<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, 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 June 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>
June 30, December 31,
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . $ 3,346 $ 3,129
Receivables . . . . . . . . . . . . . . . 15,627 16,497
Prepaid expenses. . . . . . . . . . . . . 5,032 5,057
Deferred income taxes . . . . . . . . . . 2,524 2,260
---------- ----------
Total current assets. . . . . . . . . 26,529 26,943
Property and equipment:
Revenue equipment, building and land,
office equipment, and other . . . . . . 125,453 117,512
Accumulated depreciation and
amortization. . . . . . . . . . . . . . (39,398) (38,807)
------------ ------------
Net property and equipment. . . . . . 86,055 78,705
------------ ------------
TOTAL ASSETS. . . . . . . . . . $112,584 $105,648
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Accounts payable and accrued liabilities. $ 8,803 $ 9,209
Insurance and claims accruals . . . . . . 10,370 9,639
Current maturities of long-term debt. . . 16,321 14,963
------------ ------------
Total current liabilities . . . . . . 35,494 33,811
Long-term debt, less current maturities . . 25,755 24,917
Deferred income taxes. . . . . . . . . . . . 15,428 13,816
------------ ------------
Total liabilities . . . . . . . . . . 76,677 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 . . . . . . . . . . . . 26,523 23,794
------------ ------------
Total shareholders'
investment. . . . . . . . . . . . . . 35,907 33,104
------------ -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' INVESTMENT. . . . $112,584 $105,648
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
MARTEN TRANSPORT, LTD.
CONDENSED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING REVENUE. . . . . . . . . . $34,827 $30,483 $66,788 $59,703
OPERATING EXPENSES:
Salaries, wages and benefits . . . 12,832 11,076 24,602 21,973
Purchased transportation . . . . . 2,484 1,359 4,087 2,649
Fuel and fuel taxes. . . . . . . . 6,283 5,482 12,007 11,022
Supplies and maintenance . . . . . 3,454 3,031 6,632 5,989
Depreciation and amortization. . . 3,641 3,227 7,159 6,331
Operating taxes and licenses . . . 661 650 1,375 1,268
Insurance and claims . . . . . . . 1,569 1,387 3,140 2,750
Communications and utilities . . . 412 404 808 785
Gain on disposition of revenue
equipment . . . . . . . . . . . (442) (614) (1,483) (1,129)
Other. . . . . . . . . . . . . . . 1,250 1,047 2,468 2,065
--------- --------- --------- ---------
Total operating expenses . . 32,144 27,049 60,795 53,703
--------- --------- --------- ---------
OPERATING INCOME . . . . . . . . . . 2,683 3,434 5,993 6,000
OTHER EXPENSES (INCOME):
Interest expense . . . . . . . . . 802 570 1,580 1,173
Interest income and other. . . . . (117) (40) (136) (76)
------------ ---------- ---------- ----------
INCOME BEFORE INCOME TAXES . . . . . 1,998 2,904 4,549 4,903
PROVISION FOR INCOME TAXES . . . . . 800 1,162 1,820 1,961
-------- -------- -------- ---------
NET INCOME . . . . . . . . . . . . . $ 1,198 $ 1,742 $ 2,729 $ 2,942
-------- -------- -------- --------
-------- -------- -------- --------
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE . . . . . . . . . $ 0.40 $ 0.51 $ 0.92 $ 0.86
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average common and common
equivalent shares outstanding. . . 2,967 3,404 2,966 3,432
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
MARTEN TRANSPORT, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Operations:
Net income . . . . . . . . . . . . . . . $ 2,729 $2,942
Adjustments to reconcile net
income to net cash flows
from operating activities:
Depreciation and amortization . . . 7,159 6,331
Gain on disposition of revenue
equipment . . . . . . . . . . . . (1,483) (1,129)
Deferred tax provision. . . . . . .. . . 1,348 1,413
Changes in other current
operating items . . . . . . . . . 1,220 5,565
-------- --------
Net cash provided by
operating activities. . . . . 10,973 15,122
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions:
Revenue equipment, net . . . . . . . . . (12,476) (9,479)
Building and land, office equipment,
and other additions, net . . . . . . . (550) (486)
-------- ---------
Net cash used for investing
activities. . . . . . . . . . (13,026) (9,965)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock . . . . . . . . . 74 -
Common stock repurchased . . . . . . . . . - (8,000)
Long-term borrowings . . . . . . . . . . . 11,032 10,061
Repayment of long-term borrowings. . . . . (8,836) (9,144)
-------- --------
Net cash provided by (used for)
financing activities. . . . . 2,270 (7,083)
-------- ---------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS. . . . . . . . . . . . . . . . 217 (1,926)
CASH AND CASH EQUIVALENTS:
Beginning of period. . . . . . . . . . . . 3,129 5,339
-------- --------
End of period. . . . . . . . . . . . . . . $ 3,346 $3,413
-------- --------
-------- --------
CASH PAID (RECEIVED) FOR:
Interest . . . . . . . . . . . . . . . . . $ 1,551 $1,212
-------- --------
-------- --------
Income taxes . . . . . . . . . . . . . . . $ (645) $ 68
-------- ---------
-------- ---------
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
<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 June 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) 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.
(3) Subsequent Event
The Company purchased a maintenance facility in Oregon for approximately $1.6
million on July 14, 1995, using cash flow from operations.
(4) 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.
(5) 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.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
RESULTS OF OPERATIONS
Operating revenue of $34.8 million for the second quarter of 1995 increased 14.3
percent from $30.5 million for the same period of 1994. Operating revenue for
the first six months of 1995 was $66.8 million, an increase of 11.9 percent over
$59.7 million in 1994. These increases were the result of transporting
additional freight associated with a moderate increase in the size of the
Company's fleet. However, revenue growth was less than expected during the
second quarter of 1995 due to weak customer demand. Average freight rates
increased slightly in 1995. Management anticipates that operating revenue for
the remainder of 1995 will exceed 1994 levels due to continued expansion of the
Company's fleet.
Operating expenses for the second quarter of 1995 were 92.3 percent of operating
revenue, compared with 88.7 percent for the same period in 1994. Operating
expenses for the first six months of 1995 were 91.0 percent of revenue,
compared with 90.0 percent for the first half of 1994. These ratios increased
in 1995 due primarily to weak customer demand causing reduced equipment
utilization and less-than-expected revenue growth. Increases in the 1995
operating expenses were 18.8 percent for the second quarter and 13.2 percent for
the first six months, which exceeded the above growth in operating revenue. All
expense categories increased in 1995 due to transportation of additional freight
and an increase in the Company's fleet. Purchased transportation expense in
1995 also increased due to the additional use of independent contractor-owned
vehicles. Gains on disposition of revenue equipment declined in the second
quarter of 1995 due to fewer planned replacements. Gains on planned
replacements of revenue equipment are projected to continue in 1995. Management
anticipates that operating expenses, as a percentage of operating revenue, will
remain at year-to-date 1995 levels for the remainder of the year.
Interest expense during the three months ended June 30, 1995, increased 40.7
percent over the same period in 1994. For the first six months of 1995,
interest expense increased 34.7 percent over 1994. These increases were the
result of higher interest rates in 1995 and additional long-term debt associated
with equipment purchases and the 1994 repurchase of the Company's common stock.
The Company recorded net income of $1,198,000, or 40 cents per share for the
second quarter of 1995. This compares with net income of $1,742,000, or 51
cents per share for the second quarter of 1994. For the six months ended June
30, 1995, Marten recorded net income of $2,729,000, or 92 cents per share,
compared with $2,942,000, or 86 cents per share, in 1994. The declines in net
income 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.
6
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
The Company continued to invest in new, more efficient revenue equipment during
the second quarter, 1995, as planned. These expenditures were funded using cash
flow from operations and long-term debt collateralized by the new equipment.
The working capital deficit at June 30, 1995, was $9.0 million, up from $6.9
million at December 31, 1994. This increase was due primarily to an increase in
current maturities of long-term debt associated with revenue equipment purchases
and additional accruals for insurance and claims expense. Marten has
consistently operated with a working capital deficit caused primarily by current
maturities of long-term debt related to the acquisitions of revenue equipment.
The Company has operated effectively with a working capital deficit due to
strong operating profits, short turnover of accounts receivable and cash
management practices. Marten 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.
The Company is committed to purchase an additional $19 million of new revenue
equipment, net of trade-in allowances, during the remainder of 1995. In
addition, Marten purchased a maintenance facility in Oregon for approximately
$1.6 million on July 14, 1995, using cash flow from operations.
7
<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:
The annual meeting of stockholders of the Company was held on May 2,
1995. The following items were voted upon at the annual meeting:
(a) Five incumbent directors were elected to serve a one-year
term expiring at the annual meeting of stockholders to be held in
1996 with the following vote totals:
<TABLE>
<CAPTION>
Broker
Nominee Votes For Votes Withheld Non-Votes
------- --------- -------------- ---------
<S> <C> <C> <C>
Randolph L. Marten 2,382,560 145,636 -0-
Darrell D. Rubel 2,382,560 145,636 -0-
Arnold P. Schultz 2,382,260 145,936 -0-
Larry B. Hagness 2,382,260 145,936 -0-
Thomas J. Winkel 2,382,260 145,936 -0-
</TABLE>
(b) The Marten Transport, Ltd. 1995 Stock Incentive Plan was approved by a
vote of 2,013,502 shares in favor, 362,336 shares opposed, 2,650 shares
abstaining, and 12,000 broker non-votes.
(c) The appointment of Arthur Andersen LLP as independent auditors of the
Company for the fiscal year ending December 31, 1995 was approved by a vote
of 2,522,596 shares in favor, 4,800 shares opposed, and 800 shares
abstaining.
ITEM 5. Other Information:
None
8
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K:
a) Exhibits:
Item No. Item Method of Filing
------- ---- ----------------
27.1 Financial Data
Schedule. . . . . . . .Filed herewith.
b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the quarter ended June
30, 1995.
9
<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 11, 1995 By: /s/ Darrell D. Rubel
--------------------------------------
Darrell D. Rubel
Executive Vice President and Treasurer
(Chief Financial Officer)
10
<PAGE>
MARTEN TRANSPORT, LTD.
EXHIBIT INDEX TO QUARTERLY REPORT
ON FORM 10-Q
FOR THE FISCAL QUARTER ENDED JUNE 30, 1995
ITEM NO. ITEM METHOD OF FILING
-------- ---- ----------------
27.1 Financial Data
Schedule. . . . . . Filed herewith.
11
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 3,346,000
<SECURITIES> 0
<RECEIVABLES> 15,627,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 26,529,000
<PP&E> 125,453,000
<DEPRECIATION> 39,398,000
<TOTAL-ASSETS> 112,584,000
<CURRENT-LIABILITIES> 35,494,000
<BONDS> 25,755,000
<COMMON> 29,000
0
0
<OTHER-SE> 35,878,000
<TOTAL-LIABILITY-AND-EQUITY> 112,584,000
<SALES> 66,788,000
<TOTAL-REVENUES> 66,788,000
<CGS> 0
<TOTAL-COSTS> 60,795,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,580,000
<INCOME-PRETAX> 4,549,000
<INCOME-TAX> 1,820,000
<INCOME-CONTINUING> 2,729,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,729,000
<EPS-PRIMARY> .92
<EPS-DILUTED> .92
</TABLE>
