-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IxHTcaXpZkHn43vz/QhztlQaGaWfMDOhmgMPVu+eva1OR7ySajccnLTusBJymfaR xqIeBM7YO0VYACDI6fb5aA== 0000790372-01-500011.txt : 20010510 0000790372-01-500011.hdr.sgml : 20010510 ACCESSION NUMBER: 0000790372-01-500011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MS CARRIERS INC CENTRAL INDEX KEY: 0000790372 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 621014070 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14781 FILM NUMBER: 1627232 BUSINESS ADDRESS: STREET 1: 3171 DIRECTORS ROW CITY: MEMPHIS STATE: TN ZIP: 38116 BUSINESS PHONE: 9013322500 MAIL ADDRESS: STREET 1: 3171 DIRECTORS ROW CITY: MEMPHIS STATE: TN ZIP: 38116 10-Q 1 msc10q.txt M.S. CARRIERS 10-Q 1ST QUARTER 2001 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2001 Commission file Number 0-14781 M.S. CARRIERS, INC. (Exact name of Registrant as specified in its charter.) Tennessee 62-1014070 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3171 Directors Row, Memphis, TN 38131 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (901) 332-2500 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date (April 30, 2001): Common Stock, $.01 per share: 11,234,101 shares 1 M.S. Carriers, Inc. Index to Form 10-Q Contents Part I - Financial Information Item 1 - Financial Statements (Unaudited) Consolidated Balance Sheets as of March 31, 2001 and December 31, 2000............................................. 3 Consolidated Statements of Income for the Three Months Ended March 31, 2001 and 2000....................................... 5 Consolidated Statement of Stockholders' Equity for the Three Months Ended March 31, 2001................................... 6 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2001 and 2000................................. 7 Notes to Consolidated Financial Statements...................... 8 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations........................... 11 Item 3 - Quantitative and Qualitative Disclosures About Market Risk.......................................................... 16 Part II - Other Information Item 1 - Legal Proceedings...................................... 17 Item 2 - Changes in Securities.................................. 17 Item 3 - Defaults Upon Senior Securities........................ 17 Item 4 - Submission of Matters to a Vote of Security Holders.... 17 Item 5 - Other Information...................................... 17 Item 6 - Exhibits and Reports on Form 8-K....................... 17 Signatures...................................................... 20 2 PART I - Financial Information Item 1. Financial Statements (Unaudited) M.S. Carriers, Inc. Consolidated Balance Sheets March 31 December 31 2001 2000 ---------------------------------------- (Unaudited) Assets Current assets: Cash and cash equivalents $ 287,532 $ 442,188 Accounts receivable: Trade, net 83,785,713 84,547,281 Affiliate 11,007,081 Officers and employees 1,718,019 1,657,217 ---------------------------------------- 85,503,732 97,211,579 Recoverable income taxes 5,991,776 3,080,972 Deferred income taxes 14,078,000 14,113,152 Prepaid expenses and other 13,800,525 8,590,836 ---------------------------------------- Total current assets 119,661,565 123,438,727 Property and equipment: Land and land improvements 13,491,942 13,469,040 Buildings 40,016,991 39,987,066 Revenue equipment 566,742,379 567,967,605 Service equipment and other 56,522,084 56,118,261 Construction in progress 2,976,729 2,895,443 ---------------------------------------- 679,750,125 680,437,415 Less accumulated depreciation and amortization 218,730,253 204,637,683 ---------------------------------------- 461,019,872 475,799,732 Other assets 20,961,393 21,213,310 ---------------------------------------- Total assets $601,642,830 $620,451,769 ======================================== See accompanying notes. 3 M.S. Carriers, Inc. Consolidated Balance Sheets (continued) March 31 December 31 2001 2000 ---------------------------------------- (Unaudited) Liabilities and stockholders' equity Current liabilities: Accounts Payable: Trade, net $ 5,298,319 $ 7,398,017 Affiliate 953,385 Accrued compensation and related costs 7,395,997 4,611,314 Accrued expenses 15,465,644 13,139,878 Claims payable 33,752,269 33,842,957 Current maturities of long-term debt 61,171,858 65,558,795 ---------------------------------------- Total current liabilities 124,037,472 124,550,961 Fair value of interest rate swaps 3,039,900 Long-term debt, less current maturities 186,743,933 207,816,118 Deferred income taxes 69,179,351 69,929,823 Commitments and Contingencies Stockholders' equity: Common stock Authorized Shares - 20,000,000 Issued and outstanding shares - 11,234,101 at March 31, 2001 11,168,501 at December 31, 2000 112,341 111,685 Additional paid-in capital 61,868,748 60,567,768 Retained earnings 161,384,911 160,321,332 Notes receivable from officers (851,719) (851,719) Cumulative other comprehensive loss (3,872,107) (1,994,199) ---------------------------------------- Total stockholders' equity 218,642,174 218,154,867 ---------------------------------------- Total liabilities and stockholders' equity $601,642,830 $620,451,769 ======================================== See accompanying notes. 4 M.S. Carriers, Inc. Consolidated Statements of Income (Unaudited) Three Months Ended March 31 2001 2000 ---------------------------------------- Operating revenues $182,183,334 $167,068,901 Operating expenses: Salaries, wages and benefits 66,182,115 53,042,521 Operations and maintenance 38,481,921 31,511,492 Taxes and licenses 3,890,545 3,225,958 Insurance and claims 8,294,694 4,991,473 Communications and utilities 2,496,661 2,071,188 Depreciation and amortization 16,539,574 18,208,486 Gain on disposals of revenue equipment (139,340) (12,934) Rent and purchased transportation 37,440,981 42,917,026 Other 2,269,418 1,247,191 ---------------------------------------- 175,456,569 157,202,401 ---------------------------------------- Operating income 6,726,765 9,866,500 Other expense (income): Interest expense 4,740,860 3,424,101 Other 194,637 (630,361) ---------------------------------------- 4,935,497 2,793,740 ---------------------------------------- Income before income taxes 1,791,268 7,072,760 Income taxes 727,689 2,458,472 ---------------------------------------- Net income $ 1,063,579 $ 4,614,288 ======================================== Basic earnings per share $0.09 $0.39 ======================================== Diluted earnings per share $0.09 $0.38 ======================================== See accompanying notes. 5
M.S. Carriers, Inc. Consolidated Statement of Stockholders' Equity (Unaudited) Notes Receiv- Cumulative Common Stock Paid-In Retained able From Other Compre- Shares Amount Capital Earnings Officers hensive Loss Total -------------------------------------------------------------------------------------------- Balance at January 1, 2001 11,168,501 $111,685 $60,567,768 $160,321,332 ($851,719) ($1,994,199) $218,154,867 Exercise of employee stock options 65,600 656 1,300,980 1,301,636 Foreign currency translation adjustment 82,827 82,827 Fair market value of interest rate swaps, net of taxes (1,960,735) (1,960,735) Net income 1,063,579 1,063,579 ---------------------------------------------------------------------------------------------- Balance at March 31, 2001 11,234,101 $112,341 $61,868,748 $161,384,911 ($851,719) ($3,872,107) $218,642,174 ============================================================================================== See accompanying notes.
6 M.S. Carriers, Inc. Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31 2001 2000 ----------------------------------------- Operating activities Net income $ 1,063,579 $ 4,614,288 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 16,539,574 18,208,486 Gain on disposals of revenue equipment (139,340) (12,934) Deferred income taxes 363,845 1,229,236 Changes in operating assets and liabilities: Accounts receivable 761,568 (8,351,188) Current and other assets 2,988,436 (6,549,137) Trade accounts payable (2,099,698) (1,260,165) Other current liabilities 5,973,146 2,168,231 ----------------------------------------- Net cash provided by operating activities 25,451,110 10,046,817 Investing activities Purchases of property and equipment (1,685,106) (37,058,526) Proceeds from disposals of property and equipment 2,657,454 7,123,449 ----------------------------------------- Net cash provided by (used in) investing activities 972,348 (29,935,077) Financing activities Net change in revolving line of credit obligations (18,545,000) 39,948,546 Proceeds from exercise of stock options 1,301,636 - Principal payments on long-term debt obligations (9,334,750) (8,165,445) Repurchase of common stock (11,801,875) ----------------------------------------- Net cash provided by (used in) financing activities (26,578,114) 19,981,226 ----------------------------------------- Increase (decrease) in cash and cash equivalents (154,656) 92,966 Cash and cash equivalents at beginning of period 442,188 242,606 ----------------------------------------- Cash and cash equivalents at end of period $ 287,532 $ 335,572 ========================================= Supplemental cash flow disclosure: Property and equipment acquired under capitalized lease obligations $ 2,420,626 $ 12,555,166 ========================================= See accompanying notes. 7 M.S. Carriers, Inc. Notes to Consolidated Financial Statements (Unaudited) March 31, 2001 1. Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001. For further information and a listing of the Company's significant accounting policies, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2000. 2. Net Income Per Common Share Three Months Ended March 31 2001 2000 -------------------------------------- Numerator: Net income available to common shareholders $ 1,063,579 $ 4,614,288 ====================================== Denominator: Weighted-average shares for basic earnings per share 11,223,964 11,949,568 Dilutive employee stock options 508,730 239,708 -------------------------------------- Adjusted weighted-average shares for diluted earnings per share 11,732,694 12,189,276 ====================================== Basic earnings per share $0.09 $0.39 ====================================== Diluted earnings per share $0.09 $0.38 ====================================== 8 3. Industry Segments The Company's two reportable segments are trucking operations and logistics. These segments are classified primarily by the type of services they provide. Performance of the segments is generally evaluated by their operating income. Summarized segment information is as follows: Three Months Ended March 31 2001 2000 -------------------------------------- (in thousands) Operating Revenues: Trucking $182,183 $153,553 Logistics(1) - 17,261 Intersegment eliminations - (3,745) -------------------------------------- $182,183 $167,069 ====================================== Operating Income: Trucking $ 6,727 $ 9,193 Logistics - 674 -------------------------------------- $ 6,727 $ 9,867 ====================================== (1) In July 2000, the Company contributed its logistics operations to Transplace.com in exchange for an ownership interest in Transplace.com. The Company's investment in Transplace.com is classified as an other asset on its consolidated balance sheet. 4. Derivative Financial Instruments The Company adopted Statement of Financial Standards No. 133 (SFAS No. 133), "Accounting for Derivative Instruments and Hedging Activities," and its amendments, Statements 137 and 138, on January 1, 2001. SFAS No. 133 requires that all derivative instruments be recorded on the balance sheet at fair value. The Company has designated its interest rate swap agreements as cash flow hedge instruments. The swap agreements are used to manage exposure to interest rate movement by effectively changing the variable rate to a fixed rate. The critical terms of the interest rate swap agreements are the same; therefore, the Company has assumed that there is no hedge ineffectiveness in the hedge relationship. Changes in fair value of the interest rate swap agreements will be recognized in other comprehensive income, until the hedged items are recognized in earnings. The Company has hedged its exposure to interest rate movement through March 18, 2009. At January 1, 2001, the swap agreements were in an unfavorable position by approximately $1,417,800. In accordance with the transition provisions of SFAS No. 133, the cumulative effect of an accounting change adjustment on January 1, 2001, was $914,481 in accumulated other comprehensive loss, with a 9 deferred income tax asset of $503,319. At March 31, 2001, the fair value of the swap agreements decreased further; therefore, the derivative financial instruments were adjusted to a liability of $3,039,900. Accumulated other comprehensive income was adjusted to an accumulated loss of $1,960,735 and the deferred income tax asset was adjusted to $1,079,165. For the three months ended March 31, 2001, approximately $62,000 loss was reclassified as interest expense. As the swap agreements are deemed to be effective cash flow hedges, there was no income statement impact related to hedge ineffectiveness. The Company expects to reclassify approximately $629,000 of existing losses in accumulated other comprehensive income (loss), net of taxes, into net income (loss) through March 31, 2002. 5. Fuel Surcharges In accordance with SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements", the Company has classified fuel surcharges as revenue for the three months ended March 31, 2001. Previously, fuel surcharges were recorded as an offset to fuel expense in operations and maintenance expense. The Company's statement of income for the three months ended March 31, 2000 has been restated to reflect this reclassification. 6. Change in Accounting Principle Effective January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS No. 133), as amended in June 2000 by Statement of Accounting Standards No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities (SFAS No. 138), which requires that all derivative instruments be reported on the balance sheet at fair value and establishes criteria for design and effectiveness of hedging relationships. The cumulative effect of adopting SFAS No. 133 resulted in a decrease of $1,417,800 to other comprehensive income. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following table sets forth the percentage relationship of revenue and expense items to operating revenues for the periods indicated. Percentage of Operating Revenues Three Months Ended March 31 2001 2000 ---------------------------------- Operating revenues 100.00% 100.00% Operating expenses: Salaries, wages and benefits 36.3% 31.8% Operations and maintenance 21.1% 18.9% Taxes and licenses 2.1% 1.9% Insurance and claims 4.6% 3.0% Communications and utilities 1.4% 1.2% Depreciation and amortization 9.1% 10.9% Gain on disposals of revenue equipment (0.1%) - Rent and purchased transportation 20.6% 25.7% Other 1.2% 0.7% ---------------------------------- Total operating expenses 96.3% 94.1% ---------------------------------- Operating income 3.7% 5.9% Other expense (income): Interest expense 2.6% 2.1% Other 0.1% (0.4%) ---------------------------------- Income before income taxes 1.0% 4.2% Income taxes 0.4% 1.5% ---------------------------------- Net income 0.6% 2.7% ================================== 11 Results of Operations Operating revenues for the first three months of 2001 increased $15.1 million, or 9.0%, to $182.2 million compared with $167.1 million for the same period in the prior year. The Company's increase in revenues was due primarily to increased capacity and increased trucking revenues. Total trucking revenues during the first quarter of 2001 increased 18.6% compared to the same quarter of 2000. The Company's fleet increased to 5,007 tractors at March 31, 2001 from 4,717 at March 31, 2000, an increase of 290 tractors. The Company's trucking revenues per mile increased to $1.24 for the first quarter of 2001 from $1.22 for the same quarter of 2000 as a result of rate increases implemented in 2000. Average revenue per tractor per week increased to $2,695 in the first quarter of 2001 from $2,486 for the same quarter of 2000. Despite the increases in total revenues and revenues per mile experienced by the Company during the first quarter of 2001 as compared to the first quarter of 2000, the general truckload freight market remained soft and the Company continued to experience a lower demand for its services in some of the markets which it serves. The sources of the Company's operating revenues were as follows: Three Months Ended March 31 2001 2000 ------------------------ (in thousands) Trucking Revenues: Domestic Irregular Route $109,696 $ 94,151 International Irregular Route(1) 37,239 34,539 Dedicated Route 35,248 24,863 ------------------------ Total Trucking Revenues $182,183 $153,553 Logistics Revenues(2) - 17,261 Intersegment eliminations - (3,745) ------------------------ Total Operating Revenues $182,183 $167,069 ======================== (1) International Irregular Route Trucking Revenues include loads originating or terminating at Laredo, TX, Brownsville, TX, El Paso, TX, Nogales, AZ, San Diego, CA, and Calexico, CA. (2) In July 2000, the Company contributed its logistics operations to Transplace.com in exchange for an ownership interest in Transplace.com. 12 The operating ratio (operating expenses as a percentage of operating revenues) for the trucking and logistics segments and the Company's total business were as follows: Three Months Ended March 31 2001 2000 ------------------------ Trucking Segment 96.3% 93.9% Logistics Segment N/A 96.1% Total Company 96.3% 94.1% Salaries, wages and benefits were 36.3% of operating revenues for the three month period ending March 31, 2001 compared to 31.8% for the same period in 2000. This increase was due primarily to (i) a significant driver pay increase implemented in March 2000; and (ii) the elimination of logistics revenues as a result of the Company's contribution of its logistics operations to Transplace.com. Operations and maintenance expenses increased to 21.1% of operating revenues for the three month period ending March 31, 2001 from 18.9% for the same period in 2000. This increase resulted primarily from the elimination of logistic revenues and higher fuel costs during the first quarter of 2001. Fuel price swaps which the Company had utilized to convert floating fuel prices to fixed fuel prices on a portion of its monthly fuel requirements expired in May 2000. These swaps had lessened the impact of higher fuel prices. Further increases in fuel costs, to the extent not offset by rate increases or fuel surcharges could have an adverse effect on the operations and profitability of the Company. Insurance and claims expense was 4.6% of operating revenues in the first quarter of 2001 compared to 3.0% for the same quarter of 2000. During 2000, the Company modified its method of estimating and accruing its ultimate costs related to accident, workers' compensation, cargo and physical damage claims. The Company has continued to refine the loss development factors that are applied to its accident and claims history to estimate the ultimate costs of these claims. The increase in insurance and claims expense resulted primarily from unfavorable accident claims experience during the first quarter of 2001. Depreciation and amortization was 9.1% and 10.9% of operating revenues for the first three months of 2001 and 2000, respectively. The decrease was attributable primarily to the Company's implementation of a change from a three-year trade cycle to a four-year trade cycle with respect to Company- owned tractors and the utilization of operating leases to expand the Company's fleet. Expenses for operating leases are recorded as rent and purchased transportation. Rent and purchased transportation decreased to 20.6% of operating revenues for the three month period ending March 31, 2001 from 25.7% for the same period in 2000. This decrease was due primarily to the contribution of the Company's 13 logistics operations to Transplace.com in July 2000 as expenses related to logistics operations were recorded as rent and purchased transportation. Interest expense was $4,740,860 for the first quarter of 2001 compared to $3,424,101 for the same period in 2000. The increase in interest expense was due primarily to higher interest rates during the first quarter of 2001 as compared to the first quarter of 2000. The Company recorded other expenses of $194,637 during the first quarter of 2001 compared to other income of $630,361 for the same period of 2000. Operating losses reported by Transportes EASO S.A. de C.V. ("EASO"), a Mexican trucking company in which the Company has a 50% ownership interest, were the primary reason for this difference. The Company recorded a loss of $258,000 relating to EASO during the first quarter of 2001 compared to income of $495,000 during the first quarter of 2000. The effective income tax rate increased to 40.6% for the three month period ended March 31, 2001 from 34.8% for the three month period ended March 31, 2000. The Company's income taxes are calculated without regard to losses or income relating to EASO. The Company's effective income tax rate was increased as a result of recording a loss from EASO during the first quarter of 2001 and was decreased as a result of recording income from EASO during the first quarter of 2000. Liquidity and Capital Resources The Company's business has required significant investments in new equipment and office and terminal facilities. The Company has historically financed these investments largely from cash provided by operating activities, secured borrowings, and secured and unsecured credit facilities during the past three years. During 2000, the Company began leasing various revenue equipment under operating leases. During the three month period ended March 31, 2001, the Company had net cash provided by operating activities of $25.5 million. At March 31, 2001, the Company had outstanding long-term obligations, including current maturities, of $247.9 million and future minimum lease payments under noncancelable operating leases of $68.7 million. In October 2000, the Company restructured its credit facility with its primary bank to provide for a $55 million reducing revolving note and a $30 million revolving note, with interest based on a leverage ratio defined therein and ranging from the 30-LIBOR rate plus .50% to 1.90% (6.98% at March 31, 2001). There was approximately $45 million outstanding under this credit facility at March 31, 2001. Management expects to retire the reducing revolving note through cash provided by operating activities or secured borrowings and expects to maintain the revolving note for an indefinite period. In December 2000, the Company entered into a merger agreement with Swift Transportation Co., Inc. pursuant to which the Company would become a wholly owned subsidiary of Swift. The merger is expected to close in June 2001. The Company anticipates that planned revenue equipment purchases and the financing thereof will be coordinated through Swift following the merger. 14 Recently Issued Accounting Standards Effective January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS No. 133), as amended in June 2000 by Statement of Accounting Standards No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities (SFAS No. 138), which requires that all derivative instruments be reported on the balance sheet at fair value and establishes criteria for design and effectiveness of hedging relationships. The cumulative effect of adopting SFAS No. 133 resulted in a decrease of $1,417,800 to other comprehensive income. Forward-Looking Statements Certain statements and information included herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This information is in accordance with the Company's current expectations and is subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward- looking statements. With respect to the Company's financial results these uncertainties include, without limitation, the following: the Company will have reasonable success recruiting and retaining experienced drivers and owner operators at the Company's current compensation level; demand and pricing for the markets served by the Company will remain at historical levels; fuel will remain available and without rapid price fluctuations; the Company's accident experience will remain at historical levels; the Company will be able to develop and implement operational and financial systems to manage growing operations; and the Company will be able to obtain financing on acceptable terms to finance the Company's growth and operations. With respect to the proposed merger transaction with Swift these uncertainties include, without limitation, the following: the inability to obtain governmental approvals of the merger on the proposed terms and schedule; the failure of M.S. Carriers and Swift stockholders to approve the merger; the risk that the businesses will not be integrated successfully; the risk that the revenue synergies and costs savings anticipated from the merger may not be fully realized or may take longer to realize than expected; disruptions from the merger making it more difficult to maintain relationships with customers, employees or suppliers; and increased competition and its effect on pricing, spending, third-party relationships and revenues. 15 Item 3. Quantitative And Qualitative Disclosure About Market Risk Interest Rate Risk The Company has market risk exposure to changing interest rates. The Company's policy is to manage interest rates through the use of a combination of fixed and floating rate debt. Interest rate swaps may be used to adjust interest rate exposure based on market conditions. These swaps are entered into with a group of financial institutions with investment grade credit ratings, thereby minimizing the risk of credit loss. At March 31, 2001, the fair value of the Company's total long-term debt is approximately $248 million, using yields obtained for similar types of borrowing arrangements and taking into consideration the underlying terms of the debt. Market risk is estimated as the potential change in fair value resulting from a hypothetical ten percent decrease in interest rates and amounts to approximately $419,000 at March 31, 2001. At March 31, 2001, the Company had approximately $186 million of variable-rate debt. The Company has entered into interest rate swaps which convert floating rates to fixed rates for a total notional amount of $70 million. If interest rates on the Company's variable-rate debt, after considering interest rate swaps, were to increase by ten percent from their March 31, 2001 rates for the next twelve months, the increase in interest expense would be approximately $600,000. The potential change in fair value of the Company's interest rate swaps resulting from a hypothetical ten percent decrease in interest rates would not be material to the Company's financial position at March 31, 2001. 16 PART II - Other Information Item 1. Legal Proceedings The Company is involved in certain ordinary routine litigation incidental to its business. The Company does not expect that the outcome of any of these proceedings will have a material adverse effect upon the Company's operations or its financial position. Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders during the first quarter of 2001. Item 5. Other Information None Item 6 - Exhibits and Reports on Form 8-K (a) The exhibits filed as a part of this report are listed below: Exhibit Number Description 3(i).1 Restated Charter of M.S. Carriers, Inc. filed as an exhibit to Registrant's Registration Statement on Form S-1 (Registration Number 33-12070). 3(i).2 Articles of Amendment to Charter of M.S. Carriers, Inc. filed as an exhibit to Registrant's Registration Statement on Form S-3 (Registration Number 33-63280). 3(ii) Amended and Restated By-Laws of M.S. Carriers, Inc. filed as an exhibit to Registrant's Registration Statement on Form S-3 (Registration Number 33-63280). 17 10.1 Incentive Stock Option Plan of M.S. Carriers, Inc. filed as an exhibit to Registrant's Registration Statement on Form S-1 (Registration Number 33-12070).* 10.2 Amendment to Incentive Stock Option Plan of M.S. Carriers, Inc. filed as an exhibit to Registrant's Registration Statement on Form S-1 (Registration Number 33-12070).* 10.3 1993 Stock Option Plan of M.S. Carriers, Inc. filed as an exhibit to Registrant's Registration Statement on Form S-3 (Registration Number 33-63280).* 10.4 Non-Employee Directors Stock Option Plan of M.S. Carriers, Inc. filed as an exhibit to Registrant's Proxy Statement dated March 31, 1995.* 10.5 Employment Agreements with James W. Welch and M.J. Barrow of M.S. Carriers, Inc. filed as an exhibit to Registrant's Statement on Form S-1 (Registration Number 33-12070).* 10.6 Employment Agreement with Michael S. Starnes of M.S. Carriers, Inc. filed as an exhibit to Registrant's Form 10-Q for the quarter ended June 30, 1995.* 10.7 M.S. Carriers, Inc. 1996 Stock Option Plan filed as an exhibit to Registrant's Proxy Statement dated April 4, 1996.* 10.8 Operating Agreement of Transplace.com, LLC filed as an exhibit to Registrant's Form 10-Q for the quarter ended June 30, 2000. 10.9 Initial Subscription Agreement of Transplace.com, LLC filed as an exhibit to Registrant's Form 10-Q for the quarter ended June 30, 2000. 10.10 Ninth Amended and Restated Loan Agreement with Bank of America, N.A. filed as an exhibit to Registrant's Form 10-Q for the quarter ended September 30, 2000. 10.11 Merger Agreement dated December 11, 2000, among Swift Transportation Co., Inc., Sun Merger, Inc. and M.S. Carriers, Inc. filed as an exhibit to Registrant's Form 10-K for the year ended December 31, 2000. 10.12 Voting Agreement dated December 11,2000, among M.S. Carriers, Inc., Jerry and Vicki Moyes Family Trust dated 12/11/87 and Jerry Moyes filed as an exhibit to Registrant's Form 10-K for the year ended December 31, 2000. 10.13 Voting Agreement dated December 11, 2000, among Swift Transportation Co., Inc., Sun Merger, Inc. and Michael S. Starnes filed as an exhibit to Registrant's Form 10-K for the year ended December 31, 2000. 10.14 First Amendment to Ninth Amended and Restated Loan Agreement with Bank of America, N.A. filed as an exhibit to Registrant's Form 10-K for the year ended December 31, 2000. 18 21. Subsidiaries of M.S. Carriers, Inc. filed as an exhibit to Registrant's Form 10-K for the year ended December 31, 2000. ____________ * Indicates a compensation plan. (b) The Company did not file any reports on Form 8-K during the three months ended March 31, 2001. 19 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. M.S. Carriers, Inc. (Registrant) Date: May 9, 2001 /s/ M.J. Barrow M.J. Barrow Senior Vice President (Chief Financial Officer of the Company) 20 -----END PRIVACY-ENHANCED MESSAGE-----