<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: September 30, 1995
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 2,941,616 as of September 30, 1995.
<PAGE>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
MARTEN TRANSPORT, LTD.
CONDENSED BALANCE SHEETS
(In thousands, except share information)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents. . . . . . . . . . $ 3,804 $ 3,129
Receivables. . . . . . . . . . . . . . . . . 17,578 16,497
Prepaid expenses . . . . . . . . . . . . . . 4,888 5,057
Deferred income taxes . . . . . . . . . . . 2,653 2,260
-------- --------
Total current assets . . . . . . . . . . 28,923 26,943
Property and equipment:
Revenue equipment, building and land,
office equipment, and other. . . . . . . . 128,452 117,512
Accumulated depreciation and
amortization . . . . . . . . . . . . . . . (40,682) (38,807)
-------- --------
Net property and equipment . . . . . . 87,770 78,705
-------- --------
TOTAL ASSETS. . . . . . . . . . . . $116,693 $105,648
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Accounts payable and accrued liabilities . . $ 9,552 $ 9,209
Insurance and claims accruals. . . . . . . . 10,985 9,639
Current maturities of long-term debt . . . . 16,908 14,963
-------- --------
Total current liabilities. . . . . . . . . 37,445 33,811
------- -------
Long-term debt, less current maturities. . . 25,785 24,917
Deferred income taxes. . . . . . . . . . . . 16,217 13,816
-------- -------
Total liabilities. . . . . . . . . . . . 79,447 72,544
------- -------
Shareholders' investment:
Common stock, $.01 par value per
share, 10,000,000 shares authorized,
2,941,616 and 2,929,950 shares issued
and outstanding . . . . . . . . . . . . 29 29
Additional paid-in capital. . . . . . . . 9,355 9,281
Retained earnings . . . . . . . . . . . . 27,862 23,794
-------- --------
Total shareholders investment. . . . 37,246 33,104
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' INVESTMENT . . . . . . $116,693 $105,648
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
MARTEN TRANSPORT, LTD.
CONDENSED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING REVENUE. . . . . . . . . . $35,889 $31,443 $102,677 $91,146
OPERATING EXPENSES:
Salaries, wages and benefits . . 12,807 11,512 37,409 33,485
Purchased transportation . . . . 3,006 1,309 7,093 3,958
Fuel and fuel taxes. . . . . . . 6,234 5,744 18,241 16,766
Supplies and maintenance . . . . 3,665 3,099 10,297 9,088
Depreciation and amortization. . 3,604 2,967 10,763 9,298
Operating taxes and licenses . . 871 703 2,246 1,971
Insurance and claims . . . . . . 1,627 1,381 4,767 4,131
Communications and utilities . . 424 386 1,232 1,171
Gain on disposition of revenue
equipment . . . . . . . . . . (422) (515) (1,905) (1,644)
Other. . . . . . . . . . . . . . 1,050 1,213 3,518 3,278
------- ------- ------- -------
Total operating expenses . 32,866 27,799 93,661 81,502
------- ------- ------- -------
OPERATING INCOME . . . . . . . . . . 3,023 3,644 9,016 9,644
OTHER EXPENSES (INCOME):
Interest expense . . . . . . . . . 812 692 2,392 1,865
Interest income and other. . . . . (20) (29) (156) (105)
------- ------- ------- -------
INCOME BEFORE INCOME TAXES . . . . . 2,231 2,981 6,780 7,884
PROVISION FOR INCOME TAXES . . . . . 892 1,193 2,712 3,154
------- ------- ------- -------
NET INCOME . . . . . . . . . . . . . $ 1,339 $ 1,788 $ 4,068 $ 4,730
------- ------- ------- -------
------- ------- ------- -------
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE . . . . . . . . $ 0.45 $ 0.60 $ 1.37 $ 1.45
------- ------- ------- -------
------- ------- ------- -------
Weighted average common and common
equivalent shares outstanding. . . 2,966 2,960 2,966 3,273
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
MARTEN TRANSPORT, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
1995 1994
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Operations:
Net income . . . . . . . . . . . . . . . $ 4,068 $ 4,730
Adjustments to reconcile net
income to net cash flow
from operating activities:
Depreciation and amortization . . . 10,763 9,298
Gain on disposition of revenue
equipment . . . . . . . . . . . . (1,905) (1,644)
Deferred tax provision. . . . . . . 2,008 2,274
Changes in other current
operating items . . . . . . . . . 777 2,907
------- -------
Net cash provided by
operating activities. . . . . 15,711 17,565
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions:
Revenue equipment, net . . . . . . . . . (15,762) (13,200)
Building and land, office equipment,
and other additions, net . . . . . . . (2,161) (711)
------- -------
Net cash used for investing
activities. . . . . . . . . . (17,923) (13,911)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock . . . . . . . . . 74 -
Common stock repurchased . . . . . . . . . - (8,000)
Long-term borrowings . . . . . . . . . . . 15,845 15,339
Repayment of long-term borrowings. . . . . (13,032) (13,004)
------- -------
Net cash provided by (used for)
financing activities. . . . . 2,887 (5,665)
------- -------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS. . . . . . . . . . . . . . . . 675 (2,011)
CASH AND CASH EQUIVALENTS:
Beginning of period. . . . . . . . . . . . 3,129 5,339
------- -------
End of period. . . . . . . . . . . . . . . $ 3,804 $ 3,328
------- -------
------- -------
CASH PAID (RECEIVED) FOR:
Interest . . . . . . . . . . . . . . . . . $ 2,351 $ 1,885
------- -------
------- -------
Income taxes . . . . . . . . . . . . . . . $ (558) $ 605
------- -------
------- -------
</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 of the Company's financial condition, results of operations, and
cash flows as of September 30, 1995. 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, 1994.
(2) Change in Estimated Useful Life
The Company changed the estimated useful life of certain revenue equipment as of
July 1, 1995. The change resulted in a decrease in depreciation expense of
$144,000 and an increase in net income of $86,000 or $0.03 per share for the
three months ended September 30, 1995.
(3) 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.
(4) Stock Option Exercises
Options were exercised for 11,666 shares of Company stock under the Company's
stock option plans during the three months ended June 30, 1995.
(5) 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 in 1994 by $8 million.
(6) Reclassifications
Certain amounts in the 1994 financial statements have been reclassified to be
consistent with the 1995 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 for the third quarter of 1995 increased 14.1 percent to $35.9
million, compared with $31.4 million for the same period last year. Operating
revenue for the first nine months of 1995 was $102.7 million, an increase of
12.7 percent over $91.1 million in 1994. The primary reason for these increases
was the transportation of additional freight associated with a moderate increase
in the size of the Company's fleet. Average freight rates also increased in
1995. However, operating revenue in 1995 was adversely impacted by weaker than
expected customer demand, causing average miles traveled per tractor to decline
from 1994 levels. Management anticipates that operating revenue for the
remainder of 1995 will exceed 1994 levels due to an increase in the size of the
Company's fleet.
Operating expenses for the third quarter of 1995 represented 91.6 percent of
operating revenue, compared with 88.4 percent for the same period in 1994.
Operating expenses for the first nine months of 1995 were 91.2 percent of
revenue, compared with 89.4 percent in 1994. These ratios increased in 1995 due
primarily to reduced equipment utilization and less-than-expected revenue
growth. Operating expenses for 1995 increased 18.2 percent and 14.9 percent for
the third quarter and the first nine months, respectively. All expense
categories increased in 1995 due to the transportation of additional freight and
the expansion of the Company's fleet. Purchased transportation expense also
increased due to the Company's use of an additional number of independent
contractor-owned vehicles in 1995. Depreciation expense increased in 1995
primarily due to the continued expansion of the Company's fleet. This increase
was partially offset by a decrease of $144,000 due to a change in the estimated
useful life of the Company's satellite tracking equipment effective July 1,
1995. Gains on disposition of revenue equipment declined in the third quarter
of 1995 due to fewer planned replacements. Gains on disposition of revenue
equipment are projected to continue in 1995 and 1996. Management anticipates
that operating expenses as a percentage of operating revenue will remain at the
current 1995 level for the remainder of the year.
Interest expense in 1995 increased from 1994 levels due to additional long-term
debt associated with equipment purchases and the 1994 repurchase of 500,000
shares of the Company's common stock.
The Company recorded net income of $1,339,000, or 45 cents per share for the
third quarter of 1995. This compares with net income of $1,788,000, or 60 cents
per share for the third quarter of 1994. For the nine months ended September
30, 1995, Marten recorded net income of $4,068,000, or $1.37 per share, compared
with $4,730,000, or $1.45 per share in 1994. These declines can be attributed
to reduced customer demand causing less-than-expected revenue growth. Per share
amounts have been impacted by the repurchase and subsequent retirement of
500,000 shares of common stock in June, 1994.
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
The Company continued to replace and expand its fleet with new, more efficient
revenue equipment during the first nine months of 1995. These purchases were
funded using cash flow from operations and long-term debt collateralized by the
new equipment. In addition, the Company purchased a maintenance facility in
Oregon for approximately $1.6 million in July, 1995, using cash flow from
operations.
Historically, Marten has operated effectively with a working capital deficit
caused primarily by current maturities of long-term debt related to the
acquisitions of revenue equipment. Working capital requirements have been
funded by cash flow from operations due to the Company's operating profits,
short turnover in accounts receivable and cash management practices. Marten's
working capital deficit at September 30, 1995, increased to $8.5 million from
$6.9 million at December 31, 1994. This increase primarily resulted from an
increase in current maturities of long-term debt associated with revenue
equipment purchases and additional accruals for insurance and claims expense.
The Company has not used short-term borrowings to meet working capital needs,
and does not anticipate the use of short-term borrowings in 1995. Management
believes the Company's liquidity is adequate to meet expected near-term
operating requirements.
Marten is committed to purchase an additional $25 million of new revenue
equipment, net of trade-in allowances, during the remainder of 1995 and 1996.
<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:
<TABLE>
<CAPTION>
Item No. Item Method of Filing
-------- ---- ----------------
<S> <C> <C>
27.1 Financial Data
Schedule . . . . . Filed herewith.
</TABLE>
b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the quarter
ended September 30, 1995.
<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 9, 1995 By: /s/ Darrell D. Rubel
---------------------------------
Darrell D. Rubel
Executive Vice President and Treasurer
(Chief Financial Officer)
<PAGE>
MARTEN TRANSPORT, LTD.
EXHIBIT INDEX TO QUARTERLY REPORT
ON FORM 10-Q
For the Fiscal Quarter Ended September 30, 1995
<TABLE>
<CAPTION>
Item No. Item Method of Filing
-------- ---- ----------------
<S> <C> <C>
27.1 Financial Data
Schedule . . . . . . . Filed herewith.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED STATEMENTS OF INCOME AND THE CONDENSED BALANCE SHEETS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 3,804,000
<SECURITIES> 0
<RECEIVABLES> 17,578,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 28,923,000
<PP&E> 128,452,000
<DEPRECIATION> 40,682,000
<TOTAL-ASSETS> 116,693,000
<CURRENT-LIABILITIES> 37,445,000
<BONDS> 25,785,000
<COMMON> 29,000
0
0
<OTHER-SE> 37,217,000
<TOTAL-LIABILITY-AND-EQUITY> 116,693,000
<SALES> 102,677,000
<TOTAL-REVENUES> 102,677,000
<CGS> 0
<TOTAL-COSTS> 93,661,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,392,000
<INCOME-PRETAX> 6,780,000
<INCOME-TAX> 2,712,000
<INCOME-CONTINUING> 4,068,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,068,000
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.37
</TABLE>
