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
November 30, 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 December 31, 1994, 25,206,816 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 nine-month periods ended November
30, 1994 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1994 (see Note 2 regarding change of the Company's
fiscal year). 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 November 30, 1994 and 1993 .................... Page 3
Consolidated Statements of Income for the
Nine Months Ended November 30, 1994 and 1993 ..................... Page 4
Consolidated Condensed Balance Sheets as of
November 30, 1994 and February 28, 1994 .......................... Page 5
Consolidated Statements of Cash Flows for the
Nine Months Ended November 30, 1994 and 1993 ..................... Page 6
Notes to Consolidated Financial Statements
as of November 30, 1994 .......................................... Page 7
2
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<TABLE>
WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended
(Amounts in thousands, except per share data) November 30
1994 1993
(Unaudited)
<S> <C> <C>
Operating revenues $137,061 $111,932
Operating expenses:
Salaries, wages and benefits 48,715 37,905
Fuel 11,316 11,324
Supplies and maintenance 12,437 10,119
Taxes and licenses 11,321 10,039
Insurance and claims 4,453 4,713
Depreciation 14,328 11,494
Rent and purchased transportation 16,807 11,086
Communications and utilities 2,098 2,181
Other (1,145) (781)
Total operating expenses 120,330 98,080
Operating income 16,731 13,852
Other expense (income):
Interest expense 265 322
Interest income (208) (199)
Other 33 32
Total other expense 90 155
Income before income taxes 16,641 13,697
Income taxes 6,490 5,205
Net income $ 10,151 $ 8,492
Average common shares outstanding 25,276 24,195
Earnings per share $ .40 $.35
<FN>
</TABLE>
3
<PAGE>
<TABLE>
WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Nine Months Ended
(Amounts in thousands, except per share data) November 30
1994 1993
(Unaudited)
<S> <C> <C>
Operating revenues $398,184 $321,919
Operating expenses:
Salaries, wages and benefits 140,783 112,356
Fuel 32,074 31,393
Supplies and maintenance 35,174 28,613
Taxes and licenses 33,524 28,259
Insurance and claims 12,840 11,946
Depreciation 40,436 33,226
Rent and purchased transportation 48,717 28,377
Communications and utilities 7,094 6,108
Other (2,397) (1,268)
Total operating expenses 348,245 279,010
Operating income 49,939 42,909
Other expense (income):
Interest expense 515 1,257
Interest income (487) (355)
Other 132 107
Total other expense 160 1,009
Income before income taxes 49,779 41,900
Income taxes 19,414 16,712
Net income $ 30,365 $25,188
Average common shares outstanding 25,308 23,330
Earnings per share $1.20 $1.08
<FN>
</TABLE>
4
<PAGE>
<TABLE>
WERNER ENTERPRISES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
(In thousands) November 30 February 28
1994 1994
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,668 $ 10,833
Accounts receivable, net 57,794 45,681
Prepaid expenses and other current assets 20,063 22,068
Total current assets 82,525 78,582
Property and equipment 475,443 399,129
Less - accumulated depreciation 113,580 97,282
Property and equipment, net 361,863 301,847
$444,388 $380,429
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 23,653 $ 13,825
Accrued payroll 10,126 9,115
Current maturities of
capitalized lease obligations - 4,310
Income taxes payable 6,010 3,189
Other current liabilities 21,479 21,243
Total current liabilities 61,268 51,682
Long-term debt 20,000 -
Insurance and claims accruals 21,300 21,200
Other long-term liabilities 3,136 3,136
Deferred income taxes 63,833 55,100
Stockholders' equity 274,851 249,311
$444,388 $380,429
</TABLE>
5
<PAGE>
<TABLE>
WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Nine Months Ended
(In thousands) November 30
1994 1993
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $30,365 $25,188
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 40,436 33,226
Deferred income taxes 8,733 3,514
Gain on disposal of operating equipment (3,009) (2,133)
Tax benefit from exercise of stock options - 900
Long-term liabilities 100 (1,475)
Changes in certain working capital items:
Accounts receivable, net (12,113) (7,295)
Prepaid expenses and other current assets 2,005 4,024
Accounts payable 9,828 (11,852)
Accrued payroll 1,011 2,498
Other current liabilities 3,057 8,272
Net cash provided by operating activities 80,413 54,867
Cash flows from investing activities:
Additions to property and equipment (118,841) (85,411)
Retirements of property and equipment 21,398 14,788
Net cash used in investing activities (97,443) (70,623)
Cash flows from financing activities:
Proceeds from issuance of debt 20,000 -
Short-term borrowings - 20,000
Repayments of short-term borrowings - (20,000)
Repayments of capitalized lease
obligations (4,310) (16,473)
Proceeds from issuance of common stock,
net of related expenses - 52,182
Dividends on common stock (1,899) (1,375)
Repurchase of common stock (2,939) -
Stock options exercised 13 978
Net cash provided by financing activities 10,865 35,312
Net increase (decrease) in cash and cash equivalents (6,165) 19,556
Cash and cash equivalents, beginning of period 10,833 6,441
Cash and cash equivalents, end of period $ 4,668 $25,997
<FN>
</TABLE>
<TABLE>
Supplemental disclosures of cash flow information:
<CAPTION>
<S> <C> <C>
Cash paid during the period for:
Interest $ 454 $ 1,288
Income taxes 7,859 5,855
<FN>
</TABLE>
6
<PAGE>
WERNER ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Commitments
As of November 30, 1994, the Company has committed to capital expenditures
of approximately $60,000,000 (net cost, after revenue equipment trade-in
allowances of approximately $34,000,000).
(2) Subsequent event
On December 20, 1994, the Company's Board of Directors approved the change
of the Company's fiscal year from a February 28 year-end to a calendar year-end
of December 31. The primary reason for the change is to enhance the
comparability of the Company's quarterly financial and operating information
with that of other companies in the transportation industry. For its December
31, 1994 Annual Report on Form 10-K, the Company will report all financial
statements and schedules for all periods required to be reported in the Form
10-K as of and for the years ended December 31.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Financial Condition:
During the nine months ended November 30, 1994, cash flow from
operations generated $80.4 million and the Company made long-term borrowings
of $20.0 million, which enabled the Company to make net property additions,
primarily revenue equipment, of $97.4 million, repay capitalized lease
obligations of $4.3 million, pay common stock dividends of $1.9 million and
repurchase Company common stock of $2.9 million.
The Company's long-term debt to equity ratio at November 30, 1994 was
7.3%, compared with 0% at February 28, 1994.
Results of Operations:
Three Months Ended November 30, 1994 and 1993
Operating revenues increased 22% in the three months ended November 30,
1994, compared to the same period in the prior year. The average number of
tractors increased by 17%. Revenue per mile increased 5% 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 8% and 7%, respectively,
in these markets. The revenue per mile increase was primarily the result of
rate increases obtained by the Company. The Company's continued expansion
into markets where the average revenue per mile is higher and the average
miles per trip are less also contributed to the increased revenue per mile
and decreased tractor utilization.
Operating expenses, expressed as a percentage of operating revenues,
were 87.8% for the three months ended November 30, 1994, compared to 87.6%
for the three months ended November 30, 1993. Salaries, wages and benefits
increased from 33.9% of revenues to 35.5% of revenues due primarily to an
increase in driver pay due to a 2 cent per mile driver pay increase effective
May 1, 1994, the retention of more experienced, higher paid drivers, and
other driver pay increases, partially offset by an increase in the percentage
of owner-operator tractors compared to company-owned tractors. Owner-
operators are independent contractors under 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 10.1% of revenues to 8.2% of revenues as a
result of lower average fuel prices, improved fuel efficiency and an increase
in the percentage of owner-operator tractors. Supplies and maintenance
increased from 9.0% of revenues to 9.1% of revenues due to an increase in
costs related to driver advertising and tolls, offset partially by the
increase in the percentage of owner-operator tractors. Taxes and licenses
decreased from 9.0% of revenues to 8.3% of revenues due to an increase in the
percentage of owner-operator tractors, partially 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 4.2% of revenues to
3.2% of revenues as a result of favorable claims experience. Depreciation
8
<PAGE>
increased from 10.3% of revenues to 10.5% of revenues due to the November
1994 purchase of satellite tracking equipment which was previously leased,
and an increase in the trailer to tractor ratio, partially offset by the
increase in the percentage of owner-operator tractors. 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
(.7)% of revenues to (.8)% of revenues due to an increase in gains realized
on the sale of revenue equipment.
Rent and purchased transportation increased from 9.9% of revenues to
12.3% of revenues due primarily to an increase in the percentage of
owner-operator tractors as compared to company-owned tractors. The average
number of owner-operator tractors for the quarter ended November 30, 1994 was
592 compared to an average of 423 for the quarter ended November 30, 1993.
Rent and purchased transportation also increased due to an increase in the
use of intermodal and other third-party transportation services.
Communications and utilities decreased from 1.9% of revenues to 1.5% of
revenues, due to the purchase of the satellite tracking equipment which had
been leased previously.
The Company's effective income tax rate (income tax expense divided by
income before income taxes) increased to 39.0% for the three months ended
November 30, 1994, compared to 38.0% for the three months ended November 30,
1993.
Nine Months Ended November 30, 1994 and 1993
Operating revenues increased 24% in the nine months ended November 1994,
compared to the same period in the prior year. The average number of
tractors increased by 19%. Revenue per mile increased 4% while tractor
utilization decreased.
Operating expenses, expressed as a percentage of operating revenues,
were 87.5% for the nine months ended November 30, 1994, compared to 86.7% for
the nine months ended November 30, 1993. Salaries, wages and benefits
increased from 34.9% of revenues to 35.4% of revenues due primarily to an
increase in driver pay due to a 2 cent per mile driver pay increase effective
May 1, 1994, the retention of more experienced, higher paid drivers, and
other driver pay increases partially offset by an increase in the percentage
of owner-operator tractors compared to company-owned tractors. Fuel
decreased from 9.8% of revenues to 8.1% of revenues as a result of improved
fuel efficiency and an increase in the percentage of owner-operator tractors,
offset partially by slightly higher average fuel prices. Supplies and
maintenance decreased from 8.9% of revenues to 8.8% of revenues due to the
increase in the percentage of owner-operator tractors offset partially by
increases in driver advertising, tolls and third-party loadings and
unloadings. Taxes and licenses decreased from 8.8% of revenues to 8.4% 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 3.7% of revenues to 3.2% of
revenues as a result of favorable claims experience. Depreciation decreased
from 10.3% of revenues to 10.2% of revenues due to the increase in the
percentage of owner-operator tractors, offset partially by an increase in the
9
<PAGE>
trailer to tractor ratio. Other operating expenses decreased from (.4)% of
revenues to (.6)% of revenues due to an increase in gains realized on the
sale of revenue equipment.
Rent and purchased transportation increased from 8.8% 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 $1.3 million for the nine months ended
November 30, 1993 to $.5 million for the nine months ended November 30, 1994
due primarily to the repayment of $4.3 million of capitalized lease
obligations during the nine months ended November 30, 1994. The Company's
effective income tax rate decreased to 39.0% for the nine months ended
November 30, 1994, compared to 39.9% for the nine months ended November 30,
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 nine months ended November 30, 1993.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K.
A report on Form 8-K, dated December 21, 1994, regarding
the approval by the Company's Board of Directors on
December 20, 1994 of the change of the Company's fiscal
year from a February 28 year-end to a December 31
calendar year-end.
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: January 12, 1995 By:/s/Robert E. Synowicki, Jr.
Robert E. Synowicki, Vice
President, Treasurer and
Chief Financial Officer
Date: January 12, 1995 By:/s/John J. Steele
John J. Steele
Vice President - Controller
and Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> NOV-30-1994
<CASH> 4,668
<SECURITIES> 0
<RECEIVABLES> 57,794
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 82,525
<PP&E> 475,443
<DEPRECIATION> 113,580
<TOTAL-ASSETS> 444,388
<CURRENT-LIABILITIES> 61,268
<BONDS> 0
<COMMON> 258
0
0
<OTHER-SE> 274,593
<TOTAL-LIABILITY-AND-EQUITY> 444,388
<SALES> 398,184
<TOTAL-REVENUES> 398,184
<CGS> 0
<TOTAL-COSTS> 348,245
<OTHER-EXPENSES> (355)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 515
<INCOME-PRETAX> 49,779
<INCOME-TAX> 19,414
<INCOME-CONTINUING> 30,365
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,365
<EPS-PRIMARY> 1.20
<EPS-DILUTED> 1.20
</TABLE>
