10-K 1 10-K -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year Commission file number: ended: DECEMBER 31, 1994 0-15010
------------------------ MARTEN TRANSPORT, LTD. (Exact name of Registrant as specified in its charter) DELAWARE 39-1140809 (State of Incorporation) (I.R.S. Employer Identification No.) 129 MARTEN STREET 54755 MONDOVI, WISCONSIN (Zip Code) (Address of Principal Executive Offices)
Registrant's telephone number, including area code: (715) 926-4216 ------------------------ SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK, PAR VALUE $.01 PER SHARE ------------------------ 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 / / Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. / / As of March 1, 1995, 2,929,950 shares of Common Stock of the Registrant were outstanding, and the aggregate market value of the Common Stock of the Registrant (based upon the last reported sale price of the Common Stock at that date by the Nasdaq National Market), excluding shares owned beneficially by officers and directors was approximately $21,810,975. Part II of this Annual Report on Form 10-K incorporates by reference information (to the extent specific pages are referred to herein) from the Registrant's Annual Report to Shareholders for the year ended December 31, 1994 (the "1994 Annual Report"). Part III of this Annual Report on Form 10-K incorporates by reference information (to the extent specific sections are referred to herein) from the Registrant's Proxy Statement for its annual meeting to be held May 2, 1995 (the "1995 Proxy Statement"). -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- PART I ITEM 1. BUSINESS (a) GENERAL DEVELOPMENT OF BUSINESS. Marten Transport, Ltd. ("the Company") is a long-haul truckload carrier providing protective service transportation, which is temperature controlled or insulated carriage of temperature sensitive materials and general commodities and carriage of time sensitive freight, pursuant to operating authority, both contract and common, granted by the Interstate Commerce Commission ("ICC"). The Company believes that the common carrier truckload market continues to expand as shippers increasingly utilize common carriage to gain cost efficiencies and more effectively use resources. Shippers are also consolidating their distribution facilities which has led to consolidation in the number of carriers used. As of December 31, 1994, the Company operated a fleet consisting of 965 tractors and 1,253 trailers (all of which are protective service trailers). Of the total fleet, 909 tractors were Company-owned and 56 tractors and 3 trailers were leased from independent contractors who also provide the services of a driver satisfactory to the Company. As of December 31, 1994, the Company had 1,206 employees, including 976 drivers, none of whom is represented by a collective bargaining unit. The Company was organized under Wisconsin law in 1970 as a successor to a sole proprietorship operated by Roger R. Marten since 1946. In 1988, the Company reincorporated under Delaware law. The Company's executive offices are located at 129 Marten Street, Mondovi, Wisconsin 54755, and its telephone number is (715) 926-4216. (b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS. Since its inception, the Company's revenue, operating profits and assets have been attributable primarily to one business segment--long-haul truckload carriage of temperature and time sensitive materials and general commodities. (c) NARRATIVE DESCRIPTION OF BUSINESS. The Company specializes in protective service transportation of foods, chemicals and other products that require temperature controlled or insulated carriage. The Company also provides carriage of dry freight for customers requiring the special services the Company offers. In 1994, the Company derived approximately 78% of its revenue from hauling products requiring protective service and 22% of its revenue from hauling dry freight. Most of the Company's dry freight loads require special services the Company offers or permit the Company to position its equipment for hauling protective service loads. The specialized transportation services offered by the Company include: - dependable, late model tractors which allow timely deliveries - late model temperature controlled trailers - scheduled pickups and deliveries - assistance in loading and unloading - the availability of extra trailers that can be placed for the convenience of customers - sufficient equipment to respond promptly to customers' varying requirements - an on-line computer system which allows customers to obtain information regarding the status of deliveries MARKETING AND CUSTOMERS Senior management and marketing personnel seek customers whose products require protective or other specialized services and who ship multiple truckloads per week. To minimize empty miles, the Company places special emphasis on soliciting customers whose shipping requirements allow the Company to balance the number of load originations and terminations in any given area. A key element of the Company's emphasis on service is its strong commitment to accommodating the individualized requirements of its customers. The Company has developed an electronic data interface ("EDI") system, through which the Company can provide its customers with current information regarding the location and status of shipments in transit. This system also allows customers to place orders for their transportation needs and allows the Company to bill customers directly. In 1993, the Company implemented a satellite tracking system that enhances monitoring of truck and shipment locations. The Company maintains marketing offices in its Wisconsin headquarters, as well as other selected locations throughout the United States. Marketing personnel travel in their assigned regions to solicit new customers and maintain contact with existing customers. Once a customer relationship is established, the primary Company contact is one of the Company's customer service managers. Working from the Company's terminal in Mondovi, Wisconsin, the customer service managers regularly contact existing customers to solicit additional business on a load-by-load basis, particularly when equipment will be available nearby following a completed haul. Each customer service manager is assigned to particular customers and is responsible for monitoring overall transportation and service requirements as well as freight movements for each assigned customer. These efforts to coordinate shipper needs with equipment availability have been instrumental in maintaining a low average empty mile factor of 6.7% in 1994. The Company's Vice President of Sales is responsible for the development of new business, particularly in the area of protective service transportation. To further this goal, the Company maintains an incentive program for the sales force. The program rewards salespeople for meeting or exceeding defined objectives within their respective regions. The Company sets its own freight rates instead of using those published by tariff publishing bureaus. This allows the Company to offer rates that are more responsive to market conditions and the level of service required by a particular customer. The Company's rate structure is designed to compensate the Company for the cost of protective service revenue equipment as well as hauling loads into areas that generate empty miles. The Company derived approximately 12 percent of its revenue from a single customer in 1994, 14 percent in 1993 and 13 percent in 1992. OPERATIONS The Company's operations are designed for efficient use of equipment while maintaining the emphasis placed on providing individualized service to customers. The Company's computer system provides real-time, on-line information to track shipments and increase equipment utilization as well as to assist management in long-range planning and trend analysis. The Company maintains its dispatch operations in its Mondovi, Wisconsin, headquarters. The customer service managers are assigned to particular customers and regions and work closely with the Company's fleet managers, marketing personnel and drivers. Loads are assigned to drivers by load planners. Loads are then dispatched by fleet managers who are assigned a group of drivers regardless of load destination. Once a load has been dispatched, a fleet manager is responsible for - 2 - its proper and efficient delivery and tracks the status and location of that load through daily contact with drivers. Customer service managers coordinate with the Company's marketing personnel to match customer needs with Company capacity and location of revenue equipment. Each driver is monitored daily on his/her location, load temperature and any problems by the appropriate fleet manager. This information, along with information concerning available loads, is constantly updated on the Company's computer system. Computer-generated information is used to meet delivery schedules, respond to customer inquiries and match available equipment with loads. The Company's primary traffic lanes are between the Midwest and the West Coast, Pacific Northwest, Southwest, Southeast, East Coast and within California. The average length of a trip (one-way) was 1,132 miles during 1994, 1,143 miles during 1993 and 1,162 miles during 1992. The Company's loads generally move from origin directly to destination, thus eliminating any need for freight terminals. Due to the significant number of loads originating in the Los Angeles area and the size of the Company's western operations, the Company operates a maintenance facility in Ontario, California. The Company also maintains smaller maintenance facilities in Jonesboro, Georgia, and Aurora, Oregon. In order to reduce fuel costs, the Company has agreements with various fuel distributors which enable drivers to purchase fuel at a discount while in transit. The Company also purchases fuel in bulk at its Mondovi and Ontario facilities. DRIVERS As of December 31, 1994, the Company employed 976 drivers and had contracts with independent contractors for the services of 56 tractors that provide both a tractor and a qualified driver for the Company's exclusive use. The Company recruits drivers from throughout the United States. The ratio of drivers to tractors as of December 31, 1994, was 1 to 1. None of the Company's drivers is represented by a collective bargaining unit. The Company's turnover of drivers was approximately 59% in 1994, which the Company believes is better than the industry average. Drivers, including independent contractors, are selected in accordance with specific Company guidelines relating to safety records, driving experience and personal evaluations. Once selected, a driver is trained in all phases of Company policies and operations as well as safety techniques and fuel-efficient operation of the equipment. In addition, all new drivers must pass a road test prior to assignment to a vehicle. Recognizing the importance of driver contact while on the road for extended periods, the Company maintains a toll-free number and a staff of fleet managers to provide timely communication and driver support. To enhance this communication and support, the Company implemented a satellite tracking system in 1993. To retain qualified drivers and promote safe operations, the Company purchases premium quality tractors and equips them with optional comfort and safety features, including air ride suspension, air conditioning, high-quality interiors, power steering, engine brakes and double sleeper cabs. The Company maintains stringent screening, training and testing procedures for its drivers to reduce the potential for accidents and the corresponding cost of insurance and claims. Company-employed drivers receive a fixed rate per mile which is increased based on the driver's length of service. Drivers are also eligible for bonuses based upon safe, efficient driving. The Company believes that its compensation program provides an important incentive to attract and retain qualified drivers. The Company compensates independent contractors on the basis of a fixed rate per mile or a percentage of revenue from loads hauled. Independent contractors pay their own fuel, insurance, maintenance and repairs and other expenses. - 3 - REVENUE EQUIPMENT The Company's policy is to purchase tractors and trailers manufactured to Company specifications. The Company's tractors are generally manufactured by Kenworth, a subsidiary of PACCAR, Inc., and Freightliner. Most of the Company's tractors are equipped with 365-horsepower Detroit Diesel engines, which are designed to enable the equipment to maintain constant speed with optimum fuel economy under conditions often encountered by the Company's equipment, such as mountainous terrain and maximum weight loads. Most of the Company's single van trailers are manufactured by Utility or Great Dane and are equipped with Thermo- King cooling and heating equipment. The current cost of a temperature- controlled, protective service trailer is approximately $38,000. Standardization of equipment enables the Company to simplify driver training, control the cost of spare parts inventory, enhance its preventive maintenance program and increase fuel economy. The following table shows the type and age of equipment owned by the Company as of December 31, 1994: Model year Tractors Single van trailers ---------- -------- ------------------- 1995 120 94 1994 185 245 1993 293 280 1992 131 109 1991 179 145 1990 1 4 1989 -- 241 1988 -- 132 ___ _____ Total 909 1,250 === ===== The 1,250 single van refrigerated trailers are 48 feet long by 102 inches wide with a minimum of 102 inches of inside height. The Company's policy is to replace its tractors and trailers based on factors such as age, the market for used equipment and improvements in technology and fuel efficiency. The Company believes that this policy has resulted in one of the most modern fleets among carriers of comparable size. During 1994, 87 tractors and 78 trailers were added, net of equipment trades. In 1995, the Company plans to purchase 304 additional tractors (for which 208 tractors will be traded) and 300 additional trailers (for which 158 trailers will be traded). The Company has a comprehensive maintenance program for its Company-owned tractors and trailers to minimize equipment downtime and enhance resale value. Inspections, repairs and maintenance are performed regularly at the Company's facilities in Mondovi, Wisconsin; Ontario, California; Jonesboro, Georgia; and Aurora, Oregon; and at independent contract maintenance facilities in the Company's service territory. The Company's tractors and trailers are washed regularly to enhance appearance and prolong equipment life. EMPLOYEES As of December 31, 1994, the Company employed 1,206 people, of whom 976 were drivers, 83 were mechanics and maintenance personnel and 147 were support personnel, including management and administration. None of the Company's employees is represented by a collective bargaining unit, and the Company considers relations with its employees to be good. - 4 - COMPETITION The trucking industry is highly competitive. The Company competes primarily with other protective service truckload carriers and with private carriage fleets. For freight that does not require protective service trailers, the Company also competes with dry freight truckload carriers and to a lesser extent with railroads. The Company competes primarily on the basis of its quality of service and its ability to provide protective service and other specialized services. Several other truckload carriers offering protective service have substantially greater financial resources than the Company, own more equipment and carry a larger volume of freight than the Company. REGULATION The Company is a motor common and contract carrier regulated by the ICC and various state agencies. These regulatory authorities have broad powers, generally governing activities such as authority to engage in motor carrier operations, rates and charges, and certain mergers, consolidations and acquisitions. The Motor Carrier Act of 1980 (the "MCA") substantially increased competition among motor carriers and limited the level of regulation in the industry. The MCA enables applicants to obtain ICC operating authority more easily and allows interstate motor carriers such as the Company to change their rates without ICC approval. The law also allows for the removal of many route and commodity restrictions on the transportation of freight. The Trucking Industry Regulatory Reform Act of 1994 (the "TIRRA") has further increased industry competition and limited industry regulation. The TIRRA repeals tariff filing for individually determined rates; simplifies the granting of ICC operating authority; and pre-empts price, route, and service regulation by the states. Motor carrier operations are subject to safety requirements prescribed by the United States Department of Transportation governing interstate operations. Such matters as weight and dimensions of equipment are also subject to federal and state regulations. The Company also has operating authority in the Canadian Provinces of Alberta, British Columbia, Manitoba, Ontario, Quebec and Saskatchewan. ITEM 2. PROPERTIES The Company's executive offices and principal terminal are located on approximately seven acres in Mondovi, Wisconsin, which currently consists of approximately 28,000 square feet of office space and approximately 21,000 square feet of equipment repair and maintenance space. It was originally constructed in 1965 and was expanded in 1971, 1980, 1987 and 1993. The Company also maintains a maintenance facility in Ontario, California. This facility is currently leased from R & R Properties, a sole-proprietorship owned by Randolph L. Marten, for a period of 5 years terminating December 31, 1999. The current lease provides for rent of $126,000 per year from 1995 through 1999. This rent is based on the debt service of R & R Properties to finance this facility. The Company is required to bear the cost of insurance, maintenance and repairs, taxes, special assessments and utilities. In 1993, the Company remodeled this facility. The current total square footage of this facility is approximately 15,000, including approximately 2,700 square feet of office space and 8,000 square feet of equipment repair and maintenance space. The parking lot measures 150,000 square feet. The Company purchased a maintenance facility in Jonesboro, Georgia, in 1993. The facility measures approximately 12,500 square feet and consists of office space, a two and one-half bay service and repair space and parking for up to forty tractors and trailers. - 5 - The Company also leases a maintenance facility in Aurora, Oregon. The lease provides for rent of $51,600 per year. The facility, which is approximately 6,800 square feet, consists of office space, a three-bay service and repair space and parking for up to twenty tractors and trailers. The lease expires in January 1996. ITEM 3. LEGAL PROCEEDINGS The Company is a party to routine litigation incidental to its business, primarily involving claims for personal injury and property damage incurred in the transport of freight. The Company self-insures for property damage. The Company partially self-insures for losses related to workers' compensation claims, employees' group health benefits and cargo claims. The Company also maintains excess general liability and automobile liability insurance policies, each with a per incident policy limit of $2,000,000 and a cumulative coverage limit of $21,000,000. The Company believes that its current liability limit is reasonable under the circumstances. It is possible, however, that the Company could incur liability in excess of its policy limits in the future, in which case its financial condition could be adversely affected. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this Report. ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT The Company's executive officers and their ages along with the offices held as of March 1, 1995, are as follows: Name Age Position Randolph L. Marten 42 Chairman of the Board, President, Chief Operating Officer and Director Darrell D. Rubel 49 Executive Vice President, Chief Financial Officer, Treasurer, Assistant Secretary and Director Timothy P. Nash 43 Vice President of Sales Franklin J. Foster 39 Vice President of Finance Robert G. Smith 51 Vice President of Operations Voin S. Long 47 Vice President of Information Systems Randolph L. Marten has been a full time employee of the Company since 1974. Mr. Marten has been a Director of the Company since October 1980, its President and Chief Operating Officer since June 1986 and its Chairman of the Board since August 1993. Mr. Marten was Vice President of the Company from October 1980 to June 1986. Darrell D. Rubel has been a Director of the Company since February 1983, its Chief Financial Officer since January 1986, its Treasurer since June 1986 and its Executive Vice President since May 1993. Mr. Rubel was also Secretary of the Company from June 1986 until August 1987 - 6 - and Vice President from January 1986 until May 1993, and has been Assistant Secretary since August 1987. Timothy P. Nash has been Vice President of Sales since November 1990 and was Regional Sales Manager from July 1987 to November 1990. Mr. Nash was a regional sales manager for Overland Express, Inc., a long-haul truckload carrier, from August 1986 to July 1987. Franklin J. Foster has been Vice President of Finance since December 1991 and was Director of Finance from January 1991 to December 1991. Mr. Foster was a vice president in commercial banking for First Bank National Association from October 1985 to January 1991. Robert G. Smith has been Vice President of Operations since June 1993 and was Director of Operations from September 1989 to June 1993. Mr. Smith was director of operations for Transport Corporation of America, an irregular-route truckload carrier, from January 1985 to September 1989. Voin S. Long has been Vice President of Information Systems since July 1994 and was Director of Information Systems from February 1986 to July 1994. Mr. Long was president of AVL, Inc., a transportation software company from July 1978 to February 1986. Executive Officers of the Company are elected by the Board of Directors for one-year terms, commencing with their election at the first meeting of the Board of Directors immediately following the annual meeting of shareholders and continuing until the next such meeting of the Board of Directors. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The information under the caption "Common Stock Data" on page 21 of the Company's 1994 Annual Report is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA The financial information under the caption "Five-Year Financial Summary" on page 9 of the Company's 1994 Annual Report is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 10 and 11 of the Company's 1994 Annual Report is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Company's Financial Statements and the report of its independent public accountants on pages 12 - 20 of the Company's 1994 Annual Report are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. - 7 - PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT A. DIRECTORS OF THE REGISTRANT. The information under the captions "Election of Directors--Information About Nominees" and "Election of Directors--Other Information About Nominees" in the Company's 1995 Proxy Statement is incorporated herein by reference. B. EXECUTIVE OFFICERS OF THE REGISTRANT. Information concerning Executive Officers of the Company is included in this Report under Item 4A, "Executive Officers of the Registrant." C. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT. The information contained under the caption "Section 16 Compliance" in the Company's 1995 Proxy Statement is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information under the captions "Election of Directors--Director Compensation" and "Compensation and Other Benefits" in the Company's 1995 Proxy Statement is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information under the caption "Principal Stockholders and Beneficial Ownership of Management" in the Company's 1995 Proxy Statement is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information under the caption "Certain Transactions" in the Company's 1995 Proxy Statement is incorporated herein by reference. - 8 - PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. Financial Statements: The following Financial Statements are incorporated herein by reference from the pages indicated in the Company's 1994 Annual Report: Report of Independent Public Accountants - page 20 Balance Sheets as of December 31, 1994 and 1993 - page 12 Statements of Operations for the years ended December 31, 1994, 1993 and 1992 - page 13 Statements of Changes in Shareholder's Investment for the years ended December 31, 1994, 1993 and 1992 - page 14 Statements of Cash Flows for the years ended December 31, 1994, 1993 and 1992 -page 15 Notes to Financial Statements - pages 16 - 20 2. Financial Statement Schedules: None. 3. Exhibits: The exhibits to this Report are listed in the Exhibit Index on pages 11 - 15 of this Annual Report on Form 10-K. A copy of any of the exhibits listed or referred to above will be furnished at a reasonable cost to any person who was a shareholder of the Company as of March 24, 1995, upon receipt from any such person of a written request for any such exhibit. Such request should be sent to Darrell D. Rubel, Executive Vice President and Chief Financial Officer, Marten Transport, Ltd., 129 Marten Street, Mondovi, Wisconsin 54755. The following is a list of each management contract or compensatory plan or arrangement required to be filed as an Exhibit to this Annual Report on Form 10-K pursuant to Item 14(c): (1) Marten Transport, Ltd. Incentive Stock Option Plan, as amended. (2) Marten Transport, Ltd. Non-Statutory Stock Option Plan, as amended. (3) Employment Agreement, dated May 1, 1993, between the Company and Darrell D. Rubel. (4) Marten Transport, Ltd. 1995 Stock Incentive Plan. (b) Reports on Form 8-K: None during the fourth quarter of the fiscal year ended December 31, 1994. - 9 - SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: March 22, 1995 MARTEN TRANSPORT, LTD. By /s/ Randolph L. Marten -------------------------------- Randolph L. Marten Chairman of the Board, President and Chief Operating Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below on March 22, 1995 by the following persons on behalf of the Registrant and in the capacities indicated. Signature Title --------- ----- /s/ Randolph L. Marten ------------------------------- Chairman of the Board, Randolph L. Marten President, Chief Operating Officer (Principal Executive Officer) and Director /s/ Darrell D. Rubel ------------------------------- Executive Vice President, Chief Darrell D. Rubel Financial Officer, Treasurer, Assistant Secretary (Principal Financial and Accounting Officer) and Director /s/ Arnold P. Schultz ------------------------------- Director Arnold P. Schultz /s/ Larry B. Hagness ------------------------------- Director Larry B. Hagness /s/ Thomas J. Winkel ------------------------------- Director Thomas J. Winkel - 10 - MARTEN TRANSPORT, LTD. EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 Item No. Item Method of Filing -------- ---- ---------------- 3.1 Certificate of Incorporation of the Company . . . . . . . . . . Incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-8 (File No. 33-75648). 3.2 Bylaws of the Company. . . . . . . Incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-8 (File No. 33-75648). 4.1 Specimen form of the Company's Common Stock Certificate. . . . . . . . . . . . Incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-1 (File No. 33-8108). 4.2 Certificate of Incorporation of the Company. . . . . . . . . . . . See Exhibit 3.1 4.3 Bylaws of the Company. . . . . . . See Exhibit 3.2 9.1 Voting Trust Agreement dated February 14, 1983, as amended . . . . . . . . . . . . Incorporated by reference to Exhibit 9.1 to the Company's Registration Statement on Form S-1 (File No. 33-8108). 9.2 Agreement regarding Voting Trust Agreement, dated May 4, 1993 . . . Incorporated by reference to Exhibit 19.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 (File No. 0-15010). 10.1 Marten Transport, Ltd. Incentive Stock Option Plan, as amended . . . . . . . . . Incorporated by reference to Exhibit 10.1 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1986 (File No. 0-15010). - 11 - 10.2 Marten Transport, Ltd. Non-Statutory Stock Option Plan, as amended. . . . . . Incorporated by reference to Exhibit 10.2 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1987 (File No. 0-15010). 10.3 Real Estate Lease dated November 29, 1994 between the Company, as Lessee, and R & R Properties and Randolph L. Marten, as Lessor. . . Filed herewith. 10.4 Stock Restriction Agreement among Roger R. Marten, Randolph L. Marten and Darrell D. Rubel . . . . . . . . . Incorporated by reference to Exhibit 10.5 to the Company's Registration Statement on Form S-1 (File No. 33-8108). 10.5 Agreement on Credit Terms dated as of January 5, 1990 between the Company and First Bank National Association. . . . . . . . . . . . Incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 (File No. 0-15010). 10.6 Amendment to Agreement on Credit Terms dated as of July 31, 1990 between the Company and First Bank National Association . . . . . . . Incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990 (File No. 0-15010). 10.7 Incentive Stock Option Agreement dated November 1, 1990 between the Company and Timothy P. Nash. . . . . . . . Incorporated by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990 (File No. 0-15010). 10.8 Lease Agreement and Supplement No. 1 to Lease Agreement dated April 1, 1990 between the Company and Barclays Leasing, Inc. . . . . . . . . . . . . . Incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for the for the fiscal year ended December 31, 1990 (File No. 0-15010). - 12 - 10.9 Lease Agreement dated September 12, 1990 between the Company and Truck Country of WI, Inc.. . . . . Incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991 (File No. 0-15010). 10.10 Security Agreement dated January 12, 1990, as amended, between the Company and First Bank National Association . . . . . . . Incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992 (File No. 0-15010). 10.11 Second Amendment to Agreement on Credit Terms dated May 31, 1991 between the Company and First Bank National Association. . . . . . . . . . . . Incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992 (File No. 0-15010). 10.12 Amendment No. 3 to Agreement on Credit Terms dated May 17, 1993 between the Company and First Bank National Association . . . . . . . Incorporated by reference to Exhibit 19.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 (File No. 0-15010). 10.13 Employment Agreement dated May 1, 1993 between the Company and Darrell D. Rubel. . . . . . . . . . . . . . . Incorporated by reference to Exhibit 19.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 (File No. 0-15010). 10.14 Stock Purchase Agreement dated November 15, 1993 between the Company and Timothy P. Nash. . . . . . . . . . Incorporated by reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (File No. 0- 15010). - 13 - 10.15 Stock Purchase Agreement dated November 16, 1993 between the Company and Arnold P. Schultz. . . . . . . . . Incorporated by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (File No. 0- 15010). 10.16 Stock Redemption Agreement dated June 21, 1994 between the Company and Darrell D. Rubel, as Personal Representative of the Estate of Roger R. Marten. . . . . . . . . . Filed herewith. 10.17 Stock Purchase Agreement dated December 16, 1994 between the Company and Timothy P. Nash. . . . Filed herewith. 10.18 Marten Transport, Ltd. 1995 Stock Incentive Plan . . . . . . . . . . Filed herewith. 13.1 1994 Annual Report to Shareholders - pages 9-21. . . . . Filed herewith. 23.1 Consent of Arthur Anderson & LLP . . . . . . . . . . Filed herewith. 27.1 Financial Data Schedule. . . . . . Filed herewith. - 14 - EX-10.3 2 EXHIBIT 10.3 EXHIBIT 10.3 REAL ESTATE LEASE This Lease made and entered into this 29th day of November, 1994, by and among R & R Properties, a Wisconsin partnership, and Randolph L. Marten (hereinafter jointly and severally referred to as "LESSOR") and Marten Transport, Ltd., a Delaware corporation (hereinafter referred to as "LESSEE"). 1. PREMISES. The Lessor, for and in consideration of the covenants herein contained, does hereby lease to Lessee Lessor's land and building located in the City of Ontario, San Bernardino County, California, for the purposes of general offices and freight terminals, which property is legally described as set forth on the attached Exhibit 1. 2. TERM. This Lease shall be for a period of five years (60 months) commencing on January 1, 1995, and terminating on December 31, 1999. Lessee shall have the option, exercisable by written notice to Lessor given at least ninety (90) days prior to the end of the initial term of this Lease, to renew this Lease for an additional term of five years (60 months), commencing immediately after the end of the initial term of this Lease and terminating on December 31, 2004, upon the same terms and conditions set forth in this Lease. 3. RENT. Base rent for the leased premises shall consist of monthly payments of $10,514.78. All monthly payments shall be made in advance on the first day of each and every month during the term of this Lease. It is mutually understood by the parties that this rental represents an absolute net rental to be received by the Lessor. In addition, the Lessee shall pay, as additional rent for the leased premises, property taxes, special assessments, insurance, utilities, nonstructural repairs and maintenance applicable to the leased premises as hereinafter set forth. 4. LESSEE COVENANTS. Lessee covenants and agrees, during the term of this Lease and for such further time as Lessee shall hold the leased premises or any part thereof, that Lessee shall: A. Pay the rent and any other monies due on the days and in the manner herein provided. B. Not allow the interest of the Lessor in the leased premises to become subject to any liens, charges or encumbrances whatsoever and to indemnify and to keep indemnified the Lessor against all such liens, charges and encumbrances placed thereon by acts of the Lessee. C. Not use the leased premises in any manner contrary to, and to comply with, any and all governmental regulations, rules, laws or ordinances now or hereinafter in force. D. Surrender, yield and to give up the leased premises in a clean and reasonable condition, ordinary wear and tear and damage by fire or other casualty reimbursed by insurance to Lessor excepted, upon the termination of the Lease, either by lapse of time or otherwise. E. Obtain, manage and keep in force for the benefit of the Lessee and Lessor general public liability insurance against claims for personal injury, death or property damage occurring on or about the leased premises or areas adjacent thereto in such amounts as reasonably established from time to time by Lessor consistent with levels of insurance maintained in prior periods. Such insurance shall be carried at Lessee's own expense naming Lessor as an additional insured and Lessee shall furnish to Lessor proof of such coverage and provide for non-cancellation without at least thirty (30) days prior written notice to Lessor and Lessee. F. Obtain, maintain and keep in force for the benefit and in the name of the Lessor fire extended coverage, vandalism, malicious mischief and other casualty insurance to the extent of the fair market value of Lessor's buildings and improvements situated on the leased premises, and as to the Lessee, as desired by Lessee on its inventory, equipment, machinery and leasehold improvements and other items owned by Lessee. All such insurance shall be at Lessee's expense and Lessee shall furnish to Lessor proof of such coverage and provide for non-cancellation without at least thirty (30) days prior written notice to Lessor and Lessee. G. Maintain, repair or replace, and keep at its own expense, in good condition, all of the leased premises occupied by Lessee, excluding, however, repairs of structural damage not caused by acts or omissions of Lessee, agents or invitees and excluding damages and losses covered by insurance required under paragraph F above and paid to Lessor. H. Be responsible for furnishing and paying for all utilities and services desired by Lessee including electrical, water, phone, etc. I. Pay all property taxes and assessments when due on the leased premises including any and all property taxes and assessments upon the property of the Lessee used in the operation of the business of the Lessee conducted on the leased premises or in connection with the Lessees' business conducted on the leased premises. 5. LESSOR COVENANTS. Lessor covenants and agrees, during the term of this Lease, and for such further time as Lessee shall hold the leased premises or any part thereof and is not in default under this Lease, that upon Lessee's paying the rent and observing and performing all of the terms, covenants and conditions on Lessee's part to be observed and performed, Lessee may peacefully and quietly have, hold, occupy and enjoy the leased premises, however, the Lessor or its or his agents may examine the leased premises at any reasonable time upon reasonable notice. 2 6. ALTERATIONS AND TRADE FIXTURES. Lessee may make normal alterations without consent of Lessor and at the expense of Lessee. Major alterations of the leased premises may not be made by Lessee without prior written consent of Lessor. Upon the termination of this Lease, or the vacating of the leased premises, any items that become part of the real estate shall be left on the leased premises by the Lessee without expense or charge to Lessor and become the property of Lessor. Trade fixtures and equipment owned by or installed at the cost of Lessee shall remain personal property and shall not be deemed to become part of the leased premises. Lessee shall have the right to remove such trade fixtures and equipment subject to the obligation of Lessee to repair any damage to the leased premises caused by such removal by Lessee. Failure to remove trade fixtures at the expiration of this Lease shall constitute automatic extension of this Lease or, at the option of Lessor, said fixtures may be removed by Lessor without liability for such removal and a lien shall vest in favor of Lessor on such fixtures for the cost of such removal and any storage of such fixtures. 7. LESSOR'S RIGHTS OF RE-ENTRY. If Lessee shall fail to pay any rent or monies required promptly on the day when the same shall become due and payable hereunder (subject, however, to a grace period of five (5) days, said grace period not to be construed as an automatic right to extend said payment five (5) days beyond the date in which rent payments are due and consistent failure to pay on the date in which said rent payments are due shall constitute automatic breach of this Lease), Lessor may terminate this Lease by giving thirty (30) days written notice to Lessee of such election; or if Lessee shall fail to promptly keep and perform any other affirmative covenant of this Lease strictly in accordance with the terms of this Lease, and shall continue in default for a period of thirty (30) days after written notice to Lessee thereof by Lessor, then, and in that event, and as often as any such event shall occur, and also if Lessee shall abandon, desert, vacate or remove from the leased premises, or shall file a petition of bankruptcy or be adjudged bankrupt after the filing of an involuntary petition of bankruptcy, or make an assignment for the benefit of creditors or receive the benefit of any insolvency or bankruptcy act, or enter into an agreement or arrangement of cooperation with its creditors, then, and in that event as well, Lessor may, at its election, terminate this Lease at any time hereafter, upon giving to Lessee thirty (30) days notice in writing of this election, and at the expiration of such thirty (30) day period, all of Lessee's rights and interests in said Lease shall cease; anything to the contrary of this Lease notwithstanding. Lessee further covenants and agrees to pay and discharge all reasonable costs and charges, including attorney's fees and expenses, with interest at the maximum lawful rate of interest authorized by law of the State of Wisconsin, that shall be made and incurred by said Lessor in enforcing the covenants and agreements of this Lease or otherwise reasonably incurred or made in 3 connection with this Lease by Lessor. All of the remedies of the Lessor are cumulative and the selection of any one remedy shall not be deemed a waiver of any other. Lessee expressly waives any and all rights of redemption granted by or under any present or future law in the event of Lessee being evicted or dispossessed or in the event of Lessor obtaining possession of the leased premises by reason of the default or failure to perform by Lessee of any of the covenants, conditions and agreements of this Lease or otherwise. 8. WAIVER OF LIABILITY, HOLD HARMLESS AND INDEMNITY AGREEMENT. Lessor shall not be responsible for damage or loss to the leased premises or property or business of Lessee, and Lessee shall not have a cause of action nor a right of action to collect for the same, except for any such damage or loss as is caused by the willful, deliberate, reckless or negligent conduct of Lessor. Lessee does hereby waive any and all right of recovery against Lessor, Lessor's employees and agents for loss occurring to the leased premises, Lessee's property or business, except for any such damage or loss as is caused by the willful, deliberate, reckless or negligent conduct of Lessor. Lessee covenants and agrees that it will indemnify and save Lessor free and harmless from any and all claims for injury and damages to persons or property arising from Lessee's use, misuse or occupancy of the leased premises or arising from any breach by Lessee of any covenant or obligation made and to be performed by it under the terms hereof. Each party further agrees that it forfeits any rights of action that it may later acquire against the other party to this agreement for loss or damage to said property or to any property in which either party may have an interest where the loss is caused by fire or other insurable hazard and arises out of or is connected with the ownership or leasing of any premises subject to this Lease or leased in the future. Each party shall advise its insurance carrier of this waiver. 9. DESTRUCTION AND CONDEMNATION. A. In the event the leased premises are rendered untenable by fire or other casualty in such a way that the premises are rendered substantially unsuitable to Lessee for the carrying on of its business and, further, if said Lessor is unable to substantially restore the premises within 90 days following any such casualty, then either party shall have the option of terminating this Lease by written notice to the other. If the premises are only partially rendered untenable, then Lessor shall undertake to promptly repair the same and the rent for the period of repairs shall be abated pro rata, based upon the portion of the premises which are serviceable and occupied. In the event the repairs are undertaken, they shall be completed within a reasonable time. B. In the event of condemnation, each party may seek, at their own expense, such awards and rights they deem appropriate subject to the following: 4 1. Partial condemnation: In the event there is sufficient land and improvements after such condemnation to continue the business of Lessee, the proceeds of any such award shall be first applied to restore/modify the property to the extent necessary to continue the conduct of the business. The rent under this Lease shall be appropriately adjusted to reflect the reduction of leasehold interest lost by Lessee. In the event Lessor and Lessee cannot agree on such reduction, it shall be determined by binding arbitration; said arbitrator to be appointed by any Judge of a court of competent jurisdiction for the County of San Bernardino, California, upon application by either party. 2. Total condemnation: In the event of total loss by condemnation, this Lease shall terminate. 10. LESSOR'S RIGHTS TO MAKE CERTAIN PAYMENTS. In the event that the Lessee fails to promptly pay when due any costs such as taxes or insurance, or other charges on said premises, and to keep the property in reasonably repair and pay all of the costs and expenses thereof promptly when due, and keep free from any and all liens or accounts thereof, then the Lessor may, at its option, pay such costs, after giving Lessee thirty days notice of demand for payment in writing. After the giving of said notice, and in default of the Lessee's paying as required, the Lessor may make any such payments and charge to Lessee for such sums so paid in advance, together with interest thereon at the prime rate charge by First National Bank of Minneapolis, Minnesota. 11. OPTION TO PURCHASE. Provided this Lease has not been cancelled or terminated or expired by its terms, Lessee shall have the option to purchase the leased premises, exercisable by written notice to Lessor during the following periods: A. At any time within six (6) months after Lessee has received demand for payment from First Bank National Association or its successors or assigns under that certain Limited Guaranty dated November 21, 1994 executed and delivered by Lessee in favor of First Bank National Association to guarantee payment of a promissory note of Lessor payable to First Bank National Association in the original principal amount of $1,000,000 (the "Guaranty"); or B. At any time during the last six (6) months of the initial term of this Lease or during the last six (6) months of the optional 5-year renewal term of this Lease. The purchase price for the leased premises payable pursuant to exercise of such option shall be equal to the fair market value of the leased premises as determined by an independent appraisal conducted by an appraiser reasonably acceptable to Lessor and Lessee, provided that, notwithstanding the foregoing, the purchase price shall in no event be less than $500,000 nor more than $1,500,000. If the appraisal is less than $500,000, then the purchase price shall be $500,000, and if the appraisal is greater 5 than $1,500,000, then the purchase price shall be $1,500,000. If Lessor and Lessee are unable to agree upon an appraiser within thirty (30) days after Lessee's notice of exercise of the option, then either party, upon ten (10) days' prior written notice to the other party, may apply to the Circuit Court of Buffalo County, Wisconsin, for such court to select and appoint the appraiser. Each party shall bear one half of the cost of appointing the appraiser and of the appraiser's fee. Lessee shall pay to Lessor the purchase price in cash or good federal funds on the date of closing of the purchase, which shall take place at a mutually agreeable time and place within sixty (60) days after Lessee's notice of exercise of the option. Notwithstanding the foregoing, Lessee shall receive a credit against the purchase price for any amount paid by Lessee pursuant to the Guaranty. Lessor agrees to indemnify and reimburse Lessee for any amount that Lessee is required to pay pursuant to the Guaranty for which Lessee does not receive a credit against the purchase price upon exercise of the option, whether or not the option is exercised. Taxes, special assessments and other expenses of the leased premises shall be pro rated as of the date of closing. Any purchase by the Lessee pursuant to this Section 11 shall be subject to the following: a. Lessor shall provide Lessee with a commitment for an ALTA Form B Extended Coverage Owners Policy written by a title insurer acceptable to Lessee agreeing to issue the owners policy to Lessee upon payment of premium ("Title Commitment"). The commitment shall be accompanied by copies of all title exceptions. The Lessee shall have a period of thirty (30) days after receipt of the Title Commitment to determine if title is marketable. If title is not marketable, Lessee will notify Lessor of its objections to title and Lessor shall have a period of ninety (90) days thereafter to render title marketable. b. Lessee shall accept and Lessor shall deliver marketable title, subject however to any encumbrances or exceptions to title which the Lessee has placed against the leased premises during the lease term, including taxes and assessments then and thereafter due against the parcel. Lessee reserves the right to cure any other defect in Lessor's title and credit the reasonable cost of the same against the purchase price for the leased premises. c. Conveyance shall be by Lessor's warranty deed, bill of sale and other conveyance documents reasonably required by Lessee accompanied by the ALTA Owner's Policy issued in the name of Lessee, as insured, in the amount of the purchase price ("Title Policy"). 6 d. Lessor shall pay Lessor's attorneys' fees, the cost of preparing the warranty deed and other conveyance documents, the cost of the Title Commitment, one-half of any reasonable and customary closing fee or charges imposed by the closing agent, if any, any transfer fees, registry stamps or deed taxes or the like imposed on the conveyance and necessary to record the warranty deed, bill of sale and other conveyance documents and any and all special assessments levied or pending against the leased premises. Lessee shall pay Lessee's attorneys' fees, all recording fees for the warranty deed, bill of sale and other conveyance documents, the cost of the Title Policy including any title premium and one-half of any reasonable and customary closing fee or charge imposed by the closing agent, if any. Real estate taxes shall be prorated as of the date of closing. e. Closing of the purchase of the leased premises shall, at Lessee's option, be through a deed and money escrow agreement with a nationally recognized title insurance company in substantially the form then currently in use by such title insurance company with provisions to make the same consistent with the foregoing requirements. f. Notice of election to purchase shall not terminate Lessee's obligation to continue to make rental payments and rents shall continue to be paid to the date of acquisition of title, any law to the contrary notwithstanding. 12. NOTICE. Any notice, demand, request or other instrument which may be or is required to be given under this Lease shall be delivered in person or sent by certified mail and shall be addressed to the parties at the addresses as noted under their signatures to this Lease or to such other address as may be, from time to time, designated to the parties by written notice. 13. SUBLET OR ASSIGN. Lessee under this Lease shall have no right to sublet or assign, expressed or implied, without written consent of Lessor, which shall not be unreasonably withheld. 7 This agreement shall inure to the benefit of and be binding upon the parties hereto, their personal representatives, successors and assigns. IN WITNESS WHEREOF, the parties have hereunto caused this Lease to be duly executed the day and year first above noted. MARTEN TRANSPORT, LTD. R & R PROPERTIES LESSEE: LESSOR: By: \s\ Darrell D. Rubel By \s\ Randolph L. Marten ------------------------------- ------------------------------ Address: 129 Marten Address: Route 3 Mondovi, WI 54755 Mondovi, WI 54755 8 EXHIBIT 1 LEASE R & R PROPERTIES - MARTEN TRANSPORT, LTD. Description of real estate: Parcel 1 of Parcel Map No. 7917, in the City of Ontario, County of San Bernardino, State of California, as per plat thereof recorded in Book 81 of Parcel Maps, Pages 56 and 57, records of said County. Subject to all covenants, conditions, restrictions, reservations, rights, right of way and easements of record. 9 EX-10.16 3 EXHIBIT 10.16 EXHIBIT 10.16 STOCK REDEMPTION AGREEMENT This AGREEMENT effective as of June 21, 1994 is between Marten Transport, Inc., a Delaware corporation (the "COMPANY"), and Darrell D. Rubel, as Personal Representative of the Estate of Roger R. Marten (the "SHAREHOLDER"). WHEREAS, the Shareholder desires to sell to the Company, and the Company desires to purchase from the Shareholder, an aggregate of Five Hundred Thousand (500,000) shares of the common stock of the Company (the "SHARES"), subject to all of the terms and conditions of this Agreement hereinafter set forth; NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. REDEMPTION OF THE SHARES. 1.1 AGREEMENT FOR PURCHASE AND SALE OF SHARES. Subject to the satisfaction of the conditions to closing of the transaction contemplated hereby as hereinafter set forth, the Shareholder hereby agrees to sell to the Company, and the Company hereby agrees to purchase from the Shareholder, the Shares for a purchase price of $16.00 per share, or an aggregate purchase price of Eight Million Dollars ($8,000,000) (the "REDEMPTION PRICE"). 1.2 CLOSING. Unless this Agreement shall have been terminated, and subject to the satisfaction of the conditions to closing of the transaction contemplated hereby hereinafter set forth, a closing (the "CLOSING") will be held on June 21, 1994 at 11:00 a.m. at the offices of Oppenheimer Wolff & Donnelly, Plaza VII, Suite 3400, 45 South Seventh Street, Minneapolis, Minnesota, or at such other place or at such other time as the parties hereto may mutually agree, at which time and place the documents and instruments necessary or appropriate to effect the transaction contemplated hereby will be exchanged by the parties. Specifically, and not in limitation of the foregoing, at the Closing, the Shareholder will deliver a certificate or certificates in proper form and duly endorsed for transfer representing the Shares, and the Company will pay to the Shareholder the Redemption Price by certified check, federal wire transfer or interbank transfers. 1.3 PAYMENT OF COSTS OF FAIRNESS OPINION. The Shareholder hereby agrees to pay all of the fees and expenses payable by the Company pursuant to the engagement by the Company of Alex. Brown & Sons Incorporated ("ALEX. BROWN") to render an opinion to the Board of Directors of the Company as to the fairness to the Company of the transaction contemplated hereby. The Company is hereby authorized to deduct from the Redemption Price any such amount payable to Alex. Brown, and the Shareholder hereby agrees to pay directly to Alex. Brown or reimburse the Company for any such fees and expenses that may become payable that are not so deducted from the payment of the Redemption Price. 2. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The Shareholder hereby represents and warrants to the Company as follows: 2.1 TITLE TO SHARES. The Shareholder is the record and beneficial owner of the Shares, free and clear of all liens, encumbrances and claims of every kind, and the delivery of the Shares by the Shareholder to the Company under this Agreement will transfer to the Company valid title to the Shares, free and clear of all liens, charges, encumbrances and claims of every kind. There are no actions, suits or proceedings against the Shareholder affecting the title to any of the Shares or the right of the Shareholder to execute, deliver and perform its obligations under this Agreement. 2.2 AUTHORITY. The Shareholder has the full legal right, power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transaction contemplated hereby. This Agreement has been duly and validly executed and delivered by, and constitutes the valid and binding agreement of, the Shareholder, enforceable against the Shareholder in accordance with its terms. 2.3 NO CONFLICT. The execution and delivery of this Agreement by the Shareholder and the consummation of the transaction contemplated hereby will not (a) conflict with, or result in any breach of any material terms, conditions or provisions of, or constitute a default under, or result in the imposition of any lien or encumbrance upon any assets or property of the Shareholder pursuant to, any applicable law, administrative regulation or judgment, or any contract to which the Shareholder is a party or by which its properties, assets or rights may be bound or affected, (b) violate any provision of any law, rule or regulation of any administrative agency or governmental body applicable to the Shareholder, or any decree of any court, arbitrator or governmental body applicable to the Shareholder, or (c) require any filing with, or license, permit, consent or other approval of, any third party or governmental body. 2.4 INVESTMENT REPRESENTATIONS. (a) The Shareholder acknowledges that the Shareholder has received such material information as has been requested, and has had an opportunity to ask questions of and receive answers from management of the Company to the extent deemed necessary by the Shareholder, in order to enable the Shareholder to become fully familiar with the financial condition, business and affairs of the Company. The Shareholder, therefore, confirms the Company's understanding that the Shareholder is fully aware of and advised concerning the present financial condition of the Company, the administration of its business affairs and its prospects for future business. 2 (b) The Shareholder, either alone or with the assistance of its professional advisors, has such knowledge and experience in financial and business matters that it is capable of reading and interpreting financial statements and evaluating the merits and risks of the transaction contemplated hereby. (c) The Shareholder has obtained, to the extent it deems necessary, its own personal professional advice with respect to the transaction contemplated hereby in light of its financial condition and investment needs. 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to the Shareholder as follows: 3.1 AUTHORITY. The Company has the full legal right, power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transaction contemplated hereby. This Agreement has been duly and validly executed and delivered by, and constitutes the valid and binding agreement of, the Company, enforceable against the Company in accordance with its terms. 3.2 NO CONFLICT. The execution and delivery of this Agreement by the Company and the consummation of the transaction contemplated hereby will not (a) conflict with, or result in any breach of any material terms, conditions or provisions of, or constitute a default under, or result in the imposition of any lien or encumbrance upon any assets or property of the Company pursuant to, any applicable law, administrative regulation or judgment, or any contract to which the Company is a party or by which its properties, assets or rights may be bound or affected, (b) violate any provision of any law, rule or regulation of any administrative agency or governmental body applicable to the Company, or any decree of any court, arbitrator or governmental body applicable to the Company, or (c) require any filing with, or license, permit, consent or other approval of, any third party or governmental body. 4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations, warranties, covenants and agreements of the Shareholder and the Company shall survive the execution and delivery of this Agreement and the consummation of the transaction contemplated hereby regardless of any investigation that may have been made at any time by or on behalf of the party to which such representations, warranties, covenants and agreements are made. 5. CONDITIONS TO CLOSING. Notwithstanding any other provision of this Agreement to the contrary, the obligation of the Company to effect the transaction contemplated hereby shall be subject to the satisfaction at or prior to the Closing of each of the following conditions: (a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and warranties of the Shareholder contained in 3 this Agreement shall be in all material respects true, complete and accurate as of the date when made and at and as of the time of the Closing as though such representations and warranties were made at and as of such time, except for changes specifically permitted or contemplated by this Agreement. (b) REQUIRED APPROVALS AND CONSENTS. All approvals and consents of or from any third party or any governmental authority required to consummate the transaction contemplated hereby shall have been delivered, made or obtained, and the Company shall have received copies thereof. (c) NO ADVERSE CHANGES. No adverse changes shall have occurred after the date hereof in the business or financial condition of the Company or in the trading price of the common stock of the Company. (d) NO PROCEEDING OR LITIGATION. No suit, action, investigation, inquiry or other proceeding by any third party or any governmental body shall have been instituted or threatened which questions the validity or legality of the transaction contemplated hereby or which, if successfully asserted, would individually or in the aggregate, otherwise have a material adverse effect on the business or financial condition of the Company. (e) OPINION OF COUNSEL TO THE SHAREHOLDER. The Company shall have received an opinion of legal counsel to the Shareholder, in form and substance satisfactory to the Company, to the following effect: (i) The Shareholder is the record and beneficial owner of the Shares, free and clear of all liens, encumbrances and claims of every kind, and the delivery of the Shares by the Shareholder to the Company under this Agreement will transfer to the Company valid title to the Shares, free and clear of all liens, charges, encumbrances and claims of every kind. There are no actions, suits or proceedings against the Shareholder effecting the title to any of the Shares or the right of the Shareholder to execute, deliver and perform its obligations under this Agreement. (ii) The Shareholder has the full legal right, power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transaction contemplated hereby. This Agreement has been duly and validly executed and delivered by, and constitutes the valid and binding agreement of, the Shareholder, enforceable against the Shareholder in accordance with its terms. 4 (iii) The execution and delivery of this Agreement by the Shareholder and the consummation of the transaction contemplated hereby will not (a) conflict with or result in any breach of any material terms, conditions or provisions of, or constitute a default under, or result in the imposition of any lien or encumbrance upon any assets or property of the Shareholder pursuant to, any applicable law, administrative regulation or judgment or any contract to which the Shareholder is now a party or by which its properties, assets or rights may be bound or affected, (b) violate any provision of any law, rule or regulation of any administrative agency or governmental body applicable to the Shareholder, or any decree of any court, arbitrator or governmental body applicable to the Shareholder, or (c) require any filing with, or license, permit, consent or other approval of, any third party or governmental body. (f) OPINION OF ALEX. BROWN. The Company shall have received a favorable opinion of Alex. Brown, in form and substance satisfactory to the Company, to the effect that the transaction contemplated hereby is fair to the Company from a financial point of view. (g) FINANCING. The Company shall have obtained, on terms satisfactory to the Company in its sole discretion, such financing as may be necessary for the Company to consummate the transaction contemplated hereby. (h) ACCEPTANCE BY COUNSEL. The form and substance of all legal matters contemplated hereby and of all instruments and documents delivered hereunder shall be in form and substance reasonably satisfactory to counsel to the Company. 6. MISCELLANEOUS. 6.1 TERMINATION. This Agreement may be terminated and the transaction contemplated hereby may be abandoned at any time, but not later than the Closing, upon the following terms: (i) by mutual written consent of the Company and the Shareholder; or (ii) by the Company on or after June 23, 1994 if any of the conditions provided for in Section 5 of this Agreement shall not have been satisfied or waived in writing by the Company prior to such date; or (iii) by the Shareholder on or after June 23, 1994 if the transaction contemplated hereby shall not have been consummated on or before such date. 5 6.2 PUBLIC ANNOUNCEMENTS. The Shareholder acknowledges and understands that the Company will make a public announcement of the transaction contemplated hereby as may be necessary or appropriate in accordance with applicable law. The Shareholder agrees that it will not make any public statement or issue any release relating to the transaction contemplated hereby without the prior written consent of the Company. 6.3 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Wisconsin. 6.4 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNMENT. This Agreement collectively sets forth the entire agreement and understanding of the parties with respect to the transaction contemplated hereby and supersedes all prior agreements, arrangements, and understandings relating to the subject matter hereof or thereof. All of the terms, representations and warranties of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors, heirs at law, legatees, distributees, executors, administrators and other legal representatives. 6.5 FURTHER ASSURANCES. Each party to this Agreement will, on or at any time after the date hereof, execute such further documents or instruments and take such further actions as may reasonably be requested by any other party to this Agreement to effect the purposes of this Agreement. 6.6 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together shall constitute but one instrument. IN WITNESS WHEREOF, the parties duly executed this Agreement as of the day and year first written above. COMPANY: MARTEN TRANSPORT, LTD. By: \s\ Randolph L. Marten ------------------------------------- Its: CHAIRMAN ------------------------------------ SHAREHOLDER: \s\ Darrell D. Rubel -------------------------------------------- Darrell D. Rubel, as Personal Representative of the Estate of Roger R. Marten 6 EX-10.17 4 EXHIBIT 10.17 EXHIBIT 10.17 STOCK PURCHASE AGREEMENT THIS AGREEMENT is entered into and effective as of December 16, 1994 by and between Marten Transport, Ltd., a Delaware corporation (the "Company"), and Timothy P. Nash (the "Employee"). WHEREAS, the Employee has exercised stock options to purchase an aggregate of three thousand (3,000) shares of the Common Stock of the Company (the "Shares") pursuant to the terms of that certain Incentive Stock Option Agreement between the Company and the Employee dated as of November 1, 1990; WHEREAS, the Employee desires to sell the Shares to the Company, and the Company desires to purchase the Shares from the Employee in order for the Employee to realize the benefits of the incentive provided under the Incentive Stock Option Agreement for his efforts in the advancement of the interests of the Company in furtherance of the purposes and intent of the Incentive Stock Option Agreement; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows: 1. PURCHASE AND SALE OF SHARES. The Employee does hereby sell, assign and transfer to the Company all right, title and interest in and to three thousand (3,000) shares of Common Stock of the Company to be issued pursuant to the terms of the Incentive Stock Option Agreement between the Employee and the Company dated November 1, 1990, and the Company hereby agrees to pay to the Employee the sum of $18.50 per share for the Shares, subject to applicable withholding requirements of federal, state, social security and other tax laws. 2. BINDING EFFECT. This Agreement shall be binding upon the heirs, executors, administrators and successors of the parties hereto. 3. GOVERNING LAW. This Agreement and all rights and obligations hereunder shall be construed in accordance with and governed by the laws of the State of Wisconsin. IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the day and year first above written. MARTEN TRANSPORT, LTD., A Delaware Corporation By: \s\ Darrell D. Rubel ------------------------------- Its: EVP/CFO ---------------------------- EMPLOYEE \s\ Timothy P. Nash ---------------------------------- Timothy P. Nash EX-10.18 5 EXHIBIT 10.18 EXHIBIT 10.18 MARTEN TRANSPORT, LTD. 1995 STOCK INCENTIVE PLAN 1. PURPOSE OF PLAN. The purpose of the Marten Transport, Ltd. 1995 Stock Incentive Plan (the "Plan") is to advance the interests of Marten Transport, Ltd. (the "Company") and its stockholders by enabling the Company to attract and retain persons of ability to perform services for the Company by providing an incentive to such individuals through equity participation in the Company and by rewarding such individuals who contribute to the achievement by the Company of its economic objectives. 2. DEFINITIONS. The following terms will have the meanings set forth below, unless the context clearly otherwise requires: 2.1 "BOARD" means the Board of Directors of the Company. 2.2 "BROKER EXERCISE NOTICE" means a written notice pursuant to which a Participant, upon exercise of an Option, irrevocably instructs a broker or dealer to sell a sufficient number of shares or loan a sufficient amount of money to pay all or a portion of the exercise price of the Option and/or any related withholding tax obligations and remit such sums to the Company and directs the Company to deliver stock certificates to be issued upon such exercise directly to such broker or dealer. 2.3 "CHANGE IN CONTROL" means an event described in Section 13.1 of the Plan. 2.4 "CODE" means the Internal Revenue Code of 1986, as amended. 2.5 "COMMITTEE" means the Compensation Committee of the Board, which is charged with administering the Plan, as provided in Section 3 of the Plan. 2.6 "COMMON STOCK" means the common stock of the Company, par value $.Ol per share, or the number and kind of shares of stock or other securities into which such Common Stock may be changed in accordance with Section 4.3 of the Plan. 2.7 "DISABILITY" means the disability of the Participant such as would entitle the Participant to receive disability income benefits pursuant to the long-term disability plan of the Company or any Subsidiary then covering the Participant or, if no such plan exists or is applicable to the Participant, the permanent and total disability of the Participant within the meaning of Section 22(e)(3) of the Code. 2.8 "ELIGIBLE RECIPIENTS" means all employees (including, without limitation, officers and directors who are also employees) of the Company or any Subsidiary and any non-employee consultants and independent contractors of the Company or any Subsidiary. 2.9 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. 2.10 "FAIR MARKET VALUE" means, with respect to the Common Stock, as of any date (or, if no shares were traded or quoted on such date, as of the next preceding date on which there was such a trade or quote), the closing sale price per share of the Common Stock as reported on the NASDAQ National Market System. 2.11 "INCENTIVE AWARD" means an Option, Stock Appreciation Right, Restricted Stock Award, Performance Unit or Stock Bonus granted to an Eligible Recipient pursuant to the Plan. 2.12 "INCENTIVE STOCK OPTION" means a right to purchase Common Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan that qualifies as an "incentive stock option" within the meaning of Section 422 of the Code. 2.13 "NON-EMPLOYEE DIRECTOR" means any member of the Board of Directors of the Company who is not an employee of the Company or any Subsidiary. 2.14 "NON-STATUTORY STOCK 0PTION" means a right to purchase Common Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan that does not qualify as an Incentive Stock Option. 2.15 "0PTION" means an Incentive Stock Option or a Non-Statutory Stock Option. 2.16 "PARTICIPANT" means an Eligible Recipient who receives one or more Incentive Awards under the Plan. 2.17 "PERFORMANCE UNIT" means a right granted to an Eligible Recipient pursuant to Section 9 of the Plan to receive a payment from the Company, in the form of stock, cash or a combination of both, upon the achievement of established performance goals. 2.18 "PREVIOUSLY ACQUIRED SHARES" means shares of Common Stock that are already owned by the Participant or, with respect to any Incentive Award, that are to be issued upon the grant, exercise or vesting of such Incentive Award. 2.19 "RESTRICTED STOCK AWARD" means an award of Common Stock granted to an Eligible Recipient pursuant to Section 8 of the Plan that is subject to the restrictions on transferability and the risk of forfeiture imposed by the provisions of such Section 8. 2.20 "RETIREMENT" means normal or approved early termination of employment or service pursuant to and in accordance with the regular retirement/pension plan or practice of the Company or Subsidiary then covering the Participant, provided that if the Participant is not covered by any such plan or practice, the Participant will be deemed to be covered by the Company's plan or practice for purposes of this determination. 2.21 "SECURITIES ACT" means the Securities Act of 1933, as amended. 2.22 "STOCK APPRECIATION RIGHT" means a right granted to an Eligible Recipient pursuant to Section 7 of the Plan to receive a payment from the Company, in the form of stock, cash or a combination of both, equal to the difference between the Fair Market Value of one or more shares of Common Stock and the exercise price of any such share under the terms of such Stock Appreciation Right. 2 2.23 "STOCK BONUS" means an award of Common Stock granted to an Eligible Recipient pursuant to Section 10 of the Plan. 2.24 "SUBSIDIARY" means any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity interest, as determined by the Committee. 2.25 "TAX DATE" means the date any withholding tax obligation arises under the Code for a Participant with respect to an Incentive Award. 3. PLAN ADMINISTRATION. 3.1 THE COMMITTEE. The Plan will be administered by the Compensation Committee of the Board, all of whom will be "disinterested persons" within the meaning of Rule 16b-3 under the Exchange Act. As used in this Plan, the term "Committee" will refer to the Compensation Committee of the Board. To the extent consistent with corporate law, the Committee may delegate to any officers of the Company the duties, power and authority of the Committee under the Plan pursuant to such conditions or limitations as the Committee may establish; provided, however, that only the Committee may exercise such duties, power and authority with respect to Eligible Recipients who are subject to Section 16 of the Exchange Act. The Committee may exercise its duties, power and authority under the Plan in its sole and absolute discretion without the consent of any Participant or other party, unless the Plan specifically provides otherwise. Each determination, interpretation or other action made or taken by the Committee pursuant to the provisions of the Plan will be conclusive and binding for all purposes and on all persons, and no member of the Committee will be liable for any action or determination made in good faith with respect to the Plan or any Incentive Award granted under the Plan. 3.2 AUTHORITY OF THE COMMITTEE. (a) In accordance with and subject to the provisions of the Plan, the Committee will have the authority to determine all provisions of Incentive Awards as the Committee may deem necessary or desirable and as consistent with the terms of the Plan, including, without Limitation, the following: (i) the Eligible Recipients to be selected as Participants; (ii) the nature and extent of the Incentive Awards to be made to each Participant (including the number of shares of Common Stock to be subject to each Incentive Award, any exercise price, the manner in which Incentive Awards will vest or become exercisable and whether Incentive Awards will be granted in tandem with other Incentive Awards) and the form of written agreement, if any, evidencing such Incentive Award; (iii) the time or times when Incentive Awards will be granted; (iv) the duration of each Incentive Award; and (v) the restrictions and other conditions to which the payment or vesting of Incentive Awards may be subject. In addition, the Committee will have the authority under the Plan to pay the economic value of any Incentive Award in the form of cash, Common Stock or any combination of both. (b) The Committee will have the authority under the Plan to amend or modify the terms of any outstanding Incentive Award in any manner, including, without limitation, the authority to modify the number of shares or other terms and conditions of an Incentive Award, extend the term of an Incentive Award, accelerate the exercisability or vesting or otherwise terminate any restrictions relating to an Incentive Award, accept the surrender 3 of any outstanding Incentive Award or, to the extent not previously exercised or vested, authorize the grant of new Incentive Awards in substitution for surrendered Incentive Awards; provided, however that the amended or modified terms are permitted by the Plan as then in effect and that any Participant adversely affected by such amended or modified terms has consented to such amendment or modification. No amendment or modification to an Incentive Award, however, whether pursuant to this Section 3.2 or any other provisions of the Plan, will be deemed to be a regrant of such Incentive Award for purposes of this Plan. (c) In the event of (i) any reorganization, merger, consolidation, recapitalization, Liquidation, reclassification, stock dividend, stock split, combination of shares, rights offering, extraordinary dividend or divestiture (including a spin-off) or any other change in corporate structure or shares, (H) any purchase, acquisition, sale or disposition of a significant amount of assets or a significant business, (iii) any change in accounting principles or practices, or (iv) any other similar change, in each case with respect to the Company or any other entity whose performance is relevant to the grant or vesting of an Incentive Award, the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) may, without the consent of any affected Participant, amend or modify the vesting criteria of any outstanding Incentive Award that is based in whole or in part on the financial performance of the Company (or any Subsidiary or division thereof) or such other entity so as equitably to reflect such event, with the desired result that the criteria for evaluating such financial performance of the Company or such other entity will be substantially the same (in the discretion of the Committee or the board of directors of the surviving corporation) following such event as prior to such event; provided, however, that the amended or modified terms are permitted by the Plan as then in effect. 4. SHARES AVAILABLE FOR ISSUANCE. 4.1 MAXIMUM NUMBER OF SHARES. Subject to adjustment as provided in Section 4.3 of the Plan, the maximum number of shares of Common Stock that will be available for issuance under the Plan will be 500,000 shares. The shares available for issuance under the Plan may, at the election of the Committee, be either treasury shares or shares authorized but unissued, and, if treasury shares are used, all references in the Plan to the issuance of shares will, for corporate law purposes, be deemed to mean the transfer of shares from treasury. 4.2 ACCOUNTING FOR INCENTIVE AWARDS. Shares of Common Stock that are issued under the Plan or that are subject to outstanding Incentive Awards will be applied to reduce the maximum number of shares of Common Stock remaining available for issuance under the Plan. Any shares of Common Stock that are subject to an Incentive Award that lapses, expires, is forfeited or for any reason is terminated unexercised or unvested and any shares of Common Stock that are subject to an Incentive Award that is settled or paid in cash or any form other than shares of Common Stock will automatically again become available for issuance under the Plan. Any shares of Common Stock that constitute the forfeited portion of a Restricted Stock Award, however, will not become available for further issuance under the Plan. 4.3 ADJUSTMENTS TO SHARES AND INCENTIVE AWARDS. In the event of any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination of shares, rights offering, divestiture or extraordinary dividend (including a spin-off) or any other change in the corporate structure or shares of the Company, the Committee (or, if the 4 Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) will make appropriate adjustment (which determination will be conclusive) as to the number and kind of securities available for issuance under the Plan and, in order to prevent dilution or enlargement of the rights of Participants, the number, kind and, where applicable, exercise price of securities subject to outstanding Incentive Awards. 5. PARTICIPATION. Participants in the Plan will be those Eligible Recipients who, in the judgment of the Committee, have contributed, are contributing or are expected to contribute to the achievement of the economic objectives of the Company or its Subsidiaries. Eligible Recipients may be granted from time to time one or more Incentive Awards, singly or in combination or in tandem with other Incentive Awards, as may be determined by the Committee. Incentive Awards will be deemed to be granted as of the date specified in the grant resolution of the Committee, which date will be the date of any related agreement with the Participant. 6. OPTIONS. 6.1 GRANT. An Eligible Recipient may be granted one or more Options under the Plan, and such Options will be subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee. The Committee may designate whether an Option is to be considered an Incentive Stock Option or a Non-Statutory Stock Option. 6.2 EXERCISE PRICE. The per share price to be paid by a Participant upon exercise of an Option will be determined by the Committee in its discretion at the time of the Option grant, provided that (a) such price will not be less than 100% of the Fair Market Value of one share of Common Stock on the date of grant with respect to an Incentive Stock Option (110% of the Fair Market Value if, at the time the Incentive Stock Option is granted, the Participant owns, directly or indirectly, more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company), and (b) such price win not be less than 85% of the Fair Market Value of one share of Common Stock on the date of grant with respect to a Non-Statutory Stock Option. 6.3 EXERCISABILITY AND DURATION. An Option will become exercisable at such times and in such installments as may be determined by the Committee at the time of grant; provided, however, that no Option may be exercisable prior to six months from its date of grant and no Incentive Stock Option may be exercisable after 10 years from its date of grant (five years from its date of grant if, at the time the Incentive Stock Option is granted, the Participant owns, directly or indirectly, more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company). 6.4 PAYMENT OF EXERCISE PRICE. The total purchase price of the shares to be purchased upon exercise of an Option will be paid entirely in cash (including check, bank draft or money order); provided, however, that the Committee may allow such payments to be made, in whole or in part and upon such terms and conditions as may be established by the Committee, by tender of a Broker Exercise Notice, Previously Acquired Shares, a promissory note or by a combination of such methods. 5 6.5 MANNER OF EXERCISE. An Option may be exercised by a Participant in whole or in part from time to time, subject to the conditions contained in the Plan and in the agreement evidencing such Option, by delivery in person, by facsimile or electronic transmission or through the mail of written notice of exercise to the Company (Attention: Chief Financial Officer) at its principal executive office in Mondovi, Wisconsin and by paying in full the total exercise price for the shares of Common Stock to be purchased in accordance with Section 6.4 of the Plan. 6.6 AGGREGATE LIMITATION OF STOCK SUBJECT TO INCENTIVE STOCK OPTIONS. To the extent that the aggregate Fair Market Value (determined as of the date an Incentive Stock Option is granted) of the shares of Common Stock with respect to which incentive stock options (within the meaning of Section 422 of the Code) are exercisable for the first time by a Participant during any calendar year (under the Plan and any other incentive stock option plans of the Company or any subsidiary or parent corporation of the Company (within the meaning of the Code)) exceeds $100,000 (or such other amount as may be prescribed by the Code from time to time), such excess Options win be treated as Non-Statutory Stock Options. The determination will be made by taking incentive stock options into account in the order in which they were granted. If such excess only applies to a portion of an incentive stock option, the Committee will designate which shares will be treated as shares to be acquired upon exercise of an incentive stock option. 6.7 AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS. (a) GRANT OF OPTIONS. Following the effective date of the Plan, each Non-Employee Director who is subsequently appointed or elected for the first time to serve on the Board will be granted automatically, as of the effective date of such appointment or election, a Non-Statutory Stock Option to purchase 10,000 shares of Common Stock (subject to adjustment as provided in Section 4.3 of the Plan). (b) OPTION EXERCISE PRICE. The per share price to be paid by the Non-Employee Director at the time such an Option is exercised will be 100% of the Fair Market Value of one share of Common Stock on the date the Option is granted. The total purchase price of the shares to be purchased upon exercise will be paid entirely in cash (including check, bank draft or money order). (c) VESTING AND DURATION OF OPTIONS. Each such Option will become exercisable, on a cumulative basis, with respect to the number of whole shares of Common Stock representing one-third of the shares covered by such Option on each of the first two anniversaries of its date of grant and as to the remaining shares on the third anniversary of the date of grant; provided that no such Option shall become exercisable as to any further shares from and after the date on which the holder thereof ceases to be a member of the Board. The term of each such Option shall be 10 years from the date of grant. Each such Option shall remain exercisable for the full term thereof irrespective of whether the holder remains a member of the Board, except that in the event of the death of the holder, such Option may be exercised by the Holder's heirs or personal representatives at any time before the earlier of the expiration of the term of the Option or one year following the date of death. Such Options will not be subject to the termination provisions of Section 11 of the Plan. 6 (d) MANNER OF 0PTION EXERCISE. An Option may be exercised by a Non- Employee Director in whole or in part from time to time, subject to the conditions contained in the Plan and in the agreement evidencing such Option, by giving written notice of exercise to the Company at its principal executive office (such notice to specify the particular Option that is being exercised and the number of shares with respect to which the Option is being exercised) accompanied by payment, in cash or check payable to the Company, of the total purchase price of the shares to be purchased under the Option. (e) NON-DISCRETIONARY GRANTS. Options granted to Non-Employee Directors pursuant to this Section 6.7 are intended to qualify as "formula awards" within the meaning of Rule 16b-3 under the Exchange Act. As a result, other than as provided in Section 16 of the Plan, the Committee will not have the authority to amend the eligibility requirements for, or modify the terms or accelerate the vesting of, such Options (including, without limitation, the authority to modify the rights of Non-Employee Directors in connection with termination of service as a director or a change in control of the Company) if such amendments, modifications or acceleration of vesting would disqualify such Options from treatment as "formula awards." (f) RESCISSION OF PRIOR AUTOMATIC GRANT PROVISION. Following the effective date of the Plan, the provisions of this Section 6.7 supercede and replace the provisions of Section 19 of the Marten Transport, Ltd. 1986 Non-Statutory Stock Option Plan, as amended, with respect to all future grants of Options to each Non-Employee Director who has been subsequently appointed or elected for the first time to serve on the Board. The provisions of Section 19 of the Marten Transport, Ltd. 1986 Non-Statutory Stock Option Plan, as amended, shall remain in effect only with respect to options that have previously been granted pursuant to such provisions and for so long as such options remain outstanding. 7. STOCK APPRECIATION RIGHTS. 7.1 GRANT. An Eligible Recipient may be granted one or more Stock Appreciation Rights under the Plan, and such Stock Appreciation Rights shall be subject to such terms and conditions, consistent with the other provisions of the Plan, as will be determined by the Committee. 7.2 EXERCISE PRICE. The exercise price of a Stock Appreciation Right will be determined by the Committee at the date of grant but will not be less than 85% of the Fair Market Value of one share of Common Stock on the date of grant. 7.3 EXERCISABILITY AND DURATION. A Stock Appreciation Right will become exercisable at such time and in such installments as may be determined by the Committee at the time of grant; provided, however, that no Stock Appreciation Right may be exercisable prior to six months or after 10 years from its date of grant. A Stock Appreciation Right will be exercised by giving notice in the same manner as for Options, as set forth in Section 6.5 of the Plan. 8. RESTRICTED STOCK AWARDS. 8.1 GRANT. An Eligible Recipient may be granted one or more Restricted Stock Awards under the Plan, and such Restricted Stock Awards will be subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee. The 7 Committee may impose such restrictions or conditions, not inconsistent with the provisions of the Plan, to the vesting of such Restricted Stock Awards as it deems appropriate, including, without limitation, that the Participant remain in the continuous employ or service of the Company or a Subsidiary for a certain period or that the Participant or the Company (or any Subsidiary or division thereof) satisfy certain performance goals or criteria; provided, however, that no Restricted Stock Award may vest prior to six months from its date of grant. 8.2 RIGHTS AS A SHAREHOLDER; TRANSFERABILITY. Except as provided in Sections 8.1, 8.3 and 14.3 of the Plan, a Participant will have all voting, dividend, liquidation and other rights with respect to shares of Common Stock issued to the Participant as a Restricted Stock Award under this Section 8 upon the Participant becoming the holder of record of such shares as if such Participant were a holder of record of shares of unrestricted Common Stock. 8.3 DIVIDENDS AND DISTRIBUTIONS. Unless the Committee determines otherwise (either in the agreement evidencing the Restricted Stock Award at the time of grant or at any time after the grant of the Restricted Stock Award), any dividends or distributions (including regular quarterly cash dividends) paid with respect to shares of Common Stock subject to the unvested portion of a Restricted Stock Award will be subject to the same restrictions as the shares to which such dividends or distributions relate. In the event the Committee determines not to pay such dividends or distributions currently, the Committee will determine whether any interest will be paid on such dividends or distributions. In addition, the Committee may require such dividends and distributions to be reinvested (and in such case the Participants consent to such reinvestment) in shares of Common Stock that will be subject to the same restrictions as the shares to which such dividends or distributions relate. 8.4 ENFORCEMENT OF RESTRICTIONS. To enforce the restrictions referred to in this Section 8, the Committee may place a legend on the stock certificates referring to such restrictions and may require the Participant, until the restrictions have lapsed, to keep the stock certificates, together with duly endorsed stock powers, in the custody of the Company or its transfer agent or to maintain evidence of stock ownership, together with duly endorsed stock powers, in a certificateless book-entry stock account with the Company's transfer agent. 9. PERFORMANCE UNITS. An Eligible Recipient may be granted one or more Performance Units under the Plan, and such Performance Units will be subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee. The Committee may impose such restrictions or conditions, not inconsistent with the provisions of the Plan, to the vesting of such Performance Units as it deems appropriate, including, without limitation, that the Participant remain in the continuous employ or service of the Company or any Subsidiary for a certain period or that the Participant or the Company (or any Subsidiary or division thereof) satisfy certain performance goals or criteria. The Committee will have the discretion either to determine the form in which payment of the economic value of vested Performance Units will be made to the Participant (i.e., cash, Common Stock or any combination thereof) or to consent to or disapprove the election by the Participant of the form of such payment. 8 10. STOCK BONUSES. An Eligible Recipient may be granted one or more Stock Bonuses under the Plan, and such Stock Bonuses will be subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee. The Participant will have all voting, dividend, liquidation and other rights with respect to the shares of Common Stock issued to a Participant as a Stock Bonus under this Section 10 upon the Participant becoming the holder of record of such shares; provided, however, that the Committee may impose such restrictions on the assignment or transfer of a Stock Bonus as it deems appropriate. 11. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE. 11.1 TERMINATION DUE TO DEATH, DISABILITY OR RETIREMENT. In the event a Participant's employment or other service with the Company and all Subsidiaries is terminated by reason of death, Disability or Retirement: (a) All outstanding Options and Stock Appreciation Rights then held by the Participant will remain exercisable to the extent exercisable as of such termination for a period of one year after such termination (but in no event after the expiration date of any such Option or Stock Appreciation Right); (b) All outstanding Restricted Stock Awards then held by the Participant that have not vested will be terminated and forfeited; and (c) All outstanding Performance Units and Stock Bonuses then held by the Participant will vest and/or continue to vest in the manner determined by the Committee and set forth in the agreement evidencing such Performance Units or Stock Bonuses. 11.2 TERMINATION FOR REASONS OTHER THAN DEATH, DISABILITY OR RETIREMENT. (a) In the event a Participant's employment or other service is terminated with the Company and all Subsidiaries for any reason other than death, Disability or Retirement, or a Participant is in the employ or service of a Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company (unless the Participant continues in the employ or service of the Company or another Subsidiary), all rights of the Participant under the Plan and any agreements evidencing an Incentive Award will immediately terminate without notice of any kind, and no Options or Stock Appreciation Rights then held by the Participant will thereafter be exercisable, all Restricted Stock Awards then held by the Participant that have not vested will be terminated and forfeited, and all Performance Units and Stock Bonuses then held by the Participant will vest and/or continue to vest in the manner determined by the Committee and set forth in the agreement evidencing such Performance Units or Stock Bonuses; provided, however, that if such termination is due to any reason other than termination by the Company or any Subsidiary for "cause," all outstanding Options and Stock Appreciation Rights then held by such Participant will remain exercisable to the extent exercisable as of such termination for a period of three months after such termination (but in no event after the expiration date of any such Option or Stock Appreciation Right). 9 (b) For purposes of this Section 11.2, "cause" (as determined by the Committee) will be as defined in any employment or other agreement or policy applicable to the Participant or, if no such agreement or policy exists, will mean (i) dishonesty, fraud, misrepresentation, embezzlement or deliberate injury or attempted injury, in each case related to the Company or any Subsidiary, (ii) any unlawful or criminal activity of a serious nature, (iii) any intentional and deliberate breach of a duty or duties that, individually or in the aggregate, are material in relation to the Participant's overall duties, or (iv) any material breach of any employment, service, confidentiality or non-compete agreement entered into with the Company or any Subsidiary. 11.3 MODIFICATION OF RIGHTS UPON TERMINATION. Notwithstanding the other provisions of this Section 11, upon a Participant's termination of employment or other service with the Company and all Subsidiaries, the Committee may in its discretion (which may be exercised at any time on or after the date of grant, including following such termination) cause Options and Stock Appreciation Rights (or any part thereof) then held by such Participant to become or continue to become exercisable and/or remain exercisable following such termination of employment or service and Restricted Stock Awards, Performance Units and Stock Bonuses then held by such Participant to vest and/or continue to vest or become free of transfer restrictions, as the case may be, following such termination of employment or service, in each case in the manner determined by the Committee; provided, however, that (a) no Option or Stock Appreciation may become exercisable, and no Restricted Stock Award may vest and become non-forfeitable, prior to six months from its date of grant, and (b) no Option or Stock Appreciation Right may remain exercisable beyond its expiration date. 11.4 BREACH OF CONFIDENTIALITY OR NON-COMPETE AGREEMENTS. Notwithstanding anything in this Plan to the contrary, in the event that a Participant materially breaches the terms of any confidentiality or non-compete agreement entered into with the Company or any Subsidiary, whether such breach occurs before or after termination of such Participant's employment or other service with the Company or any Subsidiary, the Committee may immediately terminate all rights of the Participant under the Plan and any agreements evidencing an Incentive Award then held by the Participant without notice of any kind. 11.5 DATE OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE. Unless the Committee otherwise determines, a Participant's employment or other service will, for purposes of the Plan, be deemed to have terminated on the date recorded on the personnel or other records of the Company or the Subsidiary for which the Participant provides employment or other service, as determined by the Committee based upon such records. 12. PAYMENT OF WITHHOLDING TAXES. 12.1 GENERAL RULES. The Company is entitled to (a) withhold and deduct from future wages of the Participant (or from other amounts that may be due and owing to the Participant from the Company or a Subsidiary), or make other arrangements for the collection of, all legally required amounts necessary to satisfy any and all federal, state and local withholding and employment-related tax requirements attributable to an Incentive Award, including, without limitation, the grant, exercise or vesting of, or payment of dividends with respect to, an Incentive Award or a disqualifying disposition of stock received upon exercise of an Incentive Stock Option, or (b) require the Participant promptly to remit the amount of such withholding to the Company before taking any action, including issuing any shares of Common Stock, with respect to an Incentive Award. 10 12.2 SPECIAL RULES. The Committee may, upon terms and conditions established by the Committee, permit or require a Participant to satisfy, in whole or in part, any withholding or employment-related tax obligation described in Section 12.1 of the Plan by electing to tender Previously Acquired Shares, a Broker Exercise Notice or a promissory note (on terms acceptable to the Committee in its sole discretion), or by a combination of such methods. 13. CHANGE IN CONTROL. 13.1 CHANGE IN CONTROL. For purposes of this Section 13.1, a "Change in Control' of the Company will mean the following: (a) the sale, lease, exchange or other transfer, directly or indirectly, of substantially all of the assets of the Company (in one transaction or in a series of related transactions) to a person or entity that is not controlled by the Company; (b) the approval by the stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company; (c) a merger or consolidation to which the Company is a party if the stockholders of the Company immediately prior to the effective date of such merger or consolidation have "beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act), immediately following the effective date of such merger or consolidation, of securities of the surviving corporation representing less than 50% of the combined voting power of the surviving corporation's then outstanding securities ordinarily having the right to vote at elections of directors; (d) any person (other than any person that is presently the beneficial owner of 20% or more of the outstanding Common Stock) becomes after the effective date of the Plan the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the combined voting power of the Company's outstanding securities ordinarily having the right to vote at elections of directors; or (e) a change in control of the Company of a nature that would be required to be reported pursuant to Section 13 or 15(d) of the Exchange Act, whether or not the Company is then subject to such reporting requirements. 13.2 ACCELERATION OF VESTING. Without limiting the authority of the Committee under Section 3.2 of the Plan, if a Change in Control of the Company occurs, then, (a) all outstanding Options and Stock Appreciation Rights that have been held by a Participant for at least six months will become immediately exercisable in full and will remain exercisable for the remainder of their terms, regardless of whether the Participant to whom such Options or Stock Appreciation Rights have been granted remains in the employ or service of the Company or any Subsidiary; (b) all outstanding Restricted Stock Awards that have been held by the Participant for at least six months will become immediately fully vested and non-forfeitable; and (c) all outstanding Performance Units and Stock Bonuses then held by the Participant will vest and/or continue to vest in the manner determined by the Committee and set forth in the agreement evidencing such Performance Units or Stock Bonuses. 11 13.3 CASH PAYMENT FOR 0PTIONS. If a Change in Control of the Company occurs, then the Committee, if approved by the Committee either in an agreement evidencing an Incentive Award at the time of grant or at any time after the grant of an Incentive Award, may determine that some or all Participants holding outstanding Options will receive, with respect to some or all of the shares of Common Stock subject to such Options, as of the effective date of any such Change in Control of the Company, cash in an amount equal to the excess of the Fair Market Value of such shares immediately prior to the effective date of such Change in Control of the Company over the exercise price per share of such Options. 13.4 LIMITATION ON CHANGE IN CONTROL PAYMENTS. Notwithstanding anything in Section 13.2 or 13.3 of the Plan to the contrary, if, with respect to a Participant, the acceleration of the vesting of an Incentive Award as provided in Section 13.2 or the payment of cash in exchange for all or part of an Incentive Award as provided in Section 13.3 (which acceleration or payment could be deemed a "payment" within the meaning of Section 28OG(b)(2) of the Code), together with any other payments which such Participant has the right to receive from the Company or any corporation that is a member of an "affiliated group" (as defined in Section 1504(a) of the Code without regard to Section 1504(b) of the Code) of which the Company is a member, would constitute a "parachute payment" (as defined in Section 28OG(b)(2) of the Code), then the payments to such Participant pursuant to Section 13.2 or 13.3 will be reduced to the largest amount as will result in no portion of such payments being subject to the excise tax imposed by Section 4999 of the Code; provided, however, that if such Participant is subject to a separate agreement with the Company or a Subsidiary that specifically provides that payments attributable to one or more forms of employee stock incentives or to payments made in lieu of employee stock incentives will not reduce any other payments under such agreement, even if it would constitute an excess parachute payment, or provides that the Participant will have the discretion to determine which payments will be reduced in order to avoid an excess parachute payment, then the limitations of this Section 13.4 will, to that extent, not apply. 14. RIGHTS OF ELIGIBLE RECIPIENTS AND PARTICIPANTS, TRANSFERABILITY. 14.1 EMPLOYMENT OR SERVICE. Nothing in the Plan will interfere with or limit in any way the right of the Company or any Subsidiary to terminate the employment or service of any Eligible Recipient or Participant at any time, nor confer upon any Eligible Recipient or Participant any right to continue in the employ or service of the Company or any Subsidiary 14.2 RIGHTS AS A STOCKHOLDER. As a holder of Incentive Awards (other than Restricted Stock Awards and Stock Bonuses), a Participant will have no rights as a stockholder unless and until such Incentive Awards are exercised for, or paid in the form of, shares of Common Stock and the Participant becomes the holder of record of such shares. Except as otherwise provided in the Plan, no adjustment will be made for dividends or distributions with respect to such Incentive Awards as to which there is a record date preceding the date the Participant becomes the holder of record of such shares, except as the Committee may determine. 14.3 RESTRICTIONS ON TRANSFER. Except pursuant to testamentary will or the laws of descent and distribution or as otherwise expressly permitted by the Plan, no right or interest of any Participant in an Incentive Award prior to the exercise or vesting of such Incentive Award will be assignable or transferable, or subjected to any lien, during the lifetime of the Participant, either voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise. A Participant will, however, be entitled to designate a beneficiary to receive an Incentive Award upon such 12 Participant's death, and in the event of a Participant's death, payment of any amounts due under the Plan will be made to, and exercise of any Options (to the extent permitted pursuant to Section 11 of the Plan) may be made by, the Participant's legal representatives, heirs and legatees. 14.4 NON-EXCLUSIVITY OF THE PLAN. Except as expressly set forth herein, nothing contained in the Plan is intended to modify or rescind any previously approved compensation plans or programs of the Company or create any limitations on the power or authority of the Board to adopt such additional or other compensation arrangements as the Board may deem necessary or desirable. 15. SECURITIES LAW AND OTHER RESTRICTIONS. Notwithstanding any other provision of the Plan or any agreements entered into pursuant to the Plan, the Company will not be required to issue any shares of Common Stock under this Plan, and a Participant may not sell, assign, transfer or otherwise dispose of shares of Common Stock issued pursuant to Incentive Awards granted under the Plan, unless (a) there is in effect with respect to such shares a registration statement under the Securities Act and any applicable state securities laws or an exemption from such registration under the Securities Act and applicable state securities laws, and (b) there has been obtained any other consent, approval or permit from any other regulatory body which the Committee deems necessary or advisable. The Company may condition such issuance, sale or transfer upon the receipt of any representations or agreements from the parties involved, and the placement of any legends on certificates representing shares of Common Stock, as may be deemed necessary or advisable by the Company in order to comply with such securities law or other restrictions. 16. PLAN AMENDMENT, MODIFICATION AND TERMINATION The Board may suspend or terminate the Plan or any portion thereof at any time, and may amend the Plan from time to time in such respects as the Board may deem advisable in order that Incentive Awards under the Plan will conform to any change in applicable laws or regulations or in any other respect the Board may deem to be in the best interests of the Company; provided, however, that (a) the Board will not have the authority to amend the eligibility requirements for Options granted pursuant to Section 6.7 of the Plan, or to modify the number of shares, exercise price, exercisability, duration, manner of payment or other terms with respect to such Options, more than once every six months, other than to comply with changes in the Code, the Employee Retirement Income Security Act or the rules promulgated thereunder; and (b) no amendments to the Plan will be effective without approval of the stockholders of the Company if stockholder approval of the amendment is then required pursuant to Rule 16b-3 under the Exchange Act, Section 422 of the Code or the rules of the NASD or any stock exchange. No termination, suspension or amendment of the Plan may adversely affect any outstanding Incentive Award without the consent of the affected Participant; provided, however, that this sentence win not impair the right of the Committee to take whatever action it deems appropriate under Sections 3.2(c), 4.3 and 13 of the Plan. 17. EFFECTIVE DATE AND DURATION OF THE PLAN The Plan is effective as of March 9, 1995, the date it was adopted by the Board. The Plan will terminate at midnight on March 8, 2005, and may be terminated prior to such time by Board action, and no Incentive Award will be granted after such termination. Incentive Awards 13 outstanding upon termination of the Plan may continue to be exercised, or become free of restrictions, in accordance with their terms. 18. MISCELLANEOUS 18.1 GOVERNING LAW. The validity, construction, interpretation, administration and effect of the Plan and any rules, regulations and actions relating to the Plan will be governed by and construed exclusively in accordance with the laws of the State of Wisconsin. 18.2 SUCCESSORS AND ASSIGNS. The Plan will be binding upon and inure to the benefit of the successors and permitted assigns of the Company and the Participants. 14 15 EX-13.1 6 EXHIBIT 13.1 EXHIBIT 13.1 FIVE-YEAR FINANCIAL SUMMARY
1994 ANNUAL REPORT Five-Year Financial Summary Years ended December 31, (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1994 1993 1992 1991 1990 ------------------------------------------------------------------------------------------------------------ FOR THE YEAR Operating revenue $122,730 $112,180 $98,194 $87,763 $81,349 Operating income 13,015 11,359 7,678 5,846 5,384 Income before extraordinary item and cumulative effect of change in accounting principle 6,375 5,462 3,434 2,108 1,792 Net income 6,375 6,345(1) 3,434 1,965(2) 1,792 PER SHARE DATA Income before extraordinary item and cumulative effect of change in accounting principle $ 2.00 $ 1.58 $ 1.00 $ .62 $ .52 Net income 2.00 1.84(1) 1.00 .57(2) .52 BALANCE SHEET DATA Total assets $105,648 $96,776 $81,434 $69,973 $63,355 Long-term obligations 24,917 21,117 20,523 17,734 14,616 Shareholders' investment 33,104 34,729 28,384 24,835 22,870 (1) Includes extraordinary item, proceeds of $883,000 ($.26 per share) from life insurance policy on Roger Marten, founder of Marten Transport. (2) Includes charge of $143,000 for the cumulative effect of change in accounting principle related to revenue recognition.
9 MARTEN MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS [LOGO] RESULTS OF OPERATIONS Operating revenue for 1994 increased 9 percent over 1993, compared with increases of 14 percent in 1993 and 12 percent in 1992. The primary reason for these annual increases is additional business from new and existing customers. The transportation of this additional freight resulted from continued customer demand and a moderate increase in the company's fleet each of the last three years. Average freight rates increased slightly in 1994 as the company continued to focus on its time- and temperature-sensitive services. Average freight rates were flat in 1993 and increased slightly in 1992. Equipment utilization, measured by miles per tractor, remained constant in 1994 and 1993 after a slight increase in 1992. Management anticipates that customer demand will remain strong in fiscal 1995, causing operating revenue to exceed 1994 levels. Operating expenses for 1994 represented 89.4 percent of operating revenue, compared with 89.9 percent in 1993 and 92.2 percent in 1992. This ratio has improved during the last three years due to continued revenue growth and Marten's focus on expense control. Gains on the disposition of revenue equipment increased in 1994 due to strong market demand for used equipment and planned replacements of the company's fleet. In response to these gains, Marten reviewed and changed the estimated salvage value of certain revenue equipment, effective January 1, 1994. The change resulted in a decrease to depreciation expense of $554,000 in 1994. Operating expenses increased in all categories due to the transportation of more freight and additions to the company's fleet. Purchased transportation expense also increased in 1994 and 1993 due to a higher number of independent contractor-owned vehicles. Replacement of the company's fleet with new, more fuel-efficient revenue equipment and fuel tax refunds positively impacted fuel and fuel tax expense in 1994 and 1993. During this period, the average price of diesel fuel remained relatively stable. Insurance and claims expense was 5.0 percent of revenue in 1994, 4.7 percent in 1993 and 5.5 percent in 1992. Management's continued emphasis on driver safety and training has held insurance and claims expense relatively stable. Communications and utilities expense increased in 1994 due to additional satellite transmission costs associated with the implementation of satellite tracking systems late in 1993. Management anticipates that 1995 operating expenses, as a percentage of operating revenue, will remain at current levels. Interest expense as a percent of revenue declined slightly to 2.1 percent in 1994 versus 2.2 percent in 1993 and 2.4 percent in 1992. Additional long-term debt was incurred during the last two years to finance revenue equipment purchases and to repurchase 500,000 shares of the company's common stock in 1994. The increased interest expense associated with the additional debt was partially offset by lower interest rates in 1993 and the first half of 1994. Interest expense in 1995 is expected to increase from the current level, as long-term debt will be added to finance new revenue equipment. The company's effective tax rate was 40 percent in 1994 and 1993, compared with 39 percent in 1992. Management expects that the effective tax rate will remain at 40 percent during 1995. 10 In 1994, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 119 (SFAS No. 119), "Disclosure about Derivative Financial Instruments and Fair Value of Financial Instruments." The company has not entered into any derivative financial instruments as defined by SFAS No. 119; accordingly, this standard has no impact on Marten's financial statements. Inflation can be expected to affect most of the company's operating expenses. The impact of inflation, however, was minimal during the three years ended December 31, 1994. CAPITAL RESOURCES AND LIQUIDITY Marten continued to update and expand its fleet with new, more efficient revenue equipment during 1994, requiring significant capital expenditures. Additionally, the company repurchased 500,000 shares of its common stock from the estate of its former chairman and chief executive officer, Roger R. Marten, for $16 per share. The company has retired these shares, reducing shareholders' investment by $8 million. These expenditures were funded using cash flow from operations and long-term debt collateralized by equipment. Long-term debt at December 31, 1994, rose $3.6 million from December 31, 1993, compared with an increase of $4.5 million in 1993. Marten has commitments to purchase approximately $25 million of revenue equipment in 1995, net of trade-in allowances. Management expects to fund these acquisitions with additional long-term debt and cash flow from operations. Cash generated from operations has been adequate to fund Marten's working capital requirements despite a working capital deficit. Marten has operated effectively with a working capital deficit due to a combination of operating profits, short turnover in accounts receivable and cash management practices. The deficit is primarily attributed to current maturities of long-term debt related to acquisitions of revenue equipment. The working capital deficit at December 31, 1994, rose to $7.0 million from $3.7 million at December 31, 1993. This increase is the result of a planned reduction in cash balances, increased insurance reserves and additional payables associated with revenue equipment purchases. Marten has not used short-term borrowings to meet working capital requirements and does not anticipate using short-term borrowings in 1995. Management believes that the company's liquidity is adequate to meet expected near-term operating needs. SEASONALITY The trucking industry in general has experienced seasonal fluctuations in revenue and expenses. Marten's operations are consistent with this pattern. The company experiences revenue declines after the winter holiday season as customers reduce shipments. Operating expenses temporarily increase in the winter due primarily to reduced fuel efficiency and additional maintenance costs. 11 MARTEN BALANCE SHEETS
December 31, (IN THOUSANDS, EXCEPT SHARE INFORMATION) 1994 1993 -------------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 3,129 $ 5,339 Receivables: Trade, less allowances of $600 and $540 13,281 12,444 Other 3,216 2,769 Prepaid expenses (Note 1) 4,917 4,626 Deferred income taxes (Note 5) 2,260 1,910 -------------------------------------------------------------------------------------------------------------- Total current assets 26,803 27,088 -------------------------------------------------------------------------------------------------------------- PROPERTY AND EQUIPMENT (Notes 1, 2, 3 and 4): Revenue equipment 110,724 99,129 Building and land 3,249 2,999 Office equipment and other 3,539 3,144 Less accumulated depreciation and amortization (38,807) (35,709) -------------------------------------------------------------------------------------------------------------- Net property and equipment 78,705 69,563 -------------------------------------------------------------------------------------------------------------- OTHER ASSETS 140 125 -------------------------------------------------------------------------------------------------------------- $105,648 $ 96,776 -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' INVESTMENT CURRENT LIABILITIES: Accounts payable $ 3,106 $ 2,626 Insurance and claims accruals 9,639 8,863 Accrued liabilities 6,103 4,147 Current maturities of long-term debt and capital leases (Notes 2 and 3) 14,963 15,153 -------------------------------------------------------------------------------------------------------------- Total current liabilities 33,811 30,789 LONG-TERM DEBT AND CAPITAL LEASES, less current maturities (Notes 2 and 3) 24,917 21,117 DEFERRED INCOME TAXES (Note 5) 13,816 10,141 -------------------------------------------------------------------------------------------------------------- Total liabilities 72,544 62,047 -------------------------------------------------------------------------------------------------------------- COMMITMENTS (Notes 1, 3 and 9) SHAREHOLDERS' INVESTMENT (Notes 1, 4 and 6): Common stock, $.01 par value per share, 10,000,000 shares authorized, 2,929,950 and 3,429,950 shares issued and outstanding 29 34 Additional paid-in capital 9,281 10,865 -------------------------------------------------------------------------------------------------------------- Retained earnings 23,794 23,830 -------------------------------------------------------------------------------------------------------------- Total shareholders' investment 33,104 34,729 -------------------------------------------------------------------------------------------------------------- $105,648 $ 96,776 -------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these balance sheets. 12 STATEMENTS OF OPERATIONS
For the years ended December 31, (IN THOUSANDS, EXCEPT SHARE INFORMATION) 1994 1993 1992 -------------------------------------------------------------------------------------------------------------- OPERATING REVENUE $122,730 $112,180 $98,194 -------------------------------------------------------------------------------------------------------------- OPERATING EXPENSES: Salaries, wages and benefits 44,900 40,873 36,030 Purchased transportation 5,431 3,963 2,761 Fuel and fuel taxes 22,462 20,765 19,227 Supplies and maintenance 11,826 10,889 9,180 Depreciation and amortization 12,660 12,530 11,430 Operating taxes and licenses 2,781 2,517 2,177 Insurance and claims 6,081 5,246 5,438 Communications and utilities 1,550 1,137 1,012 Gain on disposition of revenue equipment (2,220) (1,208) -- Other 4,244 4,109 3,261 -------------------------------------------------------------------------------------------------------------- 109,715 100,821 90,516 -------------------------------------------------------------------------------------------------------------- OPERATING INCOME 13,015 11,359 7,678 -------------------------------------------------------------------------------------------------------------- OTHER EXPENSES (INCOME): Interest expense 2,516 2,447 2,330 Interest income and other (126) (186) (261) -------------------------------------------------------------------------------------------------------------- 2,390 2,261 2,069 -------------------------------------------------------------------------------------------------------------- INCOME BEFORE ITEMS BELOW 10,625 9,098 5,609 PROVISION FOR INCOME TAXES (Note 5) 4,250 3,636 2,175 -------------------------------------------------------------------------------------------------------------- INCOME BEFORE EXTRAORDINARY ITEM 6,375 5,462 3,434 EXTRAORDINARY ITEM--PROCEEDS OF LIFE INSURANCE POLICY (Note 8) -- 883 -- -------------------------------------------------------------------------------------------------------------- NET INCOME $6,375 $6,345 $3,434 -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE DATA: Income before extraordinary item $2.00 $1.58 $1.00 Extraordinary item -- .26 -- -------------------------------------------------------------------------------------------------------------- Net income $2.00 $1.84 $1.00 -------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements. 13 MARTEN STATEMENTS OF CHANGES IN SHAREHOLDERS' INVESTMENT
Common Stock Additional Retained (IN THOUSANDS, EXCEPT SHARE INFORMATION) Shares Amount Paid-In Capital Earnings Total -------------------------------------------------------------------------------------------------------------- Balance at January 1, 1992 3,415,610 $34 $10,750 $14,051 $24,835 Net income for 1992 -- -- -- 3,434 3,434 Issuance of common stock 14,340 -- 115 -- 115 -------------------------------------------------------------------------------------------------------------- Balance at December 31, 1992 3,429,950 $34 $10,865 $17,485 $28,384 Net income for 1993 -- -- -- 6,345 6,345 -------------------------------------------------------------------------------------------------------------- Balance at December 31, 1993 3,429,950 $34 $10,865 $23,830 $34,729 Net income for 1994 -- -- -- 6,375 6,375 Repurchase of common stock (500,000) (5) (1,584) (6,411) (8,000) -------------------------------------------------------------------------------------------------------------- Balance at December 31, 1994 2,929,950 $29 $9,281 $23,794 $33,104 -------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements. 14 STATEMENTS OF CASH FLOWS
For the years ended December 31, (IN THOUSANDS) 1994 1993 1992 -------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Operations: Income before extraordinary item $6,375 $5,462 $3,434 Adjustments to reconcile income before extraordinary item to net cash flows from operating activities: Depreciation and amortization 12,660 12,530 11,430 Gain on disposition of revenue equipment (2,220) (1,208) -- Deferred tax provision 3,325 2,321 829 Changes in other current operating items: Receivables (1,284) (3,838) (3,031) Prepaid expenses (291) (1,714) 475 Accounts payable 480 728 (28) Other current liabilities 2,732 1,319 3,000 -------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities before extraordinary item 21,777 15,600 16,109 Extraordinary item -- 883 -- -------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 21,777 16,483 16,109 -------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Revenue equipment additions (27,168) (27,648) (24,949) Revenue equipment retirements 8,435 7,893 4,975 Building and land, office equipment and other additions, net (849) (1,901) (626) Net change in other assets (15) 93 (15) -------------------------------------------------------------------------------------------------------------- Net cash used for investing activities (19,597) (21,563) (20,615) -------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock -- -- 115 Common stock repurchased (8,000) -- -- Long-term borrowings 21,139 19,236 17,610 Repayment of long-term borrowings (17,529) (14,692) (13,909) -------------------------------------------------------------------------------------------------------------- Net cash provided by (used for) financing activities (4,390) 4,544 3,816 -------------------------------------------------------------------------------------------------------------- DECREASE IN CASH AND CASH EQUIVALENTS (2,210) (536) (690) CASH AND CASH EQUIVALENTS: Beginning of year 5,339 5,875 6,565 -------------------------------------------------------------------------------------------------------------- End of year $3,129 $5,339 $5,875 -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- CASH PAID FOR: Interest $2,552 $2,423 $2,301 -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- Income taxes $820 $2,257 $223 -------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements. 15 MARTEN NOTES TO FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF BUSINESS: Marten Transport, Ltd. (the company) is a long-haul truckload carrier providing protective service transportation of temperature-sensitive materials and general commodities pursuant to operating authority, both contract and common, granted by the Interstate Commerce Commission. The company derived approximately 12 percent of its revenue from a single customer in 1994, 14 percent in 1993 and 13 percent in 1992. CASH EQUIVALENTS: The company invests available funds in short-term cash equivalents, principally mutual funds containing U.S. government-backed securities which have an original maturity of three months or less. These investments are stated at cost, which approximates market value. PREPAID EXPENSES: As of December 31, prepaid expenses consisted of the following:
(IN THOUSANDS) 1994 1993 ----------------------------------------------------------------------------- License fees $1,612 $1,521 Tires in service 1,418 1,302 Parts and tires inventory 1,135 654 Insurance 301 255 Other 451 894 ----------------------------------------------------------------------------- $4,917 $4,626 ----------------------------------------------------------------------------- -----------------------------------------------------------------------------
PROPERTY AND EQUIPMENT: Additions and improvements to property and equipment are capitalized at cost, while maintenance and repair expenditures are charged to operations as incurred. Gains and losses on revenue equipment dispositions are included in operations. Certain facilities are leased from an entity owned by its chairman of the board (see Notes 3 and 4). Depreciation is computed based on the cost of the asset, reduced by its estimated salvage value, using the straight-line method for financial reporting purposes and accelerated methods for income tax reporting purposes. Following is a summary of estimated useful lives:
YEARS ----------------------------------------------------------------------------- Revenue equipment: Tractors 5 Trailers 7 Satellite tracking 4 Building 20 Office equipment and other 3-15 -----------------------------------------------------------------------------
The company changed the estimated salvage value of certain revenue equipment effective January 1, 1994, to reflect the continued market demand for used equipment. The change resulted in a decrease in depreciation expense of $554,000 and an increase in net income of $333,000, or $.10 per share, in 1994. TIRES IN SERVICE: The cost of original equipment and replacement tires placed in service is capitalized. Amortization is computed based on cost, less estimated salvage value, using the straight-line method over a period of 24 months. The current portion of tires in service is included in prepaid expenses in the accompanying balance sheets. The cost of tires to be amortized beyond one year, along with the estimated salvage value of tires in service, are included in revenue equipment in the accompanying balance sheets. The cost of recapping tires is charged to expense as incurred. INSURANCE AND CLAIMS: The company self-insures for property damage and self-insures, in part, for losses related to workers' compensation claims, auto liability, cargo, general liability and employees' group health benefits. Insurance coverage is maintained for per-incident and cumulative liability losses in amounts the company considers sufficient based on historical experience. The company provides currently for estimated self-insured and partially self-insured losses. Under arrangements with its insurance carriers and regulatory authorities, the company has arranged for approximately $8.8 million in letters of credit to guarantee settlement of claims. 16 REVENUE RECOGNITION: The company recognizes revenue and related expenses on the date shipment of freight is completed. EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE: Earnings per share have been computed based on the weighted average number of shares outstanding during each period as adjusted for the effect of the issuance of stock options to certain employees and directors. Weighted average common and common equivalent shares outstanding were 3,192,140 in 1994, 3,451,932 in 1993 and 3,434,538 in 1992. DERIVATIVE FINANCIAL INSTRUMENTS: The company has not entered into any derivative financial instruments as defined by Statement of Financial Accounting Standards No. 119, as of and for the years ended December 31, 1994 and 1993. RECLASSIFICATIONS: Certain amounts in the 1993 and 1992 financial statements have been reclassified to conform to the 1994 presentation. These reclassifications had no effect on previously reported net income or shareholders' investment. 2. LONG-TERM DEBT AND CAPITAL LEASES Long-term debt and capital leases consist of notes payable and capitalized leases (see Note 3) collateralized by specific revenue equipment. The notes and leases are payable in monthly principal and interest installments. Interest rates range from 6 percent to 9.2 percent. The debt agreements contain various restrictive covenants which, among other matters, require the company to maintain certain financial ratios. The company was in compliance with all debt covenants at December 31, 1994. Maturities of long-term debt at December 31, 1994, are as follows:
(IN THOUSANDS) AMOUNT ----------------------------------------------------------------------------- 1995 $14,963 1996 12,828 1997 8,339 1998 3,708 1999 42 ----------------------------------------------------------------------------- $39,880 ----------------------------------------------------------------------------- -----------------------------------------------------------------------------
3. LEASES The company acquired certain revenue equipment in 1990 under the terms of capital leases which were included within long-term debt and capital leases (see Note 2). The leases provided for 48 equal monthly payments. Payments made under these leases amounted to $1,382,000 in 1994 and $2,488,000 in 1993. The payments made in 1994 satisfied remaining capital lease obligations. The cost and related accumulated amortization of revenue equipment under capital leases included in the accompanying balance sheet at December 31, 1993, were $4,360,000 and $2,242,000, respectively. The company leases facilities and office equipment under operating leases with terms ranging from one to five years (see Note 4). Under most of these arrangements, the company pays maintenance and other expenses related to the leased property. Minimum future obligations under operating leases in effect at December 31, 1994, are as follows:
(IN THOUSANDS) AMOUNT ----------------------------------------------------------------------------- 1995 $281 1996 134 1997 128 1998 126 1999 126 ----------------------------------------------------------------------------- $795 ----------------------------------------------------------------------------- -----------------------------------------------------------------------------
Lease-related expenses were as follows:
(IN THOUSANDS) 1994 1993 1992 ----------------------------------------------------------------------------- Capital lease amortization $ 81 $867 $925 Capital lease interest expense 20 288 374 Operating lease rentals 436 493 482 -----------------------------------------------------------------------------
17 MARTEN 4. RELATED PARTY TRANSACTIONS During the three years ended December 31, 1994, the company engaged in the following related party transactions: (a) 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. (b) The company leases equipment, office and terminal facilities under a non-cancelable operating lease with an entity owned by its chairman of the board and previously with a partnership in which its current and former chairmen of the board were partners. Total rental expense charged to operations relating to this lease was $175,000 during 1994, $175,000 during 1993 and $185,000 during 1992. Future minimum rental payments under the lease are $126,000 per year from 1995 through 1999. (c) During 1993, the company made payments of $629,000 to a construction company owned by a director of Marten Transport for additions to the Mondovi, Wisconsin, headquarters and a maintenance facility in Ontario, California. (d) During the three years ended December 31, 1994, the company has maintained checking, savings and investment accounts at banks controlled by its former chairman of the board and a non-shareholder/officer of the company. 5. INCOME TAXES The company utilizes the liability method of accounting for income taxes whereby deferred taxes are determined based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of enacted tax laws. The components of the provision for income taxes consisted of the following:
(IN THOUSANDS) 1994 1993 1992 ----------------------------------------------------------------------------- Current: Federal $ 765 $1,150 $1,116 State 160 165 230 ----------------------------------------------------------------------------- 925 1,315 1,346 ----------------------------------------------------------------------------- Deferred: Federal 2,708 1,909 700 State 617 412 129 ----------------------------------------------------------------------------- 3,325 2.321 829 ----------------------------------------------------------------------------- Total provision $4,250 $3,636 $2,175 ----------------------------------------------------------------------------- -----------------------------------------------------------------------------
The statutory federal income tax rate is reconciled to the effective income tax rate as follows:
1994 1993 1992 ----------------------------------------------------------------------------- Statutory federal income tax rate 34% 34% 34% Increase in taxes arising from: State income taxes, net of federal income tax benefit 4 4 4 Permanent differences 2 2 1 ----------------------------------------------------------------------------- Effective tax rate 40% 40% 39% ----------------------------------------------------------------------------- -----------------------------------------------------------------------------
As of December 31, the net deferred tax liability consisted of the following:
(IN THOUSANDS) 1994 1993 ----------------------------------------------------------------------------- Deferred tax assets: Reserves and accrued liabilities for financial reporting in excess of tax $ 4,463 $ 4,004 State income tax deduction for financial reporting in excess of tax 644 348 Alternative minimum tax credit 104 83 ----------------------------------------------------------------------------- 5,211 4,435 ----------------------------------------------------------------------------- Deferred tax liabilities: Tax depreciation in excess of depreciation for financial reporting 14,459 10,489 Prepaid tires, licenses and use tax expensed for income tax purposes and capitalized for financial reporting 2,134 1,930 Other 174 247 ----------------------------------------------------------------------------- 16,767 12,666 ----------------------------------------------------------------------------- Net deferred tax liability $11,556 $ 8,231 ----------------------------------------------------------------------------- -----------------------------------------------------------------------------
18 6. SHAREHOLDERS' INVESTMENT The company maintains an Incentive Stock Option Plan and a Non-Statutory Stock Option Plan providing for the grant of options to purchase up to an aggregate of 250,000 shares of common stock to officers, directors and key employees. Grants can be made until August 7, 1996, as determined by the board of directors, at a price of not less than 100 percent of the fair market value on the date of grant, except that in the case of any shareholder owning 10 percent or more of the common stock of the company, the exercise price of an incentive stock option is to be not less than 110 percent of the fair market value. The term of the options under the Incentive Stock Option Plan may not exceed 10 years after date of grant, except that in the case of options to any shareholder owning more than 10 percent of the common stock of the company, the term may not exceed five years. Options under the Non-Statutory Stock Option Plan may be granted for terms of up to 10 years and one month. As of December 31, activity under the Incentive Stock Option Plan was as follows:
1994 1993 1992 ----------------------------------------------------------------------------- Outstanding, beginning of year 47,500 41,500 41,500 Granted: $13.25/share -- 15,000 -- $17.50/share 15,000 -- -- Exercised: $3.75/share -- (9,000) -- $3.75/share (3,000) -- -- ----------------------------------------------------------------------------- Outstanding, end of year 59,500 47,500 41,500 ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- Exercisable, end of year: $3.75-$17.50/share 23,500 17,500 20,500 ----------------------------------------------------------------------------- -----------------------------------------------------------------------------
The company also has granted options under the Non-Statutory Stock Option Plan to purchase 33,500 shares of common stock. During 1993, options were exercised for 10,000 shares at $5.00 per share. At December 31, 1994, options for 23,500 shares were outstanding, including 13,500 shares exercisable at $7.00 to $18.50 per share. The company repurchased 500,000 shares of its common stock on June 21, 1994, for $16 per share (see Note 4). The shares have been retired, reducing shareholders' investment by $8 million. The company repurchased, at fair market value, the 3,000 shares of stock issued in 1994 and the 19,000 shares issued in 1993 upon exercise of the options noted above. In 1992, the company issued 14,340 shares of common stock as compensation to certain employees. 7. RETIREMENT SAVINGS PLAN Effective January 1, 1993, the company adopted a defined contribution retirement savings plan, in accordance with Section 401(k) of the Internal Revenue Code, covering all employees who meet a minimum service requirement. Each participant can make contributions of up to 15 percent of compensation. The company's contribution of 25 percent of each participant's contribution to the plan for up to 4 percent of compensation vests at the rate of 20 percent per year from the second through sixth years of service. In addition, the company may make elective contributions which are determined by resolution of the board of directors. No elective contributions were made in 1994 or 1993. Total expense recorded in connection with the plan was $167,000 in 1994 and $166,000 in 1993. 8. EXTRAORDINARY ITEM On August 9, 1993, the company's former chairman and chief executive officer, Roger R. Marten, passed away. The company was the beneficiary of a $1 million life insurance policy on Mr. Marten. These proceeds, net of previously recorded cash surrender value of $117,000, were recorded in 1993 as an extraordinary credit with no income tax effect. 9. Commitments The company has commitments to purchase approximately $25 million of additional revenue equipment, net of trade-in allowances, in 1995. 19 MARTEN 10. QUARTERLY FINANCIAL DATA (UNAUDITED) The following is a summary of the quarterly results of operations for 1994 and 1993:
1994 QUARTERS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) FIRST SECOND THIRD FOURTH TOTAL ------------------------------------------------------------------------------------------------------------------- Operating revenue $29,220 $30,483 $31,443 $31,584 $122,730 Operating income 2,566 3,434 3,644 3,371 13,015 Net income 1,200 1,742 1,788 1,645 6,375 Net income per share .35 .51 .60 .56 2.00 ------------------------------------------------------------------------------------------------------------------- 1993 Quarters (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) First Second Third Fourth Total ------------------------------------------------------------------------------------------------------------------- Operating revenue $25,844 $28,260 $29,079 $28,997 $112,180 Operating income 2,146 3,182 3,499 2,532 11,359 Income before extraordinary item 934 1,562 1,761 1,205 5,462 Extraordinary item -- -- 883 -- 883 Net income 934 1,562 2,644 1,205 6,345 Net income per share before extraordinary item .27 .45 .51 .35 1.58 Net income per share .27 .45 .77 .35 1.84 -------------------------------------------------------------------------------------------------------------------
The company changed the estimated salvage value of certain revenue equipment effective January 1, 1994 (see Note 1). The change resulted in a decrease in depreciation expense of $405,000 through the third quarter of 1994. The effect of this change in estimate was recorded in the third quarter of 1994, which increased net income by $243,000, or $.08 per share, of which $.05 per share related to the first and second quarters of 1994. The net income per share for the 1994 quarters exceeds the net income per share for the year due to changes in the weighted average number of shares outstanding during the year. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Marten Transport, Ltd.: We have audited the accompanying balance sheets of Marten Transport, Ltd. (a Delaware corporation) as of December 31, 1994 and 1993, and the related statements of operations, changes in shareholders' investment and cash flows for each of the three years in the period ended December 31, 1994. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Marten Transport, Ltd. as of December 31, 1994 and 1993, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Minneapolis, Minnesota March 3, 1995 20 CORPORATE INFORMATION EXECUTIVE OFFICERS AND DIRECTORS Randolph L. Marten Chairman of the Board, President, Chief Operating Officer and Director Darrell D. Rubel Executive Vice President, Chief Financial Officer, Treasurer, Assistant Secretary and Director Timothy P. Nash Vice President of Sales Franklin J. Foster Vice President of Finance Robert G. Smith Vice President of Operations Voin S. Long Vice President of Information Systems Arnold P. Schultz Director Retired Superintendent of Schools, Goodhue, Minnesota Larry B. Hagness Director President, Durand Builders Service, Inc., Durand, Wisconsin Thomas J. Winkel Director Management Consultant, Eagan, Minnesota Mark A. Kimball Secretary Partner, Oppenheimer Wolff & Donnelly, Minneapolis, Minnesota CORPORATE HEADQUARTERS 129 Marten Street Mondovi, Wisconsin 54755 Telephone: (715) 926-4216 Fax: (715) 926-4530 SHAREHOLDER INFORMATION A copy of the company's 1994 Annual Report on Form 10-K as filed with the Securities and Exchange Commission is available by writing to: Darrell D. Rubel, executive vice president and chief financial officer, at Marten's corporate headquarters. ANNUAL MEETING Shareholders, employees and friends are invited to attend Marten Transport's annual meeting on Tuesday, May 2, 1995, at 4:00 p.m., at the Holiday Inn Eau Claire, 2703 Craig Road, Eau Claire, Wisconsin. STOCK LISTING Nasdaq National Market symbol: MRTN LEGAL COUNSEL Oppenheimer Wolff & Donnelly 45 South Seventh Street Suite 3400 Minneapolis, Minnesota 55402 INDEPENDENT PUBLIC ACCOUNTANTS Arthur Andersen LLP 45 South Seventh Street Minneapolis, Minnesota 55402 TRANSFER AGENT AND REGISTRAR Mellon Securities Trust Company c/o Mellon Securities Transfer Services 85 Challenger Road Overpeck Centre Ridgefield Park, New Jersey 07660 Communications concerning change of address or stock certificates should be directed to the transfer agent. PUBLIC/FINANCIAL RELATIONS COUNSEL Padilla Speer Beardsley Inc. 224 Franklin Avenue West Minneapolis, Minnesota 55404 COMMON STOCK DATA The company's quarterly stock price data, as reported by the Nasdaq National Market, were as follows:
1994 1993 Quarter HIGH LOW High Low -------------------------------------------------------------------------------- First 18 3/4 16 3/4 13 3/4 10 3/4 -------------------------------------------------------------------------------- Second 19 17 14 1/2 12 3/4 -------------------------------------------------------------------------------- Third 19 1/2 17 1/2 14 1/2 13 -------------------------------------------------------------------------------- Fourth 20 18 18 3/4 14 --------------------------------------------------------------------------------
The foregoing prices do not include adjustments for retail mark-ups, mark-downs or commissions. On December 31, 1994, there were 332 shareholders of record, as well as approximately 310 beneficial shareholders. The company has not paid any cash dividends on its common stock since it became publicly held in September 1986, and management does not anticipate cash dividend payments in the foreseeable future. EX-23.1 7 EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF ARTHUR ANDERSEN LLP As independent public accountants, we hereby consent to the incorporation by reference of our report dated March 3, 1995 included or incorporated by reference in this Form 10-K into Marten Transport, Ltd.'s previously filed Form S-8 dated February 23, 1994. Arthur Andersen LLP Minneapolis, Minnesota March 29, 1995 EX-27.1 8 EXHIBIT 27
5 This schedule contains summary financial information extracted from the Statements of Operations and the Balance Sheets and is qualified in its entirety by reference to such financial statements. 1,000 12-MOS DEC-31-1994 JAN-01-1994 DEC-31-1994 3,129 0 13,281 600 0 26,803 117,512 38,807 105,648 33,811 24,817 29 0 0 33,075 105,648 0 122,730 0 109,715 (126) 0 2,516 10,625 4,250 6,375 0 0 0 6,375 2.00 0