What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-26 compared with 2023-02-27 · 170 added, 173 removed, 833 unchanged (29% of the section changed)

27 unchanged sentences

The Company’s current and non-current insurance and claims accruals were $81.8 million and $239.7 million, respectively.

The accruals specifically for bodily injury, property damage, and workers’ compensation are based upon individual case estimates and actuarial estimates of loss development for reported losses and incurred-but-not-reported losses using loss development factors based upon past experience.

The accruals specifically for bodily injury and property damage are based upon individual case estimates and actuarial estimates of loss development for reported losses and incurred-but-not-reported losses using loss development factors based upon past experience.

In order to determine the loss development factors, the Company makes judgments relating to the comparability of historical claims to current claims.

1 unchanged sentence

The Company has an independent actuary review their calculation of these undiscounted insurance and claims accruals.

We identified the evaluation of the Company’s insurance and claims accruals related to bodily injury, property damage, and workers’ compensation claims not covered by insurance as a critical audit matter.

We identified the evaluation of the Company’s insurance and claims accruals related to bodily injury and property damage claims not covered by insurance as a critical audit matter.

Specifically, evaluating the loss development factors used to determine these insurance and claims accruals involved a high degree of complexity and subjectivity.

32 unchanged sentences

Interest income ( 6,701 ) ( 1,731 ) ( 1,211 )

Gain on investments in equity securities, net ( 12,195 ) ( 40,317 ) —

Loss (gain) on investments in equity securities, net 278 ( 12,195 ) ( 40,317 )

Loss from equity method investment 1,046 — —

Other 477 388 236

3 unchanged sentences

Net income 112,290 245,580 261,478

Net income attributable to noncontrolling interest ( 4,324 ) ( 2,426 ) —

Net loss (income) attributable to noncontrolling interest 92 ( 4,324 ) ( 2,426 )

Net income attributable to Werner $ 112,382 $ 241,256 $ 259,052

14 unchanged sentences

Change in fair value of interest rate swaps, net of tax ( 4,512 ) 6,886 3,610

Other comprehensive income (loss) 9,312 2,229 ( 8,105 )

Other comprehensive income, net 1,608 9,312 2,229

Comprehensive income 113,898 254,892 263,707

Comprehensive income attributable to noncontrolling interest ( 4,324 ) ( 2,426 ) —

Comprehensive loss (income) attributable to noncontrolling interest 92 ( 4,324 ) ( 2,426 )

Comprehensive income attributable to Werner $ 113,990 $ 250,568 $ 261,281

65 unchanged sentences

Insurance and claims accruals, net of current portion ( 5,246 ) 7,726 5,582

Gain on investments in equity securities, net ( 12,195 ) ( 40,317 ) —

Loss (gain) on investments in equity securities, net 278 ( 12,195 ) ( 40,317 )

Loss from equity method investment 1,046 — —

Other ( 7,612 ) ( 13,295 ) ( 3,105 )

9 unchanged sentences

Net cash invested in acquisitions ( 188 ) ( 184,118 ) ( 201,845 )

Investment in equity securities ( 20,250 ) ( 10,000 ) ( 5,000 )

Investment in equity securities, net ( 2,931 ) ( 20,250 ) ( 10,000 )

Payments to acquire equity method investment ( 3,385 ) — —

Purchase of promissory note ( 25,000 ) — —

Decrease in notes receivable 5,258 7,614 7,593

9 unchanged sentences

Distribution to noncontrolling interest — ( 1,572 ) ( 35 )

Other ( 1,500 ) — —

Net cash provided by (used in) financing activities ( 87,067 ) 118,034 89,668

28 unchanged sentences

Net income attributable to Werner — — 259,052 — — 259,052 —

Other comprehensive loss — — — ( 8,105 ) — ( 8,105 ) —

Net income attributable to noncontrolling interest — — — — — — 2,426

Other comprehensive income — — — 2,229 — 2,229 —

Purchase of 2,297,911 shares of common stock

5 unchanged sentences

Non-cash equity compensation expense — 10,807 — — — 10,807 —

Investment in noncontrolling interest — — — — — — 35,322

Purchase accounting adjustments — — — — — ( 1,766 )

Distribution to noncontrolling interest — — — — — — ( 35 )

BALANCE, December 31, 2021 805 121,904 1,667,104 ( 20,604 ) ( 441,659 ) 1,327,550 35,947

9 unchanged sentences

Non-cash equity compensation expense — 12,486 — — — 12,486 —

Investment in noncontrolling interest — — — — — — 35,322

Purchase accounting adjustments — — — — — — ( 1,766 )

Distribution to noncontrolling interest — — — — — — ( 1,572 )

1 unchanged sentence

Net income attributable to Werner — — 112,382 — — 112,382 —

Net income attributable to noncontrolling interest — — — — — — 4,324

Net loss attributable to noncontrolling interest — — — — — — ( 92 )

Other comprehensive income — — — 1,608 — 1,608 —

Purchase of 2,710,304 shares of common stock

— — — — ( 110,400 ) ( 110,400 ) —

Dividends on common stock ($ 0.55 per share)

3 unchanged sentences

Non-cash equity compensation expense — 11,943 — — — 11,943 —

Distribution to noncontrolling interest — — — — — — ( 1,572 )

BALANCE, December 31, 2023 $ 805 $ 134,894 $ 1,953,385 $ ( 9,684 ) $ ( 551,061 ) $ 1,528,339 $ 38,607

6 unchanged sentences

and its subsidiaries (collectively, the “Company”).

Redeemable noncontrolling interest on the consolidated balance sheets represents the portion of a consolidated entity in which we do not have a direct equity ownership.

In these notes, the terms “we,” “us,” or “our” refer to Werner Enterprises, Inc.

and its subsidiaries.

All significant intercompany accounts and transactions relating to these entities have been eliminated.

3 unchanged sentences

state regulatory authorities.

Our ten largest customers comprised 46 % of our revenues for the year ended December 31, 2022, and 49 % for the years ended December 31, 2021 and 2020.

Our largest customer, Dollar General, accounted for 14 % of our total revenues in 2022 and 2021, and 12 % in 2020.

Our ten largest customers comprised 48 %, 46 %, and 49 % of our revenues for the years ended December 31, 2023, 2022, and 2021, respectively.

Our largest customer, Dollar General, accounted for 10 % of our total revenues in 2023, and 14 % of our total revenues in 2022 and 2021.

Revenues generated by Dollar General are reported in both of our reportable operating segments.

31 unchanged sentences

Depreciation expense was $ 289.2 million, $ 273.8 million, and $ 265.8 million for the years ended December 31, 2023, 2022, and 2021 respectively, and is reported in depreciation and amortization on the consolidated statements of income.

Due to the ongoing stronger used trailer market and the increasing cost of new trailers, a change in accounting estimate was made during the first quarter of 2022, which decreased depreciation expense by $ 12.7 million in 2022.

During first quarter 2020, we changed the estimated life of certain trucks expected to be sold in 2020 to more rapidly depreciate the trucks to their estimated residual values due to the weak used truck market.

The effect of this change in accounting estimate was a $ 9.6 million increase to 2020 depreciation expense.

These trucks continued to depreciate at the same higher rate per truck, until all were sold in 2020.

Due to the stronger used trailer market and the increased cost of new trailers, a change in accounting estimate was made during the first quarter of 2022, which decreased depreciation expense by $ 12.7 million in 2022.

Goodwill represents the excess of cost over the fair value of net identifiable tangible and intangible assets acquired in business combinations and is allocated to reporting units that are expected to benefit from the combinations.

11 unchanged sentences

Amortization of Intangible Assets:

Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives, ranging from ten to 12 years.

Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives, ranging from 10 to 12 years.

Long-Lived Assets and Intangible Assets:

19 unchanged sentences

For the policy year that began August 1, 2022, we were responsible for the first $ 10.0 million per claim on all claims with an annual $ 10.0 million aggregate for claims between $ 10.0 million and $ 20.0 million.

For the policy year that began August 1, 2021, we were responsible for the first $ 10.0 million per claim on all claims with an annual $ 10.0 million aggregate for claims between $ 10.0 million and $ 15.0 million.

For the policy year that began on August 1, 2020, we were responsible for the first $ 10.0 million per claim with no aggregates.

Our self-insured retention (“SIR”) and deductible amount was $ 3.0 million, with an additional $ 5.0 million deductible per claim for each claim between $ 5.0 million and $ 10.0 million, for policy years from August 1, 2017 through July 31, 2020, and we were also responsible for annual aggregate amounts of liability for claims in excess of the SIR and deductible.

We maintain liability insurance coverage with insurance carriers in

excess of the $ 10.0 million per claim.

We maintain liability insurance coverage with insurance carriers in excess of the $ 10.0 million per claim.

We are also responsible for administrative expenses for each occurrence involving bodily injury or property damage.

Our SIR for workers’ compensation claims is $ 2.0 million per claim, with premium-based coverage (issued by insurance companies) for claims exceeding this amount.

Our self-insured retention (“SIR”) for workers’ compensation claims is $ 2.0 million per claim, with premium-based coverage (issued by insurance companies) for claims exceeding this amount.

Our SIR for workers’ compensation claims increased from $ 1.0 million to $ 2.0 million per claim on April 1, 2020.

18 unchanged sentences

Common Stock and 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.

Dilutive potential common shares include outstanding stock options and restricted stock awards.

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.

Performance awards are excluded from the calculation of dilutive potential common shares until the threshold performance conditions have been satisfied.

There are no differences in the numerators of our computations of basic and diluted earnings per share for any periods presented.

8 unchanged sentences

Diluted earnings per share $ 1.76 $ 3.74 $ 3.82

There were no options to purchase shares of common stock that were outstanding during the periods indicated above that 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 during the period.

Performance awards are excluded from the calculation of dilutive potential common shares until the threshold performance conditions have been satisfied.

Equity Compensation :

We have an equity compensation plan that provides for grants of non-qualified stock options, restricted stock and units (“restricted awards”), performance awards and stock appreciation rights to our associates and directors.

We have an equity compensation plan that provides for grants of stock options, restricted stock and units (“restricted awards”), unrestricted stock awards, performance awards and stock appreciation rights to our employees, directors, and consultants.

We apply the fair value method of accounting for equity compensation awards.

9 unchanged sentences

For the years ended December 31, 2023, 2022, and 2021, comprehensive income consists of net income, foreign currency translation adjustments and change in fair value of interest rate swaps.

The components of accumulated other comprehensive loss reported in the consolidated balance sheets as of December 31, 2022 and 2021, consisted of foreign currency translation adjustment losses of $ 16.2 million and $ 18.6 million, respectively, and gains of $ 4.9 million and losses of $ 2.0 million related to changes in fair value of interest rate swaps, net of tax, respectively.

New Accounting Pronouncements Adopted:

In first quarter 2022, we adopted Accounting Standards Update (“ASU”) No.

2020-04, Reference Rate Reform (Topic 848) , which provides optional guidance for a limited period of time to ease the potential burden in accounting for reference rate reform on financial reporting.

The provisions of this update apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform.

The adoption of the new guidance did not have a material impact on our consolidated financial statements.

The components of accumulated other comprehensive loss reported in the consolidated balance sheets as of December 31, 2023 and 2022, consisted of foreign currency translation adjustment losses of $ 10.0 million and $ 16.2 million, respectively, and gains of $ 0.3 million and $ 4.9 million related to changes in fair value of interest rate swaps, net of tax, respectively.

Recently Issued Accounting Pronouncements, Not Yet Effective:

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07 Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , with the objective of improving financial reporting, primarily through enhanced disclosures about significant segment expenses.

The provisions of this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, using a retrospective approach.

Early adoption is permitted.

We are evaluating the impact of adopting ASU 2023-07, and we expect this ASU to only impact our disclosures with no impacts to our results of operations, cash flows, and financial condition.

In December 2023, FASB issued ASU 2023-09 Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , with the objective of enhancing the transparency and decision usefulness of income tax information through income tax disclosure improvements, primarily related to the rate reconciliation and income taxes paid information.

The provisions of this update are effective for annual periods beginning after December 15, 2024, using a prospective approach.

Early adoption and retrospective application are permitted.

We are evaluating the impact of adopting ASU 2023-09, and we expect this ASU to only impact our disclosures with no impacts to our results of operations, cash flows, and financial condition.

(2) BUSINESS ACQUISITIONS

2022 Business Acquisitions

ReedTMS Acquisition

Developments during the year ended December 31, 2023 related to our 2022 business acquisitions are discussed below.

On November 5, 2022, we acquired 100 % of the equity interests in Reed Transport Services, Inc.

and RTS-TMS, Inc., doing business as ReedTMS Logistics (“ReedTMS”), for a total purchase price of $ 109.2 million after including the impacts of working capital adjustments, cash acquired, net present value of future insurance payments, and contingent consideration.

The contingent consideration arrangement, also referred to as earnout, requires us to pay the former owners of ReedTMS an additional amount in cash if ReedTMS achieves certain performance financial goals over a one-year period beginning January 1, 2023.

The potential undiscounted future contingent earnout payment that we could be required to make is between $ 0 and $ 7.5 million.

On a pro forma basis (unaudited), operating revenues for ReedTMS for the year ended December 31, 2022 was $ 368.5 million and operating revenues for ReedTMS for the year ended December 31, 2021 was $ 339.8 million.

and RTS-TMS, Inc., doing business as ReedTMS Logistics (“ReedTMS”), for a final purchase price of $ 108.6 million after including the impacts of working capital adjustments, cash acquired, net present value of future insurance payments, and contingent consideration, also referred to as earnout.

We financed the transaction through existing credit facilities.

ReedTMS, based in Tampa, Florida, is an asset-light logistics provider and dedicated truckload carrier that offers a comprehensive suite of freight brokerage and truckload solutions to a diverse customer base.

The acquisition further strengthens our freight brokerage capabilities and elevates our logistics portfolio with new customers.

The contingent earnout period related to the ReedTMS acquisition ended on December 31, 2023 and resulted in an additional cash payment of $ 1.5 million based on the achievement level of certain financial performance goals.

This payment resulted in a $ 2.7 million net favorable change to the contingent earnout liability, which was recorded in other operating expenses on the consolidated statements of income for the year ended December 31, 2023.

ReedTMS is an asset-light logistics provider and dedicated truckload carrier that offers a comprehensive suite of freight brokerage and truckload solutions to a diverse customer base.

The results of operations for ReedTMS are included in our consolidated financial statements beginning November 5, 2022.

1 unchanged sentence

We incurred transaction costs related to the acquisition, such as legal and professional fees, of $ 0.7 million for the year ended December 31, 2022, which is included in other operating expenses on the consolidated statements of income.

Baylor Acquisition

On October 1, 2022, we acquired 100 % of the equity interests in FAB9, Inc., doing business as Baylor Trucking, Inc.

(“Baylor”), for a final total purchase price of $ 89.0 million after including the impacts of working capital adjustments, cash acquired, and contingent consideration.

(“Baylor”), for a final purchase price of $ 89.0 million after including the impacts of working capital adjustments, cash acquired, and contingent consideration.

We financed the transaction through existing credit facilities.

The contingent consideration arrangement requires us to pay the former owner of Baylor an additional amount in cash if Baylor achieves certain performance financial goals over a three-year period beginning on November 1, 2022.

The potential undiscounted future contingent earnout payment that we could be required to make is between $ 0 and $ 15.0 million.

We financed the transaction through existing credit facilities.

Baylor, based in Milan, Indiana, operates 200 trucks and 980 trailers in the east central and south central United States.

The acquisition expands our terminal, fleet, and professional driver presence in these geographic truckload markets and adds two terminals to our network.

Baylor operates in the east central and south central United States.

The results of operations for Baylor are included in our consolidated financial statements beginning October 1, 2022.

1 unchanged sentence

We incurred transaction costs related to the acquisition, such as legal and professional fees, of $ 0.4 million for the year ended December 31, 2022, which is included in other operating expenses on the consolidated statements of income.

No measurement period adjustments were recorded during the year ended December 31, 2023.

Purchase Price Allocations

2 unchanged sentences

The purchase price of each acquisition 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 for ReedTMS and Baylor, pending the completion of acquired tangible assets valuations, independent valuations of certain acquired intangible assets, and calculations 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 in the ReedTMS and Baylor acquisitions;

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

We expect to finalize the valuation of assets and liabilities for ReedTMS and Baylor as soon as practicable, but not later than one year from the respective acquisition dates.

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

The provisional purchase price allocations for ReedTMS and Baylor as of December 31, 2022 are summarized as follows (in thousands):

ReedTMS Baylor

The purchase price allocations for ReedTMS and Baylor were considered final as of June 30, 2023.

The following table summarizes the purchase price allocation for ReedTMS, including any adjustments (in thousands):

November 5, 2022 Opening Balance Sheet

as Reported at

December 31, 2022 Adjustments (1)

November 5, 2022 Opening Balance Sheet

as Reported at

December 31, 2023

Purchase Price

14 unchanged sentences

Goodwill $ 52,841 $ ( 3,613 ) $ 49,228

(1) The measurement period adjustments were recorded during the three months ended March 31, 2023.

No material statement of income effects were identified with these adjustments.

(2) Includes $ 0.9 million related to the net present value of future insurance payments.

At closing, $ 11.5 million of the cash consideration was placed in escrow to secure certain indemnification obligations of the sellers and to cover post-closing adjustments.

(2) At closing, $ 8.5 million of the cash consideration was placed in escrow to secure certain indemnification obligations of the sellers and to cover post-closing adjustments.

(3) The estimated fair value of the ReedTMS and Baylor contingent consideration arrangements was based upon probability-adjusted inputs for each acquired entity and are recorded in other long-term liabilities on the consolidated balance sheet as of December 31, 2022.

Goodwill and Intangible Assets

Goodwill associated with the ReedTMS and Baylor business acquisitions was primarily attributable to acquiring and retaining each of the companies’ existing networks and the anticipated synergies from combining the operations of the Company and the acquired companies.

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

We have allocated a total of $ 32.3 million of the purchase prices above 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.

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 $ 24,700 10

Trade names 7,600 12

Total intangible assets $ 32,300

During the three months ended March 31, 2023, we received $ 2.1 million from escrow for post-closing adjustments.

The remaining balance of the escrow, except for $ 0.5 million, was returned to the sellers.

In exchange, the sellers obtained a $ 10.0 million Standby Letter of Credit with the Company named as beneficiary.

(3) The contingent earnout liability was recorded in other long-term liabilities as of December 31, 2022.

For additional information regarding the valuation of the contingent liability, see Note 6 – Fair Value.

2021 Business Acquisitions

NEHDS Acquisition

On November 22, 2021, we acquired 100 % of the equity interests in NEHDS Logistics, LLC (“NEHDS”).

In first quarter 2022, post-closing net working capital changes of $ 0.7 million decreased the purchase price, resulting in a final total purchase price of $ 62.3 million after including the impacts of contingent consideration and net working capital changes.

On November 22, 2021, we acquired 100 % of the equity interests in NEHDS Logistics, LLC (“NEHDS”) for a final purchase price of $ 62.3 million after including the impacts of contingent consideration and net working capital changes.

We financed the transaction through a combination of cash on hand and existing credit facilities.

The contingent earnout period related to the NEHDS acquisition ended on December 31, 2022 and did not result in any additional cash payments, as the financial performance goals were not achieved.

This resulted in a $ 2.5 million favorable change to the contingent earnout liability, which was recorded in other operating expenses on the consolidated statements of income for the year ended December 31, 2022.

NEHDS is a final mile residential delivery provider serving customers primarily in the Northeast and Midwest United States markets.

1 unchanged sentence

The results of operations for NEHDS are included in our consolidated financial statements beginning November 22, 2021.

Revenues generated by NEHDS are reported in Final Mile within our Werner Logistics (“Logistics”) segment.

The contingent earnout liability was $ 0 and $ 2.5 million as of December 31, 2022 and 2021, respectively.

The contingent earnout period related to the NEHDS acquisition ended on December, 31, 2022 and did not result in any additional cash payments, as the financial performance goals were not achieved.

This favorable change to the contingent earnout liability was recorded in other operating expense on the consolidated statements of income for the year ended December 31, 2022.

Revenues generated by NEHDS are reported in Final Mile within our Werner Logistics segment.

We incurred transaction costs related to the acquisition, such as legal and professional fees, of $ 0.6 million for the year ended December 31, 2021, which is included in other operating expenses on the consolidated statements of income.

ECM Acquisition

On July 1, 2021, we acquired an 80 % ownership interest in ECM Associated, LLC ("ECM”) for a final total purchase price of $ 141.3 million after net working capital changes and net of cash acquired.

On July 1, 2021, we acquired an 80 % ownership interest in ECM Associated, LLC ("ECM”) for a final purchase price of $ 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.

1 unchanged sentence

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

ECM provides regional truckload carrier services in the Mid-Atlantic, Ohio, and Northeast regions of the United States.

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.

1 unchanged sentence

For more information regarding our debt, see Note 8 – Debt and Credit Facilities.

ECM provides regional truckload carrier services in the Mid-Atlantic, Ohio, and Northeast regions of the United States.

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

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The following table presents our revenues disaggregated by geographic areas in which we conduct business (in thousands):

Operating revenues for foreign countries include revenues for (i) shipments with an origin or destination in that country and (ii) other services provided in that country.

If both the origin and destination are in a foreign country, the revenues are attributed to the country of origin.

Years Ended December 31,

4 unchanged sentences

Total revenues $ 3,283,499 $ 3,289,978 $ 2,734,372

Operating revenues for foreign countries include revenues for (i) shipments with an origin or destination in that country and (ii) other services provided in that country.

If both the origin and destination are in a foreign country, the revenues are attributed to the country of origin.

Transportation Services

We generate nearly all of our revenues by transporting truckload freight shipments for our customers.

Transportation services are carried out by our TTS segment and our Logistics segment.

The TTS segment utilizes company-owned and independent contractor trucks to deliver shipments, while the Logistics segment uses third-party capacity providers.

Transportation services are carried out by our TTS segment and our Werner Logistics segment.

The TTS segment utilizes company-owned and independent contractor trucks to deliver shipments, while our Werner Logistics segment uses third-party capacity providers.

We generate revenues from billings for transportation services under contracts with customers, generally on a rate per mile or per shipment, based on origin and destination of the shipment.

2 unchanged sentences

A customer may submit several shipment orders for transportation services at various times throughout a service agreement term, but each shipment represents a distinct service that is a separately identified performance obligation.

We often provide additional or ancillary services as part of the shipment (such as loading/unloading and stops in transit) which are not distinct or are not material in the context of the contract;

We often provide additional or

ancillary services as part of the shipment (such as loading/unloading and stops in transit) which are not distinct or are not material in the context of the contract;

therefore, the revenues for these services are recognized with the freight transaction price.

2 unchanged sentences

The consolidated statements of income reflect recognition of transportation revenues (including fuel surcharge revenues) and related direct costs over time as the shipment is being delivered.

We use distance shipped (for the TTS segment) and transit time (for the Logistics segment) to measure progress and the amount of revenues recognized over time, as the customer simultaneously receives and consumes the benefit.

We use distance shipped (for the TTS segment) and transit time (for the Werner Logistics segment) to measure progress and the amount of revenues recognized over time, as the customer simultaneously receives and consumes the benefit.

Determining a measure of progress requires us to make judgments that affect the timing of revenues recognized.

5 unchanged sentences

Other revenues include revenues from our driver training schools, transportation-related activities such as third-party equipment maintenance and equipment leasing, and other business activities.

These revenues are generally recognized over time and

accounted for 2 % of our total revenues in 2022, 2021 and 2020.

These revenues are generally recognized over time and accounted for 2 % of our total revenues in 2023, 2022 and 2021.

Revenues from our driver training schools require us to make judgments regarding price concessions in determining the amount of revenues to recognize.

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

At December 31, 2022 and 2021, the balance of contract liabilities was $ 0.9 million and $ 1.2 million, respectively.

At December 31, 2023 and 2022, the balance of contract liabilities was $ 0.9 million.

The amount of revenues recognized in 2023 that was included in the December 31, 2022 contract liability balance was $ 0.9 million.

10 unchanged sentences

Balance as of December 31, 2021 $ 38,084 $ 36,534 $ 74,618

Goodwill recorded in acquisition of NEHDS — 36,534 36,534

Goodwill recorded in acquisition of ECM 44,710 — 44,710

Goodwill recorded in acquisition of ReedTMS 10,341 42,500 52,841

Goodwill recorded in acquisition of Baylor 5,472 — 5,472

Purchase accounting adjustments (1)

1 unchanged sentence

Balance as of December 31, 2022 53,897 78,820 132,717

Goodwill recorded in acquisition of ReedTMS 10,341 42,500 52,841

Goodwill recorded in acquisition of Baylor 5,472 — 5,472

Purchase accounting adjustments (1)

1 unchanged sentence

Balance as of December 31, 2023 $ 46,056 $ 83,048 $ 129,104

(1) The purchase accounting adjustments are primarily attributable to post-closing adjustments related to net assets assumed in, and the redeemable noncontrolling interest associated with, the acquisition of ECM.

(2) The purchase accounting adjustments consist of post-closing adjustments related to net assets assumed in the acquisition of NEHDS.

Acquired intangible assets consists of the following as of December 31, 2022 and 2021 (in thousands):

(1) The purchase accounting adjustments consist of post-closing adjustments related to net assets assumed in the acquisitions of NEHDS and ReedTMS for the years ended December 31, 2022 and 2023, respectively.

For additional information regarding the ReedTMS purchase accounting adjustments, see Note 2 – Business Acquisitions.

The following table presents acquired intangible assets (in thousands):

Amount Accumulated

5 unchanged sentences

Total intangible assets $ 104,800 $ ( 18,323 ) $ 86,477 $ 89,500 $ ( 7,998 ) $ 81,502

Amortization expense on intangible assets was $ 6.1 million and $ 1.9 million for the years ended December 31, 2022 and 2021, respectively, and is reported in depreciation and amortization on the consolidated statements of income.

No amortization expense on intangible assets was recorded for the year ended December 31, 2020.

Amortization expense on intangible assets was $ 10.3 million, $ 6.1 million, and $ 1.9 million for the years ended December 31, 2023, 2022, and 2021, respectively, and is reported in depreciation and amortization on the consolidated statements of income.

As of December 31, 2023, the estimated future amortization expense for intangible assets by year is as follows (in thousands):

2024 $ 10,070

Thereafter (to 2034) 36,127

10 unchanged sentences

The following table presents balance sheet and other operating lease information (dollars in thousands):

Balance Sheet Classification

Right-of-use assets (recorded in other non-current assets) $ 34,814 $ 40,963

2 unchanged sentences

Total operating lease liabilities $ 36,512 $ 42,293

Other Information

Weighted-average remaining lease term for operating leases 6.15 years 6.43 years

1 unchanged sentence

The following table presents the maturities of operating lease liabilities as of December 31, 2023 (in thousands):

Maturity of Lease Liabilities

2024 $ 10,142

29 unchanged sentences

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

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

The following table presents the fair value hierarchy for our assets and liabilities measured at fair value on a recurring basis (in thousands):

Level in Fair December 31,

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For additional information regarding the valuation of these equity securities, see Note 7 – Investments.

The following table presents changes in the fair value of contingent consideration for the years ended December 31, 2022 and 2021 (in thousands):

Balance as of December 31, 2020 $ —

Contingent consideration associated with the acquisition of NEHDS (1)

The following table presents changes in the fair value of our contingent earnout liabilities for the years ended December 31, 2023 and 2022 (in thousands):

Balance as of December 31, 2021 $ 2,500

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Balance as of December 31, 2022 13,400

(1) The estimated fair value of our contingent consideration arrangements were based upon probability-adjusted inputs for each acquired entity.

For additional information regarding our contingent consideration arrangements, see Note 2 – Business Acquisitions.

Measurement period adjustment associated with the acquisition of ReedTMS (2)

Payment for contingent consideration (3)

Change in fair value (4)

Balance as of December 31, 2023 $ 8,896

(1) The contingent earnout period related to the NEHDS acquisition ended on December 31, 2022 and did not result in any additional cash payments, as the financial performance goals were not achieved.

The change in the contingent earnout liability was recorded in other operating expense on the consolidated statements of income.

Our ownership interests in Mastery Logistics Systems, Inc.

(“MLSI”) and Fleet Defender, Inc.

do not have readily determinable fair values and are accounted for using the measurement alternative in ASC 321, Investments - Equity Securities .

For additional information regarding the valuation of these investments, see Note 7 – Investments.

(2) The measurement period adjustment was recorded in goodwill on the consolidated balance sheet.

(3) The contingent earnout period related to the ReedTMS acquisition ended on December 31, 2023 and resulted in an additional cash payment, as certain financial performance goals were achieved.

(4) Includes a net favorable change of $ 2.7 million to the contingent earnout liability related to the ReedTMS acquisition for the year ended December 31, 2023.

The estimated fair values of our contingent consideration arrangements are based upon probability-adjusted inputs for each acquired entity.

Additionally, as the liability is stated at present value, the passage of time alone will increase the estimated fair value of the liability each reporting period.

Change in fair value is recorded in other operating expenses on the consolidated statements of income.

We have ownership interests in investments, primarily Mastery Logistics Systems, Inc.

(“MLSI”), which do not have readily determinable fair values and are accounted for using the measurement alternative in ASC 321, Investments - Equity Securities .

Our ownership interest in Autotech Fund III, L.P.

(“Autotech Fund III”) is accounted for under ASC 323, “ Investments - Equity Method and Joint Ventures .” For additional information regarding the valuation of these investments, see Note 7 – Investments.

Fair Value of Financial Instruments Not Recorded at Fair Value

Cash and cash equivalents, 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 amount of our fixed-rate debt not measured at fair value on a recurring basis was $ 88.8 million and $ 93.8 million as of December 31, 2023 and 2022, respectively.

The estimated fair value of our fixed-rate debt using the income approach, based on its net present value, discounted at our current borrowing rate, was $ 87.2 million as of December 31, 2022 (categorized as Level 2 of the fair value hierarchy) and approximated the carrying value as of December 31, 2021.

The estimated fair value of our fixed-rate debt using the income approach, based on its net present value, discounted at our current borrowing rate, was $ 86.7 million and $ 87.2 million as of December 31, 2023 and 2022, respectively (categorized as Level 2 of the fair value hierarchy).

The carrying amount of our variable-rate long-term debt approximates fair value due to the duration of our credit arrangement and the variable interest rate (categorized as Level 2 of the fair value hierarchy).

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Equity Investments without Readily Determinable Fair Values

Our strategic equity investments without readily determinable fair values include MLSI, a transportation management systems company, and Fleet Defender, Inc., a platform cybersecurity company for fleet owners.

Our strategic equity investments without readily determinable fair values primarily consists of our investment in MLSI, a transportation management systems company.

MLSI is developing a cloud-based transportation management system using MLSI's SaaS technology which we have agreed to license.

These investments are being accounted for under ASC 321 using the measurement alternative, and are recorded in other noncurrent assets on the consolidated balance sheets.

We record changes in the values of these investments based on events that occur that would indicate the values have changed, in gain or loss on investments in equity securities on the consolidated statements of income.

As of December 31, 2022 and 2021, the value of our investment in MLSI was $ 86.8 million and $ 38.2 million, respectively, and the value of our investment in Fleet Defender, Inc.

was $ 250 thousand as of December 31, 2022.

The following table summarizes the activity related to our equity investments without readily determinable fair values during the periods presented.

We record changes in the values of these investments based on events that occur that would indicate the values have changed, in loss (gain) on investments in equity securities on the consolidated statements of income.

As of December 31, 2023 and 2022, the value of our investment in MLSI was $ 89.8 million and $ 86.8 million, respectively, and the value of our other equity investments without readily determinable fair values was $ 316 thousand and $ 250 thousand, respectively.

The following table summarizes the activity related to our equity investments without readily determinable fair values during the periods presented (in thousands):

Years Ended December 31,

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We own strategic minority equity investments in autonomous technology companies, which are being accounted for under ASC 321 and are recorded in other noncurrent assets on the consolidated balance sheets.

We record changes in the value of these investments, based on the share prices reported by Nasdaq, in gain or loss on investments in equity securities on the consolidated statements of income.

As of December 31, 2022 and 2021, the value of these investments were $ 0.7 million and $ 17.2 million, respectively.

We recognized a net unrealized loss of $ 16.4 million and a net unrealized gain of $ 12.1 million on these investments for the years ended December 31, 2022 and 2021, respectively.

We record changes in the value of these investments, based on the share prices reported by Nasdaq, in loss (gain) on investments in equity securities on the consolidated statements of income.

As of December 31, 2023 and 2022, the value of these investments was $ 0.3 million and $ 0.7 million, respectively.

For additional information regarding the fair value of these equity investments, see Note 6 – Fair Value.

The following table summarizes the activity related to our equity investments with readily determinable fair values during the periods presented (in thousands):

Years Ended December 31,

2023 2022 2021

Loss (gain) on investments in equity securities, net $ 278 $ 16,443 $ ( 12,166 )

Portion of unrealized loss (gain) for the period related to equity securities still held at the reporting date $ 270 $ 16,443 $ ( 12,166 )

Equity Method Investment

In January 2023, we committed to make a $ 20.0 million investment in Autotech Fund III (the “Fund”) pursuant to a limited partnership agreement.

The Fund is managed by Autotech Ventures, a venture capital firm focused on ground transportation technology.

Our interest, which represents an ownership percentage of less than 20 %, is being accounted for under ASC 323, “ Investments - Equity Method and Joint Ventures .” As a limited partner, we will make periodic capital contributions toward this total commitment amount.

We contributed $ 3.4 million to the Fund during the year ended December 31, 2023.

As of December 31, 2023, the value of our investment in the Fund was $ 2.3 million and is recorded in other noncurrent assets on the consolidated balance sheets.

The carrying amount of the Fund as of December 31, 2023 approximates its fair value as of September 30, 2023, as this is the most recent information available to us at this time.

We recognized a loss of $ 1.0 million from the Fund for the year ended December 31, 2023, which is reported in loss from equity method investment on the consolidated statements of income.

(8) DEBT AND CREDIT FACILITIES

On December 20, 2022, we entered into a $ 1.075 billion unsecured credit facility with a group of lenders (the “2022 Credit Agreement”), replacing our previous unsecured credit facility with BMO Harris Bank N.A.

(“BMO Harris”), dated May 14, 2019, as amended (the “BMO Line of Credit”), and the credit agreement with Wells Fargo Bank, National Association (“Wells Fargo”), dated March 25, 2022 (the “Wells Credit Agreement”).

The BMO Line of Credit and Wells Credit Agreement are described below.

(“BMO Harris”), dated May 14, 2019, as amended, and the credit agreement with Wells Fargo Bank, National Association, dated March 25, 2022.

The 2022 Credit Agreement is scheduled to mature on December 20, 2027 and has a $ 100.0 million maximum limit for the aggregate amount of letters of credit issued.

The proceeds of the 2022 Credit Agreement may be used for working capital and other general corporate purposes, including the financing of acquisitions and other investments permitted under the agreement.

ranging between 0.125 % and 0.750 %, or (ii) Term SOFR plus 0.10 % and a margin ranging between 1.125 % and 1.750 %.

Revolving credit loans drawn under the 2022 Credit Agreement bear interest, at our option, at (i) the Base Rate (the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50 %, or (c) the one-month Term SOFR plus 1.10 %), plus a margin ranging between 0.125 % and 0.750 %, or (ii) Term SOFR plus 0.10 % and a margin ranging between 1.125 % and 1.750 %.

Swingline loans drawn under the 2022 Credit Agreement bear interest at the Base Rate, as defined above, plus a margin ranging between 0.125 % and 0.750 %.

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There are no scheduled principal payments due on the 2022 Credit Agreement until the maturity date, and interest is payable in arrears at periodic intervals not to exceed three months.

On March 25, 2022, we entered into the Wells Credit Agreement and a second amendment to the BMO Line of Credit.

The Wells Credit Agreement replaced our previous credit agreement with Wells Fargo dated May 14, 2019, as amended.

The Wells Credit Agreement provided for a $ 300.0 million unsecured revolving line of credit ("Wells Line of Credit"), with a $ 75.0 million maximum limit for the aggregate amount of letters of credit issued, and was scheduled to expire on May 14, 2024.

The Wells Credit Agreement also provided for an unsecured term loan commitment not to exceed a principal amount of $ 100.0 million ("Wells Term Loan").

The Wells Term Loan was fully funded on March 25, 2022 and there were no principal payments required prior to its scheduled maturity on May 14, 2024.

Amounts drawn under the Wells Line of Credit and the outstanding principal balance of the Wells Term Loan bore interest either, at our option, at a variable or fixed interest rate based on SOFR plus a SOFR rate adjustment and a margin rate based on our ratio of total funded debt to EBITDA, payable monthly.

The second amendment to the BMO Line of Credit increased the borrowing capacity from $ 200.0 million to $ 300.0 million and changed the variable interest rate calculation by replacing the LIBOR with the SOFR.

Amounts drawn under the BMO Line of Credit bore interest, for a selected interest period, at a variable rate based on the SOFR plus a SOFR rate adjustment and a margin rate based on our ratio of total funded debt to EBITDA, payable at the end of the applicable interest period.

On December 20, 2022, we paid off and terminated the Wells Line of Credit and Wells Term Loan under the Wells Credit Agreement and the BMO Line of Credit using the proceeds from the 2022 Credit Agreement discussed above.

In July 2023, we entered into four additional variable-for-fixed interest rate swap

agreements for a notional amount of $ 130.0 million to further limit our exposure to increases in interest rates on a portion of our variable-rate indebtedness.

On June 30, 2021, we entered into a $ 100.0 million unsecured fixed-rate term loan commitment with BMO Harris, with quarterly principal payments of $ 1.25 million, which began on September 30, 2021, and a final payment of principal and interest due and payable on May 14, 2024 ("BMO Term Loan").

We are currently planning to repay the remaining outstanding principal balance under the BMO Term Loan in May 2024 using proceeds from the 2022 Credit Agreement.

The outstanding principal balance of the BMO Term Loan bears interest at a fixed rate of 1.28 %, payable quarterly in arrears.

As of December 31, 2023 and 2022, our outstanding debt totaled $ 648.8 million and $ 693.8 million, respectively.

As of December 31, 2022, we had an outstanding revolving credit loan balance of $ 600.0 million under the 2022 Credit Agreement, including (i) $ 450.0 million at a variable interest rate of 5.67 % and (ii) $ 150.0 million which is effectively fixed at 2.78 % with two interest rate swap agreements through May 14, 2024.

As of December 31, 2023, we had an outstanding revolving credit loan balance of $ 560.0 million under the 2022 Credit Agreement, including (i) $ 280.0 million at a variable interest rate of 6.73 %, (ii) $ 150.0 million which is effectively fixed at 2.88 % with interest rate swap agreements through May 2024, (iii) $ 40.0 million which is effectively fixed at 6.20 % with interest rate swap agreements through July 2025, and (iv) $ 90.0 million which is effectively fixed at 5.87 % with interest rate swap agreements through July 2026.

Our total available borrowing capacity under the 2022 Credit Agreement was $ 463.9 million as of December 31, 2023, after considering $ 51.1 million in stand-by letters of credit under which we are obligated.

In addition, as of December 31, 2023, we had $ 88.8 million outstanding under the BMO Term Loan at a fixed interest rate of 1.28 %.

The $ 1.075 billion of borrowing capacity under our 2022 Credit Agreement at December 31, 2022, is further reduced by $ 58.8 million in stand-by letters of credit under which we are obligated.

Availability of such funds under the current debt agreements is conditional upon various customary terms and covenants.

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At December 31, 2023, the aggregate future maturities of long-term debt by year are as follows (in thousands):

2024 $ 88,750

Total $ 648,750

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We maintain a primary security interest in the tractor until the independent contractor pays the note balance in full.

Independent contractor notes receivable are included in other current assets and other non-current assets in the consolidated balance sheets.

At December 31, notes receivable consisted of the following (in thousands):

On January 24, 2023, we purchased a $ 25.0 million subordinated promissory note from MLSI with a maturity date of January 24, 2030.

The proceeds of the promissory note may be used by MLSI for working capital and general business purposes, including a limited amount for possible repayment of certain advances.

There are no scheduled principal payments due on the promissory note until the maturity date, and interest accrues at 7.5 % compounded annually, with the first accrued interest payment due on January 24, 2028, and at the end of each calendar year thereafter.

The independent contractor notes receivable, MLSI subordinated promissory note, and other notes receivable are included in other current assets and other non-current assets in the consolidated balance sheets.

The following table presents our notes receivable (in thousands):

Independent contractor notes receivable $ 6,864 $ 8,287

MLSI subordinated promissory note 25,000 —

Other notes receivable 7,231 7,921

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We also provide financing to some individuals who attended our driver training schools.

The student notes receivable are included in other receivables and other non-current assets in the consolidated balance sheets.

At December 31, student notes receivable consisted of the following (in thousands):

The student notes receivable is included in other receivables and other non-current assets in the consolidated balance sheets.

The following table presents our student notes receivable (in thousands):

Student notes receivable $ 64,956 $ 63,351

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Student notes receivable – non-current $ 28,549 $ 27,286

Subsequent Event - MLSI Subordinated Promissory Note

On January 24, 2023, we purchased a $ 25.0 million subordinated promissory note from MLSI with a maturity date of January 24, 2030.

The proceeds of the promissory note may be used by MLSI for working capital and general business purposes, including a limited amount for possible repayment of certain advances.

(10) INCOME TAXES

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Total income tax expense $ 35,491 $ 79,206 $ 84,537

At December 31, deferred income tax assets and liabilities consisted of the following (in thousands):

The following table presents our deferred income tax assets and liabilities (in thousands):

Deferred income tax assets:

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Deferred income tax assets are more likely than not to be realized as a result of the reversal of deferred income tax liabilities.

We recognized a $ 54 thousand and $ 49 thousand increase in the net liability for unrecognized tax benefits for the year ended December 31, 2022, and 2021, respectively.

We recognized a $ 201 thousand decrease, a $ 54 thousand increase, and a $ 49 thousand increase in the net liability for unrecognized tax benefits for the years ended December 31, 2023, 2022, and 2021, respectively.

We recognized net interest expense of $ 70 thousand, $ 42 thousand, and $ 10 thousand during 2023, 2022, and 2021, respectively.

If recognized, $ 2.0 million and $ 1.9 million of unrecognized tax benefits as of December 31, 2022 and 2021, respectively, would impact our effective tax rate.

Interest of $ 0.5 million and $ 0.4 million as of December 31, 2022 and 2021, respectively, has been reflected as a component of the total liability.

If recognized, $ 1.7 million, $ 2.0 million, and $ 1.9 million of unrecognized tax benefits as of December 31, 2023, 2022 and 2021, respectively, would impact our effective tax rate.

Interest of $ 0.5 million as of December 31, 2023 and 2022 has been reflected as a component of the total liability.

We expect no other significant increases or decreases for uncertain tax positions during the next 12 months.

The reconciliations of beginning and ending gross balances of unrecognized tax benefits for 2022 and 2021 are shown below (in thousands).

The reconciliations of beginning and ending gross balances of unrecognized tax benefits are shown below (in thousands).

2023 2022 2021

Unrecognized tax benefits, beginning balance $ 2,495 $ 2,425 $ 2,363

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The Werner Enterprises, Inc.

Amended and Restated Equity Plan (the “Equity Plan”), approved by the Company’s shareholders in 2013, provides for grants to employees and non-employee directors of the Company in the form of nonqualified stock options, restricted stock and units (“restricted awards”), performance awards, and stock appreciation rights.

2023 Long-term Incentive Plan (the “Equity Plan”), approved by the Company’s shareholders in 2023, provides for grants to employees, non-employee directors, and consultants of the Company in the form of stock options, restricted stock and units (“restricted awards”), unrestricted stock awards, performance awards, and stock appreciation rights.

The Board of Directors or the Compensation Committee of our Board of Directors determines the terms of each award, including the type, recipients, number of shares subject to and vesting conditions of each award.

No awards of stock appreciation rights have been issued under the Equity Plan 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 in any one calendar year under the Equity Plan is 500,000 .

No awards of stock options, unrestricted stock, and stock appreciation rights have been issued under the Equity Plan to date.

The maximum number of

shares of common stock that may be awarded under the Equity Plan is 4,000,000 shares.

As of December 31, 2023, there were 3,791,411 shares available for granting additional awards.

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Based on current treasury stock levels, we do not expect to repurchase additional shares specifically for equity compensation during 2024.

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.

No stock option awards were outstanding as of December 31, 2022 or 2021, and there were no stock option awards granted or exercised during the years ended December 31, 2022, 2021, or 2020.

Restricted Awards

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The following table summarizes restricted award activity for the year ended December 31, 2023:

thousands) Weighted-

(in thousands) Weighted-

Average Grant

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The following table summarizes performance award activity for the year ended December 31, 2023:

Performance Awards (in

thousands) Weighted-

Performance Awards

(in thousands) Weighted-

Average Grant

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The 2023 performance awards are earned based upon the level of attainment by the Company of specified performance objectives related to cumulative diluted earnings per share for the two-year period from January 1, 2023 to December 31, 2024.

Shares earned based on cumulative diluted earnings per share may be capped based on the Company’s total shareholder return during the three-year period ended December 31, 2024, relative to the total shareholder return of a peer group of companies for the same period.

Shares earned based on cumulative diluted earnings per share may increase or decrease by 25 % based on the Company’s total shareholder return during the three-year period ended December 31, 2025, relative to the total shareholder return of a peer group of companies for the same period.

The 2022 performance awards are earned based upon the level of attainment by the Company of specified performance objectives related to cumulative diluted earnings per share for the two-year period from January 1, 2022 to December 31, 2023.

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The 2023 and 2022 performance awards will vest in one installment on the third anniversary from the respective grant dates.

In January 2023, the Compensation Committee determined the 2020 fiscal year

performance objectives were achieved at a level above the target level, and the additional shares earned above the target are included in the granted shares in the activity table above.

In January 2024, the Compensation Committee determined the 2021 fiscal year performance objectives were achieved at a level above the target level;

although, shares earned based on cumulative diluted earnings per share were capped based on the Company’s total shareholder return during the three-year period ended December 31, 2023, relative to the total shareholder return of a peer group of companies for the same period.

The additional shares earned above the target are included in the granted shares in the activity table above.

We estimate the fair value of performance 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.

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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 December 31, 2023 and 2022.

The Company is pursuing an appeal of this verdict.

No assurances can be given regarding the outcome of any such appeal.

The Company pursued an appeal of this verdict, and on May 18, 2023, the Texas Court of Appeals overruled Werner’s appeal and affirmed the trial court’s judgment.

The Company has since filed a Petition for Review with the Texas Supreme Court,

seeking further review of the Texas Court of Appeals decision.

No assurances can be given regarding whether the Texas Supreme Court will accept the Company’s petition to review or the outcome of any such review.

We have been involved in class action litigation in the U.S.

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On January 10, 2023, the trial court denied Plaintiff’s motion for a new trial and entered judgment in Werner’s favor on all claims.

Plaintiffs again have appealed the case to the Eighth Circuit Court of Appeals.

As of December 31, 2023, 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.

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In first quarter 2021, we completed the sale of the Werner Global Logistics (“WGL”) freight forwarding services for international ocean and air shipments to Scan Global Logistics Group, and we realized a $ 1.0 million gain when the transaction closed on February 26, 2021.

Prior to the sale of WGL, Werner Logistics provided international services throughout Asia, with additional coverage throughout Australia, Europe, South America, and Africa.

We generate other revenues from our driver training schools, transportation-related activities such as third-party equipment maintenance and equipment leasing, and other business activities.

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Total $ 299,509 $ 279,923 $ 267,700

Information about the geographic areas in which we conduct business is summarized below (in thousands) as of and for the years ended December 31, 2022, 2021, and 2020.

Information about the geographic areas in which we conduct business is summarized below (in thousands).

Operating revenues for foreign countries include revenues for (i) shipments with an origin or destination in that country and (ii) other services provided in that country.

If both the origin and destination are in a foreign country, the revenues are attributed to the country of origin.

Years Ended December 31,

2023 2022 2021

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We generate substantially all of our revenues within the United States or from North American shipments with origins or destinations in the United States.

Our largest customer, Dollar General, accounted for 14 % of our total revenues in 2022 and 2021, and 12 % in 2020.

Our largest customer, Dollar General, accounted for 10 % of our total revenues in 2023 and 14 % in 2022 and 2021.

Revenues generated by Dollar General are reported in both of our reportable operating segments.

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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-K

Item 8. Financial Statements and Supplementary Data