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
September 30, 1995 0-14690
WERNER ENTERPRISES, INC.
(Exact name of registrant as specified in its charter.)
NEBRASKA 47-0648386
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
INTERSTATE 80 & HIGHWAY 50
POST OFFICE BOX 37308
OMAHA, NEBRASKA 68137 (402)895-6640
(Address of principal (Zip Code) (Registrant's telephone number)
executive offices)
Indicate by check mark whether the registrant(1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
As of October 31, 1995, 25,160,716 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 September
30, 1995 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1995. In the opinion of management, the
information set forth in the accompanying consolidated condensed balance sheets
is fairly stated in all material respects in relation to the consolidated
balance sheets from which it has been derived.
These interim consolidated financial statements should be read in
conjunction with the Company's latest annual report (which is incorporated by
reference in the Form 10-K for the year ended December 31, 1994).
Consolidated Statements of Income for the
Three Months Ended September 30, 1995 and 1994 ................. Page 3
Consolidated Statements of Income for the
Nine Months Ended September 30, 1995 and 1994 .................. Page 4
Consolidated Condensed Balance Sheets as of
September 30, 1995 and December 31, 1994 ....................... Page 5
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1995 and 1994 .................. Page 6
Notes to Consolidated Financial Statements
as of September 30, 1995 ....................................... 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) September 30
1995 1994
(Unaudited)
<S> <C> <C>
Operating revenues $150,303 $134,614
Operating expenses:
Salaries, wages and benefits 54,252 47,514
Fuel 11,803 10,741
Supplies and maintenance 12,766 12,521
Taxes and licenses 12,485 11,095
Insurance and claims 6,520 4,134
Depreciation 15,418 13,650
Rent and purchased transportation 19,480 16,363
Communications and utilities 1,992 2,356
Other (1,422) (836)
Total operating expenses 133,294 117,538
Operating income 17,009 17,076
Other expense (income):
Interest expense 672 162
Interest income (291) (168)
Other 30 54
Total other expense 411 48
Income before income taxes 16,598 17,028
Income taxes 6,473 6,641
Net income $ 10,125 $ 10,387
Average common shares outstanding 25,159 25,296
Earnings per share $ .40 $ .41
<FN>
</TABLE>
3
<PAGE>
<TABLE>
WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Nine Months Ended
(Amounts in thousands, except per share data) September 30
1995 1994
(Unaudited)
<S> <C> <C>
Operating revenues $426,062 $380,230
Operating expenses:
Salaries, wages and benefits 155,851 135,299
Fuel 34,435 30,774
Supplies and maintenance 38,029 33,694
Taxes and licenses 36,940 32,994
Insurance and claims 15,722 12,968
Depreciation 45,595 38,978
Rent and purchased transportation 53,866 45,971
Communications and utilities 6,210 7,189
Other (4,573) (1,815)
Total operating expenses 382,075 336,052
Operating income 43,987 44,178
Other expense (income):
Interest expense 1,661 414
Interest income (744) (432)
Other 95 137
Total other expense 1,012 119
Income before income taxes 42,975 44,059
Income taxes 16,760 17,110
Net income $ 26,215 $ 26,949
Average common shares outstanding 25,173 25,320
Earnings per share $ 1.04 $ 1.06
<FN>
</TABLE>
4
<PAGE>
<TABLE>
WERNER ENTERPRISES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
(In thousands) September 30 December 31
1995 1994
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 15,541 $ 11,660
Accounts receivable, net 63,776 52,522
Prepaid taxes, licenses and permits 3,435 7,826
Other current assets 15,783 16,168
Total current assets 98,535 88,176
Property and equipment 520,013 479,289
Less - accumulated depreciation 119,829 113,828
Property and equipment, net 400,184 365,461
$498,719 $453,637
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 19,330 $ 18,564
Insurance and claims accruals 22,115 15,642
Accrued payroll 8,698 9,888
Income taxes payable 4,905 5,659
Other current liabilities 8,527 7,534
Total current liabilities 63,575 57,287
Long-term debt 40,000 30,000
Insurance and claims accruals 22,000 21,300
Other long-term liabilities 2,736 3,136
Deferred income taxes 71,021 65,500
Stockholders' equity 299,387 276,414
$498,719 $453,637
</TABLE>
5
<PAGE>
<TABLE>
WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Nine Months Ended
(In thousands) September 30
1995 1994
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $26,215 $26,949
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 45,595 38,978
Deferred income taxes 5,521 4,108
Gain on disposal of operating equipment (5,324) (2,423)
Tax benefit from exercise of stock options - 98
Long-term liabilities 300 946
Changes in certain working capital items:
Accounts receivable, net (11,254) (10,801)
Prepaid expenses and other current assets 4,776 672
Accounts payable 766 631
Accrued payroll (1,190) 2,115
Other current liabilities 6,588 7,071
Net cash provided by operating activities 71,993 68,344
Cash flows from investing activities:
Additions to property and equipment (102,771) (100,439)
Retirements of property and equipment 27,777 25,643
Net cash used in investing activities (74,994) (74,796)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 10,000 20,000
Repayments of capitalized lease
obligations - (4,552)
Dividends on common stock (2,140) (2,027)
Repurchases of common stock (1,013) (1,265)
Stock options exercised 35 105
Net cash provided by financing activities 6,882 12,261
Net increase in cash and cash equivalents 3,881 5,809
Cash and cash equivalents, beginning of period 11,660 9,815
Cash and cash equivalents, end of period $15,541 $15,624
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 2,625 $ 356
Income taxes 10,944 7,748
</TABLE>
6
<PAGE>
WERNER ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Commitments
As of September 30, 1995, the Company has committed to capital
expenditures of approximately $25,000,000 (net cost, after revenue equipment
trade-in allowances of approximately $29,000,000).
(2) Change in Estimate
The Company periodically reviews its estimates related to the useful lives
and salvage values of its revenue equipment. Effective April 1, 1995, the
Company changed, on a prospective basis, the estimated salvage value for
certain trailers. This change was to reflect market changes in the value of
used equipment and lower trailer utilization due to a higher trailer to tractor
ratio. The change resulted in a decrease in depreciation expense of
approximately $1,800,000 and an increase in net income of approximately
$1,100,000 ($.04 per share) for the nine months ended September 30, 1995.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Financial Condition:
During the nine months ended September 30, 1995, the Company generated
cash flow from operations of $72.0 million and made long-term borrowings of
$10 million, which enabled the Company to make net property additions,
primarily revenue equipment, of $75.0 million, pay common stock dividends of
$2.1 million and repurchase Company common stock of $1.0 million.
The Company's long-term debt to equity ratio at September 30, 1995 was
13.4%, compared with 10.9% at December 31, 1994.
Results of Operations:
Three Months Ended September 30, 1995 and 1994
Operating revenues increased 12% for the three months ended September
30, 1995, compared to the same period of the prior year. The average number
of tractors increased by 10%, primarily due to expansion in the long-haul van
and dedicated fleet markets. Revenue per loaded mile was comparable to the
same period of the previous year. Tractor utilization (total miles per
tractor) was slightly higher, primarily due to increased empty miles
resulting from softer freight demand. Increased revenues from intermodal and
other third-party transportation services also contributed to the overall
increase in operating revenues.
Operating expenses, expressed as a percentage of operating revenues,
were 88.7% for the three months ended September 30, 1995, compared to 87.3%
for the three months ended September 30, 1994. Salaries, wages and benefits
increased from 35.3% of revenues to 36.1% of revenues due primarily to
increased employee health benefit costs and the retention of more
experienced, higher paid drivers. Fuel prices were comparable to the third
quarter of 1994. Supplies and maintenance decreased from 9.3% to 8.5% of
revenues primarily due to decreased driver advertising and tire expenses.
Insurance and claims increased from 3.1% to 4.3% of revenues primarily as a
result of unfavorable claims experience. Depreciation increased from 10.1%
to 10.3% of revenues due primarily to the November 1994 purchase of satellite
tracking equipment which was previously leased (and previously included in
communications and utilities), and an increase in the trailer to tractor
ratio from 2.4 to 1 at September 30, 1994 to 2.5 to 1 at September 30, 1995.
The increase in the trailer to tractor ratio is the result of providing
additional trailers to improve customer service and tractor productivity. A
decrease in the average length of haul also contributed to the increased
trailer to tractor ratio. These increases were partially offset by the
effect of a change in the estimated salvage value for certain trailers. (See
Note 2 to Consolidated Financial Statements.) Rent and purchased
transportation increased from 12.2% to 13.0% of revenues due primarily to an
increase in the use of intermodal and other third-party transportation
services. Communications and utilities decreased from 1.7% to 1.3% of
revenues, due primarily to the purchase of the satellite tracking equipment
which had been leased previously. Other operating expenses decreased from
(.6%) to (.9%) of revenues due mainly to an increase in gains realized on the
sale of revenue equipment to third parties.
8
<PAGE>
Interest expense increased from .1% to .5% of revenues due to an
increase in the average outstanding amount of long-term borrowings. The
Company's effective income tax rate (income taxes as a percentage of income
before income taxes) was 39.0% for the three-month periods ended September
30, 1995 and 1994.
Nine Months Ended September 30, 1995 and 1994
Operating revenues increased by 12% for the nine months ended September
30, 1995, compared to the same period of the previous year. The average
number of tractors increased 8%, while revenue per loaded mile increased 2%.
Increased revenues from intermodal and other third-party transportation
services also contributed to the overall increase in operating revenues.
Operating expenses, expressed as a percentage of operating revenues,
increased to 89.7% for the nine months ended September 30, 1995, compared to
88.4% for the same period of 1994. Salaries, wages and benefits increased
from 35.6% to 36.6% of revenues, primarily due to a 2 cent per mile driver
pay increase effective May 1, 1994, the retention of more experienced, higher
paid drivers, and increased employee health benefit costs, partially offset
by a reduction in the estimated liability for accrued driver payroll of
$2,400,000 during the first quarter of 1995. Supplies and maintenance was
comparable as a percentage of revenues to the same period of 1994, as
increased third-party loading and unloading costs were offset by decreased
driver advertising and tire expenses. Fuel costs were comparable to the 1994
period. Insurance and claims increased from 3.4% to 3.7% of revenues due
primarily to unfavorable claims experience. Depreciation increased from
10.2% to 10.7% of revenues due primarily to the November 1994 purchase of
satellite tracking equipment which had previously been leased, and the
increased trailer to tractor ratio, partially offset by the effect of a
change in the estimated salvage value for certain trailers. (See Note 2 to
Consolidated Financial Statements.) Rent and purchased transportation
increased from 12.1% to 12.6% of revenues due primarily to an increase in the
use of intermodal and other third-party transportation services.
Communications and utilities decreased primarily due to the purchase of
previously leased satellite tracking equipment. Other operating expenses
decreased from (.5%) to (1.1%) of revenues mainly due to increased gains
realized on the sale of revenue equipment to third parties.
Interest expense increased from .1% to .4% of revenues due to an
increase in the average outstanding amount of long-term borrowings. The
Company's effective income tax rate was 39.0% for the nine months ended
September 30, 1995, compared to 38.8% for the same period of 1994.
9
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit Page Number or Incorporated
Number Description by Reference to
10 Amended and Restated Exhibit 10 to the Company's
Stock Option Plan report on Form 10-Q for the
quarter ended May 31, 1994
27 Financial Data Schedule Page 11 of sequentially
numbered pages
(b) Reports on Form 8-K - None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WERNER ENTERPRISES, INC.
Date: November 14, 1995 By:/s/Robert E. Synowicki
Robert E. Synowicki
Vice President, Treasurer
and Chief Financial Officer
Date: November 14, 1995 By:/s/John J. Steele
John J. Steele
Vice President - Controller
and Secretary
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 15,541
<SECURITIES> 0
<RECEIVABLES> 63,776
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 98,535
<PP&E> 520,013
<DEPRECIATION> 119,829
<TOTAL-ASSETS> 498,719
<CURRENT-LIABILITIES> 63,575
<BONDS> 0
<COMMON> 258
0
0
<OTHER-SE> 299,129
<TOTAL-LIABILITY-AND-EQUITY> 498,719
<SALES> 426,062
<TOTAL-REVENUES> 426,062
<CGS> 0
<TOTAL-COSTS> 382,075
<OTHER-EXPENSES> (649)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,661
<INCOME-PRETAX> 42,975
<INCOME-TAX> 16,760
<INCOME-CONTINUING> 26,215
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,215
<EPS-PRIMARY> 1.04
<EPS-DILUTED> 1.04
</TABLE>
