UNITED STATES
                       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, 2003

                                       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 Incorporation   (I.R.S. Employer Identification
 or Organization)                                No.)

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

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           Nasdaq - Small Cap Market System

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. [ ]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act).
YES [ ]  NO [X]

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  was  $2,020,177  as of June 30, 2003 (based upon the $0.85 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 June 30, 2003, the registrant had 3,846,821 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  2004  annual  meeting  of
stockholders that will be filed no later than April 29, 2004.

                                       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.
<TABLE>
                              Document and Location

                                     Part I
<S>          <C>                                                           <C>
Item 1       Business                                                      Page 3 through 7 herein

Item 2       Properties                                                    Page 8 herein

Item 3       Legal Proceedings                                             Page 8 herein

Item 4       Submission of Matters to a Vote of Security Holders           Page 8 herein

                                     Part II

Item 5       Market for Registrant's Common Equity and Related
             Stockholder Matters                                           Page 9 herein

Item 6       Selected Financial and Operating Data                         Page 10 herein

Item 7       Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                     Page 11 through 23 herein

Item 7A      Quantitative and Qualitative Disclosures About Market Risk    Page 23 herein

Item 8       Financial Statements and Supplementary Data                   Page 24 herein

Item 9       Changes in and Disagreements with Accountants on Accounting
             and Financial Disclosure                                      Page 24 herein

Item 9A      Controls and Procedures                                       Page 24 herein

                                    Part III

Item 10      Directors and Executive Officers of the Registrant            Proxy Statement

Item 11      Executive Compensation                                        Proxy Statement

Item 12      Security Ownership of Certain Beneficial Owners and
             Management                                                    Proxy Statement

Item 13      Certain Relationships and Related Party Transactions          Proxy Statement

Item 14      Principal Accountant Fees and Services                        Proxy Statement

                                     Part IV

Item 15      Exhibits, Financial Statement Schedules, and Reports on
             Form 8-K                                                      Page 27 through 29 herein
</TABLE>
     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",  "Company",  "we", "us", or "our")
is a truckload  carrier that provides  nationwide  transportation of diversified
freight, concentrating primarily on the flatbed segment of the truckload market.
We use our "Smithway Network" of 17 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, we specialized in transporting building materials on flatbed
trailers.  William G. Smith became  President  of Smithway in 1984,  and led the
effort to diversify our customer and freight base, form the Smithway  Network of
locations, and implement systems to support the Company's growth.

     We acquired the operations of nine trucking companies between June 1995 and
March 2001.  Through  acquisitions  and  internal  growth we  expanded  from $77
million in revenue in 1995 to $199 million in 2000.  Since 2000,  revenues  have
declined  and we have  continued to incur net losses.  In the second  quarter of
2003,  we  established  and  began  to  implement  the  first  phase of a profit
improvement  plan  designed to return us to  profitability  by  achieving a more
streamlined and efficient operation. As part of the plan, terminals were closed,
unseated tractors were disposed, and personnel was reduced. We are encouraged by
the improvement in operating ratio and tractor utilization  (average revenue per
tractor per week),  and the decline in the amount of net loss. We remain focused
on the second phase of the plan, which includes upgrading our tractor fleet, and
continuing to focus on revenue enhancements and cost controls.

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

     Our headquarters are located at 2031 Quail Avenue,  Fort Dodge, Iowa 50501,
and our  website  address is  www.smxc.com.  Information  on our  website is not
incorporated  by reference  into this annual  report.  Our Annual Report on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all other
reports  we file  with  the SEC  pursuant  to  Section  13(a)  or  15(d)  of the
Securities  Exchange  Act of 1934  are  available  free of  charge  through  our
website.

Operations

     We   integrate   our   sales  and   dispatch   functions   throughout   our
computer-connected  "Smithway  Network."  The Smithway  Network  consists of our
headquarters  in  Fort  Dodge,  Iowa  and  16  terminals,   field  offices,  and
independent  agencies.  The  headquarters and 14 terminals and field offices are
managed by Smithway employees, while the two 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.  Sales and dispatch  functions for traffic are generally
performed at terminals within the sales region.

     Agents are the primary  contact for  shippers  within their region and have
regular contact with drivers and independent contractors.  Our agents are paid a
commission on revenue they generate. Agent contracts typically are cancelable on
14 days' notice. In addition to sales and customer service benefits,  we believe
agents offer the advantage of  minimizing  capital  investment  and fixed costs,
because  agents are  responsible  for all of their own  expenses.  The number of
agents has decreased over the past four years.

                                       3
<PAGE>
Customers and Marketing

     Our sales  force  includes  nine  sales  representatives,  personnel  at 15
terminals and field offices,  and two independent  commission  agents.  National
sales  representatives  focus on national  customers,  while sales  personnel at
terminals,  field offices,  and agencies are responsible  for regional  customer
contact. Our 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 our strategically located Smithway
Network. We believe that few other carriers operating principally in the Midwest
flatbed market offer similar size and service.  Consequently,  we seek primarily
service-sensitive  freight rather than competing for all freight on the basis of
price.

     In 2003,  our top 50, 25, 10, and 5 customers  accounted for  approximately
48%, 40%, 29%, and 21% of revenue,  respectively.  No single customer  accounted
for 10% or more of our revenue during 2003.

Technology

     We believe that advances in technology can enhance our operating efficiency
and customer  service.  During the summer of 2002,  we installed a new operating
system  and  freight  selection  software  to  improve  the  efficiency  of  our
operations.  After some initial  difficulties in the integration process, we are
now able to optimize the software to receive the benefits of full functionality.
This  software was  designed  specifically  for the  trucking  industry to allow
managers to coordinate  available  equipment  with the  transportation  needs of
customers, monitor truck productivity and fuel consumption, and schedule regular
equipment maintenance.  It also is designed to allow immediate access to current
information regarding driver and equipment status and location, special load and
equipment instructions, routing, and dispatching.

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

     We also offer our  customers  electronic  data  interchange,  which  allows
customers to communicate  directly with us via computer link or the Internet and
obtain location  updates of in-transit  freight,  expected  delivery times,  and
account payment instructions.

Drivers, Independent Contractors, and Other Personnel

     We seek company and independent  contractor drivers who safely manage their
equipment and treat freight  transportation as a business.  We have historically
operated a fleet  comprised of  substantial  numbers of both  company-owned  and
independent  contractor  tractors.  We believe a mixed fleet offers  competitive
advantages  because we are able to recruit from both driver pools.  We intend to
retain a mixed  fleet in the future to insure  that  recruiting  efforts  toward
either group are not damaged by becoming  categorized as predominantly  either a
company-owned  or independent  contractor  fleet,  although  several factors may
cause fluctuations in the fleet mix from time-to-time.

     Beginning in 2001 and continuing through 2003, the combination of high fuel
prices,  increasing  insurance  costs, a slowing  economy,  and tightened credit
standards placed extreme pressure on independent  contractors.  Many were forced
to exit their business. At year-end,  our number of independent  contractors had
decreased by approximately  25% from year-end 2001. The decline in the number of
independent  contractors has slowed  significantly,  however,  since  September,
2003, as freight demand and the general economy have improved.

     We have  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  driver
manager to insure  personal  contact.  In addition,  we operate over  relatively
short-to-medium  distances  (659-mile  average length of haul in 2003) to return
drivers home as frequently as possible,  and, in 2003, a temporary sign-on bonus
was implemented for new drivers to enhance driver recruiting.

                                       4
<PAGE>
     We are not a party to a collective  bargaining  agreement and our employees
are not  represented  by a union.  At  December  31,  2003,  we had 720  Company
drivers, 246 non-driver employees, and 430 independent  contractors.  We believe
that we have good relationships with our employees and independent contractors.

Safety and Insurance

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

     We currently  maintain  insurance  covering  losses in excess of a $250,000
self-insured  retention  for  casualty  insurance,  which  includes  cargo loss,
personal  injury,  property damage,  and physical damage claims.  We also have a
$250,000 self-insured retention for workers' compensation claims in states where
a  self-insured   retention  is  allowed.  Our  primary  casualty  and  workers'
compensation insurance policies have a limit of $2.0 million per occurrence.  We
do not have excess  insurance  coverage above the primary policy limit.  We have
experienced  casualty  claims in excess of $2.0 million in the past. The lack of
excess coverage and high  self-insured  retention  increases our risk associated
with frequency and severity of accidents and could increase our expenses or make
them more volatile from period to period.  Furthermore,  if we experience claims
that exceed the limits of insurance  coverage,  or if we  experience  claims for
which  coverage  is  not  provided,  our  financial  condition  and  results  of
operations could suffer a materially  adverse effect. All policies are scheduled
for renewal in July 2004.

Revenue Equipment

     Our  equipment   strategy  for   company-owned   tractors  (as  opposed  to
independent  contractors'  tractors)  is to operate  tractors  for a period that
balances  capital   expenditure   requirements,   disposition   values,   driver
acceptability,  repair and maintenance expense, and fuel efficiency. As a result
of  advances  in the  manufacturing  of tractors  and major  components  and the
depressed value of used  equipment,  in 2000 we extended the average trade cycle
mileage from 550,000 to 600,000 miles. We expect to maintain this trade cycle at
least  through  2004.  Generally,  mileage  in excess of 500,000  miles  exceeds
warranty  limits.  We have seen an  increase  in  maintenance  expense in recent
periods due to our extended trade cycle, however further increases in repair and
maintenance  expense  are  expected  to be minimal as we begin to replace  older
equipment as part of the second phase of our profit  improvement  plan. There is
much  uncertainty  surrounding  the  performance of tractors built after October
2002 with new engines that meet higher emissions  standards mandated by the EPA.
The cost of operating  tractors  containing  the new,  EPA-compliant  engines is
expected to be somewhat  higher than the cost of operating  tractors  containing
engines  manufactured  prior to October 2002, due primarily to lower anticipated
fuel  efficiency  and higher  anticipated  maintenance  expenses.  In  addition,
increased costs  associated  with the  manufacturing  of the new,  EPA-compliant
engines,  changes  in  the  market  for  used  tractors,  and  difficult  market
conditions  faced by tractor  manufacturers  may result in  increased  equipment
prices and increased operating expenses.

     We operate  conventional (engine forward) tractors with standard engine and
drivetrain  components,  and trailers with standard brakes and tires to minimize
our  inventory  of  spare  parts.  All  equipment  is  subject  to  our  regular
maintenance  program,  and also is inspected and maintained  each time it passes
through one of our maintenance  facilities.  Our company-owned tractor fleet had
an average  age of 44 months at  December  31,  2003.  In 2003,  we  purchased a
limited amount of new equipment  because of capital  constraints and reduced the
size of our tractor  fleet by disposing of unseated  tractors in order to reduce
the costs associated with financing unprofitable equipment. We have successfully
negotiated  for the purchase and financing of 215 new tractors in 2004. Of these
units,  165 will be replacement  units, and the remaining 50 will be replacement
or additional units depending on driver availability.  These units will slightly
reduce  the  average  age of our  fleet and  further  increases  in  maintenance
expenses are expected to be minimal.

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. We compete 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. We
also compete to a limited  extent with rail and rail-truck

                                       5
<PAGE>
intermodal   service,   but  attempt  to  limit  this   competition  by  seeking
service-sensitive  freight  and  focusing  on  short-to-medium  lengths of haul.
Although  we believe the  approximately  800  company  drivers  and  independent
contractors  dedicated to our flatbed  operation at December 31, 2003,  rank our
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 us.

Fuel Availability and Cost

     We actively manage fuel costs.  Company drivers  purchase  virtually all of
our  fuel  through  service  centers  with  which  we  have  volume   purchasing
arrangements.  In addition,  we  periodically  consider  entering  into options,
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.  We did not have any options,  futures  contracts,  or
price swap  agreements  in place at any time since 2000.  Most of our  contracts
with customers contain fuel surcharge provisions, and we also attempt to recover
increases in fuel prices through higher rates. However, increases in fuel prices
generally are not fully offset through these measures.

     Shortages  of fuel,  increases  in fuel  prices,  or rationing of petroleum
products  could  have  a  materially   adverse  effect  on  our  operations  and
profitability.  Throughout 2000 we experienced significant increases in the cost
of diesel fuel.  There was a short period of decreased  fuel prices  starting at
the end of 2001 and  continuing  through  the first  quarter of 2002.  Since the
second quarter of 2002 fuel prices have  continued to increase.  It is uncertain
whether fuel prices will continue to increase or will decrease, or the extent we
can recoup a portion of these costs through fuel surcharges.

Regulation

     The United States Department of  Transportation,  or DOT, and various state
and local agencies exercise broad powers over our business,  generally governing
such activities as authorization to engage in motor carrier operations,  safety,
and insurance  requirements.  In 2003, the DOT adopted revised  hours-of-service
regulations for drivers that became  effective on January 4, 2004. These revised
regulations  represent  the most  significant  changes  to the  hours-of-service
regulations in over 60 years.

     There are  several  hours of service  changes  that may have a positive  or
negative  effect on driver  hours (and  miles).  The new rules allow  drivers to
drive up to 11 hours instead of the 10 hours permitted under prior  regulations,
subject to the new  14-hour  on-duty  maximum  described  below.  The rules will
require a driver's  off-duty  period to be 10 hours,  compared  to 8 hours under
prior  regulations.  In  general,  drivers  may not  drive  beyond 14 hours in a
24-hour period,  compared to not being permitted to drive after 15 hours on-duty
under the prior rules.  During the new 14-hour  consecutive  on-duty period, the
only way to extend the on-duty period is by the use of a sleeper berth period of
at least two hours that is later  coupled with a second  sleeper  berth break to
equal 10 hours.  Under the prior  rules,  during  the  15-hour  on-duty  period,
drivers were allowed to take multiple breaks of varying  lengths of time,  which
could be either  off-duty time or sleeper berth time, that did not count against
the 15-hour period.  There was no change to the rule that precludes drivers from
driving  after being  on-duty for a maximum of 70 hours in 8  consecutive  days.
However,  under the new rules, drivers can "restart" their 8-day clock by taking
at least 34 consecutive hours off duty.

     While we believe  the  11-hour  and the  34-hour  restart  rules may have a
slight  positive  effect on driving  hours,  we  anticipate  that the 15-hour to
14-hour  rule change  likely  will have a more  significant  negative  impact on
driving hours for the truckload  industry.  The prior 15-hour rule worked like a
stopwatch  and  allowed  drivers to stop and start  their  on-duty  time as they
chose.  The new  14-hour  rule is like a running  clock.  Once the  driver  goes
on-duty and the clock starts, the driver is limited to one timeout, or the clock
keeps running. As a result of this change,  issues that cause driver delays such
as multiple stop shipments,  unloading/loading delays, and equipment maintenance
could result in a reduction in driver miles.

     We expect that the new rules could initially reduce our and other truckload
carrier's  average miles per truck.  As time goes on and we and our drivers gain
more experience with the new rules,  however, we anticipate that we will be able
to gradually  reduce any decline in average miles per truck. We have implemented
several steps to minimize the economic impact of the new hours-of-service  rules
on our business.  We have negotiated delay time charges with the majority of our
customers.  In addition,  we have conducted training programs for our driver and
operations personnel regarding the new hours-of-service  requirements.  Prior to
the  effectiveness of the new rules,

                                       6
<PAGE>
we also initiated  discussions  with many of our customers  regarding steps that
they can take to assist us in managing our drivers' non-driving activities, such
as  loading,  unloading,  or  waiting,  and we  plan  to  continue  to  actively
communicate  with our  customers  regarding  these  matters  in the  future.  In
situations where shippers are unable or unwilling to take these steps, we expect
to assess detention and other charges to offset losses in productivity resulting
from the new  hours-of-service  regulations.  Steps such as these are especially
important in our flatbed  operations,  in which more of our freight is loaded on
trailers while the driver and tractor wait, in comparison  with dry van freight.
It is still too early to ascertain the ultimate effect of these rules.  However,
based on our initial  experience,  our preliminary  expectation is that for some
period of time there will be decreased productivity on at least a portion of our
fleet.

     Our  operations  also 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. We transport certain commodities that may be
deemed hazardous  substances.  Our Fort Dodge, Iowa headquarters and Black Hawk,
South Dakota and Des Moines, Iowa terminals have above-ground fuel storage tanks
and fueling facilities.  Our terminal in Cohasset,  Minnesota has an underground
fuel storage tank which is no longer in use. If we should be involved in a spill
or other accident involving  hazardous  substances,  if any such substances were
found on our  properties,  or if we were found to be in violation of  applicable
laws and  regulations,  we could be  responsible  for clean-up  costs,  property
damage,  and fines or other penalties,  any one of which could have a materially
adverse effect.  We believe that our operations are in material  compliance with
current laws and regulations  and we do not know of any existing  condition that
would cause  compliance  with  applicable  environmental  regulations  to have a
material effect on our capital expenditures,  earnings, or competitive position.
If we should fail to comply with applicable regulations,  we could be subject to
substantial fines or penalties and to civil or criminal liability.

                                       7

<PAGE>
ITEM 2.  PROPERTIES

     Smithway's  headquarters consists of 38,340 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>
                                     Driver
       Company Locations          Maintenance     Recruitment    Dispatch     Sales    Ownership
       -----------------          -----------     -----------    --------     -----    ---------
<S>                                    <C>             <C>          <C>         <C>      <C>
Birmingham, Alabama..............                      X            X           X        Leased+
Black Hawk, South Dakota.........      X               X            X           X        Owned
Chicago, Illinois................                                   X           X        Owned
Cohasset, Minnesota..............                                   X           X        Owned
Denver, Colorado.................                                   X           X        Leased+
Des Moines, Iowa ................      X                            X           X        Owned
Enid, Oklahoma ..................                                   X                    Leased+
Fort Dodge, Iowa.................      X               X            X           X        Owned
Houston, Texas...................                                   X           X        Leased+
Joplin, Missouri.................                                   X           X        Owned
McPherson, Kansas................      X                            X           X        Owned
Oklahoma City, Oklahoma..........      X               X            X           X        Owned
Oshkosh, Wisconsin...............                                   X           X        Leased+
Phoenix, Arizona.................                                   X           X        Leased+
St. Paul, Minnesota..............                                   X           X        Leased+
        Agent Locations
Detroit, Michigan ...............                                   X           X
Toledo, Ohio ....................                                   X           X
---------------------------
+ Month-to-month leases.
</TABLE>
ITEM 3.  LEGAL PROCEEDINGS

     From time-to-time we are party to litigation and administrative proceedings
arising in the ordinary course of business.  These proceedings primarily involve
claims for personal injury and property damage incurred in the transportation of
freight.  We are not aware of any claims or threatened  claims that might have a
materially adverse effect upon our operations or financial position.

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

     On October 24, 2003,  we held our annual  meeting of  stockholders  for the
purpose of (a) ratifying the selection of KPMG LLP as our  independent  auditors
for the fiscal year ending  December 31, 2003,  and (b) electing five  directors
for one-year terms.  Proxies for the meeting were solicited  pursuant to Section
14(a) of the Securities  Exchange Act of 1934, and there was no  solicitation in
opposition to our  nominees.  Each of our nominees for director as listed in the
Company's proxy statement was elected. The voting tabulation on the selection of
accountants was 5,290,260 votes "FOR",  24,465 votes "AGAINST",  and 1,927 votes
"ABSTAIN." The voting tabulation on the election of directors was as follows:

-------------------------------------------------------------------------------
|                           |      Shares           |          Shares         |
|                           |      Voted            |          Voted          |
|                           |      "FOR"            |  "ABSTAIN" or "WITHHOLD |
|                           |                       |        AUTHORITY"       |
|---------------------------|-----------------------|-------------------------|
| William G. Smith          |     5,275,799         |          40,853         |
|---------------------------|-----------------------|-------------------------|
| G. Larry Owens            |     5,274,716         |          41,936         |
|---------------------------|-----------------------|-------------------------|
| Terry G. Christenberry    |     5,275,609         |          41,043         |
|---------------------------|-----------------------|-------------------------|
| Herbert D. Ihle           |     5,275,609         |          41,043         |
|---------------------------|-----------------------|-------------------------|
| Robert E. Rich            |     5,275,609         |          41,043         |
-------------------------------------------------------------------------------

                                       8
<PAGE>
                                    PART II

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

     Price  Range of Common  Stock.  Our  Class A Common  Stock is traded on the
Nasdaq Small Cap Market under the symbol "SMXC." The following table sets forth,
for the periods  indicated,  the high and low bid  information  per share of our
Class A Common  Stock as  quoted  through  the  Nasdaq  Small Cap  Market.  Such
quotations reflect  inter-dealer  prices,  without retail markups,  markdowns or
commissions and, therefore, may not necessarily represent actual transactions.


               Period                   High                 Low
     ---------------------------    --------------     ----------------
     Calendar Year 2003
           1st Quarter              $        1.65      $           0.73
           2nd Quarter              $        1.17      $           0.65
           3rd Quarter              $        1.62      $           0.79
           4th Quarter              $        1.95      $           1.05

               Period                   High                 Low
     ---------------------------    --------------     ----------------
     Calendar Year 2002
           1st Quarter              $        2.65      $           1.66
           2nd Quarter              $        2.23      $           1.23
           3rd Quarter              $        1.79      $           0.97
           4th Quarter              $        1.45      $           0.69

     As of February 13, 2004, we had 314  stockholders  of record of our Class A
Common Stock. However, we believe that many additional holders of Class A Common
Stock are  unidentified  because a substantial  number of our shares are held of
record by brokers or dealers for their customers in street names.

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

     See "Securities  Authorized for Issuance Under Equity  Compensation  Plans"
under  Item 12 in  Part  III of  this  Annual  Report  for  certain  information
concerning  shares of our Class A Common Stock authorized for issuance under our
equity compensation plans.

                                       9
<PAGE>
ITEM 6.  SELECTED FINANCIAL AND OPERATING DATA
<TABLE>
                                                                      Years Ended December 31,
                                                        1999         2000         2001         2002         2003
                                                        ----         ----         ----         ----         ----
Statement of Operations Data:                            (In thousands, except per share and operating data)
<S>                                                 <C>         <C>          <C>           <C>           <C>
Operating revenue...............................    $  196,945  $  198,990   $  190,826    $ 169,468     $ 165,329
Operating expenses:
  Purchased transportation......................        79,735      77,755       70,129       62,364        55,596
  Compensation and employee benefits............        49,255      51,718       54,394       51,834        50,328
  Fuel, supplies, and maintenance...............        23,754      30,995       32,894       27,722        29,857
  Insurance and claims..........................         4,212       3,426        5,325        7,324         5,571
  Taxes and licenses............................         4,045       3,943        3,817        3,444         3,444
  General and administrative....................         7,491       8,319        8,294        7,153         6,934
  Communications and utilities..................         2,190       2,052        2,123        1,783         1,463
  Depreciation and amortization.................        15,800      19,325       18,778    19,725(1)        14,239
                                                  ------------------------------------------------------------------
     Total operating expenses...................       186,482     197,533      195,754      181,349       167,432
                                                  ------------------------------------------------------------------
     Earnings (loss) from operations............        10,463       1,457       (4,928)     (11,881)       (2,103)
Interest expense (net)..........................         3,715       4,029        3,004        1,915         1,755
                                                  ------------------------------------------------------------------
Earnings (loss) before income taxes.............         6,748      (2,572)      (7,932)     (13,796)       (3,858)
Income taxes (benefit)..........................         2,822        (581)      (2,721)      (5,118)       (1,270)
                                                  ------------------------------------------------------------------
Net earnings (loss).............................         3,926      (1,991)      (5,211)   (8,678)(2)       (2,588)
                                                  ==================================================================
Basic and diluted earnings (loss) per common
share...........................................    $     0.78  $    (0.40)  $    (1.07)   $   (1.79)    $   (0.53)
                                                  ==================================================================
Operating Data: (3)
Operating ratio (4).............................         94.7%       99.3%       102.6%       107.0%        101.3%
Average revenue per tractor per week(5).........    $    2,299  $    2,261   $    2,189    $   2,162     $   2,367
Average revenue per loaded mile(5)..............    $     1.33  $     1.32   $     1.34    $    1.37     $    1.37
Average length of haul in miles.................           678         712          697          664           659
Company tractors at end of period...............           844         887          939          773           750
Independent contractor tractors at end of period           689         614          575          521           430
Weighted average tractors during period.........         1,532       1,515        1,530        1,410         1,234
Trailers at end of period.......................         2,783       2,679        2,781        2,480         2,278
Weighted average shares outstanding:
  Basic.........................................         5,031       5,009        4,852        4,846         4,846
  Diluted.......................................         5,032       5,009        4,852        4,846         4,846

Balance Sheet Data (at end of period):
Working capital.................................    $    5,159  $    3,300   $     (55)    $ (4,128)     $ (3,782)
Net property and equipment......................        94,305      86,748       79,045       67,570        54,399
Total assets....................................       125,014     115,828      106,436       89,409        76,680
Long-term debt, including current maturities....        59,515      52,334       49,742       43,820        33,617
Total stockholders' equity......................        39,508      37,233       31,866       23,193        20,605
----------------------------
(1) Includes an impairment charge for goodwill of $3,300 pre-tax.
(2) Includes an impairment charge for goodwill of $2,057 net of tax.
(3) Excludes brokerage activities except as to operating ratio.
(4) Operating expenses as a percentage of operating revenue.
(5) Net of fuel surcharges.
</TABLE>
                                       10
<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.  Our 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,"  as well as  those  discussed  in this  item  and
elsewhere in this annual report on Form 10-K.

Business Overview

     We are a truckload  carrier  that  provides  nationwide  transportation  of
diversified  freight,  concentrating  primarily  on the  flatbed  segment of the
truckload market. We 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 the southern provinces of Canada.

     Beginning in 2000 and continuing  through the present,  truckload  carriers
have operated in a very difficult  business  environment.  A combination of high
fuel prices, rising insurance premiums,  tightened credit standards, a depressed
used truck market,  a declining number of independent  contractors,  and slowing
freight demand  associated with an economic  downturn affected the profitability
of many trucking  companies,  including  Smithway.  In addition to these general
industry  factors,  the impact of the economic downturn on our customer base has
been  particularly  severe,  resulting  in a more  pronounced  weakening  in our
freight demand than that experienced by truckload carriers generally.  Since the
fourth   quarter  of  2000,   several   customers  have   experienced   economic
difficulties,  some of which have declared  bankruptcy.  It has only been in the
last half of 2003,  that our industry has begun to feel the positive  effects of
an increase in freight demand and general economic improvement.

     Since the year 2000, our revenues have decreased  16.9%, to $165 million in
2003 from $199 million in 2000,  and,  although our net loss of $2.6 million for
the year ending  December  2003 was an  improvement  over our net losses of $5.2
million and $8.7 million for the years 2001 and 2002, respectively,  we have not
operated  profitably since 1999. The operating losses have had an adverse effect
on our  liquidity,  and we were in violation of  financial  covenants  under our
primary  financing  arrangement  several times during the year 2003. We obtained
waivers  for  each  such  violation  and  since  the  beginning  of  2003,  have
successfully  negotiated  several  amendments  to the financing  arrangement  to
provide for a remaining term of at least one year.

     In the second  quarter of 2003,  we began to  implement a plan  designed to
return Smithway to  profitability  by achieving a more streamlined and efficient
operation.  The main goals of the first  phase of the plan were to reduce  fixed
costs,  eliminate  less  productive  assets,  and increase the  productivity  of
remaining assets. As part of this plan, we have, among other things:

     o    Consolidated  operations  by closing 6 terminals,  including  two with
          maintenance facilities;

     o    Improved  our ratio of tractors to  non-driving  personnel by reducing
          our headcount;

     o    Reduced the size of our tractor and trailer fleets to better match the
          revenue base; and

     o    Focused our equipment on the most  profitable  customers,  lanes,  and
          loads.

     We are encouraged by the initial results of the plan.  Revenue decreased by
only 2.4% despite a 12.4% reduction in weighted  average tractors and over a 20%
decrease in the number of terminals.  Average  revenue per tractor per week, our
main measure of asset productivity, improved 9.5%, to $2,367 in 2003 from $2,162
in 2002,  as we increased  miles per tractor,  reduced  non-revenue  miles,  and
reduced the number of tractors  without  drivers.  In  addition,  we reduced our
fixed costs of terminals,  equipment, and non-driving personnel,  although these
savings were partially offset by higher maintenance and fuel costs per mile. The
net result was an  improvement  of 570 basis points in our operating  ratio,  to
101.3% in 2003 from 107.0% in 2002.

                                       11
<PAGE>
     The second phase of the plan, which we expect to implement in 2004, focuses
on revenue enhancements,  replacing our highest mileage tractors, and continuing
our cost  control  efforts.  The major  components  of this  phase  include  the
following:

     o    We are currently engaged in a broad-based  effort to raise our revenue
          per loaded mile,  both  generally  and in respect of the new federally
          mandated   hours-of-service   requirements   that   may   affect   our
          productivity  if we are not  adequately  compensated  for lost driving
          time.

     o    We may  selectively  increase  the  size  of our  fleet,  particularly
          through  recruiting  additional  independent  contractors and pursuing
          opportunities  to take over  dedicated  fleets  currently  operated by
          shippers for their own account.

     o    We  intend  to  replace  between  165 and 215 of our  highest  mileage
          tractors,  and we believe the savings in maintenance  costs as well as
          better driver retention will more than offset increased capital costs.
          We have received a financing commitment for 215 new tractors.

     o    We intend to continue our cost control efforts.

     Based on the success of the first phase of the profit  improvement plan, we
were in  compliance  with all of the  financial  covenants  under our  financing
arrangement  at December  31, 2003,  and have  successfully  negotiated  for the
purchase and  financing of 215 new  tractors in 2004.  Based upon our  improving
results, anticipated future cash flows, current availability under the financing
arrangement with LaSalle Bank, and sources of equipment financing that we expect
to  be  available,   we  do  not  expect  to  experience  significant  liquidity
constraints in the foreseeable future.

Revenues and Expenses

     We generate  substantially  all of our revenue by transporting  freight for
our  customers.  Generally,  we are paid by the mile for our  services.  We also
derive revenue from fuel surcharges, loading and unloading activities, equipment
detention,  and other  accessorial  services.  The main  factors that affect our
revenue are the revenue per mile we receive from our  customers,  the percentage
of miles for which we are compensated,  and the number of miles we generate with
our equipment.  These factors relate,  among other things,  to the United States
economy,  inventory  levels,  the level of  capacity in the  trucking  industry,
specific  customer  demand,  and driver  availability.  We monitor  our  revenue
production primarily through average revenue per tractor per week.

     In  2003,  our  average  revenue  per  tractor  per  week  (excluding  fuel
surcharge,  brokerage,  and other  revenues)  increased to $2,367 from $2,162 in
2002. We are encouraged by this  improvement  and by the fact that our operating
revenue  decreased  only $4.1  million  (2.4%),  to $165.3  million in 2003 from
$169.5 million in 2002, while weighted average tractors decreased 12.5% to 1,234
in 2003 from 1,410 in 2002.  This reduction was part of our planned  disposition
of unseated  company-owned  tractors.  In  addition,  we  contracted  with fewer
independent  contractor  providers of  equipment.  The decrease in the number of
independent  contractors  primarily occurred in the first three quarters of 2003
and has  slowed  substantially  since  September  2003  as  freight  demand  has
increased and the economy has begun to rebound.

     The main factors that impact our  profitability on the expense side are the
variable costs of  transporting  freight for our customers.  These costs include
fuel expense,  driver-related  expenses, such as wages, benefits,  training, and
recruitment,   and  independent  contractor  costs,  which  are  recorded  under
purchased transportation.  Expenses that have both fixed and variable components
include maintenance and tire expense and our total cost of insurance and claims.
These  expenses  generally  vary  with the  miles  we  travel,  but also  have a
controllable  component  based on  safety,  fleet  age,  efficiency,  and  other
factors.  Our main fixed costs are the  acquisition  and  financing of long-term
assets, such as revenue equipment and the compensation of non-driver  personnel.
Effectively   controlling  our  expenses  is  a  key  component  of  our  profit
improvement plan.

                                       12
<PAGE>
Results of Operations

     The following table sets forth the percentage relationship of certain items
to revenue for the periods indicated:
<TABLE>
                                                               2001            2002             2003
                                                               ----            ----             ----
     <S>                                                      <C>             <C>              <C>
     Operating revenue.............................           100.0%          100.0%           100.0%
     Operating expenses:
         Purchased transportation...................           36.8            36.8             33.6
         Compensation and employee benefits.........           28.5            30.6             30.4
         Fuel, supplies, and maintenance............           17.2            16.4             18.1
         Insurance and claims.......................            2.8             4.3              3.4
         Taxes and licenses.........................            2.0             2.0              2.1
         General and administrative.................            4.3             4.2              4.2
         Communication and utilities................            1.1             1.1              0.9
         Depreciation and amortization..............            9.8            11.6              8.6
                                                     ---------------------------------------------------
         Total operating expenses...................          102.6           107.0            101.3
                                                     ---------------------------------------------------
     Earnings (loss) from operations................          (2.6)           (7.0)            (1.3)
     Interest expense, net..........................           1.6             1.1              1.1
                                                     ---------------------------------------------------
     Loss before income taxes.......................          (4.2)           (8.1)            (2.3)
     Income taxes (benefit).........................          (1.4)           (3.0)            (0.8)
                                                     ---------------------------------------------------
     Net loss.......................................          (2.7)%          (5.1)%           (1.6)%
                                                     ===================================================
</TABLE>
Comparison of year ended December 31, 2003 to year ended December 31, 2002.

     Operating  revenue decreased $4.1 million (2.4%), to $165.3 million in 2003
from $169.5 million in 2002. The decrease in operating revenue resulted from our
planned  reduction in fleet size to reduce the number of unmanned  company-owned
tractors  as well as from our  yield  management  efforts,  in  which we  ceased
hauling  certain  unprofitable  freight.  In addition,  we contracted with fewer
independent  contractor providers of equipment.  The reduction in fleet size and
yield enhancement efforts were consistent with our strategy of focusing on asset
productivity.  We believe a certain level of success has been  achieved,  as our
weighted  average number of tractors  decreased  12.5% while  operating  revenue
decreased only 2.4%.

     Average  operating  revenue per tractor per week, our main measure of asset
productivity,  increased  significantly  to $2,577 in 2003 from  $2,311 in 2002.
Operating  revenue  includes revenue from operating our trucks as well as other,
more volatile,  revenue items,  including fuel surcharge,  brokerage,  and other
revenue.  We believe the analysis of tractor  productivity is more meaningful if
fuel surcharge,  brokerage, and other revenue are excluded from the computation.
Average revenue per tractor per week (excluding fuel surcharge,  brokerage,  and
other revenue) increased to $2,367 in 2003 from $2,162 in 2002, primarily due to
increased  production  from our seated  equipment and a lower number of unseated
company  tractors.  For the  year,  revenue  per  loaded  mile  (excluding  fuel
surcharge,  brokerage,  and other revenue) remained relatively constant at $1.37
as rates were  lower in the first half of the year and higher  during the latter
part of 2003. Fuel surcharge  revenue  increased $2.7 million to $5.8 million in
2003 from $3.1 million in 2002. During 2003 and 2002, approximately $4.0 million
and $1.8 million,  respectively,  of the fuel surcharge revenue collected helped
to offset  our fuel  costs.  The  remainder  was passed  through to  independent
contractors.

     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  $6.8 million  (10.9%),  to $55.6 million in 2003 from
$62.4  million in 2002.  As a percentage  of revenue,  purchased  transportation
decreased to 33.6% in 2003 from 36.8% in 2002. The changes reflect a decrease in
the  percentage  of the fleet  supplied by  independent  contractors  and in the
number of independent  contractors.  The percentage of total  operating  revenue
provided by  independent  contractors  decreased  to 35.6% in 2003 from 39.9% in
2002. We believe the decline in  independent  contractors as a percentage of our
total fleet is attributable to high fuel costs,  high insurance  costs,  tighter
credit  standards,  and slow freight  demand,  which have diminished the pool of
drivers interested in becoming or remaining independent contractors. The decline
in independent  contractors has slowed  significantly  since September,  2003 as
freight demand and the general economy has improved.

                                       13
<PAGE>
     Compensation and employee benefits  decreased $1.5 million (2.9%), to $50.3
million  in 2003  from  $51.8  million  in 2002.  As a  percentage  of  revenue,
compensation  and  employee  benefits  decreased  slightly to 30.4% in 2003 from
30.6% in 2002. This reflects a $2.4 million decrease in wages paid to non-driver
employees.  These factors were partially offset by an increase in the percentage
of the fleet comprised of  company-owned  tractors and additional  wages paid to
new  drivers for  sign-on  bonuses  implemented  to enhance  driver  recruiting.
Additionally,  in 2002 we recorded a $650,000  increase in reserves for workers'
compensation  losses,  including  losses  which have been  incurred  but not yet
reported to us. Finally,  health claims and premiums  increased in 2003 compared
with 2002, and we expect this trend to continue in future periods.

     Fuel,  supplies,  and maintenance  increased $2.1 million (7.7%),  to $29.9
million in 2003 from $27.7 million in 2002.  As a percentage  of revenue,  fuel,
supplies,  and  maintenance  increased to 18.1% of revenue in 2003 compared with
16.4%  in 2002.  This  reflects  an  increase  in the  percentage  of the  fleet
comprised of company-owned  tractors,  higher fuel prices, and a slight increase
in maintenance costs. We have seen an increase in maintenance  expense in recent
periods due to our extended trade cycle, however further increases in repair and
maintenance  expense  are  expected  to be minimal as we begin to replace  older
equipment  as part of the second  phase of our  profit  improvement  plan.  Fuel
prices  increased  approximately  18% to an  average of $1.47 per gallon in 2003
from $1.25 per gallon in 2002. The increase in fuel prices was partially  offset
by a $2.2  million  increase  in fuel  surcharge  revenue,  which is included in
operating revenue.

     Insurance and claims  decreased  $1.8 million  (23.9%),  to $5.6 million in
2003 from $7.3 million in 2002. As a percentage of revenue, insurance and claims
decreased  to 3.4% of  revenue  in 2003  compared  with  4.3% in 2002.  In 2002,
insurance  and claims  included a $1.2  million  increase in  reserves  for auto
liability  losses.  The increase in liability  reserves  related  primarily to a
change in estimating  the ultimate  costs of claims that occurred in prior years
and did not recur in 2003.  Also, in July 2003,  due to our financial  condition
and the rising cost of insurance, we discontinued our excess insurance coverage,
leaving $2 million of primary coverage with a $250,000  self-insured  retention,
allowing  for a  substantial  reduction  in  premiums.  We have  had a  $250,000
self-insured  retention  since July 1, 2002.  In January  2003,  we exercised an
option to retroactively increase the deductible for our auto liability policy to
$125,000 per incident beginning July 1, 2001 through June 30, 2002 which reduced
our expense by $467,000.  No changes were made to the other policies during that
period.  Prior to that  time  the  retention  was  $50,000.  The lack of  excess
coverage and high  self-insured  retention  increases our risk  associated  with
frequency and severity of accidents and could increase our expenses or make them
more volatile from period to period.  Furthermore,  if we experience claims that
exceed the limits of our  insurance  coverage,  or if we  experience  claims for
which  coverage  is  not  provided,  our  financial  condition  and  results  of
operations could suffer a materially  adverse effect. The insurance policies are
scheduled for renewal on July 1, 2004. Upon renewal, we expect no changes in our
self-insured  retention level or our excess insurance  coverage limit. If we are
unable  to renew  the  policies  on  their  current  terms,  we may  modify  the
self-insured retention amount.

     Taxes and licenses  remained constant at $3.4 million in 2003 and 2002. The
decrease in the number of  company-owned  tractors subject to annual license and
permit costs was offset by an increase in the need for over-dimensional permits.
As a percentage of revenue,  taxes and licenses remained  relatively constant at
2.1% of revenue in 2003 compared with 2.0% of revenue in 2002.

     General and  administrative  expenses  decreased  $219,000 (3.1%),  to $6.9
million in 2003 from $7.2 million in 2002. As a percentage  of revenue,  general
and administrative expenses remained constant at 4.2% of revenue in both years.

         Communications and utilities decreased $320,000 (17.9%), to $1.5
million in 2003 from $1.8 million in 2002. As a percentage of revenue,
communications and utilities remained relatively constant at 0.9% of revenue in
2003 compared with 1.1% of revenue in 2002.

     Depreciation  and  amortization  decreased $5.5 million  (27.8%),  to $14.2
million  in 2003  from  $19.7  million  in 2002.  In  accordance  with  industry
practices,  the gain or loss on retirement,  sale, or write-down of equipment is
included in depreciation and  amortization.  In 2003 and 2002,  depreciation and
amortization  included  net gains from the sale of  equipment  of  $439,000  and
$792,000,  respectively.  In 2002  depreciation and  amortization  included $3.3
million for goodwill  impairment.  As a percentage of revenue,  depreciation and
amortization  decreased to 8.6% of revenue in 2003  compared with 11.6% in 2002.
Excluding the 2002 goodwill impairment charge, depreciation and amortization was
9.5% of  revenue  in  2002.  The  decreases  as a  percentage  of  revenue  were
attributable  to a smaller

                                       14
<PAGE>
fleet  of  company-owned  equipment,  and  some  of our  older  equipment  still
generates  revenue but is no longer being  depreciated.  In the  short-term,  we
expect that the presence of older equipment which is not being  depreciated will
more than offset  increases in  depreciation  resulting from the addition of new
equipment  to our fleet.  Over the  long-term,  as we  continue  to upgrade  our
equipment fleet, we expect depreciation expense to increase.

     Interest expense,  net,  decreased $160,000 (8.4%), to $1.8 million in 2003
from $1.9 million in 2002. This decrease was  attributable to lower average debt
outstanding,  partially  offset by higher  interest  rates.  As a percentage  of
revenue,  interest  expense,  net,  remained constant at 1.1% of revenue in both
2002 and 2003.

     As a result of the  foregoing,  our pre-tax  margin  increased to (2.3%) in
2003 from (8.1%) in 2002.

     Our income tax  benefit in 2003 was $1.3  million,  or 32.9% of loss before
income taxes. Our income tax benefit in 2002 was $5.1 million,  or 37.1% of loss
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 us. The impact of
paying per diem travel  expenses  varies  depending upon the ratio of drivers to
independent contractors and the level of our pre-tax loss.

     As a result of the factors  described  above,  net loss was $2.6 million in
2003 (1.6% of revenue),  compared with net loss of $8.7 million in 2002 (5.1% of
revenue).

Comparison of year ended December 31, 2002 to year ended December 31, 2001.

     Operating  revenue  decreased $21.4 million  (11.2%),  to $169.5 million in
2002 from $190.8 million in 2001.  Lower  weighted-average  tractors,  decreased
fuel surcharge revenue,  decreased brokerage revenue,  and lower average revenue
per tractor per week were  responsible  for the decrease in  operating  revenue.
Weighted-average  tractors  decreased  to 1,410 in 2002 from 1,530 in 2001 as we
disposed of a portion of our unseated company-owned tractors in the last half of
2002 and contracted with fewer  independent  contractor  providers of equipment.
Fuel surcharge  revenue decreased $3.2 million to $3.1 million in 2002 from $6.3
million in 2001.  During  2002 and 2001,  approximately  $1.8  million  and $3.5
million,  respectively, of the fuel surcharge revenue collected helped to offset
our fuel costs.  The remainder was passed  through to  independent  contractors.
Additionally,  soft freight  demand caused a $2.2 million  decrease in brokerage
revenue,  to $7.3  million in 2002 from $9.5 million in 2001.  Finally,  average
revenue per tractor per week  (excluding  revenue from brokerage  operations and
fuel surcharges)  decreased to $2,162 in 2002 from $2,189 in 2001, primarily due
to a higher number of unseated  company-owned  tractors during the first half of
2002 and lower weekly  production  caused by soft freight demand.  These factors
were  partially  offset by an  increase  in  revenue  per  loaded  mile,  net of
surcharges, to $1.37 in 2002 from $1.34 in 2001.

     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  $7.8 million  (11.1%),  to $62.4 million in 2002 from
$70.1  million  in 2001,  as we  contracted  with fewer  independent  contractor
providers  of  revenue   equipment.   We  believe  the  decline  in  independent
contractors  as a  percentage  of our total fleet is  attributable  to high fuel
costs, high insurance costs, tighter credit standards,  and slow freight demand,
which have  diminished  the pool of drivers  interested in becoming or remaining
independent  contractors.  As a percentage of revenue,  purchased transportation
remained constant at 36.8% in both years, as the drop in total operating revenue
more than exceeded the drop in independent contractor revenue.

     Compensation and employee benefits  decreased $2.6 million (4.7%), to $51.8
million  in 2002  from  $54.4  million  in 2001.  As a  percentage  of  revenue,
compensation  and  employee  benefits  increased  to 30.6% in 2002 from 28.5% in
2001. The increase was primarily attributable to a $650 increase in reserves for
workers' compensation losses,  including losses which have been incurred but not
yet  reported  to us.  Additionally,  wages paid to drivers for  unloaded  miles
increased  during the year as weak freight demand caused an increase in deadhead
miles. Finally, health claims and premiums increased in 2002 compared with 2001,
and we expect this trend to continue in future periods.

     Fuel,  supplies,  and maintenance  decreased $5.2 million (15.7%), to $27.7
million in 2002 from $32.9 million in 2002.  As a percentage  of revenue,  fuel,
supplies,  and  maintenance  decreased to 16.4% of revenue in 2002 compared with
17.2% in 2001.  This decrease was  attributable  primarily to lower fuel prices,
which decreased  approximately 9% to an average of $1.25 per gallon in 2002 from
$1.38 per gallon in 2001.  The price  decrease  was

                                       15
<PAGE>
partially  offset by higher  non-billable  miles for which we incur fuel expense
but do not receive fuel surcharges. Although average fuel prices were lower than
2001 levels,  fuel prices have risen over the last three  quarters of 2002,  and
have  continued to rise in 2003.  Cost savings  resulting from lower fuel prices
were  partially  offset  by higher  maintenance  expense  resulting  from (i) an
increase  in the  percentage  of  our  total  fleet  supplied  by  company-owned
equipment,  and (ii) a slightly  older  fleet,  as a result of our  decision  to
further  extend the trade cycle for  tractors.  Although  the average age of our
tractor fleet decreased  during 2002 due to the sale of older equipment that was
not replaced,  we incurred increased maintenance expense on the aging units that
remained in service.

     Insurance and claims  increased  $2.0 million  (37.5%),  to $7.3 million in
2002 from $5.3 million in 2001. As a percentage of revenue, insurance and claims
increased to 4.3% of revenue in 2002  compared  with 2.8% in 2001.  The increase
was  attributable  to a $1.2  million  increase in reserves  for auto  liability
losses.  The increase in liability reserves relates primarily to a change in the
method of estimating the ultimate costs of claims,  as well as the establishment
of a reserve for  incurred  but not  reported  claims.  Despite the  increase in
reserves, in 2002 we had our best safety year, in terms of accidents per million
miles,  since going public in 1996.  The cost of insurance and claims  increased
substantially on July 1, 2002, when we increased our self-insured retention from
$50,000 to $250,000 per occurrence without a premium reduction that fully offset
the increase in retention.  The higher self-insured retention increases our risk
associated  with  frequency  and  severity of accidents  and could  increase our
expenses or make them more volatile from period to period.

     Taxes and licenses  decreased $373,000 (9.8%), to $3.4 million in 2002 from
$3.8  million  in 2001,  reflecting  a decrease  in the number of  company-owned
tractors subject to annual license and permit costs. As a percentage of revenue,
taxes and licenses remained constant at 2.0% of revenue in 2002 and 2001.

     General and administrative expenses decreased $1.1 million (13.8%), to $7.2
million in 2002 from $8.3 million in 2001. As a percentage  of revenue,  general
and administrative  expenses remained  relatively constant at 4.2% of revenue in
2002 compared with 4.3% of revenue in 2001.

     Communications  and utilities  decreased  $340 (16.0%),  to $1.8 million in
2002 from $2.1 million in 2001. As a percentage of revenue,  communications  and
utilities remained constant at 1.1% of revenue in both years.

     Depreciation and amortization  increased  $947,000 (5.0%), to $19.7 million
in 2002 from $18.8  million  in 2001.  During  the  annual  goodwill  impairment
analysis required by Statement of Financial  Accounting  Standard (SFAS) 142, we
determined  that a portion of our goodwill had become  impaired  during the year
primarily as a result of continuing  operating losses. As a result, we wrote off
$3.3 million of goodwill in the fourth quarter of 2002. In 2001, we committed to
a plan to replace our  proprietary  computer  operating  system with third party
software.  Accordingly, we wrote off the $707,000 carrying value of our existing
software  during  the  fourth  quarter  of 2001.  In  accordance  with  industry
practices,  the gain or loss on retirement,  sale, or write-down of equipment is
included in depreciation and  amortization.  In 2002 and 2001,  depreciation and
amortization  included  net gains from the sale of  equipment  of  $792,000  and
$187,000,  respectively.  In addition,  2002  included $3.3 million for goodwill
impairment  and  2001  included  $707,000  for the  write-off  of a  proprietary
operating  system.  Increasing  costs of new  equipment  continued  to  increase
depreciation  per  tractor.  As  a  percentage  of  revenue,   depreciation  and
amortization  increased to 11.6% of revenue in 2002  compared with 9.8% in 2001,
primarily as a result of these factors.  Excluding the write-offs,  depreciation
and amortization remained constant at 9.5% of revenue in 2001 and 2002.

     Interest expense,  net, decreased $1.1 million (36.2%),  to $1.9 million in
2002 from $3.0 million in 2001. This decrease was attributable to lower interest
rates and lower average debt outstanding.  As a percentage of revenue,  interest
expense, net, decreased to 1.1% of revenue in 2002 compared with 1.6% in 2001.

     As a result of the  foregoing,  our pre-tax  margin  decreased to (8.1%) in
2002 from (4.2%) in 2001.

     Our income tax  benefit in 2002 was $5.1  million,  or 37.1% of loss before
income taxes. Our income tax benefit in 2001 was $2.7 million,  or 34.3% of loss
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 us. The impact of
paying per diem travel  expenses  varies  depending upon the ratio of drivers to
independent contractors and the level of our pre-tax loss.

     As a result of the factors  described  above,  net loss was $8.7 million in
2002 (5.1% of revenue),  compared with net loss of $5.2 million in 2001 (2.7% of
revenue).

                                       16
<PAGE>
Liquidity and Capital Resources

     Uses and Sources of Cash

     We require cash to fund  working  capital  requirements  and to service our
debt.  We  have  historically   financed  acquisitions  of  new  equipment  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. We also have obtained
a portion of our 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.

     Our primary sources of liquidity have been funds provided by operations and
borrowings under credit  arrangements with financial  institutions and equipment
manufacturers.  We are experiencing improved cash flow as losses decrease. As of
the date of this report, we have adequate borrowing  availability on our line of
credit to finance any near-term needs for working capital.  We have successfully
negotiated, subject to certain conditions, for the purchase and financing of 215
new  tractors  scheduled  for  delivery  during  2004.  Our ability to fund cash
requirements  in future  periods  will  depend  on our  ability  to comply  with
covenants  contained in financing  arrangements  and the  availability  of other
financing options, as well as our financial condition and results of operations.
Our financial  condition and results of operations  will depend on insurance and
claims  experience,  general  shipping demand by the Company's  customers,  fuel
prices,  the  availability  of drivers and  independent  contractors,  continued
success in implementing  the profit  improvement plan described above, and other
factors.

     Although  in the  first  quarter  we  experienced  the  traditional  lag in
shipping  demand  for  flatbed  freight,  and  there  were  weather-related  and
hours-of-service operational issues, we expect the first quarter of 2004 to show
improvement  over the first  quarter of 2003.  Going  forward,  we believe  that
seasonal  improvements  in  shipping  demand and  continued  focus on the profit
improvement plan should generate the required improvements. However, there is no
assurance the improvements  will occur as planned.  Assuming the improvements do
occur as  planned,  we believe  there will be  sufficient  cash flow to meet our
liquidity  requirements  at least through  December 31, 2004. To the extent that
actual  results or events  differ  from our  financial  projections  or business
plans, our liquidity may be adversely  affected and we may be unable to meet our
financial covenants. In such event, we believe we could renegotiate the terms of
our debt or that alternative financing would be available,  although this cannot
be assured.

     Although  there can be no  assurance,  we believe  that cash  generated  by
operations  and  available  sources of  financing  for  acquisitions  of revenue
equipment  will be adequate to meet our currently  anticipated  working  capital
requirements  and other cash needs  through  2004.  We will  require  additional
sources of  financing  over the  long-term  to upgrade  our  tractor and trailer
fleets.  To the extent that actual  results or events  differ from our financial
projections or business  plans,  our liquidity may be adversely  affected and we
may be unable to meet our  financial  covenants.  Specifically,  our  short- and
long-term  liquidity  may be adversely  affected by one or more of the following
factors:  costs  associated with insurance and claims;  weak freight demand or a
loss in customer  relationships  or volume;  the impact of new  hours-of-service
regulations on asset productivity;  the ability to attract and retain sufficient
numbers of qualified drivers and independent  contractors;  elevated fuel prices
and the ability to collect fuel  surcharges;  inability  to maintain  compliance
with, or negotiate  amendments  to, loan  covenants;  the ability to finance the
tractors and trailers delivered and scheduled for delivery;  and the possibility
of  shortened  payment  terms by our  suppliers  and vendors  worried  about our
ability  to  meet  payment  obligations.   Based  upon  our  improving  results,
anticipated  future  cash  flows,   current  availability  under  the  financing
arrangement with LaSalle Bank, and sources of equipment financing that we expect
to  be  available,   we  do  not  expect  to  experience  significant  liquidity
constraints in the foreseeable future.

     Net cash provided by operating activities was $14.3 million,  $9.3 million,
and $11.7  million  for the years  ended  December  31,  2001,  2002,  and 2003,
respectively.  Historically,  our  principal  use of cash from  operations is to
service debt and to internally finance acquisitions of revenue equipment.  Total
receivables decreased (increased) $2.8 million, $2.4 million, and ($572,000) for
the years ended December 31, 2001, 2002, and 2003, respectively. The average age
of our trade accounts receivable was approximately 37 days for 2001, 34 days for
2002, and 34 days for 2003.

     Net cash (used in) provided by  investing  activities  was ($4.0)  million,
$3.3 million,  and $2.9 million for the years ended December 31, 2001, 2002, and
2003,  respectively.  Such amounts related  primarily to purchases,  sales,

                                       17
<PAGE>
and trades of revenue equipment and payments made for the acquisition of Skipper
Transportation, Inc. in 2001. In 2003, sales of tractors and trailers as part of
decreasing  the size of our  company-owned  tractor and trailer  fleet more than
offset the few purchases of revenue equipment.

     Net cash used in financing  activities of $9.9 million,  $13.2 million, and
$14.4  million  for  the  years  ended  December  31,  2001,   2002,  and  2003,
respectively,  consisted  primarily  of net  payments  of  principal  under  our
long-term debt agreements.

     We have a financing arrangement with LaSalle Bank, which expires on January
1, 2005,  and provides  for  automatic  month-to-month  renewals  under  certain
conditions  after that date.  LaSalle may  terminate  the  arrangement  prior to
January 1, 2005, in the event of default,  as discussed below, and may terminate
at anytime  during the renewal  terms.  At several  times since the beginning of
2003, the financing arrangement has been amended to provide for a remaining term
of at least one year. The arrangement provides for a term loan, a revolving line
of credit, a capital  expenditure loan, and financing for letters of credit. The
combination  of all loans  with  LaSalle  Bank  cannot  exceed the lesser of $25
million or a specified borrowing base.

     At  December  31,  2003,  the term  loan had a  principal  balance  of $9.7
million,  payable  in 48  remaining  equal  monthly  principal  installments  of
$201,000. The revolving line of credit allows for borrowings up to 85 percent of
eligible receivables. At December 31, 2003, total borrowings under the revolving
line were $426,000.  The capital  expenditure loan allows for borrowing up to 80
percent of the purchase price of revenue equipment purchased with such advances,
provided  borrowings  under the  capital  expenditure  loan are  limited to $2.0
million annually, and $4.0 million over the term of the arrangement. At December
31, 2003, the amount owed under capital  expenditure notes was $1.0 million.  At
December 31, 2003, we had  outstanding  letters of credit  totaling $7.9 million
for self-insured  amounts under our insurance programs.  These letters of credit
directly reduce the amount of potential borrowings available under the financing
arrangement.  Any increase in  self-insured  retention,  as well as increases in
claim reserves,  may require  additional  letters of credit to be posted,  which
would negatively affect our liquidity. At December 31, 2003, our borrowing limit
under the financing  arrangement was $21.7 million,  leaving  approximately $2.8
million in remaining availability at such date.

     We are required to pay a facility fee on the LaSalle financing  arrangement
of  .25%  of  the  maximum  loan  limit  ($25  million).  Borrowings  under  the
arrangement are secured by liens on revenue equipment,  accounts receivable, and
certain other  assets.  The interest rate on  outstanding  borrowings  under the
arrangement is equal to LaSalle's prime rate plus two percent.

     The  LaSalle  financing   arrangement   requires  compliance  with  certain
financial  covenants,  including  compliance with a minimum  tangible net worth,
capital  expenditure  limits,  and a fixed  charge  coverage  ratio.  We were in
compliance  with these  covenants  at  December  31, 2003 and we believe we will
remain in  compliance,  although  there can be no  assurance  that the  required
financial  performance  will  be  achieved.  In  addition,  equipment  financing
provided by a manufacturer contains a minimum tangible net worth requirement. We
were in compliance with the required minimum tangible net worth  requirement for
December 31, 2003 and we expect to remain in  compliance  going  forward.  If we
fail to  maintain  compliance  with these  financial  covenants,  or to obtain a
waiver of any noncompliance, the lenders will have the right to declare all sums
immediately  due and pursue other  remedies.  In such event, we believe we could
renegotiate  the  terms  of our  debt or that  alternative  financing  would  be
available,  although  this cannot be assured.  As of the filing date, we were in
compliance with all financial covenants.

     Contractual Obligations and Commercial Commitments

     The  following  tables  set forth  the  contractual  obligations  and other
commercial commitments as of December 31, 2003:
<TABLE>

                                                               Payments (in thousands) due by period

                                                               Less than       1-3         3-5        More than
Contractual Obligations                           Total         1 year        years       years        5 years
                                                 --------     ----------    --------     -------      ----------
<S>                                               <C>           <C>         <C>          <C>          <C>
Long-term debt...............................     $33,191       $10,582     $15,623      $6,986       $      -
Operating leases.............................         982           227         401         277             77
                                                 --------     ----------    --------     -------      ----------
     Total ..................................     $34,173       $10,809     $16,024      $7,263       $     77
                                                 ========     ==========    ========     =======      ==========
</TABLE>
We had no other commercial commitments at December 31, 2003.

                                       18
<PAGE>
Off-Balance Sheet Arrangements

     Our liquidity is not materially affected by off-balance sheet transactions.
During 2003, we incurred minimal rental expense related to operating  leases. We
do not expect to utilize  operating  leases to finance  any  material  amount of
revenue equipment going forward.

Critical Accounting Policies

     The  preparation  of financial  statements  in conformity  with  accounting
principles  generally  accepted in the United  States of America  requires us to
make decisions  based upon  estimates,  assumptions,  and factors we consider as
relevant  to  the  circumstances.   Such  decisions  include  the  selection  of
applicable  accounting  principles and the use of judgment in their application,
the results of which impact reported amounts and disclosures.  Changes in future
economic  conditions or other business  circumstances may affect the outcomes of
our estimates and  assumptions.  Accordingly,  actual  results could differ from
those anticipated.  A summary of the significant accounting policies followed in
preparation  of  the  financial  statements  is  contained  in  Note  1  of  the
consolidated  financial  statements  attached hereto.  Other footnotes  describe
various  elements  of the  financial  statements  and the  assumptions  on which
specific amounts were determined.

     Our critical accounting policies include the following:

     Revenue Recognition

     We generally recognize operating revenue when the freight to be transported
has been  loaded.  We  operate  primarily  in the  short-to-medium  length  haul
category of the trucking industry;  therefore,  our 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.  We recognize  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.

     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 years  for  tractors,  7 years  for
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.  The  gain or loss on
retirement  or  sale  is  included  in  depreciation  and  amortization  in  the
consolidated  statements  of  operation.  Gains on trade-ins are included in the
basis of the new asset. Judgments concerning salvage values and useful lives can
have a significant impact.

     Estimated Liability for Insurance Claims

     Losses   resulting  from  auto   liability,   physical   damage,   workers'
compensation,  and cargo  loss and damage are  covered by  insurance  subject to
certain  self-retention  levels.  Losses  resulting  from  uninsured  claims are
recognized when such losses are incurred. We estimate and accrue a liability for
our share of ultimate settlements using all available information. We accrue for
claims reported, as well as for claims incurred but not reported, based upon our
past  experience.  Expenses  depend on actual  loss  experience  and  changes in
estimates  of  settlement  amounts  for open  claims  which  have not been fully
resolved. However, final settlement of these claims could differ materially from
the amounts we have accrued at year-end.  Our judgment  concerning  the ultimate
cost of claims and modification of initial reserved amounts is an important part
of establishing claims reserves,  and is of increasing  significance with higher
self-insured retention and lack of excess coverage.

                                       19
<PAGE>
     Impairment of Long-Lived Assets

     Long-lived assets are reviewed for impairment whenever events or changes in
circumstances  indicate  that  the  carrying  amount  of an  asset  may  not  be
recoverable.  Recoverability  of  assets  to be held and used is  measured  by a
comparison of the carrying  amount of an asset to future net  undiscounted  cash
flows expected to be generated by the asset. Our judgment concerning future cash
flows is an important part of this determination.  If such assets are considered
to be impaired,  the  impairment  to be  recognized is measured by the amount by
which the  carrying  amount of the assets  exceeds the fair value of the assets.
Assets to be disposed of are  reported  at the lower of the  carrying  amount or
fair value less the costs to sell.

New Accounting Pronouncements

     In July  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
associated with Exit or Disposal Activities." SFAS 146 supersedes EITF No. 94-3.
The principal  difference  between SFAS 146 and EITF No. 94-3 relates to when an
entity can recognize a liability  related to exit or disposal  activities.  SFAS
146 requires a liability be  recognized  for a cost  associated  with an exit or
disposal  activity  when the  liability  is  incurred.  EITF No. 94-3  allowed a
liability, related to an exit or disposal activity, to be recognized at the date
an entity  commits to an exit plan. The provisions of SFAS 146 were effective on
January  1,  2003.  The  adoption  of SFAS No.  146 has not had an impact on our
financial statements as of December 31, 2003.

     In  November  2002,  the  Financial   Accounting   Standards  Board  issued
Interpretation No. 45, "Guarantor's  Accounting and Disclosure  Requirements for
Guarantees,  Including  Indirect  Guarantees  of  Indebtedness  of Others." This
interpretation  elaborates  on  disclosure  requirements  of  obligations  by  a
guarantor  under  certain  guarantees.   This  interpretation  also  requires  a
guarantor to  recognize,  at the  inception of a guarantee,  a liability for the
fair value of an obligation  undertaken  in issuing a guarantee.  We applied the
provisions of  Interpretation  No. 45 for initial  recognition  and  measurement
provisions  to  guarantees  issued or  modified  after  December  31,  2002,  as
required.  We did not have any  guarantees,  including  indirect  guarantees  of
indebtedness of others, as of December 31, 2003, which would require  disclosure
under Interpretation No. 45.

     In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation
of  Variable  Interest  Entities."  In  December  2003,  the  FASB  issued  FASB
Interpretation  No. 46  (revised  December  2003),  "Consolidation  of  Variable
Interest Entities." FIN No. 46, as revised,  requires an entity to consolidate a
variable interest entity if it is designated as the primary  beneficiary of that
entity  even if the  entity  does not have a  majority  of voting  interests.  A
variable  interest entity is generally  defined as an entity where its equity is
unable to finance its activities or where the owners of the entity lack the risk
and rewards of ownership.  The provisions of this interpretation must be applied
at the  beginning of the first  interim or annual  period ending after March 15,
2004. The application of this  interpretation is not expected to have a material
effect on our consolidated financial statements.

     In April 2003,  the Financial  Accounting  Standards  Board issued SFAS No.
149,  "Amendment  of  Statement  133  on  Derivative   Instruments  and  Hedging
Activities."  SFAS  No.  149  amends  and  clarifies  financial  accounting  and
reporting for derivative instruments embedded in other contracts and for hedging
activities  under SFAS No.  133,  "Accounting  for  Derivative  Instruments  and
Hedging Activities." It applies to contracts entered into or modified after June
30,  2003,  except  as  stated  within  the  statement,  and  is to  be  applied
prospectively.  The  adoption of SFAS No. 149 did not have a material  impact on
our consolidated financial statements.

     On May 15, 2003, the Financial  Accounting  Standards Board issued SFAS No.
150, "Accounting for Certain Financial  Instruments with Characteristics of Both
Liabilities  and  Equity."  SFAS  No.  150  requires   issuers  to  classify  as
liabilities  (or assets in some  circumstances)  three  classes of  freestanding
financial  instruments that embody obligations for the issuer.  Generally,  SFAS
No. 150 applies to financial  instruments entered into or modified after May 31,
2003 and otherwise became effective at the beginning of the first interim period
beginning  after  June 15,  2003.  The  adoption  of SFAS No. 150 did not have a
material impact on our consolidated financial statements.

     In December  2003,  the  Securities  and Exchange  Commission  issued Staff
Accounting  Bulletin  No.  104 ("SAB No.  104"),  "Revenue  Recognition",  which
codifies,  revises  and  rescinds  certain  sections  of SAB No.  101,  "Revenue
Recognition",  in order  to make  this  interpretive  guidance  consistent  with
current  authoritative  accounting  and  auditing  guidance and  Securities  and
Exchange Commission rules and regulations.  The changes noted in SAB No. 104 did
not have a material effect on our consolidated financial statements.

                                       20
<PAGE>
Related Party Transactions

     In August  2003,  we generated  approximately  $213,000 of cash and avoided
future  premium  payments  by  selling  one of our two life  insurance  policies
covering our late Chief Executive Officer to such officer for the cash surrender
value.  The transferred  policy has a death benefit of $1 million and the policy
retained by us has a death benefit of $750,000.  The transaction was approved by
the disinterested directors.

     During the years ended  December 31, 2001,  and 2002 there were no material
transactions with related parties.

Inflation and Fuel Costs

     Most of our  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.  We attempt 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 our  profitability.  Most of our contracts with customers  contain
fuel surcharge provisions. Although we attempt 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.

Seasonality

     In the trucking  industry  results of  operations  show a seasonal  pattern
because  customers  generally reduce shipments during the winter season,  and we
experience some  seasonality due to the open,  flatbed nature of the majority of
our trailers.  We at times have experienced delays in meeting shipment schedules
as a result of severe weather conditions, particularly during the winter months.
In addition, our 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

     We 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.  We rely on this safe  harbor in
making such  disclosures.  In connection with this "safe harbor"  provision,  we
hereby  identify  important  factors that could cause  actual  results to differ
materially from those contained in any  forward-looking  statement made by us or
on our behalf.  Factors that might cause such a difference include,  but are not
limited to, the following:

     Losses and Liquidity  Concerns.  We have reported  operating losses for the
past three years and a net loss for the past four years.  Failure to turn around
the losses  could result in further  violation  of current and future  financing
covenants,  which  could  accelerate  our  indebtedness.  In such an event,  our
liquidity,  financial  condition,  and results of operations would be materially
and  adversely  impacted.  Although  we  have  been  encouraged  by  the  recent
improvements,  there  is no  assurance  that we will  not  experience  liquidity
constraints going forward.

     Insurance.  The lack of excess  coverage  and high  self-insured  retention
increases our risk  associated  with the frequency and severity of accidents and
could  increase our expenses or make them more  volatile  from period to period.
Furthermore,  if we  experience  claims that exceed the limits of our  insurance
coverage,  or if we experience  claims for which  coverage is not provided,  our
financial  condition and results of operations could suffer a materially adverse
effect.

     General  Economic and Business  Factors.  Our business is dependent  upon a
number of factors  that may have a materially  adverse  effect on our results of
operations,  many of which are beyond our control.  These factors include excess
capacity in the trucking industry,  significant  increases or rapid fluctuations
in fuel prices,  interest rates,  fuel taxes, and insurance and claims costs, to
the extent not offset by  increases  in freight  rates or fuel  surcharges.  Our
results of  operations  also are affected by  recessionary  economic  cycles and
downturns in customers'

                                       21
<PAGE>
business cycles, particularly in market segments and industries in which we have
a  concentration  of  customers.  In  addition,  our results of  operations  are
affected by seasonal  factors.  Customers  tend to reduce  shipments  during the
winter  months.  Despite  higher  oil  inventories,  concerns  in oil  producing
countries have caused fuel prices to rise  throughout  2003.  Shortages of fuel,
increases in fuel  prices,  or  rationing  of  petroleum  products  could have a
materially adverse effect on our operating results.

     Capital  Requirements.  The trucking  industry is very  capital  intensive.
Historically, we have depended on cash from operations, equipment financing, and
debt financing for funds to update our revenue  equipment  fleet.  Since 2001 we
have slowed our growth and extended our trade cycle on tractors and trailers. We
had minimal  capital  expenditures  in 2003.  We have  successfully  negotiated,
subject  to  certain  conditions,  for the  purchase  and  financing  of 215 new
tractors  scheduled  for  delivery  during 2004.  Going  forward we will need to
continue to upgrade our  tractor  and trailer  fleets.  We expect to pay for the
projected  capital  expenditures  with cash flows from operations and borrowings
from equipment  manufacturers  or under the financing  arrangement  with LaSalle
Bank. If we are unable to generate  sufficient  cash from  operations and obtain
financing  on  favorable  terms in the  future,  we may have to enter  into less
favorable  financing  arrangements  or operate our revenue  equipment for longer
periods,   any  of  which  could  have  a  materially   adverse  effect  on  our
profitability.

     Revenue  Equipment.  In the  short-term,  we expect the  presence  of older
equipment  which is not being  depreciated  will more than offset  increases  in
depreciation resulting from the new equipment purchases.  Over the long-term, as
we continue to upgrade our equipment  fleet, we expect  depreciation  expense to
increase.  If revenue  production  does not  increase or remains  constant,  the
increased  depreciation  could have a  materially  adverse  effect on  operating
results.

     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. We have
successfully reduced the number of company-owned tractors without drivers during
2003 by  improving  recruiting  and  retention  of drivers and by  disposing  of
unseated  equipment.   In  addition,   independent  contractors  have  decreased
industry-wide  for a variety of economic  reasons.  The  decline in  independent
contractors  has slowed  significantly  since  September  2003.  The shortage of
drivers and independent contractors has constrained revenue production.  Failure
to recruit  additional  drivers and  independent  contractors  could force us to
increase  compensation  or  limit  fleet  size,  either  of which  could  have a
materially adverse effect on operating results.

     Competition. The trucking industry is highly competitive and fragmented. We
compete 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 us. Our results
could suffer if we cannot obtain higher rates.

     Acquisitions.   In  March  2001,   we   acquired   the  assets  of  Skipper
Transportation,  Inc., a small  flatbed  carrier  headquartered  in  Birmingham,
Alabama.  This is the only acquisition we have made during the past three years.
In 2004, we hope to expand the size of our tractor fleet through the acquisition
of one identified  dedicated fleet  operation,  which will add  approximately 20
independent  contractors  during  the course of the year.  Acquisitions  involve
numerous risks,  including:  difficulties in assimilating the acquired company's
operations;   the  diversion  of  management's  attention  from  other  business
concerns;  the risks of entering into markets in which management has no or only
limited direct  experience;  and the potential loss of customers,  key employees
and  drivers of the  acquired  company,  all of which  could  have a  materially
adverse  effect  on  our  business  and  operating  results.   If  we  make  any
acquisitions  in the future,  there can be no assurance  that we will be able to
successfully integrate the acquired companies or assets into our business.

     Regulation.  The  trucking  industry  is subject  to  various  governmental
regulations. Effective January 1, 2004, the DOT established new hours of service
rules which effectively reduced the  hours-in-service  during which a driver may
operate a tractor by redefining periods of service.  The EPA has promulgated air
emission  standards that have  increased the cost of tractor  engines and reduce
fuel  mileage.  Although  we are unable to predict  the nature of any changes in
regulations,  the cost of any changes, if implemented,  may adversely affect our
profitability.  We have implemented  several steps to address asset productivity
issues caused by these  regulations.  The  predominately  flatbed  nature of our
operations,  in which more of the  freight is loaded on the  trailers  while the
driver and tractor  wait,  has caused  increased  operational  and  productivity
issues.  It is still  too  early  to  ascertain  the  ultimate  effect  of these
regulations.   However,  based  on  our  initial  experience,   our  preliminary
expectation is that for some period of

                                       22
<PAGE>
time there will be decreased productivity on at least a portion of our fleet. If
we are unable to pass these additional costs through to shippers,  our operating
results could be materially and adversely affected.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to a variety of market risks,  most  importantly the effects
of the price and availability of diesel fuel and changes in interest rates.

Commodity Price Risk

     Our operations are heavily dependent upon the use of diesel fuel. The price
and availability of diesel fuel can vary and are subject to political, economic,
and market factors that are beyond our control.  Significant increases in diesel
fuel prices could  materially and adversely affect our results of operations and
financial condition.

     We presently use fuel  surcharges  to address the risk of  increasing  fuel
prices.  We believe these fuel  surcharges are an effective  means of mitigating
the risk of  increasing  fuel  prices,  although the  competitive  nature of our
industry  prevents us from  recovering  the full amount of fuel price  increases
through the use of such surcharges.

     In the past, we have used  derivative  instruments,  including  heating oil
price  swap  agreements,  to  reduce a portion  of our  exposure  to fuel  price
fluctuations.  Since  2000 we have had no such  agreements  in place.  We do not
trade in such derivatives with the objective of earning financial gains on price
fluctuations.

Interest Rate Risk

     We also are exposed to market risks from changes in certain  interest rates
on our debt. Our financing arrangement with LaSalle Bank provides for a variable
interest rate based on LaSalle's prime rate plus two percent, provided there has
been no default.  In  addition,  approximately  $21.5  million of our other debt
carries variable  interest rates.  This variable interest exposes us to the risk
that interest rates may rise.  Assuming borrowing levels at December 31, 2003, a
one-point  increase in the prime rate would increase annual interest  expense by
approximately  $325,000.  The remainder of our other debt carries fixed interest
rates and exposes us to the risk that  interest  rates may fall. At December 31,
2003,  approximately  97% of our debt carries a variable  interest  rate and the
remainder is fixed.




                                       23
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Our audited financial statements, including our consolidated balance sheets
and consolidated statements of operations, cash flows, stockholders' equity, and
notes related thereto, are included at pages 31 to 47 of this report.

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, 2003,  involving a change of  accountants  or  disagreements  on
accounting and financial disclosure.

ITEM 9A. CONTROLS AND PROCEDURES

     As required by Rule 13a-15 under the  Exchange  Act, we have carried out an
evaluation of the  effectiveness  of the design and operation of our  disclosure
controls and  procedures  (as defined in Exchange Act Rule  13a-15(e)) as of the
end of the period covered by this report.  This evaluation was carried out under
the supervision  and with the  participation  of our  management,  including our
Chief  Executive  Officer  and our  Chief  Financial  Officer.  Based  upon that
evaluation,  our  Chief  Executive  Officer  and  our  Chief  Financial  Officer
concluded  that our  disclosure  controls and  procedures  were  effective as of
December 31, 2003.  During our fourth fiscal  quarter,  there were no changes in
our internal control over financial reporting that have materially affected,  or
that are  reasonably  likely to  materially  affect,  our internal  control over
financial reporting.  We intend to periodically evaluate our disclosure controls
and procedures as required by the Exchange Act Rules.

     Disclosure  controls and procedures are controls and other  procedures that
are  designed  to  ensure  that  information  required  to be  disclosed  in the
Company's  reports  filed or  submitted  under  the  Exchange  Act is  recorded,
processed,  summarized  and reported  within the time  periods  specified in the
Securities and Exchange  Commission's rules and forms.  Disclosure  controls and
procedures  include controls and procedures  designed to ensure that information
required to be  disclosed  in Company  reports  filed under the  Exchange Act is
accumulated  and  communicated  to  management,  including the  Company's  Chief
Executive   Officer  as  appropriate,   to  allow  timely  decisions   regarding
disclosures.

     We have confidence in our internal  controls and procedures.  Nevertheless,
our management,  including our Chief  Executive  Officer and our Chief Financial
Officer,  does not expect that our  disclosure  controls and  procedures  or our
internal  controls  will prevent all errors or  intentional  fraud.  An internal
control  system,  no matter how well  conceived and  operated,  can provide only
reasonable,  not  absolute,  assurance  that  the  objectives  of such  internal
controls are met. Further, the design of an internal control system must reflect
the fact that there are resource constraints,  and the benefits of controls must
be considered  relative to their costs.  Because of the inherent  limitations in
all internal  control  systems,  no evaluation of controls can provide  absolute
assurance  that all control  issues and instances of fraud,  if any,  within the
Company have been detected.





                                       24
<PAGE>
                                    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,"  "Corporate  Governance;  The Board of  Directors  and Its
Committees;  Committees  of the  Board  of  Directors,"  "Corporate  Governance;
Section  16(a)  Beneficial  Ownership  Reporting   Compliance,"  and  "Corporate
Governance;  Code of Ethics" in our Proxy  Statement for the 2004 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 herein by reference;
provided,  that the "Audit  Committee  Report for 2003"  contained  in the Proxy
Statement is not incorporated by reference.

ITEM 11. EXECUTIVE COMPENSATION

     The information  respecting  executive and director  compensation set forth
under the captions "Executive Compensation" and "Corporate Governance; The Board
of Directors and Its  Committees;  Board of Directors" in 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
         AND RELATED STOCKHOLDER MATTERS

     The information respecting security ownership of certain beneficial
owners and management set forth under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the Proxy Statement is incorporated herein
by reference.

     Securities  Authorized For Issuance Under Equity  Compensation  Plans.  The
following  table  provides  information  as  of  December  31,  2003,  regarding
compensation  plans under which the Company's  equity  securities are authorized
for issuance:
<TABLE>
                                         (a)                      (b)                           (c)
                               -----------------------     --------------------      -----------------------
                                                                                      Number of securities
                                                                                     remaining available for
                                                                                      future issuance under
                               Number of securities to       Weighted-average          equity compensation
                               be issued upon exercise       exercise price of          plans (excluding
                               of outstanding options,     outstanding options,      securities reflected in
                                warrants, and rights       warrants, and rights            column (a))
   Plan Category
-----------------------        -----------------------     --------------------      -----------------------
<S>                                    <C>                        <C>                          <C>
Equity compensation
plans approved by
security holders                       315,150                    $3.78                        609,850

Equity compensation
plans not approved by
security holders                        12,000                    $2.60                              0
                               -----------------------     --------------------      -----------------------
           Total                       327,150                    $3.74                        609,850
</TABLE>


                                       25
<PAGE>

     On  July  27,  2000,  we  made a  one-time  grant  to  each  of  our  three
non-employee  directors  of an option to  purchase  4,000  shares of our Class A
Common Stock. The exercise price was set at 85% of the closing price on the date
of the grant ($2.60), and the options vested immediately.  The options expire on
July 27, 2006. These grants were not subject to stockholder approval.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The information respecting accountant fees and services set forth under the
caption "Ratification of Selection of Independent Auditors; Principal Accounting
Fees and Services" in the Proxy Statement is incorporated herein by reference.

















                                       26
<PAGE>
                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)  1.  Financial Statements.

     Our audited  financial  statements are set forth at the following  pages of
this report:


Independent Auditors' Report......................... Page 31 herein
Consolidated Balance Sheets.......................... Page 32 through 33 herein
Consolidated Statements of Operations................ Page 34 herein
Consolidated Statements of  Stockholders' Equity..... Page 35 herein
Consolidated Statements of Cash Flows................ Page 36 through 37 herein
Notes to Consolidated Financial Statements........... Page 38 through 47 herein

     2.  Financial Statement Schedules.

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

     3.  Exhibits

     See list under Item 15(c) below,  with  management  compensatory  plans and
arrangements  being listed under 10.1,  10.2,  10.3, 10.5, 10.7, 10.8, 10.9, and
10.10.

(b)      Reports on Form 8-K

     During the fourth  quarter ended December 31, 2003, the Company filed with,
or furnished to, the  Securities and Exchange  Commission the following  Current
Report on Form 8-K:

     Current  Report  on Form 8-K  dated  October  24,  2003  (furnished  to the
Commission  on October 29, 2003)  regarding  the issuance of a press  release to
report the  Company's  financial  results for the quarter and nine months  ended
September 30, 2003.

(c)      Exhibits
<TABLE>
Exhibit
Number                                        Description
<S>        <C>          <C>
3.1        *            Articles of Incorporation.

3.2        #            Amended and Restated Bylaws (as in effect on March 5, 2004).

4.1        *            Articles of Incorporation.

4.2        #            Amended and Restated Bylaws (as in effect on March 5, 2004) (incorporated by reference
                        to Exhibit 3.2 filed on this Form 10-K).

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       **           1997 Profit Incentive Plan, adopted May 8, 1997.

                                       27
<PAGE>
10.8       ***          Amendment No. 2 to Smithway Motor Xpress Corp. Incentive Stock Plan, adopted May 7, 1999.

10.9       ****         Form of Outside Director Stock Option Agreement dated July 27, 2000, between Smithway
                        Motor Xpress Corp. and each of its non-employee directors.

10.10      *****        New Employee Incentive Stock Plan, adopted August 6, 2001.

10.11      *****        Amended and Restated Loan and Security Agreement dated December 28, 2001, between LaSalle
                        Bank National Association, Smithway Motor Xpress, Inc., as Borrower, and East West Motor
                        Xpress, Inc., as Borrower.

10.12      +            Third Amendment to Amended and Restated Loan and Security Agreement dated March 5, 2003,
                        between LaSalle Bank National Association, Smithway Motor Xpress, Inc., as Borrower, and
                        East West Motor Express, Inc. as Borrower.

10.13      +            Fourth Amendment to Amended and Restated Loan and Security Agreement dated March 28, 2003,
                        between LaSalle Bank National Association, Smithway Motor Xpress, Inc., as Borrower, and
                        East West Motor Express, Inc. as Borrower.

10.14      ++           Fifth Amendment to Amended and Restated Loan and Security Agreement dated April 15, 2003,
                        between LaSalle Bank National Association, Smithway Motor Xpress, Inc., as Borrower, and
                        East West Motor Express, Inc. as Borrower.

10.15      +++          Sixth Amendment to Amended and Restated Loan and Security Agreement dated July 31, 2003,
                        between LaSalle Bank National Association, Smithway Motor Xpress, Inc., as Borrower, and
                        East West Motor Express, Inc. as Borrower.

10.16      #            Seventh Amendment to Amended and Restated Loan and Security Agreement dated November 10,
                        2003, between LaSalle Bank National Association, Smithway Motor Xpress, Inc., as Borrower,
                        and East West Motor Express, Inc. as Borrower.

14         #            Code of Ethics.

21         ^            List of Subsidiaries.

23         #            Consent of KPMG LLP, independent auditors.

31.1       #            Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to
                        Section 302 of the Sarbanes-Oxley Act of 2002, by G. Larry Owens, the Company's principal
                        executive officer.

31.2       #            Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to
                        Section 302 of the Sarbanes-Oxley Act of 2002, by Douglas C. Sandvig, the Company's
                        principal financial officer.

32.1       #            Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
                        the Sarbanes-Oxley Act of 2002, by G. Larry Owens, the Company's principal executive
                        officer.

32.2       #            Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
                        the Sarbanes-Oxley Act of 2002, by Douglas C. Sandvig, the Company's principal financial
                        officer.

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

*        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 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 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

                                       28
<PAGE>
         September 30, 2000. Commission File No. 000-20793, dated November 3, 2000.

*****    Incorporated  by  reference  from the  Company's  Annual  report on Form 10-K for the  fiscal  year  ended
         December 31, 2001. Commission File No. 000-20793, dated March 28, 2002.

+        Incorporated  by reference  from the  Company's  Quarterly  Report on Form 10-Q for the period ended March
         31, 2003. Commission File No. 000-20793, dated May 13, 2003.

++       Incorporated by reference from the Company's  Quarterly  Report on Form 10-Q for the period ended June 30,
         2003. Commission File No. 000-20793, dated August 14, 2003.

+++      Incorporated  by  reference  from  the  Company's  Quarterly  Report  on Form  10-Q for the  period  ended
         September 30, 2003. Commission File No. 000-20793, dated November 13, 2003.

^        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.

#        Filed herewith.
</TABLE>








                                       29
<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 30, 2004          By:   /s/ Douglas C. Sandvig
                                 -------------------------------------------
                                 Douglas C. Sandvig
                                 Senior Vice President, Chief Financial Officer,
                                 and Treasurer


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.
<TABLE>
Signature                                                   Position                                   Date
<S>                                <C>                                                            <C>
/s/ G. Larry Owens                 President, Chief Executive Officer, and Secretary;
--------------------------         Director (principal executive office)                          March 30, 2004
G. Larry Owens

/s/ Douglas C. Sandvig             Senior Vice President, Chief Financial Officer, and
--------------------------         Treasurer (principal financial officer)                        March 30, 2004
Douglas C. Sandvig

/s/ Herbert D. Ihle                Director                                                       March 30, 2004
--------------------------
Herbert D. Ihle

/s/ Robert E. Rich                 Director                                                       March 30, 2004
--------------------------
Robert E. Rich

/s/ Terry G. Christenberry         Director                                                       March 30, 2004
--------------------------
Terry G. Christenberry

/s/ Marlys L. Smith                Director                                                       March 30, 2004
--------------------------
Marlys L. Smith
</TABLE>


                                       30
<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, 2003 and 2002, and the
related consolidated  statements of operations,  stockholders'  equity, and cash
flows for each of the years in the  three-year  period ended  December 31, 2003.
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, 2003 and 2002, and the
results  of their  operations  and their cash flows for each of the years in the
three-year  period ended  December  31,  2003,  in  conformity  with  accounting
principles generally accepted in the United States of America.



/s/ KPMG LLP

Des Moines, Iowa
February 6, 2004









                                       31

<PAGE>
                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                  (Dollars in thousands, except per share data)
<TABLE>
                                                                         December 31,
                                                         ------------------------------------------
                                                                   2002                 2003
                                                         ---------------------  -------------------
                         ASSETS
<S>                                                         <C>                  <C>
Current assets:
  Cash and cash equivalents..............................   $             105    $             355
  Receivables:
     Trade (note 4)......................................              13,496               14,231
     Other...............................................                 622                  458
     Recoverable income taxes............................                   7                    8
  Inventories............................................                 868                  882
  Deposits, primarily with insurers (note 10)............                 753                  945
  Prepaid expenses.......................................               1,492                1,037
  Deferred income taxes (note 5).........................               2,263                2,322
                                                         ---------------------  -------------------
            Total current assets.........................              19,606               20,238
                                                         ---------------------  -------------------
Property and equipment (note 4):
  Land...................................................               1,548                1,548
  Buildings and improvements.............................               8,210                8,209
  Tractors...............................................              71,221               69,384
  Trailers...............................................              42,517               39,977
  Other equipment........................................               8,105                5,516
                                                         ---------------------  -------------------
                                                                      131,601              124,634
   Less accumulated depreciation.........................              64,031               70,235
                                                         ---------------------  -------------------
            Net property and equipment...................              67,570               54,399
                                                         ---------------------  -------------------
Goodwill (note 2)........................................               1,745                1,745
Other assets.............................................                 488                  298
                                                         ---------------------  -------------------
                                                            $          89,409    $          76,680
                                                         =====================  ===================
</TABLE>






          See accompanying notes to consolidated financial statements.

                                       32
<PAGE>
                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                  (Dollars in thousands, except per share data)
<TABLE>
                                                                                             December 31,
                                                                           ---------------------------------------------
                                                                                      2002                  2003
                                                                           ---------------------- ----------------------
                   LIABILITIES AND STOCKHOLDERS' EQUITY
<S>                                                                          <C>                   <C>
Current liabilities:
  Current maturities of long-term debt (note 4)............................  $            11,595   $             10,582
  Accounts payable.........................................................                4,556                  4,827
  Accrued loss reserves (note 10)..........................................                3,882                  4,974
  Accrued compensation.....................................................                2,152                  2,535
  Checks in excess of cash balances........................................                1,086                    672
  Other accrued expenses...................................................                  463                    430
                                                                           ---------------------- ----------------------
            Total current liabilities......................................               23,734                 24,020
Long-term debt, less current maturities (note 4)...........................               30,533                 22,609
Deferred income taxes (note 5).............................................               10,257                  9,020
Line of credit (note 4)....................................................                1,692                    426
                                                                           ---------------------- ----------------------
             Total liabilities.............................................               66,216                 56,075
                                                                           ---------------------- ----------------------
Stockholders' equity (notes 6 and 7):
  Preferred stock (.01 par value; authorized 5 million shares; issued none)                    -                      -
  Common stock:
    Class A (.01 par value; authorized 20 million shares;
              issued 2002 and 2003 - 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...............................................               11,393                 11,393
  Retained earnings........................................................               12,164                  9,576
  Reacquired shares, at cost (2002 and 2003 - 189,168 shares)                              (414)                  (414)
                                                                           ---------------------- ----------------------
            Total stockholders' equity.....................................               23,193                 20,605
Commitments (note 10)
                                                                           ---------------------- ----------------------
                                                                             $            89,409   $             76,680
                                                                           ====================== ======================
</TABLE>







          See accompanying notes to consolidated financial statements.

                                       33
<PAGE>
                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                      Consolidated Statements of Operations
                  (Dollars in thousands, except per share data)
<TABLE>
                                                                          Years ended December 31,
                                                          ----------------------------------------------------------
                                                                2001                2002                2003
                                                          ------------------ ------------------- -------------------
<S>                                                       <C>                <C>                 <C>
Operating revenue:
     Freight..............................................$        190,165   $         168,918   $         164,648
     Other..............................................               661                 550                 681
                                                          ------------------ ------------------- -------------------
           Operating revenue..............................         190,826             169,468             165,329
                                                          ------------------ ------------------- -------------------
Operating expenses:
     Purchased transportation.............................          70,129              62,364              55,596
     Compensation and employee benefits...................          54,394              51,834              50,328
     Fuel, supplies, and maintenance......................          32,894              27,722              29,857
     Insurance and claims.................................           5,325               7,324               5,571
     Taxes and licenses...................................           3,817               3,444               3,444
     General and administrative...........................           8,294               7,153               6,934
     Communications and utilities.........................           2,123               1,783               1,463
     Depreciation and amortization (note 2)...............          18,778              19,725              14,239
                                                          ------------------ ------------------- -------------------
         Total operating expenses.........................         195,754             181,349             167,432
                                                          ------------------ ------------------- -------------------
         Loss from operations.............................          (4,928)            (11,881)             (2,103)
Financial (expense) income
     Interest expense.....................................          (3,052)             (1,955)             (1,781)
     Interest income......................................              48                  40                  26
                                                          ------------------ ------------------- -------------------
         Loss before income taxes.........................          (7,932)            (13,796)             (3,858)
Income tax benefit (note 5)...............................          (2,721)             (5,118)             (1,270)
                                                          ------------------ ------------------- -------------------
         Net loss.........................................$         (5,211)  $          (8,678)  $          (2,588)
                                                          ================== =================== ===================
Basic and diluted loss per share (note 8).................$          (1.07)  $           (1.79)  $           (0.53)
                                                          ================== =================== ===================
</TABLE>














          See accompanying notes to consolidated financial statements.

                                       34
<PAGE>


                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                 Consolidated Statements of Stockholders' Equity
                  Years ended December 31, 2001, 2002, and 2003
                             (Dollars in thousands)



<TABLE>
                                                              Additional                                   Total
                                                  Common       paid-in      Retained     Reacquired     stockholders'
                                                   stock       capital      earnings       shares          Equity

                                                ----------------------------------------------------------------------
<S>                                             <C>           <C>          <C>           <C>            <C>
Balance at December 31, 2000..................  $     50      $ 11,396     $  26,053     $  (266)       $   37,233
Net loss......................................         -             -        (5,211)          -            (5,211)
Treasury stock acquired (77,900 shares).......         -             -             -        (166)             (166)
Treasury stock reissued (5,516 shares)........         -            (2)            -          12                10
                                                ----------------------------------------------------------------------
Balance at December 31, 2001..................        50        11,394        20,842        (420)           31,866
Net loss......................................         -             -        (8,678)          -            (8,678)
Treasury stock reissued (2,841 shares)........         -            (1)            -           6                 5
                                                ----------------------------------------------------------------------
Balance at December 31, 2002..................        50        11,393        12,164        (414)           23,193
Net loss......................................         -             -        (2,588)          -            (2,588)
                                                ----------------------------------------------------------------------
Balance at December 31, 2003..................  $     50      $ 11,393     $   9,576     $  (414)       $   20,605
                                                ======================================================================
</TABLE>















          See accompanying notes to consolidated financial statements.

                                       35
<PAGE>
                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                             (Dollars in thousands)
<TABLE>
                                                                              Years ended December 31,
                                                                   ------------------------------------------------
                                                                        2001              2002            2003
                                                                   ---------------  --------------  ---------------
<S>                                                                 <C>              <C>             <C>
Cash flows from operating activities:
  Net loss......................................................... $     (5,211)    $    (8,678)    $     (2,588)
                                                                   ---------------  --------------  ---------------
  Adjustments to reconcile net loss to cash provided by operating
  activities:
      Depreciation and amortization................................       18,778          19,725           14,239
      Deferred income taxes (benefit)..............................         (129)         (5,142)          (1,296)
      Change in:
           Receivables.............................................        2,783           2,364             (572)
           Inventories.............................................           29             693              (14)
           Deposits, primarily with insurers.......................         (379)           (214)            (192)
           Prepaid expenses........................................           95            (566)             455
           Accounts payable and other accrued liabilities..........       (1,653)          1,087            1,713
                                                                   ---------------  --------------  ---------------
               Total adjustments...................................       19,524          17,947           14,333
                                                                   ---------------  --------------  ---------------
                 Net cash provided by operating activities.........       14,313           9,269           11,745
                                                                   ---------------  --------------  ---------------
Cash flows from investing activities:
  Payments for acquisitions........................................       (2,954)              -                -
  Purchase of property and equipment...............................       (2,537)         (1,149)            (320)
  Proceeds from sale of property and equipment.....................        1,541           4,519            3,036
  Other............................................................          (71)            (76)             190
                                                                   ---------------  --------------  ---------------
             Net cash (used in) provided by investing activities...       (4,021)          3,294            2,906
                                                                   ---------------  --------------  ---------------
Cash flows from financing activities:
   Net borrowings (repayment) on line of credit....................          585           1,107           (1,266)
   Proceeds from long-term debt....................................       24,759               -                -
   Principal payments on long-term debt............................      (35,107)        (15,378)         (12,721)
   Change in checks issued in excess of cash balances..............            -           1,086             (414)
   Treasury stock reissued.........................................           10               5                -
   Other...........................................................         (166)              -                -
                                                                   ---------------  --------------  ---------------
            Net cash used in financing activities..................       (9,919)        (13,180)         (14,401)
                                                                   ---------------  --------------  ---------------
            Net increase (decrease) in cash and cash equivalents...          373            (617)             250
Cash and cash equivalents at beginning of year.....................          349             722              105
                                                                   ---------------  --------------  ---------------
Cash and cash equivalents at end of year........................... $        722     $       105     $        355
                                                                   ===============  ==============  ===============
</TABLE>




          See accompanying notes to consolidated financial statements.

                                       36
<PAGE>

                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                             (Dollars in thousands)
<TABLE>
                                                                              Years ended December 31,
                                                                   ------------------------------------------------
                                                                        2001            2002             2003
                                                                   ---------------  --------------  ---------------
<S>                                                                 <C>              <C>              <C>
Supplemental disclosure of cash flow information:
   Cash paid (received) during year for:
          Interest................................................. $      3,075     $     2,003      $     1,746
          Income taxes.............................................         (788)         (1,790)              27
                                                                   ===============  ==============  ===============

Supplemental schedules of noncash investing and financing
activities:
   Notes payable issued for tractors and trailers.................. $      7,171     $     8,349      $     3,784
   Treasury stock reissued.........................................           10               5                -
                                                                   ===============  ==============  ===============

Cash payments for acquisitions:
   Revenue equipment............................................... $      2,088     $         -      $         -
   Intangible assets...............................................          526               -                -
   Land, buildings, and other assets...............................          340               -                -
                                                                   ---------------  --------------  ---------------
                                                                    $      2,954     $         -      $         -
                                                                   ===============  ==============  ===============
</TABLE>


















          See accompanying notes to consolidated financial statements.

                                       37
<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", "we", "us", or
"our")  is a  truckload  carrier  that  provides  nationwide  transportation  of
diversified freight, concentrating primarily in flatbed operations. We generally
operate  over   short-to-medium   traffic  routes,   serving   shippers  located
predominantly  in the central  United  States.  We also  operate in the southern
provinces  of  Canada.   Canadian   revenues,   based  on  miles  driven,   were
approximately  $649, $477, and $236 for the years ended December 31, 2001, 2002,
and 2003,  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.

Liquidity

     We incurred losses in 2001, 2002 and 2003. In addition,  working capital is
a negative  $3,782 at December 31,  2003.  We were in  compliance  with our bank
covenants at December  31, 2003,  but were out of  compliance  at various  times
during 2003.  We received  waivers for every  violation.  During 2003 there were
several amendments to the financing  arrangement.  These amendments  temporarily
increased the borrowing  base,  permanently  increased  the interest  rate,  and
revised  the  financial  covenants  to  reflect  financial  performance  that we
believed to be reasonably  achievable  and, in fact, did achieve.  We believe we
will remain in compliance with these financial covenants,  although there can be
no assurance that the required financial performance will be achieved.

     During  2003,  our  primary  sources of  liquidity  were funds  provided by
operations and borrowings under credit arrangements with financial  institutions
and equipment  manufacturers.  Our ability to fund cash  requirements  in future
periods  will  depend on our  ability  to comply  with  covenants  contained  in
financing  arrangements  and improve our  operating  results and cash flow.  Our
ability to achieve the required improvements will depend on insurance and claims
experience,   general  shipping  demand  by  our  customers,  fuel  prices,  the
availability  of drivers and  independent  contractors,  and other  factors.  We
continue to implement  our profit  improvement  plan that is intended to improve
our operating results and achieve  compliance with the financial  covenants.  We
believe we have  achieved a certain  level of success,  as our weighted  average
number of tractors  decreased  12.5% in connection  with a planned  reduction in
fleet size, while operating revenue decreased only 2.4%. In addition,  there was
a  significant  increase  in average  operating  revenue per tractor per week to
$2,577 in 2003 from $2,311 in 2002.

     Although in the first quarter of 2004 we experienced the traditional lag in
shipping  demand  for  flatbed  freight,  and  there  were  weather-related  and
hours-of-service  operational  issues, we believe that seasonal  improvements in
shipping  demand and  continued  focus on our  profit  improvement  plan  should
generate  the  required  improvements.   However,  there  is  no  assurance  the
improvements  will  occur as  planned.  Assuming  the  improvements  do occur as
planned,  we believe  there will be  sufficient  cash flow to meet our liquidity
requirements  at least  through  December  31,  2004.  To the extent that actual
results or events differ from our financial  projections or business plans,  our
liquidity  may be  adversely  affected and the Company may be unable to meet our
financial  covenants.  In such event,  our  liquidity  would be  materially  and
adversely impacted if alternative financing could not be found.

Customers

     We serve a diverse base of shippers.  No single customer accounted for more
than 10 percent of our total  operating  revenues  during any of the years ended
December  31, 2001,  2002,  and 2003.  Our 10 largest  customers  accounted  for
approximately  24  percent,  28 percent,  and 29 percent of our total  operating
revenues during 2001, 2002, and 2003, respectively. Our largest concentration of
customers  is in the steel and building  materials  industries,  which  together
accounted for approximately 42 percent, 43 percent,  and 51 percent of our total
operating revenues in 2001, 2002, and 2003, respectively.

                                       38
<PAGE>
Drivers

     We face intense industry  competition in attracting and retaining qualified
drivers and independent contractors.  This competition from time to time results
in  temporarily   idling  some  of  our  revenue  equipment  or  increasing  the
compensation we pay to our drivers and independent contractors.

Use of Estimates

     We  have  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

     We consider  interest-bearing  instruments with maturity of three months or
less at the date of purchase to be the  equivalent  of cash. We did not hold any
cash equivalents as of December 31, 2002 or 2003.

Receivables

     Trade  receivables are stated net of an allowance for doubtful  accounts of
$208 and $291 at December 31, 2002 and 2003, respectively.  We monitor and check
the  financial  status of customers  when  granting  credit.  We routinely  have
significant dollar transactions with certain customers,  however at December 31,
2002 and 2003,  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.

Prepaid Expenses

     Prepaid  expenses  consist  primarily  of prepaid  insurance  premiums  and
prepaid  licenses.  These  expenses are amortized over the remaining term of the
policy or license, which does not exceed 12 months.

Accounting for Leases

     We are 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, we are
responsible  for all repairs,  maintenance,  insurance,  and all other operating
expenses.  We are also a lessee of terminal  property  under various  short-term
operating leases.

     Rent charged to expense on the above leases, expired leases, and short-term
rentals was $1,058 in 2001;  $1,030 in 2002;  and $511 in 2003.  The decrease in
such  rentals  reflects a reduction  of leased  tractors and the closing of five
terminals in connection with our operating initiatives.

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 years  for  tractors,  7 years  for
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.  The  gain or loss on
retirement  or  sale  is  included  in  depreciation  and  amortization  in  the
consolidated statements of operations. Gains or losses on trade-ins are included
in the basis of the new asset.  During 2001,  2002, and 2003,  depreciation  and
amortization  included net gains from the sale of equipment of $187,  $792,  and
$439,  respectively.  In addition,  2001  included  $707 for the  write-off of a
proprietary  operating system, and 2002 included a $3,300 write-off for goodwill
impairment.

                                       39
<PAGE>
Impairment of Long-Lived Assets

     Long-lived assets are reviewed for impairment whenever events or changes in
circumstances  indicate  that  the  carrying  amount  of an  asset  may  not  be
recoverable.  Recoverability  of  assets  to be held and used is  measured  by a
comparison of the carrying  amount of an asset to future net  undiscounted  cash
flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceed the fair value of the assets.  Assets to be
disposed of are reported at the lower of the carrying  amount or fair value less
costs to sell.

Revenue Recognition

     We generally recognize operating revenue when the freight to be transported
has been  loaded.  We  operate  primarily  in the  short-to-medium  length  haul
category of the trucking industry;  therefore,  our 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.  We recognize  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.

Insurance and Claims

     Losses  resulting  from  personal  liability,   physical  damage,  workers'
compensation,  and cargo loss and damage are covered by  insurance  subject to a
$250 deductible,  per occurrence. We do not have excess insurance coverage above
our primary policy limit of $2,000.  Losses  resulting from uninsured claims are
recognized  when such losses are known and can be  estimated.  We  estimate  and
accrue a liability  for our 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.  These
accruals are based on our evaluation of the nature and severity of the claim and
estimates of future claims development based on historical trends. The amount of
our self-insured retention and the lack of excess coverage makes these estimates
an important accounting  judgment.  Insurance and claims expense will vary based
on the frequency and severity of claims and the premium expense.

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

     We have  adopted  the  disclosure  provisions  of  Statement  of  Financial
Accounting Standards 148, "Accounting for Stock-Based  Compensation - Transition
and  Disclosure"  (SFAS 148).  SFAS 148 amends the  disclosure  requirements  of
Statement of Financial  Accounting  Standards 123,  "Accounting  for Stock-Based
Compensation" (SFAS 123). As of December 31, 2003, we have has three stock-based
employee  compensation  plans,  which  are  described  more  fully in Note 7. We
account for these plans under the  recognition  and  measurement  principles  of
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees," and related  Interpretations.  No stock-based employee  compensation
cost is reflected in net loss,  as all options  granted under these plans had an
exercise  price equal to the market value of the common stock on the date of the
grant.

     The following  table  illustrates the effect on net loss and loss per share
if we had applied the fair value  recognition  provisions of FASB  Statement No.
123,   "Accounting  for  Stock-Based   Compensation,"  to  stock-based  employee
compensation.  We used the  Black-Scholes  option pricing model to determine the
fair value of stock options for years ended  December 31, 2001,  2002, and 2003.
The  following  assumptions  were used in  determining  the fair  value of these
options: weighted-average risk-free interest rate, 4.26% in 2001, 4.55% in 2002,
and 2.84% in

                                       40
<PAGE>
2003;  weighted-average  expected  life, 5 years in 2001, 5 years in 2002, and 5
years in 2003; and  weighted-average  expected  volatility,  60% in 2001, 61% in
2002,  and 65% in 2003.  There were no expected  dividends.  For purposes of pro
forma  disclosures,  the estimated fair value of options is amortized to expense
over  the  options'   vesting  periods  whereas  reversal  of  previous  expense
amortization  attributable  to  forfeited  options are  reflected in the year of
forfeiture.
<TABLE>
                                                 2001            2002            2003
                                              -----------     ------------    ------------
     <S>                                      <C>             <C>             <C>
     Net loss, as reported                    $  (5,211)      $   (8,678)     $   (2,588)
     Deduct:  Total stock-based
     employee compensation (expense)
     reversal determined under fair value
     based method for all awards, net of
     related tax effects                           (106)              (6)              5
                                              -----------     ------------    ------------
     Pro forma net loss                       $  (5,317)      $   (8,684)     $   (2,583)
                                              ===========     ============    ============

     Loss per share
      Basic and Diluted - as reported         $   (1.07)      $    (1.79)     $    (0.53)
      Basic and Diluted - pro forma           $   (1.10)      $    (1.79)     $    (0.53)
</TABLE>
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 we suffered a net loss for the years ended  December 31, 2001,  2002 and
2003,  the  effects  of  potential  common  shares  were  not  included  in  the
calculation as their effects would be anti-dilutive.  Stock options  outstanding
at December  31,  2001,  2002 and 2003  totaled  623,000,  384,525 and  327,150,
respectively.

Reclassifications

     Certain  2002   balances  have  been   reclassified   to  conform  to  2003
presentation.

Note 2:  Goodwill

     In 2001, the FASB issued SFAS 142, "Goodwill and Other Intangible  Assets."
SFAS 142 requires that  goodwill no longer be  amortized,  but instead be tested
for impairment at least annually.  Our initial impairment analysis at January 1,
2002 was based on an  independent  appraisal  and  indicated no  impairment.  At
December 31, 2002 we updated our impairment  analysis as required under SFAS 142
using  a  combination  of  available  market  data  for  similar  transportation
companies and an internal  update of the appraisal.  The analysis  indicated the
goodwill in one of our reporting  units was impaired,  triggered  primarily as a
result of the continued losses during 2002. We recorded an impairment  charge of
$3,300 during the fourth quarter of 2002,  which is included in depreciation and
amortization in the statement of operations and cash flows. At December 31, 2003
we  updated  our  impairment  analysis  as  required  under  SFAS  142  using an
independent appraisal. The analysis indicated no further impairment.


                                       41
<PAGE>
     The following table reflects the consolidated  results,  adjusted as though
the adoption of SFAS 142 occurred as of the beginning of the year ended December
31, 2000.
<TABLE>
(Dollars in thousands, except per share amounts)                                Years Ended December 31,
                                                                        ----------------------------------------
                                                                            2001          2002           2003
                                                                        ------------  ------------   -----------
<S>                                                                      <C>           <C>            <C>
Net loss:
    As reported                                                          $   (5,211)   $   (8,678)    $  (2,588)
    Goodwill amortization, net of tax                                           466             -             -
    Goodwill impairment charge, net of tax                                        -         2,057             -
                                                                        ------------  ------------   -----------
Adjusted net loss                                                        $   (4,745)   $   (6,621)    $  (2,588)
                                                                         ===========  ============   ===========

Loss per share - basic and diluted:
    As reported                                                          $    (1.07)   $    (1.79)    $   (0.53)
    Goodwill amortization, net of tax                                          0.09             -             -
    Goodwill impairment charge, net of tax                                        -          0.42             -
                                                                         ------------  ------------   ----------
Adjusted basic and diluted net loss per share                             $   (0.98)   $    (1.37)    $   (0.53)
                                                                         ===========  ============   ===========
</TABLE>
     A roll-forward of goodwill for the years ending December 31, is as follows:
<TABLE>
                                                                                         Years ended December 31,
                                                                                      -------------------------------
                                                                                          2002             2003
                                                                                      --------------   --------------
  <S>                                                                                   <C>              <C>
  Balance at beginning of year                                                          $     5,016      $     1,745
      Goodwill acquired                                                                           -                -
      Goodwill amortization                                                                       -                -
      Impairment charge                                                                      (3,271)               -
                                                                                      --------------   --------------
  Balance at end of year                                                                $     1,745      $     1,745
                                                                                      ==============   ==============
</TABLE>
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, 2003, the carrying amounts of cash and cash equivalents,  trade receivables,
other receivables,  line of credit,  accounts payable,  and accrued liabilities,
approximate fair value because of the short maturity of those  instruments.  The
fair value of our long-term debt, including current maturities,  was $42,150 and
$33,637 at December 31, 2002 and 2003, respectively, based upon estimated market
rates.

Note 4:  Long-Term Debt

     We have a financing arrangement with LaSalle Bank, which expires on January
1, 2005,  and provides  for  automatic  month-to-month  renewals  under  certain
conditions  after that date.  LaSalle may  terminate  the  arrangement  prior to
January 1, 2005, in the event of default,  and may  terminate at anytime  during
the renewal  terms.  At several times since the beginning of 2003, the financing
arrangement  has been  amended to provide for a  remaining  term of at least one
year.

     The agreement  provides for a term loan, a revolving line of credit,  and a
capital  expenditure  loan. The term loan has a balance of $9,660 and is payable
in 48 equal monthly  installments  of $201 in principal.  The revolving  line of
credit  allows  for  borrowings  up to 85 percent of  eligible  receivables.  At
December 31, 2003,  total  borrowings  under the revolving  line were $426.  The
capital  expenditure  loan allows for borrowing up to 80 percent of the purchase
price of revenue  equipment  purchased  with such advances  provided  borrowings
under the capital  expenditure loan are limited to $2,000  annually,  and $4,000
over the term of the agreement.  The capital  expenditure  loan has a balance of
$951 and is payable  in equal  monthly  installments  of $18 in  principal.  The
combination  of all loans with LaSalle Bank cannot exceed $25,000 or a specified
borrowing base.

     The financing arrangement also includes financing for letters of credit. At
December 31, 2003,  we had  outstanding  letters of credit  totaling  $7,874 for
self-insured amounts under our insurance programs.  (See note 10).

                                       42
<PAGE>
These  letters of credit  directly  reduce the  amount of  potential  borrowings
available  under the  financing  arrangement  discussed  above.  Any increase in
self-insured  retention,  as well as  increases in claim  reserves,  may require
additional  letters of credit to be posted,  which would  negatively  affect our
liquidity.

     At December 31, 2003, our borrowing  limit under the financing  arrangement
was $21.7 million,  leaving approximately $2.8 million in remaining availability
at such date.

     The  LaSalle  financing   arrangement   requires  compliance  with  certain
financial  covenants,  including  compliance with a minimum  tangible net worth,
capital  expenditure  limits,  and a fixed  charge  coverage  ratio.  We were in
compliance  with these  requirements  at December  31,  2003.  We believe we can
maintain compliance with all covenants throughout 2004, although there can be no
assurance that the required financial performance will be achieved.

     The weighted  average  interest  rates on debt  outstanding at December 31,
2002 and  2003  were  approximately  3.80 and  4.02  percent,  respectively.  In
connection with an early March 2003 amendment,  the interest rate on outstanding
borrowings  under the arrangement was increased from LaSalle's prime rate to the
prime  rate plus two  percent.  We are  required  to pay a  facility  fee on the
financing  arrangement of .25% of the maximum loan limit  ($25,000).  Borrowings
under  the  agreement  are  secured  by liens  on  revenue  equipment,  accounts
receivable, and certain other assets.

     Long-term debt also includes  equipment  notes with balances of $28,059 and
$22,580 at  December  31,  2002 and 2003,  respectively.  Interest  rates on the
equipment notes range from 2.21 percent to 13.02 percent with maturities through
2008. The equipment notes are  collateralized by the underlying  equipment,  and
contain a minimum tangible net worth requirement. We were in compliance with the
required  minimum  tangible net worth  requirement  for December 31, 2003 and we
expect to remain in compliance going forward.

     If we fail to maintain compliance with financial covenants in our borrowing
obligations,  or to obtain a waiver of any noncompliance,  the lenders will have
the right to declare all sums immediately due and pursue other remedies. In such
event, we believe we could renegotiate the terms of our debt or that alternative
financing would be available, although this cannot be assured..

     Future  maturities  on long-term  debt at December 31, 2003 are as follows:
2004,  $10,582;   2005,  $8,946;  2006,  $6,677;  2007,  $5,869;  2008,  $1,117;
thereafter, $0.






                                       43

<PAGE>
Note 5:  Income Taxes

     Income taxes  consisted  of the  following  components  for the three years
ended December 31:
<TABLE>
                          2001                                 2002                                2003
              ------------------------------    -----------------------------------   -------------------------------
               Federal    State     Total        Federal       State       Total       Federal    State      Total
              ---------- -------- ----------    ----------- ------------ ----------   ---------- --------- ----------
<S>            <C>        <C>      <C>           <C>          <C>        <C>          <C>         <C>      <C>
Current        $(2,541)   $ (51)   $(2,592)      $     -      $    24    $    24      $     -     $  26    $    26
Deferred          (112)     (17)      (129)       (4,147)        (995)    (5,142)      (1,045)     (251)    (1,296)
              ---------- -------- ----------    ----------- ------------ ----------   ---------- --------- ----------
               $(2,653)   $ (68)   $(2,721)      $(4,147)     $  (971)   $(5,118)     $(1,045)    $(225)   $(1,270)
              ========== ======== ==========    =========== ============ ==========   ========== ========= ==========
</TABLE>
     Total  income tax  benefit  differs  from the amount of income tax  benefit
computed by applying  the normal  United  States  federal  income tax rate of 34
percent to income  before income tax benefit.  The reasons for such  differences
are as follows:
<TABLE>
                                                                              Years ended December 31,
                                                               -------------------------------------------------------
                                                                     2001                2002                2003
                                                               ----------------    ---------------     ---------------
<S>                                                              <C>                <C>                <C>
Computed "expected" income tax benefit                           $     (2,696)      $     (4,691)       $     (1,312)
State income tax benefit, net of federal taxes                           (313)              (641)               (149)
Permanent differences, primarily nondeductible
 portion of driver per diem and  travel expenses                          288                214                 191
                                                               ----------------    ---------------     ---------------
                                                                 $     (2,721)      $     (5,118)       $     (1,270)
                                                               ================    ===============     ===============
</TABLE>
     Temporary  differences  between the financial statement basis of assets and
liabilities and the related  deferred tax assets and liabilities at December 31,
2002 and 2003, were as follows:
<TABLE>
Deferred tax assets attributable to:                                       2002               2003
                                                                     ------------------  ------------------
     <S>                                                              <C>                 <C>
     Net operating loss carryforwards                                 $         6,126     $        4,906
     Alternative minimum tax (AMT) credit carryforwards                           271                271
     Accrued expenses                                                           2,336              2,351
     Goodwill                                                                   1,265              1,031
     Other                                                                         20                 18
                                                                     ------------------  ------------------
         Total gross deferred tax assets                                       10,018              8,577
                                                                     ------------------  ------------------
Deferred tax liabilities attributable to:
     Property and equipment                                                   (18,012)           (15,275)
                                                                     ------------------- -----------------
         Net deferred tax liabilities                                 $      (  7,994)    $       (6,698)
                                                                     =================== =================
</TABLE>
     At December 31, 2003, we have net operating loss  carryforwards  for income
tax purposes of  approximately  $12,227  which are  available  to offset  future
taxable income.  These net operating losses expire during the years 2019 through
2022. The AMT credit  carryforwards are available  indefinitely to reduce future
income tax liabilities to the extent they exceed AMT liabilities.

     We have  reviewed  the  need  for a  valuation  allowance  relating  to the
deferred tax assets, and have determined that no allowance is needed. We believe
the future deductions will be realized  principally  through future reversals of
existing taxable temporary  differences,  and to a lesser extent, future taxable
income.  In  addition,  we have the ability to use  tax-planning  strategies  to
generate taxable income if necessary to realize the deferred tax assets.

Note 6:  Stockholders' Equity

     On all matters with respect to which our 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 Marlys L. Smith,
her children,  her grandchildren,  trusts for any of their benefit, and entities
wholly owned by them.

                                       44
<PAGE>
Note 7:  Stock Plans

     We have three stock-based employee compensation plans:

     (1) We have  reserved  25,000  shares of Class A common  stock for issuance
pursuant  to an outside  director  stock  option  plan.  The term of each option
granted under this plan is six years from the grant date.  Options fully vest on
the first anniversary of the grant date. The 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 we granted outside  directors 12,000 stock options in the aggregate
not covered by this plan.

     (2) We have  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.

     (3) We have  reserved  400,000  shares of Class A common stock for issuance
pursuant to a new employee  incentive stock option plan adopted during 2001. Any
shares which expire  unexercised  or are forfeited  become  available  again for
issuance  under the plan.  Under this plan, no award of incentive  stock options
may be made after August 6, 2011.

     We account for these plans under the recognition and measurement principles
of Accounting  Principles Board Opinion No. 25,  "Accounting for Stock Issued to
Employees," and related  Interpretations.  No stock-based employee  compensation
cost is reflected  in the  statement of  operations,  as all options  granted to
employees  under these plans had an exercise  price equal to the market value of
the common stock on the date of the grant.

     A summary of stock option  activity and  weighted-average  exercise  prices
follows:
<TABLE>
                                                   2001                    2002                     2003
                                          ------------------------------------------------------------------------
                                                       Exercise                Exercise                 Exercise
                                            Shares      price       Shares      price       Shares        price
                                          ------------------------------------------------------------------------
<S>                                         <C>         <C>        <C>          <C>         <C>           <C>
Outstanding at beginning of year            345,000     $5.50      623,000      $4.25       384,525       $4.66
    Granted                                 278,000      2.70       27,525       2.31        65,500        1.00
    Exercised                                     -         -            -          -             -           -
    Forfeited                                     -         -      266,000       3.47       122,875        5.14
                                          ------------------------------------------------------------------------
Outstanding at end of year                  623,000     $4.25      384,525      $4.66       327,150       $3.74
                                          ========================================================================
Options exercisable at end of year          296,400     $5.77      301,725      $5.20       255,350       $4.44
Weighted-average fair value of options
granted during the year                                 $1.49                   $1.28                     $0.56
</TABLE>
     A summary of stock options  outstanding  and exercisable as of December 31,
2003, follows:
<TABLE>
                                      Options outstanding                                Options exercisable
                   ---------------------------------------------------------      --------------------------------
 Range of exercise     Number       Weighted average      Weighted average            Number     Weighted average
      prices        outstanding  remaining life (years)    exercise price          exercisable    exercise price
----------------------------------------------------------------------------      --------------------------------
<S>                    <C>                <C>                  <C>                    <C>             <C>
$ 0.82 - $ 3.47        256,150            7.20                 $ 1.93                 184,350         $ 2.20
$ 7.23 - $ 9.50         36,000            2.08                 $ 8.56                  36,000         $ 8.56
$11.81 - $14.05         35,000            3.77                 $12.00                  35,000         $12.00
                   ---------------------------------------------------------      --------------------------------
                       327,150            6.27                 $ 3.74                 255,350         $ 4.44
                   =========================================================      ================================
</TABLE>
     We have  reserved  55,000  shares  of Class A  common  stock  for  issuance
pursuant to an independent  contractor driver bonus plan. No shares were awarded
in 2001, 2002 and 2003 under the plan.

     We also have a Class A common  stock profit  incentive  plan under which we
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. No shares were awarded
in 2001, 2002 and 2003 under the plan.

                                       45
<PAGE>
Note 8:  Loss per Share

     A summary of the basic and diluted loss per share computations is presented
below:
<TABLE>
Years ended December 31                                                  2001             2002             2003
-------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>              <C>              <C>
Net loss applicable to common stockholders                           $   (5,211)      $   (8,678)      $   (2,588)
                                                                ---------------------------------------------------
Basic weighted-average shares outstanding                             4,852,067        4,845,652        4,846,821
     Effect of dilutive stock options                                         -                -                -
                                                                ---------------------------------------------------
Diluted weighted-average shares outstanding                           4,852,067        4,845,652        4,846,821
                                                                ===================================================
Basic loss per share                                                 $    (1.07)      $    (1.79)      $    (0.53)
Diluted loss per share                                               $    (1.07)      $    (1.79)      $    (0.53)
                                                                ---------------------------------------------------
</TABLE>
Note 9:  Employees' Profit Sharing and Savings Plan

     We have 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 pre-tax compensation into the plan. Employers may make savings, matching, and
discretionary contributions,  subject to certain restrictions.  During the years
ended December 31, 2001,  2002, and 2003, we made no  contributions to the plan.
The plan owns 483,498  shares of the Company's  Class A common stock at December
31, 2003.

Note 10: Commitments and Contingent Liabilities

     Prior to July 1, 2001, our insurance policies for auto liability,  physical
damage,  and cargo  losses  involved a  deductible  of $50 per  incident and our
insurance  policy for workers'  compensation  involved a deductible  of $100 per
incident. In January 2003, we exercised an option which retroactively  increased
the  deductible  for our auto  liability  policy to $125 per  incident,  for the
policy year  beginning  July 1, 2001 through June 30,  2002,  which  reduced our
expense by $467. No changes were made to the other policies  during that period.
In  response  to  increasing  costs of  insurance  premiums,  we  increased  the
deductible for all policies to $250 per incident  beginning July 1, 2002. At the
July 1, 2003  renewal,  we  eliminated  any  coverage  over our $2.0  million of
primary  coverage and maintained the $250 per incident  deductible.  At December
31,  2002 and 2003,  we had $3,882 and  $4,974,  respectively,  accrued  for our
estimated liability for the retained portion of incurred losses related to these
policies.

     The insurance  companies require us to provide letters of credit to provide
funds for payment of the deductible  amounts.  At December 31, 2002 and 2003, we
had $7,449 and $7,874  letters of credit issued under the financing  arrangement
described in note 4. In addition,  funds totaling $654 and $812 were held by the
insurance companies as deposits at December 31, 2002 and 2003, respectively.

     Our obligations  under  non-cancelable  operating  lease  agreements are as
follows:  2004, $227; 2005, $203; 2006, $198; 2007, $198; 2008, $79,  thereafter
$77. There are no equipment re-purchase commitments or lease residual guarantees
in place on our fleet. In addition,  we have no fuel purchase  commitments as of
December 31, 2003.

     Our health  insurance  program is provided  as an employee  benefit for all
eligible  employees  and  contractors.  The plan is self funded for losses up to
$125 per covered  member.  At December 31, 2002 and 2003,  we had  approximately
$943 and $1,015,  respectively,  accrued for our estimated  liability related to
these claims.

     We are involved in certain legal actions and  proceedings  arising from the
normal course of operations.  We believe that  liability,  if any,  arising from
such legal actions and proceedings will not have a materially  adverse effect on
our financial statements.

Note 11: Transactions with Related Parties

     In August 2003, we generated  approximately $213 of cash and avoided future
premium payments by selling one of our two life insurance  policies covering our
late Chief Executive  Officer to such officer for the cash surrender  value. The
transferred  policy has a death benefit of $1,000 and the policy  retained by us
has a death benefit of $750. The transaction  was approved by the  disinterested
directors.  During the years ended  December  31,  2001,  and 2002 there were no
material transactions with related parties.

                                       46
<PAGE>


Note 12: Quarterly Financial Data (Unaudited)

     Summarized quarterly financial data for the Company for 2002 and 2003 is as
follows:
<TABLE>
                                                  March 31         June 30       September 30      December 31
                                           ---------------------------------------------------------------------
<S>                                               <C>              <C>              <C>              <C>
2002
Operating revenue                                 $41,220          $45,239          $43,272          $39,737
Loss from operations                               (2,700)          (1,263)            (648)          (7,270)  (1)
Net loss                                           (2,037)          (1,161)            (757)          (4,723)  (1)
Basic and diluted loss per share                   ($0.42)          ($0.24)          ($0.16)          ($0.97)

2003
Operating revenue                                 $39,886          $42,241          $42,461          $40,741
Earnings (loss) from operations                    (2,023)            (183)              31               72
Net loss                                           (1,558)            (458)            (305)            (268)
Basic and diluted loss per share                   ($0.32)          ($0.09)          ($0.06)          ($0.06)
</TABLE>
---------------------------
(1)  Fourth  quarter  2002  includes a charge of $3,271  ($1,998  after tax) for
     impairment of goodwill in one of our reporting units as discussed in note 2
     and a charge of $1,800  ($1,100  after  tax) for a  revision  of  estimates
     related to auto liability and workers' compensation loss reserves.

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





















                                       47