• Results of Operations

• Liquidity and Capital Resources

• Contractual Obligations and Commercial Commitments

• Off-Balance Sheet Arrangements

• Regulations

• Critical Accounting Policies

• Accounting Standards

The MD&A should be read in conjunction with our 2011 Form 10-K. Overview:
We operate in the truckload and logistics sectors of the transportation industry. In the truckload sector, we focus on transporting consumer nondurable products that generally ship more consistently throughout the year. In the logistics sector, besides managing transportation requirements for individual customers, we provide additional sources of truck capacity, alternative modes of transportation, a global delivery network and systems analysis to optimize transportation needs. Our success depends on our ability to efficiently and effectively manage our resources in the delivery of truckload transportation and logistics services to our customers. Resource requirements vary with customer demand, which may be subject to seasonal or general economic conditions. Our ability to adapt to changes in customer transportation requirements is essential to efficiently deploy resources and make capital investments in tractors and trailers (with respect to our Truckload segment) or obtain qualified third-party capacity at a reasonable price (with respect to our VAS segment). Although our business volume is not highly concentrated, we may also be affected by our customers' financial failures or loss of customer business.
Operating revenues reported in our operating statistics table under "Results of Operations" are categorized as (i) trucking revenues, net of fuel surcharge,
(ii) trucking fuel surcharge revenues, (iii) non-trucking revenues, including VAS, and (iv) other operating revenues. Trucking revenues, net of fuel surcharge, and trucking fuel surcharge revenues are generated by the operating units in the Truckload segment (One-Way Truckload and Specialized Services). Non-trucking revenues, including VAS, are generated primarily by the four operating units in our VAS segment (Brokerage, Freight Management, Intermodal and WGL), and a small amount is generated by the Truckload segment. Other operating revenues are generated from other business activities such as third-party equipment maintenance and equipment leasing. In second quarter 2012, trucking revenues (net of fuel surcharge) and trucking fuel surcharge revenues accounted for 82% of total operating revenues, and non-trucking and other operating revenues accounted for 18% of total operating revenues. Trucking revenues, net of fuel surcharge, are typically generated on a per-mile basis and also include revenues such as stop charges, loading and unloading charges, equipment detention charges and equipment repositioning charges. Because fuel surcharge revenues fluctuate in response to changes in fuel costs, we identify them separately in the operating statistics table and exclude them from the statistical calculations to provide a more meaningful comparison between periods. The key statistics used to evaluate trucking revenues, net of fuel surcharge, are (i) average revenues per tractor per week, (ii) average revenues per mile (total and loaded), (iii) average monthly miles per tractor,
(iv) average percentage of empty miles (miles without trailer cargo),
(v) average trip length (in loaded miles) and (vi) average number of tractors in service. General economic conditions, seasonal trucking industry freight patterns and industry capacity are important factors that impact these statistics. Our Truckload segment also generates a small amount of revenues categorized as non-trucking revenues, related to shipments delivered to or from Mexico where the Truckload segment utilizes a third-party capacity provider. We exclude such revenues from the statistical calculations. Our most significant resource requirements are company drivers, independent contractors, tractors and trailers. Our financial results are affected by company driver and independent contractor availability and the markets for new and used revenue equipment. Our most significant operating costs are fuel, fuel taxes (included in taxes and licenses expense), driver salaries and benefits, insurance and supplies and maintenance. To mitigate our risk to fuel price increases, we recover from our customers additional fuel surcharges that generally recoup a majority of the increased fuel costs; however, we cannot assure that current recovery levels will continue in future periods. We are self-insured for a significant portion of bodily injury, property damage and cargo claims; workers' compensation claims; and associate health claims (supplemented by premium-based insurance coverage above certain

dollar levels). For that reason, our financial results may also be affected by driver safety, medical costs, weather, legal and regulatory environments and insurance coverage costs to protect against catastrophic losses. The operating ratio is a common industry measure used to evaluate our profitability and that of our Truckload segment operating fleets. The operating ratio consists of operating expenses expressed as a percentage of operating revenues. The most significant variable expenses that impact the Truckload segment are driver salaries and benefits, fuel, fuel taxes, payments to independent contractors (included in rent and purchased transportation expense), supplies and maintenance and insurance and claims. These expenses generally vary based on the number of miles driven. We also evaluate these costs on a per-mile basis to adjust for the impact on the percentage of total operating revenues caused by changes in fuel surcharge revenues, per-mile rates charged to customers and non-trucking revenues. As discussed further in the comparison of operating results for second quarter 2012 to second quarter 2011, several industry-wide issues could cause costs to increase in future periods. These issues include shortages of drivers or independent contractors, changing fuel prices, higher new truck and trailer purchase prices and compliance with new or proposed regulations. Our main fixed costs include depreciation expense for tractors and trailers and equipment licensing fees (included in taxes and licenses expense). The Truckload segment requires substantial cash expenditures for tractor and trailer purchases. We fund these purchases with net cash from operations and financing available under our existing credit facilities, as management deems necessary.
We provide non-trucking services primarily through the four operating units within our VAS segment. Unlike our Truckload segment, the VAS segment is less asset-intensive and is instead dependent upon qualified associates, information systems and qualified third-party capacity providers. The largest expense item related to the VAS segment is the cost of purchased transportation we pay to third-party capacity providers. This expense item is recorded as rent and purchased transportation expense. Other operating expenses consist primarily of salaries, wages and benefits. We evaluate the VAS segment's financial performance by reviewing the gross margin percentage (revenues less rent and purchased transportation expenses expressed as a percentage of revenues) and the operating income percentage. The gross margin percentage can be impacted by the rates charged to customers and the costs of securing third-party capacity. We generally do not have contracted long-term rates for the cost of third-party capacity, and we cannot assure that our operating results will not be adversely impacted in the future if our ability to obtain qualified third-party capacity providers changes or the rates of such providers increase.

Results of Operations:
The following operating statistics table sets forth certain industry data
regarding our freight revenues and operations for the periods indicated.

                                Three Months Ended                        Six Months Ended
                                     June 30,                                 June 30,
                                2012          2011       % Change        2012           2011       % Change
Trucking revenues, net of
fuel surcharge (1)           $ 331,974     $ 333,709       (0.5 )%   $   653,200     $ 650,156        0.5  %
Trucking fuel surcharge
revenues (1)                    97,389       103,187       (5.6 )%       190,596       186,460        2.2  %
Non-trucking revenues,
including VAS (1)               87,440        74,240       17.8  %       167,223       140,405       19.1  %
Other operating revenues (1)     5,009         4,761        5.2  %         9,169         8,305       10.4  %
Total operating revenues (1) $ 521,812     $ 515,897        1.1  %   $ 1,020,188     $ 985,326        3.5  %
Operating ratio
(consolidated) (2)                90.2 %        90.9 %                      91.5 %        92.5 %
Average monthly miles per
tractor                          9,713        10,059       (3.4 )%         9,687         9,882       (2.0 )%
Average revenues per total
mile (3)                     $   1.555     $   1.516        2.6  %   $     1.548     $   1.509        2.6  %
Average revenues per loaded
mile (3)                     $   1.772     $   1.719        3.1  %   $     1.760     $   1.706        3.2  %
Average percentage of empty
miles (4)                        12.23 %       11.80 %      3.6  %         12.06 %       11.54 %      4.5  %
Average trip length in miles
(loaded) (5)                       476           493       (3.4 )%           483           497       (2.8 )%
Total miles (loaded and
empty) (1)                     213,488       220,142       (3.0 )%       421,995       430,776       (2.0 )%
Average tractors in service      7,327         7,295        0.4  %         7,261         7,265          -  %
Average revenues per tractor
per week (3)                 $   3,485     $   3,519       (1.0 )%   $     3,460     $   3,442        0.5  %
Total tractors (at quarter
end)
Company                          6,675         6,675                       6,675         6,675
Independent contractor             650           625                         650           625
Total tractors                   7,325         7,300                       7,325         7,300
Total trailers (Truckload
and Intermodal, at quarter
end)                            23,355        23,320                      23,355        23,320

(1) Amounts in thousands.

(2) Operating expenses expressed as a percentage of operating revenues. Operating ratio is a common measure in the trucking industry used to evaluate profitability.

(3) Net of fuel surcharge revenues.

(4) "Empty" refers to miles without trailer cargo.

(5) Three and six months ended June 30, 2011 average trip length (loaded) corrected. See www.werner.com ("Investors" tab under "Featured Documents") for correction of prior quarterly and annual average trip length data. The average trip length correction has no impact on the prior quarterly reporting of any other operating statistic (such as miles, revenues, empty miles, tractors, etc).

The following table sets forth the operating revenues, operating expenses and operating income for the Truckload segment. Operating revenues for the Truckload segment are primarily categorized as trucking revenues, net of fuel surcharge, and trucking fuel surcharge revenues but also include a small amount of non-trucking revenues as described on page 12. These non-trucking revenues were $3.4 million and $3.0 million for the three-month periods ended June 30, 2012 and June 30, 2011, respectively, and $6.4 million and $5.6 million for the six-month periods ended June 30, 2012 and June 30, 2011, respectively.

                                   Three Months Ended                           Six Months Ended
                                        June  30,                                   June  30,
                               2012                  2011                  2012                  2011
Truckload
Transportation Services
(amounts in thousands)       $          %          $          %          $          %          $          %
Operating revenues      $ 432,888     100.0   $ 439,944     100.0   $ 850,378     100.0   $ 842,290     100.0
Operating expenses        387,814      89.6     395,180      89.8     773,940      91.0     773,260      91.8
Operating income        $  45,074      10.4   $  44,764      10.2   $  76,438       9.0   $  69,030       8.2

Higher fuel prices and higher fuel surcharge revenues increase our consolidated operating ratio and the Truckload segment's operating ratio when fuel surcharges are reported on a gross basis as revenues versus netting against fuel expenses. Eliminating fuel surcharge revenues, which are generally a more volatile source of revenue, provides a more consistent basis for comparing the results of operations from period to period. The following table calculates the Truckload segment's operating ratio as if fuel surcharges are excluded from operating revenues and instead reported as a reduction of operating expenses.

                                      Three Months Ended                           Six Months Ended
                                           June 30,                                    June 30,
                                  2012                  2011                  2012                  2011
Truckload Transportation
Services (amounts in
thousands)                      $          %          $          %          $          %          $          %
Operating revenues         $ 432,888             $ 439,944             $ 850,378             $ 842,290
Less: trucking fuel
surcharge revenues            97,389               103,187               190,596               186,460
Operating revenues,
excluding fuel surcharge
revenues                     335,499     100.0     336,757     100.0     659,782     100.0     655,830     100.0
Operating expenses           387,814               395,180               773,940               773,260
Less: trucking fuel
surcharge revenues            97,389               103,187               190,596               186,460
Operating expenses,
excluding fuel surcharge

The following table sets forth the VAS segment's non-trucking revenues, rent and purchased transportation expense, gross margin, other operating expenses and operating income. Other operating expenses for the VAS segment primarily consist of salaries, wages and benefits expense. VAS also incurs smaller expense amounts in the supplies and maintenance, depreciation, rent and purchased transportation (excluding third-party capacity costs), insurance, communications and utilities and other operating expense categories.

                                     Three Months Ended                           Six Months Ended
                                          June 30,                                    June 30,
                                  2012                 2011                 2012                   2011
Value Added Services
(amounts in thousands)         $          %         $          %          $          %          $           %
Operating revenues         $ 84,024     100.0   $ 71,227     100.0   $ 160,778     100.0   $ 134,800     100.0
Rent and purchased
transportation expense       71,154      84.7     60,385      84.8     136,417      84.8     113,717      84.4
Gross margin                 12,870      15.3     10,842      15.2      24,361      15.2      21,083      15.6
Other operating expenses      8,568      10.2      7,123      10.0      16,073      10.0      13,954      10.3
Operating income           $  4,302       5.1   $  3,719       5.2   $   8,288       5.2   $   7,129       5.3

Three Months Ended June 30, 2012 Compared to Three Months Ended June 30, 2011 Operating Revenues
Operating revenues increased 1.1% for the three months ended June 30, 2012, compared to the same period of the prior year. Trucking revenues, net of fuel surcharge, decreased 0.5% due primarily to a 3.4% decrease in average monthly miles per tractor, offset by a 2.6% increase in average revenues per total mile, net of fuel surcharge, and a 0.4% increase in the average number of tractors in service.
Second quarter 2012 freight demand demonstrated typical seasonal trends and improved into June similar to second quarter 2011. Freight demand in July 2012 displayed typical seasonal trends similar to July freight trends in prior years. Supply side constraints limiting truckload capacity and demand generated by economic activity from our customers are both contributing to freight demand trends.
Average revenues per loaded mile, net of fuel surcharge, increased 3.1% from $1.719 in second quarter 2011 to $1.772 in second quarter 2012. In comparison, average revenues per total mile, net of fuel surcharge, increased 2.6% because our average percentage of empty miles increased from 11.80% in second quarter 2011 to 12.23% in second quarter 2012. Due to a 3.4% lower average trip length, our empty miles per trip remained flat at 66 miles per trip in second quarter 2012 and second quarter 2011. Contractual rate increase percentage awards to date in 2012 are similar to the same period of 2011. Our Truckload segment experienced a balanced freight market with respect to freight and trucks during second quarter 2012 with normal seasonal strengthening at the end of the quarter. Spot pricing was slightly higher in second quarter 2012 compared to second quarter 2011;

however, the number of special freight projects with customers was lower for both our truck fleets and VAS Brokerage unit in second quarter 2012. Project freight is generally high volume but short duration and therefore commands a premium price. We continue to be successful in this tightening capacity environment by working jointly with our customers to secure sustainable transportation solutions across all modes and to offset increased rates through enhanced optimization and transportation solutions whenever possible. Average monthly miles per tractor decreased from 10,059 in second quarter 2011 to 9,713 in second quarter 2012 (3.4% decrease) due to several factors. We had a decrease in student/trainer driver teams, a 3.4% reduction in our average trip length in miles and changes in truck counts by fleet within our Dedicated fleet division. The average number of tractors in service increased slightly, by 0.4%, from 7,295 in second quarter 2011 to 7,327 in second quarter 2012. In the last half of 2011, we operated slightly below our fleet goal of 7,300 trucks due to the challenging driver market, and we ended 2011 with 7,200 trucks. During the last week of first quarter 2012, we reached our goal of 7,300 trucks. Throughout second quarter 2012, we maintained our fleet at the 7,300 truck level or slightly higher. We currently intend to maintain our fleet size at approximately this level and focus on improving our operating margin percentage and our returns on assets, equity and invested capital while providing a broad portfolio of services for our customers. We cannot predict whether future driver shortages, if any, will adversely affect our ability to maintain our fleet size at approximately 7,300 trucks. If such a driver market shortage was to occur, it could result in a fleet size reduction, and our results of operations could be adversely affected.
Trucking fuel surcharge revenues represent collections from customers for the increase in fuel and fuel-related expenses, including the fuel component of our independent contractor cost (recorded as rent and purchased transportation expense) and fuel taxes (recorded in taxes and licenses expense), when diesel fuel prices rise. Conversely, when fuel prices decrease, fuel surcharge revenues decrease. These revenues decreased 5.6% from $103.2 million in second quarter 2011 to $97.4 million in second quarter 2012 because of lower average fuel prices in second quarter 2012. On a total-mile basis, trucking fuel surcharge revenues decreased 1.3 cents, from 46.9 cents in second quarter 2011 to 45.6 cents in second quarter 2012. To lessen the effect of fluctuating fuel prices on our margins, we collect fuel surcharge revenues from our customers for the cost of diesel fuel and taxes in excess of specified base fuel price levels according to terms in our customer contracts. Fuel surcharge rates generally adjust weekly based on an independent U.S. Department of Energy fuel price survey which is released every Monday. Our fuel surcharge programs are designed to (i) recoup higher fuel costs from customers when fuel prices rise and (ii) provide customers with the benefit of lower fuel costs when fuel prices decline. These programs generally enable us to recover a majority, but not all, of the fuel price increases. The remaining portion is generally not recoverable because it results from empty and out-of-route miles (which are not billable to customers) and truck idle time. Fuel prices that change rapidly in short time periods also impact our recovery because the surcharge rate in most programs only changes once per week.
We continue to diversify our business model. Our goal is to attain a more balanced revenue portfolio comprised of one-way truckload, specialized and logistics (which includes the VAS segment) services by growing our logistics services revenues. Our Specialized Services unit, primarily Dedicated, ended second quarter 2012 with 3,495 trucks (48% of our total fleet).
VAS revenues are generated by its four operating units and exclude revenues for VAS shipments transferred to the Truckload segment, which are recorded as trucking revenues by the Truckload segment. VAS revenues increased 18.0% from $71.2 million in second quarter 2011 to $84.0 million in second quarter 2012. The gross number of VAS shipments increased by 7% year over year, and VAS shifted 7% fewer shipments not committed to third-party capacity providers to our Truckload segment. Thus the net number of VAS shipments moved by third-party capacity providers increased by 14% in second quarter 2012. VAS gross margin dollars increased 18.7% from $10.8 million in second quarter 2011 to $12.9 million for the same period in 2012, and the gross margin percentage increased slightly from 15.2% in 2011 to 15.3% in 2012 during the same second quarter periods. VAS operating income increased 15.7% from $3.7 million in second quarter 2011 to $4.3 million in second quarter 2012. The following table shows the changes in VAS shipment volume and average revenue (excluding logistics fee revenue) per shipment for all VAS shipments:

                         Three Months Ended                                         Six Months Ended
                              June 30,                                                  June 30,
                          2012           2011       Difference      % Change        2012          2011       Difference      % Change
Total VAS shipments     68,376          63,671         4,705           7  %        135,196      123,107        12,089          10  %
Less: Non-committed
shipments to
Truckload segment       18,808          20,247        (1,439 )        (7 )%         37,965       38,652          (687 )        (2 )%
Net VAS shipments       49,568          43,424         6,144          14  %         97,231       84,455        12,776          15  %
Average revenue per
shipment            $    1,595         $ 1,531     $      64           4  %     $    1,559     $  1,501     $      58           4  %

Brokerage revenues in second quarter 2012 increased 11% compared to second quarter 2011 due to a 10% increase in

shipment volume and a 1% increase in average revenue per shipment. Brokerage gross margin percentage declined 80 basis points due to rising capacity costs and lower special project business, which in turn caused Brokerage operating income to be essentially flat compared to second quarter 2011. Intermodal revenues increased 20%, and Intermodal operating income was slightly lower comparing second quarter 2012 to second quarter 2011. Werner Global Logistics revenues increased 57% in second quarter 2012 compared to second quarter 2011 and had a larger percentage increase in operating income. Operating Expenses
Our operating ratio (operating expenses expressed as a percentage of operating revenues) was 90.2% for the three months ended June 30, 2012, compared to 90.9% for the three months ended June 30, 2011. Expense items that impacted the overall operating ratio are described on the following pages. The tables on pages 14 and 15 show the operating ratios and operating margins for our two reportable segments, Truckload and VAS.
The following table sets forth the cost per total mile of operating expense items for the Truckload segment for the periods indicated. We evaluate operating costs for this segment on a per-mile basis, which is a better measurement tool for comparing the results of operations from period to period.

                                     Three Months Ended        Increase         Six Months Ended        Increase
                                          June 30,            (Decrease)            June 30,           (Decrease)
                                      2012         2011        per Mile         2012        2011        per Mile
Salaries, wages and benefits      $   0.614      $ 0.585     $     0.029     $  0.611     $ 0.592     $     0.019
Fuel                                  0.462        0.500          (0.038 )      0.476       0.483          (0.007 )
Supplies and maintenance              0.198        0.183           0.015        0.194       0.183           0.011
Taxes and licenses                    0.107        0.106           0.001        0.107       0.107               -
Insurance and claims                  0.070        0.074          (0.004 )      0.081       0.080           0.001
Depreciation                          0.196        0.175           0.021        0.194       0.179           0.015
Rent and purchased transportation     0.172        0.172               -        0.169       0.169               -
Communications and utilities          0.015        0.017          (0.002 )      0.016       0.018          (0.002 )
Other                                (0.017 )     (0.017 )             -       (0.014 )    (0.016 )         0.002

Independent contractor costs are included in rent and purchased transportation expense. Independent contractors supply their own tractors and drivers and are responsible for their operating expenses (including driver pay, fuel, supplies and maintenance and fuel taxes). Independent contractor miles as a percentage of total miles were 10.9% for second quarter 2012 compared to 11.0% for second quarter 2011. This decrease in independent contractor miles as a percentage of total miles shifted costs from the rent and purchased transportation category to . . .