What changed in this filing

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Item 1. Financial Statements

2020-11-05 compared with 2020-08-06 · 97 added, 54 removed, 417 unchanged (27% of the section changed)

5 unchanged sentences

although in management’s opinion, the disclosures are adequate so that the information presented is not misleading.

Operating results for the three-month and six-month periods ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

Operating results for the three-month and nine-month periods ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

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.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In thousands, except per share amounts) 2020 2019 2020 2019

30 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In thousands) 2020 2019 2020 2019

8 unchanged sentences

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands, except share amounts) June 30,

(In thousands, except share amounts) September 30,

2020 December 31,

19 unchanged sentences

Accrued payroll 42,885 38,347

Income taxes payable 15,706 —

Other current liabilities 28,258 31,049

14 unchanged sentences

11,435,610 and 11,289,011 shares, respectively

( 290,487 ) ( 282,326 )

Total stockholders’ equity 1,180,137 1,111,008

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(In thousands) 2020 2019

23 unchanged sentences

Proceeds from issuance of long-term debt — 275,000

Change in net checks issued in excess of cash balances — 8,902

Dividends on common stock ( 18,669 ) ( 279,962 )

1 unchanged sentence

Tax withholding related to net share settlements of restricted stock awards ( 3,941 ) ( 1,191 )

Stock options exercised — 171

Net cash used in financing activities ( 156,408 ) ( 89,381 )

Effect of exchange rate fluctuations on cash ( 1,968 ) 32

Net increase in cash, cash equivalents and restricted cash 31,947 12,490

Net increase (decrease) in cash, cash equivalents and restricted cash 7,034 ( 19,576 )

Cash, cash equivalents and restricted cash, beginning of period 33,442 33,930

22 unchanged sentences

Purchases of 282,992 shares of common stock

— — — — ( 8,798 ) ( 8,798 )

Dividends on common stock ($ 0.09 per share)

— — ( 6,218 ) — — ( 6,218 )

Equity compensation activity, 125,203 shares

— ( 4,360 ) — — 430 ( 3,930 )

Non-cash equity compensation expense — 2,406 — — — 2,406

2 unchanged sentences

Dividends on common stock ($ 0.09 per share)

— — ( 6,219 ) — — ( 6,219 )

Equity compensation activity, 10,297 shares

— ( 199 ) — — 194 ( 5 )

Non-cash equity compensation expense — 1,138 — — — 1,138

BALANCE, June 30, 2020 805 111,634 1,344,361 ( 29,912 ) ( 290,500 ) 1,136,388

Comprehensive income — — 46,332 1,183 — 47,515

Dividends on common stock ($ 0.09 per share)

— — ( 6,219 ) — — ( 6,219 )

Equity compensation activity, 893 shares

— ( 19 ) — — 13 ( 6 )

Non-cash equity compensation expense — 2,459 — — — 2,459

BALANCE, September 30, 2020 $ 805 $ 114,074 $ 1,384,474 $ ( 28,729 ) $ ( 290,487 ) $ 1,180,137

See Notes to Consolidated Financial Statements (Unaudited).

WERNER ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share and per share amounts) Common

Stock Paid-In

Capital Retained

Earnings Accumulated

Comprehensive

Income (Loss) Treasury

Stockholders’

BALANCE, December 31, 2018 $ 805 $ 107,455 $ 1,413,746 $ ( 16,073 ) $ ( 241,180 ) $ 1,264,753

1 unchanged sentence

Purchases of 600,000 shares of common stock

— — — — ( 20,545 ) ( 20,545 )

Dividends on common stock ($ 0.09 per share)

— — ( 6,290 ) — — ( 6,290 )

Equity compensation activity, 46,129 shares

— ( 1,578 ) — — 399 ( 1,179 )

Non-cash equity compensation expense — 2,051 — — — 2,051

2 unchanged sentences

Purchases of 700,000 shares of common stock

— — — — ( 21,756 ) ( 21,756 )

Dividends on common stock ($ 3.84 per share)

3 unchanged sentences

Non-cash equity compensation expense — 2,314 — — — 2,314

— 2,314 — — — 2,314

BALANCE, June 30, 2019 805 110,102 1,219,529 ( 15,140 ) ( 282,952 ) 1,032,344

Comprehensive income — — 39,044 ( 2,505 ) — 36,539

Dividends on common stock ($ 0.09 per share)

— — ( 6,229 ) — — ( 6,229 )

Equity compensation activity, 9,712 shares

— ( 19 ) — — 188 169

Non-cash equity compensation expense — 1,981 — — — 1,981

BALANCE, September 30, 2019 $ 805 $ 112,064 $ 1,252,344 $ ( 17,645 ) $ ( 282,764 ) $ 1,064,804

See Notes to Consolidated Financial Statements (Unaudited).

34 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

5 unchanged sentences

A receivable is an unconditional right to consideration and is recognized when shipments have been completed and the related performance obligation has been fully satisfied.

At June 30, 2020 and December 31, 2019, the accounts receivable, net, balance was $ 299.4 million and $ 322.8 million, respectively.

At September 30, 2020 and December 31, 2019, the accounts receivable, net, balance was $ 337.9 million and $ 322.8 million, respectively.

Contract assets represent a conditional right to consideration in exchange for goods or services and are transferred to receivables when the rights become unconditional.

At June 30, 2020 and December 31, 2019, the balance of contract assets was $ 7.1 million and $ 5.9 million, respectively.

At September 30, 2020 and December 31, 2019, the balance of contract assets was $ 7.8 million and $ 5.9 million, respectively.

We have recognized contract assets within the other current assets financial statement caption on the balance sheet.

1 unchanged sentence

Contract liabilities represent advance consideration received from customers and are recognized as revenues over time as the related performance obligation is satisfied.

The balance of contract liabilities was $ 1.3 million as of June 30, 2020 and December 31, 2019.

The amount of revenues recognized in the six months ended June 30, 2020 that was included in the December 31, 2019 contract liability balance was $ 1.3 million.

The balance of contract liabilities was $ 1.0 million as of September 30, 2020 and $ 1.3 million as of December 31, 2019.

The amount of revenues recognized in the nine months ended September 30, 2020 that was included in the December 31, 2019 contract liability balance was $ 1.3 million .

We have recognized contract liabilities within the accounts payable and other current liabilities financial statement captions on the balance sheet.

4 unchanged sentences

transit times generally average approximately 3 days.

During the six months ended June 30, 2020 and June 30, 2019, revenues recognized from performance obligations related to prior periods (for example, due to changes in transaction price) were not material.

During the nine months ended September 30, 2020 and September 30, 2019, revenues recognized from performance obligations related to prior periods (for example, due to changes in transaction price) were not material.

We have entered into operating leases primarily for real estate.

7 unchanged sentences

Lease expense is reported in rent and purchased transportation on the consolidated statements of income.

The following table presents information about the amount, timing and uncertainty of cash flows arising from our operating leases as of June 30, 2020.

(In thousands) June 30, 2020

The following table presents information about the amount, timing and uncertainty of cash flows arising from our operating leases as of September 30, 2020.

(In thousands) September 30, 2020

Maturity of Lease Liabilities

12 unchanged sentences

Weighted-average discount rate for operating leases 3.38 %

An initial right-of-use asset of $ 8.7 million was recognized as a non-cash asset addition with the adoption of the new lease accounting standard.

During the six months ended June 30, 2020 and June 30, 2019, additional right-of-use assets of $ 1.5 million and $ 0.8 million, respectively, were recognized as non-cash asset additions that resulted from new operating lease liabilities.

Cash paid for amounts included in the present value of operating lease liabilities was $ 2.1 million and $ 1.8 million during the six months ended June 30, 2020 and June 30, 2019, respectively, and is included in operating cash flows.

An initial right-of-use asset of $ 8.7 million was recognized as a non-cash asset addition with the adoption of the new lease accounting standard on January 1, 2019.

During the nine months ended September 30, 2020 and September 30, 2019, additional right-of-use assets of $ 2.4 million and $ 3.6 million, respectively, were recognized as non-cash asset additions that resulted from new operating lease liabilities.

Cash paid for amounts included in the present value of operating lease liabilities was $ 3.0 million and $ 2.7 million during the nine months ended September 30, 2020 and September 30, 2019, respectively, and is included in operating cash flows.

Operating Lease Expense

Operating lease expense was $ 2.1 million and $ 4.1 million for the three and six months ended June 30, 2020, respectively, and $ 2.0 million and $ 4.3 million for the three and six months ended June 30, 2019, respectively.

This expense included $ 0.9 million and $ 1.9 million for the three and six months ended June 30, 2020, respectively, and $ 0.9 million and $ 1.8 million for the three and six months ended June 30, 2019, respectively, for long-term operating leases, with the remainder for variable and short-term lease expense .

Operating lease expense was $ 2.7 million and $ 6.8 million for the three and nine months ended September 30, 2020, respectively, and $ 2.0 million and $ 6.2 million for the three and nine months ended September 30, 2019, respectively.

This expense included $ 0.9 million and $ 2.8 million for the three and nine months ended September 30, 2020, respectively, and $ 0.9

million and $ 2.7 million for the three and nine months ended September 30, 2019, respectively, for long-term operating leases, with the remainder for variable and short-term lease expense .

Lessor Operating Leases

1 unchanged sentence

We recognize revenue for such leases on a straight-line basis over the term of the lease.

Revenues were $ 3.0 million and $ 6.3 million for the three and six months ended June 30, 2020, respectively, and $ 3.5 million and $ 6.8 million for the three and six months ended June 30, 2019, respectively.

The following table presents information about the maturities of these operating leases as of June 30, 2020.

(In thousands) June 30, 2020

Revenues were $ 3.0 million and $ 9.4 million for the three and nine months ended September 30, 2020, respectively, and $ 3.6 million and $ 10.4 million for the three and nine months ended September 30, 2019, respectively.

The following table presents information about the maturities of these operating leases as of September 30, 2020.

(In thousands) September 30, 2020

2020 (remaining) $ 2,746

1 unchanged sentence

(4) Credit Facilities

As of June 30, 2020, we had unsecured committed credit facilities with three banks.

As of September 30, 2020, we had unsecured committed credit facilities with two banks.

We had with Wells Fargo Bank, N.A.

a $ 300.0 million credit facility which will expire on May 14, 2024 .

We had a $ 200.0 million credit facility with BMO Harris Bank N.A.

which will expire on May 14, 2024 .

We also had an unsecured line of credit of $ 75.0 million with U.S.

Bank, N.A., with an expiration date of July 13, 2020 , and we repaid the outstanding balance in June 2020 prior to the expiration date.

We also had a $ 200.0 million credit facility with BMO Harris Bank N.A., which will expire on May 14, 2024 .

Our unsecured line of credit with U.S.

expired on July 13, 2020 .

Borrowings under these credit facilities bear variable interest based on the London Interbank Offered Rate (“LIBOR”).

As of June 30, 2020 and December 31, 2019, our outstanding debt totaled $ 175.0 million and $ 300.0 million, respectively.

We had $ 25.0 million outstanding under the credit facilities at a variable interest rate of 0.86 % as of June 30, 2020.

As of September 30, 2020 and December 31, 2019, our outstanding debt totaled $ 175.0 million and $ 300.0 million, respectively.

We had $ 25.0 million outstanding under the credit facilities at a variable interest rate of 0.83 % as of September 30, 2020.

We had (i) an additional $ 75.0 million outstanding under the Wells Fargo Bank, N.A.

credit facility at a variable rate of 0.85 % as of June 30, 2020, which is effectively fixed at 2.32 % with an interest rate swap agreement through May 14, 2024 and (ii) an additional $ 75.0 million outstanding under the BMO Harris Bank N.A.

credit facility at a variable rate of 0.88 % as of June 30, 2020, which is effectively fixed at 2.36 % with an interest rate swap agreement through May 14, 2024 .

The $ 575.0 million of borrowing capacity under our credit facilities at June 30, 2020, is further reduced b y $ 44.6 million in stand-by letters of credit under which we are obligated.

credit facility at a variable rate of 0.83 % as of September 30, 2020, which is effectively fixed at 2.32 % with an interest rate swap agreement through May 14, 2024 and (ii) an additional $ 75.0 million outstanding under the BMO Harris Bank N.A.

credit facility at a variable rate of 0.86 % as of September 30, 2020, which is effectively fixed at 2.36 % with an interest rate swap agreement through May 14, 2024 .

The $ 500.0 million of borrowing capacity under our credit facilities at September 30, 2020, is further reduced b y $ 44.6 million in stand-by letters of credit under which we are obligated.

Each of the debt agreements includes, among other things, financial covenants requiring us (i) to exceed a minimum ratio of earnings before interest, income taxes, depreciation and amortization to interest expense and/or (ii) not to exceed a maximum ratio of total funded debt to earnings before interest, income taxes, depreciation and amortization (as such terms are defined in each credit facility).

At June 30, 2020, we were in compliance with these covenants.

At June 30, 2020, the aggregate future maturities of long-term debt by year are as follows (in thousands):

At September 30, 2020, we were in compliance with these covenants.

At September 30, 2020, the aggregate future maturities of long-term debt by year are as follows (in thousands):

Total $ 175,000

1 unchanged sentence

(5) Commitments and Contingencies

As of June 30, 2020, we have committed to property and equipment purchases of approximately $ 214.7 million .

As of September 30, 2020, we have committed to property and equipment purchases of approximately $ 133.6 million.

We are involved in certain claims and pending litigation, including those described herein, arising in the ordinary course of business.

The majority of these claims relate to bodily injury, property damage, cargo and workers’ compensation incurred in the transportation of freight, as well as certain class action litigation related to personnel and employment matters.

We accrue for the uninsured portion of contingent losses from these and other pending claims when it is both probable that a liability has

been incurred and the amount of the loss can be reasonably estimated.

We accrue for the uninsured portion of contingent losses from these and other pending claims when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

Based on the knowledge of the facts, management believes the resolution of claims and pending litigation, taking into account existing reserves, will not have a material adverse effect on our consolidated financial statements.

5 unchanged sentences

Under the Company’s insurance policies in effect on the date of this accident, the Company’s maximum liability for this accident is $ 10.0 million (plus pre-judgment and post-judgment interest) with premium-based coverage that exceeds the jury verdict amount.

As a result of this jury verdict, the Company had recorded a liability of $ 21.2 million as of June 30, 2020, and $ 18.8 million as of December 31, 2019.

Under the terms of the Company’s insurance policies, the Company is the primary obligor of the verdict, and as such, the Company has also recorded a $ 79.2 million receivable from its third-party insurance providers in other non-current assets and a corresponding liability of the same amount in the long-term portion of insurance and claims accruals in the consolidated balance sheets as of June 30, 2020 and December 31, 2019.

As a result of this jury verdict, the Company had recorded a liability of $ 22.4 million as of September 30, 2020, and $ 18.8 million as of December 31, 2019.

The Company is pursuing an appeal of this verdict.

5 unchanged sentences

As a result of various post-trial motions, the court awarded $ 0.5 million to the plaintiffs for attorney fees and costs.

As of June 30, 2020, we had accrued for the jury’s award, attorney fees and costs in the short break matter and had not accrued for the sleeper berth matter.

As of September 30, 2020, we had accrued for the jury’s award, attorney fees and costs in the short break matter and had not accrued for the sleeper berth matter.

Plaintiffs appealed the post-verdict amounts awarded by the trial court for fees, costs and liquidated damages, and the Company filed a cross appeal on the verdict that was in plaintiffs’ favor.

13 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

14 unchanged sentences

The maximum aggregate number of shares that may be awarded to any one person in any one calendar year under the Equity Plan is 500,000 .

As of June 30, 2020, there were 6,683,155 shares available for granting additional awards.

As of September 30, 2020, there were 6,686,021 shares available for granting additional awards.

Equity compensation expense is included in salaries, wages and benefits within the Consolidated Statements of Income.

As of June 30, 2020, the total unrecognized compensation cost related to non-vested equity compensation awards was approximately $ 12.5 million and is expected to be recognized over a weighted average period of 1.9 years .

As of September 30, 2020, the total unrecognized compensation cost related to non-vested equity compensation awards was approximately $ 11.0 million and is expected to be recognized over a weighted average period of 1.8 years .

The following table summarizes the equity compensation expense and related income tax benefit recognized in the Consolidated Statements of Income (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

14 unchanged sentences

Stock options are granted at prices equal to the market value of the common stock on the date the option award is granted.

No stock option awards were outstanding as of June 30, 2020, and no stock option awards were granted or exercised in the six-month periods ended June 30, 2020 and June 30, 2019.

No stock option awards were outstanding as of September 30, 2020.

There were no stock option awards granted or exercised in the nine-month period ended September 30, 2020.

No stock options were granted in the nine-month period ended September 30, 2019, and the total intrinsic value of stock options exercised in the nine-month period ended September 30, 2019 was $ 136 thousand.

Restricted Awards

4 unchanged sentences

The restricted awards do not confer any voting or dividend rights to recipients until such shares vest and do not have any post-vesting sales restrictions.

The following table summarizes restricted award activity for the six months ended June 30, 2020:

The following table summarizes restricted award activity for the nine months ended September 30, 2020:

thousands) Weighted

8 unchanged sentences

Cash settled restricted stock units are recorded as a liability within the Consolidated Balance Sheets and are adjusted to fair value each reporting period.

The total fair value of previously granted restricted awards vested during the six-month periods ended June 30, 2020 and June 30, 2019 was $ 3.4 million and $ 1.8 million, respectively.

The total fair value of previously granted restricted awards vested during the nine-month periods ended September 30, 2020 and September 30, 2019 was $ 3.4 million and $ 1.8 million , respectively.

We withheld shares based on the closing stock price on the vesting date to settle the employees’ statutory obligation for the applicable income and other employment taxes.

2 unchanged sentences

Performance awards entitle the recipient to shares of common stock upon attainment of performance objectives as pre-established by the Compensation Committee.

If the performance objectives are achieved, performance awards currently outstanding vest, subject to continued employment, over periods ranging from 12 to 60 months from the grant date of the award.

If the performance objectives are achieved, performance awards currently outstanding vest, subject to continued employment, 36 months after the grant date of the award.

The performance awards do not confer any voting or dividend rights to recipients until such shares vest and do not have any post-vesting sales restrictions.

The following table summarizes performance award activity for the six months ended June 30, 2020:

The following table summarizes performance award activity for the nine months ended September 30, 2020:

thousands) Weighted

12 unchanged sentences

Our estimate of future dividends is based on the most recent quarterly dividend rate at the time of grant, adjusted for any known future changes in the dividend rate.

The vesting date fair value of performance awards that vested during the six-month periods ended June 30, 2020 and June 30, 2019 was $ 5.8 million and $ 1.2 million, respectively.

The vesting date fair value of performance awards that vested during the nine-month periods ended September 30, 2020 and September 30, 2019 was $ 5.8 million and $ 1.2 million, respectively.

We withheld shares based on the closing stock price on the vesting date to settle the employees’ statutory obligation for the applicable income and other employment taxes.

25 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

13 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements