SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

(Mark One)
[ X ] ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
      ACT OF 1934.
      For the Fiscal Year Ended December 31, 2000

                                       OR

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

Commission file number 000-20793

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


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

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

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

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

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

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

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

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  was  $5,230,662  as of January 31,  2001,  (based upon the $2.00 per
share  closing  price on that  date as  reported  by  Nasdaq).  In  making  this
calculation the registrant has assumed,  without admitting for any purpose, that
all executive  officers,  directors,  and holders of more than 10% of a class of
outstanding common stock, and no other persons, are affiliates, and has excluded
stock options.

As of January 31, 2001, the  registrant  had 3,916,364  shares of Class A Common
Stock and 1,000,000 shares of Class B Common Stock outstanding.

DOCUMENTS  INCORPORATED BY REFERENCE:  The information set forth under Part III,
Items 10, 11, 12, and 13 of this Report is  incorporated  by reference  from the
registrant's   definitive  proxy  statement  for  the  2001  annual  meeting  of
stockholders that will be filed no later than April 29, 2001.

                                        1

<PAGE>

                              Cross Reference Index

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


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

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

Item 2   Properties                          Page 7 herein

Item 3   Legal Proceedings                   Page 7 herein

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

                                    Part II
                                    -------

Item 5   Market for the Registrant's Common
         Equity and Related Stockholder
         Matters                             Page 8 herein

Item 6   Selected Financial Data             Page 9 herein

Item 7   Management's Discussion and
         Analysis of Financial Condition
         and Results of Operations           Page 10 through 16 herein

Item 8   Financial Statements and
         Supplementary Data                  Page 16 herein

Item 9   Changes in and Disagreements with
         Accountants on Accounting and
         Financial Disclosure                Page 16 herein

                                    Part III
                                    --------

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

Item 11  Executive Compensation              Page 5 through 6 of Proxy Statement

Item 12  Security Ownership of Principal
         Stockholders and Management         Page 9 of Proxy Statement

Item 13  Related Party Transactions          Page 5 of Proxy Statement

                                     Part IV
                                     -------

Item 14  Exhibits, Financial Statement
         Schedules, and Reports on
         Form 8-K                            Pages 17 through 19 herein


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


         This report contains "forward-looking statements." These statements are
subject to certain risks and  uncertainties  that could cause actual  results to
differ  materially  from  those  anticipated.  See  "Management  Discussion  and
Analysis of  Financial  Condition  and Results of  Operations - Factors That May
Affect Future  Results" for additional  information and factors to be considered
concerning forward-looking statements.


                                        2

<PAGE>

                                     PART I

ITEM 1.           BUSINESS

The Company

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

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

         Smithway  acquired the operations of eight trucking  companies  between
June 1995 and October 1998. In each  transaction,  Smithway  purchased  specific
assets  for fair  market  value  and paid the  selling  company's  owner a small
percentage of revenue for goodwill or a noncompetition arrangement.  The Company
acquired the business of Van Tassel,  Inc., a primarily flatbed carrier based in
Pittsburg, Kansas, in June 1995, and Smith Trucking Company, a primarily dry van
carrier based in McPherson,  Kansas, in January 1996. Both of these acquisitions
permitted  Smithway to expand and solidify  existing  customer  relationships as
well as access new  customers.  The Smith  Trucking  location  also expanded the
Company's driver  recruiting  region.  In October 1996, the Company acquired the
business of Marquardt Transportation, Inc., a primarily flatbed carrier based in
Yankton,  South  Dakota,  and with a small  facility  in  Stockton,  California.
Marquardt further diversified Smithway's freight base by increasing its presence
in hauling  large,  manufactured  items and heavy  machinery.  In February 1997,
Smithway acquired Fort Dodge,  Iowa-based Pirie Motor Freight,  Inc. Pirie was a
small flatbed  carrier,  and its operations  were  consolidated  into Smithway's
headquarters.  In  September  1997,  Smithway  acquired  the  business  of Royal
Transport,  Ltd. of Grand Rapids,  Michigan,  primarily a flatbed  carrier.  The
Royal acquisition provided Smithway a regional niche specializing in heavy loads
hauled  primarily  on multiple  axle  trailers.  In February  1998,  the Company
acquired  the  business of East West Motor  Express,  Inc. of Black Hawk,  South
Dakota  ("East  West"),  a regional  flatbed and dry van carrier.  The East West
acquisition  added 225  trucks to  Smithway's  fleet.  TP  Transportation,  Inc.
("TP"),  a flatbed  carrier from Enid,  Oklahoma was acquired in August 1998. In
October  1998 the Company  continued  to build its dry van freight base with the
acquisition  of the business of JHT, Inc.  ("JHT") of Cohasset,  Minnesota.  JHT
operated 185 tractors serving  exclusively the dry van market with slightly over
half  of  the  tractors   company-owned   and  the  balance  being  provided  by
owner-operators.  Through  acquisitions and internal growth the Company expanded
from $77 million in revenue in 1995 to $199 million in 2000. The Company did not
complete an acquisition in 1999 or 2000.

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

Operations

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

                                        3

<PAGE>

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

Customers and Marketing

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

          In 2000,  the Company's top 50, 25, 10, and 5 customers  accounted for
47%, 37%, 25%, and 17% of revenue,  respectively,  with the remaining  customers
accounting for 53% of revenue.  No single customer  accounted for 10% or more of
the Company's revenue during 2000.

Technology

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

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

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

Drivers, Independent Contractors, and Other Personnel

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

         In 2000, the combination of high fuel prices,  a slowing  economy,  and
tightened credit  standards placed extreme pressure on independent  contractors.
Many  were  forced  to  exit  their  business.   Smithway's  average  number  of
independent contractors decreased by approximately 11% during 2000 compared with
1999.

                                        4

<PAGE>

         Smithway  has  implemented  several  policies  to  promote  driver  and
independent  contractor  recruiting and retention.  These include maintaining an
open-door policy with easy access to senior  executives,  appointing an advisory
board  comprised  of top drivers and  independent  contractors  to consult  with
management, and assigning each driver and independent contractor to a particular
dispatcher  to insure  personal  contact.  In  addition,  the  Company  utilizes
conventional  (engine-forward)  tractors,  which  are more  comfortable  for the
driver,  and operates  over  relatively  short-to-  medium  distances  (712-mile
average  length  of haul in  2000)  to  return  drivers  home as  frequently  as
possible.

         Smithway is not a party to a collective  bargaining  agreement  and its
employees are not  represented by a union. At December 31, 2000, the Company had
800 Company drivers, 340 non-driver employees,  and 614 independent contractors.
Management  believes that the Company has good  relationships with its employees
and independent contractors.

Safety and Insurance

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

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

Revenue Equipment

         Smithway's  equipment  strategy  for its owned  tractors (as opposed to
independent  contractors' tractors) is to operate late-model tractors to control
repair and maintenance  expense and gain  improvements in fuel efficiency.  As a
result of advances in the  manufacturing  of tractors and major  components,  as
well as the  depressed  value of used  equipment,  the Company has  extended its
trade  cycle to  mileage  of 550,000 to  575,000  miles.  This  mileage  exceeds
warranty limits.  Based upon projected repair and maintenance needs,  management
does not  expect a  substantial  increase  in  repair  and  maintenance  expense
compared  with the cost of  disposing  of  tractors on the former  trade  cycle.
Smithway orders conventional  (engine forward) tractors with standard engine and
drivetrain  components,  and trailers with standard brakes and tires to minimize
its inventory of spare parts. All equipment is subject to the Company's  regular
maintenance  program,  and is also inspected and maintained  each time it passes
through a Smithway maintenance facility.  Smithway's company-owned tractor fleet
had an average age of 28 months at December 31, 2000.

Competition

         The truckload  segment of the trucking  industry is highly  competitive
and fragmented, and no carrier or group of carriers dominates the flatbed or van
market.  Smithway competes  primarily with other regional,  short-to-medium-haul
carriers  and private  truck  fleets used by  shippers  to  transport  their own
products in proprietary  equipment.  Competition is based primarily upon service
and price.  The Company  competes to a limited  extent with rail and  rail-truck
intermodal   service,   but  attempts  to  limit  this  competition  by  seeking
service-sensitive  freight  and  focusing  on  short-to-medium  lengths of haul.
Although  management  believes  the  approximately  1,000  company  drivers  and
independent contractors dedicated to its flatbed operation at December 31, 2000,
rank its flatbed  division  among the ten largest  such fleets in that  industry
segment, there are other trucking companies, including diversified carriers with
large flatbed fleets, that possess substantially greater financial resources and
operate more equipment than Smithway.

Fuel Availability and Cost

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

                                        5

<PAGE>

Regulation

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

         The Company's  operations are subject to various  federal,  state,  and
local environmental laws and regulations, implemented principally by the EPA and
similar state regulatory agencies, governing the management of hazardous wastes,
the discharge of pollutants into the air and surface and underground waters, and
the disposal of certain  substances.  The Company transports certain commodities
that may be deemed hazardous substances,  and its Fort Dodge, Iowa, headquarters
and Black Hawk, South Dakota, Enid, Oklahoma, and Stockton, California terminals
have  above-ground  fuel storage  tanks and fueling  facilities.  The  Company's
Cohasset,  Minnesota terminal has underground fuel storage tanks. If the Company
should be involved in a spill or other accident involving hazardous  substances,
if any such substances were found on the Company's properties, or if the Company
were found to be in violation of applicable  laws and  regulations,  the Company
could be responsible for clean-up  costs,  property  damage,  and fines or other
penalties,  any one of which  could  have a  materially  adverse  effect  on the
Company. Management believes that its operations are in material compliance with
current laws and  regulations  and does not know of any existing  condition that
would cause  compliance  with  applicable  environmental  regulations  to have a
material effect on the Company's capital expenditures,  earnings, or competitive
position. If the Company should fail to comply with applicable regulations,  the
Company  could be  subject to  substantial  fines or  penalties  and to civil or
criminal liability.

                                        6

<PAGE>

ITEM 2.           PROPERTIES

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

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

+ Month-to-month leases.

ITEM 3.           LEGAL PROCEEDINGS

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

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

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

                                        7

<PAGE>

                                     PART II

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

         Price Range of Common  Stock.  The  Company's  Class A Common  Stock is
traded on the Nasdaq  National  Market  under the symbol  "SMXC." The  following
table sets forth for the calendar  periods  indicated  the range of high and low
sales prices for the  Company's  Class A Common Stock as reported by Nasdaq from
January 1, 1999, to December 31, 2000.

          Period                           High                    Low
--------------------------------- ---------------------- -----------------------
Calendar Year 2000
      1st  Quarter                  $      4.31            $       2.75
      2nd Quarter                   $      3.75            $       1.63
      3rd Quarter                   $      3.25            $       1.84
      4th Quarter                   $      2.94            $       1.63


          Period                           High                    Low
--------------------------------- ---------------------- -----------------------
Calendar Year 1999
      1st  Quarter                  $      9.50            $       7.38
      2nd Quarter                   $     10.69            $       6.75
      3rd Quarter                   $     10.50            $       7.44
      4th Quarter                   $      8.50            $       3.56


          As of January 31, 2001 the Company had 334  stockholders  of record of
its Class A Common Stock.  However,  the Company  believes that many  additional
holders of Class A Common Stock are unidentified because a substantial number of
the  Company's  shares  are held of  record  by  brokers  or  dealers  for their
customers in street names.

         Dividend  Policy.  The  Company  has  never  declared  and  paid a cash
dividend  on its  Class A  Common  Stock.  It is the  current  intention  of the
Company's  Board of  Directors  to  continue  to retain  earnings to finance the
growth of the Company's  business rather than to pay dividends.  Future payments
of  cash  dividends  will  depend  upon  the  financial  condition,  results  of
operations,   and  capital  commitments  of  the  Company,   restrictions  under
then-existing  agreements,  and other  factors  deemed  relevant by the Board of
Directors.

                                        8

<PAGE>

ITEM 6.           SELECTED FINANCIAL AND OPERATING DATA

<TABLE>
<CAPTION>
                                                                            Years Ended December 31,
                                                          1996         1997          1998         1999           2000
                                                          ----         ----          ----         ----           ----
<S>                                                    <C>         <C>           <C>          <C>            <C>
Statement of Operations Data:                                  (In thousands, except per share and operating data)
Operating revenue....................................  $    93,667 $    120,117  $    161,375 $     196,945  $     198,990
Operating expenses:
  Purchased transportation...........................       37,386       47,095        66,495        79,735         77,755
  Compensation and employee benefits.................       20,800       26,904        38,191        49,255         51,718
  Fuel, supplies, and maintenance....................       12,347       15,965        19,738        23,754         30,995
  Insurance and claims...............................        1,995        2,206         2,745         4,212          3,426
  Taxes and licenses.................................        1,856        2,299         3,048         4,045          3,943
  General and administrative.........................        4,214        5,391         6,237         7,491          8,319
  Communications and utilities.......................          971        1,378         1,838         2,190          2,052
  Depreciation and amortization......................        5,740        7,880        11,015        15,800         19,325
                                                       ----------- ------------  ------------ -------------  -------------
     Total operating expenses........................       85,309      109,118       149,307       186,482        197,533
                                                       ----------- ------------  ------------ -------------  -------------
     Earnings from operations........................        8,358       10,999        12,068        10,463          1,457
Interest expense (net)...............................        1,548        1,545         2,965         3,715          4,029
                                                       ----------- ------------  ------------ -------------  -------------
Earnings (loss) before income taxes..................        6,810        9,454         9,103         6,748         (2,572)
Income taxes (benefit)...............................        2,860        3,781         3,774         2,822           (581)
                                                       ----------- ------------  ------------ -------------  -------------
Net earnings (loss)..................................  $     3,950 $      5,673  $      5,329 $       3,926  $      (1,991)
                                                       =========== ============  ============ =============  =============
Basic and diluted earnings per common share..........  $      0.93 $       1.13  $       1.06 $        0.78  $     (0.40)
                                                       =========== ============  ============ =============  =============

Operating Data(1)
Operating ratio(2)...................................        91.1%        90.8%         92.5%         94.7%          99.3%
Average revenue per tractor per week(3)..............  $     2,243 $      2,342  $      2,330 $       2,299  $       2,261
Average revenue per loaded mile(3)...................  $      1.37 $       1.36  $       1.33 $        1.33  $        1.32
Average length of haul in miles......................          568          609           659           678            712
Company tractors at end of period....................          458          525           815           844            887
Independent contractor tractors at end of period.....          406          443           711           689            614
Weighted average tractors during period..............          747          909         1,236         1,532          1,515
Trailers at end of period............................        1,492        1,673         2,720         2,783          2,679
Weighted averages shares outstanding:
  Basic..............................................        4,250        5,001         5,012         5,031          5,009
  Diluted............................................        4,250        5,019         5,037         5,032          5,009

Balance Sheet Data (at end of period):
Working capital......................................  $     1,893 $     10,100  $      6,811 $       5,159  $       3,300
Net property and equipment...........................       39,170       53,132        87,137        94,305         86,748
Total assets.........................................       55,330       74,878       115,494       125,014        115,828
Long-term debt, including current maturities.........       15,904       30,976        61,703        59,515         52,334
Total stockholders' equity...........................       24,193       29,906        35,405        39,508         37,233

</TABLE>

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

                                        9

<PAGE>

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

Introduction

         Except for the historical  information contained herein, the discussion
in this annual  report on Form 10-K  contains  forward-looking  statements  that
involve  risk,  assumptions,  and  uncertainties  that are difficult to predict.
Words such as "believe,"  "may,"  "could,"  "expects,"  "likely,"  variations of
these  words,   and  similar   expressions,   are  intended  to  identify   such
forward-looking statements. The Company's actual results could differ materially
from those  discussed  herein.  Factors that could cause or  contribute  to such
differences  include,  but are not  limited  to,  those  discussed  below in the
section  entitled  "Factors  That May Affect Future  Results" and  "Management's
Discussion and Analysis of Financial  Condition and Results of  Operations,"  as
well as those discussed in this item and elsewhere in this annual report on Form
10-K.

General

         The Company expanded its operations over the past three years through a
combination of  acquisitions  and internal  growth.  From 1998 to 2000 operating
revenue  increased 23.3%, to $199 million in 2000 from $161 million in 1998. For
the year 2000,  Smithway  experienced a net loss of $1,991,000 or $.40 per basic
and diluted share. The loss included  fourth-quarter pre-tax adjustments of $1.8
million relating to tractor values and reserves for accounts receivable.

         The trucking industry operated in a very difficult business environment
in 2000. A combination  of high fuel prices,  a depressed  used truck market,  a
declining  number of  owner-operators,  and slowing  freight demand affected the
profitability of most trucking companies, including Smithway.

         Smithway's revenue was negatively  impacted by three main factors.  The
slowing  economy  reduced  revenue  per  tractor per week versus the prior year,
especially during the second half and fourth quarter of 2000. In addition,  high
fuel  prices  and  lower   freight   demand   caused  the   average   number  of
owner-operators  providing tractors to Smithway to drop by 11% during 2000. With
fewer  tractors  operating,  Smithway's  revenue base  suffered.  In addition to
industry pressures, the Company's dry van operation significantly underperformed
the flatbed  operation.  During  December a  convergence  of plant  closings and
severe  ice,  cold,  and snow  compounded  the  effect of slow  freight  demand.
Management  estimates that the combined  revenue impact of these factors for the
year was approximately $11.3 million.

         On the expense side, Smithway's profitability was affected primarily by
high fuel prices and two non-recurring adjustments. Smithway's average price per
gallon of fuel increased 33% over 1999. After fuel  surcharges,  the higher cost
of fuel  decreased  operating  income by $2.3  million for the year.  During the
fourth quarter,  three of Smithway's  significant customers declared bankruptcy.
The  Company  reserved  $775,000  pretax  to  reflect  the  full  amount  of the
receivables  owed by these  customers plus certain  amounts for other  customers
experiencing economic  difficulties.  The adjustment is reflected in general and
administrative expense.

         In  response  to the  depressed  market  for  used  revenue  equipment,
Smithway  recorded an  approximately  $1.0 million  pretax  charge to reflect an
adjustment in tractor  values.  The adjustment is included in  depreciation  and
amortization.

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

                                       10

<PAGE>

Results of Operations

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

<TABLE>
<CAPTION>
                                                                            1998               1999               2000
                                                                            ----               ----               ----
<S>                                                                        <C>                <C>                <C>
Operating revenue.........................................                 100.0%             100.0%             100.0%
Operating expenses:
         Purchased transportation.........................                  41.2               40.5               39.1
         Compensation and employee benefits...............                  23.7               25.0               26.0
         Fuel, supplies, and maintenance..................                  12.2               12.1               15.6
         Insurance and claims.............................                   1.7                2.1                1.7
         Taxes and licenses...............................                   1.9                2.1                2.0
         General and administrative.......................                   3.9                3.8                4.2
         Communication and utilities......................                   1.1                1.1                1.0
         Depreciation and amortization....................                   6.8                8.0                9.7
                                                               ----------------------------------------------------------
         Total operating expenses.........................                  92.5               94.7               99.3
                                                               ----------------------------------------------------------
Earnings from operations..................................                   7.5                5.3                0.7
Interest expense, net.....................................                   1.8                1.9                2.0
                                                               ----------------------------------------------------------
Earnings (loss) before income taxes.......................                   5.6                3.4               (1.3)
Income taxes (benefit)....................................                   2.3                1.4               (0.3)
                                                               ----------------------------------------------------------
Net earnings (loss).......................................                   3.3%               2.0%              (1.0)%
                                                               ===========================================================
</TABLE>

Comparison of year ended December 31, 2000 to year ended December 31, 1999.

         Operating  revenue  increased $2.1 million (1.0%), to $199.0 million in
2000 from $196.9  million in 1999.  A  substantial  increase  in fuel  surcharge
revenue to $7.3  million in 2000 from  $489,000  in 1999 was  largely  offset by
lower  revenue  per  tractor  per  week   (excluding   revenue  from   brokerage
operations),  and slightly lower weighted average tractors.  Approximately  $3.9
million of the fuel  surcharge  revenue  helped to offset Company fuel costs and
the remainder was passed through to independent contractors. Revenue per tractor
per week (net of fuel  surcharges)  decreased $38 per week (1.7%),  to $2,261 in
2000 from $2,299 in 1999, primarily caused by a $.01 decrease in average revenue
per loaded mile. Weighted average tractors decreased 1.1%, to 1,515 in 2000 from
1,532  during  1999 as the  Company's  owner  operator  fleet  decreased  due to
economic pressures that forced many to leave the trucking industry. Revenue from
the Company's brokerage  operations  increased $752,000 (6.5%), to $12.3 million
in 2000 from $11.6 million in 1999.

         Purchased  transportation consists primarily of payments to independent
contractor  providers  of  revenue  equipment,  expenses  related  to  brokerage
activities, and payments under operating leases of revenue equipment.  Purchased
transportation  decreased  $1.9 million  (2.5%),  to $77.8  million in 2000 from
$79.7  million  in  1999,  as the  Company  contracted  with  fewer  independent
contractor providers of revenue equipment. As a percentage of revenue, purchased
transportation  decreased to 39.1% in 2000 from 40.5% in 1999.  This  reflects a
decrease in the  percentage  of the  Company's  fleet  supplied  by  independent
contractors  which was  partially  offset by an  increase in the  percentage  of
revenue  paid  to the  independent  contractors  as  they  receive  100% of fuel
surcharges attributable to the loads they haul.

         Compensation and employee  benefits  increased $2.5 million (5.0%),  to
$51.7  million in 2000 from $49.3  million in 1999.  As a percentage of revenue,
compensation  and  employee  benefits  increased  to 26.0% in 2000 from 25.0% in
1999.  The increase was  primarily  attributable  to an increase in the per-mile
wage paid to flatbed  drivers in October 1999 and an increase in the  percentage
of the Company's  revenue  attributable  to  company-owned  equipment.  This was
partially  offset by a decrease in workers'  compensation  and health  insurance
claims in 2000 compared with 1999.

         Fuel,  supplies,  and maintenance  increased $7.2 million  (30.5%),  to
$31.0  million in 2000 from $23.8  million in 1999.  As a percentage of revenue,
fuel,  supplies,  and maintenance  increased  dramatically to 15.6% in 2000 from
12.1% in 1999  caused  primarily  by higher  fuel  price.  Average  fuel  prices
increased  to $1.45 per gallon  during 2000 from $1.09 per gallon in 1999.  This
increase was partially offset by $3.9 million of fuel surcharges attributable to
loads  hauled  by  Company   trucks  and   $667,000   gains  from  fuel  hedging
transactions.  The Company is  attempting  to recover  increases  in fuel prices
through fuel surcharges and higher rates,  however,  market  pressures  indicate
that the costs will

                                       11

<PAGE>

not be fully offset through these measures. The Company's fuel hedging positions
expired in June 2000.  Maintenance expense may increase in future periods as the
Company lengthens its trade cycle for tractors beyond existing warranty terms.

         Insurance and claims  decreased  $786,000  (18.7%),  to $3.4 million in
2000 from $4.2 million in 1999. As a percentage of revenue, insurance and claims
decreased to 1.7% of revenue in 2000  compared  with 2.1% in 1999,  reflecting a
decrease in liability and physical damage claims paid and reserved.

         Taxes and licenses  decreased  $102,000 (2.5%), to $3.9 million in 2000
from $4.0  million in 1999,  reflecting  a decrease  in the number of  shipments
requiring  special  permits.  The special  permits are paid for by the shippers,
which is included in freight  revenue.  As a  percentage  of revenue,  taxes and
licenses remained  relatively  constant at 2.0% of revenue in 2000 compared with
2.1% of revenue in 1999.

         General and administrative expenses increased $828,000 (11.1%), to $8.3
million in 2000 from $7.5  million  in 1999  caused by an  increase  in bad debt
expense.  During the fourth  quarter of 2000,  three  major  customers  declared
bankruptcy  causing the Company to increase its allowance for doubtful  accounts
by $775,000.  Other  general and  administrative  expenses  remained  relatively
unchanged.  As a  percentage  of revenue,  general and  administrative  expenses
increased  to 4.2% of  revenue  in 2000  compared  with 3.8% of revenue in 1999.
Without  the  increase  in  allowance   for  doubtful   accounts,   general  and
administrative  expenses would have remained  constant at approximately  3.8% of
revenue in each year.

         Communications and utilities decreased $138,000 (6.3%), to $2.1 million
in 2000 from $2.2 million in 1999.  As a percentage  of revenue,  communications
and utilities remained  relatively  constant at 1.0% of revenue in 2000 compared
with 1.1% of revenue in 1999.

         Depreciation and amortization  increased $3.5 million (22.3%), to $19.3
million in 2000 from $15.8  million  in 1999.  In 2000 the market  value of used
tractors  declined in the United States.  In response,  management  assessed the
valuation of its long-lived assets and identified  tractors with carrying values
in excess of recoverable value. The carrying value of these tractors was reduced
by  $1,033,000.  In  accordance  with  industry  practices,  the gain or loss on
retirement,  sale, or write-down  of equipment is included in  depreciation  and
amortization.  In 2000,  the  Company  recognized  net  losses on  equipment  of
$881,000, adjusting for the $1,033,000 write-down of equipment,  compared to net
gain of $954,000 in 1999,  causing a $1.8 million  increase in depreciation  and
amortization expense.  Additionally,  increasing costs of new equipment continue
to increase  depreciation per tractor. As a percentage of revenue,  depreciation
and  amortization  increased  to 9.7% of  revenue  in 2000  from  8.0% in  1999,
reflecting losses on equipment,  higher cost of new equipment, and lower revenue
per tractor that less efficiently spread this fixed cost.

         Interest expense,  net,  increased  $314,000 (8.5%), to $4.0 million in
2000 from  $3.7  million  in 1999.  This  increase  was  attributable  to higher
interest  rates,  offset  partially  by lower  average  debt  outstanding.  As a
percentage of revenue,  interest  expense,  net,  increased  slightly to 2.0% of
revenue in 2000 compared with 1.9% in 1999.

         As a result of the foregoing,  the Company's pretax margin decreased to
(1.3%) in 2000 from 3.4% in 1999.

         The  Company's  income tax benefit for 2000 was  $581,000,  or 22.6% of
loss before  income taxes.  The  Company's  income tax expense for 1999 was $2.8
million,  or 41.8% of earnings before income taxes. In both years, the effective
tax  rate is  different  from the  expected  combined  tax  rate  for a  company
headquartered  in Iowa  because  of the cost of  nondeductible  driver  per diem
expense  absorbed by the Company.  The impact of the  Company's  paying per diem
travel  expenses  varies  depending  upon the ratio of  drivers  to  independent
contractors and the level of the Company's pretax earnings.

         As a result of the factors  described  above, net loss was $2.0 million
in 2000 (1.0% of  revenue),  compared  with net earnings of $3.9 million in 1999
(2.0% of revenue).

Comparison of year ended December 31, 1999 to year ended December 31, 1998.

         Operating revenue increased $35.5 million (22.0%), to $196.9 million in
1999 from $161.4 million in 1998. The revenue increase resulted primarily from a
24.0% increase in weighted average tractors,  to 1,532 in 1999 from 1,236 during
1998 as the Company expanded internally to meet customer demand and acquired the
business of East West Motor  Express,  Inc.  ("East West") in February  1998, TP
Transportation,  Inc.  ("TP") in August 1998,  and JHT, Inc.  ("JHT") in October
1998. This was partially offset by lower revenue per tractor per week (excluding
revenue from  brokerage  operations),  which  decreased $31 per week (1.3%),  to
$2,299 in 1999 from $2,330 in 1998. This decrease

                                       12

<PAGE>

was caused by a shortage  of manned  tractors in the fleet in the second half of
the year and lower  miles and  revenue  per  tractor in the dry van  operations.
Revenue from the Company's brokerage  operations increased $1.2 million (11.5%),
to $11.6 million in 1999 from $10.4 million in 1998.

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

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

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

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

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

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

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

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

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

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

         The  Company's  effective tax rate was 41.8% in 1999 (1.4% of revenue),
compared with 41.5% in 1998 (2.3% of revenue).  The effective tax rate is higher
than the expected combined tax rate for a company  headquartered in Iowa because
of the cost of  nondeductible  driver per diem expense  absorbed by the Company.
The impact of the Company's

                                       13

<PAGE>

paying per diem travel  expenses  varies  depending upon the ratio of drivers to
independent contractors and the level of the Company's pretax earnings.

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

Liquidity and Capital Resources

         The  growth  of  the  Company's   business  has  required   significant
investments  in new revenue  equipment  that the Company has  financed in recent
years with  borrowings  under  installment  notes payable to commercial  lending
institutions and equipment manufacturers, borrowings under lines of credit, cash
flow from operations, and equipment leases from third-party lessors. The Company
also has  obtained a portion of its  revenue  equipment  fleet from  independent
contractors  who own and operate the equipment,  which reduces  overall  capital
expenditure   requirements   compared   with   providing  a  fleet  of  entirely
company-owned  equipment.  The Company's primary sources of liquidity  currently
are funds  provided by operations and borrowings  under credit  agreements  with
financial  institutions  and equipment  manufacturers.  The Company  reduced its
borrowing by $6.8 million  during 2000 as cash generated  from  operations  paid
down  long-term  debts.  Management  believes  that its sources of liquidity are
adequate to meet its currently anticipated working capital requirements, capital
expenditures, and other needs at least through 2001.

         Net cash  provided by operating  activities  was $16.5  million,  $24.0
million,  and $18.7  million for the years ended  December 31, 1998,  1999,  and
2000,  respectively.  The Company's  principal use of cash from operations is to
service debt and internally finance accounts  receivable  associated with growth
in the business.  Total  receivables  increased  (decreased) $4.5 million,  $3.4
million,  and ($1.4)  million for the years ended  December 31, 1998,  1999, and
2000,  respectively.  The average age of the Company's trade accounts receivable
was approximately 33 days for 1998, 35 days for 1999, and 37 days for 2000.

         Net cash used in investing activities was $36.6 million, $14.7 million,
and $2.6  million  for the  years  ended  December  31,  1998,  1999,  and 2000,
respectively. Such amounts related primarily to payments made in acquisitions of
three trucking companies and purchases,  sales, and trades of revenue equipment.
The Company expects capital  expenditures  (primarily for revenue  equipment and
satellite  communications  units),  net of revenue  equipment  trade-ins,  to be
approximately $6.4 million during 2001. Such projected capital  expenditures are
expected to be funded with cash flow from operations,  borrowings,  or operating
leases.

         Net cash provided by (used in) financing  activities of $17.3  million,
($9.9 million), and ($16.5 million) for the years ended December 31, 1998, 1999,
and 2000,  respectively,  consisted  primarily of net  borrowings  (payments) of
$17.3  million,  ($9.9  million),  and ($16.5  million) of  principal  under the
Company's long-term debt agreements.

         At  December  31,  2000,  the Company had  outstanding  long-term  debt
(including current maturities) of approximately $52.3 million, most of which was
comprised of obligations  for the purchase of revenue  equipment.  Approximately
$33.8 million consisted of borrowings from financial  institutions and equipment
manufacturers and $18.5 million represented the amount drawn under the Company's
revolving credit facility. Interest rates on this debt range from 5.81% to 7.96%
with maturities through 2005.

         Currently  the  Company's   revolving  credit  facility   provides  for
borrowings of up to $32.5 million,  based upon certain  accounts  receivable and
revenue  equipment  values.  The  interest  rate  under the credit  facility  is
currently  1.25% plus the LIBOR rate for the  corresponding  period.  The credit
facility is secured and contains covenants that impose certain minimum financial
ratios and limit additional liens, the size of certain mergers and acquisitions,
dividends,  and other  matters.  The Company was in  compliance  with the credit
facility at December 31, 2000 and currently is in compliance.

Market Risks

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

Interest Rate Risk

         The  revolving  credit  facility,  provided  there has been no default,
carries a variable  interest rate based on LIBOR plus an  applicable  margin for
the  corresponding  period.  In  addition,  approximately  $11.3  million of the
Company's other debt carries  variable  interest rates.  This variable  interest
exposes the Company to the risk that interest rates may rise. Assuming borrowing
levels at December 31, 2000,  a one-point  increase in the LIBOR would  increase
interest expense

                                       14

<PAGE>

by  approximately  $298,000.  The remainder of the Company's  other debt carries
fixed interest rates and exposes the Company to the risk that interest rates may
fall. At December 31, 2000,  approximately 57.0% of the Company's debt carries a
variable interest rate and the remainder is fixed.

Commodity Price Risk

          The  Company in the past has used  derivative  instruments,  including
heating oil price swap  agreements,  to reduce a portion of its exposure to fuel
price fluctuations.  At December 31, 2000, the Company had no such agreements in
place.

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

Inflation and Fuel Costs

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

Seasonality

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

Factors That May Affect Future Results

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

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

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

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

                                       15

<PAGE>

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

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

ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

<TABLE>
<CAPTION>
                                                                      Quarterly Financial Data
                                                         (Dollars in thousands, except earnings per share)
                                                 ------------------------------------------------------------------
                                                 First Quarter    Second Quarter    Third Quarter   Fourth Quarter
                                                      2000             2000             2000            2000
                                                 -------------- ------------------ -------------- -----------------
<S>                                              <C>            <C>                <C>            <C>
Operating revenue................................$       50,748 $           51,094 $       50,206 $          46,942
Earnings (loss) from operations..................         1,519              1,206          1,204            (2,472)
Earnings (loss) before income taxes..............           521                170            174            (3,437)
Income taxes (benefit)...........................           283                163            153            (1,180)
Net earnings (loss)..............................           238                  7             21            (2,257)
Basic and diluted earnings (loss) per share......$         0.05 $             0.00 $         0.00 $           (0.46)



                                                 First Quarter    Second Quarter    Third Quarter   Fourth Quarter
                                                      1999             1999             1999            1999
                                                 -------------- ------------------ -------------- -----------------
Operating revenue................................$       47,295 $           51,117 $       50,043 $          48,490
Earnings from operations.........................         3,150              3,883          1,959             1,471
Earnings before income taxes.....................         2,237              2,952          1,035               524
Income taxes.....................................           933              1,230            425               234
Net earnings.....................................         1,304              1,722            610               290
Basic and diluted earnings per share.............$         0.26 $             0.34 $         0.12 $            0.06

</TABLE>

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

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

         No reports on Form 8-K have been filed  within the  twenty-four  months
prior to December 31, 2000,  involving a change of accountants or  disagreements
on accounting and financial disclosure.

                                    PART III

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information  respecting  executive officers and directors set forth
under the captions "Election of Directors;  Information Concerning Directors and
Executive  Officers" on page 3 and 4 and  "Section  16(a)  Beneficial  Ownership
Reporting Compliance" on page 7 of the Registrant's Proxy Statement for the 2000
annual  meeting of  stockholders,  which will be filed with the  Securities  and
Exchange  Commission  in  accordance  with  Rule  14a-6  promulgated  under  the
Securities  Exchange  Act  of  1934,  as  amended  (the  "Proxy  Statement")  is
incorporated by reference;  provided, that the "Audit Committee Report for 2000"
and the Stock Price  Performance  Graph contained in the Proxy Statement are not
incorporated by reference.

                                       16

<PAGE>

ITEM 11.          EXECUTIVE COMPENSATION

         The information  respecting executive  compensation set forth under the
caption  "Executive  Compensation"  on page 5 and 6 of the  Proxy  Statement  is
incorporated  herein by reference;  provided,  that the "Compensation  Committee
Report  on  Executive  Compensation"  contained  in the Proxy  Statement  is not
incorporated by reference.

ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information  respecting  security  ownership of certain  beneficial
owners  and  management  set forth  under the  caption  "Security  Ownership  of
Principal  Stockholders  and  Management"  on page 9 of the Proxy  Statement  is
incorporated herein by reference.

ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

                                     PART IV

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

(a)      1.       Financial Statements.

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

                                                                            Page
Independent Auditors' Report..............................................    21
Consolidated Balance Sheets...............................................    22
Consolidated Statements of Earnings.......................................    24
Consolidated Statements of  Stockholders' Equity..........................    25
Consolidated Statements of Cash Flows.....................................    26
Notes to Consolidated Financial Statements................................    28

         2.       Financial Statement Schedules.

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

         3.       Exhibits

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

(b)      Reports on Form 8-K

         None

                                       17

<PAGE>

(c)        Exhibits

Exhibit                                  Description
Number

3.1      +         Articles of Incorporation.
3.2      +         Bylaws.
4.1      +         Articles of Incorporation.
4.2      +         Bylaws.
10.1     +         Outside Director Stock Plan dated March 1, 1995.
10.2     +         Incentive Stock Plan adopted March 1, 1995.
10.3     +         401(k) Plan adopted August 14, 1992, as amended.
10.4     +         Form of Agency Agreement between Smithway Motor Xpress, Inc.
                   and its independent commission agents.
10.5     +         Memorandum of officer incentive compensation policy.
10.6     +         Form of Independent Contractor Agreement between Smithway
                   Motor Xpress, Inc. and its independent contractor providers
                   of tractors.
10.7     ++        Credit Agreement dated September  3,  1997,  between Smithway
                   Motor Xpress Corp., as Guarantor, Smithway Motor Xpress,
                   Inc., as Borrower, and LaSalle National Bank.
10.8     +++       First  Amendment  to Credit  Agreement  dated March 1, 1998,
                   between  Smithway  Motor Xpress Corp., as Guarantor, Smithway
                   Motor Xpress, Inc., as Borrower, and LaSalle National Bank.
10.9     +++       Second  Amendment to Credit  Agreement dated March 15, 1998,
                   between  Smithway Motor Xpress Corp.,  as Guarantor, Smithway
                   Motor Xpress, Inc., as  Borrower,  and LaSalle National Bank.
10.10    *         Third Amendment to Credit Agreement dated October 30, 1998,
                   between Smithway Motor Xpress Corp., as Guarantor, Smithway
                   Motor Xpress, Inc., as Borrower, and LaSalle National Bank,
                   as Lender.
10.11    **        Amendment No. 2 to Smithway Motor Xpress Corp. Incentive
                   Stock Plan, adopted May 7, 1999.
10.12    ***       Fourth Amendment to Credit Agreement dated August 20, 1999,
                   between Smithway Motor Xpress Corp., as Guarantor, Smithway
                   Motor Xpress, Inc., as Borrower, and LaSalle National Bank.
10.13    ****      Fifth Amendment to Credit Agreement dated December 17, 1999,
                   between Smithway Motor Xpress Corp., as Guarantor, Smithway
                   Motor Xpress, Inc., as Borrower, and LaSalle National Bank.
10.14    *****     1997 Profit Incentive Plan, adopted May 8, 1997.

                                       18

<PAGE>

10.15    ^         Form of Outside Director Stock Option Agreement dated
                   July 27, 2000 between Smithway Motor Xpress Corp. and each of
                   its non-employee directors.
21       ****      List of Subsidiaries.
23       #         Consent of KPMG LLP, independent auditors.

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

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

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

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

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

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

****     Incorporated by reference from the Company's Annual Report on Form 10-K
         for the fiscal year ended December 31, 1999.  Commission File No.
         000-20793, dated March 29, 2000.

*****    Incorporated by reference from the Company's Quarterly Report on Form
         10-Q for the period ended March 31, 2000.  Commission File No.
         000-20793, dated May 5, 2000.

^        Incorporated by reference from the Company's Quarterly Report on Form
         10-Q for the period ended September 30, 2000.  Commission File No.
         000-20793, dated November 3, 2000.

#        Filed herewith.

                                       19

<PAGE>

                                   SIGNATURES


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

                                    SMITHWAY MOTOR XPRESS CORP.



Date: March 16, 2001                By:     /s/ William G. Smith
      --------------                        --------------------
                                            William G. Smith
                                            Chairman of the Board, President,
                                            and Chief Executive Officer

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.


    Signature                            Position                     Date
    ---------                            --------                     ----
/s/ William G. Smith            Chairman of the Board, President,
--------------------            and Chief Executive Officer;
William G. Smith                Director (principal executive
                                officer)                          March 16, 2001

/s/ G. Larry Owens              Executive Vice President, Chief
------------------              Operating Officer, and Chief
G. Larry Owens                  Financial Officer; Director       March 16, 2001

/s/ Douglas C. Sandvig          Controller and Chief Accounting
----------------------          Officer (principal financial and
Douglas C. Sandvig              accounting officer)               March 16, 2001

/s/ Herbert D. Ihle
-------------------
Herbert D. Ihle                 Director                          March 16, 2001

/s/ Robert  E. Rich
-------------------
Robert E. Rich                  Director                          March 16, 2001

/s/ Terry G. Christenberry      Director                          March 16, 2001
--------------------------
Terry G. Christenberry

                                       20

<PAGE>

                       Independent Auditors' Report


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

         We  have  audited  the  accompanying  consolidated  balance  sheets  of
Smithway Motor Xpress Corp. and  subsidiaries  as of December 31, 1999 and 2000,
and the related consolidated  statements of earnings,  stockholders' equity, and
cash flows for each of the years in the  three-year  period  ended  December 31,
2000. These  consolidated  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

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

         In our opinion, the consolidated financial statements referred to above
present fairly,  in all material  respects,  the financial  position of Smithway
Motor Xpress Corp.  and  subsidiaries  as of December 31, 1999 and 2000, and the
results  of their  operations  and their cash flows for each of the years in the
three-year  period ended  December  31,  2000,  in  conformity  with  accounting
principles generally accepted in the United States of America.


                                  /s/ KPMG LLP
KPMG LLP



Des Moines,  Iowa
February  2, 2001,  except for Note 4
which is as of March 1, 2001

                                       21

<PAGE>

<TABLE>
<CAPTION>

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

                                                                                          December 31,
                                                                              -------------------------------------
                                                                                     1999               2000
                                                                              ------------------ ------------------
<S>                                                                           <C>                <C>
                                    ASSETS
Current assets:
  Cash and cash equivalents...................................................$              685 $              349
  Receivables:
    Trade (note 4)............................................................            17,928             17,832
    Other.....................................................................             1,599              1,310
    Recoverable income taxes..................................................             1,021                 17
  Inventories.................................................................             1,611              1,586
  Deposits, primarily with insurers (note 10)                                                281                160
  Prepaid expenses............................................................               579                910
  Deferred income taxes (note 5)..............................................             1,111              1,384
                                                                              ------------------ ------------------
         Total current assets.................................................            24,815             23,548
                                                                              ------------------ ------------------
Property and equipment (note 4):
  Land........................................................................             1,081              1,412
  Buildings and improvements..................................................             6,865              7,006
  Tractors....................................................................            74,004             77,098
  Trailers....................................................................            42,054             43,167
  Other equipment.............................................................             6,765              7,497
                                                                              ------------------ ------------------
                                                                                         130,769            136,180
  Less accumulated depreciation...............................................            36,464             49,432
                                                                              ------------------ ------------------
         Net property and equipment...........................................            94,305             86,748
                                                                              ------------------ ------------------
Intangible assets, net (note 2)...............................................             5,650              5,191
Other assets..................................................................               244                341
                                                                              ------------------ ------------------
                                                                              $          125,014 $          115,828
                                                                              ================== ==================
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       22

<PAGE>

<TABLE>
<CAPTION>

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

                                                                                          December 31,
                                                                              -------------------------------------
                                                                                     1999               2000
                                                                              ------------------ ------------------
<S>                                                                           <C>                <C>
                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current maturities of long-term debt (note 4)...............................$            8,530 $            8,636
  Accounts payable............................................................             4,962              5,669
  Accrued compensation........................................................             2,436              2,505
  Accrued loss reserves (note 10).............................................             2,540              2,344
  Other accrued expenses......................................................             1,188              1,094
                                                                              ------------------ ------------------
         Total current liabilities............................................            19,656             20,248
Long-term debt, less current maturities (note 4)..............................            50,985             43,698
Deferred income taxes (note 5)................................................            14,865             14,649
                                                                              ------------------ ------------------
         Total liabilities....................................................            85,506             78,595
                                                                              ------------------ ------------------
Stockholders' equity (notes 7 and 8):
  Preferred stock (.01 par value; authorized 5 million shares; issued none)...                 -                  -
  Common stock:
    Class A (.01 par value; authorized 20 million shares;
                   issued 1999 and 2000 - 4,035, 989 shares)..................                40                 40
    Class B (.01 par value; authorized 5 million shares;
                  issued 1 million shares)....................................                10                 10
  Additional paid-in capital..................................................            11,414             11,396
  Retained earnings...........................................................            28,044             26,053
  Reacquired shares, at cost (1999 - no shares; 2000 - 119,625 shares)........                 -               (266)
                                                                              ------------------ ------------------
         Total stockholders' equity...........................................            39,508             37,233
Commitments (notes 4 and 10)
                                                                              ------------------ ------------------
                                                                              $          125,014 $          115,828
                                                                              ================== ==================
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       23

<PAGE>

<TABLE>
<CAPTION>

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


                                                                          Years ended December 31,
                                                          ---------------------------------------------------------
                                                                1998                1999                2000
                                                          -----------------  ------------------  ------------------
<S>                                                       <C>                <C>                 <C>
Operating revenue:
     Freight..............................................$         160,975  $          196,420  $          198,247
     Other..............................................                400                 525                 743
                                                          -----------------  ------------------  ------------------
           Operating revenue..............................          161,375             196,945             198,990
                                                          -----------------  ------------------  ------------------
Operating expenses:
     Purchased transportation.............................           66,495              79,735              77,755
     Compensation and employee benefits...................           38,191              49,255              51,718
     Fuel, supplies, and maintenance......................           19,738              23,754              30,995
     Insurance and claims.................................            2,745               4,212               3,426
     Taxes and licenses...................................            3,048               4,045               3,943
     General and administrative...........................            6,237               7,491               8,319
     Communications and utilities.........................            1,838               2,190               2,052
     Depreciation and amortization........................           11,015              15,800              19,325
                                                          -----------------  ------------------  ------------------
          Total operating expenses........................          149,307             186,482             197,533
                                                          -----------------  ------------------  ------------------
            Earnings from operations......................           12,068              10,463               1,457
Financial (expense) income
     Interest expense.....................................           (3,200)             (3,829)             (4,124)
     Interest income......................................              235                 114                  95
                                                          -----------------  ------------------  ------------------
             Earnings (loss) before income taxes..........            9,103               6,748              (2,572)
Income taxes (benefit) (note 5)...........................            3,774               2,822                (581)
                                                          -----------------  ------------------  ------------------
             Net earnings (loss)..........................$           5,329  $            3,926  $           (1,991)
                                                          =================  ==================  ==================
Basic and diluted earnings (loss) per share (note 8)......$             1.0  $              0.7  $            (0.40)
                                                          =================  ==================  ==================
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       24

<PAGE>

<TABLE>
<CAPTION>

                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                 Consolidated Statements of Stockholders' Equity
                  Years ended December 31, 1998, 1999, and 2000
                             (Dollars in thousands)


                                                      Additional                                   Total
                                           Common      paid-in       Retained     Reacquired   stockholders'
                                           stock       capital       earnings       shares         equity
<S>                                     <C>          <C>           <C>           <C>           <C>
                                        --------------------------------------------------------------------
Balance at December 31, 1997............ $        50 $     11,144  $      18,789 $        (77) $      29,906
Net earnings............................           -            -          5,329            -          5,329
Issuance of stock bonuses...............           -          165              -            -            165
Treasury stock reissued (519 shares)....           -            2              -            3              5
                                        --------------------------------------------------------------------
Balance at December 31, 1998............          50       11,311         24,118          (74)        35,405
Net earnings............................           -            -          3,926            -          3,926
Issuance of stock bonuses...............           -           56              -            -             56
Treasury stock reissued for stock
bonuses (13,885 shares).................           -           47              -           74            121
                                        --------------------------------------------------------------------
Balance at December 31, 1999............          50       11,414         28,044            -         39,508
Net earnings............................           -            -         (1,991)           -         (1,991)
Treasury stock acquired (167,922 shares)           -            -              -         (456)          (456)
Treasury stock reissued for stock
bonuses (48,297 shares).................           -          (18)             -          190            172
                                         -------------------------------------------------------------------
Balance at December 31, 2000............ $        50 $     11,396  $      26,053 $       (266) $      37,233
                                         ===================================================================
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       25

<PAGE>

<TABLE>
<CAPTION>

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


                                                                               Years ended December 31,
                                                                   ------------------------------------------------
                                                                        1998            1999             2000
                                                                   --------------   -------------   ---------------
<S>                                                                <C>              <C>             <C>
Cash flows from operating activities:
  Net earnings (loss)..............................................$        5,329   $       3,926   $        (1,991)
                                                                   --------------   -------------   ---------------
  Adjustments   to  reconcile   net  earnings  to  cash  provided  by  operating
  activities:
      Depreciation and amortization................................        11,015          15,800            19,325
      Deferred income taxes........................................         2,880           2,884              (489)
      Stock bonuses................................................           165             177               172
      Change in:
           Receivables.............................................        (4,546)         (3,431)            1,389
           Inventories.............................................          (107)            (74)               25
           Deposits, primarily with insurers.......................           379             110               121
           Prepaid expenses........................................           343             531              (331)
           Accounts payable and other accrued liabilities..........         1,050           4,120               486
                                                                   --------------   -------------   ---------------
               Total adjustments...................................        11,179          20,117            20,698
                                                                   --------------   -------------   ---------------
           Net cash provided by operating activities...............        16,508          24,043            18,707
                                                                   --------------   -------------   ---------------
Cash flows from investing activities:
  Payments  for acquisitions.......................................       (26,266)              -                 -
  Purchase of property and equipment...............................       (12,865)        (18,342)           (4,366)
  Proceeds from sale of property and equipment.....................         2,592           3,478             1,905
  Other............................................................           (36)            130               (97)
                                                                   --------------   -------------   ---------------
             Net cash used in investing activities.................       (36,575)        (14,734)           (2,558)
                                                                   --------------   -------------   ---------------
Cash flows from financing activities:
   Proceeds from long-term debt....................................        41,000               -             8,500
   Principal payments on long-term debt............................       (23,744)         (9,900)          (24,529)
   Other...........................................................             5               -              (456)
                                                                   --------------   -------------   ---------------
            Net cash provided by (used in) financing activities....        17,261          (9,900)          (16,485)
                                                                   --------------   -------------   ---------------
            Net decrease in cash and cash equivalents..............        (2,806)           (591)             (336)
Cash and cash equivalents at beginning of year.....................         4,082           1,276               685
                                                                   --------------   -------------   ---------------
Cash and cash equivalents at end of year...........................$        1,276   $         685   $           349
                                                                   ==============   =============   ===============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       26

<PAGE>

<TABLE>
<CAPTION>


                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                             (Dollars in thousands)
                                                                               Years ended December 31,
                                                                   ------------------------------------------------
                                                                        1998            1999             2000
                                                                   --------------   -------------   ---------------
<S>                                                                <C>              <C>             <C>
Supplemental  disclosure of cash flow  information:  Cash paid (received) during
   year for:
          Interest.................................................$        3,262   $       3,806   $         4,181
          Income taxes.............................................         1,438             689            (1,096)
                                                                   ==============   =============   ===============

Supplemental schedules of noncash investing and financing activities:
   Notes payable issued for tractors and trailers..................$       11,780   $       7,712   $         8,848
   Issuance of stock bonuses.......................................           165             177               172
   Liability issued for intangible assets..........................         1,691               -                 -
                                                                   ==============   =============   ===============

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

          See accompanying notes to consolidated financial statements.

                                       27

<PAGE>

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


Note 1: Summary of Significant Accounting Policies


Operations

         Smithway  Motor  Xpress  Corp.  and  subsidiaries  (the  Company)  is a
truckload  carrier  that  provides  nationwide   transportation  of  diversified
freight,  concentrating  primarily in flatbed operations.  It generally operates
over short-to-medium  traffic routes,  serving shippers located predominantly in
the central United States.  The Company also operates in the southern  provinces
of Canada.  Canadian revenues,  based on miles driven,  were approximately $339,
$667  and  $670  for  the  years  ended  December  31,  1998,   1999  and  2000,
respectively.  The  consolidated  financial  statements  include the accounts of
Smithway  Motor  Xpress  Corp.  and its three  wholly  owned  subsidiaries.  All
significant  intercompany  balances and  transactions  have been  eliminated  in
consolidation.

Customers

         The  Company  serves a diverse  base of  shippers.  No single  customer
accounted for more than 10 percent of the  Company's  total  operating  revenues
during any of the years ended  December 31, 1998,  1999, and 2000. The Company's
10 largest customers accounted for approximately 26 percent, 27 percent,  and 25
percent of the Company's total operating  revenues during 1998,  1999, and 2000,
respectively.  The Company's largest  concentration of customers is in the steel
and building materials industries, which together accounted for approximately 46
percent, 43 percent, and 41 percent of the Company's total operating revenues in
1998, 1999, and 2000, respectively.

Drivers

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

Use of Estimates

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

Cash and Cash Equivalents

         The Company  considers  interest-bearing  instruments  with maturity of
three months or less at the date of purchase to be the  equivalent  of cash.  At
December  31,  1999 and 2000 cash  equivalents  consisted  of $348 and $1,170 of
commercial paper and United States Treasury bills.

Receivables

         Trade  receivables are stated net of an allowance for doubtful accounts
of $70 and $855 at  December  31,  1999 and 2000,  respectively.  The  financial
status of  customers  is checked  and  monitored  by the Company  when  granting
credit. The Company routinely has significant  dollar  transactions with certain
customers.  During 2000, three significant customers declared bankruptcy causing
the Company to increase its allowance for doubtful accounts by $775. At December
31, 1999 and 2000, no individual  customer accounted for more than 10 percent of
total trade receivables.

Inventories

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

                                       28

<PAGE>

Prepaid Expenses

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

Accounting for Leases

         The Company is a lessee of revenue  equipment under a limited number of
operating leases.  Rent expense is charged to operations as it is incurred under
the  terms  of the  respective  leases.  Under  the  leases  for  transportation
equipment, the Company is responsible for all repairs,  maintenance,  insurance,
and all other operating  expenses.  Certain leases on  transportation  equipment
require the Company to guarantee the residual value at the maturity of the lease
at amounts varying from 10 percent to 20 percent of the original equipment cost.
The maximum  contingent  liability and approximate future minimum lease payments
under such leases are not material.

         Rent  charged to  expense  on the above  leases,  expired  leases,  and
short-term rentals was $974 in 1998; $389 in 1999; and $310 in 2000.

Property and Equipment

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

         In 2000  the  market  value of used  tractors  declined  in the  United
States. In response,  management assessed the valuation of its long-lived assets
and identified tractors with carrying values in excess of recoverable value. The
carrying  value of these  tractors  was reduced by $1,033  which is reflected in
depreciation and amortization expense for the year.

Intangibles

         Intangible  assets,  primarily  goodwill,  are recorded at cost and are
amortized  using the  straight-line  method over  periods  ranging  from 5 to 15
years.  Accumulated  amortization of $1,178 and $1,803, at December 31, 1999 and
2000,  respectively,  has been netted against these intangible assets.  Goodwill
represents the excess of purchase price over fair value of net assets  acquired.
The Company assesses the  recoverability of this intangible asset by determining
whether the  amortization of the goodwill balance over its remaining life can be
recovered  through  undiscounted  future  operating  cash flows of the  acquired
operation.  The amount of goodwill  impairment,  if any,  is  measured  based on
projected   discounted  future  operating  cash  flows  using  a  discount  rate
reflecting  the  Company's   average  cost  of  funds.  The  assessment  of  the
recoverability  of goodwill will be impacted if estimated  future operating cash
flows are not achieved.

Revenue Recognition

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

                                       29

<PAGE>

Insurance and Claims

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

Income Taxes

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

Stock Option Plans

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

Derivative Instruments

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

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

         SFAS No.  133,  "Accounting  for  Derivative  Instruments  and  Hedging
Activities," will be effective for the Company for the year beginning January 1,
2001. Management has conducted a review of the Company's operations and believes
the  options  and  futures  contracts  used to  hedge  fuel  costs  are the only
derivative  instruments which will require valuation in the financial statements
under the  provisions  of SFAS 133.  The  Company  did not have any  options  or
futures  contracts  in place at January 1, 2001,  and thus there is no effect on
the financial statements from the adoption of the pronouncement.

Net Earnings Per Common Share

         Basic earnings per share have been computed by dividing net earnings by
the  weighted-average  outstanding Class A and Class B common shares during each
of the years.  Diluted earnings per share have been calculated by also including
in the computation the effect of employee stock options,  nonvested  stock,  and
similar  equity  instruments  granted to employees as potential  common  shares.
Because the Company  suffered a net loss for the year ended  December  31, 2000,
the effects of potential  common shares were not included in the  calculation as
their effects would be anti-dilutive.

                                       30

<PAGE>

Note 2:  Acquisitions

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

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

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

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

Note 3:  Financial Instruments

         SFAS 107,  "Disclosures  About  Fair Value of  Financial  Instruments,"
defines  the fair  value of a  financial  instrument  as the amount at which the
instrument could be exchanged in a current  transaction between willing parties.
At December 31, 2000, the carrying amounts of cash and cash  equivalents,  trade
receivables,  other  receivables,  accounts  payable,  and accrued  liabilities,
approximate fair value because of the short maturity of those  instruments.  The
fair value of the Company's long-term debt,  including current  maturities,  was
$59,236  and $51,999 at December  31,  1999 and 2000,  respectively,  based upon
estimated market rates.

         The Company has in the past entered  into  several  "floating to fixed"
heating oil price swap  agreements.  At December 31, 1999 the notional amount of
the  agreements  was 1.8  million  gallons,  related  specifically  to 2000 fuel
purchases.  At December 31, 1999,  the fixed price in the  agreements  was 38.25
cents per gallon. Fair value of these swaps, based upon the estimated amount the
Company would receive upon terminating the agreements,  was $422 at December 31,
1999. There were no agreements in place at December 31, 2000.

Note 4:  Long-Term Debt

         Long-term debt includes a credit agreement with an outstanding  balance
of  $25,000  and  $18,500  at  December  31,  1999 and 2000,  respectively.  The
agreement,  as amended on March 1, 2001,  allows for borrowings up to the lesser
of 85 percent of  eligible  accounts  receivable  and 55 percent of the net book
value of  unencumbered  revenue  equipment  or  $32,500.  Borrowings  under  the
agreement are secured by liens on revenue equipment,  accounts  receivable,  and
certain  other  assets.  The  agreement,  which  expires on  September  1, 2002,
contains certain compliance covenants.  The Company was in compliance with these
covenants at December 31, 1999 and 2000. The weighted  average  interest rate on
the outstanding balance is defined in the agreement and at December 31, 1999 and
2000 was 7.62 percent and 7.92 percent,  respectively. The credit agreement also
includes  financing  for letters of credit.  At December 31, 1999 and 2000,  the
Company had letters of credit of $3,000 and $4,878  outstanding for self-insured
amounts  related to its  insurance  programs.  (See note 10.)  These  letters of
credit directly reduced the amount of potential  borrowings  available under the
credit agreement.

         Long-term debt also includes  equipment  notes with balances of $34,080
and $33,834 at December 31, 1999 and 2000,  respectively.  Interest rates on the
equipment notes range from 5.81 percent to 7.86 percent with maturities  through
2005. The equipment notes are collateralized by the underlying equipment.

         At December  31, 1999 and 2000,  long-term  debt also  includes  future
payments for intangible assets of $434 and $-0-, respectively.

         Future  maturities on long-term debt for years ending  December 31, are
as follows:  2001, $8,636; 2002, $29,640;  2003, $7,284; 2004, $3,951; and 2005,
$2,823.

                                       31

<PAGE>

Note 5:  Income Taxes

         Income taxes consisted of the following  components for the three years
ended December 31:

<TABLE>
<CAPTION>

                              1998                                     1999                                    2000
               -----------------------------------     ------------------------------------     -----------------------------------
<S>            <C>          <C>         <C>            <C>           <C>         <C>            <C>          <C>         <C>
                   Federal        State      Total           Federal      State       Total          Federal      State       Total
               -----------  ----------- ----------     ------------- ----------  ----------     ------------ ----------  ----------
Current        $       805  $        89 $      894     $        (50) $     (12)  $     (62)     $       (74) $     (18)  $     (92)
Deferred             2,304          576      2,880             2,422        462       2,884             (50)       (98)       (489)
               -----------  ----------- ----------     ------------- ----------  ----------     ------------ ----------  ----------
               $     3,109  $       665 $    3,774     $       2,372 $      450  $    2,822     $      (465) $    (116)  $    (581)
               ===========  =========== ==========     ============= ==========  ==========     ============ ==========  ==========
</TABLE>


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

<TABLE>
<CAPTION>
                                                                          Years ended December 31,
                                                                          ------------------------
                                                                    1998              1999            2000
                                                              ----------------- ---------------- --------------
<S>                                                           <C>               <C>              <C>
Computed "expected" income tax expense (benefit)              $           3,095 $          2,294 $         (677)
State income tax expense net of federal taxes                               439              297            (77)
Permanent differences, primarily nondeductible
  portion of driver per diem and  travel expenses                           234              291            278
Other                                                                         6              (60)          (105)
                                                              ----------------- ---------------- --------------
                                                              $           3,774 $          2,822 $         (581)
                                                              ================= ================ ==============
</TABLE>


         Temporary  differences  between the financial statement basis of assets
and liabilities and the related  deferred tax assets and liabilities at December
31, 1999 and 2000, were as follows:

<TABLE>
<CAPTION>


Deferred tax assets:                                                       1999               2000
                                                                     -----------------  -----------------
<S>                                                                  <C>                <C>
     Net operating loss carryforwards (expiring 2019 and 2020)       $           2,197  $           3,383
     Alternative minimum tax (AMT) credit carryforwards                          1,773              2,512
     Accrued expenses                                                            1,187              1,458
     Other                                                                         134                155
                                                                     -----------------  -----------------
         Total gross deferred tax assets                                         5,291              7,508
                                                                     -----------------  -----------------
Deferred tax liabilities:
     Property and equipment                                                    (19,045)           (20,773)
                                                                     -----------------  -----------------
         Net deferred tax liabilities                                $         (13,754) $         (13,265)

</TABLE>

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

                                       32

<PAGE>


Note 6:  Stockholders' Equity

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

Note 7: Stock Plans

         The  Company has  reserved  25,000  shares of Class A common  stock for
issuance  pursuant to an outside  director  stock option plan.  The term of each
option  shall be six  years  from the  grant  date.  Options  vest on the  first
anniversary of the grant date. Exercise price of each stock option is 85 percent
of the fair market value of the common stock on the date of grant. In July, 2000
the Company granted outside  directors  12,000 stock options not covered by this
plan.

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

         The Company  applied APB  Opinion  No. 25 in  accounting  for its stock
option plans; and,  accordingly,  no compensation expense has been recognized in
the consolidated financial statements.  Had the Company determined  compensation
based on the fair  value at the grant  date for its  outstanding  stock  options
under SFAS 123, the effect on Company's net earnings and net earnings per common
share for 1998 and 1999 would have been immaterial. For 2000, pro forma net loss
would have been  $2,117,  and pro forma basic and  diluted  loss per share would
have been $.42 per share. For purposes of pro forma  disclosures,  the estimated
fair value of options is amortized to expense over the options' vesting periods.

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

<TABLE>
<CAPTION>
                                                    1998                       1999                       2000
                                          ------------------------- --------------------------  -------------------------
<S>                                       <C>         <C>           <C>           <C>           <C>          <C>
                                            Shares      Exercise       Shares       Exercise      Shares       Exercise
                                                          price                      price                      price
                                          ----------- ------------- ------------- ------------  -----------  ------------
Outstanding at beginning of year              114,000         $9.25       149,000        $9.90      152,000         $9.85
    Granted                                    35,000         12.00         3,000         7.60      193,000          2.07
    Exercised                                       -             -             -            -            -             -
    Forfeited                                       -             -             -            -            -             -
                                          ----------- ------------- ------------- ------------  -----------  ------------
Outstanding at end of year                    149,000         $9.90       152,000        $9.85      345,000         $5.50
                                          =========== ============= ============= ============  ===========  ============
Options exercisable at end of year             97,400         $9.21       106,800        $9.50      220,400         $6.71
Weighted-average fair value of                                $5.25                      $5.45                      $1.66
options granted during the year

</TABLE>

                                       33

<PAGE>

         A summary of stock options  outstanding  and exercisable as of December
31, 2000, follows:

<TABLE>
<CAPTION>


                                      Options outstanding                                Options exercisable
                   ----------------------------------------------------------     ---------------------------------
<S>                 <C>          <C>                      <C>                     <C>            <C>
 Range of exercise     Number       Weighted average      Weighted average            Number     Weighted average
      prices        outstanding  remaining life (years)    exercise price          exercisable    exercise price
-----------------------------------------------------------------------------     ---------------------------------
$1.78 - $3.47             193,000                  9.16                 $2.07          87,600                 $2.38
$7.23 - $9.50             117,000                  4.45                 $9.21         117,000                 $9.21
$11.81 - $14.05            35,000                  6.77                $12.00          15,800                $12.24
                   ------------------------------------------------------------------------------------------------
                          345,000                  7.32                 $5.50         220,400                 $6.71
                   ================================================================================================
</TABLE>


         The Company used the  Black-Scholes  option  pricing model to determine
the fair value of stock options for the years ended December 31, 1998, 1999, and
2000. The following assumptions were used in determining the fair value of these
options: weighted-average risk-free interest rate, 5.46% in 1998, 5.64% in 1999,
and 5.05% in 2000;  weighted-average  expected life, 5 years in 1998, 3 years in
1999 and 5 years in 2000; and weighted-average expected volatility, 41% in 1998,
83% in 1999, and 108% in 2000. There were no expected dividends.

         The  Company has  reserved  55,000  shares of Class A common  stock for
issuance  pursuant to an independent  contractor  driver bonus plan. The Company
awarded 5,696,  11,362 and 33,646 shares under the plan in 1998,  1999 and 2000,
respectively.

         The Company also has a Class A common stock profit incentive plan under
which the Company will set aside for delivery to certain participants the number
of shares of Class A common stock having a market value on the distribution date
equal to a designated  percentage  (as  determined by the board of directors) of
the Company's  consolidated net earnings for the applicable fiscal year. In 1999
and 2000 the Company  issued  7,838 and 13,401  shares of Class A common  stock,
respectively,  to  participants  in the plan. In 2000, the Company  awarded $-0-
under the plan, and therefore no shares will be issued in 2001.

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

Note 8:  Earnings per Share

         A summary of the basic and diluted  earnings per share  computations is
presented below:

<TABLE>
<CAPTION>

Years ended December 31                                                1998              1999               2000
---------------------------------------------------------------  ----------------- ----------------- ------------------
<S>                                                              <C>               <C>               <C>
Net earnings (loss) applicable to common  stockholders           $           5,329 $           3,926 $           (1,991)
                                                                 ----------------- ----------------- ------------------
Basic weighted-average shares outstanding                                5,012,450         5,030,959          5,008,759
     Effect of dilutive stock options                                       24,069             1,394                  -
     Effect of dilutive stock awards                                           221                 -                  -
                                                                 ----------------- ----------------- ------------------
Diluted weighted-average shares outstanding                              5,036,740         5,032,353          5,008,759
Basic earnings (loss) per share                                  $            1.06 $            0.78 $           (0.40)
Diluted earnings (loss) per share                                $            1.06 $            0.78 $           (0.40)

</TABLE>

                                       34

<PAGE>

Note 9:  Employees' Profit Sharing and Savings Plan

         The Company has an Employees' Profit Sharing and Savings Plan, which is
a  qualified  plan under the  provisions  of  Sections  401(a) and 501(a) of the
Internal  Revenue  Code.  Eligible  employees  are allowed to contribute up to a
maximum of 15 percent of pretax  compensation into the plan.  Employers may make
savings,   matching,  and  discretionary   contributions,   subject  to  certain
restrictions.  During the years ended December 31, 1998, 1999, and 2000, Company
contributions totaled $152, $330, and $180, respectively.  The plan owns 528,123
shares of the Company's Class A common stock at December 31, 2000.

Note 10:  Commitments and Contingent Liabilities

         The  Company's  insurance  program  for  personal  liability,  physical
damage,  and  cargo  losses  involves  a  deductible  of $50 per  incident.  The
Company's insurance program for workers'  compensation  involves a deductible of
$100 per incident.  At December 31, 1999 and 2000, the Company had approximately
$2,540  and  $2,344,  respectively,  accrued  for its  estimated  liability  for
incurred losses related to these programs.

         The  insurance  companies  require  the  Company to provide  letters of
credit to provide funds for payment of the deductible  amounts.  At December 31,
1999 and 2000,  the Company had $3,000 and $4,878 letters of credit issued under
the credit agreement  described in note 4. In addition,  funds totaling $256 and
$105 were held by the  insurance  companies as deposits at December 31, 1999 and
2000, respectively.

         The  Company's  health  insurance  program is  provided  as an employee
benefit for all eligible employees and contractors.  The plan is self funded for
losses up to $60 per covered member and has an aggregate excess loss cap of 125%
of expected claims. At December 31, 1999 and 2000, the Company had approximately
$730 and $799,  respectively,  accrued for its  estimated  liability  related to
these claims.

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

Note 11:  Transactions with Related Parties

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

Note 12:  Quarterly Financial Data (Unaudited)

         Summarized  quarterly  financial data for the Company for 1999 and 2000
is as follows:

<TABLE>
<CAPTION>

                                                       March 31          June 30        September 30      December 31
                                                ----------------------------------------------------------------------
<S>                                             <C>                  <C>               <C>             <C>
1999
----
Operating revenue                                       $47,295           $51,117          $50,043          $48,490
Earnings from operations                                  3,150             3,883            1,959            1,471
Net earnings                                              1,304             1,722              610              290
Basic and diluted earnings per share               $0.26             $0.34             $0.12            $0.06

2000
----
Operating revenue                                       $50,748           $51,094          $50,206          $46,942
Earnings from operations                                  1,519             1,206            1,204           (2,472)
Net earnings (loss)                                         238                 7               21           (2,257)
Basic and diluted earnings (loss) per share        $0.05             $0.00             $0.00           ($0.46)

</TABLE>

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

                                       35