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

                                    FORM 10-K

(Mark One)
   X     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES   
 -----   EXCHANGE ACT OF 1934 (FEE REQUIRED)

         For the Fiscal Year ended December 31, 1998

                                       OR

         TRANSITION REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE   
 -----   SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

         For the Transition Period from __________ to _________          

                          Commission File Number 1-7908

                         ADAMS RESOURCES & ENERGY, INC.
             (Exact name of registrant as specified in its charter)

             DELAWARE                                     74-1753147
 (State or other jurisdiction of            (I.R.S. Employer Identification No.)
  incorporation or organization)

       5 POST OAK PARK STE. 2700
            HOUSTON, TEXAS                                  77027
 (Address of Principal executive offices)                 (Zip Code)

       Registrant's telephone number, including area code: (713) 881-3600

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

        Title of each class          Name of each exchange on which registered
        -------------------          -----------------------------------------
   COMMON STOCK, $.10 PAR VALUE              AMERICAN STOCK EXCHANGE

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

         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]

         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 the
filing requirements for the past 90 days. YES  [X]  NO [ ]

         A total of 4,217,596 shares of Common Stock were outstanding at March
11, 1999.

         The aggregate market value of the voting stock held by nonaffiliates as
of March 11, 1999 was $14,604,871.


                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for Annual Meeting of Stockholders to be held
April 28, 1999 are incorporated by reference in Part III.

<PAGE>   2
                                     PART I


Items 1 and 2.  BUSINESS AND PROPERTIES.

General

         Adams Resources & Energy, Inc. and its subsidiaries (the "Company") are
engaged in the business of crude oil and petroleum products marketing, tank
truck transportation of liquid chemicals, and oil and gas exploration and
production.

         The revenues and operating earnings for each industry segment and the
identifiable assets attributable to each industry segment for the three years
ended December 31, 1998 are set forth in Note 8 of the Notes to Consolidated
Financial Statements included elsewhere herein.

Marketing

         Through its subsidiary, GulfMark Energy, Inc., the Company purchases
crude oil at the wellhead and arranges transportation to refiners and other
customers. The crude oil is transported via common carrier pipeline, barge or
truck. Activity is primarily concentrated offshore Louisiana and onshore in
Texas. Wellhead purchases of crude oil currently approximate 170,000 barrels per
day. As part of this business, the Company operates 55 tractor-trailer rigs and
maintains over 100 pipeline inventory locations or injection stations. In
addition, the Company owns and operates a 7.5 mile 6 inch crude oil gathering
pipeline in the Louisiana offshore, Ship Shoal, area. Two separate crude oil
pipeline systems in the Gulf Coast region of Texas are also owned and operated
by the Company.

         Crude oil is generally purchased at indexed prices that fluctuate with
market conditions. The crude oil is transported and either sold outright at the
field level or buy-sell arrangements (trades) are made in order to minimize
transportation or maximize the sales price. Except in certain limited situations
where back-to-back fixed price trades are in place, the contracted sales price
is also pegged to an index that fluctuates with market conditions. This reduces
the Company's loss exposure from sudden changes in crude oil prices. Sales of
crude oil are facilitated in the industry by established trade points that
include Cushing, Oklahoma, St. James, Louisiana and Midland, Texas. A key
element of profitability is the differential between market prices at the field
level and at the various trade points. Such price differentials vary with local
supply and demand conditions. Unforeseen fluctuations in price differentials can
impact financial results either favorably or unfavorably. In addition, through
its trading activities, the Company attempts to capture additional margins that
may exist between futures market versus cash market pricing. While the Company's
policies are designed to minimize market risk, some degree of exposure to
unforeseen fluctuations in market conditions remains.

         Crude oil marketing revenues totaled $1.9 billion for 1998 and the
Company believes alternative customers are available should any of its customers
reduce their purchases.


                                      I-2


<PAGE>   3




         Through its subsidiary Ada Resources, Inc., the Company markets branded
and unbranded refined petroleum products, such as gasoline and diesel fuel. The
marketing service area includes primarily metropolitan Houston and the
surrounding one hundred miles. Purchases are made at the suppliers' established
jobber prices with such prices generally being lower than the Company's sales
price to its customers. The Company is also a supplier of industrial lubricants,
oils and greases. The primary product distribution and warehousing facility is
located on 5.5 owned acres in Houston, Texas. This property includes a 60,000
square foot warehouse, 11,000 square feet of office space, bulk storage for
25,000 gallons of motor fuels and a storage facility for 200,000 gallons of
lubricating oil.

         Petroleum products marketing revenues totaled $27 million for 1998 and
the Company believes alternative customers are available should any of its
customers reduce their purchases.

Tank Truck Transportation

         Through its Service Transport Company subsidiary, the Company
transports liquid chemicals and petroleum products on a "for hire" basis
throughout the Continental United States and Canada. Transportation service is
provided to over 400 customers under contracts and on a call and demand basis.
Pursuant to regulatory requirements, the Company holds a Hazardous Materials
Certificate of Registration issued by the U.S. Department of Transportation.

         The Company presently operates 227 truck tractors and 377 tank trailers
and maintains truck terminals in Houston, Corpus Christi, and Port Nueces, Texas
as well as St. Gabriel, Louisiana and Mobile (Saraland), Alabama. Transportation
operations are headquartered at the Houston terminal facility. This terminal is
situated on 22 owned acres and includes maintenance facilities, an office
building and a six bay internal tank washrack and water treatment system. In
December 1998, the Company completed construction on its St. Gabriel, Louisiana
property. This terminal is now situated on 11.5 owned acres and includes an
office building, maintenance bays and a tank cleaning facility.

         Service Transport Company has maintained its registration to the
ISO-9002 Quality Management Standard. The scope of this Quality System
Certificate, registered in both the United States and Europe, covers the
carriage of bulk liquids throughout their area of operations as well as the tank
trailer cleaning facilities and equipment maintenance. The Company's quality
management process is one of its major assets. The practice of using statistical
process control covering safety, on-time performance and customer satisfaction
aids the Company to continuously improve in all areas of quality service to
customers.

Oil and Gas Exploration and Production

         The Company is actively engaged in the exploration and development of
domestic onshore oil and gas properties primarily in the state of Texas.
Exploration offices are maintained at the Company's headquarters in Houston and
the Company holds an interest in 252 wells, of which 58 are Company-operated.




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<PAGE>   4






         Producing Wells--The following table sets forth the Company's gross and
net productive wells at December 31, 1998. Gross wells are the total number of
wells in which the Company has an interest, while net wells are the sum of the
fractional interests owned.


<TABLE>
<CAPTION>
                          Oil Wells                   Gas Wells                 Total Wells
                          ---------                   ---------                 -----------
                       Gross       Net           Gross           Net         Gross          Net
                       -----      -----          -----           ----        -----         -----  
<S>                     <C>       <C>              <C>          <C>           <C>          <C>  
Texas                   106       17.97            21            5.89          127         23.86

Other                   104        4.33            21            2.70          125          7.03
                        ---       -----          ----            ----          ---         -----

                        210       22.30            42            8.59          252         30.89
                        ===       =====          ====            ====          ===         =====
</TABLE>


         Acreage--The following table sets forth the Company's gross and net
developed and undeveloped acreage as of December 31, 1998.

<TABLE>
<CAPTION>

                     Developed Acreage          Undeveloped Acreage
                    --------------------       ----------------------
                     Gross          Net         Gross            Net
                    --------      ------       --------        ------     
<S>                  <C>          <C>           <C>            <C>   
Texas                58,517       10,360        92,647         15,796

Other                 7,176        1,777         6,338          1,797
                     ------       ------        ------         ------
                     65,693       12,137        98,985         17,593
                     ======       ======        ======         ======
</TABLE>



         Drilling Activity--The following table sets forth the Company's
drilling activity for each of the three years during the period ended December
31, 1998. All drilling activity was onshore in Texas and Louisiana.

<TABLE>
<CAPTION>
                                                    1998                  1997                 1996       
                                             ------------------     -----------------     ---------------
                                             Gross         Net      Gross        Net      Gross      Net 
                                             --------    ------     -------    ------     ------    -----
<S>                                          <C>          <C>       <C>         <C>       <C>       <C> 
         Exploratory wells drilled
           - Productive                            1       .13         --         --          --      --
           - Dry                                   1       .13         --         --          --      --

         Development wells drilled
           - Productive                           10      1.82         14       1.99          10    1.62
           - Dry                                  --        --         --         --          --      --
</TABLE>


         In addition to the above drilling activity, at year-end 1998 one
exploratory well (.10 net wells) was in process. The well is located in San
Miguel County, Colorado.


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<PAGE>   5




         Production and Reserve Information--The Company's estimated net
quantities of proved oil and gas reserves, the estimated future net cash flows
and present value of future net cash flows from oil and gas reserves before
income taxes, calculated at a 10% discount rate for the three years ended
December 31, 1998, are presented in the table below.

<TABLE>
<CAPTION>
                                                                    December 31,
                                                  --------------------------------------------------
                                                      1998             1997              1996
                                                      ----             ----              ----
                                                                   (In thousands)
<S>                                                  <C>              <C>              <C>     
Crude oil (Barrels)                                       195              211              225
Natural gas (Mcf)                                       9,248            9,761            9,834
Future net cash flows                                $ 12,710         $ 18,468         $ 29,566
Present value of future net cash flows               $  7,606         $ 13,644         $ 21,467
</TABLE>

         The estimates of the Company's oil and gas reserves and future net
revenues therefrom as of December 31, 1998, were made by the Company's
independent petroleum engineers, Ryder Scott Company. The reserve estimates
provided at December 31, 1998 are based on oil prices of approximately $9.87 per
barrel and natural gas prices of approximately $1.86 per Mcf. In most instances,
the Company's natural gas sales contracts provide for the Company to receive a
percentage of the combined proceeds from the sales of natural gas and associated
natural gas liquids. Therefore, average natural gas reserve quantities and
prices reported herein include the value of associated natural gas liquids.

         Reserve estimates are based on many judgmental factors. The accuracy of
reserve estimates depends on the quantity and quality of geological data,
production performance data and reservoir engineering data, as well as the skill
and judgment of petroleum engineers in interpreting such data. The process of
estimating reserves involves continual revision of estimates (usually on an
annual basis) as additional information is made available through drilling,
testing, reservoir studies and acquiring historical pressure and production
data. In addition, the discounted present value of estimated future net revenues
should not be construed as the fair market value of oil and gas producing
properties. Such estimates do not necessarily portray a realistic assessment of
current value or future performance of such properties. Such revenue
calculations are also based on estimates by petroleum engineers as to the timing
of oil and gas production, and there is no assurance that the actual timing of
production will conform to or approximate such estimates. Also, certain
assumptions have been made with respect to pricing; essentially, the estimates
assume that prices will remain constant from the date of the engineer's
estimates except for changes reflected under natural gas sales contracts. There
can be no assurance that actual future prices will not vary as industry
conditions, governmental regulation and other factors impact the market price
for oil and gas.

         The Company's net oil and gas production for the three years ended
December 31, 1998 has been as follows:

<TABLE>
<CAPTION>
                  Years Ended                        Crude Oil        Natural
                  December 31,                       (Barrels)       Gas (Mcf)
                  ------------                       ---------       --------- 
<S>                                                   <C>            <C>      
         1998............................             68,000         2,552,000
         1997............................             62,000         3,775,000
         1996............................             92,000         3,450,000
</TABLE>





                                      I-5
<PAGE>   6

         Certain financial information relating to the Company's oil and gas
activities is summarized as follows:

<TABLE>
<CAPTION>
                                                               Years Ended December 31,            
                                                            -------------------------------
                                                              1998        1997       1996        
                                                            ---------   --------   --------
<S>                                                         <C>         <C>        <C>         
Average oil and condensate
   sales price per Bbl.................................     $  12.37    $  19.88   $  18.31
Average natural gas
   sales price per Mcf.................................     $   1.89    $   2.29   $   2.12
Average production cost,
   per equivalent Bbl, charged to expense..............     $   3.13    $   2.62   $   2.54
</TABLE>

         The average crude oil and natural gas sales price received for December
1998 production was $9.30 per barrel and $1.78 per Mcf, respectively. In most
instances, the Company's natural gas sales contracts provide for the Company to
receive a percentage of the combined proceeds from the sales of natural gas and
associated natural gas liquids. Therefore, average natural gas prices reported
herein include the value of associated natural gas liquids.

         The Company has had no reports to Federal authorities or agencies of
estimated oil and gas reserves except for a required report on the Department of
Energy's "Annual Survey of Domestic Oil and Gas Reserves." The Company is not
obligated to provide any fixed and determinable quantities of oil or gas in the
future under existing contracts or agreements associated with its oil and gas
exploration and production segment.

         Reference is made to the Supplementary Financial Data following the
Notes to Consolidated Financial Statements for additional disclosures relating
to oil and gas exploration and production activities.

Employees and other

         At December 31, 1998 the Company employed 565 persons, 22 of whom were
employed in oil and gas exploration and production, 194 in the marketing of
crude oil and petroleum products, 341 in transportation operations and 8 in
administrative capacities. None of the Company's employees are represented by a
union. Management believes its employee relations are satisfactory.

         The Company leases approximately 12,000 square feet of office space for
its executive offices located at 5 Post Oak Park, Suite 2700, Houston, Texas.

Competition

         In all phases of its operations, the Company encounters strong
competition from a number of companies, including some very large companies.
Many of these larger competitors possess and employ financial and personnel
resources substantially in excess of those which are available to the Company.
The Company faces competition principally in pricing and quality of service. In
its oil and gas operation, the Company also competes for the acquisition of
mineral properties. The Company's marketing division competes with integrated
oil companies which in some cases own or control refining and marketing
facilities. These major oil companies may offer their products to others on more
favorable terms than those available to the Company. The Company is a minor
competitor in all the businesses in which it has operations.



                                      I-6
<PAGE>   7


         From time to time in recent years, there has been an oversupply of
crude oil and natural gas in the marketplace. This in turn has led to a reduced
level of prices for crude oil and natural gas, and as a result, there is a high
degree of uncertainty regarding the future market price for oil and gas.

Federal and State Taxation

         The Company is subject to the provisions of the Internal Revenue Code
of 1986, as amended (the "Code"). In accordance with the Code, the Company
computes its income tax provision based on a 34% tax rate. The Company's
operations are primarily conducted within the State of Texas. As such, the
Company is subject to a 4.5% state tax on corporate net taxable income as
computed for federal income tax purposes. Oil and gas activities are also
subject to state and local income, severance, property and other taxes.
Management believes the Company is currently in compliance with all federal and
state tax regulations.

Forward-Looking Statements--Safe Harbor Provisions

         This annual report for the year ended December 31, 1998 contains
certain forward-looking statements which are intended to be covered by the safe
harbors provided under Federal securities law and regulation. To the extent such
statements are not recitations of historical fact, forward-looking statements
involve risks and uncertainties. In particular, statements under the captions
(a) Production and Reserve Information, (b) Competition, (c) Regulatory Status
and Potential Environmental Liability, (d) Management's Discussion and Analysis
of Financial Condition and Results of Operations, (e) Use of Estimates, (f)
Income Taxes, (g) Concentration of Credit Risk, (h) Commitments and
Contingencies, (i) Supplementary Financial Data, among others, contain
forward-looking statements. Where the Company expresses an expectation or belief
to future results or events, such expression is made in good faith and believed
to have a reasonable basis in fact. However, there can be no assurance that such
expectation or belief will actually result or be achieved.

         A number of factors could cause actual results or events to differ
materially from those anticipated. Such factors include, (a) general economic
conditions, (b) fluctuations in hydrocarbon prices and margins, (c)
unanticipated environmental liabilities or regulatory changes, (d) the
availability and cost of insurance, (e) changes in tax laws, and (f) the
availability of capital, among others.

                     Environmental Compliance and Regulation

         The Company is subject to an extensive variety of evolving United
States federal, state and local laws, rules and regulations governing the
storage, transportation, manufacture, use, discharge, release and disposal of
product and contaminants into the environment, or otherwise relating to the
protection of the environment. A non-exclusive listing of the environmental laws
which potentially impact the Company's Regulated Environmental Activities is set
out below:

Resource Conservation and Recovery Act of 1976, as amended in 1984 ("RCRA")--The
United States Congress enacted RCRA in 1976 and amended it in 1984. RCRA
established a comprehensive regulatory framework for the management of hazardous
wastes at active facilities. RCRA creates a "cradle to grave" system for
managing hazardous wastes. Those who generate, transport, treat, store or
dispose of waste above certain quantities are required to undertake certain
performance, testing and record keeping. The 1984 amendments to RCRA known as
the Hazardous and Solid Waste Amendments "HSWA" increased the scope of RCRA to
regulate small quantity hazardous waste generators and waste oil handlers and
recyclers as well as require the identification and regulation of underground
storage tanks in



                                      I-7
<PAGE>   8

which liquid petroleum or hazardous substances were stored. HSWA and its
implementing regulations require the notification to designated state agencies
of the existence and condition of regulated underground storage tanks and impose
design, construction and installation requirements; leak detection, reporting,
and cleanup requirements; tank closure and removal requirements; and fiscal
responsibility requirements. RCRA specifically excludes "drilling fluids,
produced waters, and other wastes associated with the exploration, development,
or production of crude oil, natural gas or geothermal energy."

Comprehensive Environmental Response Compensation and Liability Act of 1980
("CERCLA" or "Superfund") as amended in 1986--CERCLA established the Superfund
program to clean up inactive sites at which hazardous substances had been
released. Superfund has been interpreted to create strict, joint and several
liability for the costs of removal and remediation, other necessary response
costs and damages for injury to natural resources. Superfund liability extends
to generators of hazardous substances, as well as to (i) the current owners and
operators of a site at which hazardous substances were disposed; (ii) any prior
owner or operator of the site at the time of disposal; and (iii) waste
transporters who selected such facilities for treatment or disposal of hazardous
substances. CERCLA allows the United States Environmental Protection Agency
("EPA") to investigate and remediate contaminated sites and to recover the costs
of such activities (response costs), as well as damages to natural resources,
from parties specified as liable under the statute. CERCLA also authorizes
private parties who incur response costs to seek recovery from statutorily
liable parties. CERCLA was amended by the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"). SARA provides a separate funding mechanism
for the clean up of underground storage tanks. CERCLA excludes petroleum,
including crude oil or any fraction thereof, with certain limitations from the
definition of "hazardous substances" for which liability for clean up of a
contaminated site will attach. This exclusion also applies to those otherwise
hazardous substances which are inherent in petroleum, but not to those added to
or mixed with petroleum products.

The Clean Water Act of 1972, as amended (the "Clean Water Act")--The Clean Water
Act establishes water pollutant discharge standards applicable to many basic
types of manufacturing facilities and imposes standards on municipal sewage
treatment plants. The Clean Water Act requires states to set water quality
standards for significant bodies of water within their boundaries and to ensure
attainment and/or maintenance of those standards. Many industrial and
governmental facilities must apply for and obtain discharge permits, monitor
pollutant discharges and under certain conditions reduce certain discharges. The
Clean Water Act also requires pre-treatment of certain discharges prior to
release into a publicly owned treatment works.

Federal Oil Pollution Act of 1990 ("OPA")--The OPA amends the Clean Water Act
and expands the liability for the discharge of oil into navigable waters.
Liability is triggered by discharge or substantial threat of a discharge of oil
into navigable waters of adjoining shoreline from any vessel or any on-shore or
off-shore facility. OPA defines three classes of parties subject to liability:
1) owners, operators, and persons chartering vessels; 2) lessees and permitees
of areas where off-shore facilities are located; and 3) owners and operators of
on-shore facilities.

The Clean Air Act of 1970, as amended (the "Clean Air Act")--The Clean Air Act
required EPA to establish and ensure compliance with national ambient air
quality standards ("NAAQS") for certain pollutants. The NAAQS generally are to
be achieved by the individual states through state implementation plans
("SIPs"). SIPs typically attempt to meet the NAAQS by, among other things,
regulating the quantity and quality of emissions from specific industrial
sources. As required by the Clean Air Act, EPA also has established regulations
that limit emissions of specified hazardous air pollutants and other regulations
that limit emissions from new industrial sources within certain source
categories. The Clean Air Act was amended extensively in 1990, to, among other
things, impose additional emissions




                                      I-8
<PAGE>   9

standards that must be implemented by the EPA through regulations. The
implementation of the Clean Air Act requirements is accomplished in Texas by the
Texas Natural Resources Conservation Commission ("TNRCC").

The Toxic Substances Control Act of 1976 ("TSCA")--TSCA authorizes the EPA to
gather information on the risks of chemicals, and to monitor and regulate the
manufacture, distribution, processing, use and disposal of many chemicals.

The Emergency Planning and Community Right-to-Know Act ("EPCRA")--EPCRA requires
emergency planning notification, emergency release notification and reports with
respect to the storage and release of specified chemicals. Industry must provide
information to communities regarding the presence of extremely hazardous
substances at facilities within those communities.

The Occupational Safety and Health Administration Act ("OSHA")--OSHA regulates
exposure to toxic substances and other forms of workplace pollution. The
Department of Labor administers OSHA. OSHA specifies maximum levels of toxic
substance exposure. OSHA also sets out a "right-to-know" rule which requires
that workers be informed of, and receive training relating to, the physical and
health hazards posed by hazardous materials in the workplace.

Texas Clean Air Act and Texas Natural Resources Conservation Commission
Regulations--Pursuant to the federal Clean Air Act and the Texas Clean Air Act,
the TNRCC has established rules that, among other things, regulate various types
of emissions from industrial sources. Among these rules is a requirement that
each industrial source in Texas that emits any air pollutant be authorized by a
permit, or be exempt from permitting through a standard exemption or because
such facility was in existence as of August 30, 1971 and has not been modified
since then (i.e., is "grandfathered"). Industrial sources that are located in
areas in which the NAAQS have not been attained for certain pollutants
("non-attainment areas") and that emit such pollutants, are often subject to
additional and/or more stringent rules than similar facilities located in
attainment areas.

Texas Solid Waste Disposal Act ("TSWDA")--The TSWDA and the TNRCC regulations
promulgated thereunder regulate the generation and management of industrial
solid waste, including hazardous waste, and municipal solid waste. These
regulations include permitting requirements applicable to most facilities that
manage such wastes. The TNRCC regulations relating to the generation and
management of hazardous wastes implement the requirement of RCRA (discussed
above). The TSWDA also contains enforcement provisions that allow for civil and
criminal penalties and/or injunctive relief for violations of the TSWDA and/or
associated regulations. A state "superfund" program, which is similar to the
federal Superfund program, was also established by the TSWDA to provide
remediation of inactive sites at which hazardous substances have been released.

Texas Water Code--Chapter 26 of the Texas Water Code and the TNRCC regulations
promulgated thereunder prohibit the unauthorized discharge of waste into or
adjacent to waters of the State. They also regulate (including requiring
permits) industrial, domestic, and municipal wastewater discharges to ensure
that the state water quality standards are satisfied. The Texas Water Code
contains enforcement provisions that provide for civil and/or criminal penalties
and/or injunctive relief for violations of the Texas Water Code and/or
associated regulations. Another program mandated by the Texas Water Code
regulates underground storage tanks that store certain materials, including
among other materials gasoline, oil, and other petroleum products, and
established a fee-based fund to remediate contamination from leaking underground
storage tanks.

Texas Oil Spill Prevention and Response Act of 1991 ("OSPRA")--With respect to
oil spills in the marine




                                      I-9
<PAGE>   10

environment, OSPRA provides a comprehensive legal framework and funding system
allowing the State to establish and monitor oil spill prevention and response
requirements for vessels and facilities that handle oil, to establish and carry
out an effective program for state response to oil spills, to provide timely and
equitable settlement and compensation of claims for those harmed by oil spills,
and to provide for assessment and restoration for environmental damage from oil
spills. OSPRA supports and compliments OPA.

State and Local Government Regulation--Many states have been authorized by the
EPA to enforce regulations promulgated under various federal statutes. In
addition, there are numerous other state as well as local authorities that
regulate the environment, some of which impose more stringent environmental
standards than Federal laws and regulations. The penalties for violations of
state law vary but typically include injunctive relief, recovery of damages for
injury to air, water or property and fines for non-compliance.

Oil and Gas Operations--The Company's oil and gas drilling and production
activities are generally subject to existing laws and regulations relating to
environmental quality and pollution control. One associated aspect of the
Company's oil and gas operation is the disposal of used drilling fluids,
saltwater, and crude oil sediments. In addition, at times low-level naturally
occurring radiation may occur with the production of crude oil and natural gas.
The Company's policy in these areas has been to comply with environmental
regulations and industry standards as they have historically existed.
Environmental standards in these areas are becoming increasingly stringent and
the Company, from time to time, has been required to remediate past practices.
Management believes that such required remediations in the future, if any, will
not have a material adverse impact on the Company's financial position or
results of operations.

All states in which the Company owns significant producing oil and gas
properties have statutory provisions regulating the production and sale of crude
oil and natural gas. Regulations generally require permits for the drilling of
wells and extend to the spacing of wells, the prevention of waste of oil and gas
reserves, the rate of production, prevention and clean-up of pollution and other
matters. In Texas, the Texas Railroad Commission is the state agency with
primary jurisdiction for regulating oil and gas operations.

Historically, the Federal government has instituted a number of regulations
designed to control and limit the market price for crude oil and/or natural gas.
Under the current weak market conditions and the recent deregulation practices
of the federal government, this area of federal law does not generally impact
the Company's operations.

Marketing Operations--The Company's marketing facilities are subject to a number
of state and federal environmental statutes and regulations, including the
regulation of underground fuel storage tanks. The EPA's Office of Underground
Tanks has established regulations requiring owners or operators of underground
fuel tanks to demonstrate evidence of financial responsibility for the costs of
corrective action and the compensation of third parties for bodily injury and
property damage caused by sudden and nonsudden accidental releases arising from
operating underground tanks. In addition, the EPA requires the installation of
leak detection devices and stringent monitoring of the ongoing condition of
underground tanks. Should leakage develop in an underground tank, the Company
would be obligated for clean up costs. The Company has secured insurance
covering both third party liability and clean up costs. Currently, the Company
is responsible for less than 10 underground storage tanks.

Transportation Operations--The Company's tank truck operations are conducted
pursuant to authority of the United States Department of Transportation (DOT)
and various State regulatory authorities. The 




                                      I-10
<PAGE>   11

Company's transportation operations must also be conducted in accordance with
various laws relating to pollution and environmental control. Interstate motor
carrier operations are subject to safety requirements prescribed by the DOT.
Such matters as weight and dimension of equipment are also subject to federal
and state regulations. DOT regulations also require mandatory drug testing of
drivers and require certain tests for alcohol levels in drivers and other safety
personnel. The trucking industry is subject to possible regulatory and
legislative changes such as increasingly stringent environmental regulations or
limits on vehicle weight and size. Regulatory change may affect the economics of
the industry by requiring changes in operating practices or by changing the
demand for common or contract carrier services or the cost of providing
truckload services. In addition, the Company's tank wash facilities are subject
to increasingly more stringent local, state and federal environmental
regulations.

Former Coal Operations--Under Kentucky and Illinois law and the Federal Surface
Mining Control and Reclamation Act of 1977, the Company was required to obtain
permits prior to beginning active mining operations. In order to obtain a
permit, the Company was required to show that its mining operations would meet
certain reclamation and environmental standards. The Company believes it has
complied in all respects with the regulations under which the permits were
issued.

Regulatory Status and Potential Environmental Liability--The operations and
facilities of the Company are subject to numerous federal, state and local
environmental laws and regulations including those described above, as well as
associated permitting and licensing requirements. The Company regards compliance
with applicable environmental regulations as a critical component of its overall
operation, and devotes significant attention to providing quality service and
products to its customers, protecting the health and safety of its employees,
and protecting the Company's facilities from damage. Management believes the
Company has obtained or applied for all permits and approvals required under
existing environmental laws and regulations to operate its current business.
Management has reported that the Company is not subject to any pending or
threatened environmental litigation or enforcement action(s) which could
materially and adversely affect the Company's business. While the company has,
where appropriate, implemented operating procedures at each of its facilities
designed to assure compliance with environmental laws and regulation, the
Company, given the nature of its business, is subjected to environmental risks
and the possibility remains that the Company's ownership of its facilities and
its operations and activities could result in civil or criminal enforcement and
public as well as private action(s) against the Company, which may necessitate
or generate mandatory clean up activities, revocation of required permits or
licenses, denial of application for future permits, or significant fines,
penalties or damages, any and all of which could have a material adverse effect
on the Company.

Item 3.  LEGAL PROCEEDINGS

         The Company's subsidiary, Ada Crude Oil Company (Ada), has been named
as one of sixty-three defendants in a lawsuit styled The State of Texas et al vs
Amerada Hess Corporation. The suit alleges, among other claims, that the
defendants as "common purchasers of oil" discriminated against the plaintiffs in
favor of the defendants' own production and that of others. The plaintiffs also
seek class certification. In response, the Company has filed a general denial
and has asserted a number of affirmative defenses. Attorneys for the plantiff
reviewed Ada's response and subsequently informed the Company that Ada has been
recommended for dismissal from the lawsuit. This recommendation is currently
under review by the plantiff. The Company will continue to vigorously contest
this matter and does not expect it to have a significant adverse effect on its
financial position or results of operations.

         In the normal course of business, the Company becomes involved in
litigation incident to operations. In management's opinion, the ultimate
resolution of all litigation matters and disputes will not have a material
adverse impact on the Company's financial position or results of operations.



                                      I-11
<PAGE>   12


Item 4.  SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS.

         None.
                      EXECUTIVE OFFICERS OF THE REGISTRANT

         The persons who are currently serving as executive officers of the
Company, their ages and the positions they hold with the Company are as follows:

<TABLE>
<CAPTION>

        Name                                    Age                        Positions with the Company                  
------------------------                        ---           ------------------------------------------------
<S>                                             <C>           <C>   
K. S. Adams, Jr.                                 76           Chairman, President and Chief Executive Officer
Claude H. Lewis                                  55           Vice President-Land Transportation
Richard B. Abshire                               46           Vice President-Finance
David B. Hurst                                   45           Secretary
</TABLE>

         Each officer has served in his present position for at least five
years. No family relationship exists between any of the officers. Mr. Hurst is a
partner in the law firm of Chaffin & Hurst.





                                      I-12
<PAGE>   13


                                     PART II

Item 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY 
         HOLDER MATTERS

         The Company's common stock is traded on the American Stock Exchange.
The following table sets forth the high and low sales prices of the common stock
as published in The Wall Street Journal for issues listed on the American Stock
Exchange for each calendar quarter since January 1, 1997.

<TABLE>
<CAPTION>
                                                                   American Stock Exchange
                                                                   -----------------------             
Year                                                                High             Low
----                                                                ----             ---
<S>                                                                <C>             <C>  
1997
   First Quarter..............................................     18-3/8          11-5/8
   Second Quarter.............................................     15-3/8          11-5/8
   Third Quarter..............................................     15-5/8              12
   Fourth Quarter.............................................     16-3/4         13-5/16

1998
   First Quarter..............................................    14-9/16          11-5/8
   Second Quarter.............................................     14-3/4          11-1/8
   Third Quarter..............................................    11-9/16           6-3/8
   Fourth Quarter.............................................      8-7/8           5-1/4
</TABLE>

         At December 31, 1998 there were 765 holders of record of the Company's
common stock and the closing stock price was $5-3/4 per share.

         The terms of the Company's bank loan agreement require the Company to
retain at least 50% of annual net income as an addition to total shareholders'
equity, thus such amount would not be available for payment of cash dividends on
the Company's common stock.

         On each of December 15, 1998, 1997 and 1996, the Company paid an annual
cash dividend of $.10, $ .10 and $.07, respectively, to all holders of its
common stock of record on December 1st of each year. Such dividends aggregated
$422,000, $422,000 and $292,000, respectively.













                                      II-1
<PAGE>   14







Item 6.  SELECTED FINANCIAL DATA



                   FIVE YEAR REVIEW OF SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                Years Ended December 31,                              
                                   -------------------------------------------------------------------------------------
                                       1998               1997              1996            1995                1994    
                                   ------------        -----------      -----------      -----------         -----------
                                                              (In thousands, except per share data)
<S>                                <C>                 <C>              <C>              <C>                 <C>        
Revenues:
    Marketing ................     $ 1,936,358         $ 1,921,486      $ 1,466,736      $   803,669         $   610,944
    Transportation ...........          32,145              31,970           21,282           21,390              20,455
    Oil and gas ..............           5,689               9,904            9,061            6,378               3,586
                                   -----------         -----------      -----------      -----------         -----------
                                   $ 1,974,192         $ 1,963,360      $ 1,497,079      $   831,437         $   634,985
                                   ===========         ===========      ===========      ===========         ===========

Operating earnings:
    Marketing ................     $     4,478         $     1,382      $     5,816      $     2,496         $     2,114
    Transportation ...........           3,474               5,225            2,356            2,045               2,923
    Oil and gas ..............          (1,840)(1)           4,059            3,711           (1,410)(1)           1,272
                                   -----------         -----------      -----------      -----------         -----------
                                         6,112              10,666           11,883            3,131               6,309
Other income (expense):
    General and administrative          (2,738)             (2,578)          (2,783)          (2,176)             (2,018)
    Property sales and other .             420                 792              142            1,134                 583
    Interest .................            (327)               (318)            (477)            (526)               (106)
                                   -----------         -----------      -----------      -----------         -----------
Earnings before income taxes .           3,467               8,562            8,765            1,563               4,768

Income tax provision
    Current ..................             226               1,092              624              100                 305
    Deferred .................             901               1,737            2,500              238               1,446
                                   -----------         -----------      -----------      -----------         -----------
                                         1,127               2,829            3,124              338               1,751
                                   -----------         -----------      -----------      -----------         -----------

Net earnings .................     $     2,340         $     5,733      $     5,641      $     1,225         $     3,017
                                   ===========         ===========      ===========      ===========         ===========

Basic and diluted earnings per
    common share .............     $       .55         $      1.36      $      1.34      $       .29         $       .72
                                   ===========         ===========      ===========      ===========         ===========


FINANCIAL POSITION

Working capital ..............     $    10,855         $     8,694      $    10,484      $     5,115         $     2,957
Total assets .................         122,334             114,283          110,882           80,917              62,301
Long-term debt, net of
    current maturities .......           9,100               6,900            6,171           10,589               9,263
Shareholders' equity .........          30,056              28,138           22,760           15,678              13,233
Dividends on common shares ...             422                 422              292              207                 124
</TABLE>


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

(1) The oil and gas operating loss in 1998 and 1995 resulted principally from a
write-down of oil and gas properties due to reduced prices for crude oil and
natural gas and for 1998, additional 3D seismic expense.



                                      II-2
<PAGE>   15


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

RESULTS OF OPERATIONS

              -  Marketing

         Marketing segment profitability is dependent upon the spread between
the price paid to suppliers for the commodity purchased (i.e., crude oil,
natural gas or refined products) and the sales price to the end market customer,
less distribution costs. Since the Company is marketing a commodity, the gross
purchase price at the supplier level and the gross sales price at the customer
level tend to move in unison. However, the spread between purchase and sales
contracts will vary with localized supply and demand conditions. In a commodity
business, operating margins as a percentage of gross revenues are typically very
narrow; e.g., less than 1/2 of 1% in the case of crude oil. As a small margin,
high volume business, a relatively minor change in the spread can have a
significant impact on earnings.

          Substantially all of the Company's marketing revenues and operating
earnings are derived from the purchase and sale of crude oil. The strategy for
crude oil marketing is to link purchase and sales contracts to established
quotations that move with general market trends. Thus, the Company is insulated
from the impact of general movements in world crude oil prices. While the
Company policy is designed to minimize market risk, some degree of exposure to
unforeseen market conditions remains.

         Marketing division revenues, operating earnings and significant
operating statistics were as follows (in thousands except barrel and price
information):

<TABLE>
<CAPTION>
                                                                                   
                                                                           Wellhead          Average
                                                         Operating         Purchases        Crude Oil
                                         Revenues         Earnings         per day (1)         Price    
                                       ------------     ------------      ------------     -------------
<S>                                    <C>              <C>               <C>              <C>          
         1998....................      $  1,936,358     $      4,478      136,000 bbls     $   12.46/bbl
         1997....................      $  1,921,486     $      1,382       76,000 bbls     $   18.50/bbl
         1996....................      $  1,466,736     $      5,816       58,000 bbls     $   20.50/bbl
</TABLE>

(1)  Reflects the volume of crude purchased from third parties at the lease
     level and shipped to market.


         Sustained volume growth has increased or at least maintained gross
revenues during a period of generally falling commodity prices. The spread
between the commodity acquisition cost and the ultimate sales realization is the
most significant determinant of profitability. The year 1996 offered exceptional
margins while spreads were very narrow during 1997. The margins available in
1998 were fairly normal and the Company utilized its volume growth to improve
earnings.

         Because of its effect on inventory valuation, both 1998 and 1997
earnings were adversely affected by the general crude oil price decline. As a
shipper of crude oil on common carrier pipelines, the Company is required to
carry its pro-rata share of line fill. When crude oil prices fell from $25 per
barrel at the end 1996, to $17 per barrel at year-end 1997, and to $10 per
barrel at the end of 1998, the Company recognized a $1.3 million and a $1.1
million inventory valuation write-down in 1998 and 1997, respectively. As of
December 31, 1998 the Company was holding approximately 673,000 barrels of crude
oil inventory valued at approximately $10.09 per barrel.




                                      II-3
<PAGE>   16


              - Transportation

              Transportation revenues and operating earnings were as follows (in
thousands):

<TABLE>
<CAPTION>
                                                           Revenues             Operating Earnings       
                                                     -----------------------   ---------------------
                                                                 Percentage              Percentage
                                                       Amount     Change (1)    Amount    Change (1)
                                                     ---------   -----------   --------  -----------  
<S>                                                  <C>              <C>      <C>           <C>  
              1998..............................     $  32,145        1%       $  3,474      (33)%
              1997..............................     $  31,970       50%       $  5,225      122%
              1996..............................     $  21,282       (1)%      $  2,356       15%
</TABLE>

(1)  Represents the percentage increase (decrease) from the prior year.


         Initially in early 1997, the Company was able to increase its
transportation revenues because of strong customer demand. This demand
improvement was consistent with the generally strong United States economy
existing at the time. In response to projected demand, the Company began to
expand its fleet and terminal capacity. This allowed the Company to continue
sales growth. As sales volume began to grow in 1997, operating earnings improved
as a direct result of the increased demand. Because of the fixed costs
associated with a trucking operation, on a percentage basis in 1997, operating
earnings improved at a faster rate than revenues.

         Beginning in early 1998 the United States economy slowed and while
still growing, demand for the Company's petrochemical trucking services did not
meet projections. With the new expanded capacity, higher fixed costs caused 1998
operating earnings to be reduced in spite of still increasing revenues and
demand. As presently configured the Transportation division's fixed costs are
approximately $18 million per year and consist primarily of tractor-trailer
rentals, insurance, depreciation and terminal operating expenses. Variable
costs, which typically approximate 33 percent of gross revenues, consist
primarily of drivers' wages and fuel. As a result of varying demand conditions,
revenues and operating earnings may experience significant variations between
periods.


              - Oil and Gas

         Oil and gas division revenues and operating earnings are primarily
derived from crude oil and natural gas production volumes and prices.
Comparative amounts are as follows (in thousands except average price data):

<TABLE>
<CAPTION>

                                                             Crude Oil             Natural Gas       
                                              Operating   ------------------    -------------------      
                                               Earnings              Average                Average
                                   Revenues     (Loss)    Barrels     Price      Mcf's       Price    
                                   --------    --------   -------    ------     ------       ------
<S>                                 <C>        <C>           <C>     <C>         <C>         <C>  
     1998........................   $5,689     $(1,840)      68      $12.37      2,552       $1.89
     1997........................   $9,904     $ 4,059       62      $19.88      3,775       $2.28
     1996........................   $9,061     $ 3,711       92      $18.31      3,450       $2.12
</TABLE>





                                      II-4
<PAGE>   17





         Oil and gas revenues and operating earnings were consistent in 1996 and
1997 as prices were stable and new production from current drilling efforts
offset normal production declines. Revenues and earnings declined in 1998,
however, as prices fell without offsetting new volume. In addition, the
prolonged period of price declines necessitated an approximate $1 million
write-down in the carrying value of certain oil and gas properties. Further, the
Company incurred and expensed $1.4 million of 3D seismic costs during the
current year. This combination of factors produced the $1.8 million operating
loss in 1998.

Other Income (Expense)

         Property sales and other income in 1998 includes $179,000 of interest
income and $182,000 in gains from various property and equipment sales. Other
income for 1997 includes $179,000 of interest income, a $400,000 recovery from
an insurance carrier and a $230,000 gain realized on the sale of twenty-one
truck tractors. Seven tank trailers were sold in 1996 for a $168,000 gain.


LIQUIDITY AND CAPITAL RESOURCES

  Overview

         The Company's liquidity and its capital investment program are
primarily a function of annual net earnings as adjusted by the non-cash
provision for depreciation, depletion, and amortization. In recent years, the
Company has utilized its available cash flow to make discretionary investments
in its oil and gas, transportation and marketing businesses. The table below
illustrates this relationship.

<TABLE>
<CAPTION>
                                                                     1998             1997           1996 
                                                                ----------        -----------     ----------
                                                                                (In thousands)
<S>                                                             <C>               <C>             <C>       
         Net earnings..................................         $    2,340        $    5,733      $    5,641
         Depreciation, depletion & amortization........              8,606             5,914           6,160
         Deferred taxes and other......................                398             1,118           1,995
                                                                 ---------         ---------       ---------

         Cash flow before working capital items........             11,344            12,765          13,796
         Debt and other financing activities...........               (573)            1,198          (7,839)
                                                                 ---------         ---------       ---------

         Property and equipment  additions.............         $   10,771        $   13,963       $   5,957
                                                                ==========        ==========       =========
</TABLE>

         Historically, the Company's operating earnings from its diversified
operations have been stable and reliable. Management relies on the continued
stability of this earnings stream in making capital project decisions. All
capital projects are divided into manageable segments and the timing of their
implementation is accelerated or delayed based on current cash flows.

         The balancing factor for the Company's short term cash needs is the
Company's bank line of credit. For the past five years the Company has
maintained an approximate $4 - 9 million outstanding balance on its bank line of
credit. Day-to-day fluctuations in cash flow needs are accommodated by daily
borrowing or repayments on the line of credit. While the Company's bank line of
credit is fully secured, the bank is primarily relying on the Company's ability
to generate cash flow from continuing operations for repayment. At year-end
1998, the Company's balance of bank debt outstanding ($9.1 million) was balanced
by the Company's cash balance of $10.2 million.

         Also important to liquidity and capital availability is the Company's
ability to conduct its truck




                                      II-5
<PAGE>   18

fleet management program through lease financing transactions. The Company has
readily found lease financing from a number of major national leasing concerns.
See Note 7 to Consolidated Financial Statements. The Company's philosophy is to
maintain a modern, up-to-date fleet of tractors and trailers to accommodate
demand for its services. This requires frequent tractor replacements as well as
modest growth in the size of the fleet. Since there is a large active secondary
market for truck-tractors, historically, the Company has realized gains upon the
disposition of such equipment.

         Due to the high volume of the Company's transactions, the components of
working capital such as accounts receivable and accounts payable can fluctuate
dramatically from day to day. No particular significance should be ascribed to
such variations. A key factor that provides order and discipline for cash flow
is the practice of the crude oil industry to settle all accounts by cash payment
on the 20th of the month following inception of the transaction. Since 90% of
the Company's business is tied to crude oil marketing, this settlement process
is critical. The Company relies on payments received from its customers to
satisfy the requirements to pay its suppliers on the same day. See Note 4 to
Consolidated Financial Statements for a discussion of "Concentration of Credit
Risk."

  Banking Relationships

         The Company's bank loan agreement provides for two separate lines of
credit with interest at the bank's prime rate minus 1%. The agreement also
provides for an interest rate option at the lender's quoted Eurodollar rate
(LIBOR) plus 2%. The working capital loan provides for borrowings up to
$5,000,000 based on 80% of eligible accounts receivable and 50% of eligible
inventories. Available capacity under the line is calculated monthly and as of
December 31, 1998 was established at $4,400,000. The oil and gas production loan
provides for flexible borrowings subject to a borrowing base established
semi-annually by the bank. The borrowing base is presently established at
$5,500,000, with the next scheduled redetermination date being September 1,
1999. The working capital loans also provide for the issuance of letters of
credit. The amount of each letter of credit obligation is deducted from the
borrowing capacity. The line of credit loans are scheduled to expire on October
27, 2000, with the then present balance outstanding converting to a term loan
payable in 12 equal quarterly installments. As of December 31, 1998, bank debt
outstanding under the Company's two revolving credit facilities totaled
$9,100,000, with letters of credit outstanding totaling $25,000.

         The Company's GulfMark subsidiary maintains a separate banking
relationship in order to support its crude oil purchasing activities. GulfMark
has established a bank letter of credit facility that is maintained on a
month-to-month basis in order to secure the purchase of crude oil. In addition
to providing letters of credit, GulfMark's banking institution will also finance
up to $5,000,000 of crude oil inventory and certain accounts receivable
associated with crude oil sales. Such financing is provided on a demand note
basis with interest at the bank's prime rate plus 1 percent. As of December 31,
1998 the Company had $6.8 million of eligible crude oil inventory, however, no
amounts were outstanding under this facility.

  Investment Activities

         During 1998, the Company invested approximately $3 million in oil and
gas projects, $4.4 million for expansion of its truck terminals and fleet and
$.6 million for the completion of construction on its 7.5 mile offshore crude
oil gathering pipeline. An additional $2.8 million was invested in facilities,
trucks and equipment for the Company's marketing operations. Oil and gas
exploration and development efforts continue and the Company plans to invest
approximately $5 million toward such projects in 1999. An additional $2 million
is anticipated to be invested during 1999 toward the Company's marketing
activities.



                                      II-6
<PAGE>   19

         During 1998, the Company entered into certain operating lease
transactions in order to acquire 90 tractors and 71 trailers for use in its
common carrier fleet. Further, during 1999 the Company anticipates entering into
certain operating lease transactions in order to acquire approximately 30
additional tractors and 20 trailers for use in its trucking fleet. Annual lease
costs associated with the planned 1999 additions are estimated to be $500,000.


  Year 2000

         Many currently installed computer systems and software products are
coded to accept only two digit entries in the date code field. Beginning in the
year 2000, these date code fields will need to accept four-digit entries to
distinguish 21st century dates from 20th century dates. As a result, computer
systems and software used by many companies may need to be upgraded to comply
with such "Year 2000" requirements. Significant uncertainty exists concerning
the potential effects associated with such compliance, but systems that do not
properly recognize such information could generate erroneous data or cause a
system to fail.

         The Company has completed a review of its key computer systems and is
in the process of implementing certain new operating systems applications
necessary to resolve potential year 2000 compliance issues. Many of the
Company's operating and financial systems are already compliant. The Company's
remaining operating and financial systems are scheduled for compliance in phases
and will be compliant by the year 2000.

         The Company is communicating with software vendors, business partners
and others with which it conducts business to provide assurances that their
systems will be year 2000 compliant. Adams could be adversely affected by the
failure of these unaffiliated companies to adequately address the year 2000
issue. Contingency planning will be included in this assessment to identify
arrangements to mitigate the impact of disruptions from outside sources.

         As of year-end 1998, the Company had incurred and expensed
approximately $150,000 of costs to become year 2000 compliant. An additional
$50,000 is expected to be incurred and expensed in 1999 in order to complete
this project.



ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company is exposed to market risk, including adverse changes in
commodity prices and interest rates as discussed below.

Commodity Price Risk.

           The Company's major market risk exposure is in the pricing applicable
to its marketing of crude oil and its production of crude oil and natural gas.
Realized pricing is primarily driven by the prevailing worldwide price for crude
oil and spot prices applicable to oil and gas.

           Commodity price risk in the Company's marketing operations represents
the potential loss that may result from a change in the market value of an asset
or a commitment. As part of its crude oil marketing operations, the Company
enters into forward contracts to minimize the impact of market



                                      II-7
<PAGE>   20




fluctuations on its purchases of crude oil. The Company also enters into natural
gas price support contracts with certain customers to secure a floor price on
the purchase of certain natural gas supply. In each instance, the Company locks
in a separate matching price support contract with a third party in order to
minimize the risk of these financial instruments. The crude oil forward
contracts are no longer than one year in duration. The Company monitors all
commitments and positions to ensure that all positions are effectively balanced.
At December 31, 1998 the Company had an insignificant gain on its open
positions.

           Historically, prices received for oil and gas production have been
volatile and unpredictable. Pricing volatility is expected to continue. Gas
price realizations ranged from a monthly low of $1.51 per Mcf to a monthly high
of $2.22 per Mcf during 1998. Oil prices ranged from a low of $9.87 per barrel
to a high of $15.01 per barrel during the same period.

Interest Rate Risk.

           Total long-term debt at December 31, 1998 included $9,100,000 of
floating rate debt. As a result, the Company's annual interest costs in 1999
will fluctuate based on interest rate changes. Because the interest rate on the
Company's long-term debt is a floating rate, the fair value approximates
carrying value as of December 31, 1998. A hypothetical 10 percent adverse change
in the floating rate would not have had a material effect on the Company's
results of operations for the fiscal year ending December 31, 1998.





                                      II-8
<PAGE>   21
                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                          INDEX TO FINANCIAL STATEMENTS

Item 8.

<TABLE>
<CAPTION>
                                                                                                       Page
                                                                                                       -----  
<S>                                                                                                    <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ........................................................      II-10

FINANCIAL STATEMENTS:

         Consolidated Balance Sheet as of December 31, 1998 and 1997 ............................      II-11

         Consolidated Statement of Earnings for the Years Ended December 31, 1998,
           1997 and 1996 ........................................................................      II-12

         Consolidated Statement of Shareholders' Equity for the Years Ended
           December 31, 1998, 1997 and 1996......................................................      II-13

         Consolidated Statement of Cash Flows for the Years Ended December 31,
           1998, 1997 and 1996...................................................................      II-14

         Notes to Consolidated Financial Statements .............................................      II-15

         Supplementary Financial Data............................................................      II-25
</TABLE>



                                      II-9
<PAGE>   22


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Adams Resources & Energy, Inc.:

         We have audited the accompanying consolidated balance sheet of Adams
Resources & Energy, Inc. (a Delaware corporation) and subsidiaries as of
December 31, 1998 and 1997, and the related consolidated statements of earnings,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1998. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Adams
Resources & Energy, Inc. and subsidiaries as of December 31, 1998 and 1997, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1998, in conformity with generally accepted
accounting principles.





                                                  ARTHUR ANDERSEN LLP



Houston, Texas
March 11, 1999




                                     II-10
<PAGE>   23




                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                   December 31,         
                                                           -------------------------- 
              ASSETS                                          1998            1997   
                                                           ----------     -----------
<S>                                                        <C>            <C>      
CURRENT ASSETS:
   Cash and cash equivalents                               $  10,215      $   6,496
   Accounts receivable, net                                   73,864         73,806
   Inventories                                                 8,288          5,092
   Prepaids                                                      801          1,675
                                                           ---------      ---------
                  Total current assets                        93,168         87,069
                                                           ---------      ---------
PROPERTY AND EQUIPMENT:
   Marketing                                                  17,491         14,432
   Transportation                                             14,906
                                                                             11,144
   Oil and gas (successful efforts method)                    31,523         30,623
   Other                                                          99             99
                                                           ---------      ---------
                                                              64,019         56,298
   Less -Accumulated depreciation, depletion
          and amortization                                   (36,226)       (30,361)
                                                           ---------      ---------
                                                              27,793         25,937
                                                           ---------      ---------

OTHER ASSETS                                                   1,373          1,277
                                                           ---------      ---------
                                                           $ 122,334      $ 114,283
                                                           =========      =========


                  LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                        $  78,444      $  74,829
   Accrued and other liabilities                               3,869          3,475
   Current maturities of long-term debt                           --             71
                                                           ---------      ---------

          Total current liabilities                           82,313         78,375

LONG-TERM DEBT, less current maturities                        9,100          6,900

DEFERRED TAXES AND OTHER LIABILITIES                             865            870
                                                           ---------      ---------
                                                              92,278         86,145
                                                           ---------      ---------

COMMITMENTS AND CONTINGENCIES (NOTE 7)

SHAREHOLDERS' EQUITY:
   Preferred stock, $1.00 par value, 960,000
     shares authorized, none outstanding                          --             --
   Common stock, $.10 par value, 7,500,000 shares
     authorized, 4,217,596 issued and outstanding                422            422
   Contributed capital                                        11,693         11,693
   Retained earnings since December 31, 1992                  17,941         16,023
                                                           ---------      ---------
        Total shareholders' equity                            30,056         28,138
                                                           ---------      ---------
                                                           $ 122,334      $ 114,283
                                                           =========      =========
</TABLE>

   The accompanying notes are an integral part of these financial statements.




                                     II-11
<PAGE>   24

                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENT OF EARNINGS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                             Years Ended December 31,
                                                 --------------------------------------------- 
                                                     1998             1997             1996   
                                                 -----------      -----------      -----------                 
<S>                                              <C>              <C>              <C>        
REVENUES:
    Marketing                                    $ 1,936,358      $ 1,921,486      $ 1,466,736
    Transportation                                    32,145           31,970           21,282
    Oil and gas                                        5,689            9,904            9,061
                                                 -----------      -----------      -----------
                                                   1,974,192        1,963,360        1,497,079
                                                 -----------      -----------      -----------
COSTS AND EXPENSES:
    Marketing                                      1,928,754        1,918,885        1,459,021
    Transportation                                    27,706           26,106           18,346
    Oil and gas                                        3,014            1,810            1,695
    General and administrative                         2,738            2,578            2,783
    Depreciation, depletion and amortization           8,606            5,914            6,160
                                                 -----------      -----------      -----------
                                                   1,970,818        1,955,293        1,488,005
                                                 -----------      -----------      -----------

OPERATING EARNINGS                                     3,374            8,067            9,074

OTHER INCOME (EXPENSE):
    Property sales and other                             420              813              168
    Interest                                            (327)            (318)            (477)
                                                 -----------      -----------      -----------

EARNINGS BEFORE INCOME TAXES                           3,467            8,562            8,765

INCOME TAX PROVISION
    Current                                              226            1,092              624
    Deferred                                             901            1,737            2,500
                                                 -----------      -----------      -----------
                                                       1,127            2,829            3,124
                                                 -----------      -----------      -----------

NET EARNINGS                                     $     2,340      $     5,733      $     5,641
                                                 ===========      ===========      ===========

BASIC AND DILUTED EARNINGS PER SHARE             $       .55      $      1.36      $      1.34
                                                 ===========      ===========      ===========

DIVIDENDS PER COMMON SHARE                       $       .10      $       .10      $       .07
                                                 ===========      ===========      ===========
</TABLE>




   The accompanying notes are an integral part of these financial statements.





                                     II-12
<PAGE>   25



                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                     TOTAL                           
                                       COMMON      CONTRIBUTED      RETAINED      SHAREHOLDERS'
                                       STOCK         CAPITAL        EARNINGS         EQUITY       
                                      --------     -----------      --------      -------------

<S>                                   <C>            <C>            <C>             <C>     
BALANCE, December 31, 1995 ......     $    420       $  9,895       $  5,363        $ 15,678
   Stock options exercised ......           --             23             --              23
   Deferred income taxes (Note 3)           --          1,710             --           1,710
   Net earnings .................           --             --          5,641           5,641
   Dividends paid on common stock           --             --           (292)           (292)
                                      --------       --------       --------        --------
BALANCE, December 31, 1996 ......          420         11,628         10,712          22,760
   Stock options exercised ......            2             65             --              67
   Net earnings .................           --             --          5,733           5,733
   Dividends paid on common stock           --             --           (422)           (422)
                                      --------       --------       --------        --------
BALANCE, December 31, 1997 ......          422         11,693         16,023          28,138
   Net earnings .................           --             --          2,340           2,340
   Dividends paid on common stock           --             --           (422)           (422)
                                      --------       --------       --------        --------
BALANCE, December 31, 1998 ......     $    422       $ 11,693       $ 17,941        $ 30,056
                                      ========       ========       ========        ========
</TABLE>


   The accompanying notes are an integral part of these financial statements.




                                     II-13
<PAGE>   26



                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                    Years Ended December 31,             
                                                              -------------------------------------
                                                                1998          1997          1996   
                                                              ---------     ---------     ---------   
<S>                                                           <C>           <C>           <C>     
CASH PROVIDED BY OPERATIONS:
  Net earnings ..........................................     $  2,340      $  5,733      $  5,641
  Items of income not requiring (providing) cash
    Depreciation, depletion and amortization ............        8,606         5,914         6,160
    Gain on sales of properties .........................         (182)         (230)         (168)
    Deferred income taxes ...............................          901         1,737         2,500
    Other, net ..........................................         (321)         (389)         (337)
  Decrease (increase) in accounts receivable ............          (58)        6,432       (29,754)
  Decrease (increase) in inventories ....................       (3,196)         (225)       (1,690)
  Decrease (increase) in prepaids .......................          194          (559)          (96)
  Increase (decrease) in accounts payable ...............        3,615        (2,620)       27,912
  Increase (decrease) in accrued liabilities ............          394            (6)        1,065
                                                              --------      --------      --------
       Net cash provided by operating activities ........       12,293        15,787        11,233
                                                              --------      --------      --------

INVESTING ACTIVITIES:
  Property and equipment additions ......................      (10,771)      (13,963)       (5,957)
  Proceeds from property sales ..........................          490           509           742
                                                              --------      --------      --------
       Net cash used in investing activities ............      (10,281)      (13,454)       (5,215)
                                                              --------      --------      --------

FINANCING ACTIVITIES:
  Borrowings ............................................        2,200         3,300            --
  Repayment of debt .....................................          (71)       (2,564)       (6,004)
  Issuance of common stock ..............................           --            67            23
  Dividend payments .....................................         (422)         (422)         (292)
                                                              --------      --------      --------
      Net cash (used in) provided by financing activities        1,707           381        (6,273)
                                                              --------      --------      --------
INCREASE (DECREASE) IN CASH AND CASH
     EQUIVALENTS ........................................        3,719         2,714          (255)

CASH AND CASH EQUIVALENTS AT BEGINNING
      OF YEAR ...........................................        6,496         3,782         4,037
                                                              --------      --------      --------

CASH AND CASH EQUIVALENTS AT END OF YEAR ................     $ 10,215      $  6,496      $  3,782
                                                              ========      ========      ========
</TABLE>




   The accompanying notes are an integral part of these financial statements.




                                     II-14
<PAGE>   27


                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Principles of Consolidation

         The accompanying consolidated financial statements include the accounts
of Adams Resources & Energy, Inc., a Delaware corporation, and its subsidiaries
(the "Company") after elimination of all significant intercompany accounts and
transactions. The Company accounts for its operating or working interests in oil
and gas joint ventures through pro-rata consolidation.

  Nature of Operations

         The Company is engaged in the business of oil and gas exploration and
production, crude oil marketing, petroleum products marketing and tank truck
transportation of petroleum products and liquid chemicals. Its primary area of
operation is within a 500 mile radius of Houston, Texas.

  Cash and Cash Equivalents

         Cash and cash equivalents include any treasury bill, commercial paper,
money market fund or federal fund with a maturity of 30 days or less. Included
in the cash balance at December 31, 1998 and 1997 is a $2 million deposit to
collateralize the Company's month-to-month crude oil letter of credit facility.
See Note 2 to Consolidated Financial Statements.

  Inventories

         Crude oil and petroleum products inventories are carried at the lower
of cost or market. Petroleum products inventories include gasoline, lubricating
oils and other petroleum products purchased for resale and are priced at cost
determined primarily on the first-in, first-out basis, while crude oil inventory
is priced at average cost. Materials and supplies inventories are included in
inventories at specific cost, with a valuation allowance provided if needed.
Components of inventory are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                              December 31,       
                                                                         ---------------------  
                                                                           1998          1997    
                                                                         ---------      ------  
<S>                                                                      <C>            <C>   
              Crude oil................................................  $   6,795      $3,638
              Petroleum products.......................................      1,063       1,062
              Materials and supplies...................................        430         392
                                                                         ---------      ------
                                                                         $   8,288      $5,092
                                                                         =========      ======
</TABLE>

  Property and Equipment

         Expenditures for major renewals and betterments are capitalized, and
expenditures for maintenance and repairs are expensed as incurred. Interest
costs incurred in connection with major capital expenditures are capitalized and
amortized over the lives of the related assets. When properties are retired or
sold, the related cost and accumulated depreciation, depletion and amortization
("DD&A") are removed from the accounts and any gain or loss is reflected in
earnings.



                                     II-15
<PAGE>   28


                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         Oil and gas exploration and development expenditures are accounted for
in accordance with the successful efforts method of accounting. Direct costs of
acquiring developed or undeveloped leasehold acreage, including lease bonus,
brokerage and other fees, are capitalized. Exploratory drilling costs are
initially capitalized until the properties are evaluated and determined to be
either productive or nonproductive. If an exploratory well is determined to be
nonproductive, the capitalized costs of drilling the well are charged to
expense. Costs incurred to drill and complete development wells, including dry
holes, are capitalized.

         Producing oil and gas leases, equipment and intangible drilling costs
are depleted or amortized over the estimated recoverable reserves using the
units-of-production method. Other property and equipment is depreciated using
the straight-line method over the estimated average useful lives of eight to
twenty years for marketing, three to fifteen years for transportation and ten to
twenty years for all others. The 1996 provision for depreciation, depletion and
amortization includes a $1,167,000 asset impairment recognized by the Company on
certain refined product marketing facilities and equipment. The impairment was
recorded because of continued operating and cash flow losses associated with
these assets.

         Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting
for the Impairment of Long-Lived Assets to be Disposed of" requires that
long-lived assets be reviewed for impairment whenever there is evidence that the
carrying value of such assets may not be recoverable. This consists of comparing
the carrying value of the asset with the asset's expected future undiscounted
cash flows without interest costs. Estimates of expected future cash flows are
to represent management's best estimate based on reasonable and supportable
assumptions. The Company reviews its proved oil and gas properties on a field by
field basis when such evidence exists. Any impairment recognized in accordance
with SFAS No. 121 is permanent and may not be restored. Due principally to the
prolonged depressed state of oil and natural gas prices, one of the Company's
proved oil and gas fields was deemed impaired because it was not expected to
individually recover its entire carrying value. A $1 million charge for this
asset impairment was included in 1998 DD&A.

  Other Assets

         Included in other assets is $1,195,000 held in escrow as part of the
Company's efforts to comply with State of Kentucky regulations governing certain
of the Company's former coal mining operations. The Company has submitted all
documentation necessary to obtain final approval for land reclamation on a 280
acre tract in Kentucky. When the State issues its final approval, the escrowed
cash will be returned to the Company.

  Crude Oil Marketing Activities

         The Company enters into forward contracts to minimize the impact of
market fluctuations on its purchases of crude oil. The Company does not consider
these contracts to be financial instruments since the contracts permit
settlement in the delivery of crude oil. These contracts are no longer than one
year in duration. Gains and losses due to changes in the underlying market value
of crude oil are recognized in cost of sales in the month of physical delivery.

         The Company also utilizes swap agreements with two counterparties,
which are financial instruments requiring payments to (or receipt of payments
from) counterparties based on the differential between a fixed and variable
price for stated volumes over a contractual period of time.



                                     II-16
<PAGE>   29

                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


For each swap agreement written, the Company enters into an offsetting swap
agreement with a separate counterparty. These swap agreements are accounted for
using the mark-to-market method of accounting and the gain or loss is recorded
in cost of sales in the period of change in the market value. Gains and losses
on these agreements were immaterial to the Company for the years ended December
31, 1997 and 1996. No such agreements were utilized in 1998.

  Statement of Cash Flows

         Interest paid totaled $327,000, $323,000 and $619,000 during the years
ended December 31, 1998, 1997 and 1996, respectively. Income taxes paid during
these same periods totaled $566,000, $2,075,000 and $564,000, respectively.

Earnings Per Share

         The Company computes and presents earnings per share in accordance with
SFAS No. 128, "Earnings Per Share", which requires the presentation of basic
earnings per share and fully diluted earnings per share for potentially dilutive
securities. Earnings per share are based on the weighted average number of
shares of common stock and common stock equivalents outstanding during the
period. Such shares outstanding averaged 4,217,596 for 1998, 4,210,471 for 1997,
and 4,200,225 for 1996.

Use of Estimates

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. Examples of significant estimates used in the accompanying
consolidated financial statements include the accounting for depreciation,
depletion and amortization, income taxes and contingencies.

Recent Accounting Pronouncements

         In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." The statement establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. The statement requires (a) classification of items of
other comprehensive income by their nature in a financial statement and (b)
display of the accumulated balance of other comprehensive income separate from
retained earnings and additional paid-in capital in the equity section of the
balance sheet. SFAS No. 130 is effective for fiscal years beginning after
December 15, 1997 and reclassification of financial statements for earlier
periods provided for comparative purposes is required. There were no differences
between comprehensive and net income for the periods presented.

         In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." The
Statement establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. The Statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Qualifying hedges allow a derivative's gains




                                     II-17
<PAGE>   30
                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and losses to offset related results on the hedged item in the income statement,
and requires that a company must formally document, designate, and assess the
effectiveness of transactions that receive hedge accounting. SFAS No. 133 is
effective for fiscal years beginning after June 15, 1999. The standard cannot be
applied retroactively but early adoption is permitted. The Company has not yet
determined the impacts of adopting SFAS No. 133; however, this standard could
increase volatility in earnings and shareholders' equity, through other
comprehensive income.

         In December 1998, the Emerging Issues Task Force ("EITF") reached a
consensus on Issue 98-10, "Accounting for Contracts Involved in Energy Trading
and Risk Management Activities." EITF 98-10 is effective for fiscal years
beginning after December 15, 1998, and requires energy trading contracts to be
recorded at fair value on the balance sheet, with the change in fair value to be
recorded in earnings. The effect of initial application of EITF 98-10 will be
recorded as a cumulative effect of a change in accounting principle. Management
believes that the adoption of EITF 98-10 will not have a material impact on its
financial position or results of operations.

 (2)  LONG-TERM DEBT

         Long-term debt is comprised of the following (in thousands):
<TABLE>
<CAPTION>

                                                                                               December 31,        
                                                                                        --------------------------
                                                                                            1998           1997   
                                                                                        -----------     ----------   
<S>                                                                                     <C>             <C>       
         Bank lines of credit, secured by substantially all of the Company's
           (excluding GulfMark's) assets, due in twelve quarterly installments
           commencing on October 27, 2000.......................................        $     9,100     $    6,900
         Notes payable in varying installments through September 1998, interest 
           rate up to 10%, secured by certain land and equipment ...............                 --             71
                                                                                        -----------     ----------
                           Total debt...........................................              9,100          6,971
           Less - current maturities............................................                 --             71
                                                                                        -----------     ----------

         Long-term debt.........................................................        $     9,100     $    6,900
                                                                                        ===========     ==========

</TABLE>

         The Company's revolving bank loan agreement provides for two separate
lines of credit with interest at the bank's prime rate minus 1%. The agreement
also provides for an interest rate option at the lender's quoted Eurodollar rate
(LIBOR) plus 2%. The first line of credit or working capital loan provides for
borrowings up to $5,000,000 based on the total of 80% of eligible accounts
receivable and 50% of eligible inventories. Available borrowing capacity under
the working capital line is calculated monthly and as of December 31, 1998 was
established at $4,400,000 with $3,625,000 outstanding at year end 1998. The
second line of credit or oil and gas production loan provides for flexible
borrowings, subject to a borrowing base established semi-annually by the bank.
The borrowing base is presently established at $5,500,000, with the next
scheduled redetermination date being September 1, 1999. As of December 31, 1998,
$5,475,000 was outstanding under the oil and gas production loan facility. The
working capital loans also provide for the issuance of letters of credit. The
amount of each letter of credit obligation is deducted from the borrowing
capacity. As of December 31, 1998, letters of credit under this




                                     II-18
<PAGE>   31

                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


facility totaled $25,000. The revolving line of credit loans are scheduled to
expire on October 27, 2000, with the then present balance outstanding converting
to a term loan payable in 12 equal quarterly installments.


         The revolving loan agreement, among other things, places certain
restrictions on the Company with respect to additional borrowings and the
purchase or sale of assets, as well as requiring the Company to comply with
certain financial covenants, including maintaining a 1.0 to 1.0 ratio of
consolidated current assets to consolidated current liabilities. The Company is
also required to restrict from dividend payment at least 50% of annual net
income. At December 31, 1998, the Company was in compliance with all loan
covenants.

         A subsidiary of the Company (GulfMark) maintains a separate banking
relationship to provide letters of credit and to provide financing for up to $5
million of crude oil inventories and certain accounts receivable associated with
sales of crude oil. Such financing is provided on a demand note basis with
interest at the bank's prime rate plus 1 percent. The letter of credit and
demand note facilities are secured by substantially all of GulfMark's assets.
GulfMark had approximately $105 million and $85 million in letters of credit
outstanding as of December 31, 1998 and 1997, respectively, in support of its
crude oil purchasing activities. As of December 31, 1998, the Company had $6.8
million of eligible crude oil inventory, however, no amounts were outstanding
under the GulfMark term loan facility.

         The Company's weighted average effective interest rate for 1998, 1997,
and 1996 was 6.75%, 7.5% and 7.9%, respectively. No interest was capitalized
during 1998, 1997 or 1996. At December 31, 1998, the scheduled aggregate
principal maturities of the Company's long-term debt are: 1999 - None; 2000 -
$758,333; 2001 - $3,033,333; and 2002 - $3,033,333; 2003 - $2,275,001.

 (3)  INCOME TAXES

         The following table shows the components of the Company's income tax
provision (in thousands):

<TABLE>
<CAPTION>
                                                                                  Years Ended December 31,
                                                                          ---------------------------------------- 
                                                                              1998         1997            1996    
                                                                          ----------    -----------     ---------- 
<S>                                                                       <C>           <C>             <C>       
         Current:
              Federal.................................................    $       71    $      707      $      170
              State...................................................           155           385             454
                                                                          ----------    ----------      ----------
                                                                                 226         1,092             624
                                                                          ----------    ----------      ----------
         Deferred:
              Federal.................................................           901         1,737           2,500
                                                                          ----------    ----------      ----------
                                                                          $    1,127    $    2,829      $    3,124
                                                                          ==========    ==========      ==========
</TABLE>



         As of December 31, 1998 and 1997, the Company's deferred tax liability
totaled $560,000 and $229,000, respectively, and consisted principally of book
basis in excess of the underlying tax basis of fixed assets.



                                     II-19
<PAGE>   32


                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         A reconciliation of taxes computed at the corporate federal income tax
rate to the reported income tax provision is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                  Years Ended December 31,          
                                                                            --------------------------------------
                                                                                1998        1997           1996    
                                                                            ----------  -----------     ----------    
<S>                                                                         <C>          <C>            <C>       
         Statutory federal income tax provision at 34%............          $    1,126   $    2,780     $    2,825
         State income tax provision...............................                 155          385            454
         Federal statutory depletion..............................                (153)        (340)          (175)
         Other....................................................                  (1)           4             20
                                                                            -----------  ----------     ----------
                  Income taxes as reported........................          $    1,127   $    2,829     $    3,124
                                                                            ==========   ==========     ==========
</TABLE>


(4)  FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK

  Fair Value of Financial Instruments

         Cash Equivalents, Long and Short Term Debt

         The carrying amount of cash equivalents are assumed to approximate
their fair values because of the short maturities of these instruments.
Substantially all of the Company's long and short term debt obligations bear
interest at floating rates. As such, carrying amounts approximate fair values.

         Trading Activities

         During 1997 and 1996, the Company entered into swap agreements which
required payments to (or receipt of payments from) counterparties based on the
differential between a fixed and variable price for the commodities specified.
The Company accounted for these agreements using the mark-to-market method of
accounting and recorded the gain or loss as a cost of sales in the period of
change in the market with an offsetting entry to trade accounts receivable or
payable as appropriate. This activity was not material to the Company's
financial position or results of operations in 1997 or 1996. No such agreements
were entered into in 1998.

         The Company does not consider its forward contracts to be financial
instruments since the contracts permit settlement through the delivery of crude
oil.

Concentration of Credit Risk

         Credit risk represents the account loss which the Company would absorb
if its customers failed to perform pursuant to contractual terms. Management of
credit risk involves a number of considerations, such as the financial profile
of the customer, the value of collateral held, if any, specific terms and
duration of the contractual agreement, and the customer's sensitivity to
economic developments. The Company has established various procedures to manage
credit exposure, including initial credit approval, credit limits, and rights of
offset. Letters of credit and guarantees are also utilized to limit credit risk.



                                     II-20
<PAGE>   33




                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         The Company's largest customers consist of large multinational
integrated oil companies. In addition, the Company transacts business with
independent oil producers, major chemical concerns, crude oil trading companies
and a variety of commercial energy users. Accounts receivable associated with
crude oil marketing activities comprise approximately 90% of the Company's total
receivables as of December 31, 1998, and industry practice requires payment for
purchases of crude oil to take place on the 20th of the month following a
transaction. The Company's credit policy and the relatively short duration of
receivables mitigates the amount of the allowance for doubtful accounts
required. The Company had accounts receivable from two customers that comprised
16% and 15%, respectively, of total receivables at December 31, 1998 and from
one customer that comprised 20% of total receivables at December 31, 1997.

         An allowance for doubtful accounts is provided on non-crude oil
marketing receivables and accounts receivable are net of allowances for doubtful
accounts at December 31, 1998 and 1997, of $235,000 and $98,000, respectively.



(5)  EMPLOYEE BENEFITS

         The Company's 1984 stock option plan authorized the granting of
incentive stock options or non-qualified stock options to certain executives and
key employees to purchase an aggregate of 125,000 shares of common stock at not
less than the fair market value at the date of grant. The plan expired in 1994
with respect to the granting of additional stock options. During 1997, 14,250
stock options were exercised at prices ranging from $3.625 to $4.75 per share.
During 1996, 5,750 stock options were exercised at prices ranging from $3.625 to
$4.75 per share. As of December 31, 1997, the plan was terminated and all
unexecuted options expired.

         The Company maintains a 401(k) plan for the benefit of its employees.
Company contributions to the plan were $210,000 in 1998, $180,000 in 1997, and
$180,000 in 1996.

(6)  TRANSACTIONS WITH RELATED PARTIES

         Sakco, Ltd. ("Sakco") and Kasco, Ltd. ("Kasco"), family limited
partnerships of which Mr. K. S. Adams, Jr., Chairman and President, is a limited
partner, Sakdril, Inc. ("Sakdril"), a wholly owned subsidiary of KSA Industries
Inc. (KSAI), a major stockholder of the Company, and certain officers and
members of the Board of Directors of the Company have participated as working
interest owners in certain oil and gas wells and programs drilled or
administered by the Company. Sakco, Kasco, Sakdril and the officers and
directors participated in each of the wells and programs under terms no
better than those afforded other non-affiliated working interest owners.
Associated with this activity, as of December 31, 1998, the Company was owed
$40,000 from Kasco and Sakco, and the Company owed $285,000 to Kasco and Sakco.
As of December 31, 1997, the Company was owed $38,000 from Kasco and Sakco, and
the Company owed $720,000 to Kasco and Sakco.




                                     II-21
<PAGE>   34





                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         David B. Hurst, Secretary of the Company, is a partner in the law firm
of Chaffin & Hurst. The Company has been represented by Chaffin & Hurst since
1974 and plans to use the services of that firm in the future. Chaffin & Hurst
currently leases office space from the Company. Such transactions with Chaffin &
Hurst are on the same terms as those prevailing at the time for comparable
transactions with unrelated entities.

         The Company also enters into certain transactions in the normal course
of business with other affiliated entities. These transactions with affiliated
companies are on the same terms as those prevailing at the time for comparable
transactions with unrelated entities.

(7)  COMMITMENTS AND CONTINGENCIES

         The Company has operating lease arrangements for tractors, trailers,
office space, warehousing and other equipment and facilities. Rental expense for
the years ended December 31, 1998, 1997, and 1996 was $7,093,000, $5,933,000 and
$3,827,000, respectively. At December 31, 1998, commitments under long-term
noncancelable operating leases for the next five years and thereafter are
payable as follows: 1999 - $4,787,000; 2000 - $4,054,000; 2001 - $3,827,000;
2002 - $2,984,000; 2003 - $2,139,000; 2004 and thereafter - $2,331,000.

         The Company's subsidiary, Ada Crude Oil Company (Ada), has been named
as one of sixty-three defendants in a lawsuit styled The State of Texas et al vs
Amerada Hess Corporation. The suit alleges, among other claims, that the
defendants as "common purchasers of oil" discriminated against the plaintiffs in
favor of the defendants' own production and that of others. The plaintiffs also
seek class certification. In response, the Company has filed a general denial
and has asserted a number of affirmative defenses. Attorneys for the plantiff
reviewed Ada's response and subsequently informed the Company that Ada has been
recommended for dismissal from the lawsuit. This recommendation is currently
under review by the plantiff. The Company will continue to vigorously contest
this matter and does not expect it to have a significant adverse effect on its
financial position or results of operations.

          In the normal course of business, the Company and its subsidiaries
become involved in litigation incident to operations. In management's opinion,
the ultimate resolution of all litigation matters and disputes will not have a
material adverse impact on the Company's financial position or results of
operations.

(8)      SEGMENT REPORTING

         In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." Under this new standard, companies
are required to report certain information about operating segments in
consolidated statements. Operating segments are determined based on the method
by which management organizes its business for making operating decisions and
assessing performance. The standard also requires that companies report certain
information about their products and services, the geographic areas in which
they operate, and their major customers. The Company adopted SAFS No. 131
effective January 1, 1998. Previous presentation of segment information
reflected management's view of its operations and, as such, adoption of this
standard did not alter the segment information that follows.



                                     II-22
<PAGE>   35

                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         The Company is primarily engaged in the business of crude oil and
petroleum products marketing, transportation, and oil and gas exploration and
production. Information concerning the Company's various business activities is
summarized as follows (in thousands):


<TABLE>
<CAPTION>
                                                                                
                                                         Earnings       Depreciation,     Property
                                                          (Loss)          Depletion         and      
                                                           from              and          Equipment     Identifiable
                                          Revenues      Operations       Amortization     Additions        Assets    
                                         ----------     ----------      -------------     ---------     ------------         
<S>                                      <C>            <C>                <C>            <C>            <C>       
Year ended
 December 31, 1998 -
   Marketing .......................     $1,936,358     $    4,478         $    3,126     $    3,370     $   86,510
   Transportation ..................         32,145          3,474                965          4,378         13,947
   Oil and gas .....................          5,689         (1,840)(1)          4,493          3,023         10,227
   Other ...........................             --             --                 22             --         11,650
                                         ----------     ----------         ----------     ----------     ----------
                                         $1,974,192     $    6,112         $    8,606     $   10,771     $  122,334
                                         ==========     ==========         ==========     ==========     ==========

Year ended
 December 31, 1997 -
   Marketing .......................     $1,921,486     $    1,382         $    1,219     $    6,913     $   82,923
   Transportation ..................         31,970          5,225                639          1,377         10,345
   Oil and gas .....................          9,904          4,059              4,035          5,653         12,445
   Other ...........................             --             --                 21             20          8,570
                                         ----------     ----------         ----------     ----------     ----------

                                         $1,963,360     $   10,666         $    5,914     $   13,963     $  114,283
                                         ==========     ==========         ==========     ==========     ==========


Year ended
 December 31, 1996 -
   Marketing .......................     $1,466,736     $    5,816         $    1,899     $    1,953     $   84,087
   Transportation ..................         21,282          2,356                580            758          9,012
   Oil and gas .....................          9,061          3,711              3,655          3,161         11,218
   Other ...........................             --             --                 26             85          6,565
                                         ----------     ----------         ----------     ----------     ----------
                                         $1,497,079     $   11,883         $    6,160     $    5,957     $  110,882
                                         ==========     ==========         ==========     ==========     ==========
</TABLE>


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

(1) Includes a $5,899,000 comparative earnings decrease caused by 3D seismic
expense, decreased crude oil and natural gas prices and a related write-down of
oil and gas properties.

         Intersegment sales are insignificant. Other identifiable assets are
primarily corporate cash, accounts receivable, and properties not identified
with any specific segment of the Company's business. All sales by the Company
occurred in the United States.

         During 1998, the Company had sales to one customer that totaled $319
million or more than 10% of total sales. During 1997 and 1996, the Company had
sales to two customers which totaled more than 10% of total sales. Such sales
totaled $267 million and $261 million in 1997 and $166 million and $151 million,
in 1996.


                                     II-23
<PAGE>   36

                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         Earnings from operations by segment represent revenues less operating
costs and expenses and depreciation, depletion and amortization and are
reconciled to earnings from operations before income taxes, as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                             Years Ended December 31,             
                                                                   -------------------------------------------
                                                                       1998             1997           1996     
                                                                   ----------       -----------    -----------   
<S>                                                                <C>              <C>             <C>       
Earnings from operations.............................              $    6,112       $   10,666      $   11,883
General and administrative expenses..................                  (2,738)          (2,578)         (2,783)
Property sales and other.............................                     420              792             142
Interest expense ....................................                    (327)            (318)           (477)
                                                                   -----------       ---------      ----------
Earnings before income taxes.........................              $    3,467        $   8,562      $    8,765
                                                                   ==========        =========      ==========
</TABLE>





















                                     II-24
<PAGE>   37


                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                          SUPPLEMENTARY FINANCIAL DATA

Quarterly Financial Data (Unaudited) -

         Selected quarterly financial data and earnings per share of the Company
are presented below for the years ended December 31, 1998 and 1997 (in
thousands, except per share data):

<TABLE>
<CAPTION>

                                                                       Net Earnings                 Dividends          
                                                              --------------------------      ----------------------    
                                                  Operating                      Per                           Per
                               Revenues            Earnings        Amount      Share(1)       Amount          Share
                           -------------        ------------   ------------    --------       -------        -------   
<S>                        <C>                  <C>            <C>              <C>           <C>            <C>    
1998 -
March 31...........        $     416,636        $      2,134   $      1,040     $   .25       $    --        $    --
June 30............              464,578               1,427            424         .10            --             --
September 30.......              542,390               1,056            143         .03            --             --
December 31........              550,588               1,495            733         .17           422            .10
                           -------------        ------------   ------------      ------       -------        -------
                           $   1,974,192        $      6,112   $      2,340      $  .55       $   422        $   .10 
                           =============        ============   ============      ======       =======        ======= 

1997 -
March 31...........        $     494,145        $      3,257   $      1,882      $  .45       $    --         $   --
June 30............              442,015               1,477            716         .17            --             --
September 30.......              451,870               2,977          1,568         .37            --             --
December 31........              575,330               2,955          1,567         .37           422            .10
                           -------------        ------------   ------------      ------       -------         ------
                           $   1,963,360        $     10,666   $      5,733      $ 1.36       $   422         $  .10
                           =============        ============   ============      ======       =======         ======
</TABLE>





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

(1) Reflects basic and diluted earnings per share for indicated periods.




                                     II-25
<PAGE>   38


                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                          SUPPLEMENTARY FINANCIAL DATA


Oil and Gas Producing Activities (Unaudited) -

         Total costs incurred in oil and gas exploration and development
activities, all incurred within the United States, were as follows (in
thousands, except per barrel information):

<TABLE>
<CAPTION>
                                                                          Years Ended December 31,        
                                                                   ---------------------------------------   
                                                                      1998            1997         1996    
                                                                   ----------      ----------   ----------
<S>                                                                <C>             <C>          <C>
         Property acquisition costs
              Unproved......................................       $      600      $      472   $       41
              Proved........................................              788              --           --
         Exploration costs..................................            1,559              --           --
         Development costs..................................            1,636           5,181        3,120
                                                                   ----------      ----------   ----------
              Total costs incurred..........................       $    4,583      $    5,653   $    3,161
                                                                   ==========      ==========   ==========
</TABLE>

         The aggregate capitalized costs relative to oil and gas producing
activities are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                 December 31,        
                                                                       -----------------------------
                                                                          1998                1997 
                                                                       ---------          ----------    
<S>                                                                    <C>                <C>       
         Unproved oil and gas properties......................         $     871          $    1,135
         Proved oil and gas properties........................            30,652              29,488
                                                                       ---------          ----------
                                                                          31,523              30,623
         Accumulated depreciation, depletion
           and amortization...................................           (22,010)            (19,641)
                                                                       ---------          ----------

                  Net capitalized cost........................         $   9,513          $   10,982
                                                                       =========          ==========
</TABLE>





                                     II-26
<PAGE>   39

                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                          SUPPLEMENTARY FINANCIAL DATA

  Estimated Oil and Natural Gas Reserves (Unaudited) -

         The following information regarding estimates of the Company's proved
oil and gas reserves, all located in the United States, is based on reports
prepared on behalf of the Company by independent petroleum engineers, Ryder
Scott Company. Because oil and gas reserve estimates are inherently imprecise
and require extensive judgments of reservoir engineering data, they are
generally less precise than estimates made in conjunction with financial
disclosures. The revisions of previous estimates as reflected in the table below
result from more precise engineering calculations based upon additional
production histories.


<TABLE>
<CAPTION>
                                                               Years Ended December 31,                         
                                        ---------------------------------------------------------------------
                                                1998                   1997                    1996         
                                        -------------------     -------------------     ---------------------
                                        Natural     Natural     Natural
                                          Gas         Oil         Gas         Oil          Gas        Oil
                                        (Mcf's)     (Bbls.)     (Mcf's)     (Bbls.)      (Mcf's)     (Bbls.)
                                                                   (In thousands)
<S>                                     <C>           <C>        <C>           <C>        <C>           <C> 
Proved developed and
  undeveloped reserves -
   Beginning of year                     9,761        211         9,834        225         7,692        281
   Revisions of previous
     estimates                              75         19         1,153        (12)        1,124          1
   Purchase of oil and gas
     reserves                            1,281          3            --         --            --         --
   Extensions, discoveries
     and other additions                   683         30         2,549         60         4,468         35
   Production                           (2,552)       (68)       (3,775)       (62)       (3,450)       (92)
                                      --------     ------        ------        ---        ------        ---
   End of year                           9,248        195         9,761        211         9,834        225
                                      ========     ======        ======        ===        ======        ===
Proved developed reserves -
   End of year                           9,248        195         9,761        211         9,834        225
                                      ========     ======        ======        ===        ======        ===
</TABLE>

  Standardized Measure of Discounted Future Net Cash Flows from Oil and Gas
             Operations and Changes Therein (Unaudited) -

         The standardized measure of discounted future net cash flows was
determined based on the economic conditions in effect at the end of the years
presented, except in those instances where fixed and determinable gas price
escalations are included in contracts. The disclosures below do not purport to
present the fair market value of the Company's oil and gas reserves. An estimate
of the fair market value would also take into account, among other things, the
recovery of reserves in excess of proved reserves, anticipated future changes in
prices and costs, a discount factor more representative of the time value of
money and risks inherent in reserve estimates.

         The reserve estimates provided at December 31, 1998 are based on oil
prices of approximately $9.87 per barrel and gas prices of approximately $1.86
per Mcf. In most instances, the Company's natural gas sales contracts provide
for the Company to receive a percentage of the combined proceeds from the sales
of natural gas and associated natural gas liquids. Therefore, average natural
gas prices reported herein include the value of associated natural gas liquids.




                                     II-27
<PAGE>   40

                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                          SUPPLEMENTARY FINANCIAL DATA


<TABLE>
<CAPTION>
                                                                            Years Ended December 31,            
                                                                     ---------------------------------------- 
                                                                         1998           1997           1996  
                                                                     -----------     -----------   ----------   
                                                                                    (In thousands)
<S>                                                                  <C>             <C>           <C>       
Future gross revenues.............................................   $    19,157     $   25,569    $   38,074
Future costs -
    Lease operating expenses......................................        (6,381)        (7,042)       (8,407)
    Development costs.............................................           (66)           (59)         (101)
                                                                     -----------     ----------    ----------
Future net cash flows before income taxes.........................        12,710         18,468        29,566
Discount at 10% per annum.........................................        (5,104)        (4,824)       (8,099)
                                                                     ------------    ----------    ----------
Discounted future net cash flows
    before income taxes...........................................         7,606         13,644        21,467
Future income taxes, net of discount at 10%
    per annum.....................................................        (1,765)        (1,777)       (4,431)
                                                                     ------------    ----------    -----------
Standardized measure of
    discounted future net cash flows..............................   $     5,841     $   11,867    $   17,036
                                                                     ===========     ==========    ==========
</TABLE>

         The following are the principal sources of changes in the standardized
measure of discounted future net cash flows:

<TABLE>
<CAPTION>
                                                                            Years Ended December 31,            
                                                                     -----------------------------------------  
                                                                         1998           1997           1996   
                                                                     -----------     -----------   -----------  
                                                                                  (In thousands)
<S>                                                                  <C>             <C>           <C>       
Beginning of year.................................................   $    11,867     $   17,036    $    8,211
    Revisions to reserves proved in prior years -
      Net change in prices and production costs...................        (2,625)        (7,978)        2,875
      Net change due to revisions in quantity estimates...........           316          1,331         1,840
      Accretion of discount.......................................         1,364          2,146         1,010
      Production rate changes and other ..........................        (3,218)          (770)        2,383
                                                                     -----------     ----------    ----------
         Total revisions..........................................        (4,163)        (5,271)        8,108
    Purchase of oil and gas reserves, net of future
      production costs............................................         1,282             --            --
    New field discoveries and extensions,
      net of future production costs..............................         1,080          5,542        10,623
    Sales of oil and gas produced, net of
      production costs ...........................................        (4,213)        (8,094)       (7,366)
    Net change in income taxes....................................           (12)         2,654        (2,540)
                                                                     -----------     ----------    -----------
    Net change in standardized measure of
      discounted future net cash flows ...........................        (6,026)        (5,169)        8,825
                                                                     -----------     ----------    ----------
End of year.......................................................   $     5,841     $   11,867    $   17,036
                                                                     ===========     ==========    ==========
</TABLE>





                                     II-28
<PAGE>   41




                 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

                          SUPPLEMENTARY FINANCIAL DATA


  Results of Operations for Oil and Gas Producing Activities (Unaudited) -

         The results of oil and gas producing activities, excluding corporate
overhead and interest costs, are as follows:

<TABLE>
<CAPTION>
                                                                             Years Ended December 31,  
                                                                     -----------------------------------------
                                                                        1998            1997          1996    
                                                                     -----------     ----------    ----------- 
                                                                                   (In thousands)
<S>                                                                  <C>             <C>           <C>       
Revenues..........................................................   $     5,689     $    9,904    $    9,061
Costs and expenses -
    Production....................................................         1,476          1,810         1,695
    Exploration...................................................         1,560             --            --
    Depreciation, depletion and amortization......................         4,493          4,035         3,655
                                                                     -----------     ----------    ----------
Operating income (loss) before income taxes.......................        (1,840)         4,059         3,711
Income tax expense (benefit)......................................          (644)         1,380         1,170
                                                                     -----------     ----------    ----------
Operating income (loss)...........................................   $    (1,196)    $    2,679    $    2,541
                                                                     ===========     ==========    ==========
</TABLE>


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

           None.






                                     II-29
<PAGE>   42





                                    PART III

Item 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

         The information concerning executive officers of the Company is
included in Part I. The information concerning directors of the Company is
incorporated by reference from the Company's definitive Proxy Statement for the
Annual Meeting of Shareholders to be held April 28, 1999, to be filed with the
Commission not later than 120 days after the end of the fiscal year covered by
this Form 10-K.

Item 11.   EXECUTIVE COMPENSATION

Item 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Item 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by Items 11, 12 and 13 is incorporated by
reference from the Company's definitive Proxy Statement for the Annual Meeting
of Shareholders to be held April 28, 1999, to be filed with the Commission not
later than 120 days after the end of the fiscal year covered by this Form 10-K.




                                     III-1
<PAGE>   43



                                     PART IV


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

(a) The following documents are filed as a part of this Form 10-K:

               1. Financial Statements

                     Report of Independent Public Accountants

                     Consolidated Balance Sheet as of December 31, 1998 and 1997

                     Consolidated Statement of Earnings for the Years Ended
                             December 31, 1998, 1997 and 1996

                     Consolidated Statement of Shareholders' Equity for the 
                             Years Ended December 31, 1998, 1997 and 1996

                     Consolidated Statement of Cash Flows for the Years Ended
                             December 31, 1998, 1997 and 1996

                     Notes to Consolidated Financial Statements

                     Supplementary Financial Data (All unaudited)

               2. Exhibits required to be filed

3(a)    -      Certificate of Incorporation of the Company, as amended.
               (Incorporated by reference to Exhibit 3(a) filed with the Annual
               Report on Form 10-K of the Company for the fiscal year ended
               December 31, 1987)

3(b)    -      Bylaws of the Company, as amended (Incorporated by reference to
               Exhibits 3.2 and 3.2.1 of Amendment No. 1 to the Registration
               Statement on Form S-1 filed with the Securities and Exchange
               Commission on October 29, 1973 - File No. 2-48144)

3(c)    -      Amendment to the Bylaws of the Company to add an Article VII,
               Section 8. Indemnification of Directors, Officers, Employees and
               Agents (Incorporated by reference to Exhibit 3(c) of the Annual
               Report on Form 10-K of the Company for the fiscal year ended
               December 31, 1986)

4(a)    -      Specimen common stock Certificate (Incorporated by reference to
               Exhibit 4(a) of the Annual Report on Form 10-K of the Company for
               the fiscal year ended December 31, 1991)







                                      IV-1

<PAGE>   44



4(c)*    -     Fifth Amendment to Loan Agreement  between Service Transport 
               Company et al and NationsBank of Texas N.A. dated September
               30, 1997.

21*      -     Subsidiaries of the Registrant

27*      -     Financial Data Schedule

------------------------------
*  - Filed herewith

         All other financial schedules have been omitted because they are not
applicable or the required information is shown in the financial statements or
notes thereto.

         The separate financial statements of Adams Resources & Energy, Inc.
(the "Parent") are omitted because the conditions specified in Rules 5-04 and
12-04 of regulation S-X are met.

         Copies of all agreements defining the rights of holders of long-term
debt of the Company and its subsidiaries, which agreements authorize amounts not
in excess of 10% of the total consolidated assets of the Company, are not filed
herewith but will be furnished to the Commission upon request.




                                      IV-2
<PAGE>   45




                                   SIGNATURES

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

                                            ADAMS RESOURCES & ENERGY, INC.
                                                              (Registrant)


By /s/ RICHARD B. ABSHIRE                   By /s/ K. S. ADAMS, JR.  
   ------------------------------------        --------------------------------
    (Richard B. Abshire,                       (K. S. Adams, Jr.,
     Vice President-Finance, Director          President,Chairman of the Board,
and Chief Financial Officer)                   and Chief Executive Officer)


Date:  March 11, 1999

         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 date indicated.


By /s/ CLAUDE H. LEWIS                      By /s/ E. C. REINAUER, JR. 
   ------------------------------------        --------------------------------
    (Claude H. Lewis, Director)                (E. C. Reinauer, Jr., Director)


By /s/ THOMAS S. SMITH                      By /s/ E. JACK WEBSTER, JR.  
   ------------------------------------        --------------------------------
    (Thomas S. Smith, Director)                (E. Jack Webster, Jr., Director)


By /s/ JUANITA G. SIMMONS                   By /s/ EDWARD WIECK   
   ------------------------------------        --------------------------------
    (Juanita G. Simmons, Director)             (Edward Wieck, Director)


By /s/ JOHN A. BARRETT                         
   ------------------------------------        
    (John A. Barrett, Director




Date:  March 11, 1999



                                      V-1
<PAGE>   46




                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

 Exhibit
 Number             Description             
---------          -------------
<S>                <C>
3(a)       -       Certificate of Incorporation of the Company, as amended.
                   (Incorporated by reference to Exhibit 3(a) filed with the
                   Annual Report on Form 10-K of the Company for the fiscal year
                   ended December 31, 1987)

3(b)       -       Bylaws of the Company, as amended (Incorporated by
                   reference to Exhibits 3.2 and 3.2.1 of Amendment No. 1 to the
                   Registration Statement on Form S-1 filed with the Securities
                   and Exchange Commission on October 29, 1973 - File No.
                   2-48144)

3(c)       -       Amendment to the Bylaws of the Company to add an Article
                   VII, Section 8. Indemnification of Directors, Officers,
                   Employees and Agents (Incorporated by reference to Exhibit
                   3(c) of the Annual Report on Form 10-K of the Company for the
                   fiscal year ended December 31, 1986)

4(a)       -       Specimen common stock Certificate (Incorporated by
                   reference to Exhibit 4(a) of the Annual Report on Form 10-K
                   of the Company for the fiscal year ended December 31, 1991)

4(b)       -       Loan Agreement  between Adams Resources & Energy,  Inc. and
                   NationsBank Texas N.A. dated October 27, 1993 ( Incorporated
                   by reference to Exhibit 4(b) of the Annual Report on Form
                   10-K of the Company for the fiscal year ended December 31,
                   1993)

4(c)*      -       Fifth Amendment to Loan Agreement between Service Transport
                   Company et al and NationsBank of Texas N.A. dated September
                   30, 1997.

21*        -       Subsidiaries of the Registrant

27*        -       Financial Data Schedule
</TABLE>

------------------------------
*  - Filed herewith



                                      V-2