

                       SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549-1004





                                    FORM 10-Q

(Mark One)
(X)   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 1999

(   ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

                         Commission File Number 0-24960

                            Covenant Transport, Inc.
             (Exact name of registrant as specified in its charter)

          Nevada                                      88-0320154
(State or other jurisdiction of          (I.R.S. employer identification number)
incorporation or organization)
                               400 Birmingham Hwy.
                              Chattanooga, TN 37419
                                 (423) 821-1212
               (Address, including zip code, and telephone number,
                      including area code, of registrant's
                           principal executive office)

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 at least 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 practicable date (June 30, 1999).

           Class A Common Stock, $.01 par value: 12,561,550 shares
           Class B Common Stock, $.01 par value:   2,350,000 shares

Exhibit Index is on Page 14

                                        1

<PAGE>
                                     PART I
                              FINANCIAL INFORMATION




                                                                          Page
                                                                          Number
Item 1. Financial statements

        Condensed Consolidated Balance Sheets as of December 31, 1998          3
              and June 30, 1999 (Unaudited)

        Condensed Consolidated Statements of Income for the three and          4
              and six months ended June 30, 1998 and 1999 (Unaudited)

        Condensed Consolidated Statements of Cash Flows for the six            5
              months ended June 30, 1998 and 1999 (Unaudited)

        Notes to Condensed Consolidated Financial Statements (Unaudited)       6


Item 2. Management's Discussion and Analysis of Financial Condition            8
          and Results of Operations

Item 3. Quantitative and Qualitative Disclosures about Market Risk            13





                                     PART II
                                OTHER INFORMATION


                                                                          Page
                                                                          Number

Item 1.    Legal Proceedings                                                  14


Items 2 and 3.  Not applicable                                                14


Item 4.   Submission of Matters to a vote of Security Holders                 14


Item 5.   Not applicable                                                      14


Item 6.   Exhibits and reports on Form 8-K                                    14

                                        2
<PAGE>
<TABLE>
<CAPTION>


                    COVENANT TRANSPORT, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (In thousands except share data)

                                                                                 December 31,                    June 30,
                                                                                     1998                          1999
                                                                               -----------------             -----------------
                                    ASSETS                                                                     (unaudited)
<S>                                                                             <C>                         <C>
Current assets:
  Cash and cash equivalents                                                       $       2,926                     $     763

  Accounts receivable, net of allowance of $1,065 in 1998 and
    $1,024 in 1999                                                                       51,789                        51,493
  Drivers' advances and other receivables                                                 2,476                         3,246
  Tire and parts inventory                                                                1,929                         2,507
  Prepaid expenses                                                                        5,325                         7,672
  Deferred income taxes                                                                   1,674                         1,836
                                                                               -----------------             -----------------
Total current assets                                                                     66,119                        67,517

Property and equipment, at cost                                                         282,358                       280,062
Less accumulated depreciation and amortization                                           81,821                        77,680
                                                                               -----------------             -----------------
Net property and equipment                                                              200,537                       202,382

Other                                                                                     6,303                         6,194
                                                                               -----------------             -----------------

Total assets                                                                        $   272,959                   $   276,093
                                                                               =================             =================

                     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Checks outstanding in excess of bank balances                                               -                           833
  Current maturities of long-term debt                                                    1,943                         1,249
  Accounts payable                                                                        3,485                         9,333
  Accrued expenses                                                                       14,318                        13,292
                                                                               -----------------             -----------------
Total current liabilities                                                               19,747                         24,707

Long-term debt, less current  maturities                                                 84,331                        71,594
Deferred income taxes                                                                    27,359                        29,068
                                                                               -----------------             -----------------
Total liabilities                                                                       131,437                       125,693

Stockholders' equity:
Class A common stock, $.01 par value; 20,000,000 shares authorized;
12,560,250 and 12,561,550 shares issued and outstanding as of 1998 and 1999,                126                           126
respectively
Class B common stock, $.01 par value; 5,000,000 shares authorized;
2,350,000 shares issued and outstanding as of 1998 and 1999                                  24                            24
Additional paid-in-capital                                                               78,261                        78,281
Retained earnings                                                                        63,112                        72,293
                                                                               -----------------             -----------------
Total stockholders' equity                                                              141,522                       150,724
                                                                               -----------------             -----------------
Total liabilities and stockholders' equity                                          $   272,959                   $   276,093
                                                                               =================             =================

</TABLE>

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

                                        3
<PAGE>
<TABLE>
<CAPTION>

                    COVENANT TRANSPORT, INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1999
                      (In thousands except per share data)

                                                            Three months ended                        Six months ended
                                                                  June 30,                                June 30,
                                                                (unaudited)                             (unaudited)
                                                             1998              1999                   1998             1999
                                                             ----              ----                   ----             ----
<S>                                                          <C>               <C>                    <C>              <C>
Revenue                                                    $ 89,010         $ 113,211              $ 168,834        $ 210,975
Operating expenses:
  Salaries, wages, and related expenses                      39,907            48,320                 75,149           93,156
  Fuel, oil and road expenses                                16,334            20,484                 32,256           37,821
  Revenue equipment rentals and purchased
    Transportation                                            5,429            10,924                 10,431           19,085
  Repairs                                                     1,809             2,431                  3,643            4,374
  Operating taxes and licenses                                2,062             2,750                  4,379            5,157
  Insurance                                                   2,304             2,854                  4,818            5,648
  General supplies and expenses                               5,002             5,776                  9,441           11,361
  Depreciation and amortization, including gain
on                                                            7,262             8,560                 14,035           16,531
     disposal of equipment
                                                      --------------    --------------         --------------   --------------
    Total operating expenses                                 80,110           102,099                154,152          193,133
                                                      --------------    --------------         --------------   --------------
    Operating income                                          8,901            11,112                 14,682           17,842
Interest expense                                              1,542             1,225                  3,003            2,525
                                                      --------------    --------------         --------------   --------------
Income before income taxes                                    7,358             9,887                 11,679           15,317
Income tax expense                                            2,799             3,955                  4,444            6,136
                                                      ==============    ==============         ==============   ==============
Net income                                                 $  4,559          $  5,932                $ 7,235         $  9,181
                                                      ==============    ==============         ==============   ==============

Basic earnings per share                                   $   0.32          $   0.40               $   0.52         $   0.62

Diluted earnings per share                                 $   0.32          $   0.40               $   0.52         $   0.61

Weighted average shares outstanding                          14,392            14,912                 13,877           14,912

Adjusted weighted average shares and assumed
  conversions outstanding                                    14,413            14,966                 13,901           15,015

</TABLE>

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

                                        4
<PAGE>
<TABLE>
<CAPTION>
                    COVENANT TRANSPORT, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1999
                                 (In thousands)

                                                                             Six months ended              Six months ended
                                                                              June 30, 1998                 June 30, 1999
                                                                           ---------------------         ---------------------
                                                                                 (unaudited)                   (unaudited)
<S>                                                                        <C>                            <C>
Cash flows from operating activities:
Net income                                                                         $      7,235                  $      9,181
Adjustments to reconcile net income to net cash
   provided by operating activities:
      Provision for losses on receivables                                                   180                           149
      Depreciation and amortization                                                      15,668                        16,715
      Deferred income tax expense                                                         1,965                         1,547
      Gain on disposition of property and equipment                                     (1,633)                         (184)
Changes in operating assets and liabilities:
      Receivables and advances                                                          (8,485)                         (785)
      Prepaid expenses                                                                  (3,264)                       (2,347)
      Tire and parts inventory                                                            (468)                         (578)
      Accounts payable and accrued expenses                                               1,347                         4,821
                                                                           ---------------------         ---------------------
Net cash flows provided by operating activities                                          12,545                        28,520

Cash flows from investing activities:
      Acquisition of property and equipment                                            (57,231)                      (43,697)
      Proceeds from disposition of property and equipment                                17,906                        25,592
                                                                           ---------------------         ---------------------
Net cash flows used in investing activities                                            (39,325)                      (18,105)

Cash flows from financing activities:
     Changes in checks outstanding in excess of bank
        balances                                                                              -                           833
     Exercise of stock option                                                                67                            20
     Proceeds from issuance of long-term debt                                            38,000                        25,000
     Repayments of long-term debt                                                      (41,337)                      (38,431)
     Proceeds from equity offering                                                       27,551                             -
                                                                           ---------------------         ---------------------
Net cash flows provided by/(used in) financing activities                              24,281                      (12,578)
                                                                           ---------------------         ---------------------

Net change in cash and cash equivalents                                                 (2,499)                       (2,163)

Cash and cash equivalents at beginning of period                                          2,610                         2,926
                                                                           ---------------------         ---------------------

Cash and cash equivalents at end of period                                           $      111                   $       763
                                                                           =====================         =====================
</TABLE>

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

                                        5

<PAGE>


                    COVENANT TRANSPORT, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands except per share data)

Note 1.     Basis of Presentation

      The condensed  consolidated  financial  statements include the accounts of
      Covenant Transport,  Inc., a Nevada holding company,  and its wholly-owned
      subsidiaries  (the Company).  All  significant  intercompany  balances and
      transactions have been eliminated in consolidation.

      The financial statements have been prepared,  without audit, in accordance
      with generally accepted accounting  principles,  pursuant to the rules and
      regulations of the Securities and Exchange  Commission.  In the opinion of
      management,  the accompanying financial statements include all adjustments
      which are necessary for a fair presentation of the results for the interim
      periods  presented,  such adjustments  being of a normal recurring nature.
      Certain  information  and  footnote  disclosures  have been  condensed  or
      omitted  pursuant to such rules and  regulations.  The  December  31, 1998
      Condensed  Consolidated Balance Sheet was derived from the audited balance
      sheet of the Company for the year then ended.  It is suggested  that these
      condensed  consolidated  financial statements and notes thereto be read in
      conjunction with the consolidated  financial  statements and notes thereto
      included in the Company's  Form 10-K for the year ended December 31, 1998.
      Results of operations in interim periods are not necessarily indicative of
      results to be expected for a full year.

Note 2.     Basic and Diluted Earnings Per Share

      The following  table sets forth for the periods  indicated the calculation
      of net earnings per share included in the Company's Condensed Consolidated
      Statements of Income:
<TABLE>
<CAPTION>

                                                                       Three months                     Six months ended
                                                                      ended June 30,                        June 30,
                                                                   1998            1999               1998            1999
                                                                   ----            ----               ----            ----
<S>                                                                <C>             <C>                <C>             <C>
Numerator:

  Net Income                                                       $ 4,560         $ 5,932            $ 7,235         $ 9,181

Denominator:

  Denominator for basic earnings
    per share - weighted-average shares                             14,392          14,912             13,877          14,912

Effect of dilutive securities:

  Employee stock options                                                21              54                 24             103
                                                                 ----------      ----------         ----------      ----------


Denominator for diluted earnings per share - adjusted
weighted-average shares and assumed conversions
                                                                    14,413          14,966             13,901          15,015
                                                                 ==========      ==========         ==========      ==========

Basic earnings per share                                            $  .32          $  .40             $  .52          $  .62
                                                                 ==========      ==========         ==========      ==========

Diluted earnings per share                                          $  .32          $  .40             $  .52          $  .61
                                                                 ==========      ==========         ==========      ==========
</TABLE>

Note 3.     Income Taxes

      Income tax expense varies from the amount computed by applying the federal
      corporate  income tax rate of 37% to income before income taxes  primarily
      due to state income taxes,  net of federal  income tax effect,  which were
      approximately  2.0% higher in the quarter ended June 30, 1999, as compared
      with the quarter ended June 30, 1998.

Note 4.     Recent Accounting Pronouncement

       In June 1998, the Financial  Accounting  Standards Board issued Statement
       of Financial  Accounting  Standards No. 133,  Accounting  for  Derivative
       Instruments and Hedging Activities.  The statement established accounting
       and  reporting  standards  requiring  that  every  derivative  instrument
       (including certain derivative instruments embedded in other contracts) be
       recorded
                                        6
<PAGE>
       on the balance sheet as either an asset or liability measured at
       its fair value.  SFAS No. 133 requires  that changes in the  derivative's
       fair value be  recognized  currently in earnings  unless  specific  hedge
       accounting criteria are met. The Company may engage in hedging activities
       using futures, forward contracts,  options, and swaps to hedge the impact
       of market fluctuations on energy commodity prices and interest rates. The
       Company is  currently  assessing  the effect,  if any,  on its  financial
       statements of implementing  SFAS No. 133. The Company will be required to
       adopt the standard in 2001.



                                            FORWARD LOOKING STATEMENTS

      This document contains  forward-looking  statements in paragraphs that are
      marked with an  asterisk.  Statements  by the  Company in press  releases,
      public filings, and stockholder reports, as well as oral public statements
      by  Company  representatives,  also may  contain  certain  forward-looking
      information.  Forward-looking  information is subject to certain risks and
      uncertainties  that could cause actual results to differ  materially  from
      those projected. Without limitation, these risks and uncertainties include
      economic  factors such as  recessions,  downturns in  customers'  business
      cycles, surplus inventories,  inflation,  fuel price increases, and higher
      interest rates; the resale value of the Company's used revenue  equipment;
      the availability and compensation of qualified  drivers;  competition from
      trucking,  rail, and intermodal  competitors;  and the ability to identify
      acceptable  acquisition  targets and  negotiate,  finance,  and consummate
      acquisitions and integrate acquired  companies.  Readers should review and
      consider  the  various  disclosures  made  by the  Company  in  its  press
      releases,  stockholder reports, and public filings, as well as the factors
      explained in greater detail in the Company's annual report on Form 10-K.

                                        7
<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company grew its revenue  25.0%,  to $211.0  million in the six months ended
June 30, 1999, from $168.8 million during the same period of 1998. The Company's
pretax margin  increased to 7.3% of revenue from 6.9% of revenue.  A significant
increase  in fleet size to meet  customer  demand as well as an  increase in the
freight rates  contributed  to revenue  growth over this period.  In addition to
internal growth,  the Company completed two acquisitions  during 1998. In August
1998, the Company acquired certain assets of Gouge Trucking,  Inc., a $4 million
annual revenue carrier  located in North Carolina.  In October 1998, the Company
purchased  all  of  the  outstanding  capital  stock  of  Southern  Refrigerated
Transportation,  Inc.,  ("SRT"),  a $23 million annual revenue  carrier based in
southwest Arkansas.  Additionally,  the Company formed a new division,  Covenant
Transport  Logistics,  in October 1998. The Company  intends to continue to grow
both internally and through  acquisitions,  with the main constraint on internal
growth being the ability to recruit and retain  sufficient  numbers of qualified
drivers. (*)

The Company has increased net income approximately 26.9%, to $9.2 million in the
six months  ended June 30,  1999,  from $7.2  million  during the same period of
1998. Several factors  contributed to the increase,  including lower fuel prices
and  negotiating  higher freight rates from  customers.  Although  higher driver
compensation  partially offset the increased freight rates,  management believes
the Company benefited from attracting and retaining more drivers.

Changes in several operating  statistics and expense  categories are expected to
result from actions the Company  took in 1997 and 1998.  The  operations  of Bud
Meyer Truck Lines,  acquired in 1997,  and SRT use  predominately  single-driver
tractors,  as opposed to the primarily  team-driver  tractor  fleet  operated by
Covenant's long-haul,  dry van operation. The single driver fleets operate fewer
miles per tractor and experience  more empty miles.  In addition,  Bud Meyer and
SRT's operations must bear additional expenses of fuel for refrigeration  units,
pallets,  and  depreciation  and  interest  expense of more  expensive  trailers
associated  with  temperature-controlled  service.  The additional  expenses and
lower  productive  miles are offset by generally  higher revenue per loaded mile
and the reduced employee expense of compensating only one driver.  The Company's
operating  statistics  and expenses are expected to shift in future periods with
the mix of single, team, and temperature-controlled operations. (*)

The Company  initiated  the use of  owner-operators  of tractors in 1997 and had
contracted  with  approximately  249   owner-operators  as  of  June  30,  1999.
Owner-operators  provide a tractor and a driver and bear all operating  expenses
in exchange  for a fixed lease  payment per mile.  The Company does not have the
capital outlay of purchasing  the tractor.  As of June 30, 1999, the Company had
financed  approximately  625 tractors under operating  leases as compared to 316
tractors  under  operating  leases as of June 30,  1998.  The lease  payments to
owner-operators  and the financing of tractors under operating  leases appear as
operating leases under revenue equipment  rentals and purchased  transportation.
Expenses associated with owned equipment, such as interest and depreciation, are
not incurred, and for owner-operator  tractors,  driver compensation,  fuel, and
other   expenses   are  not   incurred.   Because   obtaining   equipment   from
owner-operators and under operating leases effectively shifts financing expenses
from interest to "above the line"  operating  expenses,  the Company  intends to
evaluate its efficiency using pretax margin and net margin rather than operating
ratio.

The following  table sets forth the percentage  relationship of certain items to
revenue for the three and six months ended June 30:
<TABLE>
<CAPTION>
                                                       Three Months Ended June 30,               Six Months Ended June 30,
                                                          1998              1999                   1998             1999
                                                     ---------------   ---------------        ---------------  ---------------
  <S>                                                <C>               <C>                    <C>              <C>
      Revenue                                                100.0%            100.0%                 100.0%           100.0%
      Operating expenses:
        Salaries, wages, and related expenses                  44.8              42.7                   44.5             44.2
        Fuel, oil, and road expenses                           18.4              18.1                   19.1             17.9
        Revenue equipment rentals and purchased
          transportation                                        6.1               9.6                    6.2              9.0
        Repairs                                                 2.0               2.1                    2.2              2.1
        Operating taxes and licenses                            2.3               2.4                    2.6              2.4
        Insurance                                               2.6               2.5                    2.8              2.7
        General supplies and expenses                           5.6               5.1                    5.6              5.4
        Depreciation and amortization                           8.2               7.6                    8.3              7.8
                                                     ---------------   ---------------        ---------------  ---------------
          Total operating expenses                             90.0              90.2
                                                     ---------------   ---------------        ---------------  ---------------
          Operating income                                     10.0               9.8                    8.7              8.5
      Interest expense                                          1.7               1.1                    1.8              1.2
                                                     ---------------   ---------------        ---------------  ---------------
      Income before income taxes                                8.3               8.7                    6.9              7.3
      Income tax expense                                        3.2               3.5                    2.6              2.9
                                                     ===============   ===============        ===============  ===============

      Net income                                               5.1%              5.2%                   4.3%             4.4%
                                                     ===============   ===============        ===============  ===============
</TABLE>
                                        8
<PAGE>
COMPARISON  OF THREE  MONTHS  ENDED JUNE 30, 1999 TO THREE MONTHS ENDED JUNE 30,
1998

Revenue  increased $24.2 million  (27.2%),  to $113.2 million in the 1999 period
from $89.0  million in the 1998  period.  The  revenue  increase  was  primarily
generated by a 22.7% increase in weighted average tractors,  to 2,782 during the
1999  period  from  2,268  during  the  1998  period,  as the  Company  expanded
internally  to meet demand from new  customers  and higher  volume from existing
customers,  as well as externally  through the  acquisitions  of Gouge Trucking,
Inc.  and SRT during  August and October of 1998,  respectively.  The  Company's
revenue per tractor per week increased  4.9%, to $3,167 in the 1999 quarter from
$3,019 in the 1998 quarter as a result of improved  equipment  utilization and a
slight increase in revenue per total mile.

Salaries,  wages, and related expenses increased $8.4 million (21.1%),  to $48.3
million  in the  1999  period  from  $39.9  million  in the  1998  period.  As a
percentage of revenue,  salaries, wages, and related expenses decreased to 42.7%
in the 1999 period from 44.8% in the 1998  period.  Driver wages as a percentage
of revenue  decreased  to 30.8% in the 1999 period from 32.9% in the 1998 period
as the  Company  utilized  more  owner-operators.  The  Company  experienced  an
increase in non-driving  employee payroll expense to 5.7% of revenue in the 1999
period  from 5.3% of revenue in the 1998  period due to the start up of Covenant
Transport Logistics and the acquisition of SRT.

Fuel, oil, and road expenses increased $4.2 million (25.4%), to $20.5 million in
the 1999  period  from $16.3  million in the 1998  period.  As a  percentage  of
revenue,  fuel, oil, and road expenses decreased to 18.1% of revenue in the 1999
period from 18.4% in the 1998 period. The increased use of  owner-operators  who
pay for their own fuel purchases more than offset an approximately four cent per
gallon  increase  in the  average  price of fuel  versus the prior  period.  The
expense for  owner-operators  is reflected in the revenue  equipment rentals and
purchased transportation category.

Revenue  equipment rentals and purchased  transportation  increased $5.5 million
(101.2%),  to $10.9  million in the 1999  period  from $5.4  million in the 1998
period.  As a percentage  of revenue,  revenue  equipment  rentals and purchased
transportation  increased  to 9.6% in the  1999  period  from  6.1% in the  1998
period.  During  1997,  the  Company  began  using  owner-operators  of  revenue
equipment,  who  provide a tractor  and driver and cover all of their  operating
expenses in exchange for a fixed payment per mile. Accordingly, expenses such as
driver salaries, fuel, repairs,  depreciation,  and interest normally associated
with  Company-owned  equipment are consolidated in revenue equipment rentals and
purchased   transportation  when  owner-operators  are  utilized.   The  Company
increased the fleet size of owner-operators during the 1999 period (averaged 249
in the 1999 period  compared to 120 in the 1998  period,  a increase of 107.5%).
The Company also  entered  into  additional  operating  leases.  During the 1999
period, 622 tractors were leased compared to 316 leased tractors during the 1998
period.

Repairs increased $0.7 million (34.4%),  to $2.4 million in the 1999 period from
$1.8 million in the 1998 period.  As a percentage of revenue,  repairs increased
to 2.1% in the 1999 period from 2.0% in the 1998 period.  The 1999  increase was
primarily the result of costs related to the  preparation  of certain  equipment
for trade-in following the SRT, Inc. acquisition.

Operating taxes and licenses increased  approximately  $0.7 million (33.4%),  to
$2.8  million in the 1999  period  from $2.1  million in the 1998  period.  As a
percent of revenue,  operating taxes and licenses remained  essentially constant
at 2.4% in the 1999 period and 2.3% in the 1998 period.

Insurance,  consisting primarily of premiums for liability, physical damage, and
cargo damage  insurance,  and claims,  increased $0.6 million  (23.9%),  to $2.9
million in the 1999 period from $2.3 million in the 1998 period. As a percentage
of revenue,  insurance remained  essentially constant at 2.5% in the 1999 period
and 2.6% in the 1998 period.

General  supplies  and  expenses,  consisting  primarily  of driver  recruiting,
communications  expenses,  and  facilities  expenses,   increased  $0.8  million
(15.5%),  to $5.8  million  in the 1999  period  from $5.0  million  in the 1998
period. As a percentage of revenue,  general supplies and expenses  decreased to
5.1% in the 1999  period  from 5.6% in the 1998  period.  The 1999  decrease  is
primarily  related to the fixed  nature of a portion of these  costs,  which was
more effectively spread over higher revenues.

Depreciation and amortization,  consisting  primarily of depreciation of revenue
equipment,  increased $1.3 million  (17.9%),  to $8.6 million in the 1999 period
from $7.3 million in 1998 period.  As a percentage of revenue,  depreciation and
amortization  decreased  to 7.6% in the 1999 period from 8.2% in the 1998 period
as the Company utilized more  owner-operators  and leased more revenue equipment
through  operating leases.  Amortization  expense relates to deferred debt costs
incurred  and  covenants  not to  compete  from  two  1995  and one  1998  asset
acquisitions, as well as goodwill from two 1997 and two 1998 acquisitions.

Interest  expense  decreased $0.3 million  (20.6%),  to $1.2 million in the 1999
period  from $1.5  million  in the 1998  period.  As a  percentage  of  revenue,
interest  expense  decreased  to 1.1% in the 1999  period  from 1.7% in the 1998
period,   as  the  Company  financed

                                        9
<PAGE>
more equipment under  operating  leases,  contracted  with more  owner-operators
during  the  1999  period,  and  benefited  from an  improvement  in  cash  from
operations.

As a result of the foregoing,  the Company's  pretax margin  improved to 8.7% in
the 1999 period versus 8.3% in the 1998 period.

The  Company's  effective tax rate was 40.0% in the 1999 period  compared with
38.0% in the 1998 period  reflecting  increased  state  income taxes in the 1999
period.

Primarily as a result of the factors  described above, net income increased $1.4
million (30.1%),  to $5.9 million in the 1999 period (5.2% of revenue) from $4.6
million in the 1998 period (5.1% of revenue).

COMPARISON OF SIX MONTHS ENDED JUNE 30, 1999 TO SIX MONTHS ENDED JUNE 30, 1998

Revenue  increased $42.1 million  (25.0%),  to $211.0 million in the 1999 period
from $168.8  million in the 1998  period.  The revenue  increase  was  primarily
generated by a 23.9% increase in weighted average tractors,  to 2,722 during the
1999  period  from  2,197  during  the  1998  period,  as the  Company  expanded
internally  to meet demand from new  customers  and higher  volume from existing
customers,  as well as externally  through the  acquisitions  of Gouge Trucking,
Inc.  and SRT during  August and October of 1998,  respectively.  The  Company's
revenue per tractor per week  increased  1.5%, to $3,015 in the 1999 period from
$2,972 in the 1998 period,  as a result of a one cent per total mile increase in
freight rates and improved equipment utilization.

Salaries,  wages, and related expenses increased $18.0 million (24.0%), to $93.2
million  in the  1999  period  from  $75.1  million  in the  1998  period.  As a
percentage of revenue,  salaries, wages, and related expenses decreased to 44.2%
in the 1999 period from 44.5% in the 1998  period.  Driver wages as a percentage
of revenue  decreased  to 31.7% in the 1999 period from 32.2% in the 1998 period
as the use of  owner-operators  more than offset a $.025 pay increase  that went
into effect in April 1998.  The Company  experienced  an increase in non-driving
employee  payroll  expense to 5.9% of revenue  in the 1999  period  from 5.3% of
revenue in the 1998 period due to the start up of Covenant  Transport  Logistics
and the acquisition of SRT.

Fuel, oil, and road expenses increased $5.6 million (17.3%), to $37.8 million in
the 1999  period  from $32.3  million in the 1998  period.  As a  percentage  of
revenue,  fuel, oil, and road expenses decreased to 17.9% of revenue in the 1999
period from 19.1% in the 1998 period  primarily as a result of the increased use
of owner-operators  who pay for fuel purchases.  The expense for owner-operators
is  reflected  in the revenue  equipment  rentals and  purchased  transportation
category.

Revenue  equipment rentals and purchased  transportation  increased $8.7 million
(83.0%),  to $19.1  million in the 1999  period  from $10.4  million in the 1998
period.  As a percentage  of revenue,  revenue  equipment  rentals and purchased
transportation  increased  to 9.0% in the  1999  period  from  6.1% in the  1998
period.  During  1997,  the  Company  began  using  owner-operators  of  revenue
equipment,  who  provide a tractor  and driver and cover all of their  operating
expenses in exchange for a fixed payment per mile. Accordingly, expenses such as
driver salaries, fuel, repairs,  depreciation,  and interest normally associated
with  Company-owned  equipment are consolidated in revenue equipment rentals and
purchased transportation when owner operators are utlized. The Company increased
the fleet size of  owner-operators  during the 1999 period  (averaged 218 in the
1999  period  compared  to 118 in the 1998  period,  a increase  of 84.7%).  The
Company also entered into additional  operating leases.  During the 1999 period,
622 tractors were leased compared to 316 leased tractors during the 1998 period.

Repairs increased $0.8 million (20.1%),  to $4.4 million in the 1999 period from
$3.6 million in the 1998 period.  As a percentage of revenue,  repairs  remained
essentially constant at 2.1% in the 1999 period and 2.2% in the 1998 period.

Operating taxes and licenses increased  approximately  $0.8 million (17.8%),  to
$5.2  million in the 1999  period  from $4.4  million in the 1998  period.  As a
percent of revenue,  operating taxes and licenses  decreased to 2.4% in the 1999
period from 2.6% in the 1998 period.

Insurance,  consisting primarily of premiums for liability, physical damage, and
cargo damage  insurance,  and claims,  increased $0.8 million  (17.2%),  to $5.6
million in the 1999 period from $4.8 million in the 1998 period. As a percentage
of revenue,  insurance remained  essentially constant at 2.7% in the 1999 period
and 2.8% in the 1998 period.

General  supplies  and  expenses,  consisting  primarily  of driver  recruiting,
communications  expenses,  and  facilities  expenses,   increased  $1.9  million
(20.3%),  to $11.4  million  in the 1999  period  from $9.4  million in the 1998
period. As a percentage of revenue,  general supplies and expenses  decreased to
5.4% in the 1999  period  from 5.6% in the 1998  period.  The 1999  decrease  is
primarily  related to the fixed  nature of a portion of these  costs,  which was
more effectively spread over higher revenues.

                                       10
<PAGE>
Depreciation and amortization,  consisting  primarily of depreciation of revenue
equipment,  increased $2.5 million (17.8%),  to $16.5 million in the 1999 period
from $14.0 million in 1998 period. As a percentage of revenue,  depreciation and
amortization  decreased  to 7.8% in the 1999 period from 8.3% in the 1998 period
as the Company utilized more  owner-operators  and leased more revenue equipment
through  operating leases.  Amortization  expense relates to deferred debt costs
incurred  and  covenants  not to  compete  from  two  1995  and one  1998  asset
acquisitions, as well as goodwill from two 1997 and two 1998 acquisitions.

Interest  expense  decreased $0.5 million  (15.9%),  to $2.5 million in the 1999
period  from $3.0  million  in the 1998  period.  As a  percentage  of  revenue,
interest  expense  decreased  to 1.2% in the 1999  period  from 1.8% in the 1998
period,   as  the  Company  financed  more  equipment  under  operating  leases,
contracted with more owner-operators  during the 1999 period, and benefited from
an improvement in cash from operations.

As a result of the foregoing,  the Company's  pretax margin  improved to 7.3% in
the 1999 period versus 6.9% in the 1998 period.

The  Company's  effective tax rate was 40.1% in the 1999 period  compared with
38.0% in the 1998 period  reflecting  increased  state  income taxes in the 1999
period.

Primarily as a result of the factors  described above, net income increased $1.9
million (26.9%),  to $9.2 million in the 1999 period (4.4% of revenue) from $7.2
million in the 1998 period (4.3% of revenue).

LIQUIDITY AND CAPITAL RESOURCES

The growth of the Company's business has required significant investments in new
revenue equipment.  The Company has financed its revenue equipment  requirements
with borrowings under a line of credit,  cash flows from  operations,  long-term
operating  leases,  and a small portion with borrowings under  installment notes
payable to commercial  lending  institutions  and equipment  manufacturers.  The
Company's  primary sources of liquidity at June 30, 1999, were funds provided by
operations and borrowings under its primary credit  agreement,  amended June 18,
1999, which had maximum  available  borrowing of $130.0 million at June 30, 1999
(the "Credit  Agreement").  The Company  believes  its sources of liquidity  are
adequate to meet its current and projected needs. (*)

The Company's  primary  sources of cash flow from  operations in the 1999 period
were net income  increased by depreciation and amortization and accounts payable
and accrued  expenses.  Net cash  provided  by  operating  activities  was $28.5
million in the 1999 period and $12.5 million in the 1998 period. The increase in
the 1999 period  resulted  from a  significant  improvement  in the cash flow of
receivables  and a higher  payables  level  caused by timing of the month end in
June.

Net cash used in investing activities was $18.1 million and $39.3 million in the
1999 and 1998 periods, respectively. These investments were primarily to acquire
additional  revenue  equipment  as the  Company  expanded  its  operations.  The
decrease in the 1999 period as  compared  to the 1998 period  resulted  from the
Company's  entering into more operating  leases and increasing its fleet through
the use of owner-operators who provide a tractor.  The Company expects to expend
approximately  an additional  $27.0 million on capital  expenditures  during the
remainder  of 1999 (excluding  planned  operating  leases  of  equipment). Total
projected capital  expenditures for 1999 are expected to be approximately  $45.0
million excluding operating leases and the effect of any potential acquisitions.
(*)

Net cash  used in  financing  activities  of $12.6  million  in the 1999  period
related  primarily  to  repayment  of debt  under  borrowings  under the  Credit
Agreement. This compared with net cash provided by financing activities of $24.3
million in the 1998 period.  At June 30, 1999, the Company had outstanding  debt
of $72.8  million,  primarily  consisting of  approximately  $42.0 million drawn
under the Credit Agreement,  $25.0 million in 10-year senior notes, $3.0 million
in an interest bearing note to the former primary  stockholder of SRT related to
the acquisition,  $2.1 million in term equipment financing,  and $0.7 million in
notes related to non-compete agreements.  Interest rates on this debt range from
5.7% to 10.8%.

The Credit Agreement is with a group of banks and has a maximum  borrowing limit
of $130.0 million.  Borrowings  related to revenue  equipment are limited to the
lesser  of 90% of the net  book  value of  revenue  equipment.  Working  capital
borrowings are limited to 85% of eligible accounts receivable. Letters of credit
are limited to an aggregate  commitment of $10.0 million.  The Credit  Agreement
includes  a  "security   agreement"  such  that  the  Credit  Agreement  may  be
collateralized  by virtually  all assets of the Company if a covenant  violation
occurs. A commitment fee, that is adjusted  quarterly  between 0.125% and 0.275%
per annum based on cash flow coverage, is due on the daily unused portion of the
Credit Agreement.  The Company,  including all subsidiaries,  are parties to the
Credit Agreement and related documents.

The Company renewed the loan in June 1999. The Credit Agreement revolves through
December  31, 2000 and then has a three-year  term out if not renewed.  Payments
for interest are due  quarterly  in arrears  with  principal  payments due in 12
equal quarterly

                                       11
<PAGE>
installments  beginning  in 2001 if not  renewed.  Borrowings  under the  Credit
Agreement are based on the banks' base rate or LIBOR and accrue  interest  based
on one,  two,  or three  month  LIBOR  rates plus an  applicable  margin that is
adjusted quarterly between 0.55% and 0.925% based on cash flow coverage. At June
30, 1999, the margin was 0.60%.  The Company has an interest rate swap agreement
that  fixes the  interest  rate on $10  million  of  borrowing  under the Credit
Agreement  at a rate of 5.95%  plus  applicable  margin.  The $10  million  swap
agreement will expire October 29, 1999.

In October 1995,  the Company placed $25 million in 10-year senior notes with an
insurance company. The notes bear interest at 7.39%, payable semi-annually,  and
mature  on  October  1,  2005.  Principal  payments  are  due  in  equal  annual
installments  beginning in the seventh year of the notes.  Proceeds of the notes
were used to reduce borrowings under the Credit Agreement.

The Credit  Agreement,  senior notes,  and the  headquarters  and terminal lease
agreement  entered into in 1996,  contain  certain  restrictions  and  covenants
relating  to, among other  things,  dividends,  tangible net worth,  cash flows,
acquisitions and dispositions,  and total indebtedness. All of these instruments
are  cross-defaulted.  At June 30, 1999, the Company was in compliance  with the
agreements.

SEASONALITY

In the trucking  industry,  revenue  generally  decreases  as  customers  reduce
shipments  during the winter  holiday  season and as inclement  weather  impedes
operations.  At the same time, operating expenses generally increase,  with fuel
efficiency  declining  because  of  engine  idling  and  weather  creating  more
equipment repairs. First quarter net income historically has been lower than net
income in each of the other  three-quarters  of the year because of the weather.
The Company's equipment utilization typically improves substantially between May
and October of each year because of the trucking industry's seasonal shortage of
equipment on traffic  originating  in California  and the  Company's  ability to
satisfy some of that requirement. The seasonal shortage typically occurs between
May and August because California produce carriers'  equipment is fully utilized
for produce during those months and does not compete for shipments hauled by the
Company's dry van operation. During September and October, business increases as
a  result  of  increased  retail  merchandise  shipped  in  anticipation  of the
holidays. (*)

YEAR 2000

The Year 2000  ("Y2K")  issue  concerns  the  inability  of computer  systems to
recognize and process  date-sensitive  information  after 1999 due to the use of
only the last two digits to refer to a year.  This  problem  could  affect  both
information  systems  (software and hardware) and other equipment that relies on
microprocessors.  Management  has  completed a  Company-wide  evaluation of this
impact on its computer systems, applications, and other date-sensitive equipment
and has hired a nationally-recognized  consulting firm to perform a status study
of the Company's  processes and activities related to the Company's Y2K project.
All known remediation efforts and testing of mission critical  systems/equipment
were  completed by July 31, 1999.  The cost of the  assessment  and  remediation
efforts for the  modifications  and updates to existing software is estimated to
be approximately $250,000.

The Company is also in the process of monitoring  the progress of material third
parties,  including  shippers  and  suppliers,  in their  efforts  to become Y2K
compliant and expects this phase to be ongoing  throughout the rest of the year.
The Company's  primary  information  technology  systems ("IT Systems")  include
hardware  and  software  for  billing,  dispatch,  electronic  data  interchange
("EDI"),  fueling,  payroll,  telephone,  vehicle  maintenance,  inventory,  and
satellite  communications  systems. The majority of the Company's IT Systems are
purchased from and maintained by third parties.  A primary IT System designed by
a  third  party  is  the  satellite  tracking  system,  which  tracks  equipment
locations,   provides  dispatch  and  routing  information,  and  allows  in-cab
communications  with  drivers.  The  Company's  operating  system  that  manages
payroll,  billing, and dispatch was purchased from the supplier in March 1999 on
a long term  lease.  Another  significant  IT System  provided  by a third party
transmits payroll funds to drivers and allows drivers to purchase fuel and other
items  outside  the  Company's  terminal  locations.   The  Company's  financial
reporting  system  also is  provided  by a third  party.  In addition to our own
completed  testing,  the Company has been  informed  by the  providers  of these
systems that they are Y2K compliant. The Company believes it is Y2K compliant in
its EDI  applications.  As customers will allow,  the Company will be performing
Y2K testing of EDI transmissions with its customers  throughout the remainder of
the year. (*)

The Company has reviewed its risks associated with  microprocessors  embedded in
facilities and equipment ("Non-IT Systems"). The primary Non-IT Systems includes
microprocessors  in tractor engines and other components,  terminal  facilities,
satellite   communications  units,  and   telecommunications  and  other  office
equipment.  The  Company's  assessment  of  its  revenue  equipment,   satellite
communications  units, and office equipment Non-IT Systems has revealed low risk
of material replacement  requirements.  Such equipment is relatively new and was
designed to be Y2K  compliant.  The Company is  continuing  to assess its Non-IT
Systems  in  its  terminal   facilities   but  believes   that  the  risk  of  a
service-interrupting failure in these systems is low. (*)

                                       12
<PAGE>
The  Company  could be faced  with  severe  consequences  if Y2K  issues are not
identified  and resolved in a timely  manner by the Company and  material  third
parties.   The  Company's  primary  risk  relating  to  Y2K  compliance  is  the
possibility  of service  disruption  from  third-party  suppliers  of  satellite
communications,   telephone,  fueling,  and  financial  services.  A  worst-case
scenario  would  result in the short term  inability  of the  Company to deliver
freight for its  shippers.  This would  result in lost  revenues;  however,  the
amount  would be  dependent  on the length and nature of the  disruption,  which
cannot be predicted or  estimated.  The Company is in the process of  developing
contingency plans in case business  interruptions do occur.  Management  expects
these plans to be completed by August 31, 1999. (*)

           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

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

COMMODITY PRICE RISK

Prices and  availability  of all  petroleum  products are subject to  political,
economic,  and market factors that are generally outside the Company's  control.
Because the Company's  operations  are dependent  upon diesel fuel,  significant
increases  in diesel  fuel  costs  could  materially  and  adversely  affect the
Company's  results of operations  and  financial  condition.  Historically,  the
Company has been able to recover a portion of  short-term  fuel price  increases
from customers in the form of fuel  surcharges.  The price and  availability  of
diesel fuel can be  unpredictable as well as the extent to which fuel surcharges
could be collected to offset such  increases.  For the first six months of 1999,
diesel fuel expenses represented 16.6% of the Company's total operating expenses
and 15.2% of total revenue. The Company uses derivative  instruments,  including
purchased commitments through suppliers,  to reduce a portion of its exposure to
fuel price fluctuations.  At June 30, 1999, the national average price of diesel
fuel as provided by the U.S. Department of Energy was $1.087 per gallon. At June
30, 1999,  the notional  amount for purchased  commitments  for the remainder of
1999 was 6.0 million gallons. Net unrealized losses were approximately $100,000.
At June 30,  1999,  a ten  percent  change in the price of fuel  would  cause an
approximately   $650,000  change  in  losses  or  gains  on  the  fuel  purchase
commitments.

INTEREST RATE RISK

The Credit  Agreement,  provided  there has been no  default,  carries a maximum
variable  interest rate of LIBOR for the  corresponding  period plus 0.925%.  At
June 30, 1999,  the Company had drawn $42.0 million under the Credit  Agreement.
Approximately  $32.0  million was subject to  variable  rates and the  remaining
$10.0  million was subject to an interest rate swap that fixed the interest rate
at 5.95% plus  applicable  margin per annum.  The swap expires October 29, 1999.
Considering the effect of the interest rate swap and all debt outstanding,  each
one-percentage  point  increase in LIBOR would  increase  the  Company's  pretax
interest expense by $290,000.

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

                                       13

<PAGE>

                            PART II OTHER INFORMATION

Item 1.     Legal Proceedings.

            None

Items 2 and 3. Not applicable

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

                   The Annual  Meeting of  Stockholders  of Covenant  Transport,
         Inc.  was held on May 20, 1999,  for the purpose of (a) electing  seven
         directors  for  one-year  terms (b)  ratification  of the  selection of
         PricewaterhouseCoopers  LLP as independent certified public accountants
         for the Company and (c) amending the Company's  Incentive Stock Plan to
         reserve an additional  651,550  shares of the Company's  Class A common
         stock for  issuance  to  participants.  Proxies  for the  meeting  were
         solicited  pursuant to Section 14(a) of the Securities  Exchange Act of
         1934,  and there was no  solicitation  in  opposition  to  management's
         nominees.  Each of management's  nominees for director as listed in the
         Proxy Statement was elected.

                  The voting  tabulation  on the  election of  directors  was as
         follows:
<TABLE>
<CAPTION>

                                                     Shares                  Shares                      Shares
                                                     Voted                   Voted                       Voted
                                                     "FOR"                  "AGAINST"                   "ABSTAIN"
                 <S>                                <C>                     <C>                         <C>

                  David R. Parker                    16,430,991                 0                         36,190
                  Michael W. Miller                  16,430,991                 0                         36,190
                  R. H. Lovin, Jr.                   16,430,991                 0                         36,190
                  Mark A. Scudder                    16,430,991                 0                         36,190
                  William T. Alt                     16,429,971                 0                         37,210
                  Hugh O. Maclellan, Jr.             16,430,991                 0                         36,190
                  Robert E. Bosworth                 16,430,991                 0                         36,190
</TABLE>


                  The voting  tabulation on the selection of accountants was
         16,461,756  shares "FOR," 1,600 shares "AGAINST," and 3,825 shares
         "ABSTAIN."

                  The voting  tabulation  on amending  the  Company's  Incentive
         Stock Plan was 12,724,525 shares "FOR," 3,112,255 shares "AGAINST," and
         5,932 shares "ABSTAIN."

Item 5.     Not applicable

Item 6.     Exhibits and reports on Form 8-K.
            (a) Exhibits
Exhibit
Number      Description

3.1+        Restated Articles of Incorporation.
3.2+        Amended By-Laws dated September 27, 1994.
4.1+        Restated Articles of Incorporation.
4.2+        Amended By-Laws dated September 27, 1994.
10.1+       Incentive Stock Plan, filed as Exhibit 10.9.
10.2+       401(k) Plan, filed as Exhibit 10.10.
10.3++      Note  Purchase  Agreement  dated  October 15, 1995,  among  Covenant
            Transport,  Inc., a Tennessee  corporation  and CIG & Co.,  filed as
            Exhibit 10.12.
10.4+++     Participation   Agreement  dated  March  29,  1996,  among  Covenant
            Transport, Inc., a Tennessee corporation,  Lease Plan USA, Inc., and
            ABN-AMRO Bank, N.V., Atlanta Agency, filed as Exhibit 10.14.
10.5+++     First Amendment to Note Purchase Agreement and Waiver dated April 1,
            1996, filed as Exhibit 10.16.

                                       14
<PAGE>
10.6++++    Waiver to Note  Purchase  Agreement  dated March 31, 1997,  filed as
            Exhibit 10.12.
10.7+++++   Second Amendment to Note Purchase Agreement dated December 30, 1997,
            filed as Exhibit 10.19.
10.8+++++   Stock  Purchase  Agreement  made and entered  into as of October 10,
            1997, by and among Covenant  Transport,  Inc., a Nevada corporation;
            Russell  Meyer;  and  Bud  Meyer  Truck  Lines,  Inc.,  a  Minnesota
            Corporation, filed as Exhibit 10.21.
10.9#       Stock  Purchase  Agreement  made and entered  into as of October 15,
            1998, by and among Covenant  Transport,  Inc., a Nevada corporation;
            Smith   Charitable    Remainder   Trust,    Southern    Refrigerated
            Transportation, Inc.,
                   an Arkansas  corporation,  and Tony and Kathy Smith,  husband
            and wife and residents of Arkansas, filed as Exhibit 10.22.
10.10       Amendment No. 2 to the Incentive Stock Plan.
10.11       Amended and Restated Credit Agreement dated June 18, 1999.
27          Financial Data Schedule.
+           Filed as an exhibit to the registrant's Registration Statement on
            Form S-1, Registration No. 33-82978, effective October 28, 1994, and
            incorporated herein by reference.
++          Filed as an  exhibit  to the  registrant's  Form 10-K for the
            year ended December 31, 1995, and incorporated herein by reference.
+++         Filed as an exhibit to the  registrant's  Form 10-Q for the  quarter
            ended March 31, 1996, and incorporated herein by reference.
++++        Filed as an exhibit to the  registrant's  Form 10-Q for the  quarter
            ended March 31, 1997, and incorporated herein by reference.
+++++       Filed as an exhibit to the  registrant's  Annual Report on Form 10-K
            for the period ended December 31, 1997, and  incorporated  herein by
            reference.
#           Filed as an exhibit to the  registrant's  Annual Report on Form 10-K
            for the period ended December 31, 1998, and  incorporated  herein by
            reference.

            (b) No reports on Form 8-K have been filed  during the  quarter  for
which this report is filed.

                                       15
<PAGE>

                                   SIGNATURE



      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.


                                   COVENANT TRANSPORT, INC.


Date: August 11, 1999               /s/ Joey B. Hogan
                                   -----------------

                                   Joey B. Hogan
                                   Treasurer and Chief Financial Officer

                                       16
