What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-09 compared with 2021-08-05 · 240 added, 88 removed, 395 unchanged (45% 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, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Operating results for the three-month and nine-month periods ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

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) 2021 2020 2021 2020

(Unaudited) (Unaudited)

Operating revenues $ 702,891 $ 590,214 $ 1,969,151 $ 1,751,876

5 unchanged sentences

Insurance and claims 27,702 23,307 70,497 85,160

Depreciation 63,865 67,670 127,816 136,507

Depreciation and amortization 68,615 62,980 196,431 199,487

Rent and purchased transportation 161,061 131,843 458,474 378,989

6 unchanged sentences

Interest income ( 287 ) ( 323 ) ( 918 ) ( 1,326 )

Gain on equity investment ( 20,191 ) — ( 20,191 ) —

Gain on investments in equity securities, net ( 16,090 ) — ( 36,281 ) —

Other 50 55 146 123

3 unchanged sentences

Net income 65,089 46,332 183,613 108,522

Net income attributable to noncontrolling interest ( 1,328 ) — ( 1,328 ) —

Net income attributable to Werner $ 63,761 $ 46,332 $ 182,285 $ 108,522

Earnings per share:

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In thousands) 2021 2020 2021 2020

(Unaudited) (Unaudited)

Net income $ 65,089 $ 46,332 $ 183,613 $ 108,522

4 unchanged sentences

Comprehensive income 64,370 47,515 184,854 94,521

Comprehensive income attributable to noncontrolling interest 1,328 — 1,328 —

Comprehensive income attributable to Werner $ 63,042 $ 47,515 $ 183,526 $ 94,521

See Notes to Consolidated Financial Statements (Unaudited).

1 unchanged sentence

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands, except share amounts) June 30,

(In thousands, except share amounts) September 30,

2021 December 31,

11 unchanged sentences

Property and equipment, net 1,606,526 1,543,258

Goodwill 44,710 —

Intangible assets, net 50,974 —

Other non-current assets 207,140 156,502

Total assets $ 2,479,141 $ 2,156,676

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY

Current liabilities:

10 unchanged sentences

Deferred income taxes 253,335 237,870

Total liabilities 1,135,969 961,636

Commitments and contingencies

Temporary equity - redeemable noncontrolling interest 36,615 —

Stockholders’ equity:

9 unchanged sentences

Total stockholders’ equity 1,306,557 1,195,040

Total liabilities and stockholders’ equity $ 2,382,867 $ 2,156,676

Total liabilities, temporary equity and stockholders’ equity $ 2,479,141 $ 2,156,676

See Notes to Consolidated Financial Statements (Unaudited).

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(In thousands) 2021 2020

2 unchanged sentences

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 127,816 136,507

Depreciation and amortization 196,431 199,487

Deferred income taxes 14,756 ( 2,358 )

3 unchanged sentences

Other ( 1,422 ) 21,771

Gains on investment in equity securities ( 20,191 ) —

Gain on investments in equity securities, net ( 36,281 ) —

Changes in certain working capital items:

7 unchanged sentences

Proceeds from sales of property and equipment 132,755 107,185

Net cash invested in acquisition ( 141,291 ) —

Investment in equity securities ( 10,000 ) —

9 unchanged sentences

Tax withholding related to net share settlements of restricted stock awards ( 3,773 ) ( 3,941 )

Other cash flows from financing activities ( 35 ) —

Net cash provided by (used in) financing activities 71,869 ( 156,408 )

Effect of exchange rate fluctuations on cash ( 212 ) ( 1,968 )

Net increase (decrease) in cash, cash equivalents and restricted cash 162,794 31,947

Net increase in cash, cash equivalents and restricted cash 16,094 7,034

Cash, cash equivalents and restricted cash, beginning of period 29,334 33,442

9 unchanged sentences

Dividends accrued but not yet paid at end of period 8,026 6,219

Redeemable noncontrolling interest associated with acquisition 35,322 —

See Notes to Consolidated Financial Statements (Unaudited).

6 unchanged sentences

Comprehensive

Income (Loss) Treasury

Loss Treasury

Stockholders’

BALANCE, December 31, 2020 $ 805 $ 116,039 $ 1,438,916 $ ( 22,833 ) $ ( 337,887 ) $ 1,195,040

Comprehensive income — — 46,492 ( 265 ) — 46,227

Net income — — 46,492 — — 46,492

Other comprehensive loss — — — ( 265 ) — ( 265 )

Purchases of 130,446 shares of common stock

6 unchanged sentences

BALANCE, March 31, 2021 805 114,588 1,478,616 ( 23,098 ) ( 343,181 ) 1,227,730

Comprehensive income — 72,032 2,225 — 74,257

Net income — — 72,032 — — 72,032

Other comprehensive income — — — 2,225 — 2,225

Dividends on common stock ($ 0.12 per share)

4 unchanged sentences

BALANCE, June 30, 2021 805 117,069 1,542,497 ( 20,873 ) ( 342,915 ) 1,296,583

Net income — — 63,761 — — 63,761

Other comprehensive loss — — — ( 719 ) — ( 719 )

Purchases of 1,049,120 shares of common stock

— — — — ( 47,759 ) ( 47,759 )

Dividends on common stock ($ 0.12 per share)

— — ( 8,026 ) — — ( 8,026 )

Equity compensation activity, 1,498 shares

— ( 43 ) — — 10 ( 33 )

Non-cash equity compensation expense — 2,750 — — — 2,750

BALANCE, September 30, 2021 $ 805 $ 119,776 $ 1,598,232 $ ( 21,592 ) $ ( 390,664 ) $ 1,306,557

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

Loss Treasury

Stockholders’

BALANCE, December 31, 2019 $ 805 $ 112,649 $ 1,294,608 $ ( 14,728 ) $ ( 282,326 ) $ 1,111,008

Comprehensive income — — 23,058 ( 15,490 ) — 7,568

Net income — — 23,058 — — 23,058

Other comprehensive loss — — — ( 15,490 ) — ( 15,490 )

Purchases of 282,992 shares of common stock

6 unchanged sentences

BALANCE, March 31, 2020 805 110,695 1,311,448 ( 30,218 ) ( 290,694 ) 1,102,036

Comprehensive income — — 39,132 306 — 39,438

Net income — — 39,132 — — 39,132

Other comprehensive income — — — 306 — 306

Dividends on common stock ($ 0.09 per share)

4 unchanged sentences

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

Net income — — 46,332 — — 46,332

Other comprehensive income — — — 1,183 — 1,183

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).

13 unchanged sentences

We are evaluating the impact of the optional expedients in this update and their applicability to modifications of our existing credit facilities and hedging relationships that reference LIBOR.

(2) Business Acquisition

ECM Acquisition

On July 1, 2021, pursuant to a Unit Purchase Agreement, we acquired an 80 % ownership interest in ECM Associated, LLC ("ECM”) for $ 141.3 million after net working capital changes and net of cash acquired.

We have an exclusive option to purchase the remaining 20 % ownership interest in ECM upon the occurrence of certain events or after a period of five years following transaction close, based on a fixed multiple of ECM’s average annual adjusted earnings before interest, taxes, depreciation and amortization.

The noncontrolling interest holder also has an option to put the remaining 20 % ownership interest to us on the same terms.

We record the 20 % remaining interest in temporary equity – redeemable noncontrolling interest in the consolidated condensed balance sheets.

We recorded net income attributable to noncontrolling interest of $ 1.3 million and a distribution to the noncontrolling interest holder of $ 35 thousand for the three months ended September 30, 2021.

ECM, through its ECM Transport, LLC (“ECM Transport”) and Motor Carrier Service (“MCS”) subsidiaries, provides regional truckload carrier services in the Mid-Atlantic, Ohio, and Northeast regions of the United States and operates nearly 500 trucks and 2,000 trailers in its network of eight terminals and 18 drop yard facilities.

The primary reason for this acquisition was to expand our fleet size, terminal network, geographic market presence, and short-haul expertise in a segment in which consumer demand and supply chain needs are growing.

We financed the cash transaction through a combination of cash on hand, existing credit facilities, and the addition of a $ 100.0 million unsecured fixed-rate term loan commitment with BMO Harris Bank N.A.

on June 30, 2021.

For more information regarding our debt, see Note 7 – Credit Facilities.

The results of operations for ECM are included in our consolidated financial statements beginning July 1, 2021.

We incurred transaction costs related to the acquisition, such as legal and professional fees, of $ 1.0 million for the nine months ended September 30, 2021, which is included in other operating expenses on the consolidated statements of income.

Provisional Purchase Price Allocation

We accounted for the purchase of ECM using the acquisition method of accounting under U.S.

generally accepted accounting principles (GAAP).

The purchase price has been allocated to the assets acquired and liabilities assumed using market data and valuation techniques.

The estimated fair values of the assets acquired and liabilities assumed are considered provisional, pending the completion of the valuation of acquired tangible assets, an independent valuation of certain acquired intangible assets, and the calculation of deferred taxes based upon the underlying tax basis of assets acquired and liabilities assumed.

The determination of estimated fair values requires management to make significant estimates and assumptions.

We believe that the information available provides a reasonable basis for estimating the values of assets acquired and liabilities assumed;

however, these provisional estimates may be adjusted upon the availability of new information regarding facts and circumstances which existed at the acquisition date, and such adjustments may impact future earnings.

We expect to finalize the valuation of assets and liabilities as soon as practicable, but not later than one year from the acquisition date.

Any adjustments to the initial

estimates of the fair value of the acquired assets and liabilities assumed will be recorded as adjustments to the respective assets and liabilities, with the residual amounts allocated to goodwill.

The provisional purchase price allocation for ECM is summarized as follows (in thousands):

Purchase Price

Cash consideration paid (1)

Cash and cash equivalents acquired ( 13,327 )

Working capital surplus (deficiency) ( 1,068 )

Total purchase price (fair value of consideration) 141,291

Provisional Purchase Price Allocation

Accounts receivable, trade 16,170

Other receivables 43

Inventories and supplies 204

Prepaid taxes, licenses and permits 700

Other current assets 351

Property and equipment 68,772

Intangible assets 52,200

Other non-current assets 3,644

Total assets acquired 142,084

Accounts payable ( 510 )

Insurance and claims accruals ( 890 )

Accrued payroll ( 2,130 )

Accrued expenses ( 3,006 )

Other current liabilities ( 1,185 )

Other long-term liabilities ( 2,460 )

Total liabilities assumed ( 10,181 )

Temporary equity - redeemable noncontrolling interest in ECM ( 35,322 )

Goodwill $ 44,710

(1) At closing, $0.8 million and $0.7 million of the cash consideration was placed in escrow to cover post-closing adjustments and to secure certain indemnification obligations of the sellers, respectively.

As of September 30, 2021, the indemnification escrow payment remains subject to adjustment.

Goodwill and Intangible Assets

Goodwill represents the excess of cost over the fair value of net identifiable tangible and intangible assets acquired in a business combination.

Goodwill and intangible assets with indefinite lives are not amortized.

Goodwill is reviewed for potential impairment on an annual basis or more frequently if indicators of a potential impairment exist.

Goodwill associated with the acquisition was primarily attributable to acquiring and retaining the existing ECM network and the anticipated synergies from combining the operations of the Company and ECM.

The goodwill associated with the acquisition is expected to be deductible for income tax purposes.

All goodwill is assigned to our Truckload Transportation Services (“TTS”) segment.

We have allocated $52.2 million of the purchase price to finite-lived intangible assets, consisting of customer relationships and trade names.

The estimated fair values of the intangible assets were determined, with the assistance of an independent third-party valuation firm, using the multi-period excess earnings method for customer relationships and the relief-from-royalty method for trade names.

All methods are forms of the income approach, which require a forecast of all the expected future cash flows.

Intangible assets with finite lives are amortized on the straight-line method.

Amortization expense on acquired intangible assets was $ 1.2 million for three and nine months ended September 30, 2021.

The following table summarizes the major classes of intangible assets and the respective weighted-average estimated amortization periods:

Estimated Fair Value

(in thousands) Weighted-Average Estimated Amortization Period

Customer relationships $ 33,200 10

Trade names 19,000 12

Total intangible assets $ 52,200

Revenue Recognition

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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, 2021 and December 31, 2020, the accounts receivable, trade, net, balance was $ 391.1 million and $ 341.1 million, respectively.

At September 30, 2021 and December 31, 2020, the accounts receivable, trade, net, balance was $ 426.3 million and $ 341.1 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, 2021 and December 31, 2020, the balance of contract assets was $ 8.9 million and $ 6.9 million, respectively.

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

At September 30, 2021 and December 31, 2020, the balance of contract assets was $ 9.2 million and $ 6.9 million, respectively.

We have recognized contract assets within the other current assets financial statement caption on the consolidated condensed balance sheets.

These contract assets are considered current assets as they will be settled in less than 12 months.

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 $ 2.0 million as of June 30, 2021 and $ 1.5 million as of December 31, 2020.

The amount of revenues recognized in the six months ended June 30, 2021 that was included in the December 31, 2020 contract liability balance was $ 1.5 million.

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

The balance of contract liabilities was $ 1.2 million as of September 30, 2021 and $ 1.5 million as of December 31, 2020.

The amount of revenues recognized in the nine months ended September 30, 2021 that was included in the December 31, 2020 contract liability balance was $ 1.5 million.

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

These contract liabilities are considered current liabilities as they will be settled in less than 12 months.

Performance Obligations

We have elected to apply the practical expedient in ASC Topic 606 to not disclose the value of remaining performance obligations for contracts with an original expected length of one year or less.

We have elected to apply the practical expedient in Accounting Standards Codification (“ASC”) Topic 606 to not disclose the value of remaining performance obligations for contracts with an original expected length of one year or less.

Remaining performance obligations represent the transaction price allocated to future reporting periods for freight shipments started but not completed at the reporting date that we expect to recognize as revenue in the period subsequent to the reporting date;

transit times generally average approximately 3 days.

During the six months ended June 30, 2021 and June 30, 2020, 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, 2021 and September 30, 2020, 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, 2021.

(In thousands) June 30, 2021

The following table presents information about the amount, timing and uncertainty of cash flows arising from our operating leases as of September 30, 2021.

(In thousands) September 30, 2021

Maturity of Lease Liabilities

12 unchanged sentences

Weighted-average discount rate for operating leases 2.91 %

During the six months ended June 30, 2021 and June 30, 2020, right-of-use assets of $ 2.1 million and $ 1.5 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 $ 1.9 million and $ 2.1 million for the six months ended June 30, 2021 and June 30, 2020, respectively, and is included in operating cash flows.

During the nine months ended September 30, 2021 and September 30, 2020, right-of-use assets of $ 3.9 million and $ 2.4 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 $ 3.2 million and $ 3.0 million for the nine months ended September 30, 2021 and September 30, 2020, respectively, and is included in operating cash flows.

Operating Lease Expense

Operating lease expense was $ 3.5 million and $ 7.1 million for the three and six months ended June 30, 2021, respectively, and $ 2.1 million and $ 4.1 million for the three and six months ended June 30, 2020, respectively.

This expense included $ 1.0 million and $ 2.0 million for the three and six months ended June 30, 2021, respectively, and $ 0.9 million and $ 1.9 million for the three and six months ended June 30, 2020, respectively, for long-term operating leases, with the remainder for variable and short-term lease expense .

Operating lease expense was $ 4.2 million and $ 11.3 million for the three and nine months ended September 30, 2021, respectively, and $ 2.7 million and $ 6.8 million for the three and nine months ended September 30, 2020, respectively.

This expense included $ 1.3 million and $ 3.3 million for the three and nine months ended September 30, 2021, respectively, and $ 0.9 million and $ 2.8 million for the three and nine months ended September 30, 2020, 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 $ 6.1 million for the three and six months ended June 30, 2021, respectively, and $ 3.0 million and $ 6.3 million for the three and six months ended June 30, 2020, respectively.

The following table presents information about the maturities of these operating leases as of June 30, 2021.

(In thousands) June 30, 2021

Revenues were $ 2.9 million and $ 9.0 million for the three and nine months ended September 30, 2021, respectively, and $ 3.0 million and $ 9.4 million for the three and nine months ended September 30, 2020, respectively.

The following table presents information about the maturities of these operating leases as of September 30, 2021.

(In thousands) September 30, 2021

2021 (remaining) $ 2,483

Total $ 8,171

(5) Fair Value

Fair Value Measurement — Definition and Hierarchy

ASC 820-10, “Fair Value Measurement,” defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.

ASC 820-10 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs reflect the assumptions market participants would use in pricing the asset or liability, developed based on market data obtained from sources independent of the Company.

Unobservable inputs reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability, developed based on the best information available in the circumstances.

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as follows:

Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access.

Level 2 — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Such inputs include quoted prices in markets that are not active, quoted prices for similar assets and liabilities in active and inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 — Unobservable inputs for the asset or liability, where there is little, if any, observable market activity or data for the asset or liability.

The following table presents the Company's fair value hierarchy for assets measured at fair value on a recurring basis (in thousands):

Level in Fair Fair Value

Value Hierarchy September 30, 2021 December 31, 2020

Other non-current assets:

Equity securities (1)

1 $ 13,129 N/A

(1) Represents our investment in TuSimple Class A common stock.

For additional information regarding the valuation of our investment in TuSimple, see Note 6 – Investments.

Our investment in Mastery Logistics Systems, Inc.

(“MLSI”) is estimated at fair value on a nonrecurring basis, as MLSI does not have a readily determinable fair value.

MLSI is accounted for using the measurement alternative under ASC 321,

“Investments - Equity Securities” (categorized as Level 3 of the fair value hierarchy).

For additional information regarding the valuation of our investment in MLSI, see Note 6 – Investments.

Valuation Techniques

In general, and where applicable, we use quoted prices in active markets for identical assets or liabilities to determine fair value.

This pricing methodology applies to our Level 1 assets and liabilities.

If quoted prices in active markets for identical assets and liabilities are not available to determine fair value, then we use quoted prices for similar assets and liabilities or inputs other than the quoted prices that are observable, either directly or indirectly.

This pricing methodology would apply to Level 2 assets and liabilities.

Fair Value of Financial Instruments Not Recorded at Fair Value

Cash, accounts receivable trade, and accounts payable are short-term in nature and accordingly are carried at amounts that approximate fair value.

These financial instruments are recorded at or near their respective transaction prices and historically have been settled or converted to cash at approximately that value (categorized as Level 2 of the fair value hierarchy).

The carrying amounts of our long-term debt approximate fair value due to the duration of our credit facilities and the variable interest rates (categorized as Level 2 of the fair value hierarchy).

(6) Investments

Investment in Mastery Logistics Systems, Inc.

In 2020, we entered into a strategic partnership with Mastery Logistics Systems, Inc.

(“MLSI”), a transportation technology development company.

Equity Investments without Readily Determinable Fair Values

In 2020, we entered into a strategic partnership with MLSI, a transportation management systems company.

We are collaborating with MLSI to develop a cloud-based transportation management system using MLSI's SaaS technology which we have agreed to license.

In 2020, we paid MLSI $ 5.0 million for shares of preferred stock of MLSI which represent approximately 5 % ownership.

This investment is being accounted for under ASC 321, Investments - Equity Securities and is recorded in other noncurrent assets on the consolidated balance sheet.

As of June 30, 2021, no events have occurred that would indicate that the value of our investment in MLSI has changed.

Investment in TuSimple

In both November 2020 and September 2021, we paid MLSI $5.0 million for shares of its preferred stock.

As of September 30, 2021, our ownership percentage in MLSI was approximately 9.8 %.

This investment is being accounted for under ASC 321, “Investments - Equity Securities,” using the measurement alternative, and is recorded in other noncurrent assets on the consolidated condensed balance sheets.

We record changes in the value of our investment, based on events that occur that would indicate the value of our investment in MLSI has changed, in other expense (income) on the consolidated statements of income.

During third quarter 2021, an investment by a third-party resulted in the remeasurement of our investment in MLSI, and in the three and nine months ended September 30, 2021, we recognized a $ 28.2 million unrealized gain on our investment based upon the price paid by the third party.

As of September 30, 2021 and December 31, 2020, the fair value of our investment was $ 38.2 million and $ 5.0 million, respectively.

Equity Investments with Readily Determinable Fair Values

On January 8, 2021, we made a $ 5.0 million equity investment in TuSimple, an autonomous technology company.

Upon completion of TuSimple’s initial public offering in April 2021, our equity investment was converted to Class A common shares.

Our interest, which represents an ownership percentage of less than 1%, is being accounted for under ASC 321, Investments - Equity Securities and is recorded in other noncurrent assets on the consolidated balance sheet.

Our interest, which represents an ownership percentage of less than 1%, is being accounted for under ASC 321, “Investments - Equity Securities” and is recorded in other noncurrent assets on the consolidated condensed balance sheets.

We record changes in the value of our investment, based on the share price reported by Nasdaq, in other expense (income) on the consolidated statements of income.

In the three and six months ended June 30, 2021, we recognized a $20.2 million unrealized gain on our investment.

As of June 30, 2021, the fair value of our investment was $25.2 million.

In the three and nine months ended September 30, 2021, we recognized a $ 12.1 million unrealized loss and $ 8.1 million unrealized gain on our investment.

As of September 30, 2021, the fair value of our investment was $ 13.1 million.

For additional information on the fair value of our investment in TuSimple, see Note 5 – Fair Value.

(7) Credit Facilities

2 unchanged sentences

from $200.0 million to $300.0 million.

The outstanding principal balance of the term loan shall bear interest at a fixed rate of 1.28%.

As of June 30, 2021, we had unsecured committed credit facilities with two banks, as well as the new term loan commitment described above with one of these banks.

We had with Wells Fargo Bank, N.A.

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

We also had a $ 200.0 million credit facility with BMO Harris Bank N.A., which will expire on May 14, 2024 , and a $100.0 million term loan with quarterly principal payments of $ 1.25 million beginning September 30, 2021 and a final payment of principal and interest due and payable on May 14, 2024 .

Borrowings under these credit facilities bear variable interest based on the London Interbank Offered Rate (“LIBOR”), and the term loan has a fixed interest rate.

As of June 30, 2021 and December 31, 2020, our outstanding debt totaled $ 300.0 million and $ 200.0 million, respectively.

Under the credit facilities as of June 30, 2021, we had $ 50.0 million outstanding at a weighted average variable interest rate of 0.77 % and $ 100.0 million outstanding at a fixed interest rate of 1.28 %.

The outstanding principal balance of the term loan bears interest at a fixed rate of 1.28%.

As of September 30, 2021, we had a $ 300.0 million and a $ 200.0 million unsecured committed credit facility with Wells Fargo Bank, N.A.

and BMO Harris Bank N.A., respectively, which will expire on May 14, 2024 .

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

We also had a new $100.0 million unsecured fixed-rate term loan commitment with BMO Harris Bank N.A., as described above, with quarterly principal payments of $ 1.25 million beginning September 30, 2021 and a final payment of principal and interest due and payable on May 14, 2024 .

As of September 30, 2021 and December 31, 2020, our outstanding debt totaled $ 350.0 million and $ 200.0 million, respectively.

Under the credit facilities as of September 30, 2021, we had $ 100.0 million outstanding at a variable interest rate of 0.76 % and $ 100.0 million outstanding at a fixed interest rate of 1.28 %.

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

credit facility at a variable rate of 0.76 % as of June 30, 2021, 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 0.79 % as of June 30, 2021, which is effectively fixed at 2.36 % with an interest rate swap agreement through May 14, 2024 .

The $ 600.0 million of borrowing capacity under our credit arrangements at June 30, 2021, is further reduced b y $ 50.9 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, 2021, we were in compliance with these covenants.

At June 30, 2021, the aggregate future maturities of long-term debt by year are as follows (in thousands):

credit facility at a variable interest rate of 0.76 % as of September 30, 2021, 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 interest rate of 0.78 % as of September 30, 2021, which is effectively fixed at 2.36 % with an interest rate swap agreement through May 14, 2024 .

Subsequent to the end of the quarter, in October 2021, we borrowed an additional $ 50.0 million under our BMO Harris Bank N.A.

credit facility, which will be classified as long-term in the consolidated condensed balance sheets.

The $ 600.0 million of borrowing capacity under our credit arrangements at September 30, 2021, is further reduced b y $ 50.9 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 September 30, 2021, we were in compliance with these covenants.

At September 30, 2021, the aggregate future maturities of long-term debt by year are as follows (in thousands):

2021 (remaining) $ 2,500

Total $ 350,000

The carrying amounts of our long-term debt approximate fair value due to the duration of the notes and the variable interest rates.

(8) Commitments and Contingencies

As of June 30, 2021, we have committed to property and equipment purchases of approximately $ 269.8 million .

As of September 30, 2021, we have committed to property and equipment purchases of approximately $ 109.7 million .

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

8 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 $ 26.2 million as of June 30, 2021, and $ 23.6 million as of December 31, 2020.

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, 2021 and December 31, 2020.

As a result of this jury verdict, the Company had recorded a liability of $ 27.5 million as of September 30, 2021, and $ 23.6 million as of December 31, 2020.

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 condensed balance sheets as of September 30, 2021 and December 31, 2020.

The Company is pursuing an appeal of this verdict.

3 unchanged sentences

The period covered by this class action suit is August 2008 through March 2014.

The case was tried to a jury in May 2017, resulting in a verdict of $ 0.8 million in plaintiffs’ favor on the short break matter and a verdict in our favor on the sleeper berth matter.

The case was tried to a jury in May 2017, resulting in a verdict of $ 0.8 million in plaintiffs’ favor on the short break matter and a verdict

in our favor on the sleeper berth matter.

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

4 unchanged sentences

On July 21, 2020, Plaintiffs’ counsel filed a notice of appeal of that dismissal.

As of June 30, 2021, we

have an accrual 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, 2021, we have an accrual for the jury’s award, attorney fees and costs in the short break matter and had not accrued for the sleeper berth matter.

We are also involved in certain class action litigation in which the plaintiffs allege claims for failure to provide meal and rest breaks, unpaid wages, unauthorized deductions and other items.

2 unchanged sentences

(9) 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 outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method.

Basic earnings per share is computed by dividing net income attributable to Werner by the weighted average number of common shares outstanding during the period.

Diluted earnings per share is computed by dividing net income attributable to Werner by the weighted average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method.

Dilutive potential common shares include outstanding restricted stock awards.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net income $ 72,032 $ 39,132 $ 118,524 $ 62,190

Net income attributable to Werner $ 63,761 $ 46,332 $ 182,285 $ 108,522

Weighted average common shares outstanding 67,475 69,097 67,776 69,148

10 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, 2021, there were 6,534,087 shares available for granting additional awards.

As of September 30, 2021, there were 6,527,854 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, 2021, the total unrecognized compensation cost related to non-vested equity compensation awards was approximately $ 15.7 million and is expected to be recognized over a weighted average period of 1.9 years.

As of September 30, 2021, the total unrecognized compensation cost related to non-vested equity compensation awards was approximately $ 13.3 million and is expected to be recognized over a weighted average period of 1.7 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,

2021 2020 2021 2020

18 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, 2021:

The following table summarizes restricted award activity for the nine months ended September 30, 2021:

thousands) Weighted

7 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.

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, 2021 and June 30, 2020 was $ 5.1 million and $ 3.4 million , respectively.

Cash settled restricted stock units are recorded as a liability within the consolidated condensed balance sheets and are adjusted to fair value each reporting period.

The total fair value of previously granted restricted awards vested during the nine-month periods ended September 30, 2021 and September 30, 2020 was $ 5.2 million and $ 3.4 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.

4 unchanged sentences

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, 2021:

The following table summarizes performance award activity for the nine months ended September 30, 2021:

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, 2021 and June 30, 2020 was $ 4.1 million and $ 5.8 million, respectively.

The vesting date fair value of performance awards that vested during the nine-month periods ended September 30, 2021 and September 30, 2020 was $ 4.1 million and $ 5.8 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.

1 unchanged sentence

(11) Segment Information

We have two reportable segments – Truckload Transportation Services (“TTS”) and Werner Logistics.

We have two reportable segments – Truckload Transportation Services and Werner Logistics.

The TTS segment consists of two operating units, Dedicated and One-Way Truckload.

4 unchanged sentences

(ii) the expedited (“Expedited”) fleet provides time-sensitive truckload services utilizing driver teams;

(iii) the regional short-haul (“Regional”) fleet provides comparable truckload van service within geographic regions across the United States;

(iii) the regional short-haul (“Regional”) fleet, including ECM, provides comparable truckload van service within geographic regions across the United States;

and (iv) the Temperature Controlled fleet provides truckload services for temperature sensitive products over irregular routes utilizing temperature-controlled trailers.

15 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

12 unchanged sentences

Total $ 71,324 $ 62,103 $ 210,658 $ 145,987

(10) Subsequent Event

On July 1, 2021, we acquired an 80 % equity ownership interest in ECM Transport Group (“ECM”) for a cash purchase price of $ 142.4 million, with an exclusive option to purchase the remaining 20% after a period of five years.

ECM consists of ECM Transport and Motor Carrier Service, which are regional truckload carriers that operate in the Mid-Atlantic, Ohio and Northeast regions of the United States.

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