<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM 10-K/A-1
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended: Commission file number:
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").
<PAGE>
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
<PAGE>
- 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. This customer is
the Phillip Morris group of companies, which included 11 different accounts in
1994.
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.
- 2 -
<PAGE>
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 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 in line with
turnover rates in the industry.
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.
- 3 -
<PAGE>
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.
REVENUE EQUIPMENT
The trucking industry requires significant capital investment in revenue
equipment. The Company has elected to finance these purchases using long-term
debt with significant current maturities, causing a working capital deficit.
The Company has operated effectively with a working capital deficit due to a
combination of operating profits, short turnover in accounts receivable and cash
management.
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:
<TABLE>
<CAPTION>
MODEL YEAR TRACTORS SINGLE VAN TRAILERS
---------- -------- -------------------
<S> <C> <C>
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
___ _____
___ _____
</TABLE>
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. 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).
- 4 -
<PAGE>
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.
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.
- 5 -
<PAGE>
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: October 18, 1995 MARTEN TRANSPORT, LTD.
By \s\ Darrell D. Rubel
--------------------------
Darrell D. Rubel
Chief Financial Officer
