SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

(Mark One)

[ 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
                                       OR

[   ]  TRANSITION  REPORT  PURSUANT  TO  SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934.
       For the transition period from               to

                        Commission file number 000-20793

                           SMITHWAY MOTOR XPRESS CORP.
                           ---------------------------
             (Exact name of registrant as specified in its charter)

            Nevada                                       42-1433844
-----------------------------------------  -------------------------------------
(State or Other Jurisdiction of            (I.R.S. Employer Identification No.)
Incorporation or Organization)

        2031 Quail Avenue
        Fort Dodge, Iowa                                    50501
-----------------------------------------  -------------------------------------
(Address of Principal Executive Offices)                  (Zip Code)

Registrant's telephone number, including area code:  515/576-7418
                                                     ------------

Securities Registered Pursuant to Section 12(b) of the Act:  None
                                                             ----

Securities Registered Pursuant to Section 12(g) of the Act:
     $0.01 Par Value Class A Common Stock
     ------------------------------------

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


Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by  reference in Part III of this Form 10-K or any  amendments  to
this Form 10-K. [ X ]

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant was $5,674,647 as of March 15, 2000, (based upon the $3.125 per share
closing  price on that date as reported by Nasdaq).  In making this  calculation
the  registrant  has  assumed,  without  admitting  for any  purpose,  that  all
executive  officers,  directors,  and  holders  of more  than  5% of a class  of
outstanding common stock, and no other persons, are affiliates.

As of March 15, 2000,  the  registrant  had  4,010,640  shares of Class A Common
Stock and 1,000,000 shares of Class B Common Stock outstanding.

DOCUMENTS  INCORPORATED BY REFERENCE:  The information set forth under Part III,
Items 10, 11, 12, and 13 of this Report is  incorporated  by reference  from the
registrant's   definitive  proxy  statement  for  the  2000  annual  meeting  of
stockholders that will be filed no later than April 29, 2000.

                                        1

<PAGE>




                              Cross Reference Index
                              ---------------------

         The following cross reference index indicates the document and location
of the information  contained herein and incorporated by reference into the Form
10-K.


                              Document and Location
                              ---------------------

                                     Part I
                                     ------
Item 1    Business                                     Page 3 through 6 herein

Item 2    Properties                                   Page 6 herein

Item 3    Legal Proceedings                            Page 7 herein

Item 4    Submission of Matters to a Vote              Page 7 herein
            of Security Holders
                                     Part II
                                     -------

Item 5    Market for the Registrant's Common Equity
             and Related Stockholder Matters           Page 7 herein

Item 6    Selected Financial Data                      Page 8 herein

Item 7    Management's Discussion and Analysis of
             Financial Condition and
             Results of Operations                     Page 9 through 14 herein

Item 8    Financial Statements and
             Supplementary Data                        Page 15 herein

Item 9    Changes in and Disagreements with
             Accountants on Accounting and
             Financial Disclosure                      Page 15 herein

                                    Part III
                                    --------

Item 10   Directors and Executive Officers
              of the Registrant              Page 3 through 4 of Proxy Statement

Item 11   Executive Compensation             Page 5 of Proxy Statement

Item 12   Security Ownership of Principal
              Stockholders and Management    Page 8 of Proxy Statement

Item 13   Related Party Transactions         Page 5 of Proxy Statement

                                     Part IV
                                     -------

Item 14   Exhibits, Financial Statement      Pages 16 through 18 herein
              Schedules, and Reports on Form 8-K

                 ------------------------------------
         This report  contains  "forward-looking  statements" in paragraphs that
are marked with an asterisk.  These  statements are subject to certain risks and
uncertainties  that could cause actual results to differ  materially  from those
anticipated.  See "Management's  Discussion and Analysis of Financial  Condition
and Results of  Operations  -  Cautionary  Statement  Regarding  Forward-Looking
Statements" for additional  information and factors to be considered  concerning
forward-looking statements.


                                        2

<PAGE>

                                     PART I
                                     ------

ITEM 1.           BUSINESS

The Company

         Smithway  Motor  Xpress  Corp.  ("Smithway"  or  the  "Company")  is  a
truckload  carrier  that  provides  nationwide   transportation  of  diversified
freight, concentrating primarily on the flatbed segment of the truckload market.
The Company uses its "Smithway Network" of 27 computer-connected  field offices,
commission  agencies,   and  Company-owned   terminals  to  offer  comprehensive
truckload  transportation services to shippers located predominantly between the
Rocky  Mountains in the West and the  Appalachian  Mountains in the East, and in
eight Canadian provinces.

         Prior  to  1984,  the  Company  specialized  in  transporting  building
materials on flatbed trailers.  William G. Smith became President of Smithway in
1984,  and led the Company's  effort to diversify its customer and freight base,
form the Smithway  Network of locations,  and  implement  systems to support the
Company's growth.  Management  commenced the Company's  acquisition  strategy in
1995 to take advantage of opportunities offered by industry consolidation.

         Smithway  acquired the operations of eight trucking  companies  between
June 1995 and October 1998. In each  transaction,  Smithway  purchased  specific
assets  for fair  market  value  and paid the  selling  company's  owner a small
percentage of revenue for goodwill or a noncompetition arrangement.  The Company
acquired the business of Van Tassel,  Inc., a primarily flatbed carrier based in
Pittsburg, Kansas, in June 1995, and Smith Trucking Company, a primarily dry van
carrier based in McPherson,  Kansas, in January 1996. Both of these acquisitions
permitted  Smithway to expand and solidify  existing  customer  relationships as
well as access new  customers.  The Smith  Trucking  location  also expanded the
Company's driver  recruiting  region.  In October 1996, the Company acquired the
business of Marquardt Transportation, Inc., a primarily flatbed carrier based in
Yankton,  South  Dakota,  and with a small  facility  in  Stockton,  California.
Marquardt further diversified Smithway's freight base by increasing its presence
in hauling  large,  manufactured  items and heavy  machinery.  In February 1997,
Smithway acquired Fort Dodge,  Iowa-based Pirie Motor Freight,  Inc. Pirie was a
small flatbed  carrier,  and its operations  were  consolidated  into Smithway's
headquarters.  In  September  1997,  Smithway  acquired  the  business  of Royal
Transport,  Ltd. of Grand Rapids,  Michigan,  primarily a flatbed  carrier.  The
Royal acquisition provided Smithway a regional niche specializing in heavy loads
hauled  primarily  on multiple  axle  trailers.  In February  1998,  the Company
acquired  the  business of East West Motor  Express,  Inc. of Black Hawk,  South
Dakota  ("East  West"),  a regional  flatbed and dry van carrier.  The East West
acquisition  added 225  trucks to  Smithway's  fleet.  TP  Transportation,  Inc.
("TP"),  a flatbed  carrier from Enid,  Oklahoma was acquired in August 1998. In
October  1998 the Company  continued  to build its dry van freight base with the
acquisition  of the business of JHT, Inc.  ("JHT") of Cohasset,  Minnesota.  JHT
operated 185 tractors serving  exclusively the dry van market with slightly over
half  of  the  tractors   company-owned   and  the  balance  being  provided  by
owner-operators.  Through  acquisitions and internal growth the Company expanded
from $77 million  revenue in 1995 to $197  million in 1999.  The Company did not
complete an acquisition in 1999.

          Smithway Motor Xpress Corp. was incorporated in Nevada in January 1995
to serve as a holding company and conduct the Company's initial public offering,
which  occurred in June 1996.  References to the "Company" or "Smithway"  herein
refer to the  consolidated  operations of Smithway  Motor Xpress Corp., a Nevada
corporation  ("Smithway-Nevada"),  and its wholly owned  subsidiaries,  Smithway
Motor  Xpress,  Inc.,  an Iowa  corporation  ("Smithway-Iowa"),  East West Motor
Express,  Inc., a South Dakota  corporation,  SMSD  Acquisition  Corp.,  a South
Dakota corporation, and New Horizons Leasing, Inc., an Iowa corporation.

Operations

         Smithway  integrates  its sales and dispatch  functions  throughout its
computer-connected  "Smithway  Network."  The Smithway  Network  consists of the
Company's headquarters in Fort Dodge, Iowa, and 26 terminals, field offices, and
independent  agencies.  The  headquarters and 21 terminals and field offices are
managed  by  Smithway  employees,   while  the  five  agencies  are  managed  by
independent  commission agents. The customer sales representatives and agents at
each  location  have  front-line  responsibility  for  booking  freight in their
regions.  Fleet managers at the Fort Dodge,  Iowa,  headquarters  coordinate all
load  movements via computer link to optimize load  selection and promote proper
fleet balance among regions. Personnel at the Company's headquarters also handle
all sales and dispatch  functions  for van traffic and for flatbed  traffic that
does not originate within a specific sales region.

                                        3

<PAGE>



         Agents are important to the Company's  operations  because they are the
primary  contact for shippers  within their region and have regular contact with
drivers and independent contractors.  The Company's agents are paid a commission
on revenue they generate.  Although agent contracts  typically are cancelable on
14 days' notice,  Smithway's  agents average more than 10 years' tenure with the
Company. In addition to sales and customer service benefits, management believes
agents offer the advantage of  minimizing  capital  investment  and fixed costs,
because agents are responsible for all of their own expenses.

Customers and Marketing

         Smithway's  sales force includes seven national sales  representatives,
personnel at 22 terminals and field  offices,  and five  independent  commission
agents.  National  sales  representatives  focus on national  customers  and van
freight,  while sales  personnel at terminals,  field offices,  and agencies are
responsible for regional customer contact.  The Company's sales force emphasizes
rapid response time to customer  requests for  equipment,  undamaged and on-time
pickup and delivery,  one of the nation's  largest fleets of flatbed  equipment,
safe and professional drivers, logistics management, dedicated fleet capability,
and its  strategically  located Smithway Network.  Management  believes that few
other carriers operating principally in the Midwest flatbed market offer similar
size,  service,  and the reliability of a late-model  fleet.  Consequently,  the
Company seeks primarily  service-sensitive freight rather than competing for all
freight on the basis of price.

          In 1999,  the Company's top 50, 25, 10, and 5 customers  accounted for
46%, 38%, 27%, and 18% of revenue,  respectively,  with the remaining  customers
accounting for 54% of revenue.  No single customer accounted for more than 5% of
Smithway's revenue during 1999.

Technology

         Management  believes  that  advances  in  technology  can  enhance  the
Company's   operating   efficiency  and  customer   service.   Three   principal
technologies   used   by   Smithway   includes   freight   selection   software,
satellite-based  tracking and communication  with tractors,  and electronic data
interchange ("EDI") with customers.  In July 1993, the Company initiated the use
of the Spectrum freight selection  software.  Spectrum ranks each potential load
based upon rate per loaded mile, empty mile exposure, and history of obtaining a
profitable return load from the proposed destination.

          Smithway operates  satellite-based tracking and communication units in
all of its  Company-owned  tractors and has offered  rental of these units as an
option   to  its   independent   contractors.   Management   believes   on-board
communication  capability can reduce  unnecessary  stops and out-of-route  miles
because  drivers  are not forced to find a  telephone  to contact the Company or
receive instructions.  In addition, drivers can immediately report breakdowns or
other  emergency  conditions.  The system  also  enables  the  Company to advise
customers  of the  location of freight in transit  through  its hourly  position
reports of each tractor's location.

          Smithway  also  offers  its  customers  EDI  technology.   EDI  allows
customers to  communicate  directly with the Company via computer link and, with
the aid of  satellite  communication,  obtain  location  updates  of  in-transit
freight, expected delivery times, and account payment instructions.

Drivers, Independent Contractors, and Other Personnel

         Smithway seeks drivers and  independent  contractors  who safely manage
their  equipment and treat  freight  transportation  as a business.  The Company
historically  has  operated a fleet  comprised  of  substantial  numbers of both
Company-owned and independent  contractor tractors.  Management believes a mixed
fleet offers competitive  advantages because the Company is able to recruit from
both  personnel  pools to facilitate  fleet  expansion.  The Company  intends to
retain a mixed fleet in the future to insure that its recruiting  efforts toward
either group are not damaged by becoming  categorized as predominantly  either a
Company-owned or independent  contractor fleet,  although  acquisitions or other
factors may cause fluctuations in the fleet mix from time to time.

         Smithway  has  implemented  several  policies  to  promote  driver  and
independent  contractor  recruiting and retention.  These include maintaining an
open-door policy with easy access to senior  executives,  appointing an advisory
board  comprised  of top drivers and  independent  contractors  to consult  with
management, and assigning each driver and independent contractor to a particular
dispatcher  to insure  personal  contact.  In  addition,  the  Company  utilizes
conventional  (engine-forward)  tractors,  which  are more  comfortable  for the
driver, and operates over relatively short-to-medium distances (678-mile average
length of haul in 1999) to return drivers home as frequently as possible.

                                        4
<PAGE>
         Smithway is not a party to a collective  bargaining  agreement  and its
employees are not  represented by a union. At December 31, 1999, the Company had
757 Company drivers, 346 non-driver employees,  and 689 independent contractors.
Management  believes that the Company has good  relationships with its employees
and independent contractors.

Safety and Insurance

         Smithway's  active safety and loss  prevention  program has resulted in
the   Department  of   Transportation's   highest   safety  and  fitness  rating
(satisfactory)  and  numerous  safety  awards.  The  Company's  safety  and loss
prevention  program  includes  pre-screening,  initial  orientation,  six  weeks
on-the-road  training  for  drivers  without  substantial  experience,  100% log
monitoring, and safety bonuses.

         The Company maintains  insurance covering losses in excess of a $50,000
self-insured  retention for cargo loss,  personal injury,  property damage,  and
physical  damage  claims.  The Company has a $100,000  deductible  for  workers'
compensation  claims  in states  where a  deductible  is  allowed.  Its  primary
personal injury and property damage insurance policy has a limit of $2.0 million
per  occurrence,  and the  Company  carries  excess  liability  coverage,  which
management  believes  is  adequate to cover  exposure  to claims  exceeding  its
retention limit.

Revenue Equipment

         Smithway's  equipment  strategy  for its own  tractors  (as  opposed to
independent  contractors'  tractors) is to operate late-model tractors and trade
or  dispose  of  its  tractors  prior  to  the  expiration  of  major  component
warranties.  Management  believes that  operating  newer  equipment can minimize
repair  and  maintenance  expense  and offer  improvements  in fuel  efficiency.
Smithway orders conventional  (engine forward) tractors with standard engine and
drivetrain  components,  and trailers with standard brakes and tires to minimize
its inventory of spare parts. All equipment is subject to the Company's  regular
maintenance  program,  and is also inspected and maintained  each time it passes
through a Smithway maintenance facility.  Smithway's Company-owned tractor fleet
had an average age of 22 months at December 31, 1999.

Competition

         The truckload  segment of the trucking  industry is highly  competitive
and fragmented, and no carrier or group of carriers dominates the flatbed or van
market.  Smithway competes  primarily with other regional,  short-to-medium-haul
carriers  and private  truck  fleets used by  shippers  to  transport  their own
products in proprietary  equipment.  Competition is based primarily upon service
and price.  The Company  competes to a limited  extent with rail and  rail-truck
intermodal   service,   but  attempts  to  limit  this  competition  by  seeking
service-sensitive  freight  and  focusing  on  short-to-medium  lengths of haul.
Although  management  believes the 870 flatbed  trailers it operated at December
31, 1999,  rank its flatbed  division  among the ten largest such fleets in that
industry  segment,  there are other trucking  companies,  including  diversified
carriers with large flatbed fleets, that possess substantially greater financial
resources and operate more equipment than Smithway.

Fuel Availability and Cost

         The Company actively  manages its fuel costs.  Company drivers purchase
virtually all of the Company's fuel through  service centers with which Smithway
has volume purchasing arrangements.  In addition, management periodically enters
into  futures  contracts  and price swap  agreements  on heating  oil,  which is
derived  from the same  petroleum  products  as  diesel  fuel,  in an  effort to
partially hedge increases in fuel prices.  Most of the Company's  contracts with
customers  contain fuel  surcharge  provisions  and the Company also attempts to
recover  increases in fuel prices  through  higher  rates.  However,  the recent
increases in fuel prices will not be fully offset through these measures.

Regulation

         Historically,  the Interstate  Commerce  Commission ("ICC") and various
state agencies regulated motor carriers'  operating rights,  accounting systems,
mergers and acquisitions,  periodic financial  reporting,  and other matters. In
1995,  federal  legislation  preempted state regulation of prices,  routes,  and
services of motor carriers and  eliminated  the ICC.  Several ICC functions were
transferred to the Department of  Transportation  ("DOT").  Management  does not
believe that  regulation by the DOT or by the states in their remaining areas of
authority will have a material effect on the Company's operations. The Company's
drivers  and  independent  contractors  must  comply with the safety and fitness
regulations promulgated by the DOT, including those relating to drug and alcohol
testing and hours of service.

         The Company's  operations are subject to various  federal,  state,  and
local environmental laws and regulations, implemented principally by the EPA and
similar state regulatory agencies, governing the management of hazardous wastes,
the discharge of pollutants into the air and surface and underground waters, and
the disposal of certain  substances.  The Company transports certain commodities
that may be deemed hazardous substances,  and its Fort Dodge, Iowa, headquarters
and Black Hawk, South Dakota, Enid, Oklahoma, and Stockton, California terminals
                                        5
<PAGE>



have  above-ground  fuel storage  tanks and fueling  facilities.  The  Company's
Cohasset,  Minnesota terminal has underground fuel storage tanks. If the Company
should be involved in a spill or other accident involving hazardous  substances,
if any such substances were found on the Company's properties, or if the Company
were found to be in violation of applicable  laws and  regulations,  the Company
could be responsible for clean-up  costs,  property  damage,  and fines or other
penalties,  any one of which  could  have a  materially  adverse  effect  on the
Company. Management believes that its operations are in material compliance with
current laws and  regulations  and does not know of any existing  condition that
would cause  compliance  with  applicable  environmental  regulations  to have a
material effect on the Company's capital expenditures,  earnings, or competitive
position. If the Company should fail to comply with applicable regulations,  the
Company  could be  subject to  substantial  fines or  penalties  and to civil or
criminal liability.

ITEM 2.           PROPERTIES

         Smithway's  headquarters consists of 25,000 square feet of office space
and 51,000 square feet of equipment maintenance and wash facilities,  located on
31 acres near Fort Dodge, Iowa. The Smithway Network consists of locations in or
near the following cities with the facilities noted:


<TABLE>
<CAPTION>


                                              Driver
    Company Locations         Maintenance   Recruitment   Dispatch      Sales        Ownership
--------------------------    ------------ ------------- ----------- ------------- -------------
<S>                           <C>          <C>           <C>         <C>           <C>
Altoona, Iowa ................       X                                     X            Owned
Birmingham, Alabama ..........                               X             X           Leased
Black Hawk, South Dakota......       X           X           X             X            Owned
Chicago, Illinois.............                               X             X            Owned
Cincinnati, Ohio..............                               X             X           Leased
Cohasset, Minnesota...........       X           X           X             X            Owned
Dallas, Texas.................                               X             X           Leased+
Denver, Colorado..............                               X             X           Leased+
Enid, Oklahoma................       X           X           X             X           Leased
Fort Dodge, Iowa..............       X           X           X             X            Owned
Grand Rapids, Michigan........                               X             X           Leased
Joplin, Missouri..............       X           X           X             X            Owned
Kansas City, Missouri.........                               X             X           Leased+
McPherson, Kansas.............       X                       X             X           Leased
Oklahoma City, Oklahoma.......                               X             X            Owned
Oshkosh, Wisconsin............                               X             X           Leased+
Stockton, California..........       X           X           X             X           Leased+
St. Louis, Missouri...........                               X             X           Leased+
St. Paul, Minnesota...........                               X             X           Leased+
Tulsa, Oklahoma ..............                                             X           Leased
Yankton, South Dakota.........       X           X           X             X           Leased
Youngstown, Ohio..............                   X           X             X           Leased+

        Agent Locations
--------------------------------
Cedar Rapids, Iowa ...........                               X             X
Detroit, Michigan ............                               X             X
Hennepin, Illinois ...........                               X             X
Norfolk, Nebraska ............                               X             X
Toledo, Ohio .................                               X             X

--------------------------------
+ Month-to-month leases.

</TABLE>

                                        6

<PAGE>



ITEM 3.           LEGAL PROCEEDINGS

         The Company from time to time is a party to  litigation  arising in the
ordinary course of its business,  substantially all of which involves claims for
personal injury and property damage incurred in the  transportation  of freight.
The  Company is not aware of any claims or  threatened  claims that might have a
materially adverse effect upon its operations or financial position.

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

         During the fourth  quarter of the fiscal year ended  December 31, 1999,
no matters were submitted to a vote of security holders.

                                     PART II
                                     -------

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

         Price Range of Common  Stock.  The  Company's  Class A Common  Stock is
traded on the Nasdaq  National  Market  under the symbol  "SMXC." The  following
table sets forth for the calendar  periods  indicated  the range of high and low
sales prices for the  Company's  Class A Common Stock as reported by Nasdaq from
January 1, 1998, to December 31, 1999.


           Period                      High                    Low
------------------------------- ---------------------- -----------------------
Calendar Year 1999
         1st Quarter             $           9 1/2      $        7 3/8
         2nd Quarter             $          10 11/16    $        6 3/4
         3rd Quarter             $          10 1/2      $        7 7/16
         4th Quarter             $           8 1/2      $        3 9/16


            Period                      High                    Low
------------------------------- ---------------------- -----------------------
Calendar Year 1998
         1st Quarter             $          16 1/8       $      11 1/2
         2nd Quarter             $          19 1/8       $       9 3/4
         3rd Quarter             $          10 3/4       $       6 7/8
         4th Quarter             $          10           $       6 5/8


          As of March 15, 2000 the Company had 310 stockholders of record of its
Class A Common Stock. However, the Company believes that many additional holders
of Class A Common Stock are  unidentified  because a  substantial  number of the
Company's shares are held of record by brokers or dealers for their customers in
street names.

         Dividend  Policy.  The  Company  has  never  declared  and  paid a cash
dividend  on its  Class A  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 payments
of  cash  dividends  will  depend  upon  the  financial  condition,  results  of
operations,   and  capital  commitments  of  the  Company,   restrictions  under
then-existing  agreements,  and other  factors  deemed  relevant by the Board of
Directors.




                                        7

<PAGE>





Item 6.  Selected Financial and Operating Data
<TABLE>
<CAPTION>

                                                                            Years Ended December 31,
                                                           1995         1996          1997          1998          1999
                                                           ----         ----          ----          ----          ----
<S>                                                        <C>          <C>           <C>           <C>           <C>
Statement of Operations Data:                              (In thousands, except per share and operating data amounts)
Operating revenue....................................  $     77,339 $      93,667 $    120,117  $    161,375      $196,945
Operating expenses:
  Purchased transportation...........................        31,621        37,386       47,095        66,495        79,735
  Compensation and employee benefits.................        17,182        20,800       26,904        38,191        49,255
  Fuel, supplies, and maintenance....................        10,183        12,347       15,965        19,738        23,754
  Insurance and claims...............................         1,827         1,995        2,206         2,745         4,212
  Taxes and licenses.................................         1,588         1,856        2,299         3,048         4,045
  General and administrative.........................         3,592         4,214        5,391         6,237         7,491
  Communications and utilities.......................           758           971        1,378         1,838         2,190
  Depreciation and amortization......................         3,879         5,740        7,880        11,015        15,800
                                                       ------------ ------------- ------------  ------------  ------------
     Total operating expenses........................        70,630        85,309      109,118       149,307       186,482
                                                       ------------ ------------- ------------  ------------  ------------
     Earnings from operations........................         6,709         8,358       10,999        12,068        10,463
Interest expense (net)...............................         1,225         1,548        1,545         2,965         3,715
                                                       ------------ ------------- ------------  ------------  ------------
Earnings before income taxes.........................         5,484         6,810        9,454         9,103         6,748
Income taxes.........................................         2,393         2,860        3,781         3,774         2,822
                                                       ------------ ------------- ------------  ------------  ------------
Net earnings.........................................  $      3,091 $       3,950 $      5,673  $      5,329  $      3,926
                                                       ============ ============= ============  ============  ============
Basic and diluted earnings per common share..........  $       0.88 $        0.93 $       1.13  $       1.06  $       0.78
                                                       ============ ============= ============  ============  ============

Operating Data(1)
Operating ratio(2)...................................         91.3%         91.1%        90.8%         92.5%         94.7%
Average revenue per tractor per week.................  $      2,160 $       2,243 $      2,342  $      2,330  $      2,299
Average revenue per loaded mile(3)...................  $       1.38 $        1.37 $       1.36  $       1.33  $       1.33
Average length of haul in miles......................           563           568          609           659           678
Company tractors at end of period....................           376           458          525           815           844
Independent contractor tractors at end of period.....           303           406          443           711           689
Weighted average tractors during period..............           619           747          909         1,236         1,532
Trailers at end of period............................         1,167         1,492        1,673         2,720         2,783
Weighted averages shares outstanding:
  Basic..............................................         3,524         4,250        5,001         5,012         5,031
  Diluted............................................         3,524         4,250        5,019         5,037         5,032

Balance Sheet Data (at end of period):
Working capital......................................  $      2,516 $       1,893 $     10,100  $      6,811  $      5,159
Net property and equipment...........................        27,843        39,170       53,132        87,137        94,305
Total assets.........................................        40,702        55,330       74,878       115,494       125,014
Long-term debt, including current maturities.........        23,219        15,904       30,976        61,703        59,515
Total stockholders' equity...........................         7,871        24,193       29,906        35,405        39,508
</TABLE>

(1) Excludes brokerage activities except as to operating ratio.
(2) Operating expenses as a percentage of operating revenue.
(3) Net of fuel surcharges.



                                        8

<PAGE>
Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

General

         The Company has expanded  its  operations  substantially  over the past
three years through a combination of acquisitions and internal growth. Operating
revenue  growth  exceeded  20% for the third  straight  year.  From 1997 to 1999
operating  revenue increased 64.0%, to $197 million in 1999 from $120 million in
1997,  while net  earnings  decreased  30.8%,  to $3.9 million in 1999 from $5.7
million in 1997.

         The  Company  operates  a  tractor-trailer   fleet  comprised  of  both
Company-owned  vehicles and  vehicles  obtained  under  leases from  independent
contractors  and  third-party  finance  companies.  Fluctuations  among  expense
categories  may occur as a result of changes in the relative  percentage  of the
fleet obtained  through  equipment that is owned versus equipment that is leased
from independent contractors or financing sources. Costs associated with revenue
equipment acquired under operating leases or through agreements with independent
contractors are expensed as "purchased  transportation." For these categories of
equipment the Company does not incur costs such as interest and  depreciation as
it might with owned equipment.  In addition,  independent  contractor  tractors,
driver compensation, fuel, communications,  and certain other expenses are borne
by the independent  contractors  and are not incurred by the Company.  Obtaining
equipment  from  independent  contractors  and under  operating  leases  reduces
capital  expenditures  and  on-balance  sheet  leverage and  effectively  shifts
expenses from interest to "above the line" operating expenses. The fleet profile
of acquired  companies  and the  Company's  relative  recruiting  and  retention
success with  Company-employed  drivers and independent  contractors  will cause
fluctuations  from time-to-time in the percentage of the Company's fleet that is
owned  versus  obtained  from   independent   contractors  and  under  operating
leases.(*)

Results of Operations

         The following  table sets forth the percentage  relationship of certain
items to revenue for the periods indicated:

<TABLE>
<CAPTION>
                                                                1997             1998              1999
                                                                ----             ----              ----
<S>                                                            <C>              <C>               <C>
Operating revenue.........................................     100.0%           100.0%            100.0%
Operating expenses:
         Purchased transportation.........................      39.2             41.2              40.5
         Compensation and employee benefits...............      22.4             23.7              25.0
         Fuel, supplies, and maintenance..................      13.3             12.2              12.1
         Insurance and claims.............................       1.8              1.7              2.1
         Taxes and licenses...............................       1.9              1.9              2.1
         General and administrative.......................       4.5              3.9              3.8
         Communication and utilities......................       1.1              1.1              1.1
         Depreciation and amortization....................       6.6              6.8              8.0
                                                          ---------------------------------- ----------------
         Total operating expenses.........................      90.8             92.5              94.7
                                                          ---------------------------------- ----------------
Earnings from operations..................................       9.2              7.5              5.3
Interest expense, net.....................................       1.3              1.8              1.9
                                                          ---------------------------------- ----------------
Earnings before income taxes..............................       7.9              5.6              3.4
Income taxes..............................................       3.2              2.3              1.4
                                                          ---------------------------------- ----------------
Net earnings..............................................       4.7%             3.3%             2.0%
                                                          ===================================================
</TABLE>
Comparison of year ended December 31, 1999 to year ended December 31, 1998.

        Operating  revenue  increased $35.5 million  (22.0%),  to $196.9 million
in 1999 from $161.4 million in 1998.The revenue increase resulted primarily from
a 24.0% increase in weighted average tractors,to 1,532 in 1999 from 1,236 during
1998 as the Company expanded internally to meet customer demand and acquired the
business of East West in February  1998,  TP in August 1998,  and JHT in October
1998. This was partially offset by lower revenue per tractor per week (excluding
revenue from  brokerage  operations),  which  decreased $31 per week (1.3%),  to
$2,299 in 1999 from $2,330 in 1998.  This  decrease  was caused by a shortage of
manned  tractors in the fleet in the second half of the year and lower miles and
revenue  per  tractor  in the dry van  operations.  Revenue  from the  Company's
brokerage  operations  increased $1.2 million (11.5%),  to $11.6 million in 1999
from $10.4 million in 1998.



                                        9

<PAGE>
         Purchased  transportation consists primarily of payments to independent
contractor  providers  of  revenue  equipment,  expenses  related  to  brokerage
activities, and payments under operating leases of revenue equipment.  Purchased
transportation  increased $13.2 million  (19.9%),  to $79.7 million in 1999 from
$66.5  million in 1998,  as the  Company's  business  expanded  and the  Company
contracted with more independent contractor providers of revenue equipment. As a
percentage of revenue,  purchased transportation decreased to 40.5% in 1999 from
41.2% in 1998. This reflects a decrease in the amount of freight brokered by the
Company as a percent of total  revenue,  a slight  decrease in the percentage of
the Company's  fleet  supplied by  independent  contractors,  and a reduction in
equipment rent caused by the purchase of equipment which was previously leased.

         Compensation and employee  benefits  increased $11.1 million (29.0%) to
$49.3  million in 1999 from $38.2  million in 1998.  As a percentage of revenue,
compensation  and  employee  benefits  increased  to 25.0% in 1999 from 23.7% in
1998.  The  increase  was  attributable  to (i) an increase in the  self-insured
retention  for  workers  compensation  and health  insurance  claims and reserve
amounts for the period,  (ii) an increase in the  per-mile  wage paid to flatbed
drivers in October 1999,  (iii) an increase in the number of driver trainers and
trainees,  and (iv) a slight increase in the percentage of  the  Company's fleet
supplied by Company trucks.

         Fuel, supplies, and maintenance increased $4.1 million(20.3%), to $23.8
million in 1999 from $19.7 million in 1998.  As a percentage  of revenue,  fuel,
supplies, and maintenance decreased slightly to 12.1% in 1999 from 12.2% in 1998
in spite of a 5.8%  increase in fuel costs to $1.09 per gallon  during 1999 from
$1.03 per gallon in 1998.  The increased fuel costs were largely offset by gains
from fuel hedging  transactions as well as lower costs for parts,  tires, tarps,
supplies,  and binders.  The Company is attempting to recover  increases in fuel
prices  through fuel  surcharges  and higher rates,  however,  recent fuel price
increases will not be fully offset through these  measures.  Going forward,  the
Company's fuel hedging positions cover less fuel than in 1999 and expire in June
2000.

         Insurance and claims increased $1.5 million (53.4%), to $4.2 million in
1999 from $2.7 million in 1998. As a percentage of revenue, insurance and claims
increased to 2.1% of revenue in 1999 compared  with 1.7% in 1998,  reflecting an
increase in liability and physical damage claims paid and reserved.

         Taxes and licenses  increased $1.0 million (32.7%),  to $4.0 million in
1999  from  $3.0  million  in 1998,  reflecting  an  increase  in the  number of
shipments  requiring  special  permits and an increase in the number of tractors
licensed by the Company. The special permits are paid for by the shippers, which
increases  freight  revenue.  As a  percentage  of revenue,  taxes and  licenses
remained  relatively  constant at 2.1% of revenue in 1999  compared with 1.9% of
revenue in 1998.

         General and administrative  expenses increased $1.3 million (20.1%), to
$7.5  million in 1999 from $6.2  million in 1998.  As a  percentage  of revenue,
general and  administrative  expenses  remained  relatively  constant at 3.8% of
revenue in 1999 compared with 3.9% of revenue in 1998.

         Communications  and  utilities  increased  $352,000  (19.2%),  to  $2.2
million  in 1999  from  $1.8  million  in  1998.  As a  percentage  of  revenue,
communications and utilities remained unchanged at 1.1% in both years.

         Depreciation and amortization  increased $4.8 million (43.4%), to $15.8
million  in 1999  from  $11.0  million  in 1998.  As a  percentage  of  revenue,
depreciation and amortization  increased to 8.0% of revenue in 1999 from 6.8% in
1998. The increase was attributable to a larger fleet of Company-owned  tractors
and trailers,  which increased the cost of the equipment being  depreciated,  an
increase in the number of Company-owned  tractors financed with debt rather than
operating  leases,  and lower revenue per tractor which less efficiently  spread
this fixed cost.

         Interest expense,  net, increased $750,000 (25.3%),  to $3.7 million in
1999 from $3.0 million in 1998.  As a percentage of revenue,  interest  expense,
net, remained  relatively constant at 1.9% of revenue in 1999 compared with 1.8%
in 1998.

         As a result of the foregoing,  the Company's pretax margin decreased to
3.4% in 1999 from 5.6% in 1998.

         The  Company's  effective tax rate was 41.8% in 1999 (1.4% of revenue),
compared with 41.5% in 1998 (2.3% of revenue).  The effective tax rate is higher
than the expected combined tax rate for a company  headquartered in Iowa because
of the cost of  nondeductible  driver per diem expense  absorbed by the Company.
The impact of the Company's  paying per diem travel  expenses  varies  depending
upon the  ratio of  drivers  to  independent  contractors  and the  level of the
Company's pretax earnings.

         As a result of the factors  described above, net earnings  decreased to
$3.9  million  in 1999  (2.0% of  revenue),  from $5.3  million in 1998 (3.3% of
revenue).


                                       10

<PAGE>



Comparison of year ended December 31, 1998 to year ended December 31, 1997.

         Operating revenue increased $41.3 million (34.3%), to $161.4 million in
1998 from $120.1 million in 1997. The revenue increase resulted primarily from a
36.0% increase in weighted  average  tractors,  to 1,236 in 1998 from 909 during
1997 as the Company expanded internally to meet customer demand and acquired the
business of East West in February  1998,  TP in August 1998,  and JHT in October
1998. Revenue per tractor per week (excluding revenue from brokerage operations)
decreased  $12 per week  (0.5%),  to $2,330 in 1998  from  $2,342 in 1997.  This
resulted from a decrease in revenue per loaded mile, which was largely offset by
an increase in miles per tractor and a decrease in empty miles percentage. These
changes  were a  result  of the  increase  in van  freight  associated  with the
acquisition  of East West.  In addition,  revenue from the  Company's  brokerage
operations  increased $3.1 million  (42.3%),  to $10.4 million in 1998 from $7.3
million in 1997.

         Purchased  transportation consists primarily of payments to independent
contractor  providers  of  revenue  equipment,  expenses  related  to  brokerage
activities, and payments under operating leases of revenue equipment.  Purchased
transportation  increased $19.4 million  (41.2%),  to $66.5 million in 1998 from
$47.1  million in 1997,  as the  Company's  business  expanded  and the  Company
contracted with more independent contractor providers of revenue equipment. As a
percentage of revenue,  purchased transportation increased to 41.2% in 1998 from
39.2% in 1997.  This  reflects an increase in the  percentage  of the  Company's
fleet supplied by independent  contractors as a result of the Company's internal
recruiting efforts and the acquisition of East West, which has obtained a higher
percentage  of its fleet  from  independent  contractors.  It also  reflects  an
increase in the freight hauled by brokered equipment.

         Compensation and employee  benefits  increased $11.3 million (42.0%) to
$38.2  million in 1998 from $26.9  million in 1997.  As a percentage of revenue,
compensation  and  employee  benefits  increased  to 23.7% in 1998 from 22.4% in
1997. The increase was attributable to (i) an increase in the per-mile wage paid
to van drivers,  (ii) an increase in the number of driver trainers and trainees,
and (iii) an increase in the self-insured  retention for health insurance claims
and reserve amounts for the period,  which  primarily  related to unusual health
claims during the second quarter of 1998.

         Fuel,  supplies,  and maintenance  increased $3.8 million  (23.6%),  to
$19.7  million in 1998 from $16.0  million in 1997.  As a percentage of revenue,
fuel, supplies,  and maintenance  decreased to 12.2% in 1998 from 13.3% in 1997,
reflecting a 13.4%  decrease in fuel costs to $1.03 per gallon  during 1998 from
$1.19 per gallon in 1997.  The decrease was  partially  offset by an increase in
the cost of parts,  tires,  tarps,  supplies,  and binders used in the Company's
operations.

         Insurance and claims  increased  $539,000  (24.4%),  to $2.7 million in
1998 from $2.2 million in 1997. As a percentage of revenue, insurance and claims
remained  relatively  constant at 1.7% of revenue in 1998  compared with 1.8% in
1997.

         Taxes and licenses increased $749,000 (32.6%),  to $3.0 million in 1998
from $2.3  million in 1997.  As a  percentage  of  revenue,  taxes and  licenses
remained unchanged at 1.9% of revenue for each year.

         General and administrative expenses increased $846,000 (15.7%), to $6.2
million in 1998 from $5.4 million in 1997. As a percentage  of revenue,  general
and  administrative  expenses  decreased to 3.9% of revenue in 1998 from 4.5% in
1997, as a result of a decrease in freight revenue being  dispatched by terminal
agents, resulting in less commissions paid during the 1998 period. Additionally,
certain fixed costs are being spread over a larger revenue base.

         Communications  and  utilities  increased  $460,000  (33.4%),  to  $1.8
million  in 1998  from  $1.4  million  in  1997.  As a  percentage  of  revenue,
communications and utilities remained unchanged at 1.1% in both years.

         Depreciation and amortization  increased $3.1 million (39.8%), to $11.0
million  in 1998  from  $7.9  million  in  1997.  As a  percentage  of  revenue,
depreciation and amortization  increased to 6.8% of revenue in 1998 from 6.6% in
1997. The increase was attributable to a larger fleet of Company-owned  tractors
and trailers,  which increased the cost of the equipment being  depreciated,  an
increase in the number of Company-owned  tractors financed with debt rather than
operating  leases,  slightly  lower  revenue  per  tractor,  and an  increase in
goodwill amortization as a result of the three acquisitions in 1998.

         Interest expense,  net, increased $1.4 million (91.9%), to $3.0 million
in 1998 from $1.5 million in 1997. As a percentage of revenue, interest expense,
net,  increased  to 1.8% of  revenue in 1998 from 1.3% in 1997,  as the  Company
incurred  debt to finance the  acquisition  of three  trucking  companies.  This
increase in debt was partially  offset by lower average  interest rates of 6.79%
in 1998 compared with 7.1% in 1997.


                                       11

<PAGE>



         As a result of the foregoing,  the Company's pretax margin decreased to
5.6% in 1998 from 7.9% in 1997.

         The  Company's  effective tax rate was 41.5% in 1998 (2.3% of revenue),
compared with 40.0% in 1997 (3.1% of revenue).  The effective tax rate is higher
than the expected combined tax rate for a company  headquartered in Iowa because
of the cost of  nondeductible  driver per diem expense  absorbed by the Company.
The impact of the Company's  paying per diem travel  expenses  varies  depending
upon the  ratio of  drivers  to  independent  contractors  and the  level of the
Company's pretax earnings.

         As a result of the factors  described above, net earnings  decreased to
$5.3  million  in 1998  (3.3% of  revenue),  from $5.7  million in 1997 (4.7% of
revenue).

Liquidity and Capital Resources

         The growth of the Company's business has  required  significant invest-
ments in new revenue  equipment  that the Company has  financed in recent  years
with  borrowings  under   installment   notes  payable  to  commercial   lending
institutions and equipment manufacturers, borrowings under lines of credit, cash
flow from operations, and equipment leases from third-party lessors. The Company
also has  obtained a portion of its  revenue  equipment  fleet from  independent
contractors  who own and operate the equipment,  which reduces  overall  capital
expenditure   requirements   compared   with   providing  a  fleet  of  entirely
Company-owned  equipment.  The Company's primary sources of liquidity  currently
are funds  provided by operations and borrowings  under credit  agreements  with
financial institutions and equipment manufacturers. Management believes that its
sources of liquidity  are  adequate to meet its  currently  anticipated  working
capital  requirements,  capital  expenditures,  and other needs at least through
2000.(*)

         Net cash  provided by operating  activities  was $14.9  million,  $16.5
million, and $24.0 million for the years ended December 31, 1997, 1998, and 1999
respectively.  The Company's principal use of cash from operations is to service
debt and internally  finance accounts  receivable  associated with growth in the
business. Customer accounts receivable increased $1.2 million, $4.5 million, and
$3.4  million  for  the  years  ended   December  31,  1997,   1998,  and  1999,
respectively.   The  average  age  of  the  Company's  accounts  receivable  was
approximately 34 days for 1997, 33 days for 1998, and 35 days for 1999.

         Net cash used in investing activities was $1.8 million,  $36.6 million,
and $14.7  million  for the years  ended  December  31,  1997,  1998,  and 1999,
respectively. Such amounts related primarily to payments made in acquisitions of
eight trucking companies and purchases,  sales, and trades of revenue equipment.
The Company expects capital  expenditures  (primarily for revenue  equipment and
satellite  communications  units),  net of revenue  equipment  trade-ins,  to be
approximately $22.2 million during 2000. Such projected capital expenditures are
expected to be funded with cash flow from operations,  borrowings,  or operating
leases.  The  Company  continues  to  evaluate  the need to expand  its  present
headquarters  facility  and may incur a portion of the  expansion  costs  during
2000. The size and cost of the possible  expansion has not yet been  determined.
The Company's projected capital  expenditures do not include any amount for this
possible expansion.(*)

         Net cash (used in) provided by financing activities of ($10.0 million),
$17.3 million,  and ($9.9 million) for the years ended December 31, 1997,  1998,
and 1999,  respectively,  consisted  primarily of net  (payments)  borrowings of
($5.5  million),  $17.3  million,  and ($9.9  million)  of  principal  under the
Company's  long-term debt  agreements,  and net payments of $4.5 million in 1997
under the Company's former line of credit, which was paid off during that year.

         At  December  31,  1999,  the Company had  outstanding  long-term  debt
including current maturities) of approximately $59.5 million,  most of which was
comprised of obligations  for the purchase of revenue  equipment.  Approximately
$34.0 million consisted of borrowings from financial  institutions and equipment
manufacturers,  $25 million  represented  the amount  drawn under the  Company's
revolving  credit  facility,   and  $434,000  represented  future  payments  for
purchases of intangible assets.  Interest rates on this debt range from 5.81% to
7.62% with maturities through 2004.

         At December  31,  1999,  the  revolving  credit  facility  provided for
borrowings of up to $40.0 million,  based upon certain  accounts  receivable and
revenue  equipment  values.  The  interest  rate  under the credit  facility  is
currently  1.5% plus the LIBOR  rate for the  corresponding  period.  The credit
facility is secured and contains covenants that impose certain minimum financial
ratios and limit additional liens, the size of certain mergers and acquisitions,
dividends,  and other  matters.  The Company was in  compliance  with the credit
facility at December 31, 1999.


                                       12

<PAGE>



Market Risks

         The  Company  is exposed to market  risks from  changes in (i)  certain
interest rates on its debt and (ii) certain commodity prices.

Interest Rate Risk

         The  revolving  credit  facility,  provided  there has been no default,
carries a maximum variable interest rate of LIBOR for the  corresponding  period
plus 1.5%. This variable  interest exposes the Company to the risk that interest
rates may rise.  Assuming  borrowing  levels at December  31,  1999, a one-point
increase in the LIBOR would increase  interest expense by $250,000.  Most of the
Company's other debt carries fixed interest rates and exposes the Company to the
risk that interest rates may fall. At December 31, 1999,  approximately 48.8% of
the Company's debt carries a variable interest rate and the remainder is fixed.

Commodity Price Risk

          The Company uses derivative  instruments,  including heating oil price
swap agreements, to reduce a portion of its exposure to fuel price fluctuations.
At December  31,  1999,  the Company had price swap  agreements  for 1.8 million
gallons at a fixed price of 38.25 cents per gallon. Since the Company's price is
fixed for these  gallons,  changes  in fuel  prices  would have no impact on the
Company's future fuel expense related to these gallons.  Therefore,  there is no
earnings or liquidity risk associated with these price swap agreements. The fair
value of the price swap agreements is the estimated amount the Company would pay
or receive to terminate the swap agreements. At December 31, 1999, a ten percent
change in the price of  heating  oil would  result in a  $111,000  change in the
current value of $422,000  which the Company would receive from  termination  of
the swap agreements.

         The Company does not trade in these  derivatives  with the objective of
earning  financial  gains  on  price  fluctuations,  nor  does it trade in these
instruments when there are no underlying transaction related exposures.

Inflation and Fuel Costs

          Most of the Company's operating expenses are inflation-sensitive, with
inflation  generally  producing  increased  costs of operation.  During the past
three years,  the most  significant  effects of  inflation  have been on revenue
equipment prices, the compensation paid to drivers, and fuel prices. Innovations
in equipment  technology and comfort have resulted in higher tractor prices, and
there has been an  industry-wide  increase  in wages paid to attract  and retain
qualified  drivers.  The  Company  attempts  to limit the  effects of  inflation
through increases in freight rates and certain cost control efforts. The failure
to obtain rate  increases in the future could  adversely  affect  profitability.
High  fuel  prices  also  decrease  the  Company's  profitability.  Most  of the
Company's contracts with customers contain fuel surcharge  provisions.  Although
the Company  attempts to pass  through  increases in fuel prices to customers in
the form of surcharges and higher rates,  the fuel price increases are not fully
recovered.  The recent increases in fuel prices will not be fully offset through
surcharges and higher rates.(*)

Seasonality

         In the trucking  industry results of operations show a seasonal pattern
because customers  generally reduce shipments during the winter season,  and the
Company  experiences  some  seasonality  due to the open,  flatbed nature of the
majority of its trailers. The Company at times has experienced delays in meeting
its shipment  schedules as a result of severe weather  conditions,  particularly
during the winter months.  In addition,  the Company's  operating  expenses have
been higher in the winter months due to decreased fuel  efficiency and increased
maintenance costs in colder weather.

Year 2000

         To date, the Company's  information  and non  information  systems have
experienced no adverse impact from the transition to the Year 2000. In addition,
the Company is not aware of any material  Year 2000  related  issues with any of
its  shippers,  suppliers,  or other  third  parties  with whom it has  business
relationships.  Through  December  31,  1999,  the Company  spent  approximately
$150,000 to address Year 2000  issues.  The Company does not expect to incur any
significant additional costs relating to Year 2000 issues.


                                       13

<PAGE>



Cautionary Statement Regarding Forward-Looking Statements

         The Company may from time-to-time make written or oral  forward-looking
statements.  Written  forward-looking  statements may appear in documents  filed
with the Securities and Exchange Commission,  in press releases,  and in reports
to stockholders. The Private Securities Litigation Reform Act of 1995 contains a
safe harbor for  forward-looking  statements.  The  Company  relies on this safe
harbor in making  such  disclosures.  In  connection  with  this  "safe  harbor"
provision,  the Company is hereby identifying important factors that could cause
actual results to differ materially from those contained in any  forward-looking
statement  made by or on behalf of the Company.  Factors that might cause such a
difference include, but are not limited to, the following:

         Economic  Factors;  Fuel  Prices.  Negative  economic  factors  such as
recessions,  downturns  in  customers'  business  cycles,  surplus  inventories,
inflation,  and higher  interest  rates  could  impair the  Company's  operating
results by decreasing  equipment  utilization or increasing costs of operations.
Increases in fuel prices usually are not fully recovered. Accordingly, high fuel
prices can have a negative impact on the Company's profitability.

         Resale  of  Used  Revenue  Equipment.   The  Company  historically  has
recognized  a gain on the sale of its  revenue  equipment.  The  market for used
equipment weakened  dramatically in late 1999 and into 2000. If the resale value
of the Company's  revenue  equipment were to remain low or decline,  the Company
could find it necessary to dispose its  equipment at a lower gain or a loss,  or
retain some of its  equipment  longer,  with a resulting  increase in  operating
expenses.

          Recruitment,  Retention, and  Compensation  of  Qualified Drivers  and
Independent Contractors.  Competition for drivers and independent contractors is
intense in the  trucking  industry.  There is,  and  historically  has been,  an
industry-wide  shortage of qualified drivers and independent  contractors.  This
shortage could force the Company to  significantly  increase the compensation it
pays to driver  employees and  independent  contractors or curtail the Company's
growth.

         Competition.   The  trucking   industry  is  highly   competitive   and
fragmented.  The Company competes with other truckload carriers,  private fleets
operated by existing and potential  customers,  and to some extent railroads and
rail-intermodal service.  Competition is based primarily on service, efficiency,
and freight rates. Many competitors offer transportation  service at lower rates
than the Company. The Company's  results could suffer if it cannot obtain
higher rates than competitors that offer a lower level of service.

         Acquisitions.  A significant portion of the Company's growth since June
1995  has  occurred  through  acquisitions.   In  2000,  management  intends  to
concentrate on improving the profitability of its current operations and may not
pursue    additional    acquisitions   as   aggressively.    Accordingly,    the
Company's revenue growth rate may suffer.






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

(*) May contain "forward-looking" statements.


                                       14

<PAGE>



ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The Company's audited financial statements,  including its consolidated
balance   sheets  and   consolidated   statements   of  earnings,   cash  flows,
stockholders'  equity, and notes related thereto, are included at pages 20 to 34
of this report. The supplementary quarterly financial data follows:

<TABLE>
<CAPTION>

                                                                      Quarterly Financial Data
                                                         (Dollars in thousands, except earnings per share)
                                                 ------------------------------------------------------------------
                                                 First Quarter    Second Quarter   Third Quarter   Fourth Quarter
                                                      1999             1999            1999            1999
                                                 -------------- ------------------ -------------- -----------------
<S>                                              <C>            <C>                <C>            <C>

Operating revenue................................$       47,295 $           51,117 $       50,043 $          48,490
Earnings from operations.........................         3,150              3,883          1,959             1,471
Earnings before income taxes.....................         2,237              2,952          1,035               524
Income taxes.....................................           933              1,230            425               234
Net earnings.....................................         1,304              1,722            610               290
Basic and diluted earnings per share.............$         0.26 $             0.34 $         0.12 $            0.06



                                                 First Quarter    Second Quarter    Third Quarter    Fourth Quarter
                                                      1998             1998            1998               1998
                                                 -------------- ------------------ --------------   ---------------
Operating revenue................................$       33,391  $          40,835 $       42,424   $        44,725
Earnings from operations.........................         2,493              2,396          3,528             3,651
Earnings before income taxes.....................         1,988              1,719          2,743             2,653
Income taxes.....................................           845                698          1,139             1,092
Net earnings.....................................         1,143              1,021          1,604             1,561
Basic and diluted earnings per share.............$         0.23 $             0.20 $         0.32   $          0.31
</TABLE>

As a result  of  rounding,  the  total of the four  quarters  may not  equal the
Company's results for the full year.

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

         No reports on Form 8-K have been filed  within the  twenty-four  months
prior to December 31, 1999,  involving a change of accountants or  disagreements
on accounting and financial disclosure.

                                    PART III

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information  respecting  executive officers and directors set forth
under the captions "Election of Directors;  Information Concerning Directors and
Executive  Officers" on  page 3 and 4 and  "Section  16(a)  Beneficial Ownership
Reporting Compliance" on page 6 of the Registrant's Proxy Statement for the 1999
annual  meeting of  stockholders,  which will be filed with the  Securities  and
Exchange  Commission  in  accordance  with  Rule  14a-6  promulgated  under  the
Securities  Exchange  Act  of  1934,  as  amended  (the  "Proxy  Statement")  is
incorporated by reference.

ITEM 11.          EXECUTIVE COMPENSATION

         The information  respecting executive  compensation set forth under the
caption   "Executive   Compensation"  on  page  5  of  the  Proxy  Statement  is
incorporated  herein by reference;  provided,  that the "Compensation  Committee
Report  on  Executive  Compensation"  contained  in the Proxy  Statement  is not
incorporated by reference.

ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT

         The information  respecting  security  ownership of certain  beneficial
owners  and  management  set forth  under the  caption  "Security  Ownership  of
Principal  Stockholders  and  Management"  on page 8 of the Proxy  Statement  is
incorporated herein by reference.


                                       15

<PAGE>



ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information  respecting  certain  relationships and transactions of
management  set forth under the  captions  "Compensation  Committee  Interlocks,
Insider  Participation,  and Related Party  Transactions" on page 5 of the Proxy
Statement is incorporated herein by reference.

                                     PART IV

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

(a)      1.       Financial Statements.

         The  Company's  audited  financial  statements  are  set  forth  at the
following pages of this report:


                                                                            Page
Independent Auditors' Report..............................................    20
Consolidated Balance Sheets...............................................    21
Consolidated Statements of Earnings.......................................    23
Consolidated Statements of  Stockholders' Equity..........................    24
Consolidated Statements of Cash Flows.....................................    25
Notes to Consolidated Financial Statements................................    27

         2.       Financial Statement Schedules.

         Financial  statement  schedules  are not required  because all required
information is included in the financial statements.

         3.       Exhibits

         See list under Item 14(c) below, with management compensatory plans and
arrangements being listed under 10.2, 10.3, and 10.5.

(b)      Reports on Form 8-K

         None


                                       16

<PAGE>



(c)      Exhibits

Exhibit                                          Description
Number

2.1        +++                 Asset Purchase Agreement dated February 20, 1998,
                               by and among Smithway Motor Xpress, Inc., East
                               West Motor Express,  Inc., and Darwyn and David
                               Stebbins.

2.2        +++++               Asset Purchase Agreement dated September 23,1998,
                               by and among  Smithway Motor  Xpress,  Inc., JHT,
                               Inc.,  JHT LOGISTICS,  INC., Bass Brook Truck
                               Service, Inc., and JERDON TERMINAL HOLDINGS, LLC.

2.3        +++++               First Amendment to Asset Purchase Agreement dated
                               October 29, 1998, by and among Smithway Motor
                               Xpress, Inc., JHT, Inc., JHT LOGISTICS, INC.,
                               Bass Brook Truck Service, Inc., and JERDON
                               TERMINAL HOLDINGS, LLC.

2.4        *                   Second Amendment to Asset Purchase Agreement
                               dated October 30, 1998, by and among Smithway
                               Motor Xpress, Inc., JHT,Inc., JHT LOGISTICS,INC.,
                               Bass Brook Truck Service, Inc., and JERDON
                               TERMINAL HOLDINGS, LLC.

3.1        +                   Articles of Incorporation.

3.2        +                   Bylaws.

4.1        +                   Articles of Incorporation.

4.2        +                   Bylaws.

10.1       +                   Outside Director Stock Plan dated March 1, 1995.

10.2       +                   Incentive Stock Plan adopted March 1, 1995.

10.3       +                   401(k) Plan adopted August 14, 1992, as amended.

10.4       +                   Form of Agency Agreement between Smithway Motor
                               Xpress,Inc.and its independent commission agents.

10.5       +                   Memorandum of officer incentive compensation
                               policy.

10.6       +                   Form of Independent Contractor Agreement between
                               Smithway  Motor Xpress, Inc. and its independent
                               contractor providers of tractors.

10.7       ++                  Credit  Agreement  dated  September  3,  1997,
                               between Smithway  Motor Xpress Corp., as
                               Guarantor,  Smithway Motor  Xpress, Inc., as
                               Borrower, and LaSalle National Bank.

10.8       +++                 Asset  Purchase  Agreement  dated February 20,
                               1998, by and among Smithway Motor  Xpress,  Inc.,
                               East West Motor Express, Inc., and Darwyn and
                               David Stebbins.

10.9       ++++                First  Amendment  to Credit  Agreement  dated
                               March 1, 1998, between  Smithway Motor Xpress
                               Corp.,as Guarantor, Smithway Motor  Xpress, Inc.,
                               as  Borrower, and  LaSalle National Bank.

10.10      ++++                Second  Amendment to Credit  Agreement dated
                               March 15, 1998, between Smithway  Motor Xpress
                               Corp.,as Guarantor, Smithway  Motor Xpress, Inc.,
                               as Borrower,  and  LaSalle National Bank.

10.11      +++++               Asset Purchase Agreement dated September 23,
                               1998, by and among Smithway Motor  Xpress,  Inc.,
                               JHT, Inc., JHT LOGISTICS,  INC., Bass Brook Truck
                               Service, Inc., and JERDON TERMINAL HOLDINGS, LLC.


                                       17

<PAGE>




10.12      +++++               First Amendment to Asset Purchase Agreement dated
                               October 29, 1998, by and among Smithway Motor
                               Xpress, Inc., JHT, Inc., JHT LOGISTICS, INC.,
                               Bass Brook Truck Service, Inc., and JERDON
                               TERMINAL HOLDINGS, LLC.

10.13      *                   Second Amendment to Asset Purchase Agreement
                               dated October 30, 1998, by and among Smithway
                               Motor Xpress, Inc.,JHT, Inc.,JHT LOGISTICS, INC.,
                               Bass Brook Truck Service, Inc., and JERDON
                               TERMINAL HOLDINGS, LLC.

10.14      *                   Third Amendment to Credit Agreement dated October
                               30, 1998, between Smithway Motor Xpress Corp., as
                               Guarantor, Smithway Motor Xpress, Inc.,
                               as Borrower,and LaSalle National Bank, as Lender.

10.15      **                  Amendment No. 2 to Smithway Motor Xpress Corp.
                               Incentive Stock Plan, adopted May 7, 1999.

10.16      ***                 Fourth Amendment to Credit Agreement dated August
                               20, 1999, between Smithway Motor Xpress Corp., as
                               Guarantor, Smithway Motor Xpress, Inc., as
                               Borrower, and LaSalle National Bank.

10.17      #                   Fifth Amendment to Credit Agreement dated
                               December 17, 1999, between Smithway Motor Xpress
                               Corp., as Guarantor, Smithway Motor Xpress, Inc.,
                               as Borrower, and LaSalle National Bank.

21         #                   List of subsidiaries.

23         #                   Consent of KPMG LLP, independent auditors.

27         #                   Financial Data Schedule.

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

+        Incorporated by reference from the Company's Registration Statement on
         Form S-1, Registration No. 33-90356, effective June 27, 1996.

++       Incorporated by reference from the Company's Quarterly Report on
         Form 10-Q for the period ended September  30, 1997.   Commission  File
         No.  000-20793, dated November 12, 1997.

+++      Incorporated by reference from the Company's Form 8-K.  Commission File
         No. 000-20793, dated March 12, 1998.

++++     Incorporated by reference from the Company's Quarterly Report on Form
         10-Q for the period ended March 31, 1998.   Commission File No.
         000-20793, dated May 14, 1998.

+++++    Incorporated by reference from the Company's Form 8-K.  Commission File
         No. 000-20793, dated November 12, 1998.

*        Incorporated by reference from the Company's Annual Report on Form 10-K
         for the fiscal year ended December 31, 1998.  Commission File No.
         000-20793, dated March 18, 1999.

**       Incorporated by reference from the Company's Quarterly Report on Form
         10-Q for the period ended June 30, 1999.  Commission File No.000-20793,
         dated August 13, 1999.

***      Incorporated by reference from the Company's Quarterly Report on Form
         10-Q for the period ended September 30, 1999.  Commission File No.
         000-20793, dated November 10, 1999.

#        Filed herewith.






                                       18

<PAGE>



                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                    SMITHWAY MOTOR XPRESS CORP.



Date: March 29, 2000                By:     /s/ William G. Smith
      --------------                        --------------------
                                            William G. Smith
                                            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.


Signature                   Position                              Date
---------                   --------                              ----
/s/ William G. Smith        Chairman of the Board, President,     March 29, 2000
--------------------        and Chief Executive Officer;
William G. Smith            Director (principal executive officer)

/s/ G. Larry Owens          Executive Vice President, Chief       March 29, 2000
------------------          Operating Officer, and Chief Financial
G. Larry Owens              Officer; Director

/s/ Michael E. Oleson       Treasurer and Chief Accounting        March 29, 2000
---------------------       Officer(principal financial and
Michael E. Oleson           accounting officer)

/s/ Herbert D. Ihle         Director                              March 29, 2000
-------------------
Herbert D. Ihle

/s/ Robert  E. Rich         Director                              March 29, 2000
-------------------
Robert E. Rich

/s/ Terry G. Christenberry  Director                              March 29, 2000
--------------------------
Terry G. Christenberry










                                       19

<PAGE>




                       Independent Auditors' Report


To the Stockholders and Board of Directors of Smithway Motor Xpress Corp.:

      We have audited the accompanying  consolidated  balance sheets of Smithway
Motor Xpress Corp.  and  subsidiaries  as of December 31, 1998 and 1999, and the
related  consolidated  statements of earnings,  stockholders'  equity,  and cash
flows for each of the years in the  three-year  period ended  December 31, 1999.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly,  in all material  respects,  the financial  position of Smithway
Motor Xpress Corp.  and  subsidiaries  as of December 31, 1998 and 1999, and the
results  of their  operations  and their cash flows for each of the years in the
three-year period ended December 31, 1999, in conformity with generally accepted
accounting principles.


KPMG LLP
                                   /s/KPMG LLP

Des Moines, Iowa
February 3, 2000























                                       20

<PAGE>



                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                         December 31,
                                                                              -------------------------------------
                                                                                     1998               1999
                                                                              ------------------ ------------------
<S>                                                                           <C>                <C>

                                    ASSETS
Current assets:
  Cash and cash equivalents...................................................$            1,276 $              685
  Receivables:
    Trade (note 4)............................................................            15,481             17,928
    Other.....................................................................             1,366              1,599
    Recoverable income taxes..................................................               270              1,021
  Inventories.................................................................             1,537              1,611
  Deposits, primarily with insurers (note 11)                                                391                281
  Prepaid expenses............................................................             1,110                579
  Deferred income taxes (note 5)..............................................               510              1,111
                                                                              ------------------ ------------------
         Total current assets.................................................            21,941             24,815
                                                                              ------------------ ------------------
Property and equipment (note 4):
  Land........................................................................               881              1,081
  Buildings and improvements..................................................             6,147              6,865
  Tractors....................................................................            60,915             74,004
  Trailers....................................................................            39,194             42,054
  Other equipment.............................................................             6,269              6,765
                                                                              ------------------ ------------------
                                                                                         113,406            130,769
  Less accumulated depreciation...............................................            26,269             36,464
                                                                              ------------------ ------------------
         Net property and equipment...........................................            87,137             94,305
                                                                              ------------------ ------------------
Intangible assets, net (note 2)...............................................             5,892              5,650
Other assets..................................................................               524                244
                                                                              ------------------ ------------------
                                                                              $          115,494 $          125,014
                                                                              ================== ==================

</TABLE>



          See accompanying notes to consolidated financial statements.





                                       21

<PAGE>



                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                          December 31,
                                                                              -------------------------------------
                                                                                     1998               1999
                                                                              ------------------ ------------------
<S>                                                                           <C>                <C>

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current maturities of long-term debt (note 4)...............................$            8,124 $            8,530
  Accounts payable............................................................             3,280              4,962
  Accrued compensation........................................................             1,714              2,436
  Accrued loss reserves (note 11).............................................             1,204              2,540
  Other accrued expenses......................................................               808              1,188
                                                                              ------------------ ------------------
         Total current liabilities............................................            15,130             19,656
Long-term debt, less current maturities (note 4)..............................            53,579             50,985
Deferred income taxes (note 5)................................................            11,380             14,865
                                                                              ------------------ ------------------
         Total liabilities....................................................            80,089             85,506
                                                                              ------------------ ------------------
Stockholders' equity (notes 7 and 8):
  Preferred stock (.01 par value; authorized 5 million shares; issued
                    none).....................................................                 -                  -
  Common stock:
    Class A (.01 par value; authorized 20 million shares;
                   issued 1998 - 4,015, 662; 1999 - 4,035, 989 shares)........                40                 40
    Class B (.01 par value; authorized 5 million shares;
                  issued 1 million shares)....................................                10                 10
  Additional paid-in capital..................................................            11,311             11,414
  Retained earnings...........................................................            24,118             28,044
  Reacquired shares, at cost (1998 - 13,885; 1999 - no shares)................               (74)                 -
                                                                              ------------------ ------------------
         Total stockholders' equity...........................................            35,405             39,508
                                                                              ------------------ ------------------
Commitments (notes 4, 10 and 11)..............................................
                                                                              ------------------ ------------------
                                                                              $          115,494 $          125,014
                                                                              ================== ==================
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       22

<PAGE>



                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                       Consolidated Statements of Earnings
                  (Dollars in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                          Years ended December 31,
                                                          ---------------------------------------------------------
                                                                1997                1998                1999
                                                          -----------------  ------------------  ------------------
<S>                                                       <C>                <C>                 <C>
Operating revenue:
     Freight..............................................$        119,688   $          160,975  $          196,420
     Other................................................             429                  400                 525
                                                          -----------------  ------------------  ------------------
         Operating revenue................................         120,117              161,375             196,945
                                                          -----------------  ------------------  ------------------
Operating expenses:
     Purchased transportation.............................          47,095               66,495              79,735
     Compensation and employee benefits...................          26,904               38,191              49,255
     Fuel, supplies, and maintenance......................          15,965               19,738              23,754
     Insurance and claims.................................           2,206                2,745               4,212
     Taxes and licenses...................................           2,299                3,048               4,045
     General and administrative...........................           5,391                6,237               7,491
     Communications and utilities.........................           1,378                1,838               2,190
     Depreciation and amortization........................           7,880               11,015              15,800
                                                          -----------------  ------------------  ------------------
          Total operating expenses........................         109,118              149,307             186,482
                                                          -----------------  ------------------  ------------------
          Earnings from operations........................          10,999               12,068              10,463
Financial (expense) income
     Interest expense.....................................          (1,654)              (3,200)             (3,829)
     Interest income......................................             109                  235                 114
                                                          -----------------  ------------------  ------------------
          Earnings before income taxes....................           9,454                9,103               6,748
Income taxes (note 5).....................................           3,781                3,774               2,822
                                                          -----------------  ------------------  ------------------
          Net earnings....................................$          5,673   $            5,329  $            3,926
                                                          =================  ==================  ==================
Basic and diluted earnings per share (note 8).............$           1.13   $             1.06  $             0.78
                                                          =================  ==================  ==================

</TABLE>


          See accompanying notes to consolidated financial statements.






                                       23

<PAGE>




                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                 Consolidated Statements of Stockholders' Equity
                  Years ended December 31, 1997, 1998, and 1999
                             (Dollars in thousands)


<TABLE>
<CAPTION>



                                                      Additional                                Total
                                          Common       paid-in       Retained     Reacquired   stockholders'
                                          stock        capital       earnings       shares      equity
                                       ---------------------------------------------------------------------
<S>                                    <C>           <C>           <C>           <C>           <C>
Balance at December 31, 1996             $        50 $     11,104  $      13,116 $        (77) $      24,193
Net earnings                                       -            -          5,673            -          5,673
Issuance of stock bonuses                          -           40              -            -             40
                                       ---------------------------------------------------------------------
Balance at December 31, 1997                      50       11,144         18,789          (77)        29,906
Net earnings                                       -            -          5,329            -          5,329
Issuance of stock bonuses                          -          165              -            -            165
Treasury stock reissued (519 shares)               -            2              -            3              5
                                       ---------------------------------------------------------------------
Balance at December 31, 1998                      50       11,311         24,118          (74)        35,405
Net earnings                                       -            -          3,926            -          3,926
Issuance of stock bonuses                          -           56              -            -             56
Treasury stock reissued for stock
bonuses (13,885 shares)                            -           47              -           74            121
                                       ---------------------------------------------------------------------
Balance at December 31, 1999             $        50 $     11,414  $      28,044 $           - $      39,508
                                      ======================================================================
</TABLE>










          See accompanying notes to consolidated financial statements.













                                       24

<PAGE>



                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                             (Dollars in thousands)
<TABLE>
<CAPTION>


                                                                               Years ended December 31,
                                                                   ------------------------------------------------
                                                                        1997            1998             1999
                                                                   --------------   -------------   ---------------
<S>                                                                <C>              <C>             <C>
Cash flows from operating activities:
  Net earnings.....................................................$        5,673   $       5,329   $         3,926
                                                                   --------------   -------------   ---------------
  Adjustments   to  reconcile   net  earnings  to  cash  provided
  by  operating  activities:
      Depreciation and amortization................................         7,880          11,015            15,800
      Deferred income taxes........................................         2,460           2,880             2,884
      Stock bonuses................................................            40             165               177
      Change in:
           Receivables.............................................        (1,154)         (4,546)           (3,431)
           Inventories.............................................          (326)           (107)              (74)
           Deposits, primarily with insurers.......................           151             379               110
           Prepaid expenses........................................          (264)            343               531
           Accounts payable and other accrued liabilities..........           450           1,050             4,120
                                                                   --------------   -------------   ---------------
            Total adjustments......................................         9,237          11,179            20,117
                                                                   --------------   -------------   ---------------
            Net cash provided by operating activities..............        14,910          16,508            24,043
                                                                   --------------   -------------   ---------------
Cash flows from investing activities:
  Payments  for acquisitions.......................................        (2,599)        (26,266)                -
  Purchase of property and equipment...............................          (357)        (12,865)          (18,342)
  Proceeds from sale of property and equipment.....................         1,317           2,592             3,478
  Other............................................................          (117)            (36)              130
                                                                   --------------   -------------   ---------------
            Net cash used in investing activities..................        (1,756)        (36,575)          (14,734)
                                                                   --------------   -------------   ---------------
Cash flows from financing activities:
  Proceeds from long-term debt.....................................        14,300          41,000                 -
  Principal payments on long-term debt.............................       (19,822)        (23,744)           (9,900)
  Borrowings on line of credit agreement...........................        44,670              -                 -
  Payments on line of credit agreement.............................       (49,160)             -                 -
  Other............................................................            -               5                 -
                                                                   --------------   -------------   ---------------
            Net cash (used in) provided by financing activities....       (10,012)         17,261            (9,900)
                                                                   --------------   -------------   ---------------
            Net increase (decrease) in cash and cash equivalents...         3,142          (2,806)             (591)
Cash and cash equivalents at beginning of year.....................           940           4,082             1,276
                                                                   --------------   -------------   ---------------
Cash and cash equivalents at end of year...........................$        4,082   $       1,276   $           685
                                                                   ==============   =============   ===============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       25

<PAGE>





                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                             (Dollars in thousands)
<TABLE>
<CAPTION>

                                                                               Years ended December 31,
                                                                   ------------------------------------------------
                                                                        1997            1998             1999
                                                                   --------------   -------------   ---------------
<S>                                                                <C>              <C>             <C>

Supplemental disclosure of cash flow information:
   Cash paid during year for:
          Interest.................................................$        1,455   $       3,262   $         3,806
          Income taxes.............................................           835           1,438               689
                                                                   ==============   =============   ===============

Supplemental schedules of noncash investing and financing activities:
   Notes payable issued for tractors and trailers..................$       20,594   $      11,780   $         7,712
   Issuance of stock bonuses.......................................            40             165               177
   Liability issued for intangible assets..........................             -           1,691                 -
                                                                   ==============   =============   ===============


Cash payments for acquisitions:
   Revenue equipment...............................................$        1,990   $      21,671   $             -
   Intangible assets...............................................           472           2,779                 -
   Land, buildings and other assets................................           137           1,816                 -
                                                                   --------------   -------------   ---------------
                                                                   $        2,599   $      26,266   $             -
                                                                   ==============   =============   ===============
</TABLE>

          See accompanying notes to consolidated financial statements.




                                       26

<PAGE>



                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
             (Dollars in thousands, except share and per share data)


Note 1: Summary of Significant Accounting Policies

Operations

         Smithway  Motor  Xpress  Corp.  and  subsidiaries  (the  Company)  is a
truckload  carrier  that  provides  nationwide   transportation  of  diversified
freight,  concentrating  primarily in flatbed operations.  It generally operates
over short-to-medium  traffic routes,  serving shippers located predominantly in
the central United States.  The Company also operates in the southern  provinces
of Canada. Canadian revenues, based on miles driven, were approximately $339 and
$667  for the  years  ended  December  31,  1998  and  1999,  respectively.  The
consolidated  financial statements include the accounts of Smithway Motor Xpress
Corp. and its three  wholly-owned  subsidiaries.  All  significant  intercompany
balances and transactions have been eliminated in consolidation.

Customers

         The  Company  serves a diverse  base of  shippers.  No single  customer
accounted for more than 10 percent of the  Company's  total  operating  revenues
during any of the years ended  December 31, 1997,  1998, and 1999. The Company's
10 largest customers accounted for approximately 23 percent, 26 percent,  and 27
percent of the Company's total operating  revenues during 1997,  1998, and 1999,
respectively.  The Company's largest  concentration of customers is in the steel
and building materials industries, which together accounted for approximately 51
percent, 46 percent, and 43 percent of the Company's total operating revenues in
1997, 1998, and 1999, respectively.

Drivers

         The Company  faces  intense  industry  competition  in  attracting  and
retaining qualified drivers and independent  contractors.  This competition from
time to time  results in the  Company  temporarily  idling  some of its  revenue
equipment or  increasing  the  compensation  the Company pays to its drivers and
independent contractors.

Use of Estimates

         Management   of  the  Company  has  made  a  number  of  estimates  and
assumptions  relating  to the  reporting  of  assets  and  liabilities  and  the
disclosure  of contingent  assets and  liabilities  to prepare  these  financial
statements in conformity with generally accepted accounting  principles.  Actual
results could differ from those estimates.

Cash and Cash Equivalents

         The Company  considers  interest-bearing  instruments  with maturity of
three months or less at the date of purchase to be the  equivalent  of cash.  At
December  31,  1998 and 1999 cash  equivalents  consisted  of $1,471 and $348 of
commercial paper and United States Treasury bills.

Receivables

         Trade  receivables are stated net of an allowance for doubtful accounts
of $66 and $70 at December 31, 1998 and 1999, respectively. The financial status
of customers is checked and monitored by the Company when granting  credit.  The
Company routinely has significant dollar transactions with certain customers. At
December 31, 1998 and 1999,  no individual  customer  accounted for more than 10
percent of total trade receivables.

Inventories

         Inventories   consist  of  tractor  and  trailer  supplies  and  parts.
Inventories are stated at lower of cost (first-in, first-out method) or market.

Prepaid Expenses

         Prepaid  expenses  consist  primarily  of the cost of tarps,  which are
amortized over 36 months and licenses which are amortized over 12 months.


                                       27

<PAGE>



Accounting for Leases

         The Company is a lessee of revenue  equipment under  operating  leases.
Rent expense is charged to operations  as it is incurred  under the terms of the
respective leases.

Property and Equipment

         Property and equipment are recorded at cost.  Depreciation  is provided
by use of the straight-line and declining-balance  methods over lives of 5 to 39
years for  buildings and  improvements,  5 to 7 years for tractors and trailers,
and 3 to 10 years for other  equipment.  Expenditures  for maintenance and minor
repairs are charged to operations,  and expenditures for major  replacements and
betterments are capitalized.  The cost and related  accumulated  depreciation on
property and equipment retired, traded, or sold are eliminated from the property
accounts at the time of retirement,  trade, or sale. In accordance with industry
practices,  the gain or loss on retirement  or sale is included in  depreciation
and amortization in the consolidated statements of earnings.  Gains or losses on
trade-ins are included in the basis of the new asset.

         Tires purchased as part of revenue  equipment are capitalized as a cost
of the equipment. Effective January 1, 1998, the Company changed its estimate of
the life of these  tires  from two years to the life of the  underlying  revenue
equipment.  This change is in accordance with standard industry practice and was
based on the Company's  experience  with the warranties and tread life of tires.
The change was  accounted  for  prospectively.  The effect of this change on net
earnings,  during 1998, was an increase of $175.  Replacement tires are expensed
when placed in service.

Intangibles

         Intangible  assets,  primarily  goodwill,  are recorded at cost and are
amortized  using the  straight-line  method over  periods  ranging  from 5 to 15
years.  Accumulated  amortization  of $583 and $1,178,  at December 31, 1998 and
1999,  respectively,  have been netted against these intangible assets. Goodwill
represents the excess of purchase price over fair value of net assets  acquired.
The Company assesses the  recoverability of this intangible asset by determining
whether the  amortization of the goodwill balance over its remaining life can be
recovered  through  undiscounted  future  operating  cash flows of the  acquired
operation.  The amount of goodwill  impairment,  if any,  is  measured  based on
projected   discounted  future  operating  cash  flows  using  a  discount  rate
reflecting  the Company's  average cost of funds.  The assessment of the recover
ability of goodwill will be impacted if estimated  future  operating  cash flows
are not achieved.
Revenue Recognition

         The Company generally  recognizes operating revenue when the freight to
be  transported  has  been  loaded.   The  Company  operates  primarily  in  the
short-to-medium  length haul category of the trucking industry;  therefore,  the
Company's   typical  customer  delivery  is  completed  one  day  after  pickup.
Accordingly, this method of revenue recognition is not materially different from
recognizing  revenue  based on completion  of delivery.  The Company  recognizes
operating  revenue  when the  freight is  delivered  for longer haul loads where
delivery  is  completed  more  than one day after  pickup.  Amounts  payable  to
independent  contractors  for purchased  transportation,  to Company drivers for
wages,  and other  direct  expenses  are  accrued  when the  related  revenue is
recognized.

Insurance and Claims

         Losses resulting from personal  liability,  physical  damage,  workers'
compensation,  and cargo  loss and damage are  covered by  insurance  subject to
certain deductibles.  Losses resulting from uninsured claims are recognized when
such losses are known and can be estimated.  The Company estimates and accrues a
liability for its share of ultimate settlements using all available information.
Expenses depend on actual loss experience and changes in estimates of settlement
amounts for open claims which have not been fully resolved.

Income Taxes

         Income taxes are accounted  for under the asset and  liability  method.
Deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases and operating loss and tax credit  carryforwards.  Deferred tax assets and
liabilities  are measured  using enacted tax rates  expected to apply to taxable
income in the years in which  those  temporary  differences  are  expected to be
recovered or settled. The effect of a change in tax rates on deferred tax assets
and  liabilities  is  recognized  in  income in the  period  that  includes  the
enactment date.


                                       28

<PAGE>



Stock Option Plans

         The Company has elected the pro forma disclosure option of Statement of
Financial  Accounting  Standards  (SFAS) No. 123,  "Accounting  for  Stock-Based
Compensation."  The Company  will  continue  applying the  accounting  treatment
prescribed by the provisions of APB Opinion No. 25, "Accounting for Stock Issued
to  Employees."  Pro forma net  earnings  and pro forma net  earnings per common
share have been  provided as if SFAS No. 123 were  adopted  for all  stock-based
compensation plans.

Derivative Instruments

         The Company  uses  purchased  options and futures  contracts to hedge a
portion of its anticipated  fuel  purchases.  These  derivative  instruments are
linked to  heating  oil  which has a high  correlation  to  diesel  fuel.  These
derivative  instruments meet the criteria for hedge accounting and are accounted
for on this  basis.  The  Company  does not hold or issue  options  and  futures
contracts  for  trading  purposes.   Unrealized  gains  and  losses  related  to
qualifying  hedges are deferred and recognized in income when the fuel purchases
are made, or immediately if the commitment has been canceled.

          The Company  also  uses "floating to fixed"  heating oil  price  swap
agreements  tolimit its exposure to  potentially  adverse  fluctuations  in fuel
prices. As the fuel is purchased, the differential to be paid or received on the
swap  agreements  is  recognized  as  an  adjustment  to  fuel,  supplies,   and
maintenance expense in the consolidated  statement of earnings.

Net Earnings Per Common Share

         Basic earnings per share have been computed by dividing net earnings by
the  weighted-average  outstanding Class A and Class B common shares during each
of the years.  Diluted earnings per share have been calculated by also including
in the computation the effect of employee stock options,  nonvested  stock,  and
similar equity instruments granted to employees as potential common shares.

Effect of New Accounting Standards

          SFAS No.  133,    "Accounting for  Derivative  Instruments and Hedging
Activities," will be effective for the Company for the year beginning January 1,
2001. Management is evaluating the impact the adoption of SFAS No. 133 will have
on the Company's consolidated financial statements. The Company expects to adopt
SFAS No. 133 when required.

Note 2:  Acquisitions

         In February 1998, the Company acquired tractors,  trailers, real estate
and certain  other  assets owned or leased by East West Motor  Express,  Inc. of
Black Hawk,  South  Dakota.  In exchange for these  assets,  the Company  repaid
approximately  $4,287 in  equipment  financing  secured by these assets and paid
$5,896 to the former  owners of the acquired  assets.  In addition,  the Company
agreed to pay $2,256 for goodwill and other intangible assets.

         In October 1998, the Company acquired tractors,  trailers,  and certain
other assets owned or leased by JHT,  Inc. of Cohasset,  Minnesota.  In exchange
for these  assets,  the  Company  assumed  and repaid  approximately  $10,200 in
equipment  financing  secured by these assets and paid $813 to the former owners
of the  acquired  assets.  In  addition,  the  Company  agreed to pay $1,515 for
goodwill and other intangible assets.

         The Company also acquired tractors,  trailers, and certain other assets
of TP  Transportation,  Inc. of Enid,  Oklahoma in August 1998.  In exchange for
these assets,  the Company assumed or repaid  approximately  $4,333 in equipment
financing  secured  by these  assets  and paid $125 to the  former  owners of TP
Transportation,  Inc. In addition,  the Company  agreed to pay $675 for goodwill
and other intangible  assets. The effect of this transaction was not material to
the consolidated financial statements of the Company.

         In 1997, the Company  acquired  tractors,  trailers,  and certain other
assets of Pirie Motor  Freight,  Inc. of Fort Dodge,  Iowa and Royal  Transport,
Ltd. of Grand Rapids, Michigan. In exchange for these assets, the Company repaid
approximately  $1,929 in  equipment  financing  secured by these assets and paid
$179 to former owners and $516 for  noncompete and  consulting  agreements.  The
effect of these  transactions  was not  material to the  consolidated  financial
statements.

         The above  acquisitions  were  accounted for by the purchase  method of
accounting.

                                       29

<PAGE>



Note 3:  Financial Instruments

         SFAS 107,  "Disclosures  About  Fair Value of  Financial  Instruments,"
defines  the fair  value of a  financial  instrument  as the amount at which the
instrument could be exchanged in a current  transaction between willing parties.
At December 31, 1999, the carrying amounts of cash and cash  equivalents,  trade
receivables,  other  receivables,  accounts  payable,  and accrued  liabilities,
approximate fair value because of the short maturity of those  instruments.  The
fair value of the Company's long-term debt,  including current  maturities,  was
$59,236 at December 31, 1999, based upon estimated market rates.

         The Company uses derivative instruments including purchased options and
futures  contracts to hedge a portion of their  anticipated fuel purchases.  The
Company does not hold these  instruments with the objective of earning financial
gains on price  fluctuations  alone,  nor does it enter  into  derivative  hedge
instruments for which there are no underlying transaction related exposures. The
notional amounts for options and futures contracts in place at December 31, 1998
and 1999 are 1.6 million  gallons and -0- gallons,  respectively.  These options
and futures  contracts  generally  mature in less than one year. At December 31,
1998 and 1999 deferred unrealized losses were $140 and $-0-, respectively, based
upon broker quoted prices.

         The   Company  has   also   entered   into  several "floating to fixed"
heating oil price swap  agreements.  At December  31, 1998 and 1999 the notional
amount of the agreements was 7.5 and 1.8 million gallons, respectively,  related
specifically  to 1999 and 2000 fuel  purchases.  At December 31, 1999, the fixed
price in the agreements  was 38.25 cents per gallon.  Fair value of these swaps,
based  upon the  estimated  amount  the  Company  would  (pay) or  receive  upon
terminating the  agreements,  was ($317) and $422 at December 31, 1998 and 1999,
respectively.

Note 4:  Long-Term Debt

         Long-term debt includes a credit  agreement,  entered into during 1997,
with an  outstanding  balance of  $25,000 at  December  31,  1998 and 1999.  The
agreement  allows for  borrowings  up to the  lesser of 85  percent of  eligible
accounts receivable and 75 percent of the net book value of unencumbered revenue
equipment or $40,000.  Borrowings  under the  agreement  are secured by liens on
revenue equipment,  accounts  receivable,  and certain other assets, at December
31,  1999.  The  agreement,  amended  in 1999 to extend the  expiration  date to
September 1, 2002,  contains certain  compliance  covenants.  The Company was in
compliance  with these  covenants  at December  31, 1998 and 1999.  The weighted
average interest rate on the outstanding balance is defined in the agreement and
at December 31, 1998 and 1999 was 6.79 percent and 7.62  percent,  respectively.
The credit agreement also includes  financing for letters of credit. At December
31,  1998 and 1999,  the  Company  had  letters  of credit of $2,000  and $3,000
outstanding for  self-insured  amounts related to its insurance  programs.  (See
note 11.)  These  letters of credit  directly  reduced  the amount of  potential
borrowings available under the credit agreement.

         Long-term debt also includes  equipment  notes with balances of $35,444
and $34,080 at December 31, 1998 and 1999,  respectively.  Interest rates on the
equipment notes range from 5.81 percent to 6.76 percent with maturities  through
2004. The equipment notes are collateralized by the underlying equipment.

         At December  31, 1998 and 1999,  long-term  debt also  includes  future
payments for intangible assets of $1,259 and $434, respectively.

         Future  maturities on long-term debt for years ending  December 31, are
as follows:  2000, $8,530; 2001, $7,539; 2002, $34,892;  2003, $6,185; and 2004,
$2,369.



                                       30

<PAGE>



Note 5:  Income Taxes

         Income taxes consisted of the following  components for the three years
ended December 31:
<TABLE>
<CAPTION>

                              1997                                      1998                                    1999
               -----------------------------------        ---------------------------------       ---------------------------------
                Federal       State       Total            Federal     State       Total           Federal     State       Total
               ----------  ----------- -----------        ---------- ----------  ----------       ---------- ----------  ----------
<S>            <C>         <C>         <C>                <C>        <C>         <C>              <C>        <C>         <C>

Current        $    1,082  $       239 $     1,321        $      805 $       89  $      894       $     (50) $     (12)  $     (62)
Deferred       $    2,016  $       444 $     2,460        $    2,304 $      576  $    2,880       $    2,422 $      462  $    2,884
               ----------  ----------- -----------        ---------- ----------  ----------       ---------- ----------  ----------
               $    3,098  $       683 $     3,781        $    3,109 $      665  $    3,774       $    2,372 $      450  $    2,822
               ==========  =========== ===========        ========== ==========  ==========       ========== ==========  ==========
</TABLE>

         Total income tax expense  differs from the amount of income tax expense
computed by applying  the normal  United  States  federal  income tax rate of 34
percent to income  before income tax expense.  The reasons for such  differences
are as follows:

<TABLE>
<CAPTION>

                                                                  Years ended December 31,
                                                                  ------------------------
                                                          1997               1998              1999
                                                   ------------------ ------------------ -----------------
<S>                                                <C>                <C>                <C>

Computed "expected" income tax expense             $            3,214 $            3,095 $           2,294
State income tax expense net of federal benefit                   451                439               297
Permanent differences, primarily
   nondeductible portion of driver per diem and
   travel expenses
                                                                  230                234               291
Other                                                            (114)                 6               (60)
                                                   ------------------ ------------------ -----------------
                                                   $            3,781 $            3,774 $           2,822
                                                   ================== ================== =================
</TABLE>



         Temporary  differences  between the financial statement basis of assets
and liabilities and the related  deferred tax assets and liabilities at December
31, 1998 and 1999, were as follows:


<TABLE>
<CAPTION>



                                                                   1998              1999
                                                              -------------    ---------------
<S>                                                           <C>              <C>

Deferred tax assets:
   Net operating loss carryforwards (expiring 2019)           $           -      $       2,197
   Alternative minimum tax (AMT) credit carryforwards                 1,783              1,773
   Accrued expenses                                                     650              1,187
   Other                                                                 96                134
                                                              -------------    ---------------
      Total gross deferred tax assets                                 2,529              5,291
                                                              -------------    ---------------
Deferred tax liabilities:
   Property and equipment                                           (13,399)           (19,045)
                                                              -------------    ---------------
      Net deferred tax liabilities                            $     (10,870)     $     (13,754)
                                                              =============    ===============

</TABLE>


         The AMT  credit  carryforwards  are  available  indefinitely  to reduce
future income tax liabilities to the extent they exceed AMT liabilities.


                                       31

<PAGE>



Note 6:  Stockholders' Equity

         On all matters with respect to which the Company's  stockholders have a
right to vote, each share of Class A common stock is entitled to one vote, while
each share of Class B common stock is entitled to two votes.  The Class B common
stock is  convertible  into shares of Class A common stock on a  share-for-share
basis at the election of the  stockholder  and will be  converted  automatically
into  shares of Class A common  stock  upon  transfer  to any party  other  than
William  G.  Smith,   his  wife,   Marlys  L.  Smith,   their  children,   their
grandchildren,  trusts for any of their  benefit,  and entities  wholly owned by
them.

Note 7: Stock Plans

         The  Company has  reserved  25,000  shares of Class A common  stock for
issuance  pursuant to an outside  director  stock option plan.  The term of each
option  shall be six  years  from the  grant  date.  Options  vest on the  first
anniversary of the grant date. Exercise price of each stock option is 85 percent
of the fair market value of the common stock on the date of grant.

         The Company has  reserved  500,000  shares of Class A common  stock for
issuance  pursuant to an incentive  stock  option plan.  Any shares which expire
unexercised or are forfeited become available again for issuance under the plan.
Under this plan, no awards of incentive stock options may be made after December
31, 2004.

         The Company  applied APB  Opinion  No. 25 in  accounting  for its stock
option plans; and,  accordingly,  no compensation expense has been recognized in
the consolidated financial statements.  Had the Company determined  compensation
based on the fair  value at the grant  date for its  outstanding  stock  options
under SFAS 123, the effect on Company's net earnings and net earnings per common
share  for 1998  and 1999  would  have  been  immaterial.  The  full  impact  of
calculating compensation cost for stock options under SFAS 123 is reflected over
the options' vesting period.

         A summary of stock option activity and weighted-average exercise prices
follows:

<TABLE>
<CAPTION>

                                                1997                         1998                           1999
                                      ------------------------    --------------------------    -----------------------------
                                                  Exercise                    Exercise                        Exercise
                                      Shares      price           Shares      price             Shares        price
                                      ----------- ------------    ----------- --------------    ------------  ---------------
<S>                                   <C>         <C>             <C>         <C>               <C>           <C>

Outstanding at beginning of year           88,000        $9.42        114,000          $9.25         149,000            $9.90

    Granted                                28,000         8.73         35,000          12.00           3,000             7.60

    Exercised                                   -            -              -              -               -                -

    Forfeited                              (2,000)        9.50              -              -               -                -

                                      ----------- ------------     ----------- -------------- -- ------------  ---------------
Outstanding at end of year                114,000        $9.25        149,000          $9.90         152,000            $9.85
                                      =========== ============     =========== ============== == ============  ===============
Options exercisable at end of year         48,700        $9.20         97,400          $9.21         106,800            $9.50
Weighted-average fair value of              $2.22                       $5.25                          $5.45
 options granted during the
 year
</TABLE>

At December 31, 1999, the  weighted-average  remaining  contractual  life of the
outstanding  options was 5.99 years and the exercise prices ranged from $7.23 to
$14.05 per share.

         The Company used the  Black-Scholes  option  pricing model to determine
the fair value of stock options for the years ended December 31, 1997, 1998, and
1999. The following assumptions were used in determining the fair value of these
options: weighted-average risk-free interest rate, 6.12% in 1997, 5.46% in 1998,
and 5.64% in 1999;  weighted-average  expected life, 5 years in 1997, 5 years in
1998 and 3 years in 1999; and weighted-average expected volatility, 21% in 1997,
41% in 1998, and 83% in 1999. There were no expected dividends.

         The  Company has  reserved  50,000  shares of Class A common  stock for
issuance  pursuant to an independent  contractor  driver bonus plan. The Company
awarded  3,211,  5,696 and 11,362 shares under the plan in 1997,  1998 and 1999,
respectively.


                                       32

<PAGE>



         The Company also has a Class A common stock profit incentive plan under
which the Company will set aside for delivery to certain participants the number
of shares of Class A common stock having a market value on the distribution date
equal to a designated  percentage  (as  determined by the board of directors) of
the Company's consolidated net earnings for the applicable fiscal year. In 1999,
the Company  awarded $59 to certain  employees  for which  common  stock will be
issued in 2000.  In 1998 and 1999 the Company  issued  6,079 and 7,838 shares of
Class A common stock, respectively, to participants in the plan.

         In 1996,  the Company  granted a common  stock bonus of 2,254 shares of
nonvested  Class A common  stock with a fair  value of $8.88 on the grant  date.
During 1997,  1998 and 1999,  563, 564 and 1,127  shares,  respectively,  became
vested and were issued by the Company.

Note 8:  Earnings per Share

         A summary of the basic and diluted  earnings per share  computations is
presented below:
<TABLE>
<CAPTION>


Years ended December 31                                                1997              1998               1999
                                                                 ----------------- ----------------- ------------------
<S>                                                              <C>               <C>               <C>

Net earnings available to common  stockholders                   $           5,673 $           5,329 $            3,926
                                                                 ----------------- ----------------- ------------------
Basic weighted-average shares outstanding                                5,000,860         5,012,450          5,030,959
Effect of dilutive stock options                                            18,011            24,069              1,394
Effect of dilutive stock awards                                                376               221                  -
                                                                 ----------------- ----------------- ------------------
Diluted weighted-average shares outstanding                              5,019,247         5,036,740          5,032,353
                                                                 ================= ================= ==================
Basic earnings per share                                         $            1.13 $            1.06 $             0.78
                                                                 ================= ================= ==================
Diluted earnings per share                                       $            1.13 $            1.06 $             0.78
                                                                 ================= ================= ==================

</TABLE>



Note 9:  Employees' Profit Sharing and Savings Plan

         The Company has an Employees' Profit Sharing and Savings Plan, which is
a  qualified  plan under the  provisions  of  Sections  401(a) and 501(a) of the
Internal  Revenue  Code.  Eligible  employees  are allowed to contribute up to a
maximum of 15 percent of pretax  compensation into the plan.  Employers may make
savings,   matching,  and  discretionary   contributions,   subject  to  certain
restrictions.  During the years ended December 31, 1997, 1998, and 1999, Company
contributions totaled $150, $152, and $330, respectively.  The plan owns 450,852
shares of the Company's Class A common stock at December 31, 1999.

Note 10:  Lease Commitments

         The Company has entered into various noncancelable operating leases for
transportation  equipment  and  buildings  which will  expire over the next four
years. Under the leases for transportation equipment, the Company is responsible
for all  repairs,  maintenance,  insurance,  and all other  operating  expenses.
Certain leases on transportation  equipment require the Company to guarantee the
residual  value at the maturity of the lease at amounts  varying from 10 percent
to 20 percent of the original equipment cost. The maximum  contingent  liability
under such leases is approximately $163 through 2001.

         Approximate future minimum lease payments under noncancelable operating
leases as of December 31, 1999,  totaled $197 and are payable as follows:  2000,
$169 and 2001, $28.

         Rent  charged to  expense  on the above  leases,  expired  leases,  and
short-term rentals was $1,740 in 1997; $974 in 1998; and $389 in 1999.

Note 11:  Commitments and Contingent Liabilities

         The  Company's  insurance  program  for  personal  liability,  physical
damage,   workers'   compensation,   and  cargo   losses  and  damage   involves
self-insurance  for losses up to $50 per claim,  $50 per claim,  $100 per claim,
and $50 per claim, respectively.  At December 31, 1998 and 1999, the Company had
approximately  $1,204  and  $2,540,  respectively,  accrued  for  its  estimated
liability for incurred losses related to these programs. Losses in excess of the
self-insured amount per claim are covered by insurance companies.

                                       33

<PAGE>


         The  insurance  companies  require  the  Company to provide  letters of
credit to provide funds for payment of the self-insured amounts. At December 31,
1998 and 1999, the Company had a $2,000 and $3,000 letter of credit issued under
the credit agreement  described in note 4. In addition,  funds totaling $201 and
$256 were held by the  insurance  companies as deposits at December 31, 1998 and
1999, respectively.

         The  Company's  health insurance  program is  provided  as  an employee
benefit for all eligible employees and contractors.  The plan is self funded for
losses up to $60 per covered member and has an aggregate excess loss cap of 125%
of expected claims. At December 31, 1998 and 1999, the Company had approximately
$325 and $730,  respectively,  accrued for its  estimated  liability  related to
these claims.

         The Company is also involved in certain  legal actions and  proceedings
arising  from  the  normal  course  of  operations.   Management  believes  that
liability, if any, arising from such legal actions and proceedings will not have
a material adverse effect on the financial position of the Company.

Note 12:  Transactions with Related Parties

         During the year ended  December  31,  1998,  the Company  paid $150 for
financial  advisory services to an investment  banking firm whose president is a
member of the board of directors of the Company.

Note 13:  Quarterly Financial Data (Unaudited)

         Summarized  quarterly  financial data for the Company for 1998 and 1999
is as follows:
<TABLE>
<CAPTION>



                                                 March 31           June 30          September 30         December 31
                                            -----------------  -----------------  ------------------  ------------------
<S>                                         <C>                <C>                <C>                 <C>

1998
Operating revenue                                $ 33,391            $ 40,835           $ 42,424             $ 44,725
Earnings from operations                            2,493               2,396              3,528                3,651
Net earnings                                        1,143               1,021              1,604                1,561
Basic and diluted earnings per share                 0.23                0.20               0.32                 0.31

1999
Operating revenue                                $ 47,295            $ 51,117           $ 50,043             $ 48,490
Earnings from operations                            3,150               3,883              1,959                1,471
Net earnings                                        1,304               1,722                610                  290
Basic and diluted earnings per share                 0.26                0.34               0.12                 0.06
</TABLE>

         As a result of rounding,  the total of the four  quarters may not equal
the Company's results for the year.


                                       34