<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, 1996
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 2,944,616 as of June 30, 1996.
<PAGE>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
MARTEN TRANSPORT, LTD.
CONDENSED BALANCE SHEETS
(In thousands, except share information)
(Unaudited)
June 30, December 31,
1996 1995
--------- ------------
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . $ 2,698 $ 3,330
Receivables . . . . . . . . . . . . . . . 18,204 17,463
Prepaid expenses. . . . . . . . . . . . . 5,983 5,949
Deferred income taxes . . . . . . . . . . 3,992 2,766
-------- --------
Total current assets. . . . . . . . . . 30,877 29,508
Property and equipment:
Revenue equipment, building and land,
office equipment, and other. . . . . . . 136,367 132,894
Accumulated depreciation . . . . . . . . (35,805) (39,261)
-------- --------
Net property and equipment. . . . . . . . 100,562 93,633
-------- --------
TOTAL ASSETS . . . . . . . . . . . . $131,439 $123,141
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Accounts payable and accrued liabilities. $ 10,810 $ 10,637
Insurance and claims accruals . . . . . . 13,879 11,794
Current maturities of long-term debt. . . 18,599 17,914
-------- --------
Total current liabilities . . . . . . . 43,288 40,345
Long-term debt, less current maturities . . 29,878 27,079
Deferred income taxes . . . . . . . . . . . 19,385 17,475
-------- --------
Total liabilities . . . . . . . . . . . 92,551 84,899
Shareholders' investment:
Common stock, $.01 par value per
share, 10,000,000 shares authorized,
2,944,616 and 2,941,616 shares issued
and outstanding . . . . . . . . . . . . 29 29
Additional paid-in capital . . . . . . . 9,443 9,410
Retained earnings. . . . . . . . . . . . 29,416 28,803
-------- --------
Total shareholders'
investment. . . . . . . . . . . . . . 38,888 38,242
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' INVESTMENT. . . . . . $131,439 $123,141
-------- --------
-------- --------
The accompanying notes are an integral part of these balance sheets.
<PAGE>
MARTEN TRANSPORT, LTD.
CONDENSED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
---- ---- ---- ----
OPERATING REVENUE. . . . . . . . . . $35,979 $34,827 $70,588 $66,788
OPERATING EXPENSES:
Salaries, wages and benefits . . . 12,520 12,832 24,903 24,602
Purchased transportation . . . . . 4,617 2,484 8,620 4,087
Fuel and fuel taxes. . . . . . . . 6,662 6,283 12,787 12,007
Supplies and maintenance . . . . . 3,263 3,454 6,971 6,632
Depreciation . . . . . . . . . . . 3,945 3,641 7,782 7,159
Operating taxes and licenses . . . 826 661 1,610 1,375
Insurance and claims . . . . . . . 1,832 1,569 3,845 3,140
Communications and utilities . . . 422 412 868 808
Gain on disposition of revenue
equipment . . . . . . . . . . . . (465) (442) (1,593) (1,483)
Other. . . . . . . . . . . . . . . 995 1,250 2,111 2,468
------- ------- ------- -------
Total operating expenses . . . . 34,617 32,144 67,904 60,795
------- ------- ------- -------
OPERATING INCOME . . . . . . . . . . 1,362 2,683 2,684 5,993
OTHER EXPENSES (INCOME):
Interest expense . . . . . . . . . 870 802 1,715 1,580
Interest income and other. . . . . (28) (117) (52) (136)
------- ------- ------- -------
INCOME BEFORE INCOME TAXES . . . . . 520 1,998 1,021 4,549
PROVISION FOR INCOME TAXES . . . . . 208 800 408 1,820
------- ------- ------- -------
NET INCOME . . . . . . . . . . . . . $ 312 $ 1,198 $ 613 $ 2,729
------- ------- ------- -------
------- ------- ------- -------
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE . . . . . . . . . $ 0.11 $ 0.40 $ 0.21 $ 0.92
------- ------- ------- -------
------- ------- ------- -------
Weighted average common and common
equivalent shares outstanding. . . 2,964 2,967 2,963 2,966
------- ------- ------- -------
------- ------- ------- -------
The accompanying notes are an integral part of these statements.
<PAGE>
MARTEN TRANSPORT, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months
Ended June 30,
1996 1995
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Operations:
Net income . . . . . . . . . . . . . . . . . $ 613 $ 2,729
Adjustments to reconcile net
income to net cash flows
from operating activities:
Depreciation . . . . . . . . . . . . . . . 7,782 7,159
Gain on disposition of revenue
equipment . . . . . . . . . . . . . . . . (1,593) (1,483)
Deferred tax provision . . . . . . . . . . 684 1,348
Changes in other current
operating items . . . . . . . . . . . . . 1,483 1,220
-------- --------
Net cash provided by
operating activities. . . . . . . . . . 8,969 10,973
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions:
Revenue equipment, net . . . . . . . . . . . (12,846) (12,476)
Building and land, office equipment,
and other additions, net. . . . . . . . . . (272) (550)
-------- --------
Net cash used for investing
activities. . . . . . . . . . . . . . . (13,118) (13,026)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock . . . . . . . . . . . 33 74
Long-term borrowings . . . . . . . . . . . . . 14,092 11,032
Repayment of long-term borrowings. . . . . . . (10,608) (8,836)
-------- --------
Net cash provided by
financing activities. . . . . . . . . . 3,517 2,270
-------- --------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS. . . . . . . . . . . . . . (632) 217
CASH AND CASH EQUIVALENTS:
Beginning of period. . . . . . . . . . . . . . 3,330 3,129
-------- --------
End of period. . . . . . . . . . . . . . . . . $ 2,698 $ 3,346
-------- --------
-------- --------
CASH PAID (RECEIVED) FOR:
Interest . . . . . . . . . . . . . . . . . . . $ 1,729 $ 1,551
-------- --------
-------- --------
Income taxes . . . . . . . . . . . . . . . . . $ (292) $ (645)
-------- --------
-------- --------
The accompanying notes are an integral part of these 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 June 30, 1996. 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, 1995.
(2) Stock Option Exercises
Options were exercised for 3,000 shares and 11,666 shares of Company stock
under the Company's stock option plans during the three months ended June 30,
1996 and June 30, 1995, respectively.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
RESULTS OF OPERATIONS
Operating revenue for the second quarter of 1996 increased 3.3 percent over
the same period of 1995. Operating revenue increased 5.7 percent for the
first six months of 1996 over the same period last year. These increases
were primarily the result of transporting additional freight, facilitated by
a moderate increase in the size of the Company's fleet. Additionally, the
Company implemented a temporary fuel surcharge in April, 1996, to offset an
increase in the cost of diesel fuel. The fuel surcharge represented 1.1
percent of operating revenue in the second quarter of 1996. Operating
revenue in 1996 has been adversely impacted by decreases in average freight
rates and miles traveled per tractor, which the Company attributes to
increased competition.
Operating expenses for the second quarter of 1996 were 96.2 percent of
operating revenue, compared with 92.3 percent for the same period in 1995.
This ratio for the first six months of 1996 was 96.2 percent, compared with
91.0 percent for the first half of 1995. These ratios increased in 1996 due
primarily to reduced equipment utilization and lower freight rates, causing
operating expense increases to exceed revenue increases. Most expense
categories increased in 1996 due to the transportation of additional freight
and expansion of Marten's fleet. Purchased transportation expense increased
in 1996 due to an increase in the number of independent contractor-owned
vehicles. Use of additional independent contractors decreases salaries,
wages and benefits expense and fuel and fuel tax expense relative to revenue,
as these expenses are assumed by the independent contractors. An increase in
the cost of diesel fuel negatively impacted fuel and fuel tax expense in
1996. Insurance and claims expense for the second quarter of 1996
represented 5.1 percent of revenue compared with 4.5 percent for the same
period last year. This increase resulted in additional reserves for possible
future claims.
Interest expense for the three and six month periods ended June 30, 1996,
increased 8.5 percent over the same periods in 1995. These increases were
the result of additional long-term debt associated with purchases of new
revenue equipment.
The Company recorded net income of $312,000, or 11 cents per share for the
second quarter of 1996. This compares with net income of $1,198,000, or 40
cents per share for the second quarter of 1995. For the six months ended
June 30, 1996, net income was $613,000, or 21 cents per share, compared with
$2,729,000, or 92 cents per share in 1995. These decreases can be attributed
to lower average freight rates and equipment utilization.
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
Marten continued to replace its fleet with new, more efficient revenue
equipment in 1996. These expenditures were funded using cash flow from
operations and long-term debt collateralized by the new equipment.
The Company has historically operated effectively with a working capital
deficit. This deficit is caused primarily by current maturities of long-term
debt associated with revenue equipment purchases. Working capital
requirements have been funded by Marten's operating profits, short turnover
in accounts receivable and cash management practices. The working capital
deficit at June 30, 1996, increased to $12.4 million, compared with $10.8
million at December 31, 1995. This increase was primarily due to additional
accruals for insurance and claims expense. Short-term borrowings have not
been and are not anticipated to be used to meet working capital needs.
Management believes the Company's liquidity is adequate to meet expected
near-term operating requirements.
Marten has committed to purchase an additional $18 million of new revenue
equipment, net of trade-in allowances, during the remainder of 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:
The annual meeting of stockholders of the Company was held on May 7,
1996. 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 1997
with the following vote totals:
Broker
Nominee Votes For Votes Withheld Non-Votes
------- --------- -------------- ---------
Randolph L. Marten 2,530,066 21,965 -0-
Darrell D. Rubel 2,530,066 21,965 -0-
Arnold P. Schultz 2,530,066 21,965 -0-
Larry B. Hagness 2,530,066 21,965 -0-
Thomas J. Winkel 2,530,066 21,965 -0-
(b) The appointment of Arthur Andersen LLP as independent auditors
of the Company for the fiscal year ending December 31, 1996, was
approved by a vote of 2,525,341 shares in favor, 3,700 shares
opposed, and 300 shares abstaining.
ITEM 5. Other Information:
None
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, 1996.
<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 13, 1996 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 June 30, 1996
Item No. Item Method of Filing
-------- ---- ----------------
27.1 Financial Data Schedule . . . . . Filed herewith.
<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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,698,000
<SECURITIES> 0
<RECEIVABLES> 18,204,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 30,877,000
<PP&E> 136,367,000
<DEPRECIATION> 35,805,000
<TOTAL-ASSETS> 131,439,000
<CURRENT-LIABILITIES> 43,288,000
<BONDS> 29,878,000
0
0
<COMMON> 29,000
<OTHER-SE> 38,859,000
<TOTAL-LIABILITY-AND-EQUITY> 131,439,000
<SALES> 70,588,000
<TOTAL-REVENUES> 70,588,000
<CGS> 0
<TOTAL-COSTS> 67,904,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,715,000
<INCOME-PRETAX> 1,021,000
<INCOME-TAX> 408,000
<INCOME-CONTINUING> 613,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 613,000
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.21
</TABLE>
