<PAGE>
This report consists of
nine (9) pages. There
are no Exhibits.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended: September 30, 1994
Commission File Number: 0-15010
MARTEN TRANSPORT, LTD.
(Exact name of registrant as specified in its charter)
Delaware 39-1140809
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
129 Marten Street, Mondovi, Wisconsin 54755
- - - ------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 715-926-4216
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
The number of shares outstanding of the registrant's Common Stock, par value
$.01 per share, was 2,929,950 as of September 30, 1994.
<PAGE>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
MARTEN TRANSPORT, LTD.
CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
------------ -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . $ 3,327,776 $ 5,339,300
Receivables . . . . . . . . . . . . . . . 15,027,665 15,212,725
Prepaid expenses. . . . . . . . . . . . . 3,553,420 4,626,371
Deferred income taxes . . . . . . . . . . 2,438,951 1,909,935
------------ -----------
Total current assets . . . . . . . . . 24,347,812 27,088,331
Property and equipment:
Revenue equipment, building and land,
office equipment, and other . . . . . . 114,128,942 105,271,774
Accumulated depreciation and
amortization. . . . . . . . . . . . . . (38,308,624) (35,708,945)
------------ ----------
Net property and equipment. . . . . . 75,820,318 69,562,829
Other assets . . . . . . . . . . . . . . . . 136,495 125,130
------------ -----------
TOTAL ASSETS. . . . . . . . . . . $100,304,625 $96,776,290
------------ -----------
------------ -----------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term debt
and capital leases. . . . . . . . . . . $ 14,948,587 $15,152,977
Other current liabilities. . . . . . . . . . 17,297,209 15,635,511
------------ -----------
Total current liabilities . . . . . . 32,245,796 30,788,488
Long-term debt and capital leases,
less current maturities . . . . . . . . . 23,655,751 21,117,376
Deferred income taxes. . . . . . . . . . . . 12,943,457 10,140,935
------------ -----------
Total liabilities . . . . . . . . . . 68,845,004 62,046,799
Shareholders' investment:
Common stock, $.01 par value per
share, 10,000,000 shares authorized,
2,929,950 and 3,429,950 shares issued
and outstanding . . . . . . . . . . . . 29,300 34,300
Additional paid-in capital. . . . . . . . 9,281,210 10,865,010
Retained earnings . . . . . . . . . . . . 22,149,111 23,830,181
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Total shareholders'
investment. . . . . . . . . . . . . . 31,459,621 34,729,491
------------ -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' INVESTMENT. . . . . $100,304,625 $96,776,290
------------ -----------
------------ -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
MARTEN TRANSPORT, LTD.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING REVENUE. . . . . . . . . . . $31,442,613 $29,079,457 $91,145,925 $83,183,210
OPERATING EXPENSES:
Salaries, wages and benefits . . . . 11,512,377 10,480,669 33,485,228 30,251,192
Purchased transportation . . . . . . 1,309,246 1,101,050 3,957,695 2,778,064
Fuel and fuel taxes. . . . . . . . . 5,744,327 5,198,733 16,766,202 15,644,839
Supplies and maintenance . . . . . . 3,098,738 2,779,025 9,087,968 7,995,179
Depreciation and amortization. . . . 2,966,095 3,189,464 9,297,376 9,262,702
Operating taxes and licenses . . . . 702,620 626,603 1,971,005 1,862,249
Insurance and claims . . . . . . . . 1,380,895 1,303,625 4,131,166 3,892,371
Communications and utilities . . . . 385,517 319,944 1,170,470 863,936
Gain on disposition of revenue
equipment . . . . . . . . . . . . (514,128) (397,380) (1,643,645) (1,130,096)
Other . . . . . . . . . . . . . . . 1,212,905 979,220 3,278,103 2,936,356
----------- ----------- ----------- -----------
Total operating expenses . . . 27,798,592 25,580,953 81,501,568 74,356,792
----------- ----------- ----------- -----------
OPERATING INCOME . . . . . . . . . . . 3,644,021 3,498,504 9,644,357 8,826,418
OTHER EXPENSES (INCOME):
Interest expense . . . . . . . . . . 691,863 627,371 1,865,491 1,876,972
Interest income and other. . . . . . (28,494) (62,921) (104,684) (144,649)
----------- ----------- ----------- -----------
INCOME BEFORE ITEMS BELOW. . . . . . . 2,980,652 2,934,054 7,883,550 7,094,095
PROVISION FOR INCOME TAXES . . . . . . 1,192,261 1,173,622 3,153,420 2,837,638
----------- ----------- ----------- -----------
INCOME BEFORE EXTRAORDINARY ITEM . . . 1,788,391 1,760,432 4,730,130 4,256,457
EXTRAORDINARY ITEM-PROCEEDS OF
LIFE INSURANCE POLICY. . . . . . . . - 883,284 - 883,284
----------- ----------- ----------- -----------
NET INCOME . . . . . . . . . . . . . . $ 1,788,391 $ 2,643,716 $ 4,730,130 $ 5,139,741
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE DATA:
Income before
extraordinary item . . . . . . $ 0.60 $ 0.51 $ 1.45 $ 1.23
Extraordinary item. . . . . . . . - 0.26 - 0.26
----------- ----------- ----------- -----------
Net income. . . . . . . . . . . . $ 0.60 $ 0.77 $ 1.45 $ 1.49
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average common and common
equivalent shares outstanding. . . . 2,959,911 3,462,006 3,273,231 3,459,211
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
MARTEN TRANSPORT, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
1994 1993
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Operations:
Income before extraordinary item . . . . . . . $ 4,730,130 $ 4,256,457
Adjustments to reconcile income
before extraordinary item to net
cash flows from operating
activities:
Depreciation and amortization. . . . . . . 9,297,376 9,262,702
Gain on disposition of revenue
equipment. . . . . . . . . . . . . . . . (1,643,645) (1,130,096)
Deferred tax provision . . . . . . . . . . 2,273,506 1,081,140
Changes in other current
operating items. . . . . . . . . . . . . 2,919,709 (713,888)
----------- -----------
Net cash provided by
operating activities
before extraordinary item. . . . . . 17,577,076 12,756,315
Extraordinary item . . . . . . . . . . . . . . . - 883,284
----------- -----------
Net cash provided by
operating activities . . . . . . . . 17,577,076 13,639,599
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CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions:
Revenue equipment, net . . . . . . . . . . . . (13,199,756) (15,557,225)
Building and land, office equipment,
and other additions, net . . . . . . . . . . (711,464) (1,172,543)
Net change in other assets . . . . . . . . . . . (11,365) 97,826
----------- -----------
Net cash used for investing
activities . . . . . . . . . . . . . (13,922,585) (16,631,942)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term borrowings . . . . . . . . . . . . . . 15,338,277 13,133,096
Repayment of long-term borrowings. . . . . . . . (13,004,292) (10,282,466)
Common stock repurchased . . . . . . . . . . . . (8,000,000) -
----------- -----------
Net cash provided by (used for)
financing activities . . . . . . . . (5,666,015) 2,850,630
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DECREASE IN CASH AND CASH EQUIVALENTS. . . . . . . (2,011,524) (141,713)
CASH AND CASH EQUIVALENTS:
Beginning of period. . . . . . . . . . . . . . . 5,339,300 5,875,318
----------- -----------
End of period. . . . . . . . . . . . . . . . . . $ 3,327,776 $ 5,733,605
----------- -----------
----------- -----------
CASH PAID FOR:
Interest . . . . . . . . . . . . . . . . . . $ 1,884,965 $ 1,872,068
----------- -----------
----------- -----------
Income taxes . . . . . . . . . . . . . . . . . . $ 604,673 $ 2,018,305
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(1) Financial Statements
The accompanying unaudited condensed financial statements reflect, in the
opinion of management, all adjustments considered necessary for a fair
presentation as of September 30, 1994. The results of operations for any
interim period are not necessarily indicative of results for the full year. The
unaudited interim financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1993.
(2) Change in Estimated Salvage Value
The Company changed the estimated salvage value of certain revenue equipment
effective January 1, 1994, to reflect the continued market demand for used
equipment. The change resulted in a decrease in depreciation expense of
$405,000 for the nine months ended September 30, 1994. The effect of this
change in estimate was recorded in the three months ended September 30, 1994,
which increased net income by $243,000, or $0.08 per share, of which $0.05 per
share related to the six months ended June 30, 1994.
(3) Common Stock Repurchase
The Company repurchased 500,000 shares of its common stock from the estate of
its former Chairman and Chief Executive Officer, Roger R. Marten, on June 21,
1994, for $16 per share. The shares have been retired, reducing shareholders'
investment by $8 million.
(4) Reclassifications
Certain amounts in the 1993 financial statements have been reclassified to be
consistent with the 1994 presentation. These reclassifications do not have a
material effect on the financial statements.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
RESULTS OF OPERATIONS
Operating revenue of $31.4 million for the third quarter of 1994 increased 8.1
percent over $29.1 million for the same period last year. Operating revenue
in the first nine months of 1994 was $91.1 million, an increase of 9.6 percent
over $83.2 million for the same period in 1993. The primary reason for these
increases was continued customer demand resulting in the transportation of
additional freight. Loaded miles traveled in 1994 increased 8.8 percent over
1993. Average freight rates increased slightly in 1994 causing the remainder
of the revenue increase. Management anticipates that customer demand will
remain strong in 1994, causing operating revenue to exceed 1993 levels.
Operating expenses for the quarter ended September 30, 1994 were 88.4 percent
of operating revenue compared with 88.0 percent for the same period in 1993.
The ratio for the first nine months of 1994 was 89.4 percent, equalling the
ratio in 1993. Most expense categories increased in 1994 due to the
transportation of additional freight and an increase in the Company's fleet.
Depreciation and amortization expense was reduced by $405,000 during the 1994
third quarter due to a change, effective January 1, 1994, in estimate of the
salvage value of certain revenue equipment. Of this amount, $263,000 was
attributable to the cumulative effects of the change for the six months ended
June 30, 1994. This change was in response to increased market prices for
used equipment. As a result of this change, net income increased during the
third quarter and first nine months by $243,000, or $0.08 per share. In
addition, salaries, wages and benefits expense increased in the third quarter
of 1994 due to driver wage increases. Fuel expense also increased during the
1994 third quarter when compared with the same period last year due to higher
diesel fuel prices. Management expects operating expenses, as a percentage of
revenue, to remain at current levels for the remainder of 1994.
Interest expense for the three months ended September 30, 1994, increased 10.3
percent over the same period in 1993. Interest expense during the first nine
months of 1994 remained at 1993 levels. The increase during the third quarter
resulted from increased interest rates and additional long-term borrowings
associated with revenue equipment purchases and the second quarter stock
repurchase. Management expects interest expense to increase during the
remainder of 1994 due to an increase in long-term debt and a rise in interest
rates.
The Company recorded net income of $1,788,391, or 60 cents per share, for the
third quarter of 1994. This compares with net income in the 1993 third
quarter of $2,643,716, which includes $883,284 in net proceeds of a life
insurance policy for the Company's former Chairman and Chief Executive
Officer. For the nine months ended September 30, 1994, the Company recorded
net income of $4,730,130, or $1.45 per share, compared with $5,139,741, or
$1.49 per share, in 1993.
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
The Company continued to replace and increase its fleet with new, more
efficient revenue equipment during the first nine months of 1994. These
expenditures were funded using cash flow from operations and long-term debt
collateralized by the new equipment.
Historically, cash generated from operations has been adequate to fund
Marten's working capital requirements. Cash flow from operations has been
adequate, despite a working capital deficit, due to the Company's operating
profits, short turnover in accounts receivable and cash management practices.
Marten's working capital deficit at September 30, 1994 increased to $7.9
million from $3.7 million at December 31, 1993. The primary reasons for this
increase were reduced cash balances, amortization of prepaid expenses and an
increase in accounts payable and expense accruals. Marten has not used short-
term borrowings to meet working capital needs and does not anticipate the use
of short-term borrowings in 1994. Management believes the Company's liquidity
is adequate to meet anticipated near-term operating requirements.
The Company repurchased 500,000 shares of its common stock from the estate of
its former Chairman and Chief Executive Officer, Roger R. Marten, for $16 per
share, during the second quarter of 1994. The Company has retired these
shares, reducing shareholders' investment by $8 million. The repurchase was
funded using cash reserves and long-term debt. The retirement of these shares
caused third quarter earnings per share to increase 8 cents per share.
The Company is committed to purchase an additional $20 million of new revenue
equipment, net of trade-in allowances, during the remainder of 1994 and 1995.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings:
None
ITEM 2. Change in Securities:
None
ITEM 3. Defaults Upon Senior Securities:
None
ITEM 4. Submission of Matters to a Vote of Security Holders:
None
ITEM 5. Other Information:
None
ITEM 6. Exhibits and Reports on Form 8-K:
a) Exhibits:
None
b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the quarter ended
September 30, 1994.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by
the undersigned thereto duly authorized.
MARTEN TRANSPORT, LTD.
(Registrant)
Dated: November 11, 1994 By:
---------------------------------------
Darrell D. Rubel
Executive Vice President and Treasurer
(Chief Financial Officer)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereto duly authorized.
MARTEN TRANSPORT, LTD.
(Registrant)
Dated: November 11, 1994 By: /s/ Darrell D. Rubel
---------------------------------------
Darrell D. Rubel
Executive Vice President and Treasurer
(Chief Financial Officer)
