<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, 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 2,959,616 as of September 30, 1996.
<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,
1996 1995
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . $ 3,076 $ 3,330
Receivables. . . . . . . . . . . . . . . . . . . . . . . 19,568 17,463
Prepaid expenses . . . . . . . . . . . . . . . . . . . . 5,758 5,949
Deferred income taxes. . . . . . . . . . . . . . . . . . 4,160 2,766
-------- --------
Total current assets . . . . . . . . . . . . . . . . . 32,562 29,508
Property and equipment:
Revenue equipment, building and land,
office equipment, and other. . . . . . . . . . . . . . 139,917 132,894
Accumulated depreciation . . . . . . . . . . . . . . . . (35,947) (39,261)
-------- --------
Net property and equipment . . . . . . . . . . . . . . 103,970 93,633
-------- --------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . $136,532 $123,141
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Accounts payable and accrued liabilities . . . . . . . . $ 12,401 $ 10,637
Insurance and claims accruals. . . . . . . . . . . . . . 13,995 11,794
Current maturities of long-term debt . . . . . . . . . . 19,080 17,914
-------- --------
Total current liabilities. . . . . . . . . . . . . . . 45,476 40,345
Long-term debt, less current maturities. . . . . . . . . . 31,134 27,079
Deferred income taxes. . . . . . . . . . . . . . . . . . . 20,037 17,475
-------- --------
Total liabilities. . . . . . . . . . . . . . . . . . . 96,647 84,899
Shareholders' investment:
Common stock, $.01 par value per
share, 10,000,000 shares authorized,
2,959,616 and 2,941,616 shares issued
and outstanding. . . . . . . . . . . . . . . . . . . . 30 29
Additional paid-in capital . . . . . . . . . . . . . . . 9,581 9,410
Retained earnings. . . . . . . . . . . . . . . . . . . . 30,274 28,803
-------- --------
Total shareholders' investment . . . . . . . . . . . . 39,885 38,242
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' INVESTMENT . . . . . . . . . . . . . . $136,532 $123,141
-------- --------
-------- --------
</TABLE>
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)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING REVENUE. . . . . . . . . . . . . . . . . . . . . . $ 37,593 $ 35,889 $108,181 $102,677
OPERATING EXPENSES:
Salaries, wages and benefits . . . . . . . . . . . . . . . 12,756 12,807 37,659 37,409
Purchased transportation . . . . . . . . . . . . . . . . . 5,111 3,006 13,731 7,093
Fuel and fuel taxes. . . . . . . . . . . . . . . . . . . . 6,273 6,234 19,060 18,241
Supplies and maintenance . . . . . . . . . . . . . . . . . 3,496 3,665 10,467 10,297
Depreciation . . . . . . . . . . . . . . . . . . . . . . . 4,069 3,604 11,851 10,763
Operating taxes and licenses . . . . . . . . . . . . . . . 917 871 2,527 2,246
Insurance and claims . . . . . . . . . . . . . . . . . . . 1,676 1,627 5,521 4,767
Communications and utilities . . . . . . . . . . . . . . . 391 424 1,259 1,232
Gain on disposition of revenue
equipment. . . . . . . . . . . . . . . . . . . . . . . . (416) (422) (2,009) (1,905)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,011 1,050 3,122 3,518
-------- -------- -------- --------
Total operating expenses . . . . . . . . . . . . . . . 35,284 32,866 103,188 93,661
-------- -------- -------- --------
OPERATING INCOME . . . . . . . . . . . . . . . . . . . . . . 2,309 3,023 4,993 9,016
OTHER EXPENSES (INCOME):
Interest expense . . . . . . . . . . . . . . . . . . . . . 908 812 2,623 2,392
Interest income and other. . . . . . . . . . . . . . . . . (30) (20) (82) (156)
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . . . . 1,431 2,231 2,452 6,780
PROVISION FOR INCOME TAXES . . . . . . . . . . . . . . . . . 573 892 981 2,712
-------- -------- -------- --------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . $ 858 $ 1,339 $ 1,471 $ 4,068
-------- -------- -------- --------
-------- -------- -------- --------
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE . . . . . . . . . . . . . . . . . . . . . $ 0.29 $ 0.45 $ 0.50 $ 1.37
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average common and common
equivalent shares outstanding. . . . . . . . . . . . . . . 2,964 2,966 2,963 2,966
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
MARTEN TRANSPORT, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Operations:
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 1,471 $ 4,068
Adjustments to reconcile net
income to net cash flows
from operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . 11,851 10,763
Gain on disposition of revenue
equipment. . . . . . . . . . . . . . . . . . . . . (2,009) (1,905)
Deferred tax provision . . . . . . . . . . . . . . . 1,168 2,008
Changes in other current
operating items. . . . . . . . . . . . . . . . . . 2,051 777
------- -------
Net cash provided by
operating activities . . . . . . . . . . . . . 14,532 15,711
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions:
Revenue equipment, net . . . . . . . . . . . . . . . . . (19,810) (15,762)
Building and land, office equipment,
and other additions, net . . . . . . . . . . . . . . . (369) (2,161)
------- -------
Net cash used for investing
activities . . . . . . . . . . . . . . . . . . (20,179) (17,923)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock . . . . . . . . . . . . . . . . . 172 74
Long-term borrowings . . . . . . . . . . . . . . . . . . . 21,191 15,845
Repayment of long-term borrowings. . . . . . . . . . . . . (15,970) (13,032)
------- -------
Net cash provided by
financing activities . . . . . . . . . . . . . 5,393 2,887
------- -------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . (254) 675
CASH AND CASH EQUIVALENTS:
Beginning of period. . . . . . . . . . . . . . . . . . . . 3,330 3,129
------- -------
End of period. . . . . . . . . . . . . . . . . . . . . . . $ 3,076 $ 3,804
------- -------
------- -------
CASH PAID (RECEIVED) FOR:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,636 $ 2,351
------- -------
------- -------
Income taxes . . . . . . . . . . . . . . . . . . . . . . . $ (554) $ (558)
------- -------
------- -------
</TABLE>
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 September 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 18,000 shares and 11,666 shares of Company stock
under the Company's stock option plans during the nine months ended September
30, 1996, and September 30, 1995, respectively.
(3) 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.
<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 1996 increased 4.7 percent over the
same period last year. Operating revenue for the nine months ended September
30, 1996, increased 5.4 percent over the same period in 1995. These increases
resulted from the transportation of additional freight associated with moderate
additions to the Company's fleet. Fuel surcharges implemented to offset an
increase in the cost of diesel fuel represented 0.6 percent of revenue for the
first nine months of 1996.
Operating expenses as a percent of revenue for the third quarter of 1996 were
93.9 percent, compared with 91.6 percent for the third quarter of 1995. This
ratio for the first nine months of 1996 was 95.4 percent, compared with 91.2
percent in 1995. Operating expenses in 1996 increased 7.4 percent and 10.2
percent for the third quarter and the first nine months, respectively. The
transportation of additional freight caused many of the expense categories to
increase. The Company continued to increase the number of independent
contractor-owned vehicles in 1996, causing an increase in purchased
transportation expense. Marten's use of additional independent contractors
decreased salaries, wages and benefits expense and fuel and fuel tax expense
relative to revenue, as these expenses are assumed by independent contractors.
Fuel and fuel tax expense in 1996 increased due to higher diesel fuel prices.
Depreciation expense increased due to the continued expansion of Marten's fleet.
Interest expense for the third quarter of 1996 increased 11.8 percent over the
same period in 1995. Interest expense for the first nine months of 1996
increased 9.7 percent over 1995. These increases are due to additional long-
term debt associated with revenue equipment purchases.
The Company recorded net income of $858,000, or 29 cents per share for the third
quarter of 1996, compared with net income of $1,339,000, or 45 cents per share
in 1995. Net income for the nine months ended September 30, 1996, was
$1,471,000, or 50 cents per share, compared with $4,068,000, or $1.37 per share
in 1995. These decreases are attributed to increased operating expenses without
a corresponding increase in average freight rates.
CAPITAL RESOURCES AND LIQUIDITY
Marten continued to invest in new, more efficient revenue equipment in 1996.
These purchases were funded using cash flow from operations and long-term debt
collateralized by the new equipment.
The Company has historically operated with a working capital deficit caused
primarily by current maturities of long-term debt related to revenue equipment
purchases. Marten's operating profits, short turnover in accounts receivable
and cash management practices have funded working capital needs. Short-term
borrowings have not been and are not expected to be used to meet working capital
requirements. The Company's working capital deficit at September 30, 1996,
increased to $12.9 million from $10.8 million at December 31, 1995, due
primarily to additional accruals for insurance and claims expense. Management
believes the Company's liquidity is adequate to meet anticipated near-term
operating requirements.
The Company is committed to purchase an additional $10 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:
None
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 September 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: November 12, 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 September 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,076,000
<SECURITIES> 0
<RECEIVABLES> 19,568,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 32,562,000
<PP&E> 139,917,000
<DEPRECIATION> 35,947,000
<TOTAL-ASSETS> 136,532,000
<CURRENT-LIABILITIES> 45,476,000
<BONDS> 31,134,000
0
0
<COMMON> 30,000
<OTHER-SE> 39,855,000
<TOTAL-LIABILITY-AND-EQUITY> 136,532,000
<SALES> 108,181,000
<TOTAL-REVENUES> 108,181,000
<CGS> 0
<TOTAL-COSTS> 103,188,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,623,000
<INCOME-PRETAX> 2,452,000
<INCOME-TAX> 981,000
<INCOME-CONTINUING> 1,471,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,471,000
<EPS-PRIMARY> 0.50
<EPS-DILUTED> 0.50
</TABLE>
