<PAGE>

                                M.S. Carriers, Inc.
                                3171 Directors Row
                                Memphis, TN 38131

                                March 30, 1999

Securities and Exchange Commission
Washington, D.C.  20549

Gentlemen:

Pursuant to the requirements of the Securities Exchange Act of 1934, we are
transmitting herewith the attached Form 10-K.

Sincerely,

s/ M.J. Barrow

M.J. Barrow, Senior Vice President

<PAGE>
                           United States
                 Securities and Exchange Commission
                       Washington, D.C. 20549

                           --------------

                             Form 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
                              of 1934

            For the fiscal year ended December 31, 1999

                   Commission file number 0-14781


                        M.S. Carriers, Inc.
       (Exact name of registrant as specified in its charter)

     Tennessee                                            62-1014070
(State or other jurisdiction of                      (I.R.S. Employer
incorporation or organization)                       Identification Number)

3171 Directors Row, Memphis, TN                              38131
(Address of principal executive offices)                      (Zip Code)

                           (901) 332-2500
        (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.01 Par Value           Nasdaq National Market

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 periods that the registrant was
required to filed 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. [ X ]

The aggregate market value of the registrant's $.01 par value common stock held
by non-affiliates of the registrant as of March 3, 2000 was $202,659,743 (based
on the closing sale price of $21.9375 per share on that date, as reported by
NASDAQ).

As of March 3, 2000, 12,051,601 shares of the registrant's common stock were
outstanding.

Documents Incorporated by Reference

Materials from the Registrant's Proxy Statement relating to the 2000 Annual
Meeting of Shareholders to be held on May 5, 2000 have been incorporated by
reference into Part III, Items 10, 11, 12 and 13.

<PAGE>

Table of Contents

PART I

     Item 1.     Business. . . . . . . . . . . . . . . . . . . . . .1

     Item 2.     Properties      . . . . . . . . . . . . . . . . . .3

     Item 3.     Legal Proceedings . . . . . . . . . . . . . . . . .4

     Item 4.     Submission of Matters to a Vote of Security Holders4

PART II

     Item 5.     Market for the Registrant's Common Stock and Related
                 Stockholder Matters . . . . . . . . . . . . . . . .4

     Item 6.     Selected Financial Data . . . . . . . . . . . . . .5

     Item 7.     Management's Discussion and Analysis of Results of Operations
                 and Financial Condition . . . . . . . . . . . . . .6

     Item 7A.    Quantitative and Qualitative Disclosures About Market Risk9

     Item 8.     Financial Statements and Supplementary Data . . . 10

     Item 9.     Changes in and Disagreements with Accountants on
                 Accounting and Financial Disclosures. . . . . . . 10

PART III

     Item 10.     Directors and Executive Officers of the Registrant10

     Item 11.     Executive Compensation . . . . . . . . . . . . . 10

     Item 12.     Security Ownership of Certain
                  Beneficial Owners and Management . . . . . . . . 10

     Item 13.     Certain Relationships and Related Transactions . 10

PART IV

     Item 14.     Exhibits, Financial Statement Schedules
                  and Reports on Form 8-K. . . . . . . . . . . . . 11


<PAGE>

PART I

ITEM 1. BUSINESS

General
     M.S. Carriers, Inc. (with its subsidiaries, the "Company" or "M.S.
Carriers") is a transportation company primarily engaged in the hauling of
truckload shipments of general commodities throughout the United States and the
provinces of Quebec and Ontario in Canada. The Company also provides third-party
logistics services. M.S. Carriers is a Tennessee corporation headquartered in
Memphis, Tennessee. The Company's principal executive offices are located at
3171 Directors Row, Memphis, Tennessee 38131, and its telephone number is (901)
332-2500.
     M.S. Carriers has both common and contract authority to transport any type
of freight (except certain types of explosives, household goods and commodities
in bulk) from any point in the continental United States to any other point in
any state over any route selected by the Company. The Company has authority in
Canada granted by the Quebec Transport Commission and the Ontario Highway
Transport Board to haul general commodities from points in the United States to
points in Quebec and Ontario and from points in Quebec and Ontario into the
United States. The Company also provides interline service to and from Mexico.
     The Company's primary line-haul traffic flows are between the Middle South
and the Southwest, Midwest, Central States, Southeast and Northeast. In
addition, the Company operates regional networks which serve the West,
Southeast, Southwest, Middle South, Central States and Northeast. The average
length of a trip (one-way) was approximately 729 miles in 1999 and 689 miles in
1998. The principal types of freight transported are packages, retail goods,
nonperishable foodstuffs, paper and paper products, household appliances,
furniture and packaged petroleum products.

Business Strategy
     M.S. Carriers has targeted the service-sensitive segment of the
transportation market rather than that segment which uses price as its primary
consideration. The Company has chosen to provide premium services and charge
compensating rates rather than to compete solely on the basis of price. The
principal elements of the Company's premium service are on-time deliveries,
dependable late-model equipment, fully integrated computer systems to monitor
shipment status and variations from schedules, on-board communications systems,
multiple and appointment pickups and deliveries, assistance in loading and
unloading, the availability of extra trailers which can be placed for the
convenience of customers and sufficient equipment to respond promptly to
customers' varying requirements.

Operations
   The Company's operations are designed to maximize efficiency while
maintaining the emphasis placed on providing premium service to customers.
Through the use of the Company's information and satellite tracking systems, the
location of all shipments and equipment is continuously monitored to coordinate
routes and increase equipment utilization. The Company's usual hauling method
requires the unit carrying the shipment to proceed directly from origin to
destination with no delay enroute occasioned by a change of drivers, relays or
circuitous routing. The Company's customer service department maintains constant
customer contact regarding overall service requirements and specific freight
movements and also attempts to produce backhauls for each unit.
   Because the average trip has been approximately 729 miles, most of the
Company's shipments are hauled by one driver rather than two. The relatively
short trips ordinarily run by the Company make this method of operation
preferable to team operations. Each of the Company's over-the-road tractors is
equipped with a sleeper cab so that the driver can comply with the Department of
Transportation's hours of service guidelines.

Marketing
   The Company's individualized service requires a strong commitment to
marketing. The Company's marketing efforts concentrate on attracting customers
that ship multiple loads from numerous locations that complement the Company's
existing traffic flows. As shipping patterns of existing customers expand or
change, the Company attempts to obtain additional customers to complement the
new traffic flows. Thus, the effort to attract new customers varies from time to
time depending upon growth or changes in the shipping patterns of existing
customers.
   The Company's major revenue source is the irregular route dry van truckload
market. In this market, the Company focuses on customers who value the broad
geographic coverage, premium services and flexibility available from a larger
carrier. These customers generally prefer to have their freight handled by a few
carriers with whom they can establish long-term relationships. The Company also
provides dedicated fleet services and logistics services. These services
supplement the Company's strengths in its traditional market and position the
Company to meet the anticipated needs of its customers.
   The Company had revenues of $129.7 million in 1999 and $112.2 million in 1998
from freight shipments having either a point of origin or a point of destination
in Mexico. These shipments represented approximately 20.9% and 21.2%,
respectively, of total revenues for 1999 and 1998.

                                 -1-
<PAGE>
   The largest 25, 10 and 5 customers accounted for approximately 52%, 35% and
26%, respectively, of the Company's revenues during 1999. Most of these
customers are large, publicly-held companies. One customer, Sears, accounted for
approximately 11% of the Company's revenues during 1999 and 13% in 1998. No
other customer accounted for more than 10% of the Company's revenues during 1999
or 1998.

Drivers and Employees
   The Company recognizes the importance of maintaining a professional driver
work force. The Company has established several programs to increase driver
loyalty and to give drivers a stake in the Company. The drivers are compensated
on the basis of miles driven and other services such as loading and unloading
and number of deliveries. Base pay for miles driven increases with a driver's
length of employment with the Company.
   Drivers are selected in accordance with specific Company guidelines relating
primarily 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 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 an electronic mailbox system which
allows the drivers to transmit and receive messages 24 hours a day, equips each
of its tractors with a mobile two-way satellite communication system and
maintains regular telephonic contact between dispatchers and drivers.
   The Company also recognizes that owner-operators provide the Company with
another source of drivers to support its operations. Traditional owner-operators
are independent contractors who supply their own tractors and drivers, and are
responsible for their operating expenses in return for a negotiated fee based
upon number of miles driven and accessorial services provided. While the
Company's primary benefit from traditional owner-operators is the acquisition of
the services of a qualified driver, an additional benefit is the Company
requires less capital for growth as owner-operators provide their own tractors.
In late 1997, the Company began utilizing leased owner-operators. A leased
owner-operator is an independent contractor who enters into an agreement with
the Company or one of its subsidiaries to lease, with the option to purchase, a
tractor and supplies that tractor and a driver to the Company. The Company has
determined that there are many drivers who desire to own a tractor but who are
unable to acquire a tractor without financial accommodations from the Company.
The Company intends to continue its emphasis on recruiting and retaining
owner-operators.
    Since competition for qualified drivers is intense, the Company emphasizes
the importance of attracting and retaining qualified drivers. The Company
employs driver recruiters and owner-operator recruiters. The competitive
compensation programs, together with the Company's late-model equipment,
relatively short trips and get-home policies provide important incentives to
attract and retain qualified drivers. In addition, the Company operates a
professional driving academy to train new drivers and employs full-time
recruiters in connection therewith. Despite these incentives and programs, the
Company experiences difficulty from time to time in attracting and retaining
qualified drivers.
   At December 31, 1999, the Company employed 4,667 persons, of whom 3,520 were
drivers, 266 were mechanics and other equipment maintenance personnel, and 881
were support personnel including management and administration. The Company also
leased 743 tractors with qualified drivers from traditional owner-operators and
had 562 tractors in its leased owner-operator program.
   None of the Company's employees are represented by a collective bargaining
unit, and management considers the Company's relationship with its employees to
be excellent.

Acquisitions
   The trucking industry has historically been a fragmented industry which
management of the Company believes is starting to consolidate. In 1997, the
Company adopted a strategy of seeking to acquire small-to-medium trucking
companies throughout the United States. The Company believes any acquisition
should be accretive to earnings within six months and should place the Company
in new markets for customers and drivers or provide additional capacity for
other new business opportunities.
   In September 1997, the Company completed its first acquisition, Hi-Way
Express. This acquisition added 262 tractors to the Company's fleet. In March
1998, the Company concluded the purchase of certain assets of the U.S.
operations of Challenger Motor Freight (U.S.), Inc., adding 195 tractors and 481
trailers to its fleet. In November 1998, the Company hired 280 drivers and added
803 trailers to its fleet in connection with a transaction with Interstate
Trucking Corporation of America.  Although several opportunities were reviewed
during 1999, management was unable to identify a candidate which met the
Company's acquisition criteria.

Competition
   The entire transportation industry, including the trucking industry, is
highly competitive. The Company competes primarily with other truckload
carriers. Competition for the freight transported by the Company is based, in
the long-term, primarily on service and efficiency and, to a lesser degree, on
freight rates. However, in recent years the Company has experienced an increased
focus on freight rates in certain of the markets served by the Company. Several
other truckload carriers have substantially greater financial resources, own
more equipment or carry a larger volume of freight than the Company.
                                 -2-
<PAGE>
Regulation
   The Company is a motor carrier regulated by the United States Department of
Transportation. Additionally, such matters as weight and dimensions of equipment
are subject to federal, state and international regulations. The Company
believes that it is in substantial compliance with all licensing and regulatory
requirements in each jurisdiction in which it operates.

Seasonality
   In the trucking industry generally, results of operations tend to show a
seasonal pattern as some customers reduce shipments during and after the winter
holiday season and during the summer months due to temporary plant closings for
vacations. Revenues can also be affected by bad weather and holidays, since
revenue is directly related to available working days. Furthermore, operating
expenses historically have been higher in the winter months due primarily to
decreased fuel efficiency and increased maintenance costs of revenue equipment
in cold weather.

Fuel
   Shortages of fuel or increases in fuel prices could have a materially adverse
effect on the operations and profitability of the Company. At the beginning of
1999, fuel prices were at levels below historical norms. However, fuel prices
increased dramatically during the latter part of 1999 and were approximately 36%
higher at the end of 1999 than at the beginning of 1999. The Company has
implemented a fuel surcharge program in response to this sudden increase in the
cost of fuel. This fuel surcharge will only partially offset the increase in
fuel prices. Accordingly, the profitability of the Company will be negatively
impacted by high fuel prices.
   The Company maintains fuel storage tanks at certain of its terminals. Leakage
or damage to these tanks could subject the Company to environmental clean-up
costs. The Company believes it is in substantial compliance with all
environmental laws and regulations.

ITEM 2. PROPERTIES

Office and Terminal Facilities
   The Company's executive offices and principal terminal are located in
Memphis, Tennessee on 3-acre and 48-acre tracts of land, respectively, both of
which are owned by the Company. The executive offices have 57,000 square feet of
office space. The principal terminal consists of 52,000 square feet of office
space and 41,000 square feet of maintenance facilities.
   The Company owns office and maintenance facilities of 34,500 square feet in
Columbus, Ohio, 16,500 square feet in Laredo, Texas, 16,500 square feet in
Martinsburg, West Virginia and 45,500 square feet in Atlanta, Georgia.
Additionally, the Company owns a 3,000 square foot office and terminal on a
4-acre tract of land in Tupelo, Mississippi.
The Company leases several small offices and/or trailer parking yards throughout
the country.

Revenue Equipment
   The Company has a policy of purchasing standardized tractors and trailers
manufactured to the Company's specifications. At December 31, 1999, the Company
owned and operated 3,283 Company-owned tractors; leased 743 tractors owned by
traditional owner-operators; and had 562 tractors in its leased owner-operator
program. The Company owns 14,293 van trailers; all trailers are 102 inches wide
with a minimum of 109.5 inches of inside height. Most of the tractors are
manufactured by Freightliner and most of the trailers are manufactured by Lufkin
or Trailmobile.
   Standardization enables the Company to simplify driver training, control the
cost of spare parts inventory and enhance its preventive maintenance program.
The Company adheres to a comprehensive maintenance program, based on the amount
of use of the tractor, designed to minimize equipment down-time and enhance the
resale value of all of its equipment. The Company constantly monitors the fuel
efficiency of its power equipment.
   The following table shows the age of Company-owned and operated tractors and
trailers at December 31, 1999:
<TABLE>
<CAPTION>

      Model Year       Tractors            Trailers
        <S>               <C>                 <C>
        2000              1,054               1,460
        1999                798               3,493
        1998                821               3,083
        1997                504               1,317
        1996                 82               1,207
        1995                 24               2,282
        1994                  -               1,078
        1993                  -                 152
        1992                  -                 221
                          -----               -----
                          3,283              14,293
                          =====              ======
</TABLE>
                                 -3-
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

   The Company is a party to routine litigation incidental to its business,
primarily involving claims for personal injuries and property damage incurred in
the transportation of freight. The Company believes adverse results in one or
more of these cases would not have a material adverse effect on its financial
position or its results of operations. Effective January 1, 1999, the Company
self-insures the first $500,000 of liability for each occurrence involving
bodily injury and property damage during the policy year. The Company also
self-insures the second $500,000 of liability for each occurrence until an
aggregate of $1,000,000 of liability has been paid by the Company on claims
exceeding $500,000. The Company maintains insurance which covers liability in
excess of the self-insured amounts at coverage levels that management considers
adequate.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

   No matters were submitted to a vote of security holders during the fourth
quarter of 1999.



PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Price Range of Common Stock
   The Company's Common Stock is traded in the Nasdaq National Market ("Nasdaq")
under the symbol "MSCA". The following table sets forth, for the calendar
periods indicated, the high and low sales prices for the Company's Common Stock
as reported by Nasdaq for the periods indicated.
<TABLE>
<CAPTION>

               High                 Low
      -----------------------------------
     <S>            <C>          <C>
     1999
     1st Quarter    $32.9375     $24.8438
     2nd Quarter       33.25       26.625
     3rd Quarter     32.1563      24.3125
     4th Quarter     29.0313      22.8125

     1998
     1st Quarter    $33.6875     $27.6875
     2nd Quarter     34.6875      25.0625
     3rd Quarter     31.8125      19.8125
     4th Quarter      31.625        16.00

</TABLE>
   On March 3, 2000, the last reported sales price of the Company's common stock
was $21.9375 per share. At that date, the number of shareholders of record was
191. The Company estimates that there are approximately 3,000 beneficial owners
of the Company's outstanding shares of Common Stock.

Dividend Policy
   The Company has never paid a cash dividend on its Common Stock. It is the
current intention of the Company's Board of Directors to continue to retain
earnings to finance the growth of the Company's business rather than to pay
dividends. Future payment of cash dividends will depend upon the financial
condition, results of operations and capital commitments of the Company as well
as other factors deemed relevant by the Board of Directors.

                                 -4-
<PAGE>
<TABLE>
<CAPTION>
ITEM 6. SELECTED FINANCIAL DATA

   The following selected financial data should be read in conjunction with the financial statements and notes
thereto appearing elsewhere herein.

For the year ended December 31              1999        1998         1997        1996        1995
-----------------------------------------------------------------------------------------------------
                                                 [In Thousands, except per share amounts]
<S>                                       <C>           <C>          <C>         <C>         <C>
Statement of income data:
Operating revenues                         $620,414     $528,841     $415,933     $340,236   $333,070
Operating expenses:
   Salaries, wages and benefits             184,676      163,225      133,517      127,237    126,176
   Operations and maintenance                97,947       84,260       71,381       66,224     66,961
   Taxes and licenses                        12,664       11,425       10,708        8,973     10,024
   Insurance and claims                      21,987       20,833       18,462       18,777     15,666
   Communications and utilities               7,908        6,914        5,711        5,209      6,081
   Depreciation and amortization             62,401       49,794       40,094       37,010     39,143
   Gains on disposals of revenue equipment     (941)      (1,200)        (490)      (2,397)         -
   Rent and purchased transportation        171,572      142,766       99,584       53,014     41,946
   Other                                      5,407        3,901        2,077        2,362      2,435
-----------------------------------------------------------------------------------------------------
Total operating expenses                    563,621      481,918      381,044      316,409    308,432
-----------------------------------------------------------------------------------------------------
Operating income                             56,793       46,923       34,889       23,827     24,638
Interest expense                             12,592        8,484        5,775        4,844      5,525
Other income                                 (3,221)      (1,353)        (320)        (487)    (1,424)
-----------------------------------------------------------------------------------------------------
Income before income taxes                   47,422       39,792       29,434       19,470     20,537
Income taxes                                 16,835       14,524       10,472        7,031      7,386
-----------------------------------------------------------------------------------------------------
Net income                                  $30,587      $25,268      $18,962      $12,439    $13,151
-----------------------------------------------------------------------------------------------------
Basic earnings per share                      $2.49        $2.06        $1.57        $1.03      $1.02
-----------------------------------------------------------------------------------------------------
Diluted earnings per share                    $2.39        $1.99        $1.54        $1.02      $1.01
-----------------------------------------------------------------------------------------------------


At December 31                              1999        1998         1997        1996        1995
-----------------------------------------------------------------------------------------------------
                                                              [In thousands]
Balance sheet data:
Total assets                               $591,533      484,009     $362,246     $290,662   $279,934
Long-term obligations                       202,405       146,59       79,977       45,373     47,377
Stockholders' equity                        235,210      203,753      177,391      154,211    152,524

</TABLE>
                                              -5-
<PAGE>
<TABLE>
<CAPTION>

   The following tables set forth data regarding the freight revenues, operations, revenue equipment and
employees of the Company.

                                            1999        1998         1997        1996        1995
------------------------------------------------------------------------------------------------------
<S>                                      <C>           <C>        <C>          <C>          <C>
For the year ended December 31:
Operating ratio(1)                          90.9%        91.1%      91.6%        93.0%         92.6%
Average number of truckloads per week(2)  10,964        9,839      9,385        9,277         8,265
Average revenues per tractor per week(2) $ 2,721       $2,702     $2,652       $2,575        $2,569
Average miles per trip(2)                    729          689        633          534           584
Average revenue per mile(2)              $  1.20       $ 1.20     $ 1.19       $ 1.23        $ 1.25

At December 31:
Total tractors operated:
     Company owned                         3,283        2,750      2,370        2,046          2,078
     Owner-Operator owned                    743          739        711          419            253
     Owner-Operator leased                   562          264         60            -              -
------------------------------------------------------------------------------------------------------
Total tractors                             4,588        3,753      3,141        2,465          2,331

Total trailers                            14,369       12,164      8,981        7,156          7,190

Number of employees                        4,667        3,336      3,112        2,886          2,947
</TABLE>

(1) Operating expenses as a percentage of operating revenues.
(2) Excludes logistics services.

<TABLE>
<CAPTION>
ITEM 7.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
             OPERATIONS AND FINANCIAL CONDITION

The following table sets forth the percentage relationship of revenue and expense items to operating revenues
for the periods indicated.


                                                  Percentage of Operating Revenues
                                                  --------------------------------
Year ended December 31                            1999          1998          1997
----------------------------------------------------------------------------------
<S>                                              <C>           <C>           <C>
Operating revenues                               100.0%        100.0%        100.0%
Operating expenses:
     Salaries, wages and benefits                 29.8          30.9          32.1
     Operations and maintenance                   15.8          15.9          17.2
     Taxes and licenses                            2.0           2.2           2.6
     Insurance and claims                          3.5           3.9           4.4
     Communications and utilities                  1.3           1.3           1.4
     Depreciation and amortization                10.1           9.4           9.6
     Gains on disposals of revenue equipment      (0.2)         (0.2)         (0.1)
     Rent and purchased transportation            27.7          27.0          23.9
     Other                                         0.9           0.7           0.5
----------------------------------------------------------------------------------
Total operating expenses                          90.9          91.1          91.6
----------------------------------------------------------------------------------
Operating income                                   9.1           8.9           8.4
Interest expense                                   2.0           1.6           1.4
Other income                                      (0.5)         (0.2)         (0.1)
----------------------------------------------------------------------------------
Income before income taxes                         7.6           7.5           7.1
Income taxes                                       2.7           2.7           2.5
----------------------------------------------------------------------------------
Net income                                        4.9%           4.8%          4.6%
----------------------------------------------------------------------------------
</TABLE>
                                              -6-
<PAGE>
<TABLE>
<CAPTION>
   The sources of the Company's operating revenues were as follows:

For the year ended December 31                    1999          1998          1997
----------------------------------------------------------------------------------
                                                            [in Thousands]
<S>                                           <C>           <C>           <C>
Trucking Revenues:
   Domestic Irregular Route                   $355,083      $316,236      $290,683
   International Irregular Route(1)            129,704       112,211        61,900
   Dedicated Route                              83,978        53,203        28,266
----------------------------------------------------------------------------------
Total Trucking Revenues                        568,765       481,650       380,849

Logistics Revenues                              68,214        60,939        45,135

Intersegment Eliminations                      (16,565)      (13,748)      (10,051)
----------------------------------------------------------------------------------

Total Operating Revenues                      $620,414      $528,841      $415,933
==================================================================================

</TABLE>

(1) The definition of International Irregular Route has been changed to include
loads originating or terminating in Laredo, TX, Brownsville, TX, El Paso, TX,
Nogales, AZ, San Diego, CA and Calexico, CA. Revenues for Domestic Irregular
Route and International Irregular Route categories have been restated for 1998
and 1997 to conform to this definition.


   The operating ratios (operating expenses as a percentage of operating
revenues) for the trucking and logistics segments and the Company's total
business were as follows:

<PAGE>
<TABLE>
<CAPTION>
For the year ended December 31                1999          1998          1997
---------------------------------------------------------------------------------
<S>                                           <C>           <C>           <C>
Trucking Segment                              90.4%         90.8%         91.6%

Logistics Segment                             97.0%         96.1%         93.2%

Total Company                                 90.9%         91.1%         91.6%
</TABLE>

1999 Compared to 1998
   Operating revenues grew 17.3% to $620 million in 1999 from $529 million in
1998. The Company's increase in revenues was due primarily to increased demand
from customers, expansion of the Company's fleet and increased logistics
revenues. Total trucking revenues during 1999 increased 18.1% compared to 1998,
and logistics revenues during 1999 increased 11.9% compared to 1998.
   The Company's fleet, including owner-operators, increased to 4,588 tractors
at December 31, 1999, from 3,753 at December 31, 1998, an increase of 835
tractors.
   Revenues per mile were $1.20 in 1999 and in 1998. Average length of haul
increased to 729 miles in 1999 up from 689 miles in 1998.
   The operating ratio (operating expenses as a percentage of operating
revenues) for 1999 was 90.9% compared to 91.1% for 1998. For the trucking
segment of the Company's business, the operating ratio for 1999 was 90.4%
compared to 90.8% for 1998. For the logistics segment of the Company's business,
the operating ratio for 1999 was 97.0% compared to 96.1% for 1998.
   Salaries, wages and benefits decreased to 29.8% of revenues in 1999 compared
to 30.9% of revenues in 1998. This decrease was due primarily to the
owner-operator tractors representing a larger percentage of the average number
of total tractors in service during 1999 compared to 1998, which caused a shift
in operating expenses as amounts paid to owner-operators are recorded as
purchased transportation. The Company had 1,305 owner-operators at December 31,
1999, compared to 1,003 at December 31, 1998.
   Operations and maintenance expenses decreased to 15.8% of revenues in 1999
from 15.9% of revenues in 1998. This slight decrease resulted from the expanded
use of owner-operators. Higher fuel costs experienced by the Company during the
latter part of 1999 kept the decrease from being larger.
   Insurance and claims expense was 3.5% of revenues in 1999 compared to 3.9% of
revenues in 1998. This decrease was due primarily to an improved accident and
health claims experience in 1999.
   Depreciation and amortization increased to 10.1% of revenues in 1999 compared
to 9.4% of revenues in 1998. This increase resulted primarily from the expansion
of the leased owner-operator program.
   Rent and purchased transportation increased to 27.7% of revenues in 1999 from
27.0% of revenues in 1998. This increase was attributable primarily to the
expanded use of owner-operators by the Company and increased expenses related to
logistics services.
                                 -7-
<PAGE>
   Interest expense was $12,591,491 in 1999 compared to $8,483,852 in 1998. This
increase in interest expense was due to an increase in average outstanding debt
during 1999 as compared to 1998 as the Company incurred debt to finance its
expanded operations.
   Other income increased to .5% of revenues in 1999 from .2% of revenues in
1998 primarily as a result of the recognition of income relating to the
Company's investment in Transportes EASO S.A. de C.V. increasing to $2,905,000
in 1999 from $955,000 in 1998.
   The effective income tax rate decreased to 35.5% in 1999 compared to 36.5% in
1998, as described in Note 6 to the Notes to Consolidated Financial Statements.

1998 Compared to 1997
   Operating revenues grew 27.1% to $529 million in 1998 from $416 million in
1997. The Company's increase in revenues was due primarily to increased demand
from customers, expansion of the Company's fleet and increased logistics
revenues. Total trucking revenues during 1998 increased 26.5% compared to 1997,
and logistics revenues during 1998 increased 35.0% compared to 1997.
   The Company's fleet, including owner-operators, increased to 3,753 tractors
at December 31, 1998 from 3,141 at December 31, 1997, an increase of 612
tractors. In March 1998, the Company concluded the acquisition of certain assets
of Challenger Motor Freight (U.S.), Inc. including 195 company-owned tractors.
   Revenues per mile were $1.20 in 1998 compared to $1.19 in 1997, due to a
slight increase in the average loaded rate per mile experienced by the Company
in 1998. Average length of haul increased to 689 miles in 1998 from 633 miles in
1997.
   The operating ratio (operating expenses as a percentage of operating
revenues) for 1998 was 91.1% compared to 91.6% for 1997. For the trucking
segment of the Company's business, the operating ratio for 1998 was 90.8%
compared to 91.6% for 1997. For the logistics segment of the Company's business,
the operating ratio for 1998 was 96.1% compared to 93.2% for 1997.
   Salaries, wages and benefits decreased to 30.9% of revenues in 1998 compared
to 32.1% of revenues in 1997. This decrease was due primarily to the
owner-operator tractors representing a larger percentage of the average number
of total tractors in service during 1998 compared to 1997, which caused a shift
in operating expenses as amounts paid to owner-operators are recorded as
purchased transportation. The Company had 1003 owner-operators at December 31,
1998 compared to 771 at December 31, 1997.
   Operations and maintenance expenses decreased to 15.9% of revenues in 1998
from 17.2% of revenues in 1997. This decrease resulted from the expanded use of
owner-operators and lower fuel costs.
   Insurance and claims expense was 3.9% of revenues in 1998 compared to 4.4% of
revenues in 1997. This decrease was due primarily to increased logistics
revenues in 1998 and an improved accident claims experience in 1998.
   Depreciation and amortization decreased to 9.4% of revenues in 1998 compared
to 9.6% of revenues in 1997. This decrease resulted primarily from the expanded
use of owner-operators and increased logistics revenues.
   The Company reported gains equal to .2% of revenues, or approximately
$1,200,000, from the disposal of revenue equipment in 1998 compared to .1% of
revenues, or approximately $500,000, in 1997.
   Rent and purchased transportation increased to 27.0% of revenues in 1998 from
23.9% of revenues in 1997. This increase was attributable primarily to the
expanded use of owner-operators by the Company and increased expenses related to
logistics services.
   Interest expense was $8,483,852 in 1998 compared to $5,775,020 in 1997. This
increase in interest expense was due to an increase in average outstanding debt
during 1998 as compared to 1997 as the Company incurred debt to finance its
expanded operations.
   The effective income tax rate increased to 36.5% in 1998 compared to 35.6% in
1997, as described in Note 6 to the Notes to Consolidated Financial Statements.

Liquidity and Capital Resources
   The Company's business continues to require significant investments in new
revenue equipment and office and terminal facilities. These investments have
been financed largely from cash provided by operating activities, secured and
unsecured borrowing and unsecured credit facilities during the past three years.
   Net cash provided by operating activities was approximately $73.1 million in
1999, $74.3 million in 1998 and $59.2 million in 1997. At December 31, 1999, the
Company had total outstanding obligations of $238.1 million related to purchases
of revenue equipment.
   The Company expects to have expenditures, net of sales, of approximately $100
million for additional revenue equipment in 2000. The Company expects to fund
these expenditures through cash provided by operating activities, secured
borrowings, or existing credit facilities. Prevailing interest rates and the
market for used revenue equipment may affect the timing of the Company's
purchase of new and replacement revenue equipment. Historically, cash provided
by operating activities, secured
                                 -8-
<PAGE>
and unsecured borrowing and existing credit facilities have been sufficient to
satisfy substantially all of the Company's working capital and capital
expenditure requirements. The Company has bank lines of credit providing for
total borrowings of up to $100 million, with interest at the lower of the bank's
prime rate or the 30-day LIBOR rate plus .45%. At December 31, 1999, there was
$58.7 million outstanding under these lines of credit. Management expects to
maintain these or similar credit facilities for an indefinite period.
   In December 1999, the Company's Board of Directors authorized the repurchase
of up to 1 million shares of the Company's common stock. The Company had not
repurchased any shares as of December 31, 1999, but did purchase 540,000 shares
for approximately $11.8 million during the first quarter of 2000.

Recently Issued Accounting Standards
   During 1998, the Financial Accounting Standards Board (FASB) issued Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS No.
133). This statement requires companies to record derivative instruments on the
balance sheet as assets or liabilities, measured at fair value. Gains or losses
resulting from changes in the values of a derivative would be accounted for
depending on the use of a derivative and whether it qualifies for hedge
accounting. In June 1999, the FASB issued Statement No. 137, which delayed the
effective date of SFAS No. 133 to the Company's fiscal year 2001. Because of the
Company's minimal historical use of derivatives, management anticipates that the
adoption of SFAS No. 133 will not have a significant effect on earnings or on
the financial position of the Company.

Year 2000 Issues
   In prior years, the Company discussed the nature and progress of its plans to
become Year 2000 ready. In late 1999, the Company completed its remediation and
testing of systems. As a result of those planning and implementation efforts,
the Company experienced no significant disruptions in mission critical
information technology and non-information technology systems and believes those
systems successfully responded to the Year 2000 date change. The Company
expensed approximately $743,000 during 1999 in connection with remediating its
systems. The Company is not aware of any material problems resulting from Year
2000 issues, either with its products and services, its internal systems, or the
products and services of third parties. The Company will continue to monitor its
mission critical computer applications and those of its suppliers and vendors
throughout the year 2000 to ensure that any latent Year 2000 matters that may
arise are addressed properly.

Forward-Looking Statements
   Certain statements and information included herein constitute
"forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, among other
things, the ability to develop and implement operational and financial systems
to manage growing operations; the ability to acquire and integrate businesses
and the risks associated with such businesses; the ability to obtain financing
on acceptable terms to finance the Company's operations and growth; competition
within the industry; the ability to attract and retain quality drivers, and
other factors contained in the Company's filings with the Securities and
Exchange Commission.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk
   The Company has market risk exposure to changing interest rates. The
Company's policy is to manage interest rates through the use of a combination of
fixed and floating rate debt. Interest rate swaps may be used to adjust interest
rate exposure based on market conditions. These swaps are entered into with a
group of financial institutions with investment grade credit ratings, thereby
minimizing the risk of credit loss. At December 31, 1999 and 1998, the fair
value of the Company's total long-term debt is approximately $242 million and
$174 million, respectively, using yields obtained for similar types of borrowing
arrangements and taking into consideration the underlying terms of the debt.
Market risk is estimated as the potential change in fair value resulting from a
hypothetical ten percent decrease in interest rates and amounts to $351,000 and
$660,000 at December 31, 1999 and 1998, respectively.
   At December 31, 1999, the Company had $189.5 million of variable-rate debt.
The Company has entered into interest rate swaps which convert floating rates to
fixed rates for a total notional amount of $70 million. If interest rates on the
Company's variable-rate debt, after considering interest rate swaps, were to
increase by ten percent from their 1999 year-end rates for the whole of 2000,
the increase in interest expense for 2000 would be approximately $772,000. The
potential change in fair value of the Company's interest rate swaps resulting
from a hypothetical ten percent decrease in interest rates would not be material
to the Company's financial position at December 31, 1999.
                                 -9-
<PAGE>
Commodity Derivative Product Exposure
   The Company has market risk exposure to changing diesel fuel prices. The
Company's policy is to manage fuel price exposure through the use of a
combination of spot price purchases, fixed price contracts from vendors and
commodity derivative products. Currently, the Company has entered into fuel
price swaps which convert floating spot fuel prices to fixed fuel prices for a
notional amount of 800,000 gallons per month through May 31, 2000 (which
represents approximately 18% of fuel consumed by Company owned fleet operations
at the current capacity and fleet configuration). If the fuel index on which
these derivatives are based were to decrease ten percent from its 1999 year-end
level for the whole of 2000, the Company would have an increase in fuel expense
for the 2000 year of $266,000 as a result of the fuel price swaps on the
notional 800,000 gallons per month.



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

   The Company's Consolidated Financial Statements and Financial Statement
Schedule are included on pages 15 to 29.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
          ON ACCOUNTING AND FINANCIAL DISCLOSUREs

   None.



                                  PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

   Information with respect to directors and executive officers of the Company
is set forth under the captions "Information Regarding Directors and Executive
Officers," "Additional Information Related to the Board of Directors" and
"Compliance with Section 16(a) of the Securities Exchange Act of 1934" in the
Registrant's Proxy Statement relating to its 2000 Annual Meeting of Shareholders
(the "2000 Proxy Statement") to be held on May 5, 2000, which is incorporated by
reference in this Form 10-K. With the exception of the foregoing information and
other information specifically incorporated by reference in this Form 10-K, the
2000 Proxy Statement is not being filed as a part hereof.

ITEM 11. EXECUTIVE COMPENSATION

   Information with respect to executive compensation is set forth under the
captions "Executive Compensation," "Summary Compensation Table," "Option Grants
in 1999," "Aggregated Option Exercises in 1999 and Year-End Value Table",
"Employment Contracts" and "Report of the Executive Compensation Committee" in
the 2000 Proxy Statement and is incorporated by reference in this Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   Information with respect to security ownership of certain beneficial owners
and management is included under the caption "Beneficial Ownership of Common
Stock" in the 2000 Proxy Statement and is incorporated by reference in this Form
10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   During 1999, the Executive Compensation Committee of the Board of Directors
was comprised of Michael S. Starnes, Morris H. Fair and Jack H. Morris, III, all
of whom participated in deliberations concerning executive officer compensation.
Mr. Starnes also serves as President and Chief Executive Officer of the Company.
The Committee establishes the compensation for Mr. Starnes and reviews
compensation set by Mr. Starnes for other executive officers. Mr. Starnes does
not participate in the Committee's deliberations concerning his compensation.
   During 1999, the Company purchased from M&S Aviation, Inc. a 45% interest in
a joint venture which owned a 1996 Learjet 31A and a deposit on a 1999 Learjet
45 for $2,610,000. Mr. Starnes owned 50% of the outstanding shares of stock of
M&S Aviation, Inc. at the time of this purchase. Subsequent to the purchase, M&S
Aviation, Inc. redeemed Mr. Starnes' shares. The purchase was on terms no less
favorable to the Company than those which may have been obtained from an
unaffiliated third party and was approved by the non-employee directors of the
Company.
                                 -10-
<PAGE>
   Edward A. Labry, III is President and a member of the Board of Directors of
Concord EFS, Inc. and its subsidiary EFS National Bank, Memphis, Tennessee.
Concord is a vertically integrated electronic transaction processor, providing
transaction authorization, data capture, settlement and funds transfer services
to the trucking industry and other selected markets. Concord's primary
activities include providing credit, debit, check authorization and electronic
benefits transfer (EBT) processing services to supermarket, petroleum,
convenience store and other retailers. Concord also provides electronic payment
and payroll services to trucking companies, truck stops and other segments of
the market. During 1999, Concord processed transactions in the aggregate amount
of $44,929,823 for the Company.



PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K

(a) Financial Statements and Financial Statement Schedules.

       (1) Financial Statements.

          Report of Independent Auditors . . . . . . . . . . . . . 15

          Consolidated Balance Sheets. . . . . . . . . . . . . . . 16

          Consolidated Statements of Income. . . . . . . . . . . . 17

          Consolidated Statements of Stockholders' Equity. . . . . 18

          Consolidated Statements of Cash Flow . . . . . . . . . . 19

          Notes to Consolidated Financial Statements . . . . . . . 20

       (2) Financial Statement Schedules

                Schedule II - Valuation and Qualifying Accounts for the Company
                is included herein on page 29.
                No other financial statement schedules are required.

(b) Reports on Form 8-K.

     The Company did not file any report on Form 8-K during the last quarter of
1999.

(c) Exhibits.

     An Exhibit Index of the exhibits required by Item 601 of Regulation S-K is
included on page 13.


                                 -11-
<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.

                                             M.S. Carriers, Inc.


                                             By: s/ Michael S. Starnes
                                             Michael S. Starnes
                                             Chairman of the Board, President
                                             and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.



s/ Michael S. Starnes      Chairman of the Board, President,     March 30, 2000
Michael S. Starnes         Chief Executive Officer and                Date
                           Director

s/ James W. Welch          Senior Vice President -               March 30, 2000
James W. Welch             Marketing and Director                     Date

s/ M.J. Barrow             Senior Vice President -               March 30, 2000
M.J. Barrow                Finance and Administration,                Date
                           Secretary-Treasurer and Director

s/ Dwight M. Bassett       Vice President, Chief Accounting      March 30, 2000
Dwight M. Bassett          Officer and Assistant Secretary            Date


s/ Jack H. Morris, III     Director                              March 30, 2000
Jack H. Morris, III                                                   Date


s/ Morris H. Fair          Director                              March 30, 2000
Morris H. Fair                                                        Date


s/ Edward A. Labry, III    Director                              March 30, 2000
Edward A. Labry, III                                                  Date

                                -12-
<PAGE>
EXHIBIT INDEX


Exhibit                                          Page Number or Incorporation
Number  Description                              By Reference

3(i).1  Restated Charter of M.S. Carriers, Inc.  Incorporated by reference from
                                                 exhibits to the Registrant's
                                                 Registration Statement on Form
                                                 S-1 (Registration Number
                                                 33-12070).

3(i).2  Articles of Amendment to Charter         Incorporated by reference from
                                                 exhibits to the of
                                                 M.S. Carriers, Inc.
                                                 Registrant's Registration
                                                 Statement on Form S-3
                                                 (Registration Number 33-63280).

3(ii)   Amended and Restated By-Laws of          Incorporated by reference from
                                                 exhibits to the
                                                 M.S. Carriers, Inc.
                                                 Registrant's Registration
                                                 Statement on Form S-3
                                                 (Registration Number 33-63280).

10.1*   Incentive Stock Option Plan              Incorporated by reference from
                                                 exhibits to the
                                                 Registrant's Registration
                                                 Statement on Form S-1
                                                 (Registration Number 33-12070).

10.2*   Amendment to Incentive Stock Option Plan  Incorporated by reference from
                                                 exhibits to the
                                                 Registrant's Registration
                                                 Statement on Form S-1
                                                 (Registration Number 33-12070).

10.3*   1993 Stock Option Plan                   Incorporated by reference from
                                                 exhibits to the
                                                 Registrant's Registration
                                                 Statement on Form S-3
                                                 (Registration Number 33-63280).

10.4*   Non-Employee Directors Stock Option Plan Incorporated by reference from
                                                 Registrant's Proxy Statement
                                                 dated March 31, 1995.

10.5*   Employment Agreements with James W.      Incorporated by reference
        Welch and M.J. Barrow                    from exhibits to the
                                                 Registrant's Statement on
                                                 Form S-1 (Registration Number
                                                 33-12070).


10.6*   Employment Agreement with                Incorporated by reference from
        Michael S. Starnes                       exhibits to the Registrant's
                                                 2nd Quarter 1995 Form 10-Q.

10.7*   M.S. Carriers, Inc. 1996 Stock           Incorporated by reference from
        Option Plan                              exhibits to the Registrant's
                                                 Proxy Statement dated
                                                 April 4, 1996

21      Subsidiaries of the Registrant           Page 14

27      Financial Data Schedule                  Filed herewith


*  Indicates management contract or compensatory plan or arrangement
                                 -13-
<PAGE>


Exhibit 21

Subsidiaries of M.S. Carriers, Inc.

                                                        Jurisdiction of
Subsidiary                                               Incorporation

M.S. Carriers Warehousing & Distribution, Inc.             Tennessee
M.S. Nationwide, Inc. (inactive)                           Tennessee
M.S. Carriers Logistics Mexico, S.A. de C.V.                Mexico
M.S. International, Inc.                                    Nevada
M.S. Global, Inc.                                           Nevada
M.S. Air, Inc.                                             Tennessee

                                 -14-
<PAGE>



Report of Independent Auditors


Board of Directors
M.S. Carriers, Inc.

   We have audited the accompanying consolidated balance sheets of M.S.
Carriers, Inc. as of December 31, 1999 and 1998, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 1999.  Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

   We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

   In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of M.S. Carriers,
Inc. at December 31, 1999 and 1998, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairy in all material respects the information set forth
therein.

                                                  s/ Ernst & Young LLP


Memphis, Tennessee
January 26, 2000,
except for note 15, as to which
the date is March 13, 2000

                                 -15-
<PAGE>

M.S. Carriers, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>



December 31                                                 1999          1998
--------------------------------------------------------------------------------
<S>                                                   <C>            <C>
Assets
Current assets:

     Cash and cash equivalents                            $242,606    $1,465,303
     Accounts receivable:
        Trade, less allowance for doubtful accounts of
            $2,850,000 in 1999 and $2,418,000 in 1998   74,235,169    54,892,449
        Officers and employees                           1,372,312     1,285,890
--------------------------------------------------------------------------------
                                                        75,607,481    56,178,339

     Recoverable income taxes                            4,391,692
     Deferred income taxes                               9,558,000     7,143,000
     Prepaid expenses and other                          6,627,602     9,436,180
--------------------------------------------------------------------------------
Total current assets                                    96,427,381    74,222,822


Property and equipment:
     Land and land improvements                          8,563,092     6,804,552
     Buildings                                          33,853,177    30,128,055
     Revenue equipment                                 538,170,367   444,639,971
     Service equipment and other                        50,764,814    43,202,780
     Construction in progress                            7,051,494     2,421,531
--------------------------------------------------------------------------------
                                                       638,402,944   527,196,889
     Accumulated depreciation and amortization         157,129,859   128,045,907
--------------------------------------------------------------------------------
                                                       481,273,085   399,150,982


Other assets                                            13,832,915    10,635,682
--------------------------------------------------------------------------------
Total assets                                          $591,533,381  $484,009,486
--------------------------------------------------------------------------------
Liabilities and stockholders' equity
Current liabilities:
     Trade accounts payable                              $7,300,275  $14,856,055
     Accrued compensation and related costs               5,625,679    5,066,654
     Other accrued expenses                              16,562,822   11,729,668
     Claims payable                                      19,914,990   18,072,814
     Income taxes payable                                              2,943,883
     Current maturities of long-term obligations         39,189,255   27,214,227
--------------------------------------------------------------------------------
Total current liabilities                                88,593,021   79,883,301

Long-term obligations, less current maturities          202,404,874  146,595,170

Deferred income taxes                                    65,325,276   53,777,739

Commitments and contingencies

Stockholders' equity:
     Common stock, $.01 par value:
          Authorized shares- 20,000,000
          Issued and outstanding shares-12,301,601
               in 1999 and 12,260,101 in 1998               123,016      122,601
     Additional paid-in capital                          66,222,158   65,269,015
     Retained earnings                                  170,952,739  140,365,314
     Cumulative other comprehensive loss                 (2,087,703)  (2,003,654)
--------------------------------------------------------------------------------
Total stockholders' equity                              235,210,210  203,753,276
--------------------------------------------------------------------------------
Total liabilities and stockholders' equity             $591,533,381 $484,009,486
================================================================================
</TABLE>
See accompanying notes.
                                 -16-
<PAGE>



M.S. Carriers, Inc.
Consolidated Statements of Income
<TABLE>
<CAPTION>
Year ended December 31                             1999         1998        1997
--------------------------------------------------------------------------------
<S>                                    <C>            <C>           <C>
Operating revenues                     $620,414,137   $528,841,314  $415,932,825

Operating expenses:
     Salaries, wages and benefits       184,676,598    163,224,933   133,517,321
     Operations and maintenance          97,946,624     84,260,614    71,380,518
     Taxes and licenses                  12,663,778     11,425,054    10,707,885
     Insurance and claims                21,986,637     20,832,807    18,462,037
     Communications and utilities         7,907,923      6,913,782     5,710,433
     Depreciation and amortization       62,400,797     49,794,229    40,093,988
     Gains on disposals of                 (940,944)    (1,199,851)     (489,519)
        revenue equipment
     Rent and purchased transportation  171,572,280    142,765,753    99,584,257
     Other                                5,407,423      3,901,274     2,077,206
--------------------------------------------------------------------------------
                                        563,621,116    481,918,595   381,044,126
--------------------------------------------------------------------------------
Operating income                         56,793,021     46,922,719    34,888,699

Other expense (income):
     Interest expense                    12,591,491      8,483,852     5,775,020
     Other                               (3,220,837)    (1,353,558)     (319,977)
--------------------------------------------------------------------------------
                                          9,370,654      7,130,294     5,455,043
--------------------------------------------------------------------------------
Income before income taxes               47,422,367     39,792,425    29,433,656
Income taxes                             16,834,942     14,524,236    10,471,883
--------------------------------------------------------------------------------
Net income                             $ 30,587,425   $ 25,268,189  $ 18,961,773
--------------------------------------------------------------------------------


Basic earnings per share                 $     2.49     $     2.06    $     1.57
--------------------------------------------------------------------------------


Diluted earnings per share               $     2.39     $     1.99    $     1.54
--------------------------------------------------------------------------------

</TABLE>
See accompanying notes.
                                 -17-

<PAGE>
<PAGE>


M.S. Carriers, Inc.
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
                                                                              Cumulative
                                                     Additional                  Other
                                    Common Stock      Paid-in      Retained  Comprehensive
                                  Shares    Amount    Capital      Earnings      Loss            Total
--------------------------------------------------------------------------------------------------------
<S>                           <C>         <C>       <C>          <C>          <C>           <C>
Balance at January 1, 1997    12,009,633  $120,096  $59,959,590  $96,135,352  $(2,003,654)  $154,211,384
Net income                                                        18,961,773                  18,961,773
Issuance of common
  stock upon business
  acquisition                    153,468     1,535    3,574,270                                3,575,805
Exercise of stock options         47,500       475      641,400                                  641,875
--------------------------------------------------------------------------------------------------------
Balance at December 31, 1997  12,210,601   122,106   64,175,260  115,097,125   (2,003,654)   177,390,837
Net income                                                        25,268,189                  25,268,189
Exercise of stock options         49,500       495    1,093,755                                1,094,250
--------------------------------------------------------------------------------------------------------
Balance at December 31, 1998  12,260,101   122,601   65,269,015  140,365,314   (2,003,654)   203,753,276
Comprehensive income:
  Net income                                                      30,587,425                  30,587,425
  Other comprehensive income:
   Foreign currency translation                                                   (84,049)       (84,049)
  Comprehensive income                                                                        30,503,376
Exercise of stock options         41,500       415      953,143                                  953,558
--------------------------------------------------------------------------------------------------------
Balance at December 31, 1999  12,301,601  $123,016  $66,222,158 $170,952,739  $(2,087,703)  $235,210,210
========================================================================================================
</TABLE>

See accompanying notes.
                                             -18-
<PAGE>

<PAGE>
M.S. Carriers, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31                              1999        1998       1997
--------------------------------------------------------------------------------
<S>                                          <C>         <C>         <C>
Operating activities
Net income                                   $30,587,425 $25,268,189 $18,961,773
Adjustments to reconcile net income to
  net cash provided by operating activities:
       Depreciation                           61,898,985  49,580,210  40,093,988
       Amortization                              501,812     214,019
       Gain on disposals of revenue equipment   (940,944) (1,199,851)   (489,519)
       Other                                                 (91,113)   (220,695)
       Deferred income taxes                   9,132,537  (6,021,780)  8,366,096
       Changes in operating assets
           and liabilities:
               Accounts receivable           (19,429,143)(10,966,653)(10,687,051)
               Other                          (5,366,207) (3,150,798)  1,533,687
               Trade accounts payable         (7,555,780)  9,407,945  (1,840,039)
               Other current liabilities       4,290,472  11,253,899   3,485,198

--------------------------------------------------------------------------------
Net cash provided by operating activities     73,119,157  74,294,067  59,203,438

Investing activities
Purchases of property and equipment          (94,177,749)(75,114,762)(96,025,327)
Proceeds from disposals of                    46,049,919  29,754,012  34,064,457
   property and equipment
Business acquisitions                                    (17,033,000)   (672,739)
--------------------------------------------------------------------------------
Net cash used in investing activities        (48,127,830)(62,393,750)(62,633,609)

Financing activities
Proceeds from long-term obligations            3,498,617
Net change in line of credit obligations         171,454  10,102,811  23,403,189
Principal payments on long-term obligations  (30,837,653 (21,983,994)(21,416,967)
Proceeds from issuance of common stock           953,558   1,094,250     641,875
--------------------------------------------------------------------------------
Net cash provided by (used in)
   financing activities                      (26,214,024)(10,786,933)  2,628,097
--------------------------------------------------------------------------------
Increase (decrease) in cash and
     cash equivalents                         (1,222,697)  1,113,384    (802,074)
Cash and cash equivalents at
   beginning of year                           1,465,303     351,919   1,153,993
--------------------------------------------------------------------------------
Cash and cash equivalents at end of year       $ 242,606  $1,465,303    $351,919
================================================================================
</TABLE>
See accompanying notes.
                                 -19-
<PAGE>



M.S. Carriers, Inc.
notes to consolidated Financial statements

1. Nature of Business

   M.S. Carriers, Inc. (the Company) is an irregular route, truckload carrier
transporting a wide range of commodities throughout the United States, and
between the United States and the provinces of Ontario and Quebec, Canada. The
Company also provides interline service to and from Mexico. The Company's
primary traffic flows are between the Middle South and the Southwest, Midwest,
Central States, Southeast and Northeast. The principal types of freight
transported are packages, retail goods, non-perishable foodstuffs, paper and
paper products, household appliances, furniture and packaged petroleum products.
   The Company also provides logistics services.

2. Significant Accounting Policies

Organization and Principles of Consolidation
   The consolidated financial statements include the accounts of M.S. Carriers,
Inc. and its wholly-owned subsidiaries. Significant intercompany accounts and
transactions have been eliminated in consolidation. The Company accounts for its
50% investment in Transportes EASO S.A. de C.V. (EASO), a Mexican trucking
company, by the equity method. This investment is classified as other long-term
assets in the consolidated financial statements and is approximately $5,279,000
and $2,458,000 at December 31, 1999 and 1998, respectively. The Company
recognized other income of approximately $2,905,000 in 1999, $955,000 in 1998,
and $306,000 in 1997 from its investment in EASO. At December 31, 1999,
approximately $4.2 million of the Company's retained earnings relate to
undistributed earnings of EASO.

Revenue Recognition
   Operating revenues are recognized on the date freight is delivered.

Cash Equivalents
   The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.

Property and Equipment
   Property and equipment are stated at cost. Depreciation, which includes
amortization of assets held under capital
leases, is computed on the straight-line method over the estimated useful lives
as follows:

     Buildings                        15-30 years
     Revenue equipment                  3-6 years
     Service equipment and other        3-5 years

   Tires and tubes purchased as part of revenue equipment are capitalized as a
cost of the equipment. Replacement tires and tubes are expensed when placed in
service.

Goodwill and Other Intangible Assets
   Goodwill and other intangible assets of $5,373,211 and $5,875,023 are
included in other long-term assets at December 31, 1999 and 1998, respectively.
Goodwill represents the excess of the cost of businesses acquired over fair
value of net tangible and identifiable intangible assets at the date of
acquisition. Goodwill and other intangible assets, which are net of accumulated
amortization of $715,831 and $214,019 at December 31, 1999 and 1998,
respectively, are being amortized using the straight-line method over periods of
up to 10 years.

Foreign Currency Translation
   Prior to January 1, 1999, the functional currency of the Company's foreign
subsidiary and equity investee was the reporting currency because Mexico was
designated as a highly inflationary economy. Translation gains and losses prior
to January 1, 1999, were recorded in the statement of income rather than as a
separate component of stockholders' equity. Effective January 1, 1999, Mexico is
no longer designated as a highly inflationary economy. Therefore, translation
gains and losses subsequent to that date are recorded as other comprehensive
income and presented as a separate component of stockholders' equity.

                                 -20-
<PAGE>

Income Taxes
   The Company accounts for income taxes using the liability method.

Earnings Per Share
   Basic earnings per share has been computed based on the weighted-average
number of common shares outstanding. Diluted earnings per share reflects the
increase in weighted-average common shares outstanding that would result from
the assumed exercise of dilutive outstanding stock options, calculated using the
treasury stock method.

Risks and Uncertainties
   The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and the accompanying
notes. Actual results could differ from those estimates.

Valuation of Long-Lived Assets
   Management periodically evaluates carrying values of long-lived assets,
including property and equipment, strategic investments, goodwill and other
intangible assets, to determine whether events and circumstances indicate that
these assets have been impaired. An asset is considered impaired when
undiscounted cash flows to be realized from such asset are less than its
carrying value. In that event, a loss is determined based on the amount that the
carrying value exceeds the fair market value of such asset.

Stock-Based Compensation
   The Company accounts for employee stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees (APB No. 25) and related
interpretations as permitted by Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation (SFAS No. 123).

Interest Rate Swaps
   The Company enters into interest rate swap agreements to modify the interest
characteristics of its outstanding debt. These agreements involve the exchange
of amounts based on a fixed interest rate for amounts based on variable interest
rates over the life of the agreement without an exchange of the notional amount
upon which the payments are based. The differential to be paid or received as
interest rates change is accrued and recognized as an adjustment of interest
expense related to the debt. The related amount payable to or receivable from
counterparties is included in accrued expenses or other current assets. The fair
value of the swap agreements and changes in the fair value as a result of
changes in market interest rates are not recognized in the financial statements.

Concentrations of Credit and Market Risks
   Concentrations of credit risk with respect to trade accounts receivable are
limited due to the large number of entities comprising the Company's customer
base and their dispersion across many different industries. The Company performs
ongoing credit evaluations and generally does not require collateral.
   The Company's sales are principally denominated and collected in the U.S.
dollar.
   The Company has market risk exposure to changing diesel fuel prices. The
Company's policy is to manage fuel price exposure through the use of a
combination of spot price purchases, fixed price contracts from vendors and
commodity derivative products. Currently, the Company has entered into fuel
price swaps which convert floating spot fuel prices to fixed fuel prices for a
notional amount of 800,000 gallons per month through May 31, 2000 (which
represents approximately 18% of fuel consumed by Company owned fleet operations
at the current capacity and fleet configuration).

Recently Issued Accounting Pronouncements
   During 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities (SFAS No. 133). This statement requires companies to
record derivative instruments on the balance sheet as assets or liabilities,
measured at fair value. Gains or losses resulting from changes in the value of a
derivative are accounted for depending on the use of the derivative and whether
it qualifies for hedge accounting. In June 1999, the FASB issued SFAS No. 137,
which delayed the effective date of SFAS No. 133 to the Company's fiscal year
2001. Management anticipates that the adoption of SFAS No. 133 will not have a
significant effect on the results of operations or financial position of the
Company.
                                 -21-
<PAGE>

3. Business Acquisitions

   In March 1998, the Company acquired substantially all of the assets,
consisting primarily of revenue equipment, and assumed certain liabilities of a
truckload carrier located in Ohio. In connection with this acquisition, the
Company paid cash of approximately $7,556,000 and recorded a holdback liability
of $700,000.
   In November 1998, the Company acquired substantially all of the assets,
consisting primarily of revenue equipment, and assumed certain liabilities of a
truckload carrier located in Wisconsin. In connection with this acquisition, the
Company paid cash of approximately $9,477,000 and recorded a holdback liability
of $250,000.
   In September 1997, the Company acquired substantially all of the assets and
assumed certain liabilities of a truckload carrier located in Arkansas. The
Company acquired assets, which consisted primarily of revenue equipment,
totaling approximately $19,575,000 and assumed liabilities, which consisted
primarily of capitalized lease obligations, totaling approximately $15,943,000.
In connection with this acquisition, the Company issued to the seller 153,468
shares of the Company's common stock valued at $3,575,805, recorded
approximately $443,000 in deferred payments and paid cash of $673,000.
   Each of the acquisitions was accounted for using the purchase method of
accounting. Therefore, the results of operations of the acquired businesses are
included in the consolidated financial statements of the Company from their
respective acquisition dates. The pro forma results of operations as if the
acquisitions had occurred at the beginning of the year preceding the year of
acquisition would not differ materially from the reported results.

4. Long-Term Obligations

   Long-term obligations consist of the following:
<TABLE>
<CAPTION>

     December 31                             1999           1998
     -----------------------------------------------------------
     <S>                             <C>            <C>
     Capitalized lease obligations   $179,349,058   $115,234,397
Equipment loan                     3,498,617
     Revolving lines of credit         58,746,454     58,575,000
     -----------------------------------------------------------
                                      241,594,129    173,809,397
     Less current maturities          (39,189,255)   (27,214,227)
     -----------------------------------------------------------
                                     $202,404,874   $146,595,170
     ===========================================================
</TABLE>


   The Company has an unsecured line of credit available for borrowings of up to
$80,000,000 with interest at the lower of the bank's prime rate or the 30-day
LIBOR rate plus .45% (6.91% at December 31, 1999). The balance outstanding under
this line of credit was $38,746,454 and $38,575,000 at December 31, 1999 and
1998, respectively. There are no commitment fees or compensating balance
requirements for the line of credit, which expires June 1, 2001.
   The Company also maintains two separate agreements with banks that each
provide for borrowings of up to $10,000,000 under unsecured lines of credit. The
lines of credit bear interest at varying rates based upon the lower of the
banks' prime rates or the 30-day LIBOR rate plus .45% (6.91% at December 31,
1999). The balance outstanding under both lines of credit, which expire
March 26, 2000, and April 27, 2000, respectively, was an aggregate of
$20,000,000 at December 31, 1999 and 1998. These amounts are classified as
long-term obligations in the accompanying consolidated balance sheets because
the Company intends to refinance the lines of credit on a long-term basis
through new credit facilities or through the existing $80,000,000 line of
credit.
   The Company issued a promissory note to a bank in the amount of $3,498,617.
This note is secured by related equipment and bears interest at a varying rate
based on the 90-day LIBOR rate plus 1% (6.16% at December 31, 1999). Interest
payments are to be made quarterly for the term of the note, with a single
principal payment being due on November 2, 2004.
   During 1999 and 1998, the Company entered into various lease agreements to
lease revenue equipment with a fair value of approximately $94,952,000 and
$86,802,000, respectively. These capital leases are secured by the related
revenue equipment and bear interest at fixed and variable rates. Additionally,
in connection with the 1998 acquisitions described in Note 3, the Company
assumed approximately $3,174,000 in capitalized lease obligations related to
acquired revenue equipment with a fair value of approximately $10,330,000 at the
time of acquisition.
   The Company's capital leases have remaining lease terms of 1 to 5 years and
contain guarantees of residual value at the end of the lease terms. Certain of
the leases contain renewal or fixed-price purchase options. The leases are
secured by revenue equipment with a net book value at December 31, 1999 and
1998, of approximately $156,922,000 and $116,256,000, respectively, which is net
of accumulated amortization of $52,286,000 and $17,962,000, respectively, and
bear interest at fixed and variable rates ranging from 4.2% to 8.3%. The
weighted average interest rate on the Company's fixed-rate capital leases is
approximately 5.4% at December 31, 1999.
                                 -22-
<PAGE>

   At December 31, 1999, the Company has entered into interest rate swaps which
convert floating interest rates to fixed interest rates ranging from 5.63% to
6.50% for a total notional amount of $70 million.
   Certain of the Company's debt agreements contain covenants including required
ratios of notes payable to net worth and notes payable to cash flow.
   The future maturities of long-term debt and future minimum lease payments
under capitalized lease obligations, by year and in the aggregate, consist of
the following at December 31, 1999:

<TABLE>
<CAPTION>
                                    Long-Term       Capitalized
                                       Debt      Lease Obligations
     -------------------------------------------------------------
     <S>                           <C>               <C>
     2000                          $                 $  48,963,965
     2001                           58,746,454          47,555,604
     2002                                               57,149,824
     2003                                               32,090,018
     2004                            3,498,617          15,412,237
     Thereafter                                          1,859,656
     -------------------------------------------------------------
                                    62,245,071         203,031,304
     Amounts representing interest                      23,682,246
     -------------------------------------------------------------
     Total long-term obligations  $ 62,245,071       $ 179,349,058
     =============================================================
</TABLE>

   The Company paid interest of approximately $12,422,000 in 1999, $8,344,000 in
1998, and $5,775,000 in 1997.

5. Claims Payable

   Under an agreement with its insurance underwriters through December 31, 1998,
the Company was self-insured for accident liabilities of $1,500,000 for the
initial occurrence per policy year, $1,250,000 for the second occurrence per
policy year, and $1,000,000 for each occurrence thereafter involving bodily
injury and property damage. Effective January 1, 1999, the Company entered into
a new agreement to reduce its self-insured retention limit for accident claims.
Under this new agreement, the Company self-insures the first $500,000 of
liability for each occurrence involving bodily injury and property damage. The
Company also self-insures the second $500,000 of liability for each occurrence
until an aggregate of $1,000,000 of liability has been paid by the Company on
claims exceeding $500,000 of liability. Excess liability is assumed by the
insurance underwriters. Reserves for claims are provided in amounts which
management considers adequate.
   The Company self-insures employee health claims up to $175,000 per employee
per policy year and workers' compensation claims up to $300,000 per employee per
policy year and has provided reserves which management considers adequate for
the Company's estimated liability for covered claims.
                                 -23-
<PAGE>

6. Income Taxes

   The liability method is used in accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse. Income tax expense (benefit) consists of
the following:

<TABLE>
<CAPTION>
Year ended December 31       1999            1998             1997
------------------------------------------------------------------
<S>                  <C>              <C>             <C>
Current:
     Federal         $  6,571,326     $17,616,578     $  1,931,443
     State              1,131,079       2,929,438          174,344
------------------------------------------------------------------
                        7,702,405      20,546,016        2,105,787
   Deferred:
     Federal            8,404,084      (5,163,198)       7,173,148
     State                728,453        (858,582)       1,192,948
------------------------------------------------------------------
                        9,132,537      (6,021,780)       8,366,096
------------------------------------------------------------------
                    $  16,834,942     $14,524,236     $ 10,471,883
==================================================================
</TABLE>

The effective tax rate varied from the statutory federal income tax rate of 35%
as follows:

<TABLE>
<CAPTION>

Year ended December 31           1999         1998          1997
------------------------------------------------------------------
<S>                       <C>          <C>           <C>
Taxes at statutory rate   $16,597,828  $13,927,349   $10,301,780
State income taxes,
  net of federal tax
  benefits                  1,859,532    1,422,578       919,231
Other                      (1,622,418)   (825,691)      (749,128)
------------------------------------------------------------------
                          $16,834,942  $14,524,236   $10,471,883
==================================================================
</TABLE>

   Income tax payments (refunds) were approximately $14,832,000 in 1999,
$13,078,000 in 1998 and $351,000 in 1997.

   Significant components of the Company's deferred tax liabilities and assets
as of December 31 are as follows:

<TABLE>
<CAPTION>
                                            1999            1998
     -----------------------------------------------------------
     <S>                             <C>             <C>
     Deferred tax liabilities:
          Property and equipment     $61,917,708     $54,919,170
          Other-net                    4,733,783       1,958,669
     -----------------------------------------------------------
     Total deferred tax liabilities   66,651,491      56,877,839

     Deferred tax assets:
          Claims payable               6,948,396       6,971,588
          Other-net                    3,935,819       3,271,512
     -----------------------------------------------------------
     Total deferred tax assets        10,884,215      10,243,100
     -----------------------------------------------------------
     Net deferred tax liabilities    $55,767,276     $46,634,739
     ===========================================================
</TABLE>


7. Employee Benefit Plans

   The M.S. Carriers, Inc. Retirement Savings Plan (the Plan) is a defined
contribution plan under Section 401(k) of the Internal Revenue Code (IRC) and
provides for voluntary contributions by employees and matching contributions by
the Company. All employees who are 19 years of age or older and have completed
six months of service are eligible for the Plan. The Plan provides each
participant with the option of contributing from 1% to 15% of the employee's
annual compensation subject to IRC limitations. The Company matches the employee
contribution up to 50% of the participant's contribution, but limited to a
maximum of 3% of the participant's compensation. The Company's contribution to
the Plan, net of forfeitures, was approximately $1,571,000 in 1999, $1,318,000
in 1998, and $1,098,000 for 1997.
                                 -24-
<PAGE>

9. Earnings Per Share

<TABLE>
<CAPTION>
   The following table sets forth the computations of basic and diluted earnings per share:

Year ended December 31                                    1999        1998           1997
-----------------------------------------------------------------------------------------
<S>                                                <C>         <C>           <C>
Numerator:
     Net income available to common stockholders   $30,587,425 $25,268,189   $ 18,961,773
-----------------------------------------------------------------------------------------
Denominator:
     Weighted-average shares for basic earnings
       per share                                    12,291,349  12,254,067     12,074,140
     Dilutive employee stock options                   524,266     475,339        261,064
-----------------------------------------------------------------------------------------
     Adjusted weighted-average shares for
       diluted earnings per share                   12,815,615  12,729,406     12,335,204
-----------------------------------------------------------------------------------------
Basic earnings per share                                $ 2.49     $  2.06         $ 1.57
=========================================================================================
Diluted earnings per share                              $ 2.39     $  1.99         $ 1.54
=========================================================================================
</TABLE>

9. Stock Options

   Company has elected to follow APB No. 25 and related Interpretations in
accounting for its employee stock options because the alternative fair value
accounting provided for under SFAS No. 123 requires use of option valuation
models that were not developed for use in valuing employee stock options. Under
APB No. 25, because the exercise price of the Company's employee stock options
equals the market price of the underlying stock on the date of grant, no
compensation expense
is recognized.
   The Company's Stock Option Plans (the Option Plans) provide for the granting
of either qualified or nonqualified stock options. Options are subject to terms
and conditions determined by the Compensation Committee of the Board of
Directors. Options granted under the 1986 Incentive Stock Option Plan generally
are exercisable in increments of one-third per year beginning two years from the
date of grant. Options granted under the 1993 and 1996 Stock Option Plans are
exercisable five years from the date of grant. All options expire ten years from
the date of grant. Under the Option Plans, the Company may grant options to
purchase up to a total of 2,600,000 shares of common stock at the prevailing
market price at the date of grant.
   Pro forma information regarding net income and earnings per share is required
by SFAS No. 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of SFAS No. 123. The fair
value for the Company's options was estimated at the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions for 1999, 1998, and 1997, respectively: risk-free interest rates of
6.9% in 1999, 5.7% in 1998, and 5.3% in 1997, a volatility factor of the
expected market price of the Company's common stock of .37 in 1999, .30 in 1998,
and .27 in 1997; a weighted-average expected life of the options of 7 years; and
no dividend payments.
   The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
   For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the respective options' vesting periods.
The Company's SFAS No. 123 pro forma information follows:
<PAGE>
<TABLE>
<CAPTION>

Year ended December 31                        1999            1998            1997
----------------------------------------------------------------------------------
<S>                                    <C>             <C>             <C>
Net income                             $30,587,425     $25,268,189     $18,961,773
Pro forma compensation expense          (1,925,059)     (1,308,983)     (1,323,462)
----------------------------------------------------------------------------------
Pro forma net income                   $28,662,366     $23,959,206     $17,638,311
----------------------------------------------------------------------------------
Pro forma basic earnings per share     $      2.39     $      1.98     $      1.46
----------------------------------------------------------------------------------
Pro forma diluted earnings per share   $      2.29     $      1.90     $      1.43
----------------------------------------------------------------------------------
</TABLE>
-25-
<PAGE>

     Because SFAS No. 123 applies only to stock-based compensation awards for
1995 and future years, the pro forma disclosures under SFAS No. 123 are not
likely to be indicative of future disclosures until the disclosures reflect all
outstanding, non-vested awards.
     A summary of the Company's stock option plan activity is as follows:
<TABLE>
<CAPTION>

                                Number of Shares  Weighted-Average
                                  Under Option     Exercise Price
    --------------------------------------------------------------
     <S>                            <C>               <C>
     Balance at January 1, 1997     1,696,000         $18.37
          Granted                     516,500          20.93
          Exercised                   (47,500)         13.93
          Canceled                   (429,000)         18.67
    --------------------------------------------------------------
     Balance at December 31, 1997   1,736,000          19.01
          Granted                     758,000          28.85
          Exercised                   (49,500)         22.11
          Canceled                   (476,500)         23.92
    --------------------------------------------------------------
     Balance at December 31, 1998   1,968,000          21.53
          Granted                     757,000          28.23
          Exercised                   (41,500)         18.28
          Canceled                   (644,000)         25.97
    --------------------------------------------------------------
     Balance at December 31, 1999   2,039,500         $21.64
    --------------------------------------------------------------
</TABLE>

   Options exercisable were 513,526, 315,500, and 200,833 at December 31, 1999,
1998, and 1997, respectively. The weighted-average fair value of options granted
during 1999, 1998, and 1997 was $14.67, $11.43, and $8.86, respectively.
Exercise prices for options outstanding as of December 31, 1999, ranged from
$7.19 to $34.25. At December 31, 1999, the Company had reserved 292,667 shares
of its common stock for issuance pursuant to stock option plans.
   The following table segregates option information between ranges of exercise
prices as of December 31, 1999:

<PAGE>
<TABLE>
<CAPTION>
                                                            Exercise Price
                                                         --------------------
                                                           Less      Greater
                                                         Than $10    Than $10     Total
-----------------------------------------------------------------------------------------
<S>                                                       <C>       <C>         <C>
Number of shares under option                             118,500   1,921,000   2,039,500
Weighted-average exercise price                            $ 7.19     $ 22.53     $ 21.64
Weighted-average years of remaining contractual life         0.95        7.25        6.88
Exercisable options                                       118,500     395,026     513,526
Weighted-average exercise price of exercisable options     $ 7.19     $ 20.02     $ 17.06
</TABLE>


10. Commitments and Contingencies

   The Company is involved in certain legal actions and claims arising in the
ordinary course of business. It is the opinion of management that such
litigation and claims will be resolved without material effect on the Company's
financial position or results of operations.
   The Company expects to have expenditures, net of sales, of approximately $100
million for additional revenue equipment in 2000.

11. Stock Repurchase Program

   On December 16, 1999, the Company's Board of Directors authorized the
repurchase of up to one million shares of the Company's common stock from
time-to-time through open market transactions. The stock repurchase program is
authorized through December 31, 2000. The Company will have no obligation to
purchase any shares and may cancel, suspend or extend the time period for the
purchase of shares at any time. Through December 31, 1999, the Company had not
repurchased any shares under this program.

12. Fair Value of Financial Instruments

   The carrying amounts of cash and cash equivalents, accounts receivable, and
accounts payable approximate fair value. The book value of long-term
obligations, including current portion, approximates fair value based on the
Company's current incremental borrowing rates for similar types of borrowing
arrangements.  The fair value of the Company's interest rate swap agreements is
a liability of approximately $2.2 million and $3.8 million at December 31, 1999
and 1998, respectively.
                                 -26-
<PAGE>


13. Industry Segments

   The Company's two reportable segments are trucking operations and logistics.
These segments are classified primarily by the type of services they provide.
Performance of the segments is generally evaluated by their operating income.
   The trucking operations provide irregular route freight transport services to
customers. The logistics operations arrange freight transportation for customers
using various carriers, including the trucking segment of the Company, through
agency relationships with its customers. Customers of both the trucking
operations and logistics operations primarily include manufacturing, retail,
wholesale and courier service companies.
<TABLE>
<CAPTION>
Summarized segment information is shown in the following table:

Year ended December 31                             1999         1998         1997
---------------------------------------------------------------------------------
                                                           (in thousands)
<S>                                            <C>          <C>         <C>
Operating revenues:
     Trucking (including trucking revenues
                received from logistics)       $568,765     $481,650    $380,849
     Logistics                                   68,214       60,939      45,135
     Elimination of trucking revenues
        received from logistics                 (16,565)     (13,748)    (10,051)
---------------------------------------------------------------------------------
                                               $620,414     $528,841    $415,933
=================================================================================
Operating income:
     Trucking                                  $ 54,771    $  44,546    $ 31,820
     Logistics                                    2,022        2,377       3,069
---------------------------------------------------------------------------------
                                               $ 56,793    $  46,923    $ 34,889
=================================================================================
</TABLE>


   Due to the minimal amount of long-lived assets required by the logistics
operations, the Company does not separately report such assets and related
depreciation and amortization expense in its financial records used for
allocating Company resources and evaluating operating performance. The Company
allocated operating overhead costs of approximately $3,942,000, $2,930,000, and
$2,300,000 in 1999, 1998, and 1997, respectively, to the logistics operations
for purposes of determining operating income and evaluating performance. Cost
allocations to the logistics operations are based primarily on payroll costs.
   A trucking customer, Sears, accounted for 10% or more of revenues in 1999,
1998, and 1997 with revenues of $69,594,000, $66,428,000, and $59,577,000,
respectively.


14. Selected Quarterly Data (Unaudited)

<PAGE>
<TABLE>
<CAPTION>
Summarized quarterly data for 1999 and 1998 follows:
                                                        1999
                              --------------------------------------------------------
                              March 31         June 30    September 30     December 31
--------------------------------------------------------------------------------------
<S>                       <C>             <C>             <C>             <C>
Operating revenues        $142,814,475    $153,596,736    $160,434,754    $163,568,172
Operating expenses         131,484,497     138,934,555     144,886,110     148,315,954
--------------------------------------------------------------------------------------
Operating income            11,329,978      14,662,181      15,548,644      15,252,218
Other expense                2,440,964       1,687,636       2,199,252       3,042,802
--------------------------------------------------------------------------------------
Income before taxes          8,889,014      12,974,545      13,349,392      12,209,416
Income taxes                 3,155,600       4,605,963       4,724,764       4,348,615
--------------------------------------------------------------------------------------
Net income                 $ 5,733,414     $ 8,368,582     $ 8,624,628     $ 7,860,801
======================================================================================

Basic earnings per share   $       .47     $       .68     $       .70     $       .64
======================================================================================

Diluted earnings per share $       .45     $       .65     $       .67     $       .62
======================================================================================
</TABLE>
                                             -27-
<PAGE>
<TABLE>
<CAPTION>
                                                         1998
                              --------------------------------------------------------
                              March 31         June 30    September 30     December 31
--------------------------------------------------------------------------------------
<S>                       <C>             <C>             <C>             <C>
Operating revenues        $117,203,825    $133,624,361    $137,512,075    $140,501,053
Operating expenses         108,848,896     120,815,512     124,360,633     127,893,554
--------------------------------------------------------------------------------------
Operating income             8,354,929      12,808,849      13,151,442      12,607,499
Other expense                1,440,546       1,870,274       1,949,900       1,869,574
--------------------------------------------------------------------------------------
Income before taxes          6,914,383      10,938,575      11,201,542      10,737,925
Income taxes                 2,523,750       3,992,579       4,088,562       3,919,345
--------------------------------------------------------------------------------------
Net income                $  4,390,633    $  6,945,996    $  7,112,980    $  6,818,580
======================================================================================

Basic earnings per share  $        .36    $        .57    $        .58    $        .56
======================================================================================

Diluted earnings per share$        .35    $        .54    $        .56    $        .54
======================================================================================
</TABLE>

15. SUBSEQUENT EVENT

     On March 13, 2000, the Company announced that it had signed a letter of
intent with five other trucking companies to form an internet-based global
transportation venture that would create a marketplace for shippers and
carriers. Pursuant to the letter of intent, each of the six companies is
committed to contribute their respective existing logistics operations and cash
of up to $5 million to fund working capital. The Company's logistics operations
generated approximately $68.2 million of operating revenues and $2.0 million of
operating income in 1999.

<PAGE>
<TABLE>
<CAPTION>
                                         Schedule II
                              Valuation and Qualifying Accounts

                                     M.S. Carriers, Inc.

         Column A               Column B          Column C          Column D     Column E
-------------------------------------------------------------------------------------------
                                                   Additions
                                              ---------------------
                                 Balance at   Charged to Charged to              Balance at
                                 Beginning    Costs and   Other                     End
          Description            of Period    Expenses   Accounts  Deductions(1)  of Period
-------------------------------------------------------------------------------------------
<S>                              <C>          <C>                  <C>          <C>
Year ended December 31, 1999
Deducted from asset accounts:
     Allowance for doubtful
          accounts receivable    $2,418,476   $ 624,912            $192,995     $2,850,393

Year ended December 31, 1998
Deducted from asset accounts:
     Allowance for doubtful
          accounts receivable    $1,497,651   $1,122,289           $201,464     $2,418,476

Year ended December 31, 1997
Deducted from asset accounts:
     Allowance for doubtful
          accounts receivable    $  514,610   $1,268,497           $285,456     $1,497,651
</TABLE>

(1) Uncollectible accounts written off, net of recoveries.
                                             -28-
<PAGE>