<PAGE>
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: June 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 June 30, 1994.
This report consists of nine (9) pages.
There are no exhibits.
<PAGE>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
MARTEN TRANSPORT, LTD.
CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
-------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . $ 3,413,322 $ 5,339,300
Receivables . . . . . . . . . . . . . . . . 14,114,153 15,212,725
Prepaid expenses. . . . . . . . . . . . . . 3,657,820 4,626,371
Deferred income taxes . . . . . . . . . . . 2,238,651 1,909,935
---------- ----------
Total current assets. . . . . . . . . . 23,423,946 27,088,331
Property and equipment:
Revenue equipment, building and land,
office equipment, and other . . . . . . . 111,045,575 105,271,774
Accumulated depreciation and
amortization. . . . . . . . . . . . . . . (36,719,916) (35,708,945)
------------ ------------
Net property and equipment. . . . . . . 74,325,659 69,562,829
Other assets . . . . . . . . . . . . . . . . . 132,944 125,130
----------- -----------
TOTAL ASSETS . . . . . . . . . . $97,882,549 $96,776,290
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term debt
and capital leases. . . . . . . . . . . . $14,499,389 $15,152,977
Other current liabilities . . . . . . . . . 19,142,355 15,635,511
----------- -----------
Total current liabilities . . . . . . . 33,641,744 30,788,488
Long-term debt and capital leases,
less current maturities . . . . . . . . . . 22,687,229 21,117,376
Deferred income taxes. . . . . . . . . . . . . 11,882,346 10,140,935
----------- -----------
Total liabilities . . . . . . . . . . . 68,211,319 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 . . . . . . . . . . . . . 20,360,720 23,830,181
----------- -----------
Total shareholders'
investment. . . . . . . . . . . . . . . 29,671,230 34,729,491
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' INVESTMENT . . . . $97,882,549 $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 Six Months
Ended June 30, Ended June 30,
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING REVENUE. . . . . . . . . . $30,483,271 $28,260,023 $59,703,312 $54,103,753
OPERATING EXPENSES:
Salaries, wages and benefits . . . . 11,075,655 10,130,798 21,972,851 19,770,523
Purchased transportation . . . . . . 1,358,326 909,238 2,648,449 1,677,014
Fuel and fuel taxes. . . . . . . . . 5,482,285 5,343,807 11,021,875 10,446,106
Supplies and maintenance . . . . . . 3,031,404 2,745,383 5,989,230 5,216,154
Depreciation and amortization. . . . 3,227,134 3,085,081 6,331,281 6,073,238
Operating taxes and licenses . . . . 650,276 625,003 1,268,385 1,235,646
Insurance and claims . . . . . . . . 1,387,043 1,310,128 2,750,271 2,588,746
Communications and utilities . . . . 404,075 321,411 784,953 543,992
Gain on disposition of revenue
equipment. . . . . . . . . . . (614,525) (390,650) (1,129,517) (732,716)
Other. . . . . . . . . . . . . . . . 1,047,060 998,204 2,065,198 1,957,136
----------- ----------- ----------- -----------
Total operating expenses . . . 27,048,733 25,078,403 53,702,976 48,775,839
----------- ----------- ----------- -----------
OPERATING INCOME . . . . . . . . . . . 3,434,538 3,181,620 6,000,336 5,327,914
OTHER EXPENSES (INCOME):
Interest expense . . . . . . . . . . 571,003 614,796 1,173,628 1,249,601
Interest income and other. . . . . . (40,007) (36,446) (76,190) (81,728)
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES . . . . . . 2,903,542 2,603,270 4,902,898 4,160,041
PROVISION FOR INCOME TAXES . . . . . . 1,161,417 1,041,308 1,961,159 1,664,016
----------- ----------- ----------- -----------
NET INCOME . . . . . . . . . . . . . . $ 1,742,125 $ 1,561,962 $ 2,941,739 $ 2,496,025
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE . . . . . . . . . . $ 0.51 $ 0.45 $ 0.86 $ 0.72
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average common and common
equivalent shares outstanding. . . . 3,404,287 3,459,852 3,431,736 3,458,217
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
MARTEN TRANSPORT, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
1994 1993
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Operations:
Net income . . . . . . . . . . . . . . . . . . $ 2,941,739 $ 2,496,025
Adjustments to reconcile net
income to net cash flows
from operating activities:
Depreciation and amortization . . . . . . 6,331,281 6,073,238
Gain on disposition of revenue
equipment . . . . . . . . . . . . . . . (1,129,517) (732,716)
Deferred tax provision. . . . . . . . . . 1,412,695 633,990
Changes in other current
operating items . . . . . . . . . . . . 5,573,967 24,160
----------- -----------
Net cash provided by
operating activities. . . . . . . . 15,130,165 8,494,697
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions:
Revenue equipment, net . . . . . . . . . . . . (9,479,174) (12,901,921)
Building and land, office equipment,
and other additions, net . . . . . . . . . . (485,420) (983,192)
Net change in other assets . . . . . . . . . . . (7,814) (12,887)
----------- -----------
Net cash used for investing
activities. . . . . . . . . . . . . (9,972,408) (13,898,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term borrowings . . . . . . . . . . . . . . 10,060,524 12,056,486
Repayment of long-term borrowings. . . . . . . . (9,144,259) (6,576,291)
Common stock repurchased . . . . . . . . . . . . (8,000,000) -
----------- -----------
Net cash provided by (used for)
financing activities. . . . . . . . (7,083,735) 5,480,195
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS. . . . . . . . . . . . . . . . . . . (1,925,978) 76,892
CASH AND CASH EQUIVALENTS:
Beginning of period. . . . . . . . . . . . . . . 5,339,300 5,875,318
----------- -----------
End of period. . . . . . . . . . . . . . . . . . $ 3,413,322 $ 5,952,210
----------- -----------
----------- -----------
CASH PAID FOR:
Interest . . . . . . . . . . . . . . . . . . . . $ 1,211,508 $ 1,232,123
----------- -----------
----------- -----------
Income taxes . . . . . . . . . . . . . . . . . . $ 68,331 $ 1,161,734
----------- -----------
----------- -----------
</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 June 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) 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.
(3) 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 $30.5 million for the second quarter of 1994 increased 7.9
percent over $28.3 million for the same period last year. For the six months
ended June 30, 1994, operating revenue was $59.7 million, a 10.4 percent
increase over $54.1 million for the same period in 1993. These increases were
primarily the result of transporting additional freight resulting from continued
customer demand and a moderate increase in the size of the Company's fleet.
Average freight rates increased slightly during the second quarter of 1994.
Management anticipates that customer demand will remain strong in 1994, causing
operating revenue to exceed 1993 levels.
Operating expenses as a percent of revenue for the second quarter of 1994 were
88.7 percent, which equalled the ratio for the same period a year ago. This
ratio for the first six months of 1994 was 90.0 percent, compared with 90.2
percent for the first half of 1993. The transportation of additional freight
combined with an increase in the Company's fleet caused all expense categories
to increase. Purchased transportation expense was also impacted by an increase
in the number of independent contractor-owned vehicles in 1994. Gains on the
disposition of revenue equipment in 1994 increased from 1993 levels due to
continued market demand for used equipment and additional revenue equipment
trades. Disposals of revenue equipment in 1993 and 1994 were in accordance with
Marten's planned equipment replacement program. Gains on the planned
replacement of revenue equipment are expected to total $1.6 million to $2.0
million in 1994. Management expects operating expenses, as a percentage of
operating revenue, to remain at current levels for the remainder of 1994.
Interest expense during the three months ended June 30, 1994, decreased 7.1
percent from the same period in 1993. For the first six months of 1994,
interest expense decreased 6.1 percent from 1993. These decreases are a result
of lower interest rates. Management expects interest expense to increase during
the remainder of 1994 due to an increase in long-term debt and an expected rise
in interest rates.
For the second quarter, 1994, the Company recorded net income of $1,742,125, or
51 cents per share, compared with $1,561,962, or 45 cents per share for the same
period of 1993. For the six months ended June 30, 1994, the Company recorded
net income of $2,941,739, or 86 cents per share, compared with $2,496,025, or 72
cents per share in 1993. The improvement in net income results from continued
growth of revenue and management's control of expenses.
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
The Company continued to replace and increase its fleet with new, more efficient
revenue equipment during the first half of 1994. These expenditures were funded
using cash flow from operations and long-term debt collateralized by the new
equipment.
Historically, cash flow from operations has funded working capital requirements.
Cash generated from operations has been adequate, despite a working capital
deficit, due to Marten's operating profits, short turnover in accounts
receivable and cash management practices. The working capital deficit at
June 30, 1994, increased to $10.2 million from $3.7 million at December 31,
1993. This increase primarily resulted from reduced cash balances 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 Company is committed to purchase an additional $19 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
June 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: August 9, 1994 By: ___________________________________
Darrell D. Rubel
Executive Vice President and Treasurer
(Chief Financial Officer)
