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 June 30, 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 4,180,145 as of August 8, 2000.

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements.

MARTEN TRANSPORT, LTD.

CONDENSED BALANCE SHEETS

(In thousands, except share information)

					June 30, 2000			December 31, 1999
					(Unaudited)
ASSETS
	Current assets:
		Receivables			$	25,716		$	27,673
		Prepaid expenses and other				6,302			7,471
		Deferred income taxes				4,177			4,166
			Total current assets			36,195			39,310
	Property and equipment:
		Revenue equipment, buildings and land, office equipment, and other				220,696			193,031
		Accumulated depreciation				(53,586	)		(47,311	)
			Net property and equipment			167,110			145,720
	Other assets					1,548			889
				TOTAL ASSETS	$	204,853		$	185,919
LIABILITIES AND SHAREHOLDERS' INVESTMENT
	Current liabilities:
		Accounts payable and accrued liabilities			$	13,524		$	14,475
		Insurance and claims accruals				11,191			12,680
		Current maturities of long-term debt				3,567			5,659
			Total current liabilities			28,282			32,814
	Long-term debt, less current maturities					82,121			63,599
	Deferred income taxes					32,439			29,901
			Total liabilities			142,842			126,314
	Shareholders' investment:
		Common stock, $.01 par value per share, 10,000,000 shares authorized, 4,180,145 and 4,300,145 shares issued and outstanding				42			43
		Additional paid-in capital				9,934			9,934
		Retained earnings				52,035			49,628
			Total shareholders' investment			62,011			59,605
				TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT	$	204,853		$	185,919

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

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MARTEN TRANSPORT, LTD.

CONDENSED STATEMENTS OF INCOME

(In thousands, except share information)

(Unaudited)

			Three Months Ended June 30,						Six Months Ended June 30,
			2000			1999			2000			1999
OPERATING REVENUE			$	64,811		$	54,558		$	125,104		$	103,289
OPERATING EXPENSES:
	Salaries, wages and benefits			18,459			16,085			35,645			30,937
	Purchased transportation			15,489			14,457			30,925			26,906
	Fuel and fuel taxes			9,939			6,540			18,714			12,238
	Supplies and maintenance			4,687			4,171			9,024			8,118
	Depreciation			6,039			5,055			12,104			9,963
	Operating taxes and licenses			1,182			1,072			2,345			2,006
	Insurance and claims			1,333			1,137			2,565			2,251
	Communications and utilities			757			663			1,497			1,321
	Gain on disposition of revenue equipment			(234	)		(449	)		(273	)		(910	)
	Other			1,730			1,331			3,301			2,762
		Total operating expenses		59,381			50,062			115,847			95,592
OPERATING INCOME				5,430			4,496			9,257			7,697
OTHER EXPENSES (INCOME):
	Interest expense			1,531			947			2,808			1,874
	Interest income and other			(85	)		(54	)		(154	)		(111	)
INCOME BEFORE INCOME TAXES				3,984			3,603			6,603			5,934
PROVISION FOR INCOME TAXES				1,514			1,405			2,509			2,314
NET INCOME			$	2,470		$	2,198		$	4,094		$	3,620
BASIC AND DILUTED EARNINGS PER COMMON SHARE			$	0.58		$	0.49		$	0.96		$	0.81

The accompanying notes are an integral part of these statements.

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MARTEN TRANSPORT, LTD.

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

					Six Months Ended June 30,
					2000			1999
CASH FLOWS FROM OPERATING ACTIVITIES:
	Operations:
		Net income			$	4,094		$	3,620
		Adjustments to reconcile net income to net cash flows from operating activities:
			Depreciation			12,104			9,963
			Gain on disposition of revenue equipment			(273	)		(910	)
			Deferred tax provision			2,527			1,415
			Changes in other current operating items			686			1,425
				Net cash provided by operating activities		19,138			15,513
CASH FLOWS FROM INVESTING ACTIVITIES:
	Property additions:
		Revenue equipment, net				(31,520	)		(15,511	)
		Buildings and land, office equipment, and other additions, net				(1,701	)		(573	)
	Net change in other assets					(659	)		108
				Net cash used for investing activities		(33,880	)		(15,976	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Long-term borrowings					63,650			39,900
	Repayment of long-term borrowings					(47,220	)		(37,503	)
	Common stock repurchased					(1,688	)		(2,130	)
				Net cash provided by financing activities		14,742			267
DECREASE IN CASH AND CASH EQUIVALENTS						—			(196	)
CASH AND CASH EQUIVALENTS:
	Beginning of period					—			1,116
	End of period				$	—		$	920
CASH PAID FOR:
	Interest				$	2,394		$	1,898
	Income taxes				$	362		$	9

The accompanying notes are an integral part of these statements.

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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 June 30,				Six Months Ended June 30,
		2000		1999		2000		1999
		(In thousands, except per-share amounts)
Numerator:
	Net income	$	2,470	$	2,198	$	4,094	$	3,620
Denominator:
	Basic earnings per common share—weighted-average shares		4,226		4,476		4,250		4,477
	Effect of dilutive stock options		22		13		19		14
	Diluted earnings per common share—weighted-average shares and assumed conversions		4,248		4,489		4,269		4,491
Basic and diluted earnings per common share		$	0.58	$	0.49	$	0.96	$	0.81

    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 June 30,				Six Months Ended June 30,
	2000		1999		2000		1999
Number of option shares		78,750		348,750		78,750		348,750
Weighted-average exercise price	$	15.06	$	13.65	$	15.06	$	13.65

(3)  Long-Term Debt

    In January and May 2000, we entered into amendments to our unsecured committed credit facility. These amendments added an additional bank and increased our total facility with our current banks from $40 million to $60 million. In April 2000, we entered into an agreement with an insurance company for an additional $10 million in senior unsecured notes which bear fixed interest at 8.57 percent and mature in April 2010.

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(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. Under this program, we repurchased 60,000 shares of our common stock in February 2000, for $14.125 per share, and 60,000 shares in June 2000, for $14.00 per share. The 120,000 shares have been retired, reducing shareholders' investment by $1,687,500.

(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 June 30, 2000.

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

Results of Operations

    Operating revenue for the second quarter of 2000 increased 18.8 percent over the second quarter of 1999. Operating revenue increased 21.1 percent for the first six months of 2000 over the same period last year. The increases in operating revenue, net of fuel surcharges and rebates, were 14.1 percent for the second quarter of 2000 and 16.2 percent for the six months ended June 30, 2000. These increases were 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. Our customer contracts 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 six months of 2000 than in the same period of 1999. As a result, fuel surcharges increased operating revenue for the first six months of 2000 by $4.4 million, while fuel rebates reduced operating revenue for the same period of 1999 by $503,000. We expect operating revenue for the remainder of 2000 to exceed 1999 levels given continued customer demand and planned revenue equipment additions.

    Operating expenses for the second quarter of 2000 were 91.6 percent of operating revenue, compared with 91.8 percent for the second quarter of 1999. This ratio for the first six months of 2000 was 92.6 percent, compared with 92.5 percent for the same period of 1999. Most expense categories increased in 2000 due to the transportation of additional freight and additions to our fleet. Purchased transportation expense increased in 2000 due to an increase in the number of independent contractor-owned vehicles in our fleet. Independent contractors are responsible for their own salaries, wages and benefits expense, fuel and fuel taxes expense, and supplies and maintenance expense. As a result, our expenses in these categories are reduced relative to revenue. Fuel and fuel tax expense increased due to significantly higher diesel fuel prices in the first six months of 2000 compared with the same period of 1999. Insurance and claims expense in 2000 was consistent with 1999 levels due to our continued emphasis on driver safety, training and claims management. Our gain on disposition of revenue equipment significantly decreased in the six months ended June 30, 2000, due to decreases in the number of planned revenue equipment trades and in the market value received for used revenue equipment. We expect operating expenses as a percentage of revenue to remain at current levels for the remainder of 2000.

    Interest expense for the first six months of 2000 significantly increased over the same period of 1999. An increase in our average long-term debt, incurred to finance our planned revenue equipment additions, was the primary cause of this increase. Higher interest rates also contributed to this increase. We expect interest expense to remain at current levels for the remainder of 2000.

    Our effective income tax rate was 38 percent for the six months ended June 30, 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 June 30, 2000.

Capital Resources and Liquidity

    Our operating activities in the first six months of 2000 provided net cash of $19,138,000. We invested net cash of $33,880,000 in revenue equipment additions and other capital expenditures, while financing activities provided $14,742,000 during this period. We have continued to update and expand our fleet in 2000 and 1999 by investing in new, more efficient revenue equipment. We repurchased

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60,000 shares of our common stock during each of the first and second quarters of 2000. The 120,000 shares have been retired, reducing shareholders' investment by $1,687,500. We also sold our maintenance facility in Georgia and purchased a new maintenance facility, which is also in Georgia, during the first quarter of 2000 for a net cash payment of approximately $900,000. Cash flows from operations and proceeds from long-term debt were used to fund these expenditures.

    Our cash management practice minimizes both cash and debt balances by utilizing our unsecured committed credit facility. We entered into amendments to this facility in January and May 2000. These amendments added an additional bank and increased our total facility with our current banks from $40 million to $60 million. In April 2000, we also entered into an agreement with an insurance company for an additional $10 million in senior unsecured notes. We have historically met our working capital requirements by effectively utilizing our operating profits, short turnover in accounts receivable and cash management practices. We have not used and do not anticipate using short-term borrowings to satisfy working capital needs. We believe our liquidity is adequate to meet expected 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.

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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.

    Our annual meeting of stockholders was held on May 9, 2000. The following items were voted upon at the annual meeting:

    (a) Six incumbent directors were elected to serve one-year terms expiring at the annual meeting of stockholders to be held in 2001. The following summarizes the votes cast for, votes cast against, and broker non-votes for each nominee:

Nominee	Votes For	Votes Against	Broker Non-Votes
Randolph L. Marten	3,825,461	1,012	-0-
Darrell D. Rubel	3,825,536	937	-0-
Larry B. Hagness	3,825,536	937	-0-
Thomas J. Winkel	3,825,536	937	-0-
Jerry M. Bauer	3,825,536	937	-0-
Christine K. Marten	3,825,261	1,212	-0-

    (b) The stockholders also approved the appointment of Arthur Andersen LLP as our independent auditors for the year ending December 31, 2000, by a vote of 3,825,637 shares in favor, 216 shares opposed, and 620 shares abstaining.

ITEM 5. Other Information.

    None

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

a)

Exhibits

Item No.	Item	Method of Filing
10.20	Fourth Amendment to Credit Agreement, dated May 31, 2000, between the Company, U.S. Bank National Association and The Northern Trust Company	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 June 30, 2000.

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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: August 10, 2000	By:	/s/ DARRELL D. RUBEL Darrell D. Rubel   Executive Vice President and Treasurer (Chief Financial Officer)

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MARTEN TRANSPORT, LTD.

EXHIBIT INDEX TO QUARTERLY REPORT
ON FORM 10-Q

For the Quarter Ended June 30, 2000

Item No.	Item	Method of Filing
10.20	Fourth Amendment to Credit Agreement, dated May 31, 2000, between the Company, U.S. Bank National Association and The Northern Trust Company	Filed with this report electronically.
27.1	Financial Data Schedule	Filed with this report electronically.

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PART I: FINANCIAL INFORMATION

Item 1. Financial Statements.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings.
ITEM 2. Changes in Securities and Use of Proceeds.
ITEM 3. Defaults Upon Senior Securities.
ITEM 4. Submission of Matters to a Vote of Security Holders.
ITEM 5. Other Information.
ITEM 6. Exhibits and Reports on Form 8-K.

SIGNATURE

EX-10.20

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EXECUTION COPY

FOURTH AMENDMENT TO CREDIT AGREEMENT

    This FOURTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), made and entered into as of May 31, 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, and as amended by that certain Third Amendment to Credit Agreement dated as of April 5, 2000 (as amended, the "Credit Agreement"); and

    2.  U.S. Bank National Association, in its capacity as a Bank, has extended to the Borrower, pursuant to the terms of the Credit Agreement, a revolving loan in the amount of $40,000,000. The Northern Trust Company has extended to the Borrower, pursuant to the terms of the Credit Agreement, a revolving loan in the amount of $10,000,000. The Borrower has requested, among other things, that the Revolving Commitment Amount under the Credit Agreement be increased to $60,000,000, and U.S. Bank National Association is willing to increase its revolving loan amount to $45,000,000, and The Northern Trust Company is willing to increase its revolving loan amount to $15,000,000; and

    3.  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  Definitions.  Section 1.1 of the Credit Agreement is further amended by adding the following definition of "Second Fee Letter":

    "Second Fee Letter": The confidential letter, dated as of May 31, 2000, from the Agent to the Borrower.

    2.2  Indebtedness.  Section 6.13(d) of the Credit Agreement is amended to read in its entirety as follows:

    6.13(d) Without duplication of Indebtedness under Section 6.13(c), Indebtedness secured by Liens permitted by Section 6.14(c) hereof.

    2.3  Liens.  Section 6.14(c) of the Credit Agreement is amended in its entirety to read as follows:

    6.14(c) Liens securing Indebtedness which, at the time of determination, does not exceed an amount equal to (i) 15% of consolidated net worth of the Borrower and its Subsidiaries, less

(ii) the sum of (1) the Indebtedness of the Borrower which is secured by a Lien and (2) the Indebtedness of any Subsidiary, excluding Indebtedness of any Subsidiary owed to the Borrower or any wholly-owned Subsidiary of the Borrower.

    Section 3.  Schedule I.  The Credit Agreement is hereby amended to include Schedule I in the form attached hereto.

    Section 4.  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:

    4.1 This Amendment and two new Revolving Notes payable to U.S. Bank National Association, in its capacity as a Bank, and The Northern Trust Company, each in the principal amount of $5,000,000 in the form of Exhibit 4.1 hereto (the "Revolving Notes") duly executed by the Borrower.

    4.2 A copy of the resolutions of the Board of Directors of the Borrower authorizing the execution, delivery and performance of this Amendment and the Revolving Notes certified as true and accurate by its Secretary or Assistant Secretary, along with a certification by such Secretary or Assistant Secretary (i) certifying that there has been no amendment to the Certificate of Incorporation or Bylaws of the Borrower since true and accurate copies of the same were delivered to the Lender with a certificate of the Secretary of the Borrower dated October 30, 1998, and (ii) identifying each officer of the Borrower authorized to execute this Amendment, the Revolving Notes, and any other instrument or agreement executed by the Borrower in connection with this Amendment (collectively, the "Amendment Documents"), and certifying as to specimens of such officer's signature and such officer's incumbency in such offices as such officer holds.

    4.3 A certificate of an officer of the Borrower certifying that, as of the date hereof, no Lien granted by or Indebtedness owing by the Borrower exceeds that permitted under the related financial covenants in the Senior Unsecured Loan Documents.

    4.4 Certified copies of all documents evidencing any necessary corporate action, consent or governmental or regulatory approval (if any) with respect to this Amendment.

    4.5 An opinion of counsel to the Borrower in the form of Exhibit 4.4 attached to this Amendment, duly executed by said counsel.

    4.6 A copy of the Second Fee Letter, dated as of the date hereof, duly executed by the Borrower.

    4.7 A good standing certificate for the Borrower from the States of Delaware, Wisconsin, California, Oregon, and Georgia issued not more than 30 days prior to the date of this Amendment.

    4.8 All fees, costs and expenses due and payable pursuant to the Second Fee Letter, payable in Immediately Available Funds on the date hereof.

    4.9 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 the Amendment Documents.

    Section 5.  Representations, Warranties, Authority, No Adverse Claim.

    5.1  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.

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    5.2  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.

    5.3  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 6.  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 7.  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 8.  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 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

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relating hereto or thereto in such jurisdiction, or affecting the effectiveness, validity or enforceability of such provision in any other jurisdiction.

    Section 9.  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 10.  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 11.  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 12.  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 13.  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.

4

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
$45,000,000
	By:
	Title:
	Address:	601 Second Avenue South, MPFP0602 Minneapolis, MN 55402-4302 ATTN: Michael J. Reymann
Revolving Commitment Amount:	THE NORTHERN TRUST COMPANY
$15,000,000	By:
	Title:
	Address:	50 South LaSalle Street Chicago, IL 60675 ATTN: Daniel Hintzen

5

SCHEDULE I
TO THE CREDIT AGREEMENT

NAME AND NOTICE ADDRESS OF BANK	REVOLVING COMMITMENT AMOUNT
U.S. Bank National Association 601 Second Avenue South, MPFP0602 Minneapolis, MN 55402-4302 ATTN: Michael J. Reymann	$45,000,000
The Northern Trust Company 50 South LaSalle Street Chicago, IL 60675 ATTN: Daniel Hintzen	$15,000,000

Sch. I-Page 1

QuickLinks

FOURTH AMENDMENT TO CREDIT AGREEMENT
RECITALS
AGREEMENT
SCHEDULE I TO THE CREDIT AGREEMENT

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>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-2000
<PERIOD-START>                             JAN-01-2000
<PERIOD-END>                               JUN-30-2000
<CASH>                                               0
<SECURITIES>                                         0
<RECEIVABLES>                               25,716,000
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                            36,195,000
<PP&E>                                     220,696,000
<DEPRECIATION>                              53,586,000
<TOTAL-ASSETS>                             204,853,000
<CURRENT-LIABILITIES>                       28,282,000
<BONDS>                                     82,121,000
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                        42,000
<OTHER-SE>                                  61,969,000
<TOTAL-LIABILITY-AND-EQUITY>               204,853,000
<SALES>                                    125,104,000
<TOTAL-REVENUES>                           125,104,000
<CGS>                                                0
<TOTAL-COSTS>                              115,847,000
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                           2,808,000
<INCOME-PRETAX>                              6,603,000
<INCOME-TAX>                                 2,509,000
<INCOME-CONTINUING>                          4,094,000
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                 4,094,000
<EPS-BASIC>                                       0.96
<EPS-DILUTED>                                     0.96