<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, 1997
Commission File Number: 0-15010
MARTEN TRANSPORT, LTD.
(Exact name of registrant as specified in its charter)
Delaware 39-1140809
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(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 June 30, 1997.
<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,
1997 1996
--------- ------------
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . $ 3,457 $ 3,028
Receivables . . . . . . . . . . . . . . . 19,303 19,433
Prepaid expenses. . . . . . . . . . . . . 5,728 6,339
Deferred income taxes . . . . . . . . . . 3,171 3,456
-------- --------
Total current assets . . . . . . . . 31,659 32,256
Property and equipment:
Revenue equipment, building and land,
office equipment, and other . . . . . . 147,241 140,824
Accumulated depreciation. . . . . . . . . (37,758) (34,945)
-------- --------
Net property and equipment . . . . . 109,483 105,879
Other assets . . . . . . . . . . . . . . . . 633 --
-------- --------
TOTAL ASSETS . . . . . . . . . . $141,775 $138,135
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-------- --------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Accounts payable and accrued liabilities. $ 8,949 $ 11,024
Insurance and claims accruals . . . . . . 12,214 13,558
Current maturities of long-term debt. . . 21,938 20,100
-------- --------
Total current liabilities. . . . . . 43,101 44,682
Long-term debt, less current maturities. . . 35,451 33,505
Deferred income taxes. . . . . . . . . . . . 20,864 19,904
-------- --------
Total liabilities. . . . . . . . . . 99,416 98,091
Shareholders' investment:
Common stock, $.01 par value per
share, 10,000,000 shares authorized,
2,959,616 shares issued
and outstanding . . . . . . . . . . . . 30 30
Additional paid-in capital. . . . . . . . 9,581 9,581
Retained earnings . . . . . . . . . . . . 32,748 30,433
-------- --------
Total shareholders' investment . . . 42,359 40,044
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' INVESTMENT. . . .. $141,775 $138,135
-------- --------
-------- --------
The accompanying notes are an integral part of these balance sheets.
<PAGE>
<TABLE>
<CAPTION>
MARTEN TRANSPORT, LTD.
CONDENSED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING REVENUE. . . . . . . . . . $43,817 $35,979 $82,370 $70,588
OPERATING EXPENSES:
Salaries, wages and benefits . . . 12,743 12,520 25,208 24,903
Purchased transportation . . . . . 9,165 4,617 16,019 8,620
Fuel and fuel taxes. . . . . . . . 6,362 6,662 12,834 12,787
Supplies and maintenance . . . . . 3,828 3,263 7,088 6,971
Depreciation . . . . . . . . . . . 4,278 3,945 8,480 7,782
Operating taxes and licenses . . . 854 826 1,657 1,610
Insurance and claims . . . . . . . 867 1,832 1,967 3,845
Communications and utilities . . . 521 422 1,042 868
Gain on disposition of revenue
equipment. . . . . . . . . . . . (46) (465) (109) (1,593)
Other. . . . . . . . . . . . . . . 1,127 995 2,307 2,111
------- ------- ------- -------
Total operating expenses. . 39,699 34,617 76,493 67,904
------- ------- ------- -------
OPERATING INCOME . . . . . . . . . . 4,118 1,362 5,877 2,684
OTHER EXPENSES (INCOME):
Interest expense . . . . . . . . . 1,051 870 2,079 1,715
Interest income and other. . . . . (41) (28) (61) (52)
------- ------- ------- -------
INCOME BEFORE INCOME TAXES . . . . . 3,108 520 3,859 1,021
PROVISION FOR INCOME TAXES . . . . . 1,243 208 1,544 408
------- ------- ------- -------
NET INCOME . . . . . . . . . . . . . $ 1,865 $ 312 $ 2,315 $ 613
------- ------- ------- -------
------- ------- ------- -------
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE . . . . . . . . . $ 0.63 $ 0.11 $ 0.78 $ 0.21
------- ------- ------- -------
------- ------- ------- -------
Weighted average common and common
equivalent shares outstanding. . . 2,967 2,964 2,967 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)
Six Months
Ended June 30,
1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Operations:
Net income . . . . . . . . . . . . . . . $ 2,315 $ 613
Adjustments to reconcile net
income to net cash flows
from operating activities:
Depreciation . . . . . . . . . . . 8,480 7,782
Gain on disposition of revenue
equipment. . . . . . . . . . . . (109) (1,593)
Deferred tax provision . . . . . . 1,245 684
Changes in other current
operating items. . . . . . . . . (2,678) 1,483
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Net cash provided by
operating activities. . . . . 9,253 8,969
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CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions:
Revenue equipment, net . . . . . . . . . (11,780) (12,846)
Building and land, office equipment,
and other additions, net. . . . . . . (195) (272)
Net change in other assets . . . . . . . . (633) --
------- -------
Net cash used for investing
activities. . . . . . . . . . (12,608) (13,118)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock . . . . . . . . . -- 33
Long-term borrowings . . . . . . . . . . . 15,736 14,092
Repayment of long-term borrowings. . . . . (11,952) (10,608)
------- -------
Net cash provided by
financing activities. . . . . 3,784 3,517
------- -------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS . . . . . . . . . . . 429 (632)
CASH AND CASH EQUIVALENTS:
Beginning of period. . . . . . . . . . . . 3,028 3,330
------- -------
End of period. . . . . . . . . . . . . . . $ 3,457 $ 2,698
------- -------
------- -------
CASH PAID (RECEIVED) FOR:
Interest . . . . . . . . . . . . . . . . . $ 2,085 $ 1,729
------- -------
------- -------
Income taxes . . . . . . . . . . . . . . . $ 4 $ (292)
------- -------
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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 June 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.
<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 1997 increased 21.8 percent over the
same period of 1996. Operating revenue for the first six months of 1997
increased 16.7 percent over the same period last year. These increases were
primarily the result of transporting additional freight associated with improved
customer demand and a moderate increase in the Company's fleet. Marten's
equipment utilization, measured by average miles per tractor, and average
freight rates increased in 1997. Additionally, fuel surcharges implemented to
partially offset an increase in the cost of diesel fuel represented 1.2 percent
of revenue in the first half of 1997 compared with 0.6 percent for the first six
months of 1996.
Operating expenses as a percent of operating revenue for the second quarter of
1997 were 90.6 percent, compared with 96.2 percent for the second quarter of
1996. This ratio for the first six months of 1997 was 92.9 percent, compared
with 96.2 percent in the same period of 1996. Most expense categories increased
in 1997, due to transportation of additional freight and expansion of Marten's
fleet. Marten continued to increase the number of independent contractor-owned
vehicles in 1997, resulting in an increase in purchased transportation expense.
The Company'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. These expenses are
assumed by the independent contractors. Fuel and fuel taxes expense was also
impacted by fluctuations in the price of diesel fuel in 1997. Fuel prices
increased in the first quarter and decreased in the second quarter when compared
with the same periods of 1996. Insurance and claims expense in 1997 decreased
due to continued favorable accident experience combined with adequate loss
reserves. Gain on disposition of revenue equipment significantly decreased in
1997, primarily due to a decrease in the market value realized for used revenue
equipment.
Interest expense as a percent of revenue for the three months and six months
ended June 30, 1997, remained at 1996 levels.
Marten recorded net income of $1,865,000, or 63 cents per share, for the second
quarter of 1997, compared with net income of $312,000, or 11 cents per share,
for the same period in 1996. Net income for the six months ended June 30, 1997,
was $2,315,000, or 78 cents per share. This compares with net income of
$613,000, or 21 cents per share, for the same period in 1996. The improvement
in operating results can be attributed to increased revenue combined with
management's control of expenses.
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
The Company continued to replace its fleet with new, more efficient revenue
equipment in 1997. Marten is committed to purchase an additional $7 million of
new revenue equipment, net of trade-in allowances, during the remainder of 1997.
These expenditures were, and are expected to be, funded using cash flow from
operations and long-term debt collateralized by the new equipment.
Marten has historically operated with a working capital deficit caused primarily
by current maturities of long-term debt associated with the acquisition of
revenue equipment. Working capital requirements have been adequately funded by
the Company's operating profits, short turnover in accounts receivable and cash
management practices. Short-term borrowings have not been and are not expected
to be used to meet working capital needs.
The Company's working capital deficit at June 30, 1997, decreased to $11.4
million from $12.4 million at December 31, 1996. This change resulted from a
decrease in both insurance and claims accruals and in current payables
associated with revenue equipment purchases. These decreases were partially
offset by an increase in current maturities of long-term debt caused by
additional long-term borrowing. Management believes the Company's liquidity is
adequate to meet expected near-term operating requirements.
<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.
The annual meeting of stockholders of the Company was held on May 13,
1997. The following items were voted upon at the annual meeting:
(a) Five incumbent directors were elected to serve one-year
terms expiring at the annual meeting of stockholders to be held
in 1998. No votes were cast against any nominee. The following
summarizes the votes cast for, votes withheld, and broker
non-votes with respect to each nominee:
Broker
Nominee Votes For Votes Withheld Non-Votes
------- --------- -------------- ---------
Randolph L. Marten 2,865,045 2,020 -0-
Darrell D. Rubel 2,865,045 2,020 -0-
Larry B. Hagness 2,865,045 2,020 -0-
Thomas J. Winkel 2,865,045 2,020 -0-
Jerry M. Bauer 2,865,045 2,020 -0-
(b) The stockholders also approved the appointment of Arthur
Andersen LLP as independent auditors of the Company for the
fiscal year ending December 31, 1997, by a vote of 2,863,440
shares in favor, 3,555 shares opposed, and 70 shares abstaining.
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 June 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: August 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 June 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,457,000
<SECURITIES> 0
<RECEIVABLES> 19,303,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 31,659,000
<PP&E> 147,241,000
<DEPRECIATION> 37,758,000
<TOTAL-ASSETS> 141,775,000
<CURRENT-LIABILITIES> 43,101,000
<BONDS> 35,451,000
0
0
<COMMON> 30,000
<OTHER-SE> 42,329,000
<TOTAL-LIABILITY-AND-EQUITY> 141,775,000
<SALES> 82,370,000
<TOTAL-REVENUES> 82,370,000
<CGS> 0
<TOTAL-COSTS> 76,493,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,079,000
<INCOME-PRETAX> 3,859,000
<INCOME-TAX> 1,544,000
<INCOME-CONTINUING> 2,315,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,315,000
<EPS-PRIMARY> 0.78
<EPS-DILUTED> 0.78
</TABLE>
