 1994. The Company's effective income
tax rate decreased to 39.0% for the six months ended August 31, 1994,
compared to 40.8% for the six months ended August 31, 1993, due primarily to
the corporate Federal income tax rate increase enacted August 10, 1993
(retroactive to January 1, 1993), and the adoption of Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes" effective March 1,
1993, which together resulted in a net increase in income tax expense for
the six months ended August 31, 1993.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for
the quarter ended August 31, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WERNER ENTERPRISES, INC.
Date: October 14, 1994 By: /s/Robert E. Synowicki, Jr.
Robert E. Synowicki, Jr.,
Vice President of Finance, Treasurer and
Chief Financial Officer
Date: October 14, 1994 By: /s/John J. Steele
John J. Steele
Secretary and Controller
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> AUG-31-1994
<CASH> 7,444
<SECURITIES> 0
<RECEIVABLES> 54,540
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 83,564
<PP&E> 442,639
<DEPRECIATION> 108,665
<TOTAL-ASSETS> 417,538
<CURRENT-LIABILITIES> 68,619
<BONDS> 0
<COMMON> 258
0
0
<OTHER-SE> 266,739
<TOTAL-LIABILITY-AND-EQUITY> 417,538
<SALES> 261,123
<TOTAL-REVENUES> 261,123
<CGS> 0
<TOTAL-COSTS> 227,915
<OTHER-EXPENSES> (180)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 250
<INCOME-PRETAX> 33,138
<INCOME-TAX> 12,924
<INCOME-CONTINUING> 20,214
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,214
<EPS-PRIMARY> .80
<EPS-DILUTED> .80
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