SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D.C. 20549

                               FORM 10-K

(Mark One) The Company's primary customers include retailers,  manufacturers, 
and third party logistics providers.
[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
      ACT OF 1934
      For the Fiscal  Year Ended December 31, 1998
                                   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 0-15087

                         HEARTLAND EXPRESS, INC.

          (Exact name of registrant as specified in its charter)

                 Nevada                                       93-0926999
(State or Other Jurisdiction of Incorporation)        (I.R.S. Employer I.D. No.)

           2777 Heartland Drive
             Coralville, Iowa                                 52241
  (Address of Principal Executive Offices)                  (Zip Code)

Registrant's telephone number, including area code: 319-645-2728

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 
  Common Stock

Indicated  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 the registrant's definitive proxy statement
incorporated by reference in Part III of this Form 10-K.  [X]

The  aggregate  market value of the shares of the  registrant's  $0.01 par value
common stock held by  non-affiliates  of the registrant as of March 15, 1999 was
$265,247,246  (based  upon $16.19 per share being the average of the closing bid
and asked price on that date as reported by NASDAQ).  In making this calculation
the issuer has assumed,  without  admitting for any purpose,  that all executive
officers and directors of the registrant, and no other persons, are affiliates.

The number of shares  outstanding of the Registrant's  common stock as March 15,
1999 was 30,000,000.

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  1999  annual  meeting  of
stockholders that will be filed no later than April 30, 1999.

                                       1
<PAGE>


                              Cross Reference Index

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


Document and Location
                                    Part I
Item 1    Business                                             Page 3-5 herein

Item 2    Properties                                           Page 5 herein

Item 3    Legal Proceedings                                    Page 6 herein

Item 4    Submission of Matters to a Vote of Stockholders      Page 6 herein

                                    Part II

Item 5    Market for the Registrant's Common Equity and 
          Related Stockholder Matters                          Page 6 herein

Item 6    Selected Financial Data                              Page 7 herein

Item 7    Management's Discussion and Analysis of 
          Financial Condition and Results of Operations        Page 8-12 herein

Item 8    Financial Statements and Supplementary Data          Page 13 and 
                                                               17-27 herein

Item 9    Changes in and Disagreements with Accountants 
          on Accounting and Financial Disclosure               Page 13 herein

                                   Part III

Item 10   Directors and Executive Officers of the Registrant   Pages 2 to 4 of 
                                                               Proxy Statement

Item 11   Executive Compensation                               Pages 4 and 5 of 
                                                               Proxy Statement

Item 12   Security Ownership of Certain Beneficial Owners 
          and Management                                       Page 7 of Proxy 
                                                               Statement

Item 13   Certain Relationships and Related Transactions       Page 4 of Proxy 
                                                               Statement

                                    Part IV

Item 14   Exhibits, Financial Statement Schedules, 
          and Reports on Form 8-K                              Pages 14 and 15 
                                                               herein


         This report  contains  "forward-looking  statements" in paragraphs that
are marked with an asterisk.  These  statements are subject to certain risks and
uncertainties  that could cause actual results to differ  materially  from those
anticipated.  See "Management's  Discussion and Analysis of Financial  Condition
and  Results  of  Operations-Cautionary   Statement  Regarding   Forward-Looking
Statements" for additional  information and factors to be considered  concerning
forward-looking statements.

                                       2
<PAGE>


                                     PART I
ITEM 1. BUSINESS

General

         Heartland  Express,  Inc.  ("Heartland" or the "Company") is a short-to
medium haul truckload  carrier based near Iowa City,  Iowa. The Company provides
nationwide  transportation service to major shippers, using late-model equipment
and a balanced fleet of company-owned and owner-operator tractors. The Company's
primary  traffic  lanes  are  between  customer  locations  east  of  the  Rocky
Mountains,  with  selected  service to the West.  Management  believes  that the
Company's  service  standards  and equipment  accessibility  have made it a core
carrier to many of its major customers.

         Heartland was founded by Russell A. Gerdin in 1978 and became  publicly
traded in November 1986. Over the twelve years from 1986 to 1998,  Heartland has
grown to $263.5  million  in  revenue  from  $21.6  million  and net  income has
increased  to $33.1  million  from $3.0  million.  Much of this  growth has been
attributable  to  expanding  service  for  existing  customers,   acquiring  new
customers, and continued expansion of the Company's operating regions.

         In  addition  to  internal   growth,   Heartland  has  completed   four
acquisitions  since 1987. These  acquisitions have enabled Heartland to solidify
its position within historical regions, expand its customer base in the East and
Northeast  United  States,  and to  pursue  new  customer  relationships  in new
markets. Most recently, in July 1997, Heartland increased its Eastern operations
by acquiring A & M Express, Inc. located in Kingsport, Tennessee. A & M Express,
Inc. is predominately a dry-van carrier that operates a primarily  company-owned
fleet. A & M reported gross revenues of approximately $28 million in 1996. A & M
Express generates a small portion of its revenues from the flat bed market.  The
Company  is  operating  A  &  M  Express  as  a  separate  subsidiary.  However,
administrative   functions  are  being   performed  at   Heartland's   corporate
headquarters. The purchase of A & M was funded by cash and investments.

         Heartland Express,  Inc. is a holding company  incorporated in Nevada, 
which owns,  directly or indirectly,  all of the stock of Heartland Express Inc.
of Iowa,  Heartland  Equipment,  Inc., Munson  Transportation,  Inc., Munson 
Transport Service,  Inc., Munson Equipment, Inc., and A & M Express, Inc.

Operations

         Heartland's  operations  department focuses on the successful execution
of customer  expectations and providing consistent  opportunity for the fleet of
employee  drivers  and  independent  contractors,   while  maximizing  equipment
utilization.  These objectives require a combined effort of marketing,  customer
service, transportation planning, and fleet management.

         The  Company's   customer   service   employees  are   responsible  for
maintaining the continuity between the customer's needs and Heartland's  ability
to meet  those  needs by  communicating  customer's  expectations  to the  fleet
management group.  They are charged with development of customer  relationships,
ensuring service standards,  coordinating proper freight-to-capacity  balancing,
and trailer asset management.

         Transportation  planning  employees are  responsible for daily tactical
decisions  pertaining  to matching the  Company's  freight with the  appropriate
capacity within geographical  service areas. They assign orders to drivers based
on well-defined  criteria,  such as driver safety and DOT  compliance,  customer
needs and  service  requirements,  equipment  utilization,  driver time at home,
operational efficiency, and equipment maintenance needs.

         Fleet  management   employees  are  charged  with  the  management  and
development of their fleets of drivers. Additionally, they maximize the capacity
that is available to the organization to meet the service needs of the Company's
customers.  Their  responsibilities  include  meeting  the needs of the  drivers
within the standards that have been set by the  organization  and  communicating
the  requirements  of the  customers  to the  drivers  on each  order to  ensure
successful execution.

         Serving  the short to medium haul market  (592-mile  average  length of
haul in 1998)  permits the  Company to use  primarily  single,  rather than team
drivers and dispatch most trailers  directly from origin to destination  without
an intermediate equipment change other than for driver scheduling purposes.

                                       3
<PAGE>


         Heartland  also  operates  three  specialized   regional   distribution
operations for major customers near Atlanta,  Georgia;  Columbus, Ohio; and Iowa
City,  Iowa.  These  short-haul  operations  concentrate  on  freight  movements
generally within a 400-mile radius of the regional terminal, and are designed to
meet the needs of significant  customers in those regions.  These operations are
handled  by  dispatchers  at the  regional  locations,  and the  Company  uses a
centralized  computer network and regular  communication to achieve  system-wide
load coordination.

         The  Company   emphasizes   customer   satisfaction   through   on-time
performance,   dependable   late-model   equipment,   and  consistent  equipment
availability to serve large  customers'  volume  requirements.  The Company also
maintains a high trailer to tractor ratio,  which  facilitates the stationing of
trailers at customer  locations  for  convenient  loading  and  unloading.  This
minimizes  waiting time,  which increases  tractor  utilization and assists with
driver retention.

Customers and Marketing

         The  Company  targets  customers  in its  operating  area that  require
multiple,  time-sensitive  shipments,  including those employing  "just-in-time"
manufacturing and inventory  management.  In seeking these customers,  Heartland
has positioned  itself as a provider of premium service at  compensatory  rates,
rather than competing solely on the basis of price.  Freight transported for the
most part is non-perishable  and predominantly does not require driver handling.
Heartland's  reputation for quality service,  reliable equipment,  and equipment
availability makes it a core carrier to many of its customers.

         Heartland seeks to transport  freight that will  complement  traffic in
its existing  service areas and remain  consistent  with the Company's  focus on
short-to-medium haul and regional distribution markets. Management believes that
building  additional  service in the Company's primary traffic lanes will assist
in controlling empty miles and enhancing driver "home time."

         The Company's 25, 10, and 5 largest  customers  accounted for 65%, 49%,
and 35% of revenue,  respectively,  in 1998.  The  Company's  primary  customers
include  retailers,  manufacturers,  and third party  logistics  providers.  The
distribution of customers is not significantly different from the previous year.
Sears Logistics Services accounted for 14% of revenue in 1998. No other customer
accounted for as much as ten percent of revenue.

Drivers, Independent Contractors, and Other Personnel

         Heartland's  workforce is an  essential  ingredient  in  achieving  its
business objectives.  As of December 31, 1998, Heartland employed 1,213 persons.
The Company also contracted with independent  contractors to provide and operate
tractors. Independent contractors own their own tractors and are responsible for
all  associated   expenses,   including  financing  costs,  fuel,   maintenance,
insurance,  and taxes. The Company historically has operated a balanced fleet of
company and independent contractor tractors. Management believes that a balanced
fleet   compliments  the  Company's   recruiting   efforts  and  offers  greater
flexibility in responding to fluctuations in shipper demand.

         Management's  strategy  for both  employee and  independent  contractor
drivers  is to (1)  hire the  best;  (2)  promote  retention  through  financial
incentives,  positive working  conditions,  and targeting  freight that requires
little  or no  handling;  and  (3)  minimize  safety  problems  through  careful
screening,  mandatory drug testing,  continuous training,  and financial rewards
for  accident-free  driving.  Heartland  also seeks to minimize  turnover of its
employee drivers by providing modern,  comfortable  equipment and of all drivers
by regularly  scheduling  them to their homes.  All drivers are  compensated for
empty miles as well as loaded miles.  This provides an incentive for the Company
to  minimize  empty  miles and at the same time does not  penalize  drivers  for
inefficiencies of operations that are beyond their control.

         Heartland  is  not  a  party  to  a  collective  bargaining  agreement.
Management  believes that the Company has good  relationships with its employees
and independent contractors.

                                       4
<PAGE>
Revenue Equipment

         Heartland's management believes that operating high-quality,  efficient
equipment is an important part of providing excellent service to customers.  The
Company's  policy is to operate its  tractors  while under  warranty to minimize
repair  and  maintenance  cost  and  reduce  service   interruptions  caused  by
breakdowns.  In  addition,  the  Company's  preventive  maintenance  program  is
designed  to minimize  equipment  downtime,  facilitate  customer  service,  and
enhance  trade  value  when  equipment  is  replaced.  Factors  considered  when
purchasing  new equipment  include fuel  economy,  price,  technology,  warranty
terms, manufacturer support, driver comfort, and resale value.

Competition

         The truckload  industry is highly competitive and includes thousands of
carriers,  none of which dominates the market.  The Company  competes  primarily
with other truckload carriers, and to a lesser extent with railroads, intermodal
service,  less-than-truckload  carriers, and private fleets operated by existing
and potential  customers.  Although  intermodal and rail service has improved in
recent  years,  such  service  has not  been a  major  factor  in the  Company's
short-to-medium   haul  traffic  lanes   (592-mile   average  length  of  haul).
Historically,  competition  has  created  downward  pressure  on  the  truckload
industry's  pricing  structure.  Management  believes that  competition  for the
freight  targeted by the Company is based  primarily upon service and efficiency
and to a lesser degree upon freight rates.

Regulation

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

         The Company's  operations are subject to various  federal,  state,  and
local environmental laws and regulations, implemented principally by the EPA and
similar state regulatory agencies, governing the management of hazardous wastes,
other discharge of pollutants  into the air and surface and underground  waters,
and the disposal of certain substances.  Management believes that its operations
are in material  compliance  with current laws and regulations and does not know
of  any  existing   condition  that  would  cause   compliance  with  applicable
environmental  regulations  to have a material  effect on the Company's  capital
expenditures, earnings and competitive position. In the event the Company should
fail to comply with  applicable  regulations,  the  Company  could be subject to
substantial fines or penalties and to civil or criminal liability.

ITEM 2.  PROPERTIES

         Heartland's  headquarters  is located  adjacent to Interstate  80, near
Iowa City, Iowa. The facilities include five acres of land, two office buildings
of approximately 25,000 square feet combined and a storage building,  all leased
from the Company's president and principal stockholder. Company-owned facilities
at this location include three tractor and trailer  maintenance garages totaling
approximately  26,500 square feet, and a safety and service complex  adjacent to
Heartland's  corporate offices.  The adjacent facility provides the Company with
six acres of additional  trailer parking space, a drive-through  inspection bay,
an  automatic  truck wash  facility,  and 6,000  square feet of office space and
driver  facilities.  The  Company  also  owns a motel  located  adjacent  to its
corporate offices, which functions as a motel and driver training center.

         The Company owns regional facilities in Ft. Smith, Arkansas;  O'Fallon,
Missouri;  Forest Park, Georgia;  Columbus,  Ohio;  Jacksonville,  Florida;  and
Kingsport,  Tennessee.  The  Company  is  leasing  facilities  in  Murfreesboro,
Tennessee;  Decatur,  Illinois;  and Rochester,  New York. A facility in Dubois,
Pennsylvania  is being leased to an unrelated  third party.  The Company  closed
facilities in Woodville, Ohio and Monmouth, Illinois during 1994 and 1995 and is
attempting  to dispose of such  facilities.  The  carrying  amount of the closed
facilities were reduced in years prior to 1996 to reflect fair market value less
costs to sell. In March 1998, the Company sold a parcel of land at its O'Fallon,
Missouri terminal to an unrelated third party.

                                       5
<PAGE>


ITEM 3.  LEGAL PROCEEDINGS

         The  Company  is a  party  to  routine  litigation  incidental  to  its
business,  primarily  involving  claims for personal  injury and property damage
incurred in the  transportation  of freight.  The Company  believes that adverse
results in these cases, whether individual or in the aggregate, would not have a
material effect upon the Company's financial position or results of operations.

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

         During the fourth  quarter of 1998, no matters were submitted to a vote
of securities holders.

                                     PART II

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

                           Price Range of Common Stock

         The  Company's  common  stock has been  traded on the  NASDAQ  National
Market under the symbol HTLD,  since November 5, 1986, the date of the Company's
initial public offering.  The following table sets forth for the calendar period
indicated the range of high and low price  quotations  for the Company's  common
stock as reported by NASDAQ from January 1, 1997 to December 31,1998.


             Period                       High               Low
        Calendar Year 1998
           1st Quarter                   $29.00            $22.75
           2nd Quarter                    29.00             19.75
           3rd Quarter                    20.25             15.50
           4th Quarter                    20.25             12.38

        Calendar Year 1997
           1st Quarter                   $27.38            $18.50
           2nd Quarter                    26.00             19.00
           3rd Quarter                    27.75             21.50
           4th Quarter                    30.88             22.88


         The prices  reported  reflect  interdealer  quotations  without  retail
mark-ups,  mark-downs or commissions, and may not represent actual transactions.
As of March 15, 1999 the Company  had 270  stockholders  of record of its common
stock. However, the Company estimates that it has a significantly greater number
of stockholders because a substantial number of the Company's shares are held of
record by brokers or dealers for their customers in street names.

                             Dividend Policy

         The  Company has never  declared  and paid a cash  dividend.  It is the
current  intention of the  Company's  Board of  Directors to retain  earnings to
finance the growth of the Company's business.  Future payments of cash dividends
will depend upon the  financial  condition,  results of  operations  and capital
requirements  of the Company,  as well as other factors  deemed  relevant by the
Board of Directors.

                                       6
<PAGE>


ITEM 6.          SELECTED FINANCIAL DATA

         The selected  consolidated  financial data presented  below reflect the
consolidated  financial position and results of operations of Heartland Express,
Inc., and its subsidiaries. The selected consolidated financial data are derived
from the Company's consolidated  financial statements.  This data should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's  consolidated  financial statements
and notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
                                                        Year Ended December 31,
                                                (in thousands, except per share data)                  
                                        1998         1997         1996         1995         1994 
<S>                                   <C>          <C>          <C>          <C>          <C>   
                                      ---------    ---------    ---------    ---------    ---------
Income Statement Data:
  Operating revenue ...............   $ 263,489    $ 262,504    $ 229,011    $ 191,507    $ 224,248
                                      ---------    ---------    ---------    ---------    ---------
Operating expenses:
  Salaries, wages, and benefits ...      51,995       49,535       40,261       40,715       56,440
  Rent and purchased transportation     100,089      101,169       93,961       64,043       57,799
  Operations and maintenance ......      26,072       27,739       22,158       21,035       35,557
  Taxes and licenses ..............       6,150        6,049        5,693        5,246        7,347
  Insurance and claims ............       6,810       10,404        9,976        7,967       11,872
  Communications and utilities ....       2,684        2,681        2,158        2,562        2,618
  Depreciation ....................      18,108       16,752       13,571       15,066       20,061
  Other operating expenses ........       5,872        5,048        4,534        3,745        5,468
  (Gain) on sale of fixed assets ..        (332)         (59)        (189)         (27)        (149)
  Merger consummation and
    integration costs .............        --           --           --           --          3,494
                                      ---------    ---------    ---------    ---------    ---------
                                        217,448      219,318      192,123      160,352      200,507
                                      ---------    ---------    ---------    ---------    ---------
Operating income ..................      46,041       43,186       36,888       31,155       23,741
 Interest income/(expense), net ...       4,896        3,782        2,839        1,524       (1,930)
                                      ---------    ---------    ---------    ---------    ---------
Income before income taxes ........      50,937       46,968       39,727       32,679       21,811
Federal and state income taxes ....      17,828       16,895       14,697       12,094       11,734
                                      ---------    ---------    ---------    ---------    ---------
Net income ........................   $  33,109    $  30,073    $  25,030    $  20,585    $  10,077
                                      =========    =========    =========    =========    =========
Basic weighted average shares
outstanding .......................      30,000       30,000       30,000       30,036       30,039
                                      =========    =========    =========    =========    =========
Basic earnings per share ..........   $    1.10    $    1.00    $    0.83    $    0.69    $    0.34
                                      =========    =========    =========    =========    =========

Balance sheet data:
Working capital ...................   $ 127,989    $  82,170    $  69,845    $  40,780    $   2,542
Total assets ......................   $ 256,828    $ 225,467    $ 191,504    $ 158,146    $ 136,393
Long term debt ....................   $    --      $    --      $    --      $    --      $     705
Stockholders' equity ..............   $ 186,848    $ 153,739    $ 123,666    $  98,636    $  78,050
</TABLE>

                                       7
<PAGE>



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

General

         The following  table sets forth the percentage  relationship of expense
items to operating revenue for the periods indicated.
<TABLE>
<CAPTION>

                                           Year Ended December 31,
                                           -----------------------
                                           1998       1997      1996
<S>                                       <C>        <C>       <C>    
                                          ------     ------    ------
Operating revenue                         100.0%     100.0%    100.0%
                                          ------     ------    ------
Operating expenses:
   Salaries, wages, and benefits           19.7%      18.9%     17.6%
   Rent and purchased transportation       38.0       38.5      41.0
   Operations and maintenance               9.9       10.5       9.7
   Taxes and licenses                       2.3        2.3       2.5
   Insurance and claims                     2.6        4.0       4.3
   Communications and utilities             1.0        1.0       0.9
   Depreciation                             6.9        6.4       5.9
   Other operating                          2.2        1.9       2.0
   expenses
  (Gain) on sale of fixed assets           (0.1)        --        --
                                          ------     ------    ------
   Total operating                         82.5%      83.5%     83.9%
   expenses                               ------     ------    ------
      Operating income                     17.5%      16.5%     16.1%
Interest income, net                        1.9        1.4       1.2
                                          ------     ------    ------
      Income before income taxes           19.4%      17.9%     17.3%
Federal and state income taxes              6.8        6.4       6.4
                                          ------     ------    ------
      Net income                           12.6%      11.5%     10.9%
                                          ======     ======    ======
</TABLE>

Results of Operations

Year Ended December 31, 1998 Compared With Year Ended December 31, 1997

         Operating  revenue  increased $1.0 million (0.4%), to $263.5 million in
1998 from $262.5 million in 1997. The Company's growth of operating revenues was
curtailed by the  industry-wide  shortage of  experienced  employee  drivers and
independent contractors.

         Salaries,  wages, and benefits  increased $2.5 million (5.0%), to $52.0
million  in 1998  from  $49.5  million  in 1997.  As a  percentage  of  revenue,
salaries,  wages, and benefits increased to 19.7% in 1998 from 18.9% in 1997. An
increase in the percentage of employee drivers  operating the Company's  tractor
fleet and a corresponding decrease in the percentage of the fleet being provided
by  independent  contractors  was the primary  cause.  This increase in employee
driver miles was  attributable  to internal growth and the effect of a full year
of operations  of A & M Express  which was acquired in July,  1997 and primarily
relies on employee drivers.  During 1998, employee drivers accounted for 45% and
independent contractors 55% of the total fleet miles, compared with 43% and 57%,
respectively, in 1997.

         Rent and purchased  transportation  decreased $1.1 million  (1.1%),  to
$100.1  million in 1998 from $101.2 million in 1997. As a percentage of revenue,
rent and purchased transportation decreased to 38.0% in 1998 from 38.5% in 1997.
This reflected the Company's decreased reliance upon independent contractors. In
addition,  an increased industry demand for independent  contractors has negated
the Company's previous competitive advantage.

         Operations  and  maintenance  decreased $1.7 million  (6.0%),  to $26.1
million  in 1998  from  $27.7  million  in 1997.  As a  percentage  of  revenue,
operations and  maintenance  decreased to 9.9% in 1998 from 10.5% in 1997.  This
decrease  is  attributable  to a decrease  in fuel  prices and lower  repair and
maintenance costs due to the replacement of older tractors with newer models.

                                       8
<PAGE>


                                                                   
         Taxes and licenses  increased $0.1 million  (1.7%),  to $6.1 million in
1998 from $6.0  million  1997,  primarily  from an increase in fleet size.  As a
percentage of revenue,  taxes and licenses remained constant at 2.3% in 1998 and
in 1997.

         Insurance and claims decreased $3.6 million (34.5%), to $6.8 million in
1998 from $10.4  million in 1997.  As a  percentage  of revenue,  insurance  and
claims  decreased to 2.6% in 1998 from 4.0% in 1997.  The decrease was primarily
attributable  to the favorable  settlement of claims and the lessor  severity of
incurred  claims.  Insurance  and claims  expense will vary as a  percentage  of
operating  revenue from period to period based on the  frequency and severity of
claims  incurred  in a given  period as well as  changes  in claims  development
trends.

     Communications  and utilities remained constant at $2.7 million in 1998 and
1997. As a percentage of revenue, communications and utilities remained constant
at 1.0% in 1998 and in 1997.

         Depreciation  increased $1.4 million  (8.1%),  to $18.1 million in 1998
from $16.8 million in 1997. As a percentage of revenue,  depreciation  increased
to 6.9% in 1998 from 6.4% in 1997. The increase  resulted from the growth in the
company owned fleet, as a percentage of the total fleet.

         Other  operating  expenses  increased  $0.9  million  (16.3%),  to $5.9
million in 1998 from $5.0  million in 1997.  As a percentage  of revenue,  other
operating  expenses increased to 2.2% in 1998 from 1.9% in 1997. Other operating
expenses  consists of pallet cost,  driver recruiting  expenses,  goodwill,  and
administrative  costs.  The primary area of increase was higher costs associated
with the recruitment of qualified employee drivers and independent contractors.

         Primarily as a result of the foregoing,  the Company's  operating ratio
improved to 82.5% in 1998 compared with 83.5% in 1997.

         Interest income (net) increased $1.1 million  (29.5%),  to $4.9 million
in 1998 from $3.8 million in 1997. As a percentage of revenue,  interest  income
(net)  increased to 1.9% in 1998 from 1.4% in 1997. The Company had $143 million
in cash,  cash  equivalents,  and investments at December 31, 1998 compared with
$96.0 million at December 31, 1997.  Interest income earned is primarily  exempt
from federal taxes and therefore earned at a lower pre-tax rate.

     The  Company's  effective  tax rate  was 35% in 1998 and 36% in 1997.  This
decrease  is  primarily  attributable  to the  increase of  tax-exempt  interest
earned.

     As a result of the foregoing, net income increased $3.0 million (10.1%), to
$33.1  million in 1998 (12.6% of revenue)  from $30.1  million in 1997 (11.5% of
revenue).

Year Ended December 31, 1997 Compared With Year Ended December 31, 1996

         Operating revenue increased $33.5 million (14.6%), to $262.5 million in
1997 from $229.0 million in 1996, as a result of the Company's  acquisition of A
& M Express,  Inc. and expansion of the customer base and increased  volume from
existing customers.

         Salaries,  wages, and benefits increased $9.3 million (23.0%), to $49.5
million  in 1997  from  $40.3  million  in 1996.  As a  percentage  of  revenue,
salaries,  wages and benefits  increased to 18.9% in 1997 from 17.6% in 1996. An
increase in the percentage of employee drivers  operating the Company's  tractor
fleet and a corresponding decrease in the percentage of the fleet being provided
by  independent  contractors  was the primary  cause.  This increase in employee
driver miles was  attributable  to internal  growth and the acquisition of A & M
Express  which  primarily  relies on employee  drivers.  During  1997,  employee
drivers  accounted for 43% and  independent  contractors  57% of the total fleet
miles,  compared  with 40% and 60%,  respectively,  in 1996.  Rent and purchased
transportation  increased  $7.2 million  (7.7%),  to $101.2 million in 1997 from
$94.0  million  in  1996.  As  a  percentage  of  revenue,  rent  and  purchased
transportation decreased to 38.5% in 1997 from 41.0% in 1996. This reflected the
Company's decreased reliance upon independent contractors.

                                       9
<PAGE>


         Operations and  maintenance  increased $5.6 million  (25.2%),  to $27.7
million  in 1997  from  $22.2  million  in 1996.  As a  percentage  of  revenue,
operations and  maintenance  increased to 10.6% in 1997 from 9.7% in 1996.  This
increase is attributable to the  aforementioned  increased  reliance on employee
drivers operating the Company's tractor fleet.

         Taxes and licenses  increased $0.3 million  (6.3%),  to $6.0 million in
1997 from $5.7 million in 1996. As a percentage  of revenue,  taxes and licenses
decreased to 2.3% in 1997 from 2.5 % in 1996.  The cost  increase was  primarily
attributable  to the  increase in fleet size.  The  reduction in  percentage  of
revenue can be attributed to improved utilization of equipment.

         Insurance and claims increased $0.4 million (4.3%), to $10.4 million in
1997 from $10.0  million in 1996.  As a  percentage  of revenue,  insurance  and
claims decreased to 4.0% in 1997 from 4.3% in 1996. Insurance and claims expense
will vary as a percentage  of  operating  revenue from period to period based on
the  frequency  and  severity of claims  incurred  in a given  period as well as
changes in claims development  trends.  Management believes that the change as a
percentage of revenue was insignificant.

         Communications  and utilities  increased $0.5 million (24.2%),  to $2.7
million in 1997 from $2.2 in 1996.  As a percentage  of revenue,  communications
and utilities  increased to 1.0% in 1997 from 0.9% in 1996  primarily due to the
increase  in  percentage  of the  Company's  fleet  being  operated  by employee
drivers.

         Depreciation  increased $3.2 million (23.4%),  to $16.8 million in 1997
from $13.6 million in 1996. As a percentage of revenue,  depreciation  increased
to 6.4% in 1997 from 5.9% in 1996. The increase  resulted from the growth in the
company owned fleet.

         Other  operating  expenses  increased  $0.5  million  (11.3%),  to $5.0
million  1997 from $4.5  million in 1996.  As a  percentage  of  revenue,  other
operating  expenses decreased to 1.9% in 1997 from 2.0% in 1996. Other operating
expenses consists of pallet cost, driver recruiting  expenses and administrative
costs.

         Primarily as a result of the foregoing,  the Company's  operating ratio
was 83.5% in 1997 compared with 83.9% in 1996.

         Interest  income (net) increased $1.0 million (34%), to $3.8 million in
1997 from $2.8 million in 1996.  As a  percentage  of revenue,  interest  income
(net)  increased to 1.4% in 1997 from 1.2% in 1996.  At December  31, 1997,  the
Company  had repaid  all debt.  The  Company  had $96.0  million  in cash,  cash
equivalents, and municipal bonds at December 31, 1997.

     The  Company's  effective  tax rate  was 36% in 1997 and 37% in 1996.  This
decrease  is  primarily  attributable  to the  increase in  tax-exempt  interest
earned.
     As a result of the foregoing, net income increased $5.0 million (20.1%), to
$30.1  million in 1997 (11.5% of revenue)  from $25.0  million in 1996 (10.9% of
revenue).

Liquidity and Capital Resources

         The growth of the Company's business requires  significant  investments
in new revenue equipment. Historically the Company has been debt-free, financing
revenue  equipment  through cash flow from operations.  The Company also obtains
tractor capacity by utilizing independent contractors, who provide a tractor and
bear all associated operating and financing expenses.

         Cash and cash  equivalents and investments  increased to $143.4 million
as of December 31, 1998 from $96.0  million at December 31, 1997.  The Company's
policy is to purchase only high quality liquid investments. Cash equivalents and
investments  primarily  consists of municipal  demand bonds and municipal demand
bond funds.

         Net cash  provided  by  operations  was $52.7  million  in 1998,  $46.8
million in 1997,  and $48.3 million in 1996. The primary source of funds in 1998
was net income of $33.1  million  increased by non-cash  adjustments,  including
depreciation and amortization of $19.2 million.

                                       10
<PAGE>


         Net cash provided by (used in) investing and financing  activities  was
$14.5 million in 1998,  ($30.1)  million in 1997,  and ($34.9)  million in 1996.
Such amounts were used  primarily to acquire A & M Express,  purchase  municipal
bonds,  purchase revenue  equipment,  and to pay off long term debt. The Company
expects to finance future growth in its  company-owned  fleet primarily  through
cash flow from operations and cash equivalents currently on hand.(*)

         Trade  receivables  decreased to $21.4  million as of December 31, 1998
from $24.2 million as of December 31, 1997  primarily due to a 11.6% decrease in
fourth quarter operating revenue.  Cash paid for income taxes decreased to $18.9
million in 1998 from $19.9  million in 1997.  Lower income taxes on a cash basis
are primarily due to increased interest income exempt from federal taxes.

         Accounts payable and accrued  liabilities  decreased to $7.6 million as
of December  31, 1998 from $8.9  million as of December 31, 1997 due mostly to a
decrease in payables to revenue equipment suppliers.

         Insurance  accruals  increased to $35.5 million as of December 31, 1998
from $34.7  million as of December 31, 1997 due to the increase in the Company's
fleet miles. The Company's insurance program for liability,  physical damage and
cargo damage involves self insurance  retentions for the first $500,000.  Claims
in excess of the risk  retention  are  covered by  insurance  in  amounts  which
management  considers  adequate.  The Company  accrues the estimated cost of the
uninsured  portion of the pending claims.  These accruals are estimated based on
management's  evaluation  of the nature and  severity of  individual  claims and
estimate of future  claims  development  based on historical  claim  development
trends.  If adjustments to previously  established  accruals are required,  such
amounts are included in operating expenses.

         The Company has one  customer  who  accounted  for more than 10% of the
Company's revenue for the year ended December 31, 1998. As disclosed in footnote
two to the  financial  statements,  historically  a small  number  of  customers
generate a  substantial  percentage of revenue.  In 1998 the  Company's  largest
customer generated  approximately 14% of operating revenue.  The loss of a major
customer  could  negatively  impact the Company.  Any  negative  impact would be
mitigated  by two  factors:  (1) the strong  overall  financial  position of the
Company (no long term debt at December 31, 1998 and $143.4 million in cash, cash
equivalents  and  investments)  and (2) the  flexibility  inherent  in  having a
substantial percentage of fleet miles being generated by independent contractors
who provide their own tractors.(*)

         Based on the Company's strong financial  position (current ratio of 3.4
and  no  debt),   management  foresees  no  significant  barriers  to  obtaining
sufficient financing, if necessary, to continue with growth plans. (*)

Inflation and Fuel Cost

         Most of the Company's operating expenses are inflation-sensitive,  with
inflation  generally  producing  increased costs of operations.  During the past
three years,  the most  significant  effects of  inflation  have been on revenue
equipment  prices  and the  compensation  paid to the  drivers.  Innovations  in
equipment  technology  and comfort have resulted in higher tractor  prices,  and
there has been an  industry-wide  increase  in wages paid to attract  and retain
qualified drivers. The Company historically has limited the effects of inflation
through increases in freight rates and certain cost control efforts. In addition
to inflation,  fluctuations in fuel prices can affect profitability. Most of the
Company's contracts with customers contain fuel surcharge  provisions.  Although
the Company  historically has been able to pass through most long-term increases
in fuel  prices  and taxes to  customers  in the form of  surcharges  and higher
rates, shorter-term increases are not fully recovered. (*)

Seasonality

         The nature of the Company's  primary  traffic  (appliances,  automotive
parts,  paper products,  retail goods, and packaged  foodstuffs) causes it to be
distributed with relative uniformity throughout the year. However, earnings have
historically  been affected  adversely  during the fourth quarter as a result of
reduced  shipments by customers  during the winter holiday season.  In addition,
the Company's operating expenses historically have been higher during the winter
months due to  increased  operating  costs in colder  weather  and  higher  fuel
consumption due to increased engine idling.

(*) Forward - looking statements

                                       11
<PAGE>


Year 2000

         The Company has completed a  comprehensive  inventory and assessment of
its risk associated  with the Year 2000 problem.  The position of the Company is
to ensure  successful  operation  of  business  processes  without  interruption
before,  during,  and  after  December  31,  1999.  A formal  Year 2000 team was
established in 1998 to identify  exposures,  develop a compliance plan,  correct
problems,  test results and monitor  progress on a monthly basis,  and develop a
contingency plan in the event of any system failures. All internal systems (both
information  technology "IT" and non-IT) have been assessed for risk,  including
operational  software,   operational  platforms,   desktop  systems,   telephony
equipment,  data  communications,  systems  assurance,  and facility  management
systems.  Critical  business  processes  have been  assessed  for risk,  such as
customer service, voice telecommunications, order entry, transportation capacity
planning,  logistical balance planning, driver load assignment, driver satellite
communications,    rating   and   invoicing,   payment   remittance,   financial
transactions,  and electronic data  interchange  (EDI)  communications  for load
tendering,  shipment status,  and freight invoicing.  The Company's  operational
platform  and  enterprise  software  were  upgraded  in 1998 and are  Year  2000
compliant.  The Company will be testing  systems by simulating the transition to
the Year 2000.  This testing should be completed prior to June 30, 1999. In 1998
the  Company  spent  approximately  $775,000  on Year  2000  compliance.  Future
estimated  compliance  costs are not  expected to be  material to the  Company's
consolidated financial position, results of operations, or cash flows.

         As part of the  Company's  comprehensive  review,  it is  continuing to
verify the year 2000  readiness of third parties  (vendors and  customers)  with
whom the  Company  has  material  business  relationships.  These  relationships
include  providers  of such  services  as  telecommunications,  natural  gas and
electricity, diesel fuel, satellite communications,  and financial transactions.
Formal  communications  have  been  initiated  with  significant  customers  and
suppliers.  These  customers and suppliers  indicate that they expect to achieve
compliance  and do not expect any business  interruptions.  In addition,  engine
manufacturers  have  confirmed  the year  2000  readiness  of our  company-owned
tractor fleet.

         At present  the Company is not able to  determine  with  certainty  the
effect  on  the  Company's  results  of  operations,  liquidity,  and  financial
condition in the event the  Company's  material  suppliers and customers are not
Year 2000  compliant.  There can be no assurance  that the Company will properly
identify  all Year 2000 issues or that certain  external  customers or suppliers
will not experience disruption of IT functions or actual services provided.  The
Company  will  continue to monitor the progress of its  material  suppliers  and
customers.  Contingency  plans are being  developed  to address Year 2000 issues
that may arise in the event of system failures or loss of material  suppliers or
customers.

Forward - Looking Information

         Certain  matters  discussed  in this  annual  report and marked with an
asterisk  are  "forward-looking  statements"  intended  to qualify  for the safe
harbors from liability  established by Private Securities  Litigation Reform Act
of 1995.  Such statements  address future plans,  objectives,  expectations  and
events or conditions  concerning  various matters such as capital  expenditures,
litigation,  liquidity and capital  resources,  and accounting  matters.  Actual
results in each case could differ materially from those currently anticipated in
such statements.

ITEM 7A.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The  Company  purchases  only  high  quality  liquid  investments.  All
investments as of December 31, 1998 have an original maturity of three months or
less. The Company holds all investments to maturity and therefore, is exposed to
minimal market risk related to its cash equivalents and municipal bonds.

         The  Company  has no debt  outstanding  as of  December  31,  1998  and
therefore, has no market risk related to debt.

         The Company does not engage in fuel hedging with financial  instruments
and therefore,  has no market risk related to fuel price movements.  The Company
does use purchase contracts for bulk fuel purchases.

                                       12
<PAGE>


ITEM 8.          FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The Company's audited financial statements,  including its consolidated
balance  sheets and  consolidated  statements  of  operations,  cash flows,  and
stockholders' equity, and notes related thereto, are contained at pages 17 to 27
of  this  report.  Selected  quarterly  data  is  contained  at  page  26.  Such
information is incorporated by reference.

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

         None.

                                    PART III

ITEM 10.         DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information respecting executive officers,  directors, and director
nominee,  set  forth  under  the  caption  "Election  of   Directors-Information
Concerning  Executive Officers and Directors" and "Compliance with Section 16(a)
of the  Securities  Exchange  Act of  1934" on  pages 2  through  4 and 6 of the
registrant's   proxy   statement   relating  to  its  1999  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
(the "Proxy Statement"), is incorporated by reference. With the exception of the
foregoing  information  and  other  information  specifically   incorporated  by
reference into this Form 10-K report,  the Proxy Statement is not being filed as
a part hereof.

ITEM 11.         EXECUTIVE COMPENSATION

         The information  respecting executive  compensation set forth under the
caption  "Executive  Compensation"  on pages 4 and 5 of the Proxy  Statement  is
incorporated  herein  by  reference;  provided,  however,  that  the  "Board  of
Directors'  Report on Executive  Compensation"  is not incorporated by reference
here.

ITEM 12.         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information  respecting  security  ownership of certain  beneficial
owners and management  included under the caption  "Principal  Stockholders  and
Stockholdings  of Management" on page 7 of the Proxy  Statement is  incorporated
herein by reference.

ITEM 13.        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information  respecting  certain  relationships and transactions of
management  set forth under the  captions  "Board of  Directors  Interlocks  and
Insider Participation / Certain Transactions and Relationships" on page 4 of the
Proxy Statement is incorporated herein by reference.

                                       13
<PAGE>


                                     PART IV

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

(a) 1.     Financial Statements and Schedules

                        The Company's audited financial statements are set forth
on the following pages of this report:
                                                                           Page
Reports of Independent Public Accountants ...............................   17
Consolidated Balance Sheets .............................................   18
Consolidated Statements of Operations ...................................   19
Consolidated Statements of Stockholders' Equity .........................   20
Consolidated Statements of Cash Flows ...................................   21
Notes to Consolidated Financial Statements ..............................  22-27

(a) 2     Financial Statement Schedule
                                                                           Page
Valuation and Qualifying Accounts and Reserves ..........................   27

(a) 3     Exhibits required by Item 601 of Regulation S-K are listed below.

(b)       Reports on Form 8-K

          The Company did not file a Form 8-K during the last quarter of 1998 

(c)       Exhibits

                                       14
<PAGE>



Exhibit No.          Document                      Page of Method of Filing

   3.1       Articles of Incorportion          Incorporated by reference to the
                                               Company's registration statement 
                                               on Form S-1, Registration  No.
                                               33-8165,effective November 5,1986

   3.2       Bylaws                            Incorporated by reference to the 
                                               Company's registration statement 
                                               on Form S-1, Registration No.
                                               33-8165,effective November 5,1986

   3.3       Certificate of Amendment to       Incorporated by reference to the 
             Articles of Incorporation         Company's Form 10-QA, for the 
                                               quarter ended June 30, 1997, 
                                               dated March 26, 1998.

   4.1       Articles of Incorporation         Incorporated by reference to the
                                               Company's registration statement 
                                               on Form S-1, Registration No.
                                               33-8165, effective
                                               November 5, 1986.

   4.2       Bylaws                            Incorporated by reference to the
                                               Company's registration statement
                                               on Form S-1, Registration No.
                                               33-8165, effective 
                                               November 5, 1986.

   4.3       Certificate of Amendment          Incorporated by reference to the
             to Articles of Incorporation      Company's Form 10-QA, for the 
                                               quarter ended June 30, 1997, 
                                               dated March 26, 1998.

   9.1       Voting Trust Agreement dated      Incorporated by reference to the 
             June 6, 1997 between Larry        Company's Form 10-K for the year 
             as trustee under the Gerdin       ended December 31, 1997. 
             Educational Trusts and            Commission file no. 0-15087.
             Larry Crouse voting trustee.

  10.1       Business Property Lease between   Incorporated by reference to the 
             Russell A. Gerdin as Lessor and   Company's Form 10-K for the year 
             the Company as Lessee, regarding  ended December 31, 1996. 
             the Company's headquarters at     Commission file no.0-15087.      
             2777 Heartland Drive, Coralville, 
             Iowa 52241

  10.2       Form of Independent Contractor    Incorporated by reference to the 
             Operating Agreement between the   Company's Form 10-K for the year 
             Company and its independent       ended December 31, 1993.
             contractor providers of tractors  Commission file no. 0-15087.

  10.3       Description of Key Management     Incorporated by reference to the 
             Deferred Incentive Compensation   Company's Form 10-K for the year 
             Arrangement                       ended December 31, 1993.
                                               Commission file no. 0-15087.

  21         Subsidiaries of the Registrant    Incorporated by reference to the
                                               Company's Form 10-K for the year 
                                               ended December 31, 1997. 
                                               Commission file no. 0-15087.

  27         Financial Data Schedule           Filed herewith.

                                       15
<PAGE>


                                               

                                   SIGNATURES

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

                                              HEARTLAND EXPRESS, INC.

Date: March 26, 1999                        By:   /s/ Russell A. Gerdin
      --------------                             ----------------------
                                                    Russell A. Gerdin
                                                 President and Secretary


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

    Signature                      Title                              Date

/s/ Russell A. Gerdin     Chairman, President and Chief 
Russell A. Gerdin         Executive Officer (Principal 
                          Executive Officer), Secretary          March  26, 1999

/s/ John P. Cosaert       Vice President of Finance 
John P. Cosaert           (Principal Financial Officer 
                          and Principal Accounting 
                          Officer) and Treasurer                 March  26, 1999

/s/ Richard O. Jacobson   Director
Richard O.Jacobson                                               March  26, 1999

/s/ Michael J. Gerdin     Director
Michael J.Gerdin                                                 March  26, 1999

/s/ Benjamin J. Allen     Director
Benjamin J.Allen                                                 March  26, 1999

                                       16
<PAGE>


                                               

                              REPORT OF INDEPENDENT
                               PUBLIC ACCOUNTANTS



To the Board of Directors and
Stockholders of Heartland Express, Inc.:


         We  have  audited  the  accompanying  consolidated  balance  sheets  of
Heartland Express,  Inc. (a Nevada  corporation) and Subsidiaries as of December
31,  1998 and 1997,  and the  related  consolidated  statements  of  operations,
stockholders'  equity and cash  flows for each of the three  years in the period
ended December 31, 1998.  These  financial  statements and schedule  referred to
below are the responsibility of the Company's management.  Our responsibility is
to express an opinion on these  financial  statements  and schedule based on our
audits.

         We conducted our audits in accordance with generally  accepted auditing
standards.  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 Heartland
Express,  Inc.  and  Subsidiaries,  as of December  31,  1998 and 1997,  and the
results of their  operations and their cash flows for each of the three years in
the period  ended  December  31,  1998 in  conformity  with  generally  accepted
accounting principles.

         Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole.  Schedule II is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures  applied in the audits of the basic financial  statements and, in our
opinion, fairly state in all material respects the financial data required to be
set forth  therein in  relation  to the basic  financial  statements  taken as a
whole.



ARTHUR ANDERSEN LLP


Kansas City, Missouri
January 22, 1999


                                       17
<PAGE>


                                        
                             HEARTLAND EXPRESS, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                            December 31,
                      ASSETS                            1998           1997
                   ------------                     ------------   ------------
<S>                                                <C>            <C>    
CURRENT ASSETS
  Cash and cash equivalents ....................   $143,434,594   $ 76,240,422
  Trade receivable, less allowance:
  1998 $402,812; 1997 $491,971 .................     21,391,206     24,247,307
  Prepaid tires and tubes ......................      1,039,405      1,617,464
  Investments ..................................           --       19,769,765
  Deferred income taxes ........................     16,082,000     15,841,000
  Other current assets .........................        306,142        280,243
                                                   ------------   ------------
    Total current assets .......................    182,253,347    137,996,201
                                                   ------------   ------------
PROPERTY AND EQUIPMENT
  Land and land improvements ...................      3,830,779      3,936,843
  Buildings ....................................      9,214,397      9,215,477
  Furniture and fixtures .......................      2,535,343      1,982,818
  Shop and service equipment ...................      1,444,764      1,351,440
  Revenue equipment ............................    112,162,731    118,819,981
                                                   ------------   ------------
                                                    129,188,014    135,306,559
  Less accumulated depreciation and amortization     60,618,544     54,336,481
                                                   ------------   ------------
  Property and equipment, net ..................     68,569,470     80,970,078
                                                   ------------   ------------
OTHER ASSETS ...................................      6,005,191      6,500,395
                                                   ------------   ------------
                                                   $256,828,008   $225,466,674
                                                   ============   ============
      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable and accrued liabilities .....   $  7,615,143   $  8,857,820
  Compensation and benefits ....................      4,431,905      4,992,714
  Income taxes payable .........................      3,578,501      4,224,150
  Insurance accruals ...........................     35,503,314     34,671,707
  Other accruals ...............................      3,135,232      3,080,223
                                                   ------------   ------------
    Total current liabilities ..................     54,264,095     55,826,614
                                                   ------------   ------------

DEFERRED INCOME TAXES ..........................     15,716,000     15,901,000
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS' EQUITY
  Capital Stock
  Preferred, par value  $.01; authorized
  5,000,000 shares; none issued ................           --             --
  Common par value $.01; authorized
  395,000,000 shares; issued and outstanding
  30,000,000 shares ............................        300,000        300,000
  Additional paid-in capital ...................      6,608,170      6,608,170
  Retained earnings ............................    179,939,743    146,830,890
                                                   ------------   ------------
                                                    186,847,913    153,739,060
                                                   ------------   ------------

                                                   $256,828,008   $225,466,674
                                                   ============   ============

The accompanying notes are an integral part of these financial statements 
</TABLE>

                                       18
<PAGE>


                             HEARTLAND EXPRESS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                            Years Ended December 31,
                                                  -------------
                                      1998            1997             1996
<S>                              <C>             <C>              <C>    
                                 -------------   -------------    -------------
Operating revenue ............   $ 263,489,156   $ 262,504,156    $ 229,011,108
                                 -------------   -------------    -------------

Operating expenses:
 Salaries, wages, and benefits      51,994,959      49,534,386       40,260,524
 Rent and purchased
 transportation ..............     100,089,165     101,169,061       93,961,180
 Operations and maintenance ..      26,072,323      27,739,355       22,158,279
 Taxes and licenses ..........       6,150,407       6,049,155        5,692,592
 Insurance and claims ........       6,809,819      10,404,326        9,975,716
 Communications and utilities        2,684,310       2,681,489        2,158,489
 Depreciation ................      18,107,708      16,751,384       13,571,284
 Other operating expenses ....       5,871,671       5,047,624        4,534,472
 Gain on sale of fixed assets         (332,255)        (58,903)        (189,041)
                                  -------------   -------------    -------------
                                   217,448,107     219,317,877      192,123,495
                                  -------------   -------------    -------------

 Operating income ............      46,041,049      43,186,279       36,887,613
Interest income ..............       4,895,651       3,846,157        2,871,089
Interest expense .............            --           (64,571)         (30,943)
                                  -------------   -------------    -------------
   Income before income taxes       50,936,700      46,967,865       39,727,759
Federal and state income taxes      17,827,847      16,894,972       14,697,268
                                  -------------   -------------    -------------

   Net income ................    $ 33,108,853    $ 30,072,893     $ 25,030,491
                                  =============   =============    =============

Basic earnings per share ......   $       1.10    $       1.00     $       0.83
                                  =============   =============    =============


Basic weighted average shares
 outstanding ..................     30,000,000      30,000,000       30,000,000
                                  =============   =============    =============



The accompanying notes are an integral part of these financial statements.
</TABLE>


                                       19
<PAGE>


                             HEARTLAND EXPRESS, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>


                                       Capital       Additional
                                        Stock,        Paid-In       Retained
                                        Common        Capital       Earnings          Total
<S>                                  <C>            <C>            <C>            <C>   
                                     ------------   ------------   ------------   ------------
Balance, December 31, 1995 ......    $  3,000,000   $  3,908,170   $ 91,727,506   $ 98,635,676
Net Income ......................            --             --       25,030,491     25,030,491
                                     ------------   ------------   ------------   ------------
Balance, December 31, 1996 ......       3,000,000      3,908,170    116,757,997    123,666,167
Reduction in par value ..........      (2,700,000)     2,700,000           --             --
Net income ......................            --             --       30,072,893     30,072,893
                                     ------------   ------------   ------------   ------------
Balance, December 31, 1997 ......         300,000      6,608,170    146,830,890    153,739,060
Net income ......................            --            --        33,108,853     33,108,853
                                     ------------   ------------   ------------   ------------
Balance, December 31, 1998 ......         300,000      6,608,170   $179,939,743   $186,847,913
                                     ============   ============   ============   ============


The accompanying notes are an integral part of these financial statements.
</TABLE>

                                       20
<PAGE>


                

                             HEARTLAND EXPRESS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                              Years Ended December 31,
                                                    -------------
                                              1998             1997             1996
<S>                                      <C>              <C>              <C>                 
                                         -------------    -------------    -------------
OPERATING ACTIVITIES
Net income ...........................   $  33,108,853    $  30,072,893    $  25,030,491
Adjustments to reconcile to net cash
provided by operating activities:
 Depreciation and amortization .......      19,227,213       17,488,602       13,956,088
 Deferred income taxes ...............        (426,000)      (3,149,000)      (2,807,000)
 Gain on sale of fixed assets ........        (272,893)         (58,903)        (189,041)
 Changes in certain working capital items:
   Trade receivable ..................       2,856,101       (4,623,019)       2,338,411
   Other current assets ..............        (769,666)         446,071          (14,758)
   Prepaids ..........................         502,214        1,031,682        2,605,830
   Accounts payable and 
    accrued expenses..................        (844,817)       5,413,840        5,159,151
   Accrued income taxes ..............        (645,649)         138,279        2,235,057
                                         -------------    -------------    -------------
Net cash provided by operating 
activities............................      52,735,356       46,760,445       48,314,229
                                         -------------    -------------    -------------
INVESTING ACTIVITIES
Proceeds from sale of property 
and equipment.........................         483,668          271,721          393,513
Capital additions ....................      (5,511,705)     (22,384,516)      (7,491,563)
Net maturities (purchases) of 
municipal bonds ......................      19,769,765       11,691,494      (26,941,798)
Other ................................        (282,912)      (1,150,055)        (137,619)
                                         -------------    -------------    -------------
Net cash provided (used in) by 
investing activities .................      14,458,816      (11,571,356)     (34,177,467)
                                         -------------    -------------    -------------
FINANCING ACTIVITIES
Principal payments on long-term 
notes ................................            --        (18,542,135)        (705,437)
                                         -------------    -------------    -------------
Net cash used in financing activities             --        (18,542,135)        (705,437)
                                         -------------    -------------    -------------
Net increase in cash and cash 
equivalents ..........................      67,194,172       16,646,954       13,431,325
CASH AND CASH EQUIVALENTS
Beginning of year ....................      76,240,422       59,593,468       46,162,143
                                         -------------    -------------    -------------
End of year ..........................   $ 143,434,594    $  76,240,422    $  59,593,468
                                         =============    =============    =============

SUPPLEMENTAL  DISCLOSURES OF CASH FLOW  INFORMATION  Cash paid during the period
for:
 Interest ............................   $        --      $      64,571    $      30,943
 Income taxes ........................   $  18,899,496    $  19,905,693    $  15,269,211
Noncash investing activities:
 Book value of revenue equipment traded  $   9,658,636    $   3,062,392    $   5,585,217

The accompanying notes are an integral part of these financial statements.
</TABLE>

                                       21
<PAGE>




                             HEARTLAND EXPRESS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1. Nature of business and Significant Accounting Policies

Nature of Business:

Heartland Express,  Inc., (the "Company") is a  short-to-medium-haul,  irregular
route,  truckload carrier of general commodities.  The Company's primary traffic
lanes are between customer locations east of the Rocky Mountains,  with selected
service  to the West.  The  Company  operates  the  business  as one  reportable
segment.

Significant Accounting Policies:

Principles of Consolidation:

The accompanying  consolidated  financial statements include the parent company,
Heartland  Express,  Inc., and its subsidiaries,  all of which are wholly owned.
All  material  intercompany  items  and  transactions  have been  eliminated  in
consolidation.

Use of Estimates:

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Cash and Cash Equivalents:

Cash  equivalents  are  short-term,  highly  liquid  investments  with  original
maturities of three months of less. Cash equivalents consist of municipal demand
bonds and notes, funds and trusts investing in those notes and auction preferred
stocks.

Investments:

Substantially all investments  represent municipal bonds or municipal bond funds
with a maturity of one year or less. These  investments are held to maturity and
stated at amortized cost.  Investment  income received is generally  exempt from
federal income taxes.

Revenue and Expense Recognition:

Operating  revenues  are  recognized  on the date the freight is  delivered  and
expenses are recognized as incurred.

Property and Equipment:

Property and equipment are stated at cost.  Generally,  at the time of trade-in,
the cost of new  equipment  is recorded at an amount equal to the net book value
of the  traded  equipment  plus  cash  paid.  Depreciation  is  computed  by the
straight-line  method for all assets other than tractors,  which are depreciated
by the 125% declining balance method.  Trailers are depreciated to a 30% salvage
value except for trailers  purchased after January 1, 1996 which have no salvage
value. Lives of the assets are as follows:


                                       22
<PAGE>


                             HEARTLAND EXPRESS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



                                                   Years
                 Land improvements and building     3-30
                 Furniture and fixtures             2-3
                 Shop and service equipment         3-5
                 Revenue equipment                  5-7

Assets to be  disposed of are  measured at the lower of carrying  amount or fair
market value, as estimated by management, less costs to sell.

Tires and Tubes:

The cost of tires and tubes on new revenue  equipment is carried as a prepayment
and  amortized  over the  estimated  tire life of two years.  Replacement  tires
(including recapped tires) are expensed when purchased.

Earnings Per Share:

The Company reports earnings per share in accordance with Statement of Financial
Accounting Standard No. 128, (SFAS 128) "Earnings per share." Basic earnings per
share is based upon the weighted average common shares  outstanding  during each
year.  Diluted  earnings per share is based upon the weighted average common and
common equivalent shares outstanding  during each year.  Heartland has no common
stock equivalents.

Reclassifications:

Certain  reclassifications  have  been  made  to  the  prior  year  consolidated
financial statements to conform with the current year presentation.


Note 2.  Concentrations of Credit Risk and Major Customers

The Company's major customers  represent the consumer  goods,  appliances,  food
products and automotive industries. Credit is usually granted to customers on an
unsecured  basis. The Company's five largest  customers  accounted for 35%, 39%,
and 44% of revenues  for the years ended  December  31,  1998,  1997,  and 1996,
respectively.  Operating  revenue from one customer  exceeded 10% of total gross
revenues in 1998,  1997 or 1996.  Annual  revenues for this  customer were $37.0
million, $39.0 million, and $35.0 million for the years ended December 31, 1998,
1997, and 1996, respectively.

                                       23
<PAGE>




                             HEARTLAND EXPRESS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 3.  Acquisition

On July 14, 1997, the Company  acquired the outstanding  stock of A & M Express,
Inc., (A & M) a Kingsport,  Tennessee based truckload  carrier. A & M, a dry van
carrier,  operated  primarily  in the  eastern  half of the United  States.  The
acquisition was accounted for by the purchase method of accounting.  The results
of A & M's  operations  are reflected  beginning  with the effective date of the
acquisition  (July 1, 1997).  In 1997,  The company repaid  approximately  $18.5
million  in debt which was  assumed  in  connection  with the  acquisition.  The
acquisition of A & M did not have a material impact on the results of operations
for the years ending December 31, 1998 and 1997.

Note 4.  Income Taxes

Deferred  income taxes are  determined  based upon the  differences  between the
financial  reporting  and tax basis of the  Company's  assets  and  liabilities.
Deferred  taxes are  provided  at the enacted tax rates to be in effect when the
differences reverse.

Deferred tax assets and liabilities as of December 31 are as follows:

<TABLE>
<CAPTION>

                                                       1998            1997
<S>                                                <C>             <C>   
                                                   ------------    ------------
Deferred income tax liabilities,
related to property and equipment ..............   $ 15,716,000    $ 15,901,000
                                                   ============    ============
Deferred income tax assets:
   Allowance for doubtful accounts .............   $    153,000    $    153,000
   Accrued expenses.............................      2,270,000       2,428,000
   Insurance accruals...........................     13,186,000      12,740,000
   Other........................................        473,000         520,000
                                                   ------------    ------------
   Deferred income tax assets ..................   $ 16,082,000    $ 15,841,000
                                                   ============    ============
</TABLE>

The income tax provision is as follows:
<TABLE>
<CAPTION>

                                       1998            1997            1996
<S>                                <C>             <C>             <C>     
                                   ------------    ------------    ------------
Current income taxes:
Federal ......................     $ 16,983,674    $ 18,697,215    $ 16,523,897
State.........................        1,270,173       1,346,757         980,371
                                   ------------    ------------    ------------
                                   $ 18,253,847    $ 20,043,972    $ 17,504,268
                                   ------------    ------------    ------------
Deferred income taxes:
Federal ......................     $   (408,960)   $ (3,023,040)   $ (2,689,106)
State.........................          (17,040)       (125,960)       (117,894)
                                   ------------    ------------    ------------
                                   $   (426,000)   $ (3,149,000)   $ (2,807,000)
                                   ------------    ------------    ------------
Total ........................     $ 17,827,847    $ 16,894,972    $ 14,697,268
                                   ============    ============    ============
</TABLE>


                                       24
<PAGE>


                                                             

                             HEARTLAND EXPRESS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The income tax provision differs from the amount determined by applying the 
U.S.federal tax rate as follows:
<TABLE>
<CAPTION>
                                       1998            1997            1996
                                   ------------    ------------    ------------
<S>                                <C>             <C>             <C>    
Federal tax at statutory 
rate (35%) ...........             $ 17,827,845    $ 16,438,753    $ 13,904,716
State taxes, net of federal 
benefit ........................        826,000         875,000         648,000
Non-taxable interest income          (1,398,000)     (1,105,000)       (797,000)
Other ..........................        572,002         686,219         941,552
                                   ------------    ------------    ------------
                                   $ 17,827,847    $ 16,894,972    $ 14,697,268
                                   ============    ============    ============
</TABLE>


Note 5.  Related Party Transactions

The  Company  leases  two  office  buildings  and a  storage  building  from its
president  under a lease which provided for monthly  rentals of $23,500 plus the
payment of all property taxes, insurance and maintenance.  The lease expires May
31, 2000 and contains a five year renewal option.

The total minimum rental commitment under the building lease is as follows:


                Year ending December 31: 
                        1999                282,000
                        2000                117,500
                                         ----------
                                         $  399,500
                                         ==========



Rent  expense paid to the  Company's  president  totaled  $282,000 for the years
ended  December 31,  1998,  1997,  and 1996.  The Company  also  maintains  cash
accounts with a bank owned by the Company's president.

Note 6.  Accident and Workers' Compensation Claims

Accident and workers'  compensation  claims  include the estimated  settlements,
settlement  expenses and an allowance  for claims  incurred but not yet reported
for property  damage,  personal injury and public  liability losses from vehicle
accidents and cargo losses as well as workers'  compensation  claims for amounts
not covered by insurance.

Accrued  claims  are  determined  based on  estimates  of the  ultimate  cost of
settling reported and unreported claims, including expected settlement expenses.
Such estimates are based on  management's  evaluation of the nature and severity
of  individual  claims and an estimate  of future  claims  development  based on
historical  claims  development  trends.  Since  the  reported  liability  is an
estimate,  the  ultimate  liability  may be  more  or  less  than  reported.  If
adjustments to previously  established  accruals are required,  such amounts are
included in operating expenses.


                                       25
<PAGE>




                             HEARTLAND EXPRESS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The Company acts as a  self-insurer  for liability up to $500,000 for any single
occurrence  involving cargo,  personal injury or property  damage.  Liability in
excess of this  amount is assumed by an  insurance  underwriter.  A & M Express,
however, had a $5,000 self-insurance retention.

The Company acts as a self-insurer for workers'  compensation  liability up to a
maximum  liability of $300,000 per claim.  Liability in excess of this amount is
assumed by an insurance underwriter.  The State of Iowa has required the Company
to deposit  $700,000  into a trust fund as part of the  self-insurance  program.
This  deposit has been  classified  with other  long-term  assets on the balance
sheet. In addition, the Company has provided its insurance carriers with letters
of credit and  deposits of  approximately  $6.3 million in  connection  with its
liability and workers' compensation insurance arrangements.

Note 7.  Stockholders' Equity

On February  18, 1997,  the Company  amended its  articles of  incorporation  to
increase  authorized  capital to four hundred  million  (400,000,000)  shares of
capital  stock  (395,000,000  shares of common  stock  and  5,000,000  shares of
preferred stock) and reduced the par value from $0.10 to $0.01 per share.

On September  12, 1996 the Company's  Board of Directors  approved a 1.5 for 1.0
split of the Company's common stock effected in the form of a 50% stock dividend
for  stockholders  of record as of September  23,  1996.  A total of  10,000,000
common  shares  were  issued.  All  share  and per share  amounts,  and  capital
accounts, have been restated to retroactively reflect the stock split.

Note 8.  Profit Sharing Plan and Retirement Plan

The Company has a profit  sharing  plan with  401(k) plan  features  whereby the
Company  may  make  contributions  to the  plan  at its  discretion.  Individual
employees may make voluntary  contributions to the plan.  Company  contributions
totaled $491,000,  $541,000, and $529,000 for the years ended December 31, 1998,
1997 and 1996, respectively.


                                       26
<PAGE>



                             HEARTLAND EXPRESS, INC.
                                AND SUBSIDIARIES

                          NOTES TO FINANCIAL STATEMENTS

Note 9.  Commitments and Contingencies

Various  claims  and  legal  actions  are  pending   against  the  Company.   In
management's opinion, the resolution of these matters will not materially impact
the Company's financial condition or results of operations

The Company has entered into fuel purchase  contracts  through  March 2000.  The
contracts  represent  approximately  25% of annual  fuel  usage.  The  aggregate
commitment under the contracts is $1,324,527 as of December 31, 1998.

The Company has entered  into an  equipment  purchase  agreement  to acquire new
tractors. As of December 31, 1998 the Company was committed to purchase tractors
at an aggregate purchase price of $24.4 million.


Note 10.  Quarterly Financial Information (Unaudited)
<TABLE>
<CAPTION>
                                           First     Second    Third    Fourth
<S>                                       <C>       <C>       <C>       <C>      
                                          -------   -------   -------   -------
                                          (In Thousands, Except Per Share Data)
Year ended December 31, 1998
 Operating revenue ....................   $66,840   $69,223   $65,015   $62,411
 Operating income .....................    10,954    11,976    11,675    11,436
 Income before income taxes ...........    12,009    13,104    12,973    12,851
 Net income ...........................     7,806     8,518     8,430     8,355
 Basic earnings per share .............      0.26      0.28      0.28      0.28

Year end December 31, 1997
 Operating revenue ....................   $59,887   $65,381   $70,180   $67,056
 Operating income .....................     9,642    11,196    12,084    10,264
 Income before income taxes ...........    10,521    12,269    12,928    11,250
 Net income ...........................     6,628     7,729     8,403     7,313
 Basic earnings per share .............      0.22      0.26      0.28      0.24
</TABLE>

           SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>

          Column A            Column B          Column C           Column D   Column E
         ----------         ----------   -----------------------  ----------  ---------
                                               Charges To
                                         -----------------------
                             Balance At    Cost                               Balance  
                             Beginning     And         Other                   At End
        Description          of Period    Expense      Accounts   Deductions  of Period
--------------------------   ----------  ---------  ------------  ----------  ---------
Allowance for doubtful accounts:
<S>                            <C>        <C>        <C>           <C>         <C>    

Year ended December 31, 1998   $491,971   $ 37,078   $       --     $126,237   $402,812

Year ended December 31, 1997   $402,812   $ 79,526   $ 250,000 *    $240,367   $491,971

Year ended December 31, 1996   $402,812   $ 33,710   $       --     $ 33,710   $402,812

(*) Acquired A & M reserves 
</TABLE>

                                       27
<PAGE>