SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended Commission file number
March 31, 1997 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 April 30, 1997, 38,212,571 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 period ended March 31, 1997 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1997. 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, 1996).
Consolidated Statements of Income for the
Three Months Ended March 31, 1997 and 1996........................Page 3
Consolidated Condensed Balance Sheets as of
March 31, 1997 and December 31, 1996..............................Page 4
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1997 and 1996........................Page 5
Notes to Consolidated Financial Statements
as of March 31, 1997..............................................Page 6
2
<PAGE>
WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(Amounts in thousands, except per share data) March 31
- -------------------------------------------------------------------------
1997 1996
- -------------------------------------------------------------------------
(Unaudited)
Operating revenues $172,049 $147,903
---------------------
Operating expenses:
Salaries, wages and benefits 63,273 52,377
Fuel 17,265 13,368
Supplies and maintenance 14,945 12,723
Taxes and licenses 12,719 12,402
Insurance and claims 6,350 5,287
Depreciation 17,248 15,616
Rent and purchased transportation 27,648 22,930
Communications and utilities 2,184 1,876
Other (1,036) (911)
---------------------
Total operating expenses 160,596 135,668
---------------------
Operating income 11,453 12,235
---------------------
Other expense (income):
Interest expense 447 649
Interest income (415) (396)
Other 29 36
---------------------
Total other expense 61 289
---------------------
Income before income taxes 11,392 11,946
Income taxes 3,943 4,658
---------------------
Net income $ 7,449 $ 7,288
=====================
Average common shares outstanding 37,990 37,778
=====================
Earnings per share $ .20 $ .19
=====================
Dividends declared per share $ .025 $ .020
=====================
3
<PAGE>
WERNER ENTERPRISES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands) March 31 December 31
- ---------------------------------------------------------------------------
1997 1996
- ---------------------------------------------------------------------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 23,591 $ 22,136
Accounts receivable, net 76,036 67,928
Prepaid taxes, licenses and permits 6,716 7,753
Other current assets 18,800 18,347
----------------------
Total current assets 125,143 116,164
----------------------
Property and equipment 604,214 579,075
Less - accumulated depreciation 156,137 146,028
----------------------
Property and equipment, net 448,077 433,047
----------------------
$573,220 $549,211
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 30,514 $ 19,025
Insurance and claims accruals 21,444 19,758
Accrued payroll 9,393 8,970
Income taxes payable 5,361 3,752
Other current liabilities 9,226 7,560
----------------------
Total current liabilities 75,938 59,065
----------------------
Long-term debt 30,000 30,000
Insurance and claims accruals 27,000 27,000
Other long-term liabilities 1,273 2,275
Deferred income taxes 84,012 82,500
Stockholders' equity 354,997 348,371
----------------------
$573,220 $549,211
======================
4
<PAGE>
WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
(In thousands) March 31
- ---------------------------------------------------------------------------
1997 1996
- ---------------------------------------------------------------------------
(Unaudited)
Cash flows from operating activities:
Net income $ 7,449 $ 7,288
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 17,248 15,616
Deferred income taxes 1,512 2,090
Gain on disposal of operating equipment (1,256) (1,300)
Long-term liabilities (1,002) -
Changes in certain working capital items:
Accounts receivable, net (8,108) 1,657
Prepaid expenses and other current assets 584 2,243
Accounts payable 11,489 507
Other current liabilities 5,384 2,186
----------------------
Net cash provided by operating activities 33,300 30,287
----------------------
Cash flows from investing activities:
Additions to property and equipment (38,464) (19,491)
Retirements of property and equipment 7,442 7,183
----------------------
Net cash used in investing activities (31,022) (12,308)
----------------------
Cash flows from financing activities:
Repayments of long-term debt - (10,000)
Dividends on common stock (950) (755)
Stock options exercised 127 119
----------------------
Net cash used in financing activities (823) (10,636)
----------------------
Net increase in cash and cash equivalents 1,455 7,343
Cash and cash equivalents, beginning of period 22,136 16,227
----------------------
Cash and cash equivalents, end of period $ 23,591 $ 23,570
======================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 458 $ 703
Income taxes 776 3,458
5
<PAGE>
WERNER ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Commitments
As of March 31, 1997, the Company has commitments for capital
expenditures of approximately $45,000,000 (net cost, after revenue equipment
trade-in allowances of approximately $13,000,000).
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
This report contains forward-looking statements which are based on
information currently available to the Company's management. Actual
results could differ materially from those anticipated in forward-looking
statements as a result of a number of factors, including, but not limited
to, those discussed in Item 7, "Management's Discussion and Analysis of
Results of Operations and Financial Condition", of the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.
Financial Condition:
During the three months ended March 31, 1997, the Company generated
cash flow from operations of $33.3 million. After the Company made net
property additions, primarily revenue equipment, of $31 million and paid
common stock dividends of $0.9 million, cash and cash equivalents increased
by $1.5 million. If the Company continues to grow at a faster rate than in
the prior year (as described below), additional debt borrowings may occur.
Based on the Company's strong financial position, management foresees no
significant barriers to obtaining sufficient financing, if necessary, to
continue with its growth plans.
Results of Operations:
Three Months Ended March 31, 1997 and 1996
- ------------------------------------------
Operating revenues increased 16% for the three months ended March 31,
1997, compared to the same period of the prior year. A two cent per mile
driver pay increase, effective January 1, 1997, helped the Company add and
retain experienced drivers and contributed to a 12% increase in the average
number of tractors compared to the same period of the prior year. The
Company added 350 tractors to its fleet in first quarter 1997, compared to
250 for all of 1996. Revenue per mile, excluding a temporary fuel
surcharge, increased about $.01 per mile as a result of rate increases and
a 5% decrease in the percentage of empty miles. Average miles per tractor
in service increased 0.3%. A $3.4 million increase in revenues from
logistics and other non-trucking transportation services also contributed
to the overall increase in operating revenues.
Operating expenses, expressed as a percentage of operating revenues,
were 93.3% for the three months ended March 31, 1997, compared to 91.7% for
the three months ended March 31, 1996. Salaries, wages and benefits
increased from 35.4% to 36.8% of revenues due primarily to the impact of a
two cent per mile driver pay increase effective January 1, 1997.
7
<PAGE>
Fuel increased from 9.0% to 10.0% of revenues, due mainly to higher
average fuel prices at the beginning of the first quarter of 1997. Fuel
prices at the end of first quarter 1997 were slightly lower than at the end
of first quarter 1996. Fuel prices began rising at the end of first
quarter 1996 and, for the most part, remained at elevated price levels
during much of 1996 and the beginning of first quarter 1997. In April
1996, the Company began recovering the increased cost of fuel from
customers via a temporary fuel surcharge. The amount of fuel surcharge
recovered from customers typically varies as the price of fuel fluctuates
on a weekly or monthly basis. The Company cannot predict whether the
higher fuel prices will return or the extent to which fuel surcharges will
be collected to offset such increases.
Taxes and licenses decreased from 8.4% to 7.4% of revenues due
primarily to refunds and favorable development of state tax issues.
Depreciation decreased from 10.6% to 10.0% of revenues due to increased
revenues from logistics and other non-trucking transportation services,
which require significantly less capital investment than trucking services,
and increased tractor utilization. Rent and purchased transportation
increased from 15.5% to 16.1% of revenues due primarily to the Company's
increase in logistics and other non-trucking transportation services.
The Company's effective income tax rate (income taxes as a percentage
of income before income taxes) was 34.6% and 39.0% for the three month
periods ended March 31, 1997 and 1996, respectively. The decrease was due
to favorable settlement of income tax issues. The Company's effective
income tax rate is expected to continue at a lower rate for the remainder
of 1997 compared to the effective income tax rate in 1996 due to the impact
of the favorable settlement.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share."
This statement establishes standards for computing and presenting earnings
per share (EPS). It requires dual presentation of basic and diluted EPS on
the face of the income statement for all entities with complex capital
structures. Currently, the Company presents a single disclosure of EPS.
The standard is effective for financial statements for both interim and
annual periods ending after December 15, 1997. Based on information
currently available to management, the Company expects its diluted EPS will
not differ materially from basic EPS.
8
<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
27 Financial Data Schedule Page 10 of sequentially
numbered pages
(b) Reports on Form 8-K - None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WERNER ENTERPRISES, INC.
Date: May 12, 1997 By: /s/John J. Steele
John J. Steele
Vice President, Treasurer and
Chief Financial Officer
Date: May 12, 1997 By: /s/James L. Johnson
James L. Johnson
Corporate Secretary and Controller
9
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 23,591
<SECURITIES> 0
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<ALLOWANCES> 0
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<PP&E> 604,214
<DEPRECIATION> 156,137
<TOTAL-ASSETS> 573,220
<CURRENT-LIABILITIES> 75,938
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0
0
<COMMON> 387
<OTHER-SE> 354,610
<TOTAL-LIABILITY-AND-EQUITY> 573,220
<SALES> 172,049
<TOTAL-REVENUES> 172,049
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<INCOME-TAX> 3,943
<INCOME-CONTINUING> 7,449
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,449
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
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