<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004

                                       OR

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

For the transition period from ______________ to ____________________

COMMISSION FILE NUMBER 000-20793

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

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

          2031 QUAIL AVENUE

           FORT DODGE, IOWA                               50501
---------------------------------------                ------------
(Address of Principal Executive Offices)                (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:  515/576-7418

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

As of July 30, 2004, the registrant had 3,848,821 shares of Class A Common Stock
and 1,000,000 shares of Class B Common Stock outstanding.

                                       1
<PAGE>

<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                       NUMBER
<S>                                                                                    <C>
                                           PART I
                                   FINANCIAL INFORMATION

Item 1    Financial Statements                                                           3-8

          Condensed Consolidated Balance Sheets as of December 31, 2003 and
                 June 30, 2004  (unaudited)........................................      3-4

          Condensed Consolidated Statements of Operations for the three and six
                 months ended June 30, 2003 and 2004 (unaudited)...................       5

          Condensed Consolidated Statements of Cash Flows for the six
                 months ended June 30, 2003 and 2004 (unaudited)...................       6

          Notes to Condensed Consolidated Financial Statements (unaudited).........      7-8

Item 2    Management's Discussion and Analysis of Financial Condition and
                 Results of Operations.............................................     9-18

Item 3    Quantitative and Qualitative Disclosures About Market Risks..............      18

Item 4    Controls and Procedures..................................................      19

                                           PART II
                                      OTHER INFORMATION

Item 1    Legal Proceedings........................................................      19

Item 2    Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
          Securities...............................................................      19

Item 3    Defaults Upon Senior Securities..........................................      19

Item 4    Submission of Matters to a Vote of Security Holders......................      20

Item 5    Other Information........................................................      20

Item 6    Exhibits and Reports on Form 8-K.........................................      20
</TABLE>

                                        2
<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets
                  (Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                         DECEMBER 31,    JUNE 30,
                                             2003          2004
                                         ------------   ----------
                                                        (unaudited)
<S>                                      <C>            <C>
                ASSETS
Current assets:
  Cash and cash equivalents ..........    $      355    $    2,913
  Receivables:
     Trade ...........................        14,231        17,032
     Other ...........................           458           887
     Recoverable income taxes ........             8             -
  Inventories ........................           882         1,096
  Deposits, primarily with insurers ..           945           924
  Prepaid expenses ...................         1,037           746
  Deferred income taxes ..............         2,322         2,737
                                          ----------    ----------
       Total current assets ..........        20,238        26,335
                                          ----------    ----------
Property and equipment:
  Land ...............................         1,548         1,438
  Buildings and improvements .........         8,209         7,793
  Tractors ...........................        69,384        71,618
  Trailers ...........................        39,977        38,235
  Other equipment ....................         5,516         5,488
                                          ----------    ----------
                                             124,634       124,572
  Less accumulated depreciation ......        70,235        68,984
                                          ----------    ----------
       Net property and equipment ....        54,399        55,588
                                          ----------    ----------
Goodwill .............................         1,745         1,745
Other assets .........................           298           270
                                          ----------    ----------
                                          $   76,680    $   83,938
                                          ==========    ==========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>

                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets
                  (Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                              DECEMBER 31,     JUNE 30,
                                                  2003           2004
                                              ------------    ----------
<S>                                           <C>             <C>
                                                             (unaudited)
   LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current maturities of long-term debt ....    $   10,582     $   11,323
  Accounts payable ........................         4,827          6,294
  Accrued loss reserves ...................         4,974          5,971
  Accrued compensation ....................         2,535          3,765
  Checks in excess of cash balances .......           672              -
  Other accrued expenses ..................           430            488
  Income taxes payable ....................             -             35
                                               ----------     ----------
            Total current liabilities .....        24,020         27,876
Long-term debt, less current maturities ...        22,609         24,577
Deferred income taxes .....................         9,020          9,875
Line of credit ............................           426              -
                                               ----------     ----------
            Total liabilities .............        56,075         62,328
                                               ----------     ----------
Stockholders' equity:
  Preferred stock .........................             -              -
  Common stock:
     Class A ..............................            40             40
     Class B ..............................            10             10
  Additional paid-in capital ..............        11,393         11,393
  Retained earnings .......................         9,576         10,576
  Reacquired shares, at cost ..............          (414)          (409)
                                               ----------     ----------
            Total stockholders' equity ....        20,605         21,610
Commitments
                                               ----------     ----------
                                               $   76,680     $   83,938
                                               ==========     ==========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED                 SIX MONTHS ENDED
                                                                JUNE 30,                          JUNE 30,
                                                     -----------------------------     -----------------------------
                                                         2003             2004             2003             2004
                                                     ------------     ------------     ------------     ------------
<S>                                                  <C>              <C>              <C>              <C>
Operating revenue:
     Freight ....................................    $     42,075     $     46,461     $     81,731     $     89,869
     Other ......................................             166              218              396              410
                                                     ------------     ------------     ------------     ------------
           Operating revenue ....................          42,241           46,679           82,127           90,279
                                                     ------------     ------------     ------------     ------------
Operating expenses:
     Purchased transportation ...................          14,344           15,181           28,699           29,259
     Compensation and employee benefits .........          12,653           12,984           25,027           26,408
     Fuel, supplies, and maintenance ............           7,094            8,984           14,931           17,642
     Insurance and claims .......................           1,476            1,467            2,498            2,957
     Taxes and licenses .........................             839              991            1,680            1,872
     General and administrative .................           1,856            1,712            3,214            3,434
     Communications and utilities ...............             381              314              793              680
     Depreciation and amortization ..............           3,781            3,315            7,491            6,492
                                                     ------------     ------------     ------------     ------------
           Total operating expenses .............          42,424           44,948           84,333           88,744
                                                     ------------     ------------     ------------     ------------
         (Loss) earnings from operations ........            (183)           1,731           (2,206)           1,535
Financial (expense) income
     Interest expense ...........................            (496)            (390)            (946)            (763)
     Interest income ............................               2                6                4               10
     Other income ...............................               -                -                -              727
                                                     ------------     ------------     ------------     ------------
         (Loss) earnings before income taxes ....            (677)           1,347           (3,148)           1,509
Income tax (benefit) expense ....................            (219)             682           (1,132)             509
                                                     ------------     ------------     ------------     ------------
           Net (loss) earnings ..................    $       (458)    $        665     $     (2,016)    $      1,000
                                                     ------------     ------------     ------------     ------------
Basic (loss) earnings per share .................    $      (0.09)    $       0.14     $      (0.42)    $       0.21
                                                     ============     ============     ============     ============
Diluted (loss) earnings per share ...............    $      (0.09)    $       0.13     $      (0.42)    $       0.20
                                                     ============     ============     ============     ============
Basic weighted average shares outstanding .......       4,846,821        4,847,173        4,846,821        4,846,997
Diluted weighted average shares outstanding .....       4,846,821        4,938,463        4,846,821        4,926,214
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>

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

<TABLE>
<CAPTION>
                                                                   SIX MONTHS ENDED
                                                                       JUNE 30,
                                                                 ---------------------
                                                                   2003         2004
                                                                 --------     --------
<S>                                                              <C>          <C>
Cash flows from operating activities:
  Net (loss) earnings .......................................    $ (2,016)    $  1,000
                                                                 --------     --------
  Adjustments to reconcile net (loss) earnings to cash
  provided by operating  activities:
    Depreciation and amortization ...........................       7,491        6,492
    Deferred income tax (benefit) expense ...................      (1,152)         440
    Change in:
       Receivables ..........................................      (2,720)      (3,187)
       Inventories ..........................................        (127)        (214)
       Deposits, primarily with insurers ....................         (96)          21
       Prepaid expenses .....................................          50          291
       Accounts payable and other accrued liabilities .......       2,615        3,753
                                                                 --------     --------
         Total adjustments ..................................       6,061        7,596
                                                                 --------     --------
           Net cash provided by operating activities ........       4,045        8,596
                                                                 --------     --------
Cash flows from investing activities:
  Purchase of property and equipment ........................        (271)        (440)
  Proceeds from sale of property and equipment ..............       2,231        1,833
  Other .....................................................          52           28
                                                                 --------     --------
           Net cash provided by investing activities ........       2,012        1,421
                                                                 --------     --------
Cash flows from financing activities:
  Net borrowings (payments) on line of credit ...............         927         (426)
  Principal payments on long-term debt ......................      (6,545)      (6,366)
  Change in checks issued in excess of cash balances ........        (195)        (672)
  Treasury stock reissued ...................................           -            5
                                                                 --------     --------
           Net cash used in financing activities ............      (5,813)      (7,459)
                                                                 --------     --------
           Net increase in cash and cash equivalents ........         244        2,558
Cash and cash equivalents at beginning of period ............         105          355
                                                                 --------     --------
Cash and cash equivalents at end of period ..................    $    349     $  2,913
                                                                 ========     ========
Supplemental disclosure of cash flow information:
  Cash paid during period for:
     Interest ...............................................    $    894     $    784
     Income taxes ...........................................          15           25
                                                                 ========     ========
Supplemental schedules of noncash investing and financing
activities:
  Notes payable issued for tractors and trailers ............    $  2,904     $  9,075
                                                                 ========     ========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       6
<PAGE>

                  SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1. BASIS OF PRESENTATION

      The condensed consolidated financial statements include the accounts of
      Smithway Motor Xpress Corp., a Nevada holding company, and its four wholly
      owned subsidiaries (the "Company", "we", "us", or "our"). All significant
      intercompany balances and transactions have been eliminated in
      consolidation.

      The condensed consolidated financial statements have been prepared,
      without audit, in accordance with accounting principles generally accepted
      in the United States of America, pursuant to the published rules and
      regulations of the Securities and Exchange Commission. In our opinion, the
      accompanying condensed consolidated financial statements include all
      adjustments which are necessary for a fair presentation of the results for
      the interim periods presented, such adjustments being of a normal
      recurring nature. Certain information and footnote disclosures have been
      condensed or omitted pursuant to such rules and regulations. The December
      31, 2003, Condensed Consolidated Balance Sheet was derived from our
      audited balance sheet as of that date. It is suggested that these
      condensed consolidated financial statements and notes thereto be read in
      conjunction with the consolidated financial statements and notes thereto
      included in our Form 10-K for the year ended December 31, 2003. Results of
      operations in interim periods are not necessarily indicative of results to
      be expected for a full year.

NOTE 2. LIQUIDITY

      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 June 30, 2005. To the
      extent that actual results or events differ from our financial projections
      or business plans, our liquidity may be adversely affected. Specifically,
      our liquidity may be adversely affected by one or more of the following
      factors: a decrease in freight demand or a loss in customer relationships
      or volume; the ability to attract and retain sufficient numbers of
      qualified drivers and owner-operators; elevated fuel prices and the
      ability to collect fuel surcharges; costs associated with insurance and
      claims; increased exposure with respect to accident claims as a result of
      a reduction of our excess insurance coverage limit; inability to maintain
      compliance with, or negotiate amendments to, loan covenants; and the
      possibility of shortened payment terms by our suppliers and vendors
      worried about our ability to meet payment obligations. We expect to fund
      our cash requirements primarily with cash generated from operations and
      revolving borrowings under our bank financing arrangement. At June 30,
      2004, our borrowing availability under the financing arrangement was
      approximately $5.1 million.

NOTE 3. 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 quarters. 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 quarter
      and six months ended June 30, 2003, the effects of potential common shares
      were not included in the calculation for that period as their effects
      would be anti-dilutive. Stock options outstanding at June 30, 2003, and
      2004, totaled 303,150 and 305,650, respectively.

NOTE 4. STOCK OPTION 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 shall be six years from the grant date. Options 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.

                                       7
<PAGE>

            (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 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 issued. The following assumptions were used in determining the
fair value of options granted during the second quarter of 2004: weighted
average risk-free interest rate, 3.23%; weighted average expected life, 3 years;
and weighted average expected volatility, 69%. There were no expected dividends.
There were no stock options granted during the second quarter of 2003. There
were no stock options granted during the first quarter of 2004. The following
assumptions were used in determining the fair value of options granted during
the first quarter of 2003: weighted average risk-free interest rate, 2.54%;
weighted average expected life, 5 years; and weighted average expected
volatility, 66%. 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.

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED             SIX MONTHS ENDED
                                                               JUNE 30,                       JUNE 30,
                                                       -------------------------     -------------------------
                                                          2003           2004           2003           2004
                                                       ----------     ----------     ----------     ----------
<S>                                                    <C>            <C>            <C>            <C>
Net (loss) earnings, as reported                       $     (458)    $      665     $   (2,016)    $    1,000
Deduct: Total stock-based employee compensation
   expense determined under fair value based method
   for all awards, net of related tax effects                  (4)            (4)            (9)    $       (7)
                                                       ----------     ----------     ----------     ----------
Pro forma net (loss) earnings                          $     (462)    $      661     $   (2,025)    $      993
                                                       ==========     ==========     ==========     ==========

Basic (loss) earnings per share   - as reported        $    (0.09)    $     0.14     $    (0.42)    $     0.21
                                  - pro forma          $    (0.09)    $     0.14     $    (0.42)    $     0.21

Diluted (loss) earnings per share - as reported        $    (0.09)    $     0.13     $    (0.42)    $     0.20
                                  - pro forma          $    (0.09)    $     0.13     $    (0.42)    $     0.20
</TABLE>

NOTE 5.  LONG-TERM DEBT

      During April 2004, we amended our financing arrangement with LaSalle Bank
      solely to extend the maturity date from January 1, 2005 to January 1,
      2006.

      During July 2004, we amended our financing arrangement with LaSalle Bank
      to reduce the interest rate on the debt and to reduce our total credit
      limit to $20 million. The reduction of the credit limit allows us to avoid
      fees related to the unused and unnecessary portion of credit available
      under the arrangement.

                                       8
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

INTRODUCTION

      Except for the historical information contained herein, the discussion in
this quarterly report on Form 10-Q contains forward-looking statements that
involve risk, assumptions, and uncertainties that are difficult to predict.
Words such as "anticipates," "believes," "estimates," "projects," "expects,"
variations of these words, and similar expressions, are intended to identify
such forward-looking statements. These statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. Such
statements are based upon the current beliefs and expectations of the Company's
management and are subject to significant risks and uncertainties. Actual
results may differ from those set forth in forward-looking statements. The
following factors, among others, could cause actual results to differ materially
from those in forward-looking statements: failure to sustain the recent return
to quarterly operating profitability, which could result in violation of bank
covenants and acceleration of indebtedness at several financial institutions;
the ability to obtain financing on acceptable terms, and obtain waivers and
amendments to current financing in the event of default; economic recessions or
downturns in customers' business cycles; increases or rapid fluctuations in
inflation, interest rates, fuel prices, and fuel hedging; the availability and
costs of attracting and retaining qualified drivers and owner-operators;
increases in insurance premiums and deductible amounts, or changes in excess
coverage, relating to accident, cargo, workers' compensation, health, and other
claims; the resale value of used equipment and prices of new equipment; seasonal
factors such as harsh weather conditions that increase operating costs;
regulatory requirements that increase costs and decrease efficiency, including
emissions standards and hours-of-service regulations; changes in management;
excessive increases in capacity within truckload markets; surplus inventories;
decreased demand for transportation services offered by the Company; and the
ability to negotiate, consummate, and integrate acquisitions. Readers should
review and consider the various disclosures made by the Company in its press
releases, stockholder reports, and public filings, as well as the factors
explained in greater detail in the Company's annual report on Form 10-K.

      The Company's fiscal year ends on December 31 of each year. Thus, this
report discusses the second quarter and first six months of our 2003 and 2004
fiscal years.

      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.

      During the second quarter of 2004, our average revenue per tractor per
week (excluding fuel surcharge, brokerage, and other revenues) increased to
$2,803 from $2,381 in the second quarter of 2003. We are encouraged by this
improvement and by the fact that our operating revenue increased $4.4 million
(10.5%), while weighted average tractors decreased 8.1% to 1,155 in the 2004
quarter from 1,257 in the 2003 quarter. 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 improved.

      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.

                                       9
<PAGE>

      For the three months ended June 30, 2004, operating revenue increased
10.5% to $46.7 million from $42.2 million during the same quarter in 2003. Net
earnings was $665,000, or $0.14 per basic share and $0.13 per diluted share,
compared with net loss of $458,000, or ($0.09) per basic and diluted share,
during the 2003 quarter.

      For the six months ended June 30, 2004, operating revenue increased 9.9%
to $90.3 million from $82.1 million during the same period in 2003. Net earnings
was $1,000, or $0.21 per basic share and $0.20 per diluted share, compared with
net loss of $2.0 million, or ($0.42) per basic and diluted share, during the
first six months of 2003. However, during the first quarter of 2004 we recorded
$727,000 of income from life insurance resulting from the death of William G.
Smith, our former President and Chief Executive Officer. This non operating
income is tax exempt and added $0.15 to our earnings per share for the first six
months of 2004. This is a one time event which will not recur in the future.
Without the life insurance proceeds, our net earnings would have been $273,000,
or $0.06 per basic share and diluted share, during the 2004 period, compared
with net loss of $2.0 million, or ($0.42) per basic and diluted share, during
the 2003 period. Our net earnings and earnings per share as adjusted to exclude
the life insurance proceeds are not in accordance with, or an alternative for,
generally accepted accounting principles. We believe that the presentation of
net earnings and the related per share amount excluding the one-time effect of
these life insurance proceeds provides useful information to investors regarding
business trends relating to our financial condition and results of ongoing
operations.

RESULTS OF OPERATIONS

      The following table sets forth the percentage relationship of certain
items to revenue for the three and six months ended June 30, 2003 and 2004:

<TABLE>
<CAPTION>
                                                   THREE MONTHS ENDED       SIX MONTHS ENDED
                                                        JUNE 30,                JUNE 30,
                                                   ------------------      ------------------
                                                    2003        2004        2003        2004
                                                   ------      ------      ------      ------
<S>                                                <C>         <C>         <C>         <C>
Operating revenue .............................     100.0%      100.0%      100.0%      100.0%
Operating expenses:
         Purchased transportation .............      34.0        32.5        34.9        32.4
         Compensation and employee benefits ...      30.0        27.8        30.5        29.3
         Fuel, supplies, and maintenance ......      16.8        19.2        18.2        19.5
         Insurance and claims .................       3.5         3.1         3.0         3.3
         Taxes and licenses ...................       2.0         2.1         2.0         2.1
         General and administrative ...........       4.4         3.7         3.9         3.8
         Communication and utilities ..........       0.9         0.7         1.0         0.8
         Depreciation and amortization ........       9.0         7.1         9.1         7.2
                                                   ------      ------      ------      ------
         Total operating expenses .............     100.4        96.3       102.7        98.3
                                                   ------      ------      ------      ------
(Loss) earnings from operations ...............      (0.4)        3.7        (2.7)        1.7
Interest expense, net .........................      (1.2)       (0.8)       (1.2)       (0.8)
Life insurance proceeds .......................         -           -           -         0.8
                                                   ------      ------      ------      ------
(Loss) earnings before income taxes ...........      (1.6)        2.9        (3.8)        1.7
Income tax (benefit) expense ..................      (0.5)        1.5        (1.4)        0.6
                                                   ------      ------      ------      ------
Net (loss) earnings ...........................      (1.1)%       1.4%       (2.5)%       1.1%
                                                   ======      ======      ======      ======
</TABLE>

COMPARISON OF THREE MONTHS ENDED JUNE 30, 2004, WITH THREE MONTHS ENDED JUNE 30,
2003.

      Operating revenue increased $4.4 million (10.5%), to $46.7 million in the
2004 quarter from $42.2 million in the 2003 quarter. The increase in operating
revenue resulted from increased average operating revenue per tractor per week
offset partially by a reduction in our weighted average tractors.

      Average operating revenue per tractor per week, one measure of asset
productivity, increased significantly to $3,109 in the 2004 quarter from $2,585
in the 2003 quarter. 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 $2,803 in the 2004 quarter
from $2,381 in the 2003 quarter, primarily due to increased production from our
seated equipment and a lower number of unseated company tractors. Revenue per
loaded mile (excluding fuel surcharge, brokerage, and other revenue) increased
nine cents to $1.46 in the 2004 quarter from $1.37 in the 2003 quarter,
reflecting improved lane and customer selection, increased trucking demand, and
improved general economic conditions. Fuel

                                       10
<PAGE>

surcharge revenue increased $1.2 million to $2.7 million in the 2004 quarter
from $1.4 million in the 2003 quarter. During the second quarter of 2004 and
2003, approximately $1.8 million and $1.0 million, respectively, of the fuel
surcharge revenue collected helped to offset our fuel costs. The remainder was
passed through to independent contractors.

      Our weighted average tractors decreased to 1,155 in the 2004 quarter from
1,257 in the 2003 quarter. This reflects our planned reduction in fleet size
during 2003 which reduced the number of unmanned company-owned tractors. 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 8.1% while operating revenue increased 10.5%.

      Purchased transportation consists primarily of payments to independent
contractor providers of revenue equipment, expenses related to brokerage
activities, and payments under operating leases of revenue equipment. Purchased
transportation increased $837,000 (5.8%), to $15.2 million in the 2004 quarter
from $14.3 million in the 2003 quarter. As a percentage of revenue, purchased
transportation decreased to 32.5% in the 2004 quarter from 34.0% in the 2003
quarter. 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 34.7% in the 2004 quarter from 36.5% in the 2003 quarter. 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 have improved.

      Compensation and employee benefits increased $331,000 (2.6%), to $13.0
million in the 2004 quarter from $12.7 million in the 2003 quarter. As a
percentage of revenue, compensation and employee benefits decreased to 27.8% in
the 2004 quarter from 30.0% in the 2003 quarter. This reflects an increase in
our rate per loaded mile which increases revenue without a corresponding
increase in wages and a $60,000 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. Although compensation and employee
benefits expense decreased as a percentage of revenue, the market for recruiting
drivers became increasingly challenging in the first and second quarter of 2004.
In order to increase our ability to compete for new drivers, and to retain
current drivers, we will increase drivers' wages effective August 1, 2004 by
approximately two cents per mile. We expect continuing freight rate increases
and reduction of unfilled units to offset the additional expense related to this
increase. If we experience a shortage of drivers in the near future, the
increase in driver pay would negatively impact our results of operations to the
extent that corresponding freight rate increases are not obtained.

      Fuel, supplies, and maintenance increased $1.9 million (26.6%), to $9.0
million in the 2004 quarter from $7.1 million in the 2003 quarter. As a
percentage of revenue, fuel, supplies, and maintenance increased to 19.2% of
revenue in the 2004 quarter compared with 16.8% in the 2003 quarter. This
reflects higher fuel prices and an increase in the percentage of the fleet
comprised of company-owned tractors, partially offset by an increase in our rate
per loaded mile which increases revenue without a corresponding increase in
maintenance costs. Fuel prices increased approximately 19% to an average of
$1.63 per gallon in the 2004 quarter from $1.37 per gallon in the 2003 quarter.
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 continue to replace older equipment as
part of the second phase of our profit improvement plan.

      Insurance and claims decreased $9,000 (0.6%) to $1.5 million compared with
the 2003 quarter. As a percentage of revenue, insurance and claims decreased to
3.1% of revenue in the 2004 quarter compared with 3.5% in the 2003 quarter.
Higher premiums and claims were offset by the elimination of premiums for excess
insurance coverage which we discontinued in July 2003, due to our financial
condition and the rising cost of insurance, leaving $2 million of primary
coverage with a $250,000 self-insured retention. 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 were renewed on July 1, 2004
resulting in no changes in our self-insured retention level or our excess
insurance coverage limit.

                                       11
<PAGE>

      Taxes and licenses increased $152,000 (18.1%) to $991,000 in the 2004
quarter from $839,000 in the 2003 quarter. 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 and other permits. As a percentage
of revenue, taxes and licenses remained relatively constant at 2.1% of revenue
in the 2004 quarter compared with 2.0% of revenue in the 2003 quarter.

      General and administrative expenses decreased $144,000 (7.8%), to $1.7
million in the 2004 quarter from $1.9 million in the 2003 quarter. As a
percentage of revenue, general and administrative expenses decreased to 3.7% in
the 2004 quarter from 4.4% in the 2003 quarter, reflecting lower legal and
consulting fees partially offset by higher advertising expense.

      Communications and utilities decreased $67,000 (17.6%), to $314,000 in the
2004 quarter from $381,000 in the 2003 quarter, reflecting a decrease in our
weighted average tractors. As a percentage of revenue, communications and
utilities decreased to 0.7% of revenue in the 2004 quarter from 0.9% of revenue
in the 2003 quarter.

      Depreciation and amortization decreased $466,000 (12.3%), to $3.3 million
in the 2004 quarter from $3.8 million in the 2003 quarter. In accordance with
industry practices, the gain or loss on retirement, sale, or write-down of
equipment is included in depreciation and amortization. In the 2004 and 2003
quarter, depreciation and amortization included net gains from the sale of
equipment of $33,000 and $69,000, respectively. As a percentage of revenue,
depreciation and amortization decreased to 7.1% of revenue in the 2004 quarter
compared with 9.0% in the 2003 quarter, partly due to increased average revenue
per tractor and reduction of unseated tractors, which more efficiently spreads
depreciation expense. Additionally, 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 or rent expense to increase.

      Interest expense, net, decreased $110,000 (22.3%), to $384,000 in the 2004
quarter from $494,000 in the 2003 quarter. This decrease was attributable to
lower average debt outstanding, partially offset by higher interest rates. As a
percentage of revenue, interest expense, net, decreased to 0.8% of revenue in
the 2004 quarter compared with 1.2% in the 2003 quarter.

      As a result of the foregoing, our pre-tax margin increased to 2.9% in the
2004 quarter from (1.6%) in the 2003 quarter.

      Our income tax expense in the 2004 quarter was $682,000, or 50.6% of
earnings before income taxes. Our income tax benefit in the 2003 quarter was
$219,000, or 32.3% 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 earnings or loss.

      As a result of the factors described above, net earnings was $665,000 in
the 2004 quarter (1.4% of revenue), compared with net loss of $458,000 in the
2003 quarter (1.1% of revenue). In addition, our operating ratio (operating
expenses as a percentage of operating revenue) was 96.3% during the second
quarter of 2004 as compared with 100.4% during the second quarter of 2003.

COMPARISON OF SIX MONTHS ENDED JUNE 30, 2004, WITH SIX MONTHS ENDED JUNE 30,
2003.

      Operating revenue increased $8.2 million (9.9%), to $90.3 million in the
first six months of 2004 (the 2004 period) from $82.1 million in the first six
months of 2003 (the 2003 period). The increase in operating revenue resulted
from increased average operating revenue per tractor per week offset partially
by a reduction in our weighted average tractors.

      Average operating revenue per tractor per week, one measure of asset
productivity, increased significantly to $2,975 in the 2004 period from $2,485
in the 2003 period. 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 $2,700 in the 2004 period
from $2,274 in the 2003 period, primarily due to increased production from our
seated equipment and a lower number of unseated company tractors. Revenue per
loaded mile (excluding fuel surcharge,

                                       12
<PAGE>

brokerage, and other revenue) increased seven cents to $1.43 in the 2004 period
from $1.36 in the 2003 period, reflecting improved lane and customer selection,
increased trucking demand, and improved general economic conditions. Fuel
surcharge revenue increased $1.3 million to $4.5 million in the 2004 period from
$3.2 million in the 2003 period. During the first six months of 2004 and 2003,
approximately $3.0 million and $2.1 million, respectively, of the fuel surcharge
revenue collected helped to offset our fuel costs. The remainder was passed
through to independent contractors.

      Our weighted average tractors decreased to 1,167 in the 2004 period from
1,271 in the 2003 period. This reflects our planned reduction in fleet size
during 2003 which reduced the number of unmanned company-owned tractors. 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 8.2% while operating revenue increased 9.9%.

      Purchased transportation consists primarily of payments to independent
contractor providers of revenue equipment, expenses related to brokerage
activities, and payments under operating leases of revenue equipment. Purchased
transportation increased $560,000 (2.0%), to $29.3 million in the 2004 period
from $28.7 million in the 2003 period. As a percentage of revenue, purchased
transportation decreased to 32.4% in the 2004 period from 34.9% in the 2003
period. 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 34.4% in the 2004 period from 37.3% in the 2003 period. 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 have improved.

      Compensation and employee benefits increased $1.4 million (5.5%), to $26.4
million in the 2004 period from $25.0 million in the 2003 period. As a
percentage of revenue, compensation and employee benefits decreased to 29.3% in
the 2004 period from 30.5% in the 2003 period. This reflects an increase in our
rate per loaded mile which increases revenue without a corresponding increase in
wages and a $222,000 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. Although compensation and employee benefits
expense decreased as a percentage of revenue, the market for recruiting drivers
became increasingly challenging in the first six months of 2004. In order to
increase our ability to compete for new drivers, and to retain current drivers,
we will increase drivers' wages effective August 1, 2004 by approximately two
cents per mile. We expect continuing freight rate increases and reduction of
unfilled units to offset the additional expense related to this increase. If we
experience a shortage of drivers in the near future, the increase in driver pay
would negatively impact our results of operations to the extent that
corresponding freight rate increases are not obtained.

      Fuel, supplies, and maintenance increased $2.7 million (18.2%), to $17.6
million in the 2004 period from $14.9 million in the 2003 period. As a
percentage of revenue, fuel, supplies, and maintenance increased to 19.5% of
revenue in the 2004 period compared with 18.2% in the 2003 period. This reflects
higher fuel prices and an increase in the percentage of the fleet comprised of
company-owned tractors, partially offset by an increase in our rate per loaded
mile which increases revenue without a corresponding increase in maintenance
costs. Fuel prices increased approximately 8% to an average of $1.57 per gallon
in the 2004 period from $1.45 per gallon in the 2003 period. 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 continue to replace older equipment as part of the second
phase of our profit improvement plan.

      Insurance and claims increased $459,000 (18.4%), to $3.0 million in the
2004 period from $2.5 million in the 2003 period. As a percentage of revenue,
insurance and claims increased to 3.3% of revenue in the 2004 period compared
with 3.0% in the 2003 period. During the first period of 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. This did not recur in the first period of 2004.
Generally higher insurance premiums and claims were offset by the elimination of
premiums for excess insurance coverage which we discontinued in July 2003, due
to our financial condition and the rising cost of insurance, leaving $2 million
of primary coverage with a $250,000 self-insured retention. 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

                                       13
<PAGE>

effect. The insurance policies were renewed on July 1, 2004 resulting in no
changes in our self-insured retention level or our excess insurance coverage
limit.

      Taxes and licenses increased $192,000 (11.4%) to $1.9 million in the 2004
period from $1.7 million in the 2003 period. 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
the 2004 period compared with 2.0% of revenue in the 2003 period.

      General and administrative expenses increased $220,000 (6.8%), to $3.4
million in the 2004 period from $3.2 million in the 2003 period. As a percentage
of revenue, general and administrative expenses remained relatively constant at
3.8% in the 2004 period compared with 3.9% in the 2003 period.

      Communications and utilities decreased $113,000 (14.2%), to $680,000 in
the 2004 period from $793,000 in the 2003 period, reflecting a decrease in our
weighted average tractors. As a percentage of revenue, communications and
utilities decreased to 0.8% of revenue in the 2004 period from 1.0% of revenue
in the 2003 period.

      Depreciation and amortization decreased $1.0 million (13.3%), to $6.5
million in the 2004 period from $7.5 million in the 2003 period. In accordance
with industry practices, the gain or loss on retirement, sale, or write-down of
equipment is included in depreciation and amortization. In the 2004 and 2003
period, depreciation and amortization included net gains from the sale of
equipment of $148,000 and $279,000, respectively. As a percentage of revenue,
depreciation and amortization decreased to 7.2% of revenue in the 2004 period
compared with 9.1% in the 2003 period, partly due to increased average revenue
per tractor and reduction of unseated tractors, which more efficiently spreads
depreciation expense. Additionally, 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 or rent expense to increase.

      Interest expense, net, decreased $189,000 (20.1%), to $753,000 in the 2004
period from $942,000 in the 2003 period. This decrease was attributable to lower
average debt outstanding, partially offset by higher interest rates. As a
percentage of revenue, interest expense, net, decreased to 0.8% of revenue in
the 2004 period compared with 1.2% in the 2003 period.

      During the first six months of 2004 we recorded $727,000 of income from
life insurance resulting from the death of William G. Smith, our former
President and Chief Executive Officer. This non operating income is tax exempt
and added $0.15 to our earnings per share for the first six months of 2004. This
is a one time event which will not recur in the future.

      As a result of the foregoing, our pre-tax margin increased to 1.7% in the
2004 period from (3.8%) in the 2003 period.

      Our income tax expense in the 2004 period was $509,000, or 65.1% of
earnings before life insurance proceeds and income taxes. Our income tax benefit
in the 2003 period was $1.1 million, or 36.0% 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 earnings or loss.

      As a result of the factors described above, net earnings was $1.0 million
in the 2004 period (1.1% of revenue), compared with net loss of $2.0 million in
the 2003 period (2.5% of revenue). Without the life insurance proceeds, our net
earnings would have been $273,000 (0.3% of revenue) in the 2004 period. In
addition, our operating ratio (operating expenses as a percentage of operating
revenue) was 98.3% during the first six months of 2004 as compared with 102.7%
during the first six months of 2003.

                                       14
<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 we have
returned to profitability. 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 purchased 128 new tractors during the first six months of
2004 and plan to purchase 120 new tractors throughout the remainder of 2004,
allowing for the replacement of older, high mileage tractors. 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.

      During the second quarter and first six months of 2004, our truck
production increased dramatically compared to 2003. Going forward, we believe
that shipping demand will remain high and that freight rates will increase as
truckload capacity tightens. These factors and continued focus on the profit
improvement plan should improve our financial performance. 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 June 30, 2005. 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.

      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; and the ability to finance the tractors and trailers delivered and
scheduled for delivery. 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 $8.6 million for the six
months ended June 30, 2004, compared to $4.0 million for the six months ended
June 30, 2003, reflecting improved operating results and $727,000 of life
insurance proceeds received in the first quarter 2004. Historically, our
principal use of cash from operations is to service debt and to internally
finance acquisitions of revenue equipment. Total receivables increased $3.2
million for the six months ended June 30, 2004. The average age of our trade
accounts receivable was approximately 34.1 days in the 2003 period and 32.0 days
in the 2004 period.

      Net cash provided by investing activities was $1.4 million for the six
months ended June 30, 2004, compared to $2.0 million for the six months ended
June 30, 2003. Such amounts related primarily to proceeds from the sale of
revenue equipment and other fixed assets, offset by down payments made for the
purchase of new equipment.

                                       15
<PAGE>

      Net cash used in financing activities was $7.5 million for the six months
ended June 30, 2004, compared to $5.8 million for the six months ended June 30,
2003. Such amounts 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, 2006, and provides for automatic month-to-month renewals under
certain conditions after that date. LaSalle may terminate the arrangement prior
to January 1, 2006, in the event of default, as discussed below, and may
terminate at anytime during the renewal terms. Since the beginning of 2004, the
financing arrangement has been amended to allow for changes in management and
voting control resulting from the death of William G. Smith, and 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 June 30, 2004, the term loan had a principal balance of $6.8 million,
payable in 42 remaining equal monthly principal installments of $162,000. The
revolving line of credit allows for borrowings up to 85 percent of eligible
receivables. At June 30, 2004, we had no borrowings under the revolving line of
credit. The capital expenditure loan allows for borrowings 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 June 30, 2004,
the amount owed under capital expenditure notes was $842,000. At June 30, 2004,
we had outstanding letters of credit totaling $7.7 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 June 30, 2004, our borrowing limit under the financing
arrangement was $20.4 million, leaving approximately $5.1 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 June 30, 2004 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 June 30,
2004 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 June 30, 2004:

<TABLE>
<CAPTION>
                                               PAYMENTS (IN THOUSANDS) DUE BY PERIOD
                                                  Less than                            After
                                       Total      One year    2-3 years   4-5 years   5 years
                                      --------    --------    ---------   ---------   --------
<S>                                   <C>         <C>         <C>         <C>         <C>
Contractual Obligations
Long-term debt                        $ 35,900    $ 11,323    $ 14,901    $  9,379    $    297
Operating leases                           870         219         395         197          59
                                      --------    --------    --------    --------    --------
Total contractual cash obligations    $ 36,770    $ 11,542    $ 15,296    $  9,576    $    356
                                      ========    ========    ========    ========    ========
</TABLE>

The Company had no other commercial commitments at June 30, 2004.

                                       16
<PAGE>

RECENT REGULATION

      The U.S. Department of Transportation 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. We anticipated that the new regulations could have
an overall negative impact on our average miles per tractor due to operational
changes; however, average revenue per tractor has increased as we successfully
increased our rate per mile, accessorial charges to customers for multiple stop
shipments, and rates for tractor detention during the first quarter of 2004. We
also raised driver pay for multiple stop shipments, unanticipated delays, and
other non-driving tasks.

      On July 16, 2004, the United States District Circuit Court of Appeals for
the District of Columbia vacated the new hours of service rules in their
entirety because the Federal Motor Carrier Safety Administration of the U.S.
Department of Transportation did not address driver health issues in
promulgating the rules. The current rules will remain in effect for at least 45
days while the U.S. Department of Transportation reviews the decision, and the
agency has not yet indicated what rule changes will be made, if any, once the
court's ruling becomes effective. Any changes in the current rules governing
hours of service could impact the Company's operations.

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 included in this Form 10-Q is contained
in Note 1 of the consolidated financial statements included in our Form 10-K for
the year ended December 31, 2003. Other footnotes in the Form 10-K describe
various elements of the financial statements included in this Form 10-Q 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.

                                       17
<PAGE>

      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. 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.

      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.

ITEM 3. 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 carries a variable
interest rate based on LaSalle's prime rate plus two percent, provided there has
been no default. In addition, approximately $20.0 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 June 30, 2004, a
one-point increase in the prime rate would increase interest expense by
approximately $276,000. The remainder of our other debt carries fixed interest
rates and exposes us to the risk that interest rates may fall. At June 30, 2004,
approximately 77% of our debt carries a variable interest rate and the remainder
is fixed.

                                       18
<PAGE>

ITEM 4. CONTROLS AND PROCEDURES

      As required by Rule 13a-15 under the Securities Exchange Act of 1934 (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 June 30, 2004. During our second 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.

                                     PART II
                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      No reportable events or material changes occurred during the quarter for
which this report is filed.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY
        SECURITIES

      None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

      None.

                                       19
<PAGE>

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

      On May 14, 2004, the Company held its annual meeting of stockholders for
the purpose of (a) electing four directors for one-year terms and (b) ratifying
the selection of KPMG LLP as independent auditors for the Company for the fiscal
year ending December 31, 2004.

The voting tabulation on the election of directors was as follows:

<TABLE>
<CAPTION>
                                            For                       Withheld
<S>                                      <C>                          <C>
G. Larry Owens                           5,293,238                     45,531
Marlys L. Smith                          5,297,958                     40,811
Herbert D. Ihle                          5,304,204                     34,565
Terry G. Christenberry                   5,304,304                     34,465
</TABLE>

The voting tabulation to ratify the selection of KPMG LLP as independent
auditors for the Company for the fiscal year ending December 31, 2004 was as
follows:

<TABLE>
<CAPTION>
   For                         Against                      Abstain
<S>                            <C>                          <C>
5,329,471                       4,116                        5,182
</TABLE>

ITEM 5. OTHER INFORMATION

      None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)   EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                                  DESCRIPTION
<S>         <C>
3.1    *    Articles of Incorporation.

3.2    **   Amended and Restated Bylaws.

31.1   #    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

31.2   #    Rule 13a-14(a)/15d-14(a) Certification of Chief 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.
</TABLE>

---------------------
*     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 Annual Report on Form 10-K
for the year ended December 31, 2003.

#     Filed herewith.

(b)   REPORTS ON FORM 8-K.

      During the quarter ended June 30, 2004, 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 April 30, 2004 (furnished to the
Commission on May 4, 2004) regarding the issuance of a press release to report
the Company's financial results for the quarter ended March 31, 2004.

                                       20
<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: August 13, 2004                 By:   /s/ Douglas C. Sandvig
                                          ------------------------------------
                                          Douglas C. Sandvig
                                          Senior Vice President, Treasurer,
                                          and Chief Financial Officer, in his
                                          capacity as such and on behalf of the
                                          issuer

                                       21
<PAGE>

                                  Exhibit Index

<TABLE>
<CAPTION>
Exhibit                                                                                 Method of
Number                                    Description                                    Filing
------     ------------------------------------------------------------------------   -------------
<S>        <C>                                                                        <C>
  3.1      Articles of Incorporation.                                                 Incorporated
                                                                                      by reference.

  3.2      Amended and Restated Bylaws.                                               Incorporated
                                                                                      by reference.

 31.1      Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.         Filed
                                                                                      herewith.

 31.2      Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.         Filed
                                                                                      herewith.

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

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