<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2000


                          Commission File No. 000-24615

                               LANDAIR CORPORATION
             (Exact name of registrant as specified in its charter)

                 TENNESSEE                               62-1743549
      (State or other jurisdiction of       (I.R.S. Employer Identification No.)
      incorporation or organization)

            430 AIRPORT ROAD
         GREENEVILLE, TENNESSEE                             37745
(Address of principal executive offices)                  (Zip Code)

       Registrant's telephone number, including area code: (423) 636-7000

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

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

                          COMMON STOCK, $.01 PAR VALUE
                                (Title of class)

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

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

The aggregate market value of the voting stock held by non-affiliates of the
registrant as of February 28, 2001 was approximately $5.2 million based on the
closing price of such stock on such date of $4.875.

The number of shares outstanding of the registrant's common stock, $.01 par
value, as of February 28, 2001 was 4,819,955.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement for the 2001 Annual Meeting of
Shareholders are incorporated by reference into Part III of this report. Such
definitive proxy statement will be filed with the Securities and Exchange
Commission not later than 120 days subsequent to December 31, 2000.


<PAGE>   2



                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                          Page Number
                                                                          -----------
                                     Part I
<S>                                                                       <C>
Item 1.     Business                                                            3
Item 2.     Properties                                                          8
Item 3.     Legal Proceedings                                                   8
Item 4.     Submission of Matters to a Vote of Security Holders                 8
Executive Officers of the Registrant                                            9

                                     Part II

Item 5.     Market for Registrant's Common Stock and
            Related Shareholder Matters                                        11
Item 6.     Selected Financial Data                                            12
Item 7.     Management's Discussion and Analysis of Financial
            Condition and Results of Operations                                13
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk         19
Item 8.     Financial Statements and Supplementary Data                        20
Item 9.     Changes in and Disagreements with Accountants on                   20
            Accounting and Financial Disclosure

                                      Part III

Item 10.    Directors and Executive Officers of the Registrant                 21
Item 11.    Executive Compensation                                             21
Item 12.    Security Ownership of Certain Beneficial
            Owners and Management                                              21
Item 13.    Certain Relationships and Related Transactions                     21

                                      Part IV

Item 14.    Exhibits, Financial Statement Schedules and
            Reports on Form 8-K                                                22
Signatures                                                                     23
Index to Financial Statements and Financial Statement Schedule                 F-2
</TABLE>




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<PAGE>   3



                                     PART I

ITEM 1. BUSINESS

GENERAL

       Landair Corporation, through its operating subsidiaries (the "Company"),
is a truckload carrier that transports a wide range of commodities in both
intrastate and interstate commerce. The Company provides dry van common carrier
and dedicated contract carriage for shippers of a variety of products in the
medium- and short-haul markets. These products include, among others, paper
products, building products, textiles, retail and other consumer goods, air
freight, automotive parts and supplies, electronics and metal products. The
preponderance of the Company's business involves providing high-quality,
specialized services to service-sensitive shippers on both a dedicated and ad
hoc basis. To improve service to the differing requirements of customers at
numerous shipping locations, the Company has terminals where over-the-road
tractors are based and drivers are domiciled.

       The Company utilizes a satellite-linked, computerized operations system
to monitor and facilitate the movement of freight. The Company's operating
philosophy is founded on maintaining high levels of service at market
competitive prices in the most efficient manner possible.

       During 2000, the Company continued to focus its marketing efforts and
capital resources on dedicated contract carriage. Management believes the future
growth of the Company will be in the dedicated contract carriage area and less
in the common carrier area as a result of the commoditization of the truckload
sector.

       On July 9, 1998, the Board of Directors of Forward Air Corporation
("Forward Air") authorized the separation of Forward Air into two publicly-held
corporations, one owning and operating the deferred air freight operations and
the other owning and operating the truckload operations (the "Spin-off"). The
Spin-off was effected on September 23, 1998 through the distribution to
shareholders of Forward Air of all the outstanding $.01 par value common stock
of the Company (the "Common Stock"), a truckload holding company incorporated
June 10, 1998 in Tennessee. Pursuant to the Spin-off, the Common Stock was
distributed on a pro rata basis of one share for every one share of Forward Air
$.01 par value common stock held. Effective with the Spin-off, the Company is
the legal entity that owns and operates the truckload operations through its
operating subsidiaries.

OPERATIONS

       The Company currently conducts its common carrier operations from three
terminals and various dedicated customer facilities. Each terminal is the base
for certain over-the-road tractors and is the domicile of the drivers who
operate those tractors. These terminals have facilities and staff to provide
driver supervision, fueling and maintenance. The Company believes this network


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<PAGE>   4

of facilities enhances its ability to provide responsive service to its
customers in an efficient manner.

       Each customer's shipment is accorded exclusive use of a trailer, with
most shipments being transported directly from customer pick-up locations to
destinations without a change of drivers, relays or circuitous routing via
terminals. The Company operates a centralized customer service and operations
center in Greeneville, Tennessee. All facilities and drivers are linked to a
satellite communication and dispatch system which provides interactive updates
to its operations.

       The Company's operations consist principally of dedicated contract
carriage and common carriage:

       Dedicated Contract Carriage. The Company's dedicated fleet provides
dedicated equipment and personnel on a contractual basis to each of its
customers for that customer's exclusive use, frequently as a lower cost
alternative to private carriage. While providing shippers with a higher level of
service, the implementation of a dedicated fleet program frees for other uses
that portion of a shipper's capital that would have been invested in a private
fleet. This ability to redeploy capital allows shippers to better utilize
resources in furtherance of their primary businesses. The dedicated fleet's
service also includes certain on-site staffing requirements typically associated
with operating a private fleet.

       Common Carriage. The Company serves as a common carrier for a broad array
of customers with a variety of shipping needs. Common carriage primary traffic
consists of medium- and short-haul routes and is concentrated primarily in the
eastern two-thirds of the United States. Common carriage customers include
Fortune 500 companies who subscribe to a "core-carrier" strategy as well as
smaller companies with regional shipping needs. Services include just-in-time
delivery, satellite communications and electronic data interchange, as well as
tailored services required to meet specific customer needs such as dedicated
capacity, team operations and roller bed equipment used to serve its air cargo
industry customers.

       The primary focus of the Company's marketing strategy is to focus on the
growth and development of the dedicated contract business. Within the common
carriage operation, the Company continues to increase freight density within
defined market areas that are consistent with the Company's growth and profit
objectives by capitalizing on the trend of shippers to use a fewer number of
truckload carriers in pursuit of a "core carrier" partnership strategy and the
trend to outsource private fleet transportation requirements. The financial and
operating goal of the Company is to maximize profitability by achieving optimal
equipment utilization and yield, while meeting or exceeding customer service
requirements.

REVENUE EQUIPMENT

       The Company purchases high quality tractors to help attract and retain
drivers, promote safe operations and minimize maintenance and repair costs. When
purchasing new revenue equipment, the Company typically acquires standardized
tractors and trailers manufactured to the Company's


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<PAGE>   5

specifications. Standardization enables the Company to simplify driver training,
control the cost of spare parts inventory and enhance its preventive maintenance
program.

       The Company has purchased its tractors from Freightliner Corporation and
Volvo Trucks North America, Inc. and most of its trailers from Great Dane
Corporation and Hyundai Precision America. The majority of the tractors
purchased are equipped with Series 60 Detroit Diesel electronic engines which
have contributed significantly to increased fuel efficiency. Certain of the
Company's purchase and lease agreements include a guaranteed predetermined trade
value for tractors after three or four years.

       At December 31, 2000, the Company owned or leased 573 tractors and
contracted for 317 tractors from owner-operators. The average age of the
Company-owned tractor fleet was approximately 2.75 years at December 31, 2000.
At December 31, 2000, the Company owned 3,031 trailers, of which substantially
all are 53' long and 105 include specialized roller bed equipment required to
serve air cargo industry customers. By having a majority of the Company's
trailer fleet equipped with 53' trailers, the Company is able to provide its
customers with more economy and convenience and increased driver productivity.
The average age of the trailer fleet was approximately 5.82 years at December
31, 2000.

       The Company has installed Qualcomm two-way satellite communication
systems in the majority of its tractors. The Qualcomm system provides the
Company with continuous communications capability in the event a driver
experiences a service delay or disruption. The Qualcomm system also allows the
Company to track the exact location and route of any particular shipment and
communicate instantly with drivers to improve operating efficiencies.

EMPLOYEES

       As of December 31, 2000, the Company employed approximately 830 persons,
610 of whom were drivers.

       Drivers. The Company has established programs to increase driver loyalty
and to provide a greater stake in the Company to drivers. Drivers are
compensated on the basis of miles driven, and base pay for miles driven
increases with a driver's length of employment with the Company. The Company
maintains a 401(k) benefit plan and stock purchase plan for Company drivers and
other employees.

       Safety and Training. The Company conducts comprehensive training programs
to promote safety, customer relations, service standards, productivity and
positive attitudes. Driver training and safety programs are developed by the
Company's safety department. Drivers meet or exceed United States Department of
Transportation ("DOT") qualifications. Driver qualification files are updated at
least annually to maintain compliance with DOT regulations.

       The Company's safety department focuses on (i) recruiting and maintaining
qualified drivers; (ii) improving driver and management safety training; (iii)
implementing periodic reviews


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of driving records; (iv) creating incentive bonuses for drivers with good safety
records and (v) raising awareness of safety-related issues on a Company-wide
basis.

       In March 1998, the DOT initiated a safety audit of the Company, and in
May 1998, the Company was notified that it had retained its satisfactory rating.

OWNER-OPERATORS

       The Company intends to continue to expand its operations with
owner-operator equipment. The Company believes that the owner-operators with
whom it contracts are generally more experienced than the general driver
population and that they have a vested interest in protecting their own
equipment that motivates them to operate in a cautious manner. Typically, owner-
operators are responsible for paying all their operating expenses including
fuel, maintenance, equipment payments and all other equipment-related expenses.
Owner-operators are compensated by the Company on a rate per mile or percentage
of revenue basis. As of December 31, 2000, approximately 35% of the Company's
tractors in service were contracted to the Company by owner-operators.

INSURANCE AND CLAIMS

       Claims exposure in the transportation industry consists primarily of
cargo loss and damage, vehicle liability, property damage and workers'
compensation. The Company maintains a deductible for auto liability claims, for
physical damage claims and for cargo claims. The Company also is responsible for
a significant deductible for workers' compensation claims. The Company maintains
insurance with independent insurance carriers that provide certain coverage for
claims in excess of deductible amounts. Management believes that the Company's
insurance coverage is reasonable.

TRANSPORTATION REGULATIONS

       The interstate motor carrier operations of the Company are subject to
safety requirements prescribed by the DOT and other relevant federal and state
agencies. Such matters as weight and dimension of equipment are also subject to
federal and state regulations.

       The Company is subject to various federal, state and local environmental
laws and regulations. Management believes that the Company is in substantial
compliance with applicable regulatory requirements relating to its operations.
Failure of the Company to comply with the applicable regulations could result in
substantial fines or revocation of the Company's operating permits.


                                        6


<PAGE>   7

ENVIRONMENTAL REGULATIONS

       The Company has above-ground fuel storage tanks at its Indianapolis,
Indiana and Greeneville, Tennessee facilities and underground fuel storage tanks
at its Columbus, Ohio facility. Such storage tanks are subject to various
federal and state environmental laws and regulations. Management believes that
the Company is in substantial compliance with applicable environmental laws and
regulations. No material increase for expenditures for compliance with federal,
state and local environmental laws and regulations is anticipated in 2001.

COMPETITION AND INDUSTRY TRENDS

       The Company competes with regional, inter-regional, national truckload
carriers and private fleets, and, to a lesser extent, with less-than-truckload
carriers, railroads and overnight delivery companies. Many of the Company's
competitors have greater financial resources, more equipment or larger freight
capacity than the Company. Service and price are the principal means of
competition in the transportation industry.

       The Company's principal competitive strength is its ability to
consistently provide reliable service at a competitive price. Many of the
Company's customers are high volume, time-sensitive shippers which require a
flexible and dependable motor carrier service tailored to their specific needs,
including pick-up and delivery within specified delivery times.

SEASONALITY

       In the trucking industry, revenue and operating results generally reflect
a seasonal pattern as customers reduce shipments during and after the winter
holiday season and during the month of July because of plant closings.
Additionally, the volume of shipments is often affected by weather variations.
Historically, the Company's operating expenses also have been higher in the
winter months, primarily as a result of decreased fuel efficiency and increased
maintenance costs of revenue equipment in colder weather.

INFLATION

       Significant increases in fuel prices, to the extent not offset by
increases in rates, would have a material adverse effect on the profitability of
the Company. Historically, the Company has responded to periods of sharply
higher fuel prices by implementing fuel surcharge programs or base rate
increases, or both, to recover additional costs, but there can be no assurance
that the Company will be able to successfully implement such surcharges or
increases in response to increased fuel costs in the future.

MAJOR CUSTOMER

       The Company had three customers who accounted for 10% or more of revenue
in 2000. Federal Express Corporation, Sonoco Products Company and DuPont
accounted for approximately


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18%, 16% and 10%, respectively, of consolidated operating revenue for the year
ended December 31, 2000.

ITEM 2. PROPERTIES

        The Company's offices and terminals in Columbus, Ohio and terminal
facility in Greeneville, Tennessee are owned by the Company. The remaining
Company facilities are leased. The Company's headquarters are located in
Greeneville, Tennessee.

        In addition to operations at various customer locations, the Company
currently operates terminals at Columbus, Ohio, Greeneville, Tennessee and
Indianapolis, Indiana.

ITEM 3. LEGAL PROCEEDINGS

        The Company is, from time to time, a party to litigation arising in the
normal course of its business, most of which involve claims for personal injury
and property damage incurred in connection with the transportation of freight.
Management believes that none of these actions, individually or in the
aggregate, will have a material adverse effect on the financial condition or
results of operations of the Company.

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

        During the fourth quarter of the fiscal year ended December 31, 2000, no
matters were submitted to a vote of security holders through the solicitation of
proxies or otherwise.


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<PAGE>   9

                      EXECUTIVE OFFICERS OF THE REGISTRANT

        Pursuant to Instruction 3 to Item 401(b) of Regulation S-K and General
Instruction G(3) to Form 10-K, the following information is included in Part I
of this report.

        The following are the Company's executive officers:

<TABLE>
<CAPTION>
Name                                  Age                   Position
----                                  ---                   --------
<S>                                   <C>     <C>
Scott M. Niswonger (1).................53     Chairman of the Board and Chief Executive
                                              Officer
John A. Tweed..........................35     President and Chief Operating Officer
Andrew J. Mantey.......................38     Chief Financial Officer, Senior Vice President
                                              and Treasurer
Richard H. Roberts (1).................46     Senior Vice President, General Counsel and
                                              Secretary
</TABLE>

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

(1)  Also serves as an executive officer of Forward Air.

        There are no family relationships between any of the executive officers
of the Company. All officers hold office at the pleasure of the Board of
Directors.

        The following background material is provided for each executive officer
employed by the Company, including employment history for at least the last five
years.

        Scott M. Niswonger has served as Chairman of the Board and Chief
Executive Officer of the Company since July 1998. Mr. Niswonger has also served
as an executive officer and director of Forward Air since 1981 and serves on the
Regional Advisory Board of First Tennessee Bank National Association.

        John A. Tweed has served as President, Chief Operating Officer and
director of the Company since December 2000. Since February 1996, he has also
served as President of Warehouse Logistics LLC, a privately-held company jointly
owned with Mr. Niswonger. Mr. Tweed was Vice President, Sales, of Landair
Transport, Inc. ("Landair Transport") from April 1990 until February 1996. Mr.
Tweed was Manager of Special Projects and Assistant to the President of Landair
Transport from December 1985 until March 1990.

        Andrew J. Mantey has served as Chief Financial Officer, Senior Vice
President and Treasurer and as a director of the Company since June 2000. Prior
to joining the Company, Mr. Mantey was the Chief Financial Officer of May
Trucking Company from June 1994 to June 2000. From April 1990 to June 1994, Mr.
Mantey was Controller of Freymiller Trucking, Inc. Mr. Mantey was employed with
Ernst & Young LLP from July 1985 to April 1990. Mr. Mantey is a Certified Public
Accountant.



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<PAGE>   10



        Richard H. Roberts has served as Senior Vice President, General Counsel
and Secretary and as a director of the Company since July 1998. Since July 1994,
Mr. Roberts has served as an executive officer and a director of Forward Air.
Mr. Roberts was a partner with the Baker, Worthington, Crossley & Stansberry law
firm from January 1991 until July 1994. Mr. Roberts also serves as a director of
Miller Industries, Inc.

OTHER KEY EMPLOYEES

        Harry O. Crabtree has served as Vice President, Safety, of Landair
Transport since January 1998. Prior to joining Landair Transport, he served as
Vice President, Safety and Quality of Landstar Inway, Inc. from January 1997
until January 1998. Mr. Crabtree was Vice President, Risk Management, for
Landstar TLC, Inc. from March 1995 to January 1997, and was Director of Safety
for Landstar Poole, Inc. from March 1989 until March 1995. From June 1979 to
March 1989, Mr. Crabtree held various management positions at Landstar Poole,
Inc. advancing through the maintenance, operations, claims and safety
departments.

        Jeffrey S. Kleiber has served as Director of Claims of Landair Transport
since June 1996 and as Vice President, Safety and Risk Management, from January
1997 until March 1998, when he was appointed Vice President, Risk Management.
Prior to joining Landair Transport, he served as President of Mid Atlantic
Claims, Inc. in York, Pennsylvania, a third-party administration company which
primarily handled transportation losses and claims for Goodway Transport, Inc.,
where he also served as Vice President of Safety and Risk Management from
January 1992 until May 1996. From June 1978 until January 1992, Mr. Kleiber
served as Vice President of Safety at Shaffer Trucking, Inc. in New Kingstown,
Pennsylvania.

        Jeffrey W. Maddison has served as Vice President, Maintenance and
Purchasing, of Landair Transport since January 1996. He held the same position
with Forward Air from February 1996 until August 1998. Mr. Maddison served as
Executive Vice President for Erin Truckways, Ltd., d/b/a Digby Truck Lines from
January 1992, and was Vice President of Maintenance for Crete Carrier Corp.,
Shaffer Trucking, Inc., Sunflower Carriers, Inc. and HTL Truck Lines, Inc. from
September 1987 until December 1991.

        Greg R. Smith has served as Vice President of Dedicated Operations of
Landair Transport since July 1998. Mr. Smith was employed with Builders
Transport as Vice President of Sales, Dedicated Services, from January 1989
until joining Landair Transport. From April 1987 until August 1988, he served as
Vice President, Sales and Marketing, for Poole Truckline, Inc. Mr. Smith served
in various positions at Schneider National, Inc., the last being Area Vice
President, Sales and Marketing, from July 1980 until April 1987.


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<PAGE>   11



                                     PART II

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

        The Common Stock trades on The Nasdaq National Market tier of The Nasdaq
Stock Market(R) under the symbol "LAND." The following table sets forth the high
and low sale prices for the Common Stock as reported by The Nasdaq National
Market for the last two years ending December 31, 2000:

<TABLE>
<CAPTION>
                1999                                High               Low
                ----                                ----               ---
<S>                                                 <C>              <C>
        First Quarter...........................    $8.44            $4.75
        Second Quarter..........................    $5.88            $3.88
        Third Quarter...........................    $6.00            $3.13
        Fourth Quarter..........................    $6.25            $4.75

                2000                                High               Low
                ----                                ----               ---
        First Quarter...........................    $5.38            $4.00
        Second Quarter..........................    $5.63            $3.25
        Third Quarter...........................    $5.13            $4.00
        Fourth Quarter..........................    $4.56            $3.38
</TABLE>

        There were approximately 870 shareholders of record (including brokerage
firms and other nominees) of the Common Stock as of December 31, 2000.

        The Company has not paid cash dividends on the Common Stock and it is
the current intention of management to retain earnings to finance the growth of
the Company's business. Future payment of dividends will depend upon the
financial condition, results of operations, contractual restrictions and capital
requirements of the Company, as well as other factors deemed relevant by the
Board of Directors.


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<PAGE>   12



ITEM 6. SELECTED FINANCIAL DATA

        The following table sets forth selected financial data of the Company.
The selected financial data should be read in conjunction with the Company's
financial statements and notes thereto, included elsewhere in this report.

<TABLE>
<CAPTION>
                                                                 Year ended December 31
                                             -----------------------------------------------------------
                                                2000          1999         1998       1997        1996
                                             ---------     ---------     --------    -------    --------
                                                         (In thousands, except per share data)
<S>                                          <C>           <C>           <C>         <C>        <C>
STATEMENTS OF INCOME DATA:
Operating revenue                            $ 127,487     $ 131,855     $110,353    $91,398    $ 82,242
Income (loss) from operations                   (8,846)         (236)       6,453      3,739         825
Operating ratio (1)                              106.9%        100.2%        94.2%      95.9%       99.0%
Net income (loss)                               (6,970)       (1,830)       3,075      1,150        (905)
Income (loss) per share - basic (2)              (1.29)        (0.30)        0.49       0.18       (0.14)
Income (loss) per share - diluted (2), (3)       (1.29)        (0.30)        0.49       0.18       (0.14)

Cash dividends declared per
   common share                                     --            --           --         --          --

BALANCE SHEET DATA (AT END OF PERIOD):
Total assets                                 $  81,327     $ 111,369     $ 92,429    $97,208    $ 89,292
Long-term obligations, net of
    current portion                             20,223        32,970       18,058     14,151      19,771
Shareholders' equity                            30,326        42,168       45,253     39,558      38,408
</TABLE>

(1)  Operating expenses as a percentage of operating revenue.

(2)  Income (loss) per share is presented on a pro forma basis for the 1996
     through 1998 years to reflect the 6.3 million share issuance of Common
     Stock as a result of the Spin-off of the Company in September 1998, as if
     the Spin-off had occurred on January 1, 1996.

(3)  Diluted loss per share amounts for 2000, 1999 and 1996 have been calculated
     using the same denominator as used in the basic loss per share calculation
     as the inclusion of dilutive securities in the denominator would have an
     anti-dilutive effect.


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<PAGE>   13



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

        The financial information presented in this annual report on Form 10-K
includes the assets and liabilities and results of operations directly related
to the truckload operations of Forward Air for the period presented prior to the
Spin-off on September 23, 1998, and of the Company subsequent to the Spin-off.
(See Note 1 of Notes to Consolidated Financial Statements.) Significant changes
could have occurred in the funding and operations of the Company had it been
operated as an independent stand-alone entity during the periods prior to the
Spin-off, which could have had a significant impact on its financial position
and results of operations. As a result, the financial information included in
these financial statements for periods through September 23, 1998 is not
necessarily indicative of the financial position and results of operations of
the Company which might have occurred had it been an independent stand-alone
entity during those periods.

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

<TABLE>
<CAPTION>
                                                Year Ended December 31
                                             ----------------------------
                                              2000       1999       1998
                                             ------     ------     ------
<S>                                           <C>        <C>        <C>
Operating revenue                             100.0%     100.0%     100.0%

Operating expenses:
     Salaries, wages and employee benefits     32.4       34.4       34.2
     Purchased transportation                  28.8       26.8       24.6
     Fuel and fuel taxes                        9.8       11.1       11.0
     Depreciation and amortization             11.7       11.6       10.1
     Insurance and claims                       4.2        4.7        4.5
     Operating leases                           1.6        1.3        1.0
     Impairment of long-lived assets            7.8         --         --
     Restructuring costs                        0.1         --         --
     Other operating expenses                  10.4       10.3        8.8
                                             ------     ------     ------
Total operating expenses                      106.9      100.2       94.2
                                             ------     ------     ------
Income (loss) from operations                  (6.9)      (0.2)       5.8
Interest expense                               (2.1)      (2.2)      (1.4)
Other income, net                               0.6        0.3        0.1
                                             ------     ------     ------
Income (loss) before income taxes              (8.5)      (2.1)       4.5
Income taxes (benefit)                         (3.0)      (0.7)       1.7
Net income (loss)                              (5.5)%     (1.4)%      2.8%
                                             ======     ======     ======
</TABLE>

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

        Operating revenue decreased by $4.4 million, or 3.3%, to $127.5 million
for 2000 from $131.9 million in 1999. The decrease in operating revenue resulted
primarily from a 9.0% reduction in the average tractors in service in 2000
compared to 1999. Average tractors in service were 985 during 2000 and 1,082 in
1999.

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<PAGE>   14



        The sources of the Company's operating revenue within the Company's one
reportable segment were as follows:

<TABLE>
<CAPTION>
                               Year Ended December 31
                              ------------------------
                                 2000           1999
                              ---------      ---------
                                 (In thousands)
<S>                           <C>            <C>
Truckload fleet               $  80,972      $  98,783
Dedicated fleet                  46,706         33,377
Intrasegment eliminations          (191)          (305)
                              ---------      ---------
Total operating revenue       $ 127,487      $ 131,855
                              =========      =========
</TABLE>

        The operating ratio for 2000 was 106.9% compared to 100.2% for 1999. The
increase in the operating ratio was primarily a result of the charges relating
to impairment of long-lived assets and other restructuring costs of $10.0
million in the fourth quarter of 2000. The Company recorded an impairment charge
of $6.6 million to write down equipment which the Company plans to dispose of in
2001 to its estimated realizable value, net of costs to sell. In the fourth
quarter of 2000, the Company recorded an additional $3.3 million charge related
to impairment of the goodwill associated with the acquisition of Laker Express,
Inc. ("Laker") in 1999. The impairment was based upon the determination that the
core business from Laker no longer existed. An additional $112,000 was recorded
as restructuring costs incurred in connection with the closure of four terminal
facilities and the termination of certain employees.

        Salaries, wages and employee benefits were 32.4% of operating revenue in
2000 compared to 34.4% in 1999. The decrease in salaries, wages and employee
benefits as a percentage of operating revenue was due primarily to a decrease in
the ratio of Company-operated tractors to owner-operator tractors between
periods. The average number of Company-operated tractors in service was 637 in
2000 and 746 in 1999.

        Purchased transportation was 28.8% of operating revenue in 2000 compared
to 26.8% in 1999. The increase in purchased transportation as a percentage of
operating revenue was primarily attributable to a higher ratio of owner-operator
to Company equipment during 2000 as compared to 1999. During 2000 and 1999,
approximately 35.3% and 30.9%, respectively, of average tractors in service were
contracted through owner-operators.

        Fuel and fuel taxes were 9.8% of operating revenue in 2000 compared to
11.1% in 1999. The decrease in fuel and fuel taxes as a percentage of operating
revenue during 2000 resulted from a decrease in the ratio of Company drivers to
owner-operators. The average percentage of owner- operators in the fleet
averaged 35.3% in 2000 and 30.9% in 1999.

        Depreciation and amortization expense as a percentage of operating
revenue was 11.7% in 2000 compared to 11.6% in 1999.

        Insurance and claims were 4.2% of operating revenue in 2000 compared to
4.7% in 1999. The decrease in insurance and claims expense during 2000 as
compared to 1999 resulted from a


                                       14


<PAGE>   15



decrease in the frequency and severity of accidents between years and by
improvements in claims development trends, which were partially offset by higher
premium costs.

        Operating leases were 1.6% of operating revenue in 2000 compared to 1.3%
in 1999. The increase in operating leases as a percentage of operating revenue
was attributable to an increase in the number of Company tractors accounted for
as operating leases between periods.

        Other operating expenses, a large component of which relates to
equipment maintenance, were 10.4% of operating revenue in 2000 compared to 10.3%
in 1999.

        Interest expense was $2.7 million, or 2.1% of operating revenue, in 2000
compared to $2.9 million, or 2.2%, in 1999. The decrease was a result of lower
average net borrowings during 2000 primarily resulting from the Company's
commitment to pay down long-term debt. The lower average net borrowings during
the year were partially offset by higher interest rates.

        The combined federal and state effective tax benefit for 2000 was 35.4%
compared to an effective tax benefit of 34.2% for 1999. For information
concerning income taxes, as well as information regarding differences between
effective tax rates and statutory rates, see Note 7 of the Notes to Consolidated
Financial Statements.

        As a result of the foregoing factors, net income decreased by $5.1
million resulting in a loss of $7.0 million for 2000 compared to a net loss of
$1.8 million in 1999.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

        Operating revenue increased by $21.5 million, or 19.5%, to $131.9
million for 1999 from $110.4 million in 1998. The increase in operating revenue
resulted primarily from additional tractors in service during 1999 . Average
tractors in service were 1,082 during 1999 and 835 in 1998.

        The sources of the Company's operating revenue within the Company's one
reportable segment were as follows:

<TABLE>
<CAPTION>
                               Year Ended December 31
                              ------------------------
                                 1999           1998
                              ---------      ---------
                                  (In thousands)
<S>                           <C>            <C>
Truckload fleet               $  98,783      $  92,948
Dedicated fleet                  33,377         18,508
Intrasegment eliminations          (305)        (1,103)
                              ---------      ---------
Total operating revenue       $ 131,855      $ 110,353
                              =========      =========
</TABLE>

        The operating ratio for 1999 was 100.2% compared to 94.2% for 1998. The
increase in the operating ratio in 1999 was due primarily to a higher operating
cost structure resulting from a decrease in equipment utilization between
periods and other factors as discussed below. The decrease in equipment
utilization was attributable to our truckload fleet's operating performance.


                                       15


<PAGE>   16



The truckload fleet's equipment utilization was negatively impacted by the Laker
asset acquisition in January 1999 and integration of the assets into the
Company's operations. The unfavorable increase in the operating ratio was also
attributable to higher than expected driver turnover, which was further
compounded by a tight supply of qualified drivers. As a result of the
unfavorable results attributed to the Company's expansion efforts, management
plans to restrict capital investment in our truckload fleet until we return
equipment utilization and operating profitability to acceptable levels. During
the third quarter, the Company commenced operation of a four-year $60 million
revenue dedicated fleet contract. This dedicated contract enabled us to shift
under-utilized revenue equipment from our truckload division. Start-up costs,
which were expensed during the quarter, were incurred in connection with this
new dedicated fleet contract. Such costs totaled an estimated $500,000 on a
pre-tax basis, or $.05 per share.

        Salaries, wages and employee benefits were 34.4% of operating revenue in
1999 compared to 34.2% in 1998. The increase in salaries, wages and employee
benefits as a percentage of operating revenue was due primarily to a decrease in
the equipment utilization, which was partially offset by a decrease in the ratio
of Company-operated tractors to owner-operator tractors between periods. The
average number of Company-operated tractors in service was 746 in 1999 and 589
in 1998.

        Purchased transportation was 26.8% of operating revenue in 1999 compared
to 24.6% in 1998. The increase in purchased transportation as a percentage of
operating revenue was primarily attributable to a higher ratio of owner-operator
to Company equipment during 1999 as compared to 1998. During 1999 and 1998,
approximately 336 and 246, respectively, of Truckload's average tractors in
service were contracted through owner-operators.

        Fuel and fuel taxes were 11.1% of operating revenue in 1999 compared to
11.0% in 1998. The increase in fuel and fuel taxes as a percentage of operating
revenue during 1999 resulted from a 2.7% increase in the average fuel price per
gallon. The increase in fuel prices was partially offset by a decrease in the
ratio of Company drivers to owner-operators.

        Depreciation and amortization expense as a percentage of operating
revenue was 11.6% in 1999 compared to 10.1% in 1998. The increase in
depreciation and amortization as a percentage of operating revenue was
attributable to a decrease in equipment utilization coupled with the
amortization of identified intangible assets and goodwill associated with the
Laker acquisition which totaled $395,000, or 0.3% of revenue, during 1999 and
higher unit tractor depreciation as the Company decreased the average age of its
fleet during 1999. These factors were partially offset by a decrease in the
ratio of Company-operated tractors to owner-operator tractors during 1999
compared to the prior year.

        Insurance and claims were 4.7% of operating revenue in 1999 compared to
4.5% in 1998. The increase in insurance and claims expense during 1999 as
compared to 1998 resulted from an increase in the frequency and severity of
accidents between years partially offset by improvements in claims development
trends and premium costs.


                                       16


<PAGE>   17



        Operating leases were 1.3% of operating revenue in 1999 compared to 1.0%
in 1998. The increase in operating leases as a percentage of operating revenue
was attributable to an increase in rent for revenue equipment between periods.

        Other operating expenses, a large component of which relates to
equipment maintenance, were 10.3% of operating revenue in 1999 compared to 8.8%
in 1998. The increase in other operating expenses as a percentage of operating
revenue was attributed to a decrease in equipment utilization between periods
coupled with an increase in commissions paid to sales agents.

        Interest expense was $2.9 million, or 2.2% of operating revenue, in 1999
compared to $1.6 million, or 1.4%, in 1998. The increase was a result of higher
average net borrowings during 1999 primarily resulting from the replacement of
Company revenue equipment throughout the year and the acquisition of assets from
Laker in January 1999.

        The combined federal and state effective tax benefit for 1999 was 34.2%
compared to a tax rate of 38.2% for 1998. For information concerning income
taxes, as well as information regarding differences between effective tax rates
and statutory rates, see Note 7 of the Notes to Consolidated Financial
Statements.

        As a result of the foregoing factors, net income decreased by $4.9
million resulting in a loss of $1.8 million for 1999 compared to income of $3.1
million in 1998.

Liquidity and Capital Resources

        The Company has historically financed revenue equipment purchases with
cash flows from operations, through borrowing under credit agreements with
financial institutions and through manufacturer financing. During 2000, working
capital needs were met with cash flows from operations. Net cash provided by
operating activities of the Company totaled approximately $17.4 million, $10.4
million and $20.0 million in 2000, 1999 and 1998, respectively.

        Net cash provided by investing activities was approximately $1.5 million
in 2000 and resulted from a significant decrease in new equipment purchases
combined with the sale of old equipment, both of which occurred in an effort to
reduce the size of the fleet and thereby improve utilization. Net cash used in
investing activities was approximately $32.1 million in 1999 and $21.2 million
in 1998. Investing expenditures consisted primarily of the acquisition of
revenue equipment and enhanced management information systems during 2000, 1999
and 1998, the acquisition of assets from Laker and the purchase of a terminal
facility during 1999.

        Net cash used in financing activities was $18.9 million in 2000. The
2000 financing activities included the repayment of approximately $17.9 million
of the Company's long-term debt, offset by borrowings of $3.9 million, and the
repurchase of approximately $4.9 million of the Company's Common Stock.

        Net cash provided by financing activities was $20.0 million in 1999. Net
cash used in financing activities was $2.3 million in 1998. These financing
activities included the continued


                                       17


<PAGE>   18



financing of revenue equipment coupled with repayment of long-term debt and
capital leases. In addition, 1998 included a $5.0 million capital contribution
by Forward Air prior to the Spin-off and 1999 included the financing related to
the acquisition of assets from Laker, the $1.3 million repurchase of Common
Stock of the Company and $64,000 in proceeds from the exercise of stock options
and Common Stock issued under an employee stock purchase plan.

        The Company does not expect to make significant capital expenditures in
2001. The Company expects to finance its normal operating requirements through
available borrowing capacity under existing lines of credit and cash generated
by operations. In the future, the Company will continue to have significant
capital requirements, which may require the Company to seek additional
borrowings or to access capital markets. The availability of debt financing or
equity capital will depend upon the Company's financial condition and results of
operations as well as prevailing market conditions and other factors over which
the Company has little or no control.

        The Company's credit facilities include a working capital line of credit
and two equipment financing facilities. Subject to maintenance of financial
covenants and ratios, these credit facilities permit the Company to borrow up to
$15.0 million under the working capital line of credit and $25.0 million under
the equipment financing facilities. Interest rates for advances under the
facilities vary based on covenants related to total indebtedness, cash flows,
results of operations and other ratios. The facilities bear interest at LIBOR
plus 0.75% to 2.00% and are secured by accounts receivable and certain revenue
equipment. The Company's working capital line of credit expires in May 2002.
Availability under the line of credit is reduced by the amount of outstanding
letters of credit. Among other restrictions, the terms of the line of credit
require maintenance of certain levels of net worth and other financial ratios.
As of December 31, 2000, the Company had $4.3 million of borrowings and
approximately $4.2 million of letters of credit outstanding under the working
capital line of credit facility and $12.9 million of borrowings outstanding
under the equipment financing facilities. As of December 31, 2000, the Company
had $6.5 million and $4.1 million of available additional borrowing capacity
under the working capital line of credit and the equipment financing facilities,
respectively. Management plans to restrict capital investment until equipment
utilization and operating profitability are returned to acceptable levels.

        With respect to its credit facilities, the Company is required to be in
compliance with certain covenants on a quarterly and annual basis, which include
debt to worth ratio, cash flow coverage ratio, net worth, and a limit on capital
expenditures and acquisitions during the year. Principally as a result of the
$10.0 million in non-recurring impairment and restructuring charges in the
fourth quarter of 2000, the Company failed to meet certain of its debt covenants
at December 31, 2000. In March 2001, waivers and amendments to the credit
facilities (amending the covenants) were obtained from the Company's lending
institutions which cure the events of default under the credit facilities as of
and for the year ended December 31, 2000. The Company has considered the
likelihood of violating existing or revised covenants at measurement dates
within 2001, and has concluded that a violation of a debt covenant during 2001
is not probable. Accordingly, the Company's debt at December 31, 2000 is
long-term, other than borrowings of $8.5 million which are due in 2001.


                                       18


<PAGE>   19



Impact of Recent Accounting Pronouncements

        In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133,
as amended, is required to be adopted by the Company in 2001. Management does
not anticipate that the adoption of the Statement will have a significant effect
on the financial position or results of operations of the Company.

Forward-Looking Statements

        The Company, or its officers and directors on behalf of 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 (the "Commission"), in press releases and in reports to
shareholders. Oral forward-looking statements may be made by the Company's
officers and directors on behalf of the Company to the press, potential
investors, securities analysts and others. 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.
Without limitation, factors that might cause such a difference include economic
factors such as recessions, inflation, higher interest rates, downturns in
customer business cycles, competition, surplus inventories, loss of a major
customer, fuel price increases, the ability of the Company's information systems
to handle increased volume of freight, and the availability and compensation of
qualified drivers and independent owner-operators. The Company disclaims any
intent or obligation to update these forward-looking statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        The Company is exposed to market risk from changes in interest rates and
commodity prices. To reduce such risks, the Company selectively uses forward
purchase contracts for fuel. All such forward purchase transactions are
authorized and executed pursuant to clearly defined procedures.

Interest Rates

        At December 31, 2000 and 1999, the fair value of the Company's total
variable rate debt was estimated to be approximately $17.2 million and $28.5
million, respectively, which approximated carrying value based on the Company's
current incremental borrowing rates for similar types of borrowing arrangements.
At this borrowing level, a hypothetical 10% adverse change in interest rates on
the debt would increase interest expense and decrease income before income taxes
by approximately $133,000 and $227,000 in 2000 and 1999, respectively. This
amount was determined by considering the impact of the hypothetical interest
rate increase on the Company's borrowing cost at the December 31, 2000 and 1999
borrowing levels.


                                       19


<PAGE>   20



        At December 31, 2000, the fair value of the Company's total fixed rate
debt was approximately $11.5 million, based on the Company's current incremental
borrowing rates for similar types of borrowing arrangements, which approximated
carrying value. Using a yield to maturity analysis and assuming a change in
interest rates of 10% (from December 31, 2000), the potential increase or
decrease in fair value of total fixed rate debt would be approximately $130,000.

Commodities

        The availability and price of fuel are subject to fluctuations due to
factors such as seasonality, weather, government programs and policies, and
changes in global production. To reduce price sensitivity caused by market
fluctuations, the Company from time to time will enter into forward purchase
contracts. At December 31, 2000 and 1999, the Company had commitments to
purchase approximately $1.1 million and $133,000 of fuel, respectively,
representing approximately 7.0% and 1.0% of its respective 2001 and 2000
estimated fuel requirements.

        The above market risk discussion and the estimated amounts presented are
forward-looking statements of market risk based on the assumed occurrence of
certain adverse market conditions. Actual results in the future may differ
materially from those projected due to actual developments in the market.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        The response to this item is submitted as a separate section of this
report.

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

        None.




                                       20


<PAGE>   21



                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        The information required by this item with respect to directors of the
Company is incorporated herein by reference to the Company's definitive proxy
statement for its 2001 Annual Meeting of Shareholders (the "2001 Proxy
Statement"). The 2001 Proxy Statement will be filed with the Commission not
later than 120 days subsequent to December 31, 2000.

        Pursuant to Item 401(b) of Regulation S-K, the information required by
this item with respect to executive officers of the Company is set forth in Part
I of this report.

ITEM 11. EXECUTIVE COMPENSATION

        The information required by this item is incorporated herein by
reference to the 2001 Proxy Statement, which will be filed with the Commission
not later than 120 days subsequent to December 31, 2000.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The information required by this item is incorporated herein by
reference to the 2001 Proxy Statement, which will be filed with the Commission
not later than 120 days subsequent to December 31, 2000.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        The information required by this item is incorporated herein by
reference to the 2001 Proxy Statement, which will be filed with the Commission
not later than 120 days subsequent to December 31, 2000.



                                       21


<PAGE>   22



                                     PART IV

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

        (a)(1) and (2)   List of Financial Statements and Financial Statement
                         Schedules.

                         The response to this portion of Item 14 is submitted as
                         a separate section of this report.

        (a)(3)           List of Exhibits.

                         The response to this portion of Item 14 is submitted as
                         a separate section of this report.

        (b)              Reports on Form 8-K.

                         There were no reports on Form 8-K filed during the
                         fourth quarter of 2000.

        (c)              Exhibits.

                         The response to this portion of Item 14 is submitted as
                         a separate section of this report.

        (d)              Financial Statement Schedules.

                         The response to this portion of Item 14 is submitted as
                         a separate section of this report.



                                       22


<PAGE>   23



                                   SIGNATURES

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


                                    LANDAIR CORPORATION



                                    By: /s/ Scott M. Niswonger
                                        ----------------------------------------
                                        Scott M. Niswonger, Chairman
                                        and Chief Executive Officer

                                    Date:  March 30, 2001

        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.

<TABLE>
<CAPTION>
           NAME                                    CAPACITY                              DATE

<S>                                       <C>                                    <C>
  /s/ Scott M. Niswonger                  Chairman and                           March 30, 2001
------------------------------------      Chief Executive Officer
    Scott M. Niswonger                    (Principal Executive Officer)


  /s/ John A. Tweed                       President, Chief                       March 30, 2001
------------------------------------      Operating Officer
    John A. Tweed                         and Director


  /s/ Andrew J. Mantey                    Chief Financial Officer,               March 30, 2001
------------------------------------      Senior Vice President and Treasurer
    Andrew J. Mantey                      (Principal Financial
                                          and Accounting Officer)


  /s/ Richard H. Roberts                  Senior Vice President, General         March 30, 2001
------------------------------------      Counsel, Secretary and Director
    Richard H. Roberts


 /s/ Jerry T. Armstrong                   Director                               March 30, 2001
------------------------------------
    Jerry T. Armstrong


 /s/ Duane H. Cassidy                     Director                               March 30, 2001
------------------------------------
    Gen. Duane H. Cassidy


 /s/ C. John Langley, Jr.                 Director                               March 30, 2001
------------------------------------
    C. John Langley, Jr.
</TABLE>



                                       23


<PAGE>   24




                           Annual Report on Form 10-K

                   Item 8, Item 14(a)(1) and (2), (c) and (d)

          List of Financial Statements and Financial Statement Schedule

                   Financial Statements and Supplementary Data

                                Certain Exhibits

                          Financial Statement Schedule

                          Year Ended December 31, 2000

                               Landair Corporation

                             Greeneville, Tennessee



<PAGE>   25



                               Landair Corporation

                  Form 10-K -- Item 8 and Item 14(a)(1) and (2)

         Index to Financial Statements and Financial Statement Schedule


The following consolidated financial statements of Landair Corporation are
included as a separate section of this report:

<TABLE>
<CAPTION>
                                                                                        Page No.
                                                                                        --------
<S>                                                                                     <C>
Report of Ernst & Young LLP, Independent Auditors..........................................F-3
Consolidated Balance Sheets - December 31, 2000 and 1999...................................F-4
Consolidated Statements of Operations - Years Ended December 31, 2000,
   1999 and 1998...........................................................................F-6
Consolidated Statements of Shareholders' Equity - Years Ended
   December 31, 2000, 1999 and 1998........................................................F-7
Consolidated Statements of Cash Flows - Years Ended December 31, 2000,
   1999 and 1998...........................................................................F-8
Notes to Consolidated Financial Statements - December 31, 2000.............................F-9
</TABLE>

The following financial statement schedule of Landair Corporation is included as
a separate section of this report.

<TABLE>
<S>                                                                                     <C>
Schedule II - Valuation and Qualifying Accounts............................................S-1
</TABLE>


All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and, therefore, have been omitted.




                                       F-2

<PAGE>   26




                         Report of Independent Auditors

The Board of Directors and Shareholders
Landair Corporation

We have audited the accompanying consolidated balance sheets of Landair
Corporation as of December 31, 2000 and 1999, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 2000. Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Landair
Corporation at December 31, 2000 and 1999, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.

                                                  Ernst & Young LLP

Nashville, Tennessee
February 7, 2001, except for the fourth
paragraph of Note 5, as to which the
date is March 30, 2001


                                       F-3

<PAGE>   27



                              Landair Corporation

                          Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                December 31
                                                            2000          1999
                                                          ------------------------
                                                             (In thousands)
<S>                                                       <C>          <C>
ASSETS
Current assets:
    Cash and cash equivalents                             $       9      $       9
    Accounts receivable, less allowances of $1,267 in
       2000 and $615 in 1999                                 12,923         16,329
    Inventories                                                 817            654
    Prepaid expenses                                            753          1,642
    Income taxes receivable                                     442            466
    Deferred income taxes                                     1,942          1,873
    Net assets held for sale                                  1,733             --
                                                          ------------------------
Total current assets                                         18,619         20,973

Property and equipment:
    Land                                                      1,094          1,094
    Buildings                                                 4,693          4,691
    Revenue equipment                                        74,040        101,886
    Other equipment                                           7,494          7,794
    Leasehold improvements                                    1,234          1,508
                                                          ------------------------
                                                             88,555        116,973

    Accumulated depreciation and amortization                29,783         30,825
                                                          ------------------------
                                                             58,772         86,148
Goodwill and other intangibles, net                              --          3,697
Net assets held for sale                                      3,535             --
Other assets                                                    401            551
                                                          ------------------------
Total assets                                              $  81,327      $ 111,369
                                                          ========================
</TABLE>










                                       F-4

<PAGE>   28

<TABLE>
<CAPTION>
                                                                December 31
                                                            2000          1999
                                                          ------------------------
                                                             (In thousands)
<S>                                                       <C>          <C>

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                      $   3,072      $   4,046
    Accrued payroll and related items                         1,319          1,227
    Insurance and claims accruals                             4,297          4,880
    Other accrued expenses                                    3,341          3,088
    Current portion of long-term debt                         8,495          9,732
                                                          ------------------------
Total current liabilities                                    20,524         22,973

Long-term debt, less current portion                         20,223         32,970
Deferred income taxes                                        10,254         13,258

Commitments and contingencies                                    --             --

Shareholders' equity:
   Preferred stock, $.01 par value:
      Authorized shares - 5,000,000
      No shares issued                                           --             --
   Common stock, $.01 par value:
      Authorized shares - 45,000,000
      Issued and outstanding shares - 4,886,136
        in 2000 and 6,042,148 in 1999                            49             60
   Additional paid-in capital                                38,078         42,939
   Accumulated deficit                                       (7,801)          (831)
                                                          ------------------------
Total shareholders' equity                                   30,326         42,168
                                                          ------------------------
Total liabilities and shareholders' equity                $  81,327      $ 111,369
                                                          ========================
</TABLE>

See accompanying notes.


                                       F-5

<PAGE>   29



                               Landair Corporation

                      Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                           Year ended December 31
                                                     2000           1999           1998
                                                  ---------------------------------------
                                                   (In thousands, except per share data)
<S>                                               <C>            <C>            <C>
Operating revenue:
    Trade                                         $ 125,313      $ 128,579      $ 105,922
    Forward Air                                       2,174          3,276          4,431
                                                  ---------------------------------------
                                                    127,487        131,855        110,353

Operating expenses:
    Salaries, wages and employee benefits            41,311         45,353         37,681
    Purchased transportation                         36,778         35,354         27,101
    Fuel and fuel taxes                              12,501         14,587         12,193
    Depreciation and amortization                    14,939         15,257         11,091
    Insurance and claims                              5,412          6,145          4,999
    Operating leases                                  2,056          1,774          1,076
    Impairment of long-lived assets                   9,906             --             --
    Restructuring costs                                 112             --             --
    Other operating expenses                         13,318         13,621          9,759
                                                  ---------------------------------------
                                                    136,333        132,091        103,900
                                                  ---------------------------------------
Income (loss) from operations                        (8,846)          (236)         6,453

Other income (expense):
    Interest expense                                 (2,720)        (2,918)        (1,600)
    Other, net                                          780            373            121
                                                  ---------------------------------------
                                                     (1,940)        (2,545)        (1,479)
                                                  ---------------------------------------
Income (loss) before income taxes                   (10,786)        (2,781)         4,974
Income taxes (benefit)                               (3,816)          (951)         1,899
                                                  ---------------------------------------
Net income (loss)                                 $  (6,970)     $  (1,830)     $   3,075
                                                  =======================================

Income (loss) per share (pro forma for 1998):
    Basic                                         $   (1.29)     $    (.30)     $     .49
    Diluted                                       $   (1.29)     $    (.30)     $     .49
</TABLE>

See accompanying notes.



                                       F-6

<PAGE>   30

                               Landair Corporation

                 Consolidated Statements of Shareholders' Equity

<TABLE>
<CAPTION>
                                                                                   Retained
                                           Common Stock            Additional      Earnings                        Total
                                        --------------------        Paid-in     (Accumulated   Shareholder's   Shareholders'
                                          Shares      Amount        Capital        Deficit)      Investment        Equity
                                        -----------------------------------------------------------------------------------
                                                                     (In thousands)
                                        -----------------------------------------------------------------------------------
<S>                                     <C>          <C>            <C>          <C>            <C>             <C>
Balance at December 31, 1997                  --        $ --        $     --        $    --        $ 39,558        $ 39,558
     Net income for 1998                      --          --              --            999           2,076           3,075
     Contribution of capital by
         Forward Air                          --          --              --             --           5,000           5,000
     Contribution of assets to
        Forward Air                           --          --              --             --          (2,380)         (2,380)
     Spin-off of Landair
        Corporation                        6,293          63          44,191             --         (44,254)             --
                                        -----------------------------------------------------------------------------------
Balance at December 31, 1998               6,293          63          44,191            999              --          45,253
     Net loss for 1999                        --          --              --         (1,830)             --          (1,830)
     Exercise of stock options                 3          --              12             --              --              12
     Common stock issued under
       employee stock purchase plan           15          --              52             --              --              52
     Common stock repurchased               (269)         (3)         (1,316)            --              --          (1,319)
                                        -----------------------------------------------------------------------------------
Balance at December 31, 1999               6,042          60          42,939           (831)             --          42,168
     Net loss for 2000                        --          --              --         (6,970)             --          (6,970)
     Common stock issued under
       employee stock purchase plan           18          --              57             --              --              57
     Common stock repurchased             (1,174)        (11)         (4,918)            --              --          (4,929)
                                        -----------------------------------------------------------------------------------
Balance at December 31, 2000               4,886        $ 49        $ 38,078        $(7,801)       $     --        $ 30,326
                                        ===================================================================================
</TABLE>

See accompanying notes



                                      F-7

<PAGE>   31



                               Landair Corporation

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                            Year ended December 31
                                                          2000        1999       1998
                                                        --------------------------------
                                                                 (In thousands)
<S>                                                     <C>         <C>         <C>
OPERATING ACTIVITIES
Net income (loss)                                       $ (6,970)   $ (1,830)   $  3,075
Adjustments to reconcile net income (loss) to
     net cash provided by operating activities:
         Depreciation                                     14,509      14,862      11,091
         Amortization                                        430         395          --
         Impairment of long-lived assets                   9,906          --          --
         (Gain) loss on sale of property and
              equipment                                     (530)       (172)         81
         Provision for losses on receivables               1,128         233         205
         Provision for revenue adjustments                   600       1,066         514
         Deferred income taxes                            (3,073)       (459)      1,078
         Changes in operating assets and liabilities:
              Accounts receivable                          1,678      (1,823)     (5,424)
              Inventories                                   (163)        350        (577)
              Other assets                                   150          --          --
              Prepaid expenses                               889      (2,832)     (2,700)
              Receivable from Forward Air                     --          --      17,447
              Accounts payable and accrued expenses       (1,212)        677      (5,478)
              Income taxes                                    24        (116)        734
                                                        --------------------------------
Net cash provided by operating activities                 17,366      10,351      20,046

INVESTING ACTIVITIES
Purchases of property and equipment                       (2,901)    (27,467)    (24,076)
Proceeds from disposal of property and equipment           4,391      10,332       3,180
Acquisition of Laker Express, Inc.                            --     (14,754)         --
Other                                                         --        (216)       (320)
                                                        --------------------------------
Net cash provided by (used in) investing activities        1,490     (32,105)    (21,216)

FINANCING ACTIVITIES
Proceeds from long-term debt                               3,921      35,151      25,768
Payments of long-term debt                               (17,905)    (13,916)    (25,398)
Payments of capital lease obligations                         --          --      (3,031)
Repurchase of common stock                                (4,929)     (1,319)         --
Common stock issued under employee stock
    purchase plan                                             57          52          --
Proceeds from exercise of stock options                       --          12          --
Contribution of capital by Forward Air                        --          --       5,000
                                                        --------------------------------
Net cash provided by (used in) financing activities      (18,856)     19,980       2,339
                                                        --------------------------------
Net increase (decrease) in cash and cash equivalents          --      (1,774)      1,169
Cash and cash equivalents at beginning of year                 9       1,783         614
                                                        --------------------------------
Cash and cash equivalents at end of year                $      9    $      9    $  1,783
                                                        ================================
Non-cash transaction - Issuance of note payable to
   Laker Express, Inc. for asset acquisition            $     --    $    400    $     --
                                                        ================================
</TABLE>

See accompanying notes.



                                       F-8

<PAGE>   32

                               Landair Corporation

                   Notes to Consolidated Financial Statements

                                December 31, 2000

1.  ACCOUNTING POLICIES

BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements for periods subsequent to
September 23, 1998 include the accounts of Landair Corporation and its
subsidiaries. The consolidated financial statements for periods through
September 23, 1998 include the accounts comprising the truckload operations of
Forward Air Corporation ("Forward Air"), and are based on historical amounts
included in the consolidated financial statements of Forward Air. On July 9,
1998, the Board of Directors of Forward Air authorized the separation of Forward
Air into two publicly-held corporations, one owning and operating the deferred
air freight operations and the other owning and operating the truckload
operations (the "Spin-off").

The Spin-off was effected on September 23, 1998 through the distribution to
shareholders of Forward Air of all the outstanding stock of a new truckload
holding company, Landair Corporation. Pursuant to the Spin-off, the common stock
of Landair Corporation was distributed on a pro rata basis of one share of
Landair Corporation common stock for every one share of Forward Air common stock
held. Effective with the Spin-off, Landair Corporation is the legal entity that
owns and operates the truckload operations through its operating subsidiaries,
and Forward Air is the legal entity that continues to own and operate the
deferred air freight operations through its operating subsidiaries.

As used in the accompanying consolidated financial statements, the term the
"Company" refers to Landair Corporation and its subsidiaries for periods
subsequent to September 23, 1998 and to the truckload operations of Forward Air
for periods through September 23, 1998.

These historical financial statements include the assets and liabilities and
results of operations directly related to the truckload operations of Forward
Air for all periods presented through September 23, 1998. Significant changes
could have occurred in the funding and operations of the Company had it been
operated as an independent stand-alone entity during those periods, which could
have had a significant impact on its financial position and results of
operations. As a result, the financial information included in these financial
statements for periods through September 23, 1998 is not necessarily indicative
of the financial position and results of operations of the Company which might
have occurred had it been an independent stand-alone entity during those
periods.

The Company is an irregular route, high-service truckload carrier that
transports a wide range of commodities in both intrastate and interstate
commerce. The Company provides dry van common


                                       F-9

<PAGE>   33


                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)

1.  ACCOUNTING POLICIES (CONTINUED)

carrier and dedicated contract carriage for shippers of a variety of products in
the medium- and short-haul markets. All significant intercompany transactions
and accounts have been eliminated in consolidation.

USE OF ESTIMATES

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

OPERATING REVENUE

Operating revenue and related costs are recognized as of the date shipments are
completed.

CASH EQUIVALENTS

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

Inventories

Inventories of tires, replacement parts, supplies and fuel for revenue equipment
are stated at the lower of cost or market utilizing the FIFO (first-in,
first-out) method of determining cost.

PROPERTY AND EQUIPMENT

Property and equipment are stated at the lower of cost or fair value.
Depreciation of property and equipment is calculated based upon the cost of the
asset, reduced by its estimated salvage value, using the straight-line method
over the estimated useful lives as follows:

<TABLE>
<S>                                                     <C>
              Buildings                                 30-40 years
              Revenue equipment                           3-7 years
              Other equipment                            3-10 years
              Leasehold improvements                     1-15 years
</TABLE>





                                      F-10

<PAGE>   34


                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)

1.  ACCOUNTING POLICIES (CONTINUED)

The Company reviews its long-lived assets, including goodwill and other
intangibles, for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. The measurement of possible
impairment is based upon determining whether projected undiscounted future cash
flows from the use of the asset over the remaining depreciation or amortization
period is less than the carrying value of the asset.

During the fourth quarter of 2000, as part of its periodic review of long-lived
assets, the Company evaluated its fleet of tractors and trailers and determined
that much of the equipment was under-utilized. As a result, the Company
committed to a plan to dispose of the excess revenue equipment. The Company
determined that the carrying value of these assets exceeded fair value, less
estimated costs to sell. The Company recorded an impairment charge of
approximately $6.6 million associated with the planned disposal of these assets.
This charge is included in impairment of long-lived assets in the Company's
statement of operations. The Company expects to dispose of these assets during
2001. (See Note 4.)

RISK MANAGEMENT

The Company is self-insured for certain of its workers' compensation, property
damage, auto liability and medical benefit claims. The Company has entered into
agreements with insurance companies to limit its losses with respect to these
claims.

INCOME PER SHARE

The Company calculates income per share in accordance with Statement of
Financial Accounting Standards (SFAS) No. 128, Earnings Per Share. Under SFAS
No. 128, basic earnings per share excludes any dilutive effects of options,
warrants and convertible securities. Diluted income per share includes any
dilutive effects of options, warrants and convertible securities, and uses the
treasury stock method in calculating dilution. Earnings per share for 1998 are
presented on a pro forma basis to reflect the 6.3 million share issuance of
common stock as a result of the Spin-off of the Company as if the Spin-off had
occurred on January 1, 1998 (see Note 6).

COMPREHENSIVE INCOME

The Company had no items of other comprehensive income in 2000, 1999 or 1998
and, accordingly, comprehensive income is equivalent to net income.



                                      F-11

<PAGE>   35


                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)

1.  ACCOUNTING POLICIES (CONTINUED)

EMPLOYEE STOCK OPTIONS

The Company grants options for a fixed number of shares to employees with an
exercise price generally equal to the fair value of the shares at the grant
date. The Company accounts for employee stock option grants in accordance with
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, and, accordingly, recognizes no compensation expense for the stock
option grants.

MAJOR CUSTOMER

One customer of the Company, Federal Express Corporation, accounted for 18.0%,
21.0% and 27.0% of consolidated operating revenue for the years ended December
31, 2000, 1999 and 1998, respectively. During 2000, the Company had two other
customers who accounted for 10.0% or more of revenue. Sonoco Products Company
and DuPont accounted for 16.0% and 10.0%, respectively, of consolidated
operating revenue for the year ended December 31, 2000.

COMMON EXPENSES

Prior to 1998, certain administrative expenses consisting of payroll, legal,
accounting, rent and depreciation for shared facilities, and other common
expenses which could not be specifically identified to either the deferred air
freight operations or the truckload operations have been allocated by Forward
Air to the Company based on its relative percentage of consolidated operating
revenue. These administrative expenses, which were allocated to the Company and
which would have been incurred by the Company if it had been operated as an
independent stand-alone entity, totaled $3.2 million for the period January 1,
1998 through September 23, 1998. Subsequent to the Spin-off, certain
administrative and back office functions continue to be shared by both the
Company and Forward Air. The expenses related to these services are addressed by
a Transition Services Agreement as more fully discussed in Note 2.

Interest expense of $1.4 million for the period January 1, 1998 through
September 23, 1998 has been allocated by Forward Air to the Company based upon
the pro rata share of average operating assets of the Company and Forward Air.

Management believes these allocation methods are reasonable.



                                      F-12

<PAGE>   36


                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)

1.  ACCOUNTING POLICIES (CONTINUED)

RECENTLY-ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1998, SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, was issued and was required to be adopted in years beginning after
June 15, 1999. In June 1999, SFAS No. 137 was issued, deferring the effective
date of SFAS No. 133 for one year. This Statement requires all derivatives to be
recorded on the balance sheet at fair value. This results in the offsetting
changes in fair values or cash flows of both the hedge and the hedged item being
recognized in earnings or other comprehensive income, as appropriate, in the
same period. Changes in fair value of derivatives not meeting the Statement's
hedge criteria are included in income. The Company adopted the new Statement as
of January 1, 2001. The Company does not expect the adoption of this Statement
to have a significant effect on its results of operations or financial position.

RECLASSIFICATIONS

Certain reclassifications have been made to prior year financial statements to
conform to the 2000 presentation. These reclassifications had no effect on net
income (loss) as previously reported.

2.  TRANSACTIONS WITH FORWARD AIR

The Company and Forward Air routinely engage in transactions where the Company
hauls deferred air freight shipments for Forward Air which are in excess of
Forward Air's scheduled capacity. The Company's operating revenue from these
shipments is shown separately in the accompanying statements of operations.

As discussed in Note 8, the Company subleases a portion of certain facilities
from Forward Air.

In connection with the Spin-off, the Company and Forward Air entered into
certain agreements which were effective upon the actual separation of the two
companies. The agreements were entered into to facilitate orderly changes from
an integrated transportation company to separate deferred air freight and
truckload operations companies in a way which is minimally disruptive to each
entity. Following are summaries of the principal agreements:

DISTRIBUTION AGREEMENT

The Distribution Agreement provided for, among other things, the principal
corporate transactions required to effect the Spin-off and the allocation of
certain assets and liabilities between the



                                      F-13

<PAGE>   37


                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)

2.  TRANSACTIONS WITH FORWARD AIR (CONTINUED)

Company and Forward Air. The Distribution Agreement provides that the Company
and Forward Air each have sole responsibility for claims arising out of their
respective activities after the Spin-off. It also provides that each party will
indemnify the other in the event of certain liabilities arising under the
federal securities laws, and that, for a period of three years after the
Spin-off, neither the Company nor Forward Air will directly solicit the
employment of any employee of the other company or its affiliates without the
prior written consent of such other company.

TRANSITION SERVICES AGREEMENT

The Transition Services Agreement describes the services which the Company and
Forward Air provide to each other following the Spin-off. Services performed
under the Transition Services Agreement are negotiated and paid for on an
arm's-length basis. The Company or Forward Air, as recipients of the services,
may terminate any or all such services at any time on thirty days' irrevocable
written notice, and the Company or Forward Air, as providers of the services,
may terminate any or all of the services, other than the information technology
services, on three months' irrevocable notice. Information technology services
to be provided by Forward Air to the Company have a thirty-six month term.

EMPLOYEE BENEFIT MATTERS AGREEMENT

The Employee Benefit Matters Agreement provided for the treatment of employee
benefit matters and other compensation arrangements for the employees of the
Company and Forward Air after the Spin-off. Pursuant to this agreement, Forward
Air continued sponsorship of the various employee benefit plans and welfare
plans of Forward Air with respect to Forward Air's employees after the Spin-off,
and the Company established such similar plans to provide to its employees after
the Spin-off substantially the same benefits previously provided to them as
employees of Forward Air. The Employee Benefit Matters Agreement also provided
for the adjustment and conversion of the existing non-exercisable stock options
of Forward Air into options of the Company for those employees that continued
employment with the Company after the Spin-off (see Note 6).

TAX SHARING AGREEMENT

The Tax Sharing Agreement describes the responsibilities of the Company and
Forward Air with respect to all tax matters occurring prior to and after the
Spin-off. The Tax Sharing Agreement provides for the allocation of tax expense,
assessments, refunds and other tax benefits. The Agreement also sets forth the
responsibility for filing tax returns and provides for reasonable cooperation in
the event of any audit, litigation or other proceeding with respect to any
federal, state or local tax.



                                      F-14

<PAGE>   38


                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)

2.  TRANSACTIONS WITH FORWARD AIR (CONTINUED)

In accordance with the terms included in the Transition Services Agreement,
subsequent to the Spin-off in 1998, the Company provided safety, licensing,
permitting and fuel tax, insurance and claims services, recruiting and retention
services, and driver training center services to Forward Air. The Company
charged Forward Air $230,000, $455,000 and $193,000, respectively, during the
years ended December 31, 2000 and 1999 and the period September 24, 1998 through
December 31, 1998 for these services. These charges have been included in
salaries, wages and employee benefits in the accompanying statements of
operations. In addition, Forward Air provided accounts payable, payroll, human
resources, employee benefit plan administration, owner-operator settlement,
central purchasing, accounting and legal, general administrative, and
information technology services to the Company. Forward Air charged the Company
$1.5 million, $2.4 million and $797,000, respectively, during the years ended
December 31, 2000 and 1999 and the period September 24, 1998 through December
31, 1998 for these services. These charges have been included in salaries, wages
and employee benefits in the accompanying statements of operations.

In connection with the Spin-off in 1998, Forward Air settled all intercompany
balances for cash of approximately $17.4 million, which was then used for
payments on the long-term debt of the Company. At December 31, 2000, accounts
payable included $315,000 due to Forward Air related to services covered under
the Transition Services Agreement and various other transactions between both
entities. At December 31, 1999, accounts receivable included $707,000 of amounts
due from Forward Air related to services covered under the Transition Services
Agreement and various other transactions between both entities.

3.  ACQUISITION OF BUSINESS

On January 7, 1999, the Company acquired certain operating assets of Laker
Express, Inc. ("Laker"), a truckload dry van carrier based in Indianapolis,
Indiana which operated predominantly in the Midwest in the short- to medium-haul
markets. The purchase price for Laker consisted of approximately $14.8 million
in cash and the issuance of a note payable of $400,000. The source of funds for
the cash consideration paid to Laker was from borrowings under the Company's
credit facilities.



                                      F-15

<PAGE>   39


                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)

3.  ACQUISITION OF BUSINESS (CONTINUED)

The pro forma results of operations assuming the acquisition of Laker as of
January 1, 1998 are as follows:

<TABLE>
<CAPTION>
                                                            1998
                                                           --------
              <S>                                          <C>
              Operating revenue                            $127,228
              Net income                                      3,112
              Income per share:
                 Basic                                         0.49
                 Diluted                                       0.49
</TABLE>

The pro forma results of operations do not purport to represent what the
Company's results of operations would have been had the transaction, in fact,
occurred at the beginning of the periods presented or to project the Company's
results of operations in any future period.

The acquisition was accounted for as a purchase. Identified intangible assets
acquired totaled approximately $1.5 million and have been amortized on a
straight-line basis over a life of five years. Goodwill totaled approximately
$2.6 million and has been amortized on a straight-line basis over a life of 20
years. Accumulated amortization of the identified intangible assets and goodwill
totaled $395,000 at December 31, 1999. During the fourth quarter of 2000, the
Company determined that the goodwill associated with the acquisition of Laker
was fully impaired. As a result, the Company recorded an impairment charge of
approximately $3.3 million in 2000 (see Note 4). The impairment charge is
included in impairment of long-lived assets in the 2000 statement of operations.
The results of operations for the acquired business are included in the
consolidated statement of operations from the acquisition date forward.

4.  IMPAIRMENT OF LONG-LIVED ASSETS

In accordance with the provisions of Statement of Financial Accounting Standards
(SFAS) No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of, the Company performs a periodic review of
its long-lived assets, including goodwill and other intangibles, for impairment
whenever events or changes in circumstances indicate that the carrying amount of
these assets may not be recoverable. During the fourth quarter of 2000, as part
of its periodic review of long-lived assets, the Company evaluated its fleet of
tractors and trailers and determined that much of the equipment was
underutilized. As a result, the Company committed to a plan in December 2000 to
dispose of excess revenue equipment. Based on the Company's impairment analysis,
it was determined that the carrying value of certain tractors and trailers
exceeded fair value, less estimated costs of disposal.


                                      F-16

<PAGE>   40


                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)

4.  IMPAIRMENT OF LONG-LIVED ASSETS (CONTINUED)

In the fourth quarter of 2000, the Company recorded an impairment charge of $6.6
million as a result of its impairment review. The impairment charge included
approximately $3.0 million for tractors and trailers held for sale, $2.0 million
for tractors and trailers held for use and expected to be sold within one year,
$1.1 million for lost trailers and $480,000 for other operating assets (see Note
9).

Included in current assets held for sale at December 31, 2000, are tractors and
trailers with impaired carrying values of approximately $1.7 million. These
tractors and trailers are held for disposal. The Company believes that the sale
of the tractors and trailers included in current assets will occur and proceeds
will be collected within one year of the balance sheet date. Included in
noncurrent assets held for sale are trailers with impaired carrying values of
approximately $3.5 million. The Company has negotiated with a trailer
manufacturer to trade in two to three used trailers in exchange for each new
trailer in 2001. Under the provisions of SFAS No. 121, depreciation is not
recorded during the period in which assets are being held for sale.

The remaining tractors and trailers identified for disposal by the Company
during the fourth quarter of 2000 will be used in operations until replacement
assets can be obtained. Such assets are impaired and have been written down to
fair value less costs to sell (inclusive of the intervening depreciation).
Assets held for use expected to be sold within one year will continue to be
depreciated until their disposal date and are included in revenue equipment in
the consolidated balance sheet at December 31, 2000.

In the fourth quarter of 2000, the Company also reviewed for impairment in
accordance with SFAS No. 121 the goodwill associated with the purchase of Laker
in 1999 (see Note 3). As a result of the impairment review during the fourth
quarter of 2000, the Company determined that the goodwill associated with the
acquisition of Laker was fully impaired. The acquired Laker business consisted
principally of revenue equipment, a driver base, freight lanes and a customer
base. At December 31, 2000, the Company concluded that none of the significant
customers acquired as part of the original customer base were existing customers
of the Company (and no new customers were gained as a result of the
acquisition). In addition, the Company determined that fewer than 25% of the
drivers from the original Laker driver base were still employed with the Company
and that the purchase of Laker had not resulted in the development of any
additional traffic lanes. As a result of these factors, the Company recorded an
impairment charge of approximately $3.3 million in 2000. The impairment charge
is included in impairment of long-lived assets in the 2000 statement of
operations.



                                      F-17

<PAGE>   41


                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)

5.  LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                             December 31
                                                         2000            1999
                                                      -----------------------
                                                           (In thousands)
<S>                                                   <C>             <C>
Line of credit                                        $ 4,333         $ 2,630
Equipment loan agreements                              12,876          25,886
Installment notes payable                               8,690          10,937
Other notes payable, bearing interest at 7.1%           2,819           3,249
                                                      -----------------------
                                                       28,718          42,702
Less current portion                                    8,495           9,732
                                                      -----------------------
                                                      $20,223         $32,970
                                                      =======================
</TABLE>

Effective with the Spin-off, the Company entered into a $15.0 million line of
credit with a Tennessee bank which expires in May 2002. Interest rates for
advances under the facility vary from LIBOR plus 1.0% to 1.75% based on
covenants related to total indebtedness, cash flows, results of operations and
other ratios. Advances are collateralized primarily by accounts receivable. The
agreement contains, among other things, restrictions that do not allow the
payment of dividends, and requires the maintenance of certain levels of net
worth and other financial ratios. At December 31, 2000, the Company had $4.3
million outstanding on this facility and had utilized $4.2 million of
availability for outstanding letters of credit. At December 31, 2000, the
interest rate for the line of credit was 8.2%.

The Company also has an equipment loan facility with the Tennessee bank, which
allowed the Company to borrow up to $10.0 million for the purchase of revenue
equipment. Interest rates for advances under this facility vary from LIBOR plus
1.0% to 1.75% based on covenants related to total indebtedness, cash flows,
results of operations and other ratios (7.8% to 8.5% at December 31, 2000). The
advances are collateralized by revenue equipment purchased with the proceeds
from the equipment loan agreement, which contains restrictions and covenants
similar to the line of credit agreement described above. The Company had $2.0
million in borrowings outstanding as of December 31, 2000. Additional borrowings
are not available under this credit agreement at December 31, 2000 due to
restrictions imposed by the lender.

The Company has entered into an equipment loan facility with another Tennessee
bank which permits the Company to borrow up to $15.0 million for the purchase of
revenue equipment. The equipment loan expires in December 2001. Interest rates
for advances under the facility vary from LIBOR plus 0.75% to 2.0 % based upon
covenants related to total indebtedness, cash flows, results of operations and
other ratios (7.5% to 8.8% at December 31, 2000). The advances are
collateralized by revenue equipment purchased with the proceeds from the
equipment loan agreement, which contains restrictions and covenants similar to
the line of credit agreement




                                      F-18

<PAGE>   42


                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)

5.  LONG-TERM DEBT (CONTINUED)

described above. At December 31, 2000, the Company had $10.9 million outstanding
and additional borrowing capacity of $4.1 million under this loan agreement.

With respect to its credit facilities, the Company is required to be in
compliance with certain covenants on a quarterly and annual basis, which include
debt to worth ratio, cash flow coverage ratio, net worth, and a limit on capital
expenditures and acquisitions during the year. Principally as a result of the
$10.0 million in non-recurring impairment and restructuring charges in the
fourth quarter of 2000, the Company failed to meet certain of its debt covenants
at December 31, 2000. In March 2001, waivers and amendments to the credit
facilities (amending the covenants) were obtained from the Company's lending
institutions which cure the events of default under the credit facilities as of
and for the year ended December 31, 2000. The Company has considered the
likelihood of violating existing or revised covenants at measurement dates
within 2001, and has concluded that a violation of a debt covenant during 2001
is not probable. Accordingly, the Company's debt at December 31, 2000 is
long-term, other than borrowings of $8.5 million which are due in 2001.

The Company has installment notes payable with a finance company through 2003.
The notes bear interest at fixed rates ranging from 6.4% to 7.7%. The notes are
collateralized by the related revenue equipment purchased with the proceeds of
the notes.

The Company also has a note payable to a Tennessee bank secured by real property
which bears interest at a fixed rate of 7.1%. The Company is required to make
monthly payments on this note through March 2004, at which time a balloon
payment will be due.

Revenue equipment collateralizing all of the credit facilities agreements had a
carrying value of approximately $29.5 million at December 31, 2000.

Maturities of long-term debt are as follows (in thousands):

<TABLE>
<S>                                          <C>
                 2001                        $   8,495
                 2002                           10,935
                 2003                            6,372
                 Thereafter                      2,916
                                             ---------
                                              $ 28,718
                                              ========
</TABLE>

Interest payments during 2000, 1999 and 1998 were $2.8 million, $2.8 million and
$1.6 million, respectively. The Company did not capitalize any interest costs
during 2000 or 1999, and capitalized net interest costs of $42,000 in 1998.

6.  SHAREHOLDERS' EQUITY AND STOCK OPTIONS

Shareholder's Investment -- For accounting purposes, the historical equity
(shareholder's investment) of the Company through September 23, 1998 consists of
the contributed capital and the accumulated retained earnings of the truckload
operations of Forward Air.

Preferred Stock -- The Board of Directors is authorized to issue, at its
discretion, up to 5.0 million shares of preferred stock, par value $.01. The
terms and conditions of the preferred shares are to be determined by the Board
of Directors. No shares have been issued to date.

Repurchase of Common Stock -- In February 1999, the Board of Directors
authorized the repurchase of up to 500,000 shares of the Company's common stock
in open market purchases. The amount and timing of any repurchases are to be at
such prices as management of the Company



                                      F-19

<PAGE>   43


                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)

6.  SHAREHOLDERS' EQUITY AND STOCK OPTIONS (CONTINUED)

from time to time approves. During the year ended December 31, 1999, the Company
repurchased 269,000 shares under this plan. During the year ended December 31,
2000, the Company repurchased an additional 43,700 shares under this plan for
consideration of approximately $200,000. Additionally, during the year ended
December 31, 2000, the Board of Directors approved the repurchase of two blocks
of the Company's common stock totaling 1,130,281 shares for a total
consideration of approximately $4.7 million.

Employee Stock Option and Incentive Plan -- The Company follows Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and
related Interpretations in accounting for its employee stock options. Under
Opinion No. 25, when the exercise price of the Company's employee stock options
equals the market price of the underlying stock on the date of grant, no
compensation expense is recognized.

Under the provisions of Forward Air's stock option plan, options to purchase
shares of Forward Air's common stock that were exercisable at the time of the
Spin-off and that were held by those employees who terminated employment with
Forward Air and became employees of the Company upon the Spin-off, were
cancelled if not exercised prior to such employees' termination of employment
with Forward Air. Accordingly, employees that were leaving Forward Air and
continuing as employees of the Company exercised their vested options prior to
the Spin-off. Unexercisable options held by employees of Forward Air who
remained or became employees of the Company upon consummation of the Spin-off
were converted into 169,000 options to purchase Company common stock under the
Company's Stock Option and Incentive Plan. Such conversion was on the basis of a
formula designed to preserve the fair market value of such converted options on
the date of the Spin-off.

Subsequent to the Spin-off, the Company reserved 1.0 million shares of common
stock under a Stock Option and Incentive Plan. Options issued under the Plan
have a ten year term and vest over a four year period. Prior to the Spin-off,
the Company had no outstanding common stock or options to purchase common stock.

Pro forma information regarding net income and earnings per share is required by
Statement No. 123, Accounting for Stock-Based Compensation, which also requires
that the information be determined as if the Company has accounted for its
employee stock options granted under the fair value method of that Statement.
The fair value for these options was estimated at the date of grant in 2000,
1999 and 1998, respectively, using a Black-Scholes option pricing model with the
following weighted-average assumptions: risk-free interest rates of 6.5%, 5.8%
and 4.7%; dividend ratio of zero; volatility factors of the expected market
price of the common stock of 0.7, 0.6 and 0.5; and a weighted-average expected
life of the option of seven years.



                                      F-20

<PAGE>   44


                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)

6.  SHAREHOLDERS' EQUITY AND STOCK OPTIONS (CONTINUED)

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock price volatility. Because
the Company's stock options have characteristics significantly different from
those of traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the fair
value of its stock options.

For purposes of pro forma disclosures, the estimated fair value of the stock
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows (in thousands, except per share data):

<TABLE>
<CAPTION>
                                             2000          1999          1998
                                            -------       -------       ------
<S>                                         <C>           <C>           <C>
Pro forma net income (loss)                 $(7,715)      $(2,028)      $2,950
Pro forma net income (loss) per share:
       Basic                                $ (1.43)      $  (.33)      $  .47
       Diluted (1)                          $ (1.43)      $  (.33)      $  .47
</TABLE>

(1) Diluted loss per share amounts for 2000 and 1999 have been calculated using
the same denominator as used in the basic loss per share calculation as the
inclusion of dilutive securities in the denominator would have an anti-dilutive
effect.

A summary of the Company's employee stock option activity and related
information for the years ended December 31 follows:

<TABLE>
<CAPTION>
                                             2000               1999                  1998
                                     -------------------- ------------------  --------------------
                                                Weighted-          Weighted-            Weighted-
                                                Average             Average              Average
                                     Options   Exercise   Options   Exercise   Options   Exercise
                                      (000)      Price     (000)     Price      (000)     Price
                                      -----      -----     -----     -----      -----     -----
<S>                                  <C>       <C>        <C>       <C>       <C>        <C>
Outstanding - beginning of year        404      $  4        321      $  4         --      $ --
   Granted/Converted                   146         5        208         5        333         4
   Exercised                            (1)        4         (3)        4         --        --
   Forfeited                           (68)        5       (122)        4        (12)        4
                                     -----      ----      -----      ----      -----      ----
Outstanding - end of year              481         5        404         5        321         4
                                     =====      ====      =====      ====      =====      ====
Exercisable at end of year             173      $  4         83      $  4          2        $8
                                     =====      ====      =====      ====      =====      ====
Options available for grant            515                  593                  179
                                     =====                =====                =====
Weighted-average fair value of
   options granted during the
   year                              $3.54                $3.26                $2.34
                                     =====                =====                =====
</TABLE>

Exercise prices for options outstanding as of December 31, 2000 ranged from
$3.01 to $7.71.



                                      F-21

<PAGE>   45


                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)

6.  SHAREHOLDERS' EQUITY AND STOCK OPTIONS (CONTINUED)

Non-Employee Director Options -- In May 2000 and May 1999, options to purchase
22,500 shares of common stock were granted each year to the non-employee
directors of the Company at an option price of $4.47 and $4.88, respectively.
Options to purchase 45,000 shares at an exercise price of $4.25 were granted to
non-employee directors in October 1998. The options have terms of ten years and
are exercisable in installments which vest over two-year periods from the date
of grant. At December 31, 2000, 90,000 options are outstanding and will expire
in October 2008 through May 2010, unless a non-employee director resigns or is
not re-elected, in which event the options expire 90 days after the option
holder is no longer a non-employee director.

Employee Stock Purchase Plan -- The Company implemented an employee stock
purchase plan effective January 1, 1999 at which time participating employees
became entitled to purchase common stock through payroll deduction of up to 10%
of the employee's annual compensation. The issue price of the common stock is
equal to the lesser of (1) 85% of market price on the first trading day of the
semi-annual option period or (2) 85% of market price on the last trading day of
the semi-annual option period. The Company has reserved 300,000 shares of common
stock for issuance pursuant to the plan. At December 31, 2000, approximately
33,000 shares had been issued under the plan.

Earnings (Loss) Per Share -- Earnings (loss) per share are presented on a pro
forma basis for 1998 to reflect the 6,293,542 share issuance of common stock as
a result of the Spin-off of the Company (see Note 1) as if the Spin-off had
occurred on January 1, 1998. The following table sets forth the computation of
basic and diluted earnings (loss) per share (in thousands, except per share
data):

<TABLE>
<CAPTION>
                                                      2000       1999      1998
                                                    ----------------------------
<S>                                                 <C>        <C>        <C>
Numerator:
     Numerator for basic and diluted
         earnings per share - net income (loss)     $(6,970)   $(1,830)   $3,075
                                                    ============================
Denominator:
     Denominator for basic earnings per share
         - weighted-average shares                    5,400      6,146     6,293
     Effect of dilutive stock options                    40         79        20
                                                    ----------------------------
     Denominator for diluted earnings per
         share - adjusted weighted-average shares     5,440      6,225     6,313
                                                    ============================
Basic net income (loss) per share                   $ (1.29)   $ (0.30)   $ 0.49
                                                    ============================
Diluted net income (loss) per share (1)             $ (1.29)   $ (0.30)   $ 0.49
                                                    ============================
</TABLE>

  (1) Diluted loss per share amounts for 2000 and 1999 have been calculated
using the same denominator as used in the basic loss per share calculation as
the inclusion of dilutive securities in the denominator would have an anti-
dilutive effect.


                                      F-22

<PAGE>   46


                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)

6.  SHAREHOLDERS' EQUITY AND STOCK OPTIONS (CONTINUED)

At December 31, 2000, the Company had 218,805 options outstanding to purchase
common stock at exercise prices ranging from $4.56 to $7.71, which were excluded
from the determination of the effect of dilutive stock options on diluted
earnings per share, but which could potentially dilute earnings per share in the
future. Such options were excluded from the determination of the effect of
dilutive stock options because the exercise prices exceeded the average market
price for the stock for the year ended December 31, 2000.

7.  INCOME TAXES

The operations of the Company have been included in the consolidated federal
income tax return of Forward Air for periods prior to September 23, 1998. For
the periods prior to September 23, 1998, the provision (benefit) for income
taxes reflects an allocation of federal income taxes computed on a separate
return basis. For the periods subsequent to September 23, 1998, the Company
files its own consolidated federal income tax return. The Company and Forward
Air entered into a Tax Sharing Agreement in connection with the Spin-off (see
Note 2). The provision (benefit) for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                 2000       1999      1998
                                             -----------------------------
                                                     (In thousands)
<S>                                           <C>        <C>        <C>
Current:
     Federal                                  $  (743)   $  (471)   $  703
     State                                         --        (21)      118
                                             -----------------------------
                                                 (743)      (492)      821
Deferred:
     Federal                                   (2,642)      (376)      996
     State                                       (427)       (83)       82
                                             -----------------------------
                                               (3,073)      (459)    1,078
                                             -----------------------------
                                              $(3,816)   $  (951)   $1,899
                                             =============================
</TABLE>

The historical income tax expense (benefit) differs from the amounts computed by
applying the federal statutory rate of 34% to income before income taxes as
follows:

<TABLE>
<CAPTION>
                                                 2000       1999      1998
                                             -----------------------------
                                                     (In thousands)
<S>                                           <C>        <C>        <C>
Tax expense (benefit) at the statutory rate   $(3,667)   $  (946)   $1,691
State income taxes (benefit), net of
   federal benefit                             (2,827)       (68)      191
Meals and entertainment                            34         63        17
Other                                              99         --        --
                                             -----------------------------
                                              $(3,816)   $  (951)   $1,899
                                             =============================
</TABLE>




                                      F-23
<PAGE>   47

                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)


7.  INCOME TAXES (CONTINUED)

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets are as follows:

<TABLE>
<CAPTION>
                                                   December 31
                                                2000        1999
                                             ---------------------
                                                (In thousands)
<S>                                           <C>         <C>
Deferred tax liabilities:
      Tax over book depreciation              $ 11,389    $ 15,192
      Prepaid expenses deductible when paid        254         494
      Other                                        392         376
                                             ---------------------
Total deferred tax liabilities                  12,035      16,062
Deferred tax assets:
      Accrued expenses                           1,747       2,216
      Allowance for doubtful accounts              465         225
      Net operating loss carryforward              296       2,174
      Goodwill amortization                      1,197          --
      Other                                         18          62
                                             ---------------------
Total deferred tax assets                        3,723       4,677
                                             ---------------------
Net deferred tax liabilities                  $  8,312    $ 11,385
                                             =====================
</TABLE>

The balance sheet classification of deferred income taxes is as follows:

<TABLE>
<CAPTION>
                                                   December 31
                                                2000        1999
                                             ---------------------
                                                (In thousands)
<S>                                           <C>         <C>
Current assets                                $ (1,942)   $ (1,873)
Noncurrent liabilities                          10,254      13,258
                                             ---------------------
                                              $  8,312    $ 11,385
                                             =====================
</TABLE>











                                      F-24
<PAGE>   48

                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)

8.  LEASES

The Company leases certain facilities and revenue equipment under noncancelable
operating leases that expire in various years through 2005. Certain of these
leases may be renewed for a one year term. The Company also shares certain
facilities leased by Forward Air and has been allocated a portion of the rent
expense related thereto (see Note 1 - Common Expenses). As discussed below, the
Company has entered into lease or sublease agreements with Forward Air related
to certain facilities.

Included in operating leases is a motorcoach leased from a limited liability
corporation owned by the Company's Chairman and Chief Executive Officer. The
total amount of rent expense for this lease was $-0-, $36,000 and $20,000 in
2000, 1999 and 1998, respectively.

On or prior to the date of the Spin-off, Forward Air entered into subleases with
the Company pursuant to which Forward Air sublet to the Company (i) a portion of
its terminal facility in Atlanta, Georgia; (ii) a portion of its terminal
facility in Chicago, Illinois; (iii) a portion of its terminal facility in
Detroit, Michigan; and (iv) a portion of the headquarters of Forward Air in
Greeneville, Tennessee that is leased from the Greeneville-Greene County Airport
Authority. Forward Air subleases the terminal facilities for consideration based
upon the cost of such facilities to Forward Air and an agreed-upon percentage of
usage. As of December 31, 2000, Forward Air sublet a portion of the Company's
facility in Indianapolis, Indiana from the Company for consideration based upon
an agreed-upon percentage of usage.

Future minimum rental payments under noncancelable operating leases with initial
terms of one year or more consisted of the following at December 31, 2000 (in
thousands):

<TABLE>
<S>                                              <C>
                2001                             $ 1,154
                2002                               1,009
                2003                                 623
                2004                                  25
                Thereafter                            25
                                                 -------
                Total                            $ 2,836
                                                 =======
</TABLE>

9.  RESTRUCTURING COSTS

In December 2000, the Company committed to various exit and restructuring
activities. These activities included plans to exit operations at four leased
terminals (Dallas, Memphis, Camden and Chicago). In accordance with Emerging
Issues Task Force ("EITF") Consensus No. 94-3, the Company accrued $56,000 for
future rent payments and termination penalties under non-cancelable leases at
the facilities. The Company exited the leases and paid the remaining lease
payments and termination penalties in January 2001.





                                      F-25
<PAGE>   49

                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)

9.  RESTRUCTURING COSTS (CONTINUED)

Certain employees were terminated related to the restructuring activities. The
Company accrued termination benefits of $56,000 as of December 31, 2000 related
to severance benefits that had been communicated to the respective employees as
of December 31, 2000. The Company severed several other employees during January
2001. The Company expects to incur approximately an additional $225,000 of
restructuring costs related to termination benefits in the first quarter of
2001.

As part of the closure of the terminals, the Company recorded impairment
write-downs totaling approximately $480,000 (see Note 4). Such impaired assets
primarily included leasehold improvements and other equipment abandoned at the
terminals that the Company does not expect to sell.

10.  COMMITMENTS AND CONTINGENCIES

The primary claims in the Company's business are workers' compensation, property
damage, auto liability and medical benefits. Most of the Company's insurance
coverage provides for self-insurance levels with primary and excess coverage
which management believes is sufficient to adequately protect the Company from
catastrophic claims. In the opinion of management, adequate provision has been
made for all incurred claims up to the self-insured limits, including provision
for estimated claims incurred but not reported.

The Company estimates its self-insurance loss exposure by evaluating the merits
and circumstances surrounding individual known claims, and by performing
hindsight analysis to determine an estimate of probable losses on claims
incurred but not reported. Such losses could be realized immediately as the
events underlying the claims have already occurred as of the balance sheet
dates.

Because of the uncertainty of the ultimate resolution of outstanding claims, as
well as uncertainty regarding claims incurred but not reported, it is possible
that management's provision for these losses could change materially in the near
term. However, no estimate can currently be made of the range of additional loss
that is at least reasonably possible.



                                      F-26
<PAGE>   50

                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)

11.  EMPLOYEE BENEFIT PLAN

Effective January 1, 1999, the Company adopted a retirement savings plan (the
"401(k) Plan") with terms similar to the existing retirement savings plan of
Forward Air. Employees of the Company who participated in Forward Air's 401(k)
Plan were entitled to transfer their participation into the Company's 401(k)
Plan. The 401(k) Plan is a defined contribution plan whereby employees who have
completed ninety days of service, a minimum of 1,000 hours of service and are
age 21 or older are eligible to participate. The 401(k) Plan allows eligible
employees to make contributions of 2.0% to 15.0% of their annual compensation.
Employer contributions will be made at 25.0% of the employee's contribution up
to a maximum of 4.0% of total annual compensation. Employer contributions vest
20.0% after two years of service and continue vesting 20.0% per year until fully
vested. The matching contribution by the Company to the 401(k) Plan for 2000 and
1999 and to the Forward Air plan for 1998 was approximately $107,000, $113,000
and $67,000, respectively.

12.  FINANCIAL INSTRUMENTS

Off Balance Sheet Risk

At December 31, 2000, the Company had letters of credit outstanding totaling
$4.2 million, all of which relate to obligations carried on the balance sheet.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash investments and trade
accounts receivable. The Company does not generally require collateral from its
customers. Three customers, Federal Express, Airborne Express and DuPont,
accounted for 16.0%, 13.0% and 13.0% of total trade accounts receivable at
December 31, 2000. Concentrations of credit risk with respect to trade accounts
receivable are otherwise limited due to the large number of entities comprising
the Company's customer base and their dispersion across many different
industries.

Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:

        Cash and cash equivalents: The carrying amount reported in the balance
        sheet for cash and cash equivalents approximates its fair value.





                                      F-27
<PAGE>   51

                               Landair Corporation

             Notes to Consolidated Financial Statements (continued)

12.  FINANCIAL INSTRUMENTS (CONTINUED)

        Accounts receivable and accounts payable: The carrying amounts reported
        in the balance sheet for accounts receivable and accounts payable
        approximate their fair value.

        Long-term debt: The fair value of the Company's long-term debt is
        estimated using discounted cash flow analyses, based on the Company's
        current incremental borrowing rates for similar types of borrowing
        arrangements. The carrying amounts reported in the balance sheet for
        long-term debt approximate their fair value.

13.  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the quarterly results of operations for the years
ended December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                        2000
                                  ---------------------------------------------------
                                  March 31       June 30    September 30   December 31
                                  ---------------------------------------------------
                                         (In thousands, except per share data)
<S>                               <C>           <C>           <C>           <C>
Operating revenue                 $ 33,130      $ 32,974      $ 31,960      $ 29,423
Income (loss) from operations          329         1,594           983       (11,752)
Net income (loss)                     (139)          635           259        (7,725)
Net income (loss) per common
  share:
      Basic                       $   (.02)     $    .11      $    .05      $  (1.58)
      Diluted                     $   (.02)     $    .11      $    .05      $  (1.58)
</TABLE>


<TABLE>
<CAPTION>
                                                        1999
                                  ---------------------------------------------------
                                  March 31       June 30    September 30   December 31
                                  ---------------------------------------------------
                                         (In thousands, except per share data)
<S>                               <C>           <C>           <C>           <C>
Operating revenue                 $ 31,930      $ 32,405      $ 32,987      $ 34,533
Income (loss) from operations        1,124        (1,954)         (477)        1,071
Net income (loss)                      421        (1,726)         (749)          224
Net income (loss) per common
  share:
      Basic                       $    .07      $   (.28)     $   (.12)     $    .04
      Diluted                     $    .07      $   (.28)     $   (.12)     $    .04
</TABLE>







                                      F-28
<PAGE>   52

                               Landair Corporation

                Schedule II -- Valuation and Qualifying Accounts

<TABLE>
<CAPTION>
                 Col. A                    Col. B              Col. C              Col. D        Col. E
-----------------------------------------------------------------------------------------------------------
                                                              Additions
                                                        ----------------------
                                                          (1)          (2)
                                                         Charged     Charged
                                          Balance at    to Costs     to Other                    Balance at
                                          Beginning       and        Accounts-   Deductions-      End of
              Description                 of Period     Expenses     Describe     Describe        Period
-----------------------------------------------------------------------------------------------------------
                                                                  (In thousands)
<S>                                         <C>          <C>          <C>          <C>            <C>
Year ended December 31, 2000:
      Allowance for doubtful accounts       $  423       $1,128       $   --       $ 559(2)       $  992
      Allowance for revenue
         adjustments(1)                        192          600           --         517(3)          275
                                           -----------------------------------------------------------------
                                               615        1,728           --       1,076           1,267
Year ended December 31, 1999:
      Allowance for doubtful accounts          287          233           --          97(2)          423
      Allowance for revenue
         adjustments(1)                         83        1,066           --         957(3)          192
                                           -----------------------------------------------------------------
                                               370        1,299           --       1,054             615
Year ended December 31, 1998:
      Allowance for doubtful accounts          125          205           --          43(2)          287
      Allowance for revenue
         adjustments(1)                         50          514           --         481(3)           83
                                           -----------------------------------------------------------------
                                               175          719           --         524             370
</TABLE>

(1)     Represents an allowance for adjustments to accounts receivable due to
        disputed rates, accessorial charges and other aspects of previously
        billed shipments.
(2)     Uncollectible accounts written off, net of recoveries.
(3)     Adjustments to billed accounts receivable.






                                       S-1

<PAGE>   53

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
                                                                             Exhibit No. in
        Exhibit No. Under                                                  Document Where
         Item 601 of                                                       Incorporated by
         Regulation S-K                                                        Reference
       -------------------                                                --------------------
<S>                           <C>                                         <C>
          2.1(c)      -       Distribution Agreement between the                   2.1
                              registrant and Forward Air Corporation

          2.2(d)      -       Asset Purchase Agreement between                     2.1
                              Landair Transport, Inc., Laker Express, Inc.
                              and Dennis Pressler (Schedules and other
                              exhibits to this document are omitted from
                              this filing but the registrant will furnish
                              supplemental copies of the omitted
                              materials to the Securities and Exchange
                              Commission (the "Commission") upon
                              request.)

          3.1(b)      -       Charter of the registrant                            3.1

          3.2(c)      -       Bylaws of the registrant                             3.1

          4.1(b)      -       Form of Common Stock Certificate                     4.1

         10.1(c)      -       Transition Services Agreement between the           10.1
                              registrant and Forward Air Corporation

         10.2(c)      -       Employee Benefit Matters Agreement                  10.2
                              between the registrant and Forward Air
                              Corporation

         10.3(c)      -       Tax Sharing Agreement between the                   10.3
                              registrant and Forward Air Corporation

         10.4(e)      -       Amended and Restated Stock Option                   10.1
                              and Incentive Plan

         10.5(e)      -       Amended and Restated Non-Employee                   10.2
                              Director Stock Option Plan

         10.6(b)      -       Employee Stock Purchase Plan                        10.6

         10.7(b)      -       Cash Incentive Plan                                 10.7
</TABLE>




<PAGE>   54



<TABLE>
<S>                           <C>                                         <C>
         10.8(c)      -       Loan and Security Agreement, dated as of             10.5
                              September 10, 1998, between First Tennessee
                              Bank National Association and the registrant

         10.9(c)      -       $15.0 million Master Secured Promissory Note         10.6
                              (Line of Credit), dated as of September 10,
                              1998, to First Tennessee Bank National
                              Association

        10.10(c)      -       $10.0 million Secured Promissory Note                10.7
                              (Equipment Loan), dated as of September 10,
                              1998, to First Tennessee Bank National
                              Association

        10.11(e)      -       $3.0 Million Note Secured by Real Estate,            10.5
                              dated March 25, 1999, to First Tennessee Bank
                              National Association

        10.12(e)      -       Guaranty Agreement, dated as of March 25,            10.6
                              1999, by the registrant to First Tennessee
                              Bank National Association

        10.13(e)      -       Third Amendment to Term Loan and Security            10.3
                              Agreement, dated as of January 5, 1999, between
                              SunTrust Bank, Nashville, N.A. and the
                              registrant

        10.14(e)      -       Loan and Security Agreement ($15.0 Million           10.4
                              Line of Credit), dated as of January 5, 1999,
                              among SunTrust Bank, Nashville, N.A. and the
                              registrant and Landair Transport, Inc.  Certain
                              exhibits to this document are omitted from this
                              filing but the Company will furnish supplemental
                              copies of the omitted materials to the Securities
                              and Exchange Commission upon request.

        10.15(f)      -       First Amendment to Loan and Security                 10.1
                              Agreement among SunTrust Bank,
                              Nashville, N.A., the registrant and
                              Landair Transport, Inc., dated July 28, 1999

        10.16(f)      -       Second Amendment to Loan and Security                10.2
                              Agreement among SunTrust Bank, Nashville,
                              N.A., the registrant and Landair Transport,
                              Inc., dated August 26, 1999
</TABLE>



<PAGE>   55



<TABLE>
<S>                           <C>                                         <C>
        10.17(g)      -       First Amendment to the Transition Services           10.1
                              Agreement, dated as of February 4, 2000
                              between Forward Air Corporation and the
                              registrant

        10.18(h)      -       First Amendment to the Amended and                   10.1
                              Restated Non-Employee Director Stock Option
                              Plan

        10.19(h)      -       Stock Purchase Agreement between the                 10.2
                              registrant and East Tennessee Foundation,
                              dated as of June 2, 2000

         21.1(b)      -       Subsidiaries of the registrant                       21.1

         23.1(a)      -       Consent of Ernst & Young LLP                          --
</TABLE>

            (a) Filed herewith.

            (b) Filed as an exhibit to the registrant's Registration Statement
on Form 10, filed with the Commission on July 13, 1998, as amended.

            (c) Filed as an exhibit to the registrant's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 1998, filed with the
Commission on November 16, 1998.

            (d) Filed as an exhibit to the registrant's Form 8-K, filed with the
Commission on December 22, 1998.

            (e) Filed as an exhibit to the Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1999, filed with the Commission on May 17,
1999.

            (f) Filed as an exhibit to the Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1999, filed with the Commission on November
15, 1999.

            (g) Filed as an Exhibit to the Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2000, filed with the Commission on May 5, 2000.

            (h) Filed as an Exhibit to the Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2000, filed with the Commission on August 8,
2000.