<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, 1997
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 2,960,616 as of September 30, 1997.
<PAGE>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements.
MARTEN TRANSPORT, LTD.
CONDENSED BALANCE SHEETS
(In thousands, except share information)
September 30, December 31,
1997 1996
-------------- ------------
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . $ 2,433 $ 3,028
Receivables . . . . . . . . . . . . . . . . 20,549 19,433
Prepaid expenses. . . . . . . . . . . . . . 5,658 6,339
Deferred income taxes . . . . . . . . . . . 4,914 3,456
-------- --------
Total current assets. . . . . . . . . . 33,554 32,256
Property and equipment:
Revenue equipment, building and land,
office equipment, and other . . . . . . . 149,377 140,824
Accumulated depreciation. . . . . . . . . . (40,362) (34,945)
-------- --------
Net property and equipment. . . . . . . 109,015 105,879
Other assets . . . . . . . . . . . . . . . . . 605 --
-------- --------
TOTAL ASSETS. . . . . . . . . . . . . $143,174 $138,135
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Accounts payable and accrued liabilities. . $ 11,788 $ 11,024
Insurance and claims accruals . . . . . . . 12,366 13,558
Current maturities of long-term debt. . . . 21,376 20,100
-------- --------
Total current liabilities . . . . . . . 45,530 44,682
Long-term debt, less current maturities. . . . 31,540 33,505
Deferred income taxes. . . . . . . . . . . . . 21,806 19,904
-------- --------
Total liabilities . . . . . . . . . . . 98,876 98,091
Shareholders' investment:
Common stock, $.01 par value per
share, 10,000,000 shares authorized,
2,960,616 and 2,959,616 shares issued
and outstanding. . . . . . . . . . . . . . 30 30
Additional paid-in capital. . . . . . . . . 9,596 9,581
Retained earnings. . . . .. . . . . . . . . 34,672 30,433
-------- --------
Total shareholders' investment. . . . . 44,298 40,044
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' INVESTMENT. . . . . . . $143,174 $138,135
-------- --------
-------- --------
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,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING REVENUE. . . . . . . . . . . $44,676 $37,593 $127,046 $108,181
OPERATING EXPENSES:
Salaries, wages and benefits . . . . 13,086 12,756 38,294 37,659
Purchased transportation . . . . . . 9,746 5,111 25,765 13,731
Fuel and fuel taxes. . . . . . . . . 6,385 6,273 19,219 19,060
Supplies and maintenance . . . . . . 3,593 3,496 10,681 10,467
Depreciation . . . . . . . . . . . . 4,338 4,069 12,818 11,851
Operating taxes and licenses . . . . 928 917 2,585 2,527
Insurance and claims . . . . . . . . 779 1,676 2,746 5,521
Communications and utilities . . . . 547 391 1,589 1,259
Gain on disposition of revenue
equipment. . . . . . . . . . . . . (54) (416) (163) (2,009)
Other. . . . . . . . . . . . . . . . 1,155 1,011 3,462 3,122
-------- -------- -------- --------
Total operating expenses . . . . . 40,503 35,284 116,996 103,188
-------- -------- -------- --------
OPERATING INCOME . . . . . . . . . . . 4,173 2,309 10,050 4,993
OTHER EXPENSES (INCOME):
Interest expense . . . . . . . . . . 1,039 908 3,118 2,623
Interest income and other. . . . . . (72) (30) (133) (82)
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES . . . . . . 3,206 1,431 7,065 2,452
PROVISION FOR INCOME TAXES . . . . . . 1,282 573 2,826 981
-------- -------- -------- --------
NET INCOME . . . . . . . . . . . . . . $ 1,924 $ 858 $ 4,239 $ 1,471
-------- -------- -------- --------
-------- -------- -------- --------
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE . . . . . . . . . . $ 0.65 $ 0.29 $ 1.43 $ 0.50
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average common and common
equivalent shares outstanding. . . . 2,976 2,964 2,971 2,963
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
MARTEN TRANSPORT, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months
Ended September 30,
1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Operations:
Net income . . . . . . . . . . . . . . . . . $ 4,239 $ 1,471
Adjustments to reconcile net
income to net cash flows
from operating activities:
Depreciation . . . . . . . . . . . . . . 12,818 11,851
Gain on disposition of revenue
equipment. . . . . . . . . . . . . . . (163) (2,009)
Deferred tax provision.. . . . . . . . . 444 1,168
Changes in other current
operating items . . . . . . . . . . . (863) 2,051
-------- --------
Net cash provided by
operating activities . . . . . . . . 16,475 14,532
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions:
Revenue equipment, net . . . . . . . . . . . (15,504) (19,810)
Building and land, office equipment,
and other additions, net . . . . . . . . . (287) (369)
Net change in other assets . . . . . . . . . . (605) --
------- --------
Net cash used for investing
activities . . . . . . . . . . . . . (16,396) (20,179)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock . . . . . . . . . . . 15 172
Long-term borrowings . . . . . . . . . . . . . 17,244 21,191
Repayment of long-term borrowings. . . . . . . (17,933) (15,970)
------- --------
Net cash provided by (used for)
financing activities.. . . . . . . . (674) 5,393
------- --------
DECREASE IN CASH AND CASH EQUIVALENTS. . . . . . (595) (254)
CASH AND CASH EQUIVALENTS:
Beginning of period. . . . . . . . . . . . . . 3,028 3,330
------- --------
End of period. . . . . . . . . . . . . . . . . $ 2,433 $ 3,076
------- --------
------- --------
CASH PAID (RECEIVED) FOR:
Interest . . . . . . . . . . . . . . . . . . . $ 3,117 $ 2,636
------- --------
------- --------
Income taxes . . . . . . . . . . . . . . . . . $ (135) $ (554)
------- --------
------- --------
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 (consisting of normal recurring
accruals) considered necessary for a fair presentation of the Company's
financial condition, results of operations, and cash flows as of and for the
three and nine month periods ended September 30, 1997. 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, 1996.
(2) Stock Option Exercises
Options were exercised for 1,000 shares and 18,000 shares of Company Common
Stock, par value $.01 per share, under the Company's stock option plans
during the nine months ended September 30, 1997, and September 30, 1996,
respectively.
(3) Earnings Per Share
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
(Statement No. 128), was issued in February 1997. Statement No. 128 requires
disclosure of basic earnings per share (EPS) and diluted EPS, which replace
the existing primary EPS and fully diluted EPS. Basic EPS is computed by
dividing net income by the weighted average number of shares of common stock
outstanding during the period. Diluted EPS is computed similarly to fully
diluted EPS with differences in the calculation of dilutive potential common
shares. The Company is required to adopt Statement No. 128 in the fourth
quarter of 1997, at which time all prior period EPS are to be restated. No
differences exist between basic EPS, diluted EPS or EPS as currently reported
for the three months and nine months ended September 30, 1997, and September
30, 1996.
<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 1997 increased 18.8 percent over
the same period of 1996. Operating revenue increased 17.4 percent for the
first nine months of 1997 over the same period last year. The primary reason
for these increases was the transportation of additional freight associated
with improved customer demand and a moderate increase in Marten's fleet. The
Company's average miles per tractor and average freight rates increased in
1997. Additionally, fuel surcharges represented 0.9 percent of revenue for
the first nine months of 1997 compared with 0.6 percent for the same period
of 1996.
Operating expenses for the third quarter of 1997 represented 90.7 percent of
operating revenue, compared with 93.9 percent for the third quarter of 1996.
Operating expenses for the first nine months of 1997 were 92.1 percent of
operating revenue, compared with 95.4 percent in 1996. The transportation of
additional freight and expansion of Marten's fleet caused most of the expense
categories to increase. Purchased transportation expense increased in 1997
due to an increase in the number of independent contractor-owned vehicles.
Marten's use of independent contractor-owned vehicles reduced the following
expenses relative to revenue: salaries, wages and benefits expense, fuel and
fuel taxes expense, and supplies and maintenance expense. Independent
contractors assume these expenses. Fuel and fuel taxes expense was also
favorably impacted by a decrease in the price of diesel fuel for the third
quarter of 1997 compared with the third quarter of 1996. Insurance and
claims expense in 1997 decreased due to continued favorable accident
experience. The significant decrease in the gain on disposition of revenue
equipment was primarily caused by a decrease in the market value realized for
used revenue equipment.
Interest expense as a percentage of revenue for the three months and nine
months ended September 30, 1997, was consistent with 1996 levels.
The Company recorded net income of $1,924,000, or 65 cents per share, for the
third quarter of 1997. This compares with net income in the 1996 third
quarter of $858,000, or 29 cents per share. For the nine months ended
September 30, 1997, Marten recorded net income of $4,239,000, or $1.43 per
share, compared with $1,471,000, or 50 cents per share, in the same period of
1996. The improvement in net income resulted from continued increases in
revenue and management's control of expenses.
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings Per Share," as discussed in Note 3 to the financial statements.
This statement, effective in the fourth quarter of 1997, is expected to have
minimal impact on Marten's earnings per share computation.
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
Marten continued to invest in new, more efficient revenue equipment in 1997.
The Company has committed to purchase an additional $3 million of new revenue
equipment, net of trade-in allowances, through the end of 1997. These
expenditures have been, and are expected to continue to be, funded using cash
flow from operations and long-term debt collateralized by the new equipment.
Additionally, the Company has committed to purchase $1.1 million of diesel
fuel at a fixed price through mid-1998, which is expected to be funded using
cash flow from operations.
The Company has historically operated with a working capital deficit
primarily caused 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 adequately 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, 1997, decreased to $12.0 million from $12.4 million
at December 31, 1996. This change was due primarily to an increase in the
deferred income tax asset which was partially offset by an increase in
current maturities of long-term debt. Management believes the Company's
liquidity is adequate to meet expected near-term operating requirements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.
There are no material pending legal, governmental, administrative or
other proceedings to which the Company is a party or of which any of
its property is subject.
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) Exhibit 27.1 Financial Data Schedule.
b) No reports on Form 8-K have been filed during the quarter
ended September 30, 1997.
<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, 1997 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, 1997
Item No. Item Method of Filing
-------- ---- ----------------
27.1 Financial Data
Schedule. . . . . . Filed herewith electronically.
<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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,433,000
<SECURITIES> 0
<RECEIVABLES> 20,549,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 33,554,000
<PP&E> 149,377,000
<DEPRECIATION> 40,362,000
<TOTAL-ASSETS> 143,174,000
<CURRENT-LIABILITIES> 45,530,000
<BONDS> 31,540,000
0
0
<COMMON> 30,000
<OTHER-SE> 44,268,000
<TOTAL-LIABILITY-AND-EQUITY> 143,174,000
<SALES> 127,046,000
<TOTAL-REVENUES> 127,046,000
<CGS> 0
<TOTAL-COSTS> 116,996,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,118,000
<INCOME-PRETAX> 7,065,000
<INCOME-TAX> 2,826,000
<INCOME-CONTINUING> 4,239,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,239,000
<EPS-PRIMARY> 1.43
<EPS-DILUTED> 1.43
</TABLE>
