UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[Mark one]
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2009
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Identification No.)
incorporation or organization)
14507 FRONTIER ROAD
POST OFFICE BOX 45308
OMAHA, NEBRASKA 68145-0308
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (402) 895-6640
_________________________________
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
--- ---
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule
405 of Regulation S-T (232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to
submit and post such files).
Yes No
--- ---
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated
filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer X Accelerated filer
--- ---
Non-accelerated filer Smaller reporting company
--- (Do not check if a ---
smaller reporting
company)
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes No X
--- ---
As of April 29, 2009, 71,576,555 shares of the registrant's common
stock, par value $.01 per share, were outstanding.
2
WERNER ENTERPRISES, INC.
INDEX
----- PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statements of Income for the Three Months Ended 5
March 31, 2009 and 2008
Consolidated Condensed Balance Sheets as of March 31, 2009 and 6
December 31, 2008
Consolidated Statements of Cash Flows for the Three Months 7
Ended March 31, 2009 and 2008
Notes to Consolidated Financial Statements (Unaudited) as of 8
March 31, 2009
Item 2. Management's Discussion and Analysis of Financial Condition 12
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 28
Item 4. Controls and Procedures 28
PART II - OTHER INFORMATION
Item 1A. Risk Factors 30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 30
Item 6. Exhibits 31
3
PART I
FINANCIAL INFORMATION
Cautionary Note Regarding Forward-Looking Statements:
This Quarterly Report on Form 10-Q contains historical information and
forward-looking statements based on information currently available to our
management. The forward-looking statements in this report, including those
made in Item 2, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995, as
amended. These safe harbor provisions encourage reporting companies to
provide prospective information to investors. Forward-looking statements
can be identified by the use of certain words, such as "anticipate,"
"believe," "estimate," "expect," "intend," "plan," "project" and other
similar terms and language. We believe the forward-looking statements are
reasonable based on currently available information. However, forward-
looking statements involve risks, uncertainties and assumptions, whether
known or unknown, that could cause our actual results, business, financial
condition and cash flows to differ materially from those anticipated in the
forward-looking statements. A discussion of important factors relating to
forward-looking statements is included in Item 1A (Risk Factors) of our
Annual Report on Form 10-K for the year ended December 31, 2008 and in Item
1A (Risk Factors) of this Form 10-Q. Readers should not unduly rely on the
forward-looking statements included in this Form 10-Q because such
statements speak only to the date they were made. Unless otherwise
required by applicable securities laws, we undertake no obligation or duty
to update or revise any forward-looking statements contained herein to
reflect subsequent events or circumstances or the occurrence of
unanticipated events.
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, results of operations and cash
flows for the periods presented. The interim consolidated financial
statements have been prepared in accordance with the instructions to Form
10-Q and were also prepared without audit. The interim consolidated
financial statements do not include all information and footnotes required
by accounting principles generally accepted in the United States of America
for complete financial statements; although in management's opinion, the
disclosures are adequate so that the information presented is not
misleading.
Operating results for the three-month period ended March 31, 2009 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2009. 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 and notes thereto
should be read in conjunction with the financial statements and
accompanying notes contained in our Annual Report on Form 10-K for the year
ended December 31, 2008.
4
WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
(In thousands, except per share amounts) March 31,
---------------------------------------------------------------------------
2009 2008
---------------------------------------------------------------------------
(Unaudited)
Operating revenues $ 394,508 $ 512,787
-------------------------
Operating expenses:
Salaries, wages and benefits 134,186 143,187
Fuel 51,610 123,836
Supplies and maintenance 37,897 40,509
Taxes and licenses 24,395 28,265
Insurance and claims 21,665 24,732
Depreciation 40,094 41,796
Rent and purchased transportation 68,593 94,463
Communications and utilities 4,402 5,239
Other 410 (2,658)
-------------------------
Total operating expenses 383,252 499,369
-------------------------
Operating income 11,256 13,418
-------------------------
Other expense (income):
Interest expense 76 3
Interest income (489) (1,073)
Other (272) 51
-------------------------
Total other expense (income) (685) (1,019)
-------------------------
Income before income taxes 11,941 14,437
Income taxes 5,045 6,062
-------------------------
Net income $ 6,896 $ 8,375
=========================
Earnings per share:
Basic $ 0.10 $ 0.12
=========================
Diluted $ 0.10 $ 0.12
=========================
Dividends declared per share $ 0.050 $ 0.050
=========================
Weighted-average common shares outstanding:
Basic 71,576 70,445
=========================
Diluted 71,944 71,377
=========================
See Notes to Consolidated Financial Statements (Unaudited).
5
WERNER ENTERPRISES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except share amounts) March 31, December 31,
---------------------------------------------------------------------------
2009 2008
---------------------------------------------------------------------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 48,883 $ 48,624
Accounts receivable, trade, less allowance of
$9,087 and $9,555, respectively 156,647 185,936
Other receivables 18,420 18,739
Inventories and supplies 11,805 10,644
Prepaid taxes, licenses and permits 11,872 16,493
Current deferred income taxes 31,749 30,789
Other current assets 14,555 20,659
--------------------------
Total current assets 293,931 331,884
--------------------------
Property and equipment 1,618,716 1,613,102
Less - accumulated depreciation 689,663 686,463
--------------------------
Property and equipment, net 929,053 926,639
--------------------------
Other non-current assets 16,349 16,795
--------------------------
$1,239,333 $1,275,318
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 43,690 $ 46,684
Current portion of long-term debt - 30,000
Insurance and claims accruals 79,283 79,830
Accrued payroll 25,347 25,850
Other current liabilities 19,682 19,006
--------------------------
Total current liabilities 168,002 201,370
--------------------------
Other long-term liabilities 7,485 7,406
Insurance and claims accruals, net of current
portion 118,500 120,500
Deferred income taxes 197,758 200,512
Stockholders' equity:
Common stock, $0.01 par value, 200,000,000
shares authorized; 80,533,536 shares
issued; 71,576,367 and 71,576,267 shares
outstanding, respectively 805 805
Paid-in capital 93,669 93,343
Retained earnings 829,828 826,511
Accumulated other comprehensive loss (8,733) (7,146)
Treasury stock, at cost; 8,957,169 and
8,957,269 shares, respectively (167,981) (167,983)
--------------------------
Total stockholders' equity 747,588 745,530
--------------------------
$1,239,333 $1,275,318
==========================
See Notes to Consolidated Financial Statements (Unaudited).
6
WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
(In thousands) March 31,
---------------------------------------------------------------------------
2009 2008
---------------------------------------------------------------------------
(Unaudited)
Cash flows from operating activities:
Net income $ 6,896 $ 8,375
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 40,094 41,796
Deferred income taxes (3,958) 961
Gain on disposal of property and equipment (730) (3,749)
Stock-based compensation 327 399
Other long-term assets (151) (18)
Insurance claims accruals, net of current
portion (2,000) 3,500
Other long-term liabilities 4 (83)
Changes in certain working capital items:
Accounts receivable, net 29,289 8,299
Other current assets 9,883 3,797
Accounts payable (2,994) 13,890
Other current liabilities (55) 2,879
--------------------------
Net cash provided by operating activities 76,605 80,046
--------------------------
Cash flows from investing activities:
Additions to property and equipment (68,151) (52,857)
Retirements of property and equipment 24,559 27,469
Decrease in notes receivable 1,136 1,975
--------------------------
Net cash used in investing activities (42,456) (23,413)
--------------------------
Cash flows from financing activities:
Repayments of short-term debt (30,000) -
Dividends on common stock (3,579) (3,519)
Repurchases of common stock - (4,486)
Stock options exercised 1 2,739
Excess tax benefits from exercise of stock
options - 818
--------------------------
Net cash used in financing activities (33,578) (4,448)
--------------------------
Effect of foreign exchange rate fluctuations on
cash (312) 645
Net increase in cash and cash equivalents 259 52,830
Cash and cash equivalents, beginning of period 48,624 25,090
--------------------------
Cash and cash equivalents, end of period $ 48,883 $ 77,920
==========================
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 131 $ 3
Income taxes $ 1,924 $ 3,587
Supplemental schedule of non-cash investing
activities:
Notes receivable issued upon sale of revenue
equipment $ 539 $ 1,043
See Notes to Consolidated Financial Statements (Unaudited).
7
WERNER ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) Comprehensive Income
Other than our net income, our only other source of comprehensive
income (loss) is foreign currency translation adjustments. Comprehensive
income (loss) from foreign currency translation adjustments was a loss of
$1,587,000 for the three-month period ended March 31, 2009, and income of
$645,000 for the three-month period ended March 31, 2008.
(2) Long-Term Debt
As of March 31, 2009, we have two committed credit facilities with
banks totaling $225.0 million that mature in May 2009 ($50.0 million) and
May 2011 ($175.0 million). Borrowings under these credit facilities bear
variable interest based on the London Interbank Offered Rate ("LIBOR"). As
of March 31, 2009, we had no borrowings outstanding under these credit
facilities with banks, after repaying $30.0 million on these notes during
first quarter 2009. The $225.0 million of credit available under these
facilities is further reduced by $43.8 million in letters of credit under
which we are obligated. Each of the debt agreements includes, among other
things, two financial covenants requiring us (i) not to exceed a maximum
ratio of total debt to total capitalization and (ii) not to exceed a
maximum ratio of total funded debt to earnings before interest, income
taxes, depreciation, amortization and rentals payable (as defined in each
credit facility). At March 31, 2009, we were in compliance with these
covenants.
(3) Income Taxes
For the three-month period ended March 31, 2009, there were no
material changes to the total amount of unrecognized tax benefits. We
accrued an interest benefit of $0.3 million during the three-month period
ended March 31, 2009. Our total gross liability for unrecognized tax
benefits at March 31, 2009 is $7.2 million. If recognized, $4.1 million of
unrecognized tax benefits would impact our effective tax rate. Interest of
$3.4 million has been reflected as a component of the total liability. We
do not expect any other significant increases or decreases for uncertain
tax positions during the next twelve months.
We file U.S. federal income tax returns, as well as income tax returns
in various states and several foreign jurisdictions. The years 2006
through 2008 are open for examination by the Internal Revenue Service
("IRS"), and various years are open for examination by state and foreign
tax authorities. State and foreign jurisdiction statutes of limitations
generally range from three to four years.
(4) Commitments and Contingencies
As of March 31, 2009, we have committed to property and equipment
purchases of approximately $33.6 million.
We are involved in certain claims and pending litigation arising in
the normal course of business. Management believes the ultimate resolution
of these matters will not materially affect our consolidated financial
statements.
8
(5) Earnings Per Share
We compute and present earnings per share in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 128, Earnings per Share.
Basic earnings per share is computed by dividing net income by the weighted
average number of common shares outstanding during the period. Diluted
earnings per share is computed by dividing net income by the weighted
average number of common shares plus the effect of dilutive potential
common shares outstanding during the period using the treasury stock
method. Dilutive potential common shares include outstanding stock options
and stock awards. There are no differences in the numerators of our
computations of basic and diluted earnings per share for any period
presented. The computation of basic and diluted earnings per share is
shown below (in thousands, except per share amounts).
Three Months Ended
March 31,
--------------------
2009 2008
--------------------
Net income $ 6,896 $ 8,375
Weighted average common shares
outstanding 71,576 70,445
Common stock equivalents 368 932
--------------------
Shares used in computing
diluted earnings per share 71,944 71,377
====================
Basic earnings per share $ 0.10 $ 0.12
====================
Diluted earnings per share $ 0.10 $ 0.12
====================
Options to purchase shares of common stock that were outstanding
during the periods indicated above, but were excluded from the computation
of diluted earnings per share because the option purchase price was greater
than the average market price of the common shares, were:
Three Months Ended
March 31,
---------------------------------
2009 2008
---------------------------------
Number of shares under option 1,215,819 659,519
Range of option purchase prices $16.68 - $20.36 $18.33 - $20.36
(6) Stock-Based Compensation
Our Equity Plan provides for grants of nonqualified stock options,
restricted stock and stock appreciation rights. The Board of Directors or
the Compensation Committee of our Board of Directors determines the terms
of each award, including type of award, recipients, number of shares
subject to each award and vesting conditions of each award. Stock option
and restricted stock awards are described below. No awards of stock
appreciation rights have been issued to date. The maximum number of shares
of common stock that may be awarded under the Equity Plan is 20,000,000
shares. The maximum aggregate number of shares that may be awarded to any
one person under the Equity Plan is 2,562,500. As of March 31, 2009, there
were 8,674,182 shares available for granting additional awards.
We apply the fair value method of SFAS No. 123 (Revised 2004), Share-
Based Payment, in accounting for stock-based compensation awards granted
under our Equity Plan. Stock-based employee compensation expense was $0.3
million for the three months ended March 31, 2009 and $0.4 million for the
three months ended March 31, 2008. Stock-based employee compensation
9
expense is included in salaries, wages and benefits within the Consolidated
Statements of Income. The total income tax benefit recognized in the
Consolidated Statements of Income for stock-based compensation arrangements
was $0.1 million for the three months ended March 31, 2009 and $0.2 million
for the three months ended March 31, 2008. As of March 31, 2009, the total
unrecognized compensation cost related to nonvested stock-based
compensation awards was approximately $2.5 million and is expected to be
recognized over a weighted average period of 1.7 years.
We do not have a formal policy for issuing shares upon exercise of
stock options or vesting of restricted stock, so such shares are generally
issued from treasury stock. From time to time, we repurchase shares of our
common stock, the timing and amount of which depends on market and other
factors. Historically, the shares acquired under these regular repurchase
programs have provided us with sufficient quantities of stock to issue for
stock-based compensation. Based on current treasury stock levels, we do
not expect to repurchase additional shares specifically for stock-based
compensation during 2009.
Stock Options
Stock options are granted at prices equal to the market value of the
common stock on the date the option award is granted. Option awards
currently outstanding become exercisable in installments from 24 to 72
months after the date of grant. The options are exercisable over a period
not to exceed ten years and one day from the date of grant.
The following table summarizes stock option activity for the three
months ended March 31, 2009:
Weighted
Average Aggregate
Number Weighted Remaining Intrinsic
of Options Average Contractual Value
(in Exercise Term (in
thousands) Price ($) (Years) thousands)
------------------------------------------------
Outstanding at beginning of period 2,264 $ 13.74
Options granted - $ -
Options exercised - $ -
Options forfeited (5) $ 17.32
Options expired - $ -
--------
Outstanding at end of period 2,259 $ 13.73 4.39 $ 6,255
========
Exercisable at end of period 1,566 $ 12.07 3.23 $ 6,255
========
We did not grant any stock options during the three-month periods
ended March 31, 2009 and 2008. The fair value of stock option grants is
estimated using a Black-Scholes valuation model. The total intrinsic value
of stock options exercised was $1 thousand and $2.3 million for the three-
month periods ended March 31, 2009 and March 31, 2008.
Restricted Stock
Restricted stock awards entitle the holder to shares of common stock
when the award vests. The value of these shares may fluctuate according to
market conditions and other factors. Restricted stock awards that have not
yet vested will vest sixty months from the grant date of the award. The
restricted shares do not confer any voting or dividend rights to recipients
until such shares fully vest and do not have any post-vesting sales
restrictions.
10
The following table summarizes restricted stock activity for the three
months ended March 31, 2009:
Weighted Average Grant
Number of Restricted Shares Date Fair Value ($)
(in thousands) (per share)
----------------------------------------------------
Nonvested at beginning of period 35 $ 22.88
Shares granted - $ -
Shares vested - $ -
Shares forfeited - $ -
---------------------------
Nonvested at end of period 35 $ 22.88
===========================
We did not grant any shares of restricted stock during the three-month
periods ended March 31, 2009 and 2008. We estimate the fair value of
restricted stock awards based upon the market price of the underlying
common stock on the date of grant, reduced by the present value of
estimated future dividends because the awards are not entitled to receive
dividends prior to vesting. Our estimate of future dividends is based on
the most recent quarterly dividend rate, adjusted for any known future
changes in the dividend rate.
(7) Segment Information
We have two reportable segments - Truckload Transportation Services
("Truckload") and Value Added Services ("VAS").
The Truckload segment consists of six operating fleets that are
aggregated because they have similar economic characteristics and meet the
other aggregation criteria of SFAS No. 131, Disclosures about Segments of
an Enterprise and Related Information ("No. 131"). The six operating
fleets that comprise our Truckload segment are as follows: (i) dedicated
services ("Dedicated") provides truckload services required by a specific
customer, generally for a distribution center or manufacturing facility;
(ii) the regional short-haul ("Regional") fleet provides comparable
truckload van service within five geographic regions across the United
States; (iii) the medium-to-long-haul van ("Van") fleet transports a
variety of consumer, nondurable products and other commodities in truckload
quantities over irregular routes using dry van trailers; (iv) the expedited
("Expedited") fleet provides time-sensitive truckload services utilizing
driver teams; (v) flatbed ("Flatbed") and (vi) temperature-controlled
("Temperature-Controlled") fleets provide truckload services for products
with specialized trailers. Revenues for the Truckload segment include non-
trucking revenues of $1.2 million and $1.9 million for the three-month
periods ended March 31, 2009 and March 31, 2008. These revenues consist
primarily of the portion of shipments delivered to or from Mexico where we
utilize a third-party capacity provider.
The VAS segment generates the majority of our non-trucking revenues
through four operating units that provide non-trucking services to our
customers. These four VAS operating units are (i) truck brokerage
("Brokerage"), (ii) freight management (single-source logistics) ("Freight
Management"), (iii) intermodal services ("Intermodal") and (iv) Werner
Global Logistics international services ("International").
We generate other revenues related to third-party equipment
maintenance, equipment leasing and other business activities. None of
these operations meets the quantitative threshold reporting requirements of
SFAS No. 131. As a result, these operations are grouped in "Other" in the
tables below. "Corporate" includes revenues and expenses that are
incidental to our activities and are not attributable to any of our
operating segments. We do not prepare separate balance sheets by segment
and, as a result, assets are not separately identifiable by segment. We
have no significant intersegment sales or expense transactions that would
require the elimination of revenue between our segments in the tables
below.
11
The following tables summarize our segment information (in thousands):
Revenues
--------
Three Months Ended
March 31,
----------------------
2009 2008
----------------------
Truckload Transportation Services $ 343,857 $ 446,169
Value Added Services 47,473 62,186
Other 2,516 3,905
Corporate 662 527
----------------------
Total $ 394,508 $ 512,787
======================
Operating Income
----------------
Three Months Ended
March 31,
----------------------
2009 2008
----------------------
Truckload Transportation Services $ 8,861 $ 9,235
Value Added Services 1,733 3,667
Other 283 1,066
Corporate 379 (550)
----------------------
Total $ 11,256 $ 13,418
======================
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") summarizes the financial statements from
management's perspective with respect to our financial condition, results
of operations, liquidity and other factors that may affect actual results.
The MD&A is organized in the following sections:
* Overview
* Results of Operations
* Liquidity and Capital Resources
* Contractual Obligations and Commercial Commitments
* Off-Balance Sheet Arrangements
* Regulations
* Critical Accounting Policies
* Accounting Standards
The MD&A should be read in conjunction with our Annual Report on Form
10-K for the year ended December 31, 2008.
Overview:
We operate in the truckload and logistics sectors of the
transportation industry. In the truckload sector, we focus on transporting
consumer nondurable products that ship more consistently throughout the
year. In the logistics sector, besides managing transportation
requirements for individual customers, we provide additional sources of
truck capacity, alternative modes of transportation, a global delivery
network and systems analysis to optimize transportation needs. Our success
12
depends on our ability to efficiently manage our resources in the delivery
of truckload transportation and logistics services to our customers.
Resource requirements vary with customer demand, which may be subject to
seasonal or general economic conditions. Our ability to adapt to changes
in customer transportation requirements is essential to efficiently deploy
resources and make capital investments in tractors and trailers (with
respect to our Truckload segment) or obtain qualified third-party capacity
at a reasonable price (with respect to our VAS segment). Although our
business volume is not highly concentrated, we may also be occasionally
affected by our customers' financial failures or loss of customer business.
Operating revenues reported in our operating statistics table are
categorized as (i) trucking revenues, net of fuel surcharge, (ii) trucking
fuel surcharge revenues, (iii) non-trucking revenues, including VAS, and
(iv) other operating revenues. Trucking revenues, net of fuel surcharge,
and trucking fuel surcharge revenues are generated by the six operating
fleets in the Truckload segment (Dedicated, Regional, Van, Expedited,
Temperature-Controlled and Flatbed). Non-trucking revenues, including VAS,
are generated primarily by the four operating units in our VAS segment
(Brokerage, Freight Management, Intermodal and International), and a small
amount is generated by the Truckload segment. Other operating revenues are
generated from other business activities such as third-party equipment
maintenance and equipment leasing. Trucking revenues accounted for 87% of
total operating revenues in first quarter 2009, and non-trucking and other
operating revenues accounted for 13% of total operating revenues.
Trucking revenues, net of fuel surcharge, are typically generated on a
per-mile basis and also include "accessorial" revenues such as stop
charges, loading/unloading charges and equipment detention charges.
Because fuel surcharge revenues fluctuate in response to changes in fuel
costs, we identify them separately in the operating statistics table and
exclude them from the statistical calculations to provide a more meaningful
comparison between periods. The key statistics used to evaluate trucking
revenues, net of fuel surcharge, are (i) average revenues per tractor per
week, (ii) average revenues per loaded mile, (iii) average monthly miles
per tractor, (iv) average percentage of empty miles (miles without trailer
cargo), (v) average trip length (in loaded miles) and (vi) average number
of tractors in service. General economic conditions, seasonal trucking
industry freight patterns and industry capacity are important factors that
impact these statistics. Our Truckload segment also generates a small
amount of revenues categorized as non-trucking revenues, related to
shipments delivered to or from Mexico where the Truckload segment utilizes
a third-party capacity provider. We exclude such revenues from the
statistical calculations.
Our most significant resource requirements are company drivers, owner-
operators, tractors, trailers and equipment operating costs (such as fuel
and related fuel taxes, driver pay, insurance and supplies and
maintenance). To mitigate our risk to fuel price increases, we recover
additional fuel surcharges from our customers that generally recoup a
majority of the increased fuel costs; however, we cannot assure that
current recovery levels will continue in future periods. Our financial
results are also affected by company driver and owner-operator availability
and the market for new and used revenue equipment. We are self-insured for
a significant portion of bodily injury, property damage and cargo claims,
workers' compensation benefits and health claims for our employees
(supplemented by premium-based insurance coverage above certain dollar
levels). For that reason, our financial results may also be affected by
driver safety, medical costs, weather, legal and regulatory environments
and insurance coverage costs to protect against catastrophic losses.
The operating ratio is a common industry measure used to evaluate our
profitability and that of our Truckload segment operating fleets. The
operating ratio consists of operating expenses expressed as a percentage of
operating revenues. The most significant variable expenses that impact the
Truckload segment are driver salaries and benefits, fuel, fuel taxes
(included in taxes and licenses expense), payments to owner-operators
(included in rent and purchased transportation expense), supplies and
maintenance and insurance and claims. These expenses generally vary based
on the number of miles generated. We also evaluate these costs on a per-
13
mile basis to adjust for the impact on the percentage of total operating
revenues caused by changes in fuel surcharge revenues, per-mile rates
charged to customers and non-trucking revenues. As discussed further in
the comparison of operating results for first quarter 2009 to first quarter
2008, several industry-wide issues could cause costs to increase in future
periods. These issues include a softer freight market, changing fuel
prices, higher new truck and trailer purchase prices and a weaker used
equipment market. Our main fixed costs include depreciation expense for
tractors and trailers and equipment licensing fees (included in taxes and
licenses expense). The Truckload segment requires substantial cash
expenditures for tractor and trailer purchases. We fund these purchases
with net cash from operations and financing available under our existing
credit facilities, as management deems necessary.
We provide non-trucking services primarily through four operating
units within our VAS segment. Unlike our Truckload segment, the VAS
segment is less asset-intensive and is instead dependent upon qualified
employees, information systems and qualified third-party capacity
providers. The largest expense item related to the VAS segment is the cost
of transportation we pay to third-party capacity providers. This expense
item is recorded as rent and purchased transportation expense. Other
operating expenses include salaries, wages and benefits and computer
hardware and software depreciation. We evaluate VAS by reviewing the gross
margin percentage (revenues less rent and purchased transportation expenses
expressed as a percentage of revenues) and the operating income percentage.
14
Results of Operations:
The following table sets forth certain industry data regarding the
freight revenues and operations for the periods indicated.
Three Months Ended
March 31,
-------------------- %
2009 2008 Change
-------- -------- -------
Trucking revenues, net of fuel surcharge (1) $307,976 $348,424 -11.6%
Trucking fuel surcharge revenues (1) 34,653 95,769 -63.8%
Non-trucking revenues, including VAS (1) 48,669 64,119 -24.1%
Other operating revenues (1) 3,210 4,475 -28.3%
-------- --------
Total operating revenues (1) $394,508 $512,787 -23.1%
======== ========
Operating ratio (consolidated) (2) 97.1% 97.4%
Average monthly miles per tractor 9,550 9,868 -3.2%
Average revenues per total mile (3) $1.438 $1.453 -1.0%
Average revenues per loaded mile (3) $1.662 $1.684 -1.3%
Average percentage of empty miles (4) 13.50% 13.72% -1.6%
Average trip length in miles (loaded) 469 542 -13.5%
Total miles (loaded and empty) (1) 214,170 239,744 -10.7%
Average tractors in service 7,475 8,099 -7.7%
Average revenues per tractor per week (3) $3,169 $3,309 -4.2%
Total tractors (at quarter end)
Company 6,675 7,315
Owner-operator 700 765
-------- --------
Total tractors 7,375 8,080
Total trailers (Truckload and Intermodal, at
quarter end) 24,885 24,950
(1) Amounts in thousands.
(2) Operating expenses expressed as a percentage of operating revenues.
Operating ratio is a common measure in the trucking industry used to
evaluate profitability.
(3) Net of fuel surcharge revenues.
(4) Miles without trailer cargo.
The following table sets forth the revenues, operating expenses and
operating income for the Truckload segment. Revenues for the Truckload
segment include non-trucking revenues of $1.2 million for the three-month
period ended March 31, 2009 and $1.9 million for the three-month period
ended March 31, 2008, as described on page 11.
Three Months Ended
March 31,
------------------------------------
Truckload Transportation Services 2009 2008
---------------- ----------------
(amounts in thousands) $ % $ %
---------------------- ---------------- ----------------
Revenues $ 343,857 100.0 $ 446,169 100.0
Operating expenses 334,996 97.4 436,934 97.9
--------- ---------
Operating income $ 8,861 2.6 $ 9,235 2.1
========= =========
15
Higher fuel prices and higher fuel surcharge revenues increase our
consolidated operating ratio and the Truckload segment's operating ratio
when fuel surcharges are reported on a gross basis as revenues versus
netting against fuel expenses. Eliminating fuel surcharge revenues, which
are generally a more volatile source of revenue, provides a more consistent
basis for comparing the results of operations from period to period. The
following table calculates the Truckload segment's operating ratio as if
fuel surcharges are excluded from revenue and instead reported as a
reduction of operating expenses.
Three Months Ended
March 31,
------------------------------------
Truckload Transportation Services 2009 2008
---------------- ----------------
(amounts in thousands) $ % $ %
---------------------- ---------------- ----------------
Revenues $ 343,857 $ 446,169
Less: trucking fuel surcharge revenues 34,653 95,769
--------- ---------
Revenues, net of fuel surcharges 309,204 100.0 350,400 100.0
--------- ---------
Operating expenses 334,996 436,934
Less: trucking fuel surcharge revenues 34,653 95,769
--------- ---------
Operating expenses, net of fuel surcharges 300,343 97.1 341,165 97.4
--------- ---------
Operating income $ 8,861 2.9 $ 9,235 2.6
========= =========
The following table sets forth the VAS segment's non-trucking
revenues, rent and purchased transportation expense, gross margin, other
operating expenses and operating income. Other operating expenses for the
VAS segment primarily consist of salaries, wages and benefits expense. VAS
also incurs smaller expense amounts in the supplies and maintenance,
depreciation, rent and purchased transportation (excluding third-party
transportation costs), insurance, communications and utilities and other
operating expense categories.
Three Months Ended
March 31,
----------------------------------
2009 2008
--------------- ---------------
Value Added Services (amounts in thousands) $ % $ %
------------------------------------------- --------------- ---------------
Revenues $ 47,473 100.0 $ 62,186 100.0
Rent and purchased transportation expense 39,438 83.1 52,679 84.7
-------- --------
Gross margin 8,035 16.9 9,507 15.3
Other operating expenses 6,302 13.3 5,840 9.4
-------- --------
Operating income $ 1,733 3.6 $ 3,667 5.9
======== ========
Three Months Ended March 31, 2009 Compared to Three Months Ended March 31,
---------------------------------------------------------------------------
2008
----
Operating Revenues
Operating revenues decreased 23.1% for the three months ended March
31, 2009, compared to the same period of the prior year. Excluding fuel
surcharge revenues, trucking revenues decreased 11.6% due primarily to a
7.7% decrease in the average number of tractors in service and a 3.2%
decrease in average monthly miles per tractor. The lower average monthly
miles per tractor can be partially attributed to one less calendar business
day in first quarter 2009. With respect to pricing and rates, revenue per
total mile, excluding fuel surcharges, decreased by 1.0%.
16
The already soft freight market weakened further during first quarter
2009. The recessionary economy, combined with many shippers aggressively
reducing their inventories, caused a severe slowdown in freight shipments,
particularly in the retail sector. The retail sector is the industry group
from which the largest percentage of our revenues are generated. We
proactively adapted to these challenging market conditions by further
reducing our fleet by 4% during first quarter 2009 (a 150-truck reduction
in January and a 175-truck reduction in March). However, during first
quarter 2009, the decline in freight shipments exceeded our fleet reduction
efforts, which caused a significant decline in our daily pre-booked
percentages of loads to trucks ("pre-books"). In the last few days of
March 2009 and in April 2009, freight volumes began to improve from the
very weak levels experienced for most of first quarter 2009, however
freight volumes remain well below the same period in the prior year.
The soft freight market during first quarter 2009 combined with the
excess truck capacity in the market caused increased pressure on freight
rates. This resulted in the 1.0% decrease in revenue per total mile,
excluding fuel surcharge. We expect the pressure on freight rates to
continue until freight demand improves, and we could experience further
rate deterioration.
Fuel surcharge revenues represent collections from customers for the
higher cost of fuel. These revenues decreased 63.8% to $34.7 million in
first quarter 2009 from $95.8 million in first quarter 2008 due to an
average decrease in diesel fuel costs of $1.49 per gallon in first quarter
2009 compared to first quarter 2008. To lessen the effect of fluctuating
fuel prices on our margins, we collect fuel surcharge revenues from our
customers. Our fuel surcharge programs are designed to (i) recoup higher
fuel costs from customers when fuel prices rise and (ii) provide customers
with the benefit of lower fuel costs when fuel prices decline. These
programs enable us to recover a majority, but not all, of the fuel price
increases. The remaining portion is generally not recoverable because it
results from empty miles, which are not billable to customers, out-of-route
miles, and truck idle time. Fuel prices that change rapidly in short time
periods also impact our recovery because the surcharge rate in most
programs only changes once per week. In a rapidly rising fuel price
market, there is generally a several week delay between the payment of
higher fuel prices and surcharge recovery. In a rapidly declining fuel
price market, the opposite generally occurs, and there is a temporary
higher surcharge recovery compared to the price paid for fuel.
We continue to diversify our business from the Van fleet to Dedicated,
Regional, Expedited, and North America cross-border in the Truckload
segment and Freight Management, Intermodal, Brokerage and Werner Global
Logistics International in the VAS segment. This diversification helped
soften the impact of the weak freight market in first quarter 2009 and
enables us to provide expanded services to our customers.
We remain committed to serving, and are not leaving, the one-way long-
haul sector of the truckload market. Rather, we are changing the ways we
serve our customers in this market by providing more cost-effective
solutions that provide higher returns. While we have de-emphasized the
lower-asset-return solo driver solution, we continue to grow several other
customer-focused solutions for this market. These solutions include the
use of team drivers, engineered networks of relay trucks, third-party
brokerage carriers, power-only with trucks provided by third-party carriers
and intermodal.
VAS revenues are generated by its four operating units. VAS revenues
decreased 23.7% to $47.5 million in first quarter 2009 from $62.2 million
in first quarter 2008 due to three factors: (i) a 19% reduction in the
average revenue per shipment due to lower fuel prices and customer rates;
(ii) shifting significantly more shipments, revenues and gross margin from
our VAS segment to our Truckload segment in first quarter 2009 (19,637
shipments in first quarter 2009 compared to 15,554 shipments in first
quarter 2008) to cushion the impact of the very soft freight market on the
Truckload segment; and (iii) a significantly weaker freight market that
reduced the number of industry freight shipments by an estimated 15% to
20%, which was offset by VAS shipment growth due to new customer business.
17
VAS gross margin dollars decreased 15.5% to $8.0 million in first quarter
2009 from $9.5 million for the same period in 2008 due to the reasons noted
above.
Our Brokerage revenues and gross margins declined due to the factors
described in the paragraph above. Freight Management revenues declined due
to reduced shipments with existing customers. Intermodal revenues and
gross margins declined because of an extremely weak and competitive
intermodal market in first quarter 2009.
Operating Expenses
Our operating ratio (operating expenses expressed as a percentage of
operating revenues) was 97.1% for the three months ended March 31, 2009,
compared to 97.4% for the three months ended March 31, 2008. Expense items
that impacted the overall operating ratio are described on the following
pages. The tables on page 16 show the operating ratios and operating
margins for our two reportable segments, Truckload and VAS.
The following table sets forth the cost per total mile of operating
expense items for the Truckload segment for the periods indicated. We
evaluate operating costs for this segment on a per-mile basis, which is a
better measurement tool for comparing the results of operations from period
to period.
Three Months Ended Increase
March 31, (Decrease)
------------------
2009 2008 per Mile
-----------------------------
Salaries, wages and benefits $0.599 $0.574 $0.025
Fuel 0.240 0.515 (0.275)
Supplies and maintenance 0.169 0.160 0.009
Taxes and licenses 0.114 0.118 (0.004)
Insurance and claims 0.100 0.103 (0.003)
Depreciation 0.185 0.168 0.017
Rent and purchased transportation 0.135 0.173 (0.038)
Communications and utilities 0.020 0.021 (0.001)
Other 0.002 (0.009) 0.011
Owner-operator costs are included in rent and purchased transportation
expense. Owner-operator miles as a percentage of total miles were 11.6%
for first quarter 2009 compared to 12.2% for first quarter 2008. Owner-
operators are independent contractors who supply their own tractor and
driver and are responsible for their operating expenses (including driver
pay, fuel, supplies and maintenance and fuel taxes). This decrease in
owner-operator miles as a percentage of total miles shifted costs from the
rent and purchased transportation category to other expense categories.
Due to this decrease, we estimate that rent and purchased transportation
expense for the Truckload segment was lower by approximately 0.7 cents per
total mile, and other expense categories had offsetting increases on a
total-mile basis as follows: (i) salaries, wages and benefits, 0.3 cents;
(ii) fuel, 0.2 cents; (iii) supplies and maintenance, 0.1 cent and (iv)
depreciation, 0.1 cent.
As the economy slowed during the latter part of 2008, we took steps to
further manage and reduce a variety of controllable costs and identify
efficiencies. Numerous cost-saving programs were implemented during first
quarter 2009, and we will implement several other cost-saving opportunities
in the coming months. Examples of our cost-saving measures include
decreasing the company-matching contribution percentage for our 401(k)
plan, reducing driver advertising and other driver recruiting expenses,
restructuring discretionary driver pay programs and improving our ratio of
tractors to non-driver employees. We improved our tractor-to-non-driver
ratio for the trucking operation from December 31, 2008 to March 31, 2009.
18
Salaries, wages and benefits in the Truckload segment increased 2.5
cents per mile on a total mile basis in first quarter 2009 compared to
first quarter 2008. This increase is primarily attributed to higher
student pay (average active trainer teams increased 12%), group health
insurance costs and non-driver salaries for office and equipment
maintenance personnel and, as discussed above, the shift from rent and
purchased transportation to salaries, wages and benefits because of the
decrease in owner-operator miles as a percentage of total miles. Although
we have improved our tractor to non-driver ratio (as discussed above), the
benefit was not fully realized during first quarter 2009 because of related
one-time costs that occurred during the quarter. Within the Truckload
segment, these cost increases were offset partially by lower workers'
compensation expense. Non-driver salaries, wages and benefits increased in
the non-trucking VAS segment. Although VAS revenues were lower in first
quarter 2009 than in the first quarter 2008, VAS handled 3% more shipments
in first quarter 2009, including those transferred to the Truckload
segment.
We renewed our workers' compensation insurance coverage for the policy
year beginning April 1, 2009. Our coverage levels are the same as the
prior policy year. We continue to maintain a self-insurance retention of
$1.0 million per claim. Our workers' compensation insurance premiums for
the policy year beginning April 2009 are slightly lower than the previous
policy year, due primarily to lower projected payroll.
The qualified and student driver recruiting and retention markets
improved in first quarter 2009 compared to first quarter 2008. Generally
going into the spring season, the driver market is difficult due to
seasonal construction and housing jobs that become available with improved
weather conditions. The current weakness in the construction and
automotive industries, trucking company failures and fleet reductions, and
the higher national unemployment rate contribute to an improved driver
recruiting and retention market. We anticipate that availability of
drivers will remain strong until current economic conditions improve. When
economic conditions improve, competition for qualified drivers will likely
increase, and we cannot predict whether we will experience future driver
shortages. If such a shortage were to occur and driver pay rate increases
were necessary to attract and retain drivers, our results of operations
would be negatively impacted to the extent that corresponding freight rate
increases were not obtained.
Fuel decreased 27.5 cents per total mile for the Truckload segment due
to lower average diesel fuel prices following the rapid fuel price decline
that occurred in fourth quarter 2008 and improved miles per gallon (see
paragraph below). Diesel fuel prices decreased slightly during much of
first quarter 2009 and at a much slower rate than the fuel price decline
during fourth quarter 2008. Prices began to increase in the last two weeks
of March and were slightly higher at quarter-end than the beginning of the
quarter. Average diesel fuel costs were $1.49 per gallon lower in first
quarter 2009 than in first quarter 2008.
During first quarter 2009, we continued to improve fuel miles per
gallon ("mpg") through several initiatives to improve fuel efficiency.
These initiatives have been ongoing since March 2008 and include (i)
reducing truck idle time, (ii) lowering non-billable miles, (iii)
increasing the percentage of aerodynamic, more fuel-efficient trucks in the
company truck fleet and (iv) installing auxiliary power units ("APUs") in
company trucks. As of March 31, 2009, we had installed APUs in
approximately 50% of the company-owned truck fleet. As a result of these
fuel savings initiatives, we improved our company truck average mpg by 5.6%
in first quarter 2009 compared to first quarter 2008. This mpg improvement
resulted in the purchase of 2.0 million fewer gallons of diesel fuel in
first quarter 2009 than in first quarter 2008. This equates to a reduction
of approximately 22,000 tons of carbon dioxide emissions. We intend to
continue these and other environmentally conscious initiatives, including
our active participation as a U.S. Environmental Protection Agency ("EPA")
SmartWay Transport Partner.
Shortages of fuel, increases in fuel prices and petroleum product
rationing can have a materially adverse effect on our operations and
profitability. We are unable to predict whether fuel price levels will
increase or decrease in the future or the extent to which fuel surcharges
19
will be collected from customers. As of March 31, 2009, we had no
derivative financial instruments to reduce our exposure to fuel price
fluctuations.
Supplies and maintenance for the Truckload segment increased 0.9 cents
per total mile in first quarter 2009 compared to first quarter 2008. The
average age of our company truck fleet increased from 2.2 years at March
31, 2008 to 2.5 years at March 31, 2009. The higher average age results in
more maintenance that is not covered by warranty. Increased labor and
parts rates charged by over-the-road vendors also contributed to the first
quarter 2009 increase in maintenance costs compared to first quarter 2008.
Severe cold weather in January 2009 also caused an increase in towing and
jumpstart costs.
Taxes and licenses for the Truckload segment decreased 0.4 cents on a
per-total-mile basis in first quarter 2009 compared to first quarter 2008
due to a decrease in fuel taxes per mile resulting from the 5.6%
improvement in the company truck mpg. An improved mpg results in fewer
gallons of diesel fuel purchased and consequently lower fuel taxes.
Insurance and claims for the Truckload segment decreased slightly, by
0.3 cents per total mile, in first quarter 2009 compared to first quarter
2008. We renewed our liability insurance policies on August 1, 2008 and
continue to be responsible for the first $2.0 million per claim with an
annual $8.0 million aggregate for claims between $2.0 million and $5.0
million. The annual aggregate for claims in excess of $5.0 million and
less than $10.0 million was lowered from $5.0 million to $4.0 million. We
maintain liability insurance coverage with insurance carriers substantially
in excess of the $10.0 million per claim. Our liability insurance premiums
for the policy year that began August 1, 2008 are slightly lower than the
previous policy year.
Depreciation expense for the Truckload segment increased 1.7 cents per
total mile in first quarter 2009 compared to first quarter 2008. This
increase was due primarily to lower average miles per tractor (which has
the effect of increasing this fixed cost when evaluated on a per mile
basis) and, to a lesser extent, an increase in the number of APUs installed
on company trucks and a higher ratio of trailers to tractors resulting from
the tractor fleet reductions. While we incur depreciation expense on the
APUs, we also incur lower fuel expense because tractors with APUs consume
less fuel during periods of truck idling.
Depreciation expense was historically affected by the engine emissions
standards imposed by the EPA that became effective in October 2002 and
applied to all new trucks purchased after that time, resulting in increased
truck purchase costs. Depreciation expense is affected because in January
2007, a second set of more strict EPA engine emissions standards became
effective for all newly manufactured truck engines. Compared to trucks
with engines produced before 2007, the trucks with new engines manufactured
under the 2007 standards have higher purchase prices. We began to take
delivery of trucks with these 2007-standard engines in first quarter 2008
to replace older trucks in our fleet. The engines in our fleet of company-
owned trucks as of March 31, 2009 consist of 72% Caterpillar, 14% Detroit
Diesel, 7% Cummins, and 7% Mercedes Benz.
In January 2010, a final set of more rigorous EPA-mandated emissions
standards will become effective for all new engines manufactured after that
date. It is expected that these trucks will have a higher purchase price
than the trucks manufactured to meet the 2007 EPA engine emission standards
but may be more fuel efficient. We are currently evaluating the options
available to us to prepare for the upcoming 2010 standards.
Rent and purchased transportation expense consists mainly of payments
to third-party capacity providers in the VAS segment and other non-trucking
operations and payments to owner-operators in the Truckload segment. The
payments to third-party capacity providers generally vary depending on
changes in the volume of services generated by the VAS segment. As a
percentage of VAS revenues, VAS rent and purchased transportation expense
decreased to 83.1% in first quarter 2009 compared to 84.7% in first quarter
2008.
20
Rent and purchased transportation for the Truckload segment decreased
3.8 cents per total mile in first quarter 2009 due primarily to decreased
fuel prices that resulted in lower reimbursements to owner-operators for
fuel and, to a lesser extent, the decrease in the percentage of owner-
operator truck miles versus company truck miles. Our customer fuel
surcharge programs do not differentiate between miles generated by company-
owned and owner-operator trucks. Challenging operating conditions continue
to make owner-operator recruitment and retention difficult. Such
conditions include inflationary cost increases that are the responsibility
of owner-operators and a shortage of financing. We have historically been
able to add company-owned tractors and recruit additional company drivers
to offset any decrease in the number of owner-operators. If a shortage of
owner-operators and company drivers occurs, increases in per mile
settlement rates (for owner-operators) and driver pay rates (for company
drivers) may become necessary to attract and retain these drivers. This
could negatively affect our results of operations to the extent that we
were not able to obtain corresponding freight rate increases.
Other operating expenses for the Truckload segment increased 1.1 cents
per total mile in first quarter 2009. Gains on sales of assets (primarily
trucks and trailers) are reflected as a reduction of other operating
expenses and are reported net of sales-related expenses, including costs to
prepare the equipment for sale. Gains on sales of assets decreased to $0.7
million in first quarter 2009 from $3.7 million in first quarter 2008. In
first quarter 2009, we realized lower average gains per truck and trailer
sold. We sold fewer trailers because of the effect of the softer freight
market and experienced lower buyer demand for used trucks due to the weak
spot market for freight. During first quarter 2009, we closed five lower
volume Fleet Truck Sales offices and continue to operate in 11 locations
across the continental United States. We believe our wholly-owned
subsidiary and used truck retail network, Fleet Truck Sales, is one of the
largest Class 8 used truck and equipment retail entities in the United
States. Fleet Truck Sales continues to be our resource for remarketing our
used trucks and trailers.
Other Expense (Income)
Our interest income was $0.5 million in first quarter 2009 compared to
$1.1 million in first quarter 2008. Our average cash and cash equivalents
balances were comparable for first quarter 2009 and first quarter 2008;
however, the average interest rate earned on these funds was lower in first
quarter 2009.
Income Taxes
Our effective income tax rate (income taxes expressed as a percentage
of income before income taxes) increased slightly to 42.2% for first
quarter 2009 from 42.0% for first quarter 2008. The higher income tax rate
was due primarily to lower income before income taxes on an annualized
basis, which caused non-deductible expenses such as driver per diem to
comprise a larger percentage of our income before income taxes.
Liquidity and Capital Resources:
During the three months ended March 31, 2009, net cash provided by
operating activities decreased to $76.6 million, a 4.3% decrease ($3.4
million) in cash flows compared to the same three-month period one year
ago. The decrease in net cash provided by operating activities resulted
primarily from (i) a $16.9 million decrease in cash flows related to
accounts payable, primarily due to the timing of revenue equipment payments
and the volume and timing of VAS payments to third-party capacity providers
and (ii) a decrease in long-term insurance and claims accruals due to
settlements of claims. These decreases in net cash provided by operating
activities were offset partially by a lower accounts receivable balance
because of a decrease in fuel surcharge billings in first quarter 2009. We
were able to make net capital expenditures, repay debt and pay dividends
because of the net cash provided by operating activities and existing cash
balances as discussed below.
21
Net cash used in investing activities for the three-month period ended
March 31, 2009 increased by 81.3% ($19.0 million), from $23.4 million for
the three-month period ended March 31, 2008 to $42.5 million for the three-
month period ended March 31, 2009. Net property additions (primarily
revenue equipment) were $43.6 million for the three-month period ended
March 31, 2009, compared to $25.4 million during the same period of 2008.
As of March 31, 2009, we were committed to property and equipment
purchases, net of trades, of approximately $33.6 million. We expect our
net capital expenditures (primarily revenue equipment) to be in the range
of $75.0 million to $125.0 million in 2009. We intend to fund these net
capital expenditures through cash flow from operations and financing
available under our existing credit facilities, as management deems
necessary.
Net financing activities used $33.6 million during the three months
ended March 31, 2009 and $4.4 million during the same period in 2008. The
change from 2008 to 2009 included $30.0 million in debt repayments during
the three-month period ended March 31, 2009 and no debt repayments during
the three-month period ended March 31, 2008. We paid dividends of $3.6
million in first quarter 2009 and $3.5 million in first quarter 2008.
Financing activities included no common stock repurchases for the three-
month period ended March 31, 2009 and $4.5 million in the same period of
2008. From time to time, the Company has repurchased, and may continue to
repurchase, shares of the Company's common stock. The timing and amount of
such purchases depends on market and other factors. As of March 31, 2009,
the Company had purchased 1,041,200 shares pursuant to our current Board of
Directors repurchase authorization and had 6,958,800 shares remaining
available for repurchase.
Management believes our financial position at March 31, 2009 is
strong. As of March 31, 2009, we had $48.9 million of cash and cash
equivalents and $747.6 million of stockholders' equity. Cash is invested
in government portfolio money market funds. We do not hold any investments
in auction-rate securities. As of March 31, 2009, we had $225.0 million of
available credit pursuant to credit facilities, of which we had no
outstanding borrowings. The credit available under these facilities is
further reduced by the $43.8 million in letters of credit we maintain.
These letters of credit are primarily required as security for insurance
policies. Based on our strong financial position, management foresees no
significant barriers to obtaining sufficient financing, if necessary.
22
Contractual Obligations and Commercial Commitments:
The following tables set forth our contractual obligations and
commercial commitments as of March 31, 2009.
Payments Due by Period
(in millions)
Less
than 1 1-3 3-5 More than 5 Period
Total year years years years Unknown
--------------------------------------------------------------------------------------
Contractual Obligations
Unrecognized tax benefits $ 7.2 $ 1.1 $ - $ - $ - $ 6.1
Equipment purchase
commitments 33.6 33.6 - - - -
------- ------- ------- ------- ------- -------
Total contractual cash
obligations $ 40.8 $ 34.7 $ - $ - $ - $ 6.1
======= ======= ======= ======= ======= =======
Other Commercial Commitments
Unused lines of credit $ 181.2 $ 50.0 $ 131.2 $ - $ - $ -
Standby letters of credit 43.8 43.8 - - - -
------- ------- ------- ------- ------- -------
Total commercial commitments $ 225.0 $ 93.8 $ 131.2 $ - $ - $ -
======= ======= ======= ======= ======= =======
Total obligations $ 265.8 $ 128.5 $ 131.2 $ - $ - $ 6.1
======= ======= ======= ======= ======= =======
We have committed credit facilities with two banks totaling $225.0
million, of which we had no outstanding borrowings at March 31, 2009.
These credit facilities bear variable interest based on the London
Interbank Offered Rate ("LIBOR"). The credit available under these
facilities is further reduced by the amount of standby letters of credit
under which we are obligated. The unused lines of credit are available to
us in the event we need financing for the replacement of our fleet or for
other significant capital expenditures. Given our strong financial
position, we expect that we could obtain additional financing, if
necessary. The standby letters of credit are primarily required for
insurance policies. The equipment purchase commitments relate to committed
equipment expenditures. As of March 31, 2009, we have recorded a $7.2
million liability for unrecognized tax benefits. We expect $1.1 million to
be settled within the next twelve months and are unable to reasonably
determine when the $6.1 million categorized as "period unknown" will be
settled.
Off-Balance Sheet Arrangements:
As of March 31, 2009, we did not have any non-cancelable revenue
equipment operating leases or other arrangements that meet the definition
of an off-balance sheet arrangement.
23
Regulations:
Effective October 1, 2005, all truckload carriers became subject to
revised hours of service ("HOS") regulations issued by the Federal Motor
Carrier Safety Administration ("FMCSA") ("2005 HOS Regulations"). The most
significant change for us from the previous regulations is that now,
pursuant to the 2005 HOS Regulations, drivers using the sleeper berth must
take at least one break of eight consecutive hours off-duty during their
ten hours off-duty. Previously, drivers using a sleeper berth were allowed
to split their ten-hour off-duty time into two periods, provided neither
period was less than two hours. The more restrictive sleeper berth
regulations are requiring some drivers to plan their time better. The 2005
HOS Regulations also had a negative impact on our mileage efficiency,
resulting in lower mileage productivity for those customers with multiple-
stop shipments or those shipments with pick-up or delivery delays.
Effective December 27, 2007, the FMCSA issued an interim final rule
that amended the 2005 HOS Regulations to (i) allow drivers up to 11 hours
of driving time within a 14-hour, non-extendable window from the start of
the workday (this driving time must follow 10 consecutive hours of off-duty
time) and (ii) restart calculations of the weekly on-duty time limits after
the driver has at least 34 consecutive hours off duty. This interim rule
made essentially no changes to the 11-hour driving limit and 34-hour
restart rules that we have been following since the 2005 HOS Regulations
became effective. In 2006 and 2007, the U.S. Court of Appeals for the
District of Columbia also considered the 2005 HOS Regulations and heard
arguments on the various petitions for review, one of which was submitted
by Public Citizen (a consumer safety organization). On January 23, 2008,
the Court denied Public Citizen's motion to invalidate the interim final
rule. The FMCSA solicited comments on the interim final rule until
February 15, 2008. On November 19, 2008, the FMCSA issued a final rule
which adopts the provisions of the December 2007 interim final rule. This
rule became effective January 19, 2009. On March 9, 2009, Public Citizen
and other safety advocate groups petitioned the Court for reconsideration
of the FMCSA's final rule, asserting the rule is not stringent enough. On
March 12, 2009, the American Trucking Associations then filed a motion to
intervene in support of keeping the current FMCSA rules in place. The
Court has not issued its decision and is not expected to do so until 2010.
We will continue to monitor any developments.
On January 18, 2007, the FMCSA published a Notice of Proposed
Rulemaking ("NPRM") in the Federal Register on the trucking industry's use
of Electronic On-Board Recorders ("EOBRs") for compliance with HOS rules.
The intent of this proposed rule is to (i) improve highway safety by
fostering development of new EOBR technology for HOS compliance; (ii)
encourage EOBR use by motor carriers through incentives; and (iii) require
EOBR use by operators with serious and continuing HOS compliance problems.
Comments on the NPRM were to be received by April 18, 2007. On January 23,
2009, the FMCSA withdrew the proposed rule for reconsideration. While we
do not believe the rule, as proposed, would have a significant effect on
our operations and profitability, we will continue to monitor future
developments.
The EPA mandated a new set of more stringent engine emissions
standards for all newly manufactured truck engines. These standards became
effective in January 2007. Compared to trucks with engines manufactured
before 2007 and not subject to the new standards, the trucks manufactured
with the new engines have higher purchase prices (approximately $5,000 to
$10,000 more per truck). In January 2010, a final set of more rigorous
EPA-mandated emissions standards will become effective for all new engines
manufactured after that date. We are currently evaluating the options
available to us to prepare for the upcoming 2010 standards.
Several U.S. states, counties and cities have enacted legislation or
ordinances restricting idling of trucks to short periods of time. This
action is significant when it impacts the driver's ability to idle the
truck for purposes of operating air conditioning and heating systems
particularly while in the sleeper berth. Many of the statutes or
ordinances recognize the need of the drivers to have a comfortable
environment in which to sleep and include exceptions for those
circumstances. California had such an exemption; however, since January 1,
2008, the California sleeper berth exemption no longer exists. We have
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taken steps to address this issue in California, which include driver
training, better scheduling and the installation and use of APUs.
California has also enacted restrictions on transport refrigeration unit
("TRU") emissions that require companies to operate compliant TRUs in
California. The California regulations apply not only to California
intrastate carriers, but also to carriers outside of California who wish to
enter the state with TRUs. On January 9, 2009, the EPA issued California a
waiver from preemption (as published in the Federal Register on January 16,
2009), which enables California to phase in its regulations over several
years beginning July 17, 2009. For compliance purposes, we have started
the TRU registration process in California, and we are currently evaluating
our options and alternatives for meeting these requirements in 2009 and
over the next several years as the regulations gradually become effective.
Critical Accounting Policies:
We operate in the truckload sector of the trucking industry and the
logistics sector of the transportation industry. In the truckload sector,
we focus on transporting consumer nondurable products that generally ship
consistently throughout the year. In the logistics sector, besides
managing transportation requirements for individual customers, we provide
additional sources of truck capacity, alternative modes of transportation,
a global delivery network and systems analysis to optimize transportation
needs. Our success depends on our ability to efficiently manage our
resources in the delivery of truckload transportation and logistics
services to our customers. Resource requirements vary with customer demand
and may be subject to seasonal or general economic conditions. Our ability
to adapt to changes in customer transportation requirements is essential to
efficient resource deployment, making capital investments in tractors and
trailers or obtaining qualified third-party carrier capacity at a
reasonable price. Although our business volume is not highly concentrated,
we may also be occasionally affected by our customers' financial failures
or loss of customer business.
Our most significant resource requirements are company drivers, owner-
operators, tractors, trailers and related equipment operating costs (such
as fuel and related fuel taxes, driver pay, insurance and supplies and
maintenance). To mitigate our risk to fuel price increases, we recover
additional fuel surcharges from our customers that recoup a majority, but
not all, of the increased fuel costs; however, we cannot assure that
current recovery levels will continue in future periods. Our financial
results are also affected by company driver and owner-operator availability
and the new and used revenue equipment market. Because we are self-insured
for a significant portion of bodily injury, property damage and cargo
claims and for workers' compensation benefits and health claims for our
employees (supplemented by premium-based insurance coverage above certain
dollar levels), financial results may also be affected by driver safety,
medical costs, weather, legal and regulatory environments and insurance
coverage costs to protect against catastrophic losses.
The most significant accounting policies and estimates that affect our
financial statements include the following:
* Selections of estimated useful lives and salvage values for purposes
of depreciating tractors and trailers. Depreciable lives of
tractors and trailers range from 5 to 12 years. Estimates of
salvage value at the expected date of trade-in or sale (for example,
three years for tractors) are based on the expected market values of
equipment at the time of disposal. Although our normal replacement
cycle for tractors is three years, we calculate depreciation expense
for financial reporting purposes using a five-year life and 25%
salvage value. Depreciation expense calculated in this manner
continues at the same straight-line rate (which approximates the
continuing declining market value of the tractors) when a tractor is
held beyond the normal three-year age. Calculating depreciation
expense using a five-year life and 25% salvage value results in the
same annual depreciation rate (15% of cost per year) and the same
net book value at the normal three-year replacement date (55% of
25
cost) as using a three-year life and 55% salvage value. We
continually monitor the adequacy of the lives and salvage values
used in calculating depreciation expense and adjust these
assumptions appropriately when warranted.
* Impairment of long-lived assets. We review our long-lived assets
for impairment whenever events or circumstances indicate the
carrying amount of a long-lived asset may not be recoverable. An
impairment loss would be recognized if the carrying amount of the
long-lived asset is not recoverable and the carrying amount exceeds
its fair value. For long-lived assets classified as held and used,
the carrying amount is not recoverable when the carrying value of
the long-lived asset exceeds the sum of the future net cash flows.
We do not separately identify assets by operating segment because
tractors and trailers are routinely transferred from one operating
fleet to another. As a result, none of our long-lived assets have
identifiable cash flows from use that are largely independent of the
cash flows of other assets and liabilities. Thus, the asset group
used to assess impairment would include all of our assets.
* Estimates of accrued liabilities for insurance and claims for
liability and physical damage losses and workers' compensation. The
insurance and claims accruals (current and noncurrent) are recorded
at the estimated ultimate payment amounts and are based upon
individual case estimates (including negative development) and
estimates of incurred-but-not-reported losses using loss development
factors based upon past experience. An actuary reviews our self-
insurance reserves for bodily injury and property damage claims and
workers' compensation claims every six months.
* Policies for revenue recognition. Operating revenues (including
fuel surcharge revenues) and related direct costs are recorded when
the shipment is delivered. For shipments where a third-party
capacity provider (including owner-operators under contract with us)
is utilized to provide some or all of the service and we (i) are the
primary obligor in regard to the shipment delivery, (ii) establish
customer pricing separately from carrier rate negotiations,
(iii) generally have discretion in carrier selection and/or
(iv) have credit risk on the shipment, we record both revenues for
the dollar value of services we bill to the customer and rent and
purchased transportation expense for transportation costs we pay to
the third-party provider upon the shipment's delivery. In the
absence of the conditions listed above, we record revenues net of
those expenses related to third-party providers.
* Accounting for income taxes. Significant management judgment is
required to determine (i) the provision for income taxes,
(ii) whether deferred income taxes will be realized in full or in
part and (iii) the liability for unrecognized tax benefits in
accordance with the provisions of Financial Accounting Standards
Board ("FASB") Interpretation No. 48, Accounting for Uncertainty in
Income Taxes - an Interpretation of FASB Statement No. 109. Deferred
income tax assets and liabilities are measured using enacted tax
rates that are expected to apply to taxable income in the years when
those temporary differences are expected to be recovered or settled.
When it is more likely that all or some portion of specific deferred
income tax assets will not be realized, a valuation allowance must
be established for the amount of deferred income tax assets that are
determined not to be realizable. A valuation allowance for deferred
income tax assets has not been deemed necessary due to our
profitable operations. Accordingly, if facts or financial
circumstances change and consequently impact the likelihood of
realizing the deferred income tax assets, we would need to apply
management's judgment to determine the amount of valuation allowance
required in any given period.
* Allowance for doubtful accounts. The allowance for doubtful
accounts is our estimate of the amount of probable credit losses in
our existing accounts receivable. We review the financial
condition of customers for granting credit and monitor changes in
customers' financial conditions on an ongoing basis. We determine
the allowance based on our historical write-off experience and
national economic conditions. During 2008 and the beginning of
2009, numerous significant events affected the U.S. financial
26
markets and resulted in significant reduction of credit
availability and liquidity. Consequently, we believe some of our
customers may be unable to obtain or retain adequate financing to
support their businesses in the future. We anticipate that because
of these combined factors, some of our customers may also be
compelled to restructure their businesses or may be unable to pay
amounts owed to us. We have formal policies in place to
continually monitor credit extended to customers and to manage our
credit risk. We maintain credit insurance for some customer
accounts. We evaluate the adequacy of our allowance for doubtful
accounts quarterly and believe our allowance for doubtful accounts
is adequate based on information currently available.
Management periodically re-evaluates these estimates as events and
circumstances change. Together with the effects of the matters discussed
above, these factors may significantly impact our results of operations
from period to period.
Accounting Standards:
In September 2006, the FASB issued SFAS No. 157, Fair Value
Measurements ("No. 157"). This statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting
principles and expands disclosures about fair value measurements. SFAS No.
157 does not require any new fair value measurements but rather eliminates
inconsistencies in guidance found in various prior accounting
pronouncements and was effective for fiscal years beginning after November
15, 2007. In February 2008, the FASB issued FASB Staff Position No. 157-2
("FSP No. 157-2"). FSP No. 157-2 delays the effective date of SFAS No. 157
for all nonfinancial assets and nonfinancial liabilities, except those that
are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually), until fiscal years beginning after
November 15, 2008 and interim periods within those fiscal years. These
nonfinancial items include assets and liabilities such as reporting units
measured at a fair value in a goodwill impairment test and nonfinancial
assets acquired and liabilities assumed in a business combination.
Effective January 1, 2008, we adopted SFAS No. 157 for financial assets and
liabilities recognized at fair value on a recurring basis, and on January
1, 2009, we fully adopted SFAS No. 157. Upon full adoption, SFAS No. 157
had no effect on our financial position, results of operations and cash
flows.
In December 2007, the FASB issued SFAS No. 141 (revised 2007),
Business Combinations ("No. 141R"). This statement establishes
requirements for (i) recognizing and measuring in an acquiring company's
financial statements the identifiable assets acquired, the liabilities
assumed and any noncontrolling interest in the acquiree, (ii) recognizing
and measuring the goodwill acquired in the business combination or a gain
from a bargain purchase and (iii) determining what information to disclose
to enable users of the financial statements to evaluate the nature and
financial effects of the business combination. The provisions of SFAS No.
141R are effective for business combinations for which the acquisition date
is on or after the beginning of the first annual reporting period beginning
on or after December 15, 2008. Upon adoption, SFAS No. 141R had no effect
on our financial position, results of operations and cash flows.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling
Interests in Consolidated Financial Statements-an amendment of ARB No. 51
("No. 160"). This statement amends Accounting Research Bulletin No. 51 to
establish accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary. The
provisions of SFAS No. 160 are effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15, 2008.
Upon adoption, SFAS No. 160 had no effect on our financial position,
results of operations and cash flows.
27
In March 2008, the FASB issued SFAS No. 161, Disclosures about
Derivative Instruments and Hedging Activities-an amendment of FASB
Statement No. 133 ("No. 161"). This statement amends FASB Statement No.
133 to require enhanced disclosures about an entity's derivative and
hedging activities. The provisions of SFAS No. 161 are effective for
fiscal years, and interim periods within those fiscal years, beginning on
or after November 15, 2008. Upon adoption, SFAS No. 161 had no effect on
our financial position, results of operations and cash flows.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risk from changes in commodity prices,
foreign currency exchange rates and interest rates.
Commodity Price Risk
The price and availability of diesel fuel are subject to fluctuations
attributed to changes in the level of global oil production, refining
capacity, seasonality, weather and other market factors. Historically, we
have recovered a majority, but not all, of fuel price increases from
customers in the form of fuel surcharges. We implemented customer fuel
surcharge programs with most of our customers to offset much of the higher
fuel cost per gallon. However, we do not recover all of the fuel cost
increase through these surcharge programs. We cannot predict the extent to
which fuel prices will increase or decrease in the future or the extent to
which fuel surcharges could be collected. As of March 31, 2009, we had no
derivative financial instruments to reduce our exposure to fuel price
fluctuations.
Foreign Currency Exchange Rate Risk
We conduct business in several foreign countries, including Mexico,
Canada and China. To date, most foreign revenues are denominated in U.S.
Dollars, and we receive payment for foreign freight services primarily in
U.S. Dollars to reduce direct foreign currency risk. Assets and
liabilities maintained by subsidiary companies in the local currency are
subject to foreign exchange gains or losses. Foreign currency transaction
gain and losses primarily relate to changes in the value of revenue
equipment owned by a subsidiary in Mexico, whose functional currency is the
Peso. Foreign currency transaction gains and losses were losses of $1.6
million for first quarter 2009 and gains of $0.6 million for first quarter
2008.
Interest Rate Risk
We had no debt outstanding at March 31, 2009. Interest rates on our
unused credit facilities are based on the LIBOR. Increases in interest
rates could impact our annual interest expense on future borrowings. As of
March 31, 2009, we do not have any derivative financial instruments to
reduce our exposure to interest rate increases.
Item 4. Controls and Procedures.
As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures, as defined in Rule 15d-15(e) of the Securities
Exchange Act of 1934 ("Exchange Act"). Our disclosure controls and
procedures are designed to provide reasonable assurance of achieving the
desired control objectives. Based upon that evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
28
controls and procedures are effective in enabling us to record, process,
summarize and report information required to be included in our periodic
filings with the U.S. Securities and Exchange Commission within the
required time period.
Management, under the supervision and with the participation of our
Chief Executive Officer and Chief Financial Officer, concluded that no
changes in our internal control over financial reporting occurred during
our most recent fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
We have confidence in our internal controls and procedures.
Nevertheless, our management, including the Chief Executive Officer and
Chief Financial Officer, does not expect that the internal controls or
disclosure procedures and controls will prevent all errors or intentional
fraud. An internal control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of such internal controls are met. Further, the design of an
internal control system must reflect that resource constraints exist, and
the benefits of controls must be relative to their costs. Because of the
inherent limitations in all internal control systems, no evaluation of
controls can provide absolute assurance that all control issues and
instances of fraud, if any, have been prevented or detected.
29
PART II
OTHER INFORMATION
Item 1A. Risk Factors.
Risks and uncertainties may cause our actual results, business,
financial condition and cash flows to materially differ from those
anticipated in the forward-looking statements included in this Form 10-Q.
A discussion of important factors relating to forward-looking statements is
included in Item 1A (Risk Factors) of our Annual Report on Form 10-K for
the year ended December 31, 2008. In addition to the risk factors set
forth in our Form 10-K, we believe the following additional risk factor
should be considered in evaluating our business.
Restrictions on travel to and from Mexico due to health epidemics could
disrupt our operations and have a material adverse effect on our operations
and profitability.
Approximately 7% of our revenues are generated from freight moving to
or from Mexico. Our business could be materially and adversely affected by
restrictions on travel to and from Mexico due to a health epidemic or
outbreak such as influenza A (H1N1) (also referred to as the "swine flu").
Any restrictions on travel to and from Mexico due to influenza A (H1N1) or
another epidemic or outbreak in Mexico may disrupt our operations and
decrease our ability to provide services to our customers. Additionally,
any such epidemic or outbreak may have a material adverse effect on demand
for freight into and out of Mexico, which could disrupt our business
operations and adversely affect our financial condition and results of
operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On October 15, 2007, we announced that on October 11, 2007 our Board
of Directors approved an increase in the number of shares of our common
stock that Werner Enterprises, Inc. (the "Company") is authorized to
repurchase. Under this authorization, the Company is permitted to
repurchase an additional 8,000,000 shares. As of March 31, 2009, the
Company had purchased 1,041,200 shares pursuant to this authorization and
had 6,958,800 shares remaining available for repurchase. The Company may
purchase shares from time to time depending on market, economic and other
factors. The authorization will continue unless withdrawn by the Board of
Directors.
No shares of common stock were repurchased during the first quarter of
2009 by either the Company or any "affiliated purchaser," as defined by
Rule 10b-18 of the Exchange Act.
30
Item 6. Exhibits.
Exhibit No. Exhibit Incorporated by Reference to:
----------- ------- -----------------------------
3(i) Restated Articles of Incorporation of Werner Exhibit 3(i) to the Company's Quarterly
Enterprises, Inc. Report on Form 10-Q for the quarter ended
June 30, 2007
3(ii) Revised and Restated By-Laws of Werner Exhibit 3(ii) to the Company's Quarterly
Enterprises, Inc. Report on Form 10-Q for the quarter ended
June 30, 2007
10.1 Named Executive Officer Compensation Exhibit 10.4 to the Company's Annual
Report of Form 10-K for the year ended
December 31, 2008
11 Statement Re: Computation of Per Share See Note 5 (Earnings Per Share) in the
Notes to Earnings Consolidated Financial
Statements (Unaudited) under Item 1
31.1 Certification of the Chief Executive Officer Filed herewith
pursuant to Rules 13a-14(a) and 15d-14(a) of
the Securities Exchange Act of 1934 (Section
302 of the Sarbanes-Oxley Act of 2002)
31.2 Certification of the Chief Financial Officer Filed herewith
pursuant to Rules 13a-14(a) and 15d-14(a) of
the Securities Exchange Act of 1934 (Section
302 of the Sarbanes-Oxley Act of 2002)
32.1 Certification of the Chief Executive Officer Filed herewith
pursuant to 18 U.S.C. Section 1350 (Section
906 of the Sarbanes-Oxley Act of 2002)
32.2 Certification of the Chief Financial Officer Filed herewith
pursuant to 18 U.S.C. Section 1350 (Section
906 of the Sarbanes-Oxley Act of 2002)
31
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 4, 2009 By: /s/ John J. Steele
----------------- ---------------------------------------
John J. Steele
Executive Vice President, Treasurer and
Chief Financial Officer
Date: May 4, 2009 By: /s/ James L. Johnson
----------------- ---------------------------------------
James L. Johnson
Senior Vice President, Controller and
Corporate Secretary
32