10-Q

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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

Form 10-Q

Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarter ended March 31, 2000

Commission File Number 0-15010

MARTEN TRANSPORT, LTD.
(Exact name of registrant as specified in its charter)

Delaware
(State of incorporation) 39-1140809
(I.R.S. Employer Identification No.)

129 Marten Street, Mondovi, Wisconsin 54755
(Address of principal executive offices)

715-926-4216
(Registrant's telephone number)

    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/  No / /

    The number of shares outstanding of the registrant's Common Stock, par value $.01 per share, was 4,240,145 as of May 4, 2000.

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements.

MARTEN TRANSPORT, LTD.

CONDENSED BALANCE SHEETS

(In thousands, except share information)

	March 31, 2000			December 31, 1999
	(Unaudited)
ASSETS
Current assets:
Receivables	$	24,317		$	27,673
Prepaid expenses and other		7,066			7,471
Deferred income taxes		4,016			4,166
Total current assets		35,399			39,310
Property and equipment:
Revenue equipment, buildings and land, office equipment, and other		209,543			193,031
Accumulated depreciation		(50,573	)		(47,311	)
Net property and equipment		158,970			145,720
Other assets		1,434			889
TOTAL ASSETS	$	195,803		$	185,919
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Accounts payable and accrued liabilities	$	15,297		$	14,475
Insurance and claims accruals		11,931			12,680
Current maturities of long-term debt		4,691			5,659
Total current liabilities		31,919			32,814
Long-term debt, less current maturities		72,539			63,599
Deferred income taxes		30,964			29,901
Total liabilities		135,422			126,314
Shareholders' investment:
Common stock, $.01 par value per share, 10,000,000 shares authorized, 4,240,145 and 4,300,145 shares issued and outstanding		42			43
Additional paid-in capital		9,934			9,934
Retained earnings		50,405			49,628
Total shareholders' investment		60,381			59,605
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT	$	195,803		$	185,919

The accompanying notes are an integral part of these balance sheets.

MARTEN TRANSPORT, LTD.

CONDENSED STATEMENTS OF INCOME

(In thousands, except share information)

(Unaudited)

	Three Months Ended March 31,
	2000			1999
OPERATING REVENUE	$	60,293		$	48,731
OPERATING EXPENSES:
Salaries, wages and benefits		17,186			14,852
Purchased transportation		15,436			12,449
Fuel and fuel taxes		8,775			5,698
Supplies and maintenance		4,337			3,947
Depreciation		6,065			4,908
Operating taxes and licenses		1,163			934
Insurance and claims		1,232			1,114
Communications and utilities		740			658
Gain on disposition of revenue equipment		(39	)		(461	)
Other		1,571			1,431
Total operating expenses		56,466			45,530
OPERATING INCOME		3,827			3,201
OTHER EXPENSES (INCOME):
Interest expense		1,277			927
Interest income and other		(69	)		(57	)
INCOME BEFORE INCOME TAXES		2,619			2,331
PROVISION FOR INCOME TAXES		995			909
NET INCOME	$	1,624		$	1,422
BASIC AND DILUTED EARNINGS PER COMMON SHARE	$	0.38		$	0.32

The accompanying notes are an integral part of these statements.

MARTEN TRANSPORT, LTD.

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2000			1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Operations:
Net income	$	1,624		$	1,422
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation		6,065			4,908
Gain on disposition of revenue equipment		(39	)		(461	)
Deferred tax provision		1,213			625
Changes in other current operating items		3,834			692
Net cash provided by operating activities		12,697			7,186
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions:
Revenue equipment, net		(17,966	)		(5,876	)
Buildings and land, office equipment, and other additions, net		(1,310	)		(182	)
Net change in other assets		(545	)		9
Net cash used for investing activities		(19,821	)		(6,049	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term borrowings		26,250			15,900
Repayment of long-term borrowings		(18,278	)		(17,530	)
Common stock repurchased		(848	)		—
Net cash provided by (used for) financing activities		7,124			(1,630	)
DECREASE IN CASH AND CASH EQUIVALENTS		—			(493	)
CASH AND CASH EQUIVALENTS:
Beginning of period		—			1,116
End of period	$	—		$	623
CASH PAID FOR:
Interest	$	1,007		$	938
Income taxes	$	159		$	344

The accompanying notes are an integral part of these statements.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

(1) Financial Statements

    The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements, and therefore do not include all information and disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, such statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present our financial condition, results of operations and cash flows for the interim periods presented. The results of operations for any interim period do not necessarily indicate the results for the full year. The unaudited interim financial statements should be read with reference to the financial statements and notes to financial statements in our 1999 Annual Report on Form 10-K.

(2) Earnings Per Common Share

    Basic and diluted earnings per common share were computed as follows:

	Three Months Ended March 31,
	2000		1999
	(In thousands, except per-share amounts)
Numerator:
Net income	$	1,624	$	1,422
Denominator:
Basic earnings per common share—weighted-average shares		4,274		4,478
Effect of dilutive stock options		19		19
Diluted earnings per common share—weighted-average shares and assumed conversions		4,293		4,497
Basic and diluted earnings per common share	$	0.38	$	0.32

    The following options were outstanding but were not included in the calculation of diluted earnings per share because their exercise prices were greater than the average market price of the common shares and, therefore, including the options in the denominator would be antidilutive, or decrease the number of weighted-average shares.

	Three Months Ended March 31,
	2000		1999
Number of option shares		63,750		18,750
Weighted-average exercise price	$	15.10	$	15.95

(3) Long-Term Debt

    In January 2000, we entered into an agreement with an additional bank which increased our unsecured committed credit facility from $40 million to $50 million. In April 2000, we entered into an agreement with an insurance company for $10 million in senior unsecured notes which bear fixed interest at 8.57 percent and mature in April 2010.

(4) Common Stock Repurchase

    In November 1999, our Board of Directors approved the repurchase of up to 300,000 shares of our common stock in the open market. We repurchased 60,000 shares of our common stock under this program in February 2000, for $14.125 per share. The shares have been retired, reducing shareholders' investment by $847,500.

(5) Accounting for Derivative Instruments and Hedging Activities

    Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (Statement No. 133) was issued in June 1998 and will be effective in our first quarter of 2001. Statement No. 133 requires companies to record the fair value of derivatives as either assets or liabilities on the balance sheet. The accounting for gains or losses from changes in the fair value of derivatives depends on the intended use of the derivatives and whether the criteria for hedge accounting have been satisfied. We have entered into commodity swap agreements to partially hedge our exposure to diesel fuel price fluctuations. Statement No. 133 is expected to have minimal impact on our results of operations and financial position because we did not hold significant derivative instruments as of March 31, 2000.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations

    Operating revenue for the first quarter of 2000 increased 23.7 percent over the first quarter of 1999. The increase in operating revenue, net of fuel surcharges and rebates, was 18.7 percent. This increase was primarily the result of transporting additional freight associated with an increase in our fleet. Average freight rates increased in 2000, but were partially offset by a slight decrease in equipment utilization. Freight rates for the first quarter of 2000 were positively impacted by special freight services in response to customer concerns with the Year 2000 problem, which continued into early January 2000. Our contracts with customers provide for fuel surcharges and rebates based upon significant fluctuations in the price of diesel fuel. Diesel fuel prices were significantly higher in the first quarter of 2000 than in the first quarter of 1999. As a result, operating revenue for the first quarter of 2000 was increased by fuel surcharges of $2.0 million, while operating revenue for the same period of 1999 was reduced by fuel rebates of $376,000. We expect operating revenue for the remainder of 2000 to exceed 1999 levels due to continued customer demand and planned additions to our fleet.

    Operating expenses for the first quarter of 2000 were 93.7 percent of operating revenue, compared with 93.4 percent for the same period of 1999. The transportation of additional freight and expansion of our fleet caused most expense categories to increase in 2000. We continued to increase the number of independent contractor-owned vehicles in our fleet, which increased our purchased transportation expense. Our use of independent contractor-owned vehicles reduces the following expenses relative to revenue: salaries, wages and benefits expense, fuel and fuel taxes expense, and supplies and maintenance expense. The independent contractors are responsible for these expenses. Fuel and fuel tax expense increased due to significantly higher diesel fuel prices in the first quarter of 2000 compared with the first quarter of 1999. Insurance and claims expense as a percent of revenue for the first three months of 2000 improved over the same period of 1999, reflecting our continued emphasis on driver safety, training and claims management. Gain on disposition of revenue equipment significantly decreased in the first quarter of 2000 due to decreases in the number of planned revenue equipment trades and in the market value received for used revenue equipment. We expect our operating expenses as a percent of revenue to remain at current levels for the remainder of 2000.

    Interest expense for the first quarter of 2000 increased from the same period of 1999. This increase was primarily caused by an increase in our average long-term debt incurred to finance our planned revenue equipment purchases during these periods. We expect interest expense to remain at current levels for the remainder of 2000.

    Our effective income tax rate was 38 percent for the first quarter of 2000, compared with 39 percent for the prior year. We expect our effective income tax rate to remain at 38 percent for the remainder of 2000.

    In 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," as discussed in Note 5 to the financial statements. This statement, effective in our first quarter of 2001, is expected to have minimal impact on our results of operations and financial position because we did not hold significant derivative instruments as of March 31, 2000.

Capital Resources and Liquidity

    Net cash flows from operations provided $12,697,000 during the first three months of 2000. Net cash of $19,821,000 was used to invest in revenue equipment additions and other capital expenditures, while financing activities provided $7,124,000 during this period. We continued to update and expand our fleet with new, more efficient revenue equipment in 2000 and 1999. Additionally, we repurchased 60,000 shares of our common stock during the first quarter of 2000 for $14.125 per share. The shares have been retired, reducing shareholders' investment by $847,500. We sold our maintenance facility in Georgia and purchased a new maintenance facility, which is also in Georgia, during the first quarter of 2000. A net cash outlay of approximately $900,000 was required for these two maintenance facility

transactions. We paid for these purchases using cash flows from operations and proceeds from long-term debt.

    Our current cash management practice utilizes our unsecured committed credit facility to minimize our cash and debt balances. We entered into an agreement during the first quarter of 2000 with an additional bank, increasing our committed credit facility from $40 million to $50 million. In April 2000, we also entered into an agreement with an insurance company for $10 million in senior unsecured notes. Our operating profits, short turnover in accounts receivable and cash management practices allow us to effectively meet our working capital requirements. We have not used and do not expect to use short-term borrowings to satisfy working capital needs. We believe our liquidity will adequately meet anticipated near-term operating requirements.

Forward-Looking Information

    This Quarterly Report on Form 10-Q contains certain forward-looking statements. Any statements not of historical fact may be considered forward-looking statements. Written words such as "may," "expect," "believe," "anticipate" or "estimate," or other variations of these or similar words, identify such statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially, depending on a variety of factors, such as the industry driver shortage, the market for revenue equipment, fuel prices and general weather and economic conditions.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

    Not applicable.

PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings.

    There are currently no material pending legal, governmental, administrative or other proceedings to which we are a party or of which any of our property is the subject which are unreserved.

ITEM 2.  Changes in Securities and Use of Proceeds.

    None

ITEM 3.  Defaults Upon Senior Securities.

    None

ITEM 4.  Submission of Matters to a Vote of Security Holders.

    None

ITEM 5.  Other Information.

    None

ITEM 6.  Exhibits and Reports on Form 8-K.

a)

Exhibits

Item No.	Item	Method of Filing
10.18	Third Amendment to Credit Agreement, dated April 5, 2000, between the Company, U.S. Bank National Association and The Northern Trust Company	Filed with this report electronically.
10.19	Note Purchase Agreement, dated April 6, 2000, between the Company and The Prudential Insurance Company of America	Filed with this report electronically.
27.1	Financial Data Schedule	Filed with this report electronically.

b)

No reports on Form 8-K have been filed during the quarter ended March 31, 2000.

SIGNATURE

    Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MARTEN TRANSPORT, LTD. (Registrant)
Dated: May 8, 2000	By:	/s/ DARRELL D. RUBEL Darrell D. Rubel Executive Vice President and Treasurer (Chief Financial Officer)

MARTEN TRANSPORT, LTD.
EXHIBIT INDEX TO QUARTERLY REPORT
ON FORM 10-Q
For the Quarter Ended March 31, 2000

Item No.	Item	Method of Filing
10.18	Third Amendment to Credit Agreement, dated April 5, 2000, between the Company, U.S. Bank National Association and The Northern Trust Company	Filed with this report electronically.
10.19	Note Purchase Agreement, dated April 6, 2000, between the Company and The Prudential Insurance Company of America	Filed with this report electronically.
27.1	Financial Data Schedule	Filed with this report electronically.

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PART I: FINANCIAL INFORMATION
SIGNATURE
MARTEN TRANSPORT, LTD. EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q For the Quarter Ended March 31, 2000

EX-10.18

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EXECUTION COPY

THIRD AMENDMENT TO CREDIT AGREEMENT

    This THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), made and entered into as of April 5, 2000, is by and between MARTEN TRANSPORT, LTD., a Delaware corporation (the "Borrower"), the banks which are signatories hereto (individually, a "Bank" and, collectively, the "Banks"), and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as agent for the Banks (in such capacity, the "Agent").

RECITALS

    1.  The Borrower and U.S. Bank National Association, in its capacity as a Bank and the Agent, entered into a Credit Agreement dated as of October 30, 1998, as amended by that certain First Amendment to Credit Agreement dated as of January 3, 2000, and as amended by that certain Second Amendment to Credit Agreement dated as of January 19, 2000 (as amended, the "Credit Agreement"); and

    2.  The Borrower desires to amend certain other provisions of the Credit Agreement, and the Banks and Agent have agreed to make such amendments, subject to the terms and conditions set forth in this Amendment.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby covenant and agree to be bound as follows:

Section 1.  Capitalized Terms.  Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement, unless the context shall otherwise require.

Section 2.  Amendments.  The Credit Agreement is hereby amended as follows:

    2.1  Indebtedness.  Section 6.13(c) is hereby amended in its entirety to read as follows:

    6.13(c)  Indebtedness disclosed on Schedule 6.13 hereto, but not including any extension or refinancing thereof.

    2.2 Schedule 6.13 (Indebtedness) to the Credit Agreement is amended in its entirety in the form of Exhibit 2.2 attached hereto.

Section 3.  Effectiveness of Amendments.  The amendments contained in this Amendment shall become effective upon delivery by the Borrower of, and compliance by the Borrower with, the following:

3.1 This Amendment duly executed by the Borrower.

3.2 The Borrower shall have satisfied such other conditions as specified by the Agent and the Banks, including payment of all unpaid legal fees and expenses incurred by the Agent through the date of this Amendment in connection with the Credit Agreement and any other instrument or agreement executed by the Borrower in connection with this Amendment (collectively, the "Amendment Documents").

Section 4.  Representations, Warranties, Authority, No Adverse Claim.

4.1  Reassertion of Representations and Warranties, No Default.  The Borrower hereby represents that on and as of the date hereof and after giving effect to this Amendment (a) all of the representations and warranties contained in the Credit Agreement are true, correct and complete in all respects as of the date hereof as though made on and as of such date, except for changes permitted by the terms of the Credit Agreement, and (b) there will exist no Default or

Event of Default under the Credit Agreement as amended by this Amendment on such date which has not been waived by the Agent and the Banks.

4.2  Authority, No Conflict, No Consent Required.  The Borrower represents and warrants that the Borrower has the power and legal right and authority to enter into the Amendment Documents and has duly authorized as appropriate the execution and delivery of the Amendment Documents and other agreements and documents executed and delivered by the Borrower in connection herewith or therewith by proper corporate, and none of the Amendment Documents nor the agreements contained herein or therein contravenes or constitutes a default under any agreement, instrument or indenture to which the Borrower is a party or a signatory or a provision of the Borrower's Certificate of Incorporation, Bylaws or any other agreement or requirement of law in which the consequences of such default or violation could have a material adverse effect on the business, operations, properties, assets or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole, or result in the imposition of any Lien on any of its property under any agreement binding on or applicable to the Borrower or any of its property except, if any, in favor of the Agent on behalf of the Banks. The Borrower represents and warrants that no consent, approval or authorization of or registration or declaration with any Person, including but not limited to any governmental authority, is required in connection with the execution and delivery by the Borrower of the Amendment Documents or other agreements and documents executed and delivered by the Borrower in connection therewith or the performance of obligations of the Borrower therein described, except for those which the Borrower has obtained or provided and as to which the Borrower has delivered certified copies of documents evidencing each such action to the Agent.

4.3  No Adverse Claim.  The Borrower warrants, acknowledges and agrees that no events have taken place and no circumstances exist at the date hereof which would give the Borrower a basis to assert a defense, offset or counterclaim to any claim of the Agent or the Banks with respect to the Obligations or the Borrower's obligations under the Credit Agreement as amended by this Amendment.

Section 5.  Affirmation of Credit Agreement, Further References.  The Agent, the Banks, and the Borrower each acknowledge and affirm that the Credit Agreement, as hereby amended, is hereby ratified and confirmed in all respects and all terms, conditions and provisions of the Credit Agreement, except as amended by this Amendment, shall remain unmodified and in full force and effect. All references in any document or instrument to the Credit Agreement are hereby amended and shall refer to the Credit Agreement as amended by this Amendment. All of the terms, conditions, provisions, agreements, requirements, promises, obligations, duties, covenants and representations of the Borrower under such documents and any and all other documents and agreements entered into with respect to the obligations under the Credit Agreement are incorporated herein by reference and are hereby ratified and affirmed in all respects by the Borrower.

Section 6.  Merger and Integration, Superseding Effect.  This Amendment, from and after the date hereof, embodies the entire agreement and understanding between the parties hereto and supersedes and has merged into this Amendment all prior oral and written agreements on the same subjects by and between the parties hereto with the effect that this Amendment, shall control with respect to the specific subjects hereof and thereof.

Section 7.  Severability.  Whenever possible, each provision of this Amendment and the other Amendment Documents and any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto shall be interpreted in such manner as to be effective, valid and enforceable under the applicable law of any jurisdiction, but, if any provision of this Amendment, the other Amendment Documents or any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto shall be held to be prohibited, invalid or unenforceable under

2

the applicable law, such provision shall be ineffective in such jurisdiction only to the extent of such prohibition, invalidity or unenforceability, without invalidating or rendering unenforceable the remainder of such provision or the remaining provisions of this Amendment, the other Amendment Documents or any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto in such jurisdiction, or affecting the effectiveness, validity or enforceability of such provision in any other jurisdiction.

Section 8.  Successors.  The Amendment Documents shall be binding upon the Borrower, the Banks, and the Agent and their respective successors and assigns, and shall inure to the benefit of the Borrower, the Banks, and the Agent and the successors and assigns of the Banks and the Agent.

Section 9.  Legal Expenses.  As provided in Section 9.2 of the Credit Agreement, the Borrower agrees to reimburse the Agent, upon execution of this Amendment, for all reasonable out-of-pocket expenses (including attorney' fees and legal expenses of Dorsey & Whitney LLP, counsel for the Agent) incurred in connection with the Credit Agreement, including in connection with the negotiation, preparation and execution of the Amendment Documents and all other documents negotiated, prepared and executed in connection with the Amendment Documents, and in enforcing the obligations of the Borrower under the Amendment Documents, and to pay and save the Agent and the Banks harmless from all liability for, any stamp or other taxes which may be payable with respect to the execution or delivery of the Amendment Documents, which obligations of the Borrower shall survive any termination of the Credit Agreement.

Section 10.  Headings.  The headings of various sections of this Amendment have been inserted for reference only and shall not be deemed to be a part of this Amendment.

Section 11.  Counterparts.  The Amendment Documents may be executed in several counterparts as deemed necessary or convenient, each of which, when so executed, shall be deemed an original, provided that all such counterparts shall be regarded as one and the same document, and either party to the Amendment Documents may execute any such agreement by executing a counterpart of such agreement.

Section 12.  Governing Law.THE AMENDMENT DOCUMENTS SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS, THEIR HOLDING COMPANIES AND THEIR AFFILIATES.

(THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY.)

3

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date and year first above written.

	MARTEN TRANSPORT, LTD.
	By:
	Title:
	Address:	129 Marten Street Mondovi, Wisconsin 54755
Revolving Commitment Amount:	U.S. BANK NATIONAL ASSOCIATION In its individual corporate capacity and as Agent
$40,000,000	By:
	Title:
	Address:	601 Second Avenue South, MPFP0602 Minneapolis, MN 55402-4302 ATTN: Michael J. Reymann
Revolving Commitment Amount:	THE NORTHERN TRUST COMPANY
$10,000,000	By:
	Title:
	Address:	50 South LaSalle Street Chicago, IL 60675 ATTN: Daniel Hintzen

4

EXHIBIT 2.2 TO
THIRD AMENDMENT TO CREDIT AGREEMENT

Schedule 6.13

MARTEN TRANSPORT, LTD.
SCHEDULE OF INDEBTEDNESS
AS OF 3/31/00

Payee	Loan Number	3/31/00 Balance
U.S. Bank—Minneapolis	199059	161,244.04
U.S. Bank—Minneapolis	199061	304,859.26
U.S. Bank—Minneapolis	199062	300,218.76
U.S. Bank—Minneapolis	199063	441,171.58
U.S. Bank—Minneapolis	199068	650,459.15
U.S. Bank—Minneapolis	199070	1,367,323.19
U.S. Bank Subtotal		3,225,275.98
BANK OF AMERICA	9	144,531.80
BANK OF AMERICA	10	176,684.44
BANK OF AMERICA	12	706,266.80
BANK OF AMERICA	14	1,018,426.26
BANK OF AMERICA	15	343,248.77
Bank of America Subtotal		2,389,158.07
The Prudential Insurance Company of America		40,000,000.00	*
TOTAL INDEBTEDNESS		45,614,434.05

*

PRO FORMA BALANCE

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MARTEN TRANSPORT, LTD. SCHEDULE OF INDEBTEDNESS AS OF 3/31/00

EX-10.19

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REQUEST FOR PURCHASE
MARTEN TRANSPORT, LTD.

    Reference is made to the Note Purchase and Private Shelf Agreement (the "Agreement"), dated as of October 30, 1998, between Marten Transport, Ltd., a Delaware corporation (the "Company"), on the one hand, and The Prudential Insurance Company of America ("Prudential") and each Prudential Affiliate which becomes party thereto, on the other hand. Capitalized terms used and not otherwise defined herein shall have the respective meanings specified in the Agreement.

    Pursuant to Paragraph 2B(3) of the Agreement, the Company hereby makes the following Request for Purchase:

     1. Aggregate principal amount of the Notes covered hereby (the "Notes")      $10,000,000

     2. Individual specifications of the Notes:

Principal Amount		Final Maturity Date	Principal Prepayment Dates and Amounts	Interest Payment Period
$	10,000,000	April 6, 2010	$1,428,571.43 on April 6 in each of the years 2004, 2005, 2006, 2007, 2008, 2009 and 2010	Quarterly

     3. Use of proceeds of the Notes: Refinance Existing Indebtedness

     4. Proposed day for the closing of the purchase and sale of the Notes: April 6, 2000

     5. The purchase price of the Notes is to be transferred to:

Name and Address and ABA Routing Number of Bank	Number of Account
U.S. Bank	Marten Transport Ltd.
ABA No.	Account No.

     6. The Company certifies (a) that the representations and warranties contained in paragraph 8 of the Agreement are true on and as of the date of this Request for Purchase except to the extent of changes caused by the transactions contemplated in the Agreement and (b) that there exists on the date of this Request for Purchase no Event of Default or Default.

     7. The Issuance Fee to be paid pursuant to the Agreement will be paid by the Company on the closing date.

Dated: March 27, 2000	MARTEN TRANSPORT, LTD.
	By:
	Title:	Vice President

1

CONFIRMATION OF ACCEPTANCE
MARTEN TRANSPORT, LTD.

    Reference is made to the Note Purchase and Private Shelf Agreement (the "Agreement"), dated as of October 30, 1998 between Marten Transport, Ltd., a Delaware corporation (the "Company"), on the one hand, and The Prudential Insurance Company of America ("Prudential") and each Prudential Affiliate which becomes party thereto, on the other hand. All terms used herein that are defined in the Agreement have the respective meanings specified in the Agreement.

    Prudential or the Prudential Affiliate which is named below as a Purchaser of Notes hereby confirms the representations as to such Notes set forth in paragraph 9 of the Agreement, and agrees to be bound by the provisions of paragraphs 2B(5) and 2B(7) of the Agreement relating to the purchase and sale of such Notes and by the provisions of the penultimate sentence of paragraph 11A of the Agreement.

    Pursuant to paragraph 2B(5) of the Agreement, an Acceptance with respect to the following Accepted Notes is hereby confirmed:

I.

Accepted Notes: Aggregate principal amount $10,000,000

(A	)	(a)	Name of Purchaser: The Prudential Insurance Company of America
		(b)	Principal amount: $10,000,000
		(c)	Final maturity date: April 6, 2010
		(d)	Principal prepayment dates and amounts: $1,428,571.43 on April 6 annually in the years 2004, 2005, 2006, 2007, 2008, 2009 and 2010
		(e)	Interest rate: 8.57%
		(f)	Interest payment period: Quarterly
		(g)	Payment and notice instructions: As set forth on attached Purchaser Schedule

II.

Closing Day: April 6, 2000

Dated: April 6, 2000	MARTEN TRANSPORT, LTD.
	By:
	Title:	Vice President
	THE PRUDENTIAL INSURANCE   COMPANY OF AMERICA
	By:
		Vice President

1

MARTEN TRANSPORT, LTD.
SENIOR SERIES B NOTE

No. 2000 B-1
ORIGINAL PRINCIPAL AMOUNT: $10,000,000
ORIGINAL ISSUE DATE: April 6, 2000
INTEREST RATE: 8.57% per annum
INTEREST PAYMENT DATES: January 6, April 6, July 6 and October 6 of each year
FINAL MATURITY DATE: April 6, 2010
PRINCIPAL PREPAYMENT DATES AND AMOUNTS: $1,428,571.43 on April 6 in each of the years 2004, 2005, 2006, 2007, 2008, 2009 and 2010

    FOR VALUE RECEIVED, the undersigned, Marten Transport, Ltd. (herein called the "Company"), a corporation organized and existing under the laws of the State of Delaware, hereby promises to pay to The Prudential Insurance Company of America, or registered assigns, the principal sum of TEN MILLION DOLLARS, payable on the Principal Prepayment Dates and in the amounts specified above, and on the Final Maturity Date specified above in an amount equal to the unpaid balance of the principal hereof, with interest (computed on the basis of a 360-day year—30-day month) (a) on the unpaid balance thereof at the Interest Rate per annum specified above, payable on each Interest Payment Date specified above and on the Final Maturity Date specified above, commencing with the Interest Payment Date next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) on any overdue payment (including any overdue prepayment) of principal, any overdue payment of Yield Maintenance Amount and any overdue payment of interest, payable on each Interest Payment Date as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 2% over the Interest Rate specified above or (ii) 2% over the rate of interest publicly announced by Morgan Guaranty Trust Company of New York from time to time in New York City as its Prime Rate.

    Payments of principal, Yield Maintenance Amount, if any, and interest are to be made at the main office of Bank of New York in New York City or at such other place as the holder hereof shall designate to the Company in writing, in lawful money of the United States of America.

    This Note is one of a series of Senior Notes (herein called the "Notes") issued pursuant to a Note Purchase and Private Shelf Agreement, dated as of October 30, 1998 (herein called the "Agreement"), between the Company, on the one hand, and The Prudential Insurance Company of America and each Prudential Affiliate (as defined in the Agreement) which becomes party thereto, on the other hand, and is entitled to the benefits thereof.

    This Note is subject to optional prepayment, in whole or from time to time in part, on the terms specified in the Agreement.

    This Note is a registered Note and, as provided in the Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for the then outstanding principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary.

    In case an Event of Default shall occur and be continuing, the principal of this Note may be declared or otherwise become due and payable in the manner and with the effect provided in the Agreement.

    This Note is intended to be performed in the State of Illinois and shall be construed and enforced in accordance with the internal laws and decisions (as opposed to the conflicts of law provisions) of such State.

MARTEN TRANSPORT, LTD.
By:
Title:	Vice President of Finance

MARTEN TRANSPORT, LTD.
CERTIFICATE AS TO REPRESENTATIONS, DEFAULTS, ETC.

    Marten Transport, Ltd., a Delaware corporation (herein called the "Company"), does hereby certify, pursuant to Section 3A of the Note Purchase and Private Shelf Agreement dated as of October 30, 1998 (the "Note Agreement") between the Company and The Prudential Insurance Company of America and each Prudential Affiliate which becomes a party thereto, as follows:

     1. The representations and warranties contained in Paragraph 8 of the Note Agreement are true on and as of the date hereof (except to the extent of changes caused by the transactions contemplated by the Note Agreement).

     2. There exists on the date hereof no Event of Default or Default as specified in paragraph 7 of the Note Agreement.

    IN WITNESS WHEREOF, I have hereunto set my hand and the seal of the Company this 6^th day of April, 2000.

MARTEN TRANSPORT, LTD.
By:
Title:	Vice President

OFFICER'S CERTIFICATE

This Officer's Certificate is made by Franklin J. Foster, in his capacity as Vice President of Marten Transport, Ltd., a Delaware corporation ("Marten"), in connection with that certain Note Purchase and Private Shelf Agreement between Marten and The Prudential Life Insurance Company of America ("Prudential") dated as of October 30, 1998 ("Agreement") whereby Marten will on April 6, 2000 issue its Senior Notes for $10,000,000 to Prudential (the "Notes"). All capitalized terms used herein but not defined herein shall have the definition prescribed for such term as set forth in the Agreement.

The undersigned does hereby certify to Oppenheimer Wolff & Donnelly LLP that:

1.

Marten has no Subsidiaries; and

2.

The execution, delivery, offering, issuance and sale of the Notes and compliance with the Agreement and the Notes do not conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, or result in any violation of, or result in the creation of any Lien upon any of the properties or assets of Marten pursuant to, or require any authorization, consent, approval, exemption or other action by notice to or filing with any court, administrative or governmental body or other person pursuant to any agreement, instrument, order, judgment or decree to which Marten is a party or otherwise subject, except to the extent the Credit Agreement between U.S. Bank National Association, The Northern Trust Company and Marten, dated as of October 30, 1998, as amended, which has been disclosed to you, may so conflict.

This Officer's Certificate is executed as of April 6, 2000.

MARTEN TRANSPORT, LTD.
By:
Printed name:	Franklin J. Foster
Title:	Vice President of Finance

CERTIFICATE OF SECRETARY
MARTEN TRANSPORT, LTD.

    The undersigned certifies that he is the Secretary of Marten Transport, Ltd., a Delaware corporation (the "Corporation"), and as such, he is authorized to execute and deliver this Certificate on behalf of the Corporation pursuant to Paragraph 3A(iv) of that certain Note Purchase and Private Shelf Agreement dated as of October 30, 1998 (the "Note Agreement") between the Corporation and The Prudential Insurance Company of America.

(a)

The Certificate of Incorporation of the Corporation has not been amended or revised since October 30, 1998.



(b)

The By-laws of the Corporation have not been amended or revised since October 30, 1998.



(c)

Attached hereto as Exhibit A is a true and correct copy of the Corporation's Board of Directors dated April   , 2000. Such resolutions have not been rescinded, amended or modified, and are in full force and effect on the date hereof.



(d)

Attached hereto as Exhibit B is a good standing certificate for the Corporation from the Secretary of State of Wisconsin.



(e)

The following named persons were duly elected to, and are validly acting in, the office (or capacity) listed opposite their respective names, and their respective specimen signatures set forth below are genuine:

Name	Title	Signature
Darrell D. Rubel	Executive Vice President, Chief Financial Officer and Treasurer
Franklin J. Foster	Vice President of Finance
Thomas A. Letscher	Secretary

IN WITNESS WHEREOF, the undersigned has executed this Certificate and caused this Certificate to be delivered this 6^th day of April, 2000.

Thomas A. Letscher
Secretary

QuickLinks

REQUEST FOR PURCHASE MARTEN TRANSPORT, LTD.
CONFIRMATION OF ACCEPTANCE MARTEN TRANSPORT, LTD.
MARTEN TRANSPORT, LTD. SENIOR SERIES B NOTE
MARTEN TRANSPORT, LTD. CERTIFICATE AS TO REPRESENTATIONS, DEFAULTS, ETC.
OFFICER'S CERTIFICATE
CERTIFICATE OF SECRETARY MARTEN TRANSPORT, LTD.

EX-27.1

 


<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED STATEMENTS OF INCOME AND THE CONDENSED BALANCE SHEETS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.


                             
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                          DEC-31-2000
<PERIOD-START>                             JAN-01-2000
<PERIOD-END>                               MAR-31-2000
<CASH>                                               0
<SECURITIES>                                         0
<RECEIVABLES>                               24,317,000
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                            35,399,000
<PP&E>                                     209,543,000
<DEPRECIATION>                              50,573,000
<TOTAL-ASSETS>                             195,803,000
<CURRENT-LIABILITIES>                       31,919,000
<BONDS>                                     72,539,000
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                        42,000
<OTHER-SE>                                  60,339,000
<TOTAL-LIABILITY-AND-EQUITY>               195,803,000
<SALES>                                     60,293,000
<TOTAL-REVENUES>                            60,293,000
<CGS>                                                0
<TOTAL-COSTS>                               56,466,000
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                           1,277,000
<INCOME-PRETAX>                              2,619,000
<INCOME-TAX>                                   995,000
<INCOME-CONTINUING>                          1,624,000
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                 1,624,000
<EPS-BASIC>                                       0.38
<EPS-DILUTED>                                     0.38