UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 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 September 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: 0-24946




                           KNIGHT TRANSPORTATION, INC.
             (Exact name of registrant as specified in its charter)


               Arizona                                        86-0649974

   (State or other jurisdiction of                        (I.R.S. Employer
    incorporation or organization)                        Identification No.)



                             5601 West Buckeye Road
                                Phoenix, Arizona
                                      85043
                    (Address of Principal Executive Offices)
                                   (Zip Code)

Registrant's telephone number, including area code:      602-269-2000



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. [X] Yes [ ] No

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

The number of shares  outstanding of registrant's  Common Stock, par value $0.01
per share, as of October 20, 2004 was 56,515,083 shares.
<PAGE>







                           KNIGHT TRANSPORTATION, INC.

                                      INDEX

<TABLE>
<S>        <C>                                                                              <C>
PART I - FINANCIAL INFORMATION                                                              Page Number

Item 1.    Financial Statements

           Condensed Consolidated Balance Sheets as of September 30, 2004                        1
             and December 31, 2003 (Unaudited)

           Condensed Consolidated Statements of Income for the three months                      3
             and nine months ended September 30, 2004 and 2003 (Unaudited)

           Condensed Consolidated Statements of Cash Flows for the nine                          4
             months ended September 30, 2004 and 2003 (Unaudited)

           Notes to Condensed Consolidated Financial Statements (Unaudited)                      6

Item 2.    Management's Discussion and Analysis of Financial Condition                          10
             and Results of Operations

Item 3.    Quantitative and Qualitative Disclosures About Market Risk                           20

Item 4.    Controls and Procedures                                                              21

Part II - OTHER INFORMATION

Item 1.    Legal Proceedings                                                                    22

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds                          22

Item 3.    Defaults Upon Senior Securities                                                      22

Item 4.    Submission of Matters to a Vote of Security Holders                                  22

Item 5.    Other Information                                                                    22

Item 6.    Exhibits                                                                             22

Signatures                                                                                      24
</table>
<PAGE>

<TABLE>
PART I  -  FINANCIAL INFORMATION


Item 1. Financial Statements



                              KNIGHT TRANSPORTATION, INC. AND SUBSIDIARIES
                            Condensed Consolidated Balance Sheets (unaudited)
                             As of September 30, 2004 and December 31, 2003
                                             (In thousands)

<S>                                                <C>                             <C>
                                                     September 30, 2004              December 31, 2003
                                                   ------------------------        -----------------------

ASSETS

CURRENT ASSETS:

   Cash and cash equivalents                       $           24,382              $          40,550
   Accounts receivable, net                                    52,802                         38,751
   Notes receivable, net                                          226                            515
   Inventories and supplies                                     1,957                          1,336
   Prepaid expenses                                             2,325                          7,490
   Income tax receivable                                          -                            1,761
   Deferred tax asset                                           6,863                          5,667
                                                   ------------------------        -----------------------

         Total current assets                                  88,555                         96,070
                                                   ------------------------        -----------------------

PROPERTY AND EQUIPMENT:
   Land and improvements                                       14,951                         13,911
   Buildings and improvements                                  24,531                         17,166
   Furniture and fixtures                                       5,896                          4,916
   Shop and service equipment                                   2,666                          2,409
   Revenue equipment                                          331,467                        256,803
   Leasehold improvements                                         796                            968
                                                   ------------------------        -----------------------

                                                              380,307                        296,173
   Less:  Accumulated depreciation
           and amortization                                   (96,765)                       (83,238)
                                                   ------------------------        -----------------------

PROPERTY AND EQUIPMENT, net                                   283,542                        212,935
                                                   ------------------------        -----------------------

NOTES RECEIVABLE - long-term                                       80                            362
GOODWILL                                                        7,504                          7,504
OTHER ASSETS                                                    5,285                          4,355
                                                   ------------------------        -----------------------

                                                   $          384,966              $         321,226
                                                   ========================        =======================
</TABLE>
The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.

                                       1
<PAGE>
<TABLE>

                                        KNIGHT TRANSPORTATION, INC. AND SUBSIDIARIES

                               Condensed Consolidated Balance Sheets (unaudited) (continued)
                                       As of September 30, 2004 and December 31, 2003
                                             (In thousands, except par values)


<S>                                                                   <C>                         <C>
                                                                         September 30, 2004           December 31, 2003
                                                                      ------------------------    ------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

            Accounts payable                                          $         13,658            $         3,408
            Accrued payroll                                                      4,467                      3,448
            Accrued liabilities                                                  7,043                      4,493
            Claims accrual                                                      20,329                     14,805
                                                                      ------------------------    ------------------------

         Total current liabilities                                              45,497                     26,154


DEFERRED INCOME TAXES                                                           64,425                     55,149
                                                                      ------------------------    ------------------------

         Total liabilities                                                     109,922                     81,303
                                                                      ------------------------    ------------------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
            Preferred stock, $0.01 par value;
             authorized 50,000 shares;
             none issued and outstanding                                          -                          -
            Common stock, $0.01 par value; authorized
             100,000 shares; 56,467 and 56,234
             issued  and  outstanding at September 30, 2004
             and December 31, 2003, respectively                                   565                        563
            Additional paid-in capital                                          79,589                     77,754
            Retained earnings                                                  194,890                    161,606
                                                                      ------------------------    ------------------------

         Total shareholders' equity                                            275,044                    239,923
                                                                      ------------------------    ------------------------

                                                                      $        384,966            $       321,226
                                                                      ========================    ========================
</TABLE>


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

                                       2
<PAGE>
<TABLE>
                                        KNIGHT TRANSPORTATION, INC. AND SUBSIDIARIES
                                  Condensed Consolidated Statements of Income (unaudited)
                                           (In thousands, except per share data)

<S>                                           <C>              <C>                              <C>             <C>
                                                  Three Months Ended                                Nine Months Ended
                                                     September 30,                                    September 30,

                                                2004             2003                             2004             2003
                                                ----             ----                             ----             ----
 REVENUE
      Revenue, before fuel surcharge          $106,109          $84,445                         $296,521         $239,786
      Fuel surcharge                             7,947            3,194                           18,996           10,171
                                              --------         --------                         --------         --------
             Total revenue                     114,056           87,639                          315,517          249,957
                                              --------         --------                         --------         --------
OPERATING EXPENSES:
      Salaries, wages and benefits              34,441           26,908                           96,904           77,097
      Fuel                                      21,879           14,277                           59,011           42,142
      Operations and maintenance                 7,234            5,444                           19,022           15,165
      Insurance and claims                       5,376            4,136                           15,978           12,237
      Operating taxes and licenses               2,476            2,342                            7,066            6,758
      Communications                               912              769                            2,653            2,236
      Depreciation and amortization             10,463            7,744                           28,935           21,796
      Lease expense - revenue
        equipment                                  634            1,920                            2,903            5,843
      Purchased transportation                   7,560            6,465                           21,697           18,519
      Miscellaneous operating
        expenses                                 2,305            1,816                            6,253            5,535
                                              --------         --------                         --------         --------
                                                93,280           71,821                          260,422          207,328
                                              --------         --------                         --------         --------

      Income from operations                    20,776           15,818                           55,095           42,629
                                              --------         --------                         --------         --------

OTHER INCOME (EXPENSE):
      Interest income                              132              110                              339              419
      Interest expense                              -              (165)                              -              (548)
                                              --------         --------                         --------         --------

                                                   132              (55)                             339             (129)
                                              --------         --------                         --------         --------

      Income before taxes                       20,908           15,763                           55,434           42,500
                                              --------         --------                         --------         --------

INCOME TAXES                                    (8,350)          (6,300)                         (22,150)         (17,010)
                                              --------         --------                         --------         --------
      Net income                               $12,558           $9,463                          $33,284          $25,490
                                              ========         ========                         ========         ========

Income per common share and
common share equivalent:
      Basic                                      $0.22            $0.17                            $0.59            $0.46
                                              ========         ========                         ========         ========
      Diluted                                    $0.22            $0.16                            $0.58            $0.44
                                              ========         ========                         ========         ========

Weighted average number of common
shares and common share equivalents
outstanding:
      Basic                                     56,402           56,082                           56,332           55,958
                                              ========         ========                         ========         ========
      Diluted                                   57,747           57,503                           57,534           57,345
                                              ========         ========                         ========         ========
</TABLE>
The  accompanying  notes  are an  integral  part of  these  unaudited  condensed
consolidated financial statements.

                                       3
<PAGE>
<TABLE>
                                      KNIGHT TRANSPORTATION, INC. AND SUBSIDIARIES
                               Condensed Consolidated Statements of Cash Flows (unaudited)
                                                     (In thousands)

                                                                     Nine Months Ended
                                                                       September 30,
<S>                                                        <C>                   <C>
                                                                 2004                   2003
                                                                 ----                   ----

CASH FLOWS FROM OPERATING ACTIVITIES

Net income                                                 $   33,284            $    25,490

Adjustments to reconcile net income to net cash
  provided by operating activities:
       Depreciation and amortization                           28,935                 21,796
       Non-cash compensation expense for issuance of
         stock to certain members of board of directors            13                     23
       Allowance for doubtful accounts                           (276)                   401
       Interest rate swap agreement - fair value change            -                     249
       Tax benefit from exercise of stock options                 686                  1,638
       Deferred income taxes                                    8,080                  4,222
Changes in assets and liabilities:
       Increase in trade receivables                          (13,828)                  (973)
       Increase in inventories and supplies                      (621)                    (3)
       Decrease in prepaid expenses                             5,164                    550
       Decrease in income tax receivable                        1,761                     -
       Increase in other assets                                  (930)                  (441)
       Increase in accounts payable                             3,359                  1,604
       Increase in accrued liabilities and claims accrual       9,093                  5,520
                                                           ----------             ----------

       Net cash provided by operating activities               74,720                 60,076
                                                           ----------             ----------

CASH FLOW FROM INVESTING ACTIVITIES:

       Purchase of property and equipment                     (92,650)               (53,064)
       Investment in/advances to other companies                   -                    (213)
       Cash received from advance to other company                 -                   1,600
       Decrease in notes receivable, net                          624                  1,305
                                                           ----------             ----------

       Net cash used in investing activities                  (92,026)               (50,372)
                                                           ----------             ----------

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

                                       4
<PAGE>
<TABLE>
                                     KNIGHT TRANSPORTATION, INC. AND SUBSIDIARIES
                        Condensed Consolidated Statements of Cash Flows (unaudited) (continued)
                                                    (In thousands)



                                                                                     Nine Months Ended
                                                                                       September 30,
<S>                                                                  <C>                           <C>
                                                                             2004                          2003
                                                                             ----                          ----

CASH FLOW FROM FINANCING ACTIVITIES:

         Payments on long-term debt                                                     -                        (2,715)
         Proceeds from exercise of stock options                                    1,138                         1,627
                                                                     ----------------------        ---------------------

         Net cash used in financing activities                                      1,138                        (1,088)
                                                                     ----------------------        ---------------------

NET (DECREASE) INCREASE IN CASH AND
         CASH EQUIVALENTS                                                         (16,168)                        8,616
CASH AND CASH EQUIVALENTS,
         Beginning of period                                                       40,550                        36,198
                                                                     ----------------------        ---------------------

CASH AND CASH EQUIVALENTS, end of period                                   $       24,382                $       44,814
                                                                     ======================        =====================


SUPPLEMENTAL DISCLOSURES:

         Noncash investing and financing transactions:
             Equipment acquired in accounts payable                        $        6,966                $        4,476
             Net book value of equipment traded                                     8,854                        12,869

         Cash Flow Information:
             Income taxes paid                                             $       10,308                $        9,911
             Interest paid                                                              -                           297

</TABLE>

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

                                       5
<PAGE>



                  KNIGHT TRANSPORTATION, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


Note 1.  Financial Information

The  accompanying   condensed  consolidated  financial  statements  include  the
accounts of Knight Transportation,  Inc., and its wholly owned subsidiaries (the
Company).  All  material  inter-company  balances  and  transactions  have  been
eliminated in consolidation.

The  condensed  consolidated  financial  statements  included  herein  have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America ("GAAP"),  pursuant to the rules and regulations of the
Securities and Exchange  Commission  ("SEC").  Certain  information and footnote
disclosures  have  been  omitted  or  condensed   pursuant  to  such  rules  and
regulations. In the opinion of management, all adjustments (consisting of normal
recurring  adjustments)  considered  necessary for a fair presentation have been
included.   Results  of  operations  in  interim  periods  are  not  necessarily
indicative of results for a full year. For additional information,  please refer
to other  filings with the SEC,  including  our Form 10Q for the quarters  ended
March 31 and June 30, 2004, and our consolidated  financial statements and notes
thereto  included in our Annual Report on Form 10-K for the year ended  December
31, 2003.

Note 2.  Stock-Based Compensation

Stock-Based   Compensation  -  At  September  30,  2004,  the  Company  had  one
stock-based    employee    compensation    plan.   The   Company   applies   the
intrinsic-value-based  method of accounting  prescribed by Accounting Principles
Board (APB)  Opinion No. 25,  "Accounting  for Stock Issued to  Employees,"  and
related  interpretations  including Financial  Accounting Standards Board (FASB)
Interpretation  No. 44,  "Accounting  for Certain  Transactions  involving Stock
Compensation, an interpretation of APB Opinion No. 25," issued in March 2000, to
account  for its  fixed-plan  stock  options.  Under this  method,  compensation
expense is recorded on the date of grant only if the current market price of the
underlying   stock  exceeded  the  exercise  price.   No  stock-based   employee
compensation  cost is reflected in net income,  as all options granted under the
plan had an exercise  price equal to the market value of the  underlying  common
stock on the date of the grant.  Statement  of  Financial  Accounting  Standards
(SFAS) No. 123,  "Accounting for Stock-Based  Compensation,"  as amended by SFAS
No. 148, "Accounting for Stock-Based  Compensation - Transition and Disclosure,"
established  accounting and  disclosure  requirements  using a  fair-value-based
method of accounting for stock-based employee  compensation plans. As allowed by
SFAS  No.   123,   the   Company   has   elected  to   continue   to  apply  the
intrinsic-value-based method of accounting described above, and has adopted only
the disclosure requirements of SFAS No. 123. The following table illustrates the
effect on net  income if the  fair-value-based  method  had been  applied to all
outstanding and unvested awards for the three-month and nine-month periods ended
September 30, 2004 and 2003, respectively (in thousands, except per share data):

                                       6
<PAGE>

<TABLE>
<S>                                        <C>                 <C>                 <C>               <C>
                                                   Three Months Ended                      Nine Months Ended
                                                      September 30,                          September 30,

                                                2004                2003                2004               2003
                                                ----                ----                ----               ----

Net income, as reported                           $ 12,558             $ 9,463           $ 33,284            $ 25,490

Deduct total stock-based
compensation expense determined
under fair-value based method for
all awards, net of tax                                (254)               (256)              (761)               (767)
                                           ----------------    ----------------    ---------------    ----------------

Pro forma net income                              $ 12,304             $ 9,207          $  32,523             $24,723
                                           ================    ================    ===============    ================

   Diluted earnings per share:
                  As reported                        $0.22               $0.16              $0.58               $0.44
                                           ================    ================    ===============    ================
                  Pro forma                          $0.21               $0.16              $0.57               $0.43
                                           ================    ================    ===============    ================
</TABLE>

The fair value of each option  grant is estimated on the date of the grant using
the  Black-Scholes  option  pricing  model with the following  weighted  average
assumptions used for grants in 2004: risk free interest rate of 3.39%;  expected
life of 6.0 years;  expected  volatility of 49%; expected dividend yield rate of
zero;  and  expected  forfeitures  of  3.48%.  The  following  weighted  average
assumptions  were  used for  grants  in 2003:  risk free  interest  rate  3.36%;
expected life of 6.0 years;  expected volatility of 51%; expected dividend yield
rate of zero; and expected forfeitures of 3.51%.

Note 3.  Income Per Share

A reconciliation of the basic and diluted income per share  computations for the
three months and nine months ended September 30, 2004 and 2003, respectively, is
as follows:

<TABLE>
<S>                                         <C>                 <C>                <C>                <C>
                                                   Three Months Ended                      Nine Months Ended
                                                      September 30,                          September 30,

                                                2004                2003                2004               2003
                                                ----                ----                ----               ----

Weighted average common
    shares outstanding  - Basic                     56,402              56,082             56,332              55,958

Effect of stock options                              1,345               1,421              1,202               1,387
                                           ----------------    ----------------    ---------------    ----------------

Weighted average common
    share and common share
    equivalents outstanding -
    Diluted                                         57,747              57,503             57,534              57,345
                                           ================    ================    ===============    ================

Net income                                         $12,558             $ 9,463          $  33,284             $25,490
                                           ================    ================    ===============    ================

   Income per common share and
   common share equivalent
                  Basic                              $0.22               $0.17              $0.59               $0.46
                                           ================    ================    ===============    ================
                  Diluted                            $0.22               $0.16              $0.58               $0.44
                                           ================    ================    ===============    ================
</TABLE>

                                       7
<PAGE>
Note 4.  Comprehensive Income

Comprehensive  income for the three and nine-month  periods ended  September 30,
2004 and 2003 was as follows (in thousands):

<TABLE>
<S>                                         <C>                 <C>                <C>              <C>
                                                   Three Months Ended                      Nine Months Ended
                                                      September 30,                          September 30,

                                                2004                2003                2004               2003
                                                ----                ----                ----               ----

Net Income                                         $12,558              $9,463            $33,284             $25,490

Other comprehensive income:
Interest rate swap agreement - fair
market value adjustment                                  -                  82                  -                 249
                                           ----------------    ----------------    ---------------    ----------------

Comprehensive income                               $12,558              $9,545            $33,284             $25,739
                                           ================    ================    ===============    ================
</TABLE>

Note 5.  Segment Information

Although we have nineteen operating  divisions,  we have determined that we have
one reportable  segment.  Eighteen of the divisions are managed based on regions
in the United  States in which we operate.  Each of these  divisions has similar
economic  characteristics  as they all provide  short to  medium-haul  truckload
carrier  services of general  commodities  to a similar class of  customers.  In
addition,  each  division  exhibits  similar  financial  performance,  including
average  revenue per mile and operating  ratio.  The  remaining  division is not
reported  because it does not meet the  materiality  thresholds in SFAS No. 131,
"Disclosures  about  Segments of an Enterprise  and Related  Information".  As a
result,  we have  determined  that it is  appropriate to aggregate our operating
divisions into one reportable  segment  consistent with the guidance in SFAS No.
131. Accordingly,  we have not presented separate financial information for each
of our operating divisions as our consolidated  financial statements present our
one reportable segment.

Note 6.  Derivative Instruments

All  derivatives  are  recognized on the balance  sheet at their fair value.  In
August and September  2000, and in July 2001, we entered into three  agreements,
respectively,  which are derivative instruments. These three contracts relate to
the price of heating oil on the New York Merchantile  Exchange ("NYMX") and were
entered into in connection  with volume diesel fuel  purchases  between  October
2000 and February 2002. The three agreements described above are stated at their
fair  market  value  in  the  accompanying   condensed   consolidated  financial
statements.

During  2001,  we entered  into an  interest  rate swap  agreement  on the $12.2
million  outstanding on our line of credit for purposes of better  managing cash
flow. On November 7, 2001, we paid $762,500 to settle this swap  agreement.  The
amount was included in other  comprehensive  income and had been fully amortized
to interest expense at December 31, 2003.

Note 7.  Recently Adopted and to be Adopted Accounting Pronouncements

In January  2003,  the FASB  issued  Interpretation  No. 46,  "Consolidation  of
Variable Interest Entities,  an interpretation of ARB No. 51", which was revised
in December 2003. This  interpretation  addresses the  consolidation by business
enterprises  of variable  interest  entities as defined in this  interpretation.
This  interpretation  applies  immediately  to  variable  interests  in variable
interest entities created after

                                       8
<PAGE>
January 31,  2003,  and to variable  interests  in  variable  interest  entities
obtained after January 31, 2003. For public enterprises with a variable interest
in  a  variable   interest   entity  created  before   February  l,  2003,  this
interpretation  applies to that  enterprise  no later than the  beginning of the
first interim or annual  reporting period beginning after December 15, 2003. The
application  of  this  interpretation  did not  have a  material  effect  on our
consolidated financial statements.

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

Note 8.  Commitments and Contingencies

We are involved in certain  legal  proceedings  arising in the normal  course of
business.  In the opinion of  management,  our potential  exposure under pending
legal  proceedings  is  adequately  provided for in the  accompanying  condensed
consolidated financial statements.

Note 9.  Stock Split

On July 20, 2004, we effected a 3-for-2 stock split.  Earnings per share for all
periods presented have been adjusted to reflect the stock split.

                                       9
<PAGE>
Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

Cautionary Note Regarding Forward-Looking Statements

     Except for certain historical  information  contained herein, the following
discussion contains  forward-looking  statements that involve risks, assumptions
and  uncertainties  which are difficult to predict.  All statements,  other than
statements   of  historical   fact,   are   statements   that  could  be  deemed
forward-looking  statements,  including without  limitation:  any projections of
earnings,   revenues,   or  other  financial  items;  any  statement  of  plans,
strategies,  and objectives of management for future operations;  any statements
concerning  proposed  new services or  developments;  any  statements  regarding
future economic conditions or performance;  and any statements of belief and any
statement  of  assumptions  underlying  any  of the  foregoing.  Words  such  as
"believe," "may," "could," "expects," "hopes,"  "anticipates," and "likely," and
variations of these words, or similar expressions, are intended to identify such
forward-looking  statements.  Actual events or results  could differ  materially
from those discussed in forward-looking statements.  Factors that could cause or
contribute to such differences  include, but are not limited to, those discussed
in the section  entitled  "Factors  That May Affect  Future  Results," set forth
below. We do not assume, and specifically disclaim, any obligation to update any
forward-looking statement contained in this Report.

Introduction

Business Overview

     We are primarily a dry van truckload carrier based in Phoenix, Arizona, and
we also offer  refrigerated  services.  We  transport  general  commodities  for
shippers  throughout  the United  States,  generally  focusing our operations on
short-to-medium  lengths of haul. We provide regional truckload carrier services
from our operations centers located throughout the United States.  Over the past
five years we have achieved substantial revenue and income growth as a result of
our continuing expansion into new regional markets,  emphasis on maintaining and
improving  efficiencies  and cost control  discipline,  and success at obtaining
rate increases as a result of providing a high level of customer service. During
this period, our revenue, before fuel surcharge, grew at a 21% compounded annual
rate from $125.0  million in 1998 to $326.9  million in 2003, and our net income
grew at a 22% compounded annual rate from $13.3 million in 1998 to $35.5 million
in 2003.

Operating and Growth Strategy

     Our operating strategy is focused on the following core elements:

     o    Focusing  on  Regional  Operations.  We seek to operate  primarily  in
          high-density,   predictable   traffic  lanes  in  selected  geographic
          regions. We believe our regional operations allow us to obtain greater
          freight  volumes and higher  revenue per mile, and also enhance safety
          and driver recruitment and retention.

     o    Maintaining  Operating  Efficiencies  and Controlling  Costs. We focus
          primarily  on  operating  dry vans,  along  with a  limited  number of
          refrigerated  trailers, in distinct geographic and shipping markets in
          order to achieve  increased  penetration of targeted service areas and
          higher equipment  utilization in dense traffic lanes. We actively seek
          to control costs by, among other things,  operating a modern equipment
          fleet,  maintaining a high tractor to non-driver  employee ratio,  and
          regulating vehicle speed.

                                       10
<PAGE>
     o    Providing a High Level of Customer Service.  We seek to compete on the
          basis of service in addition to price, and offer our customers a broad
          range of services to meet their  specific  needs,  including  multiple
          pick ups and deliveries, on-time pick ups and deliveries within narrow
          time frames,  dedicated fleet and personnel,  and  specialized  driver
          training.

     o    Using  Technology to Enhance Our  Business.  Our tractors are equipped
          with satellite-based  tracking and communications systems to permit us
          to stay in contact with our drivers, obtain load position updates, and
          provide our customers with freight visibility. A significant number of
          our trailers  are equipped  with  tracking  technology  to allow us to
          manage  our  trailers  more  effectively,  maintain  a low  trailer to
          tractor ratio,  efficiently  assess detention fees, and minimize cargo
          loss.

     The primary  source of our revenue  growth has been our ability to open new
divisions in certain  geographic areas and operate these facilities at a profit.
We opened our most recent  divisions in Carlisle,  Pennsylvania in June 2004 and
Lakeland,  Florida in August 2004. Based on our current expectations  concerning
the  economy,  we  anticipate  increasing  our  total  tractors  by  350  to 400
system-wide for the entire year of 2004. We have increased our total tractors by
335  through  September  30,  2004.  As part  of our  growth  strategy,  we also
periodically evaluate acquisition opportunities and we will continue to consider
acquisitions  that meet our financial and operating  criteria.  In addition,  in
July 2004, we began  operating a  refrigerated  division based out of a separate
facility  located  in  Phoenix.   This  new  refrigerated  division  began  with
approximately  20 tractors and was  operating  33 tractors as of  September  30,
2004.

Revenue and Expenses

     We primarily  generate  revenue by transporting  freight for our customers.
Generally we are paid a rate per mile for our  services.  We enhance our revenue
by charging for tractor and trailer detention, loading and unloading activities,
and other  specialized  services,  as well as  through  the  collection  of fuel
surcharges  to mitigate the impact of  increases  in the cost of fuel.  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  general  level  of  economic  activity  in the  United  States,
inventory  levels,  specific  customer  demand,  the  level of  capacity  in the
trucking industry, and driver availability.

     During  the first  nine  months of 2004,  the  United  States  economy  has
experienced strong growth and business inventory levels seemed to improve during
this period.  As a result of these positive  developments,  we have  experienced
stronger and more stable freight demand among current and prospective  customers
thus far in 2004 than we experienced in the preceding three years. Historically,
the excess  capacity in the  transportation  industry has limited our ability to
improve rates. Over the past two years,  however,  the  transportation  industry
seems to have seen some reduction in capacity.  We hope that, over the remainder
of 2004,  lower capacity  coupled with stronger  freight demand will continue to
provide us with better pricing power.

     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  owner-operator  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 operations  centers,  and the  compensation of non-driver
personnel.  Effectively  controlling  our  expenses is an  important  element of
assuring  our  profitability.  The  primary  measure  we  use  to  evaluate  our
profitability is operating ratio, excluding the impact of fuel surcharge revenue
(operating expenses,

                                       11
<PAGE>
net of fuel surcharge,  as a percentage of revenue,  before fuel surcharge).  We
view any operating ratio,  whether for the Company or any operations  center, in
excess of 85% as unacceptable performance.

Recent Results of Operations and Quarter-End Financial Condition

     For the  quarter  ended  September  30,  2004,  our  results of  operations
improved as follows versus the same period in 2003:

     o    Revenue,  before fuel  surcharge,  increased  25.7%, to $106.1 million
          from $84.4 million;

     o    Net income increased 32.6%, to $12.6 million from $9.5 million; and

     o    Net income per diluted share increased 37.5% to $0.22 from $0.16.

     We believe the improvements in our profitability are attributable primarily
to higher average revenue per tractor per week (excluding fuel  surcharge),  our
main measure of asset productivity,  which increased 9.5% to $3,085 in the third
quarter of 2004 from $2,818 in the third quarter of 2003.  This  improvement was
driven by an 8.3% increase in average  revenue per loaded mile  (excluding  fuel
surcharge)  to $1.556  from  $1.437 and a 1.6%  increase  in  average  miles per
tractor to 28,834 from 28,379.  We believe these increases were  attributable to
stronger  freight  demand  and a better  rate  environment  in the 2004  quarter
primarily due to the improving U.S. economy and a favorable relationship between
demand and trucking  capacity.  Rate and mile improvements were partially offset
by a 5.6% increase in our percentage of non-revenue miles to 11.4% for the third
quarter  of 2004 from  10.8% for the same  period in the prior  year,  which was
principally  due to positioning of our revenue  equipment in areas which allowed
us to capitalize on the most favorable freight in terms of the higher rates.

     At September 30, 2004,  our balance sheet  reflected  $24.4 million in cash
and cash  equivalents,  no long-term  debt, and  shareholders'  equity of $275.0
million.  For  the  quarter,  we  generated  $28.7  million  in cash  flow  from
operations and used $41.4 million for net capital  expenditures (net of net book
value of equipment traded of $2.3 million).

                                       12
<PAGE>


Results of Operations

     The following table sets forth the percentage  relationships of our expense
items to total revenue and revenue,  before fuel surcharge,  for the three-month
and nine-month  periods ended September 30, 2004, and 2003,  respectively.  Fuel
expense as a percentage of revenue,  before fuel surcharge,  is calculated using
fuel expense, net of surcharge.  Management believes that eliminating the impact
of this sometimes volatile source of revenue affords a more consistent basis for
comparing our results of operations from period to period.

<TABLE>
<S>                                   <C>       <C>          <C>        <C>           <C>       <C>          <C>        <C>
                                                               (Revenue, before)                               (Revenue, before)
                                       (Total revenue)         (fuel surcharge)        (Total revenue)         (fuel surcharge)
                                         Three-Month             Three-Month             Nine-Month              Nine-Month
                                         Period Ended            Period Ended            Period Ended            Period Ended
                                         ------------            ------------            ------------            ------------
                                         September 30,           September 30,           September 30,           September 30,
                                        2004       2003         2004       2003         2004       2003         2004       2003
                                        ----       ----         ----       ----         ----       ----         ----       ----

Revenue                                100.0%     100.0%       100.0%     100.0%       100.0%     100.0%       100.0%     100.0%

Operating expenses:
Salaries, wages and
  benefits                              30.2       30.7         32.5       31.9         30.7       30.8         32.7       32.2
Fuel                                    19.2       16.3         13.1 (1)   13.1 (1)     18.7       16.9         13.5 (1)   13.3 (1)
Operations and maintenance               6.3        6.2          6.8        6.4          6.0        6.1          6.4        6.3
Insurance and claims                     4.7        4.7          5.1        4.9          5.1        4.9          5.4        5.1
Operating taxes and licenses             2.2        2.7          2.3        2.8          2.2        2.7          2.4        2.8
Communications                           0.8        0.9          0.9        0.9          0.8        0.9          0.9        0.9
Depreciation and amortization            9.2        8.8          9.9        9.2          9.2        8.7          9.8        9.1
Lease expense - revenue
  equipment                              0.6        2.2          0.6        2.3          0.9        2.3          1.0        2.4
Purchased transportation                 6.6        7.4          7.1        7.7          6.9        7.4          7.3        7.8
Miscellaneous
  operating expenses                     2.0        2.1          2.1        2.1          2.0        2.3          2.0        2.3
                                        ----       ----         ----       ----         ----       ----         ----       ----
Total Operating
  Expenses                              81.8       82.0         80.4       81.3         82.5       83.0         81.4       82.2
                                        ----       ----         ----       ----         ----       ----         ----       ----
Income from operations                  18.2       18.0         19.6       18.7         17.5       17.0         18.6       17.8
Net interest expense                     0.1        0.0          0.1        0.0          0.0        0.0          0.1       (0.1)
                                        ----       ----         ----       ----         ----       ----         ----       ----
Income before income taxes              18.3       18.0         19.7       18.7         17.5       17.0         18.7       17.7
Income taxes                             7.3        7.2          7.9        7.5          7.0        6.8          7.5        7.1
                                        ----       ----         ----       ----         ----       ----         ----       ----
Net income                              11.0       10.8         11.8       11.2         10.5       10.2         11.2       10.6
                                        ====       ====         ====       ====         ====       ====         ====       ====
</TABLE>

(1)  Net of fuel surcharge.
     There are minor rounding differences in the above table.

     A  discussion  of our  results of  operations  for the nine and three month
periods ended September 30, 2004 and 2003 is set forth below.

Comparison  of Nine Months and Three  Months  Ended  September  30, 2004 to Nine
Months and Three Months Ended September 30, 2003

     Our total revenue for the nine months ended  September  30, 2004  increased
26.2% to $315.5 million from $250.0  million for the same period in 2003.  Total
revenue  included  $19.0  million of fuel  surcharge  revenue in the 2004 period
compared to $10.2 million in the 2003 period.  Our total revenue for the quarter
ended  September 30, 2004  increased  30.1% to $114.1 million from $87.6 million
for the same  quarter  in 2003.  Total  revenue  included  $7.9  million of fuel
surcharge  revenue  in the 2004  quarter  compared  to $3.2  million in the 2003
quarter.  In discussing  our results of  operations we use revenue,  before fuel
surcharge, and fuel expense, net of surcharge,  because management believes that
eliminating  the impact of this sometimes  volatile  source of revenue affords a
more  consistent  basis for comparing  our results of operations  from period to
period.  We also discuss the changes in our expenses as a percentage of revenue,
before fuel surcharge,  rather than absolute dollar changes.  We do this because
we believe the

                                       13
<PAGE>
high  variable  cost nature of our  business  makes a  comparison  of changes in
expenses  as a  percentage  of revenue  more  meaningful  than  absolute  dollar
changes.

     Revenue, before fuel surcharge, increased by 23.6% to $296.5 million in the
nine months ended  September 30, 2004 from $239.8 million for the same period in
2003.  Revenue,  before fuel surcharge,  increased by 25.7% to $106.1 million in
the quarter  ended  September 30, 2004 from $84.4 million in the same quarter in
2003.  These  increases  primarily  resulted from the expansion of our fleet and
customer base as we continue to open additional  divisions,  as well as improved
rates and utilization in the 2004 period.  As a result of our expansion into new
regions and improving  freight demand,  our tractor fleet grew to 2,753 tractors
(including 256 owned by independent  contractors) as of September 30, 2004, from
2,330 tractors (including 229 owned by independent  contractors) as of September
30,  2003,  an 18.2%  increase.  This growth in our fleet,  coupled  with higher
average  revenue  per  tractor  per week in the 2004  periods,  resulted  in the
significant period-over-period improvement in revenue.

     Salaries,  wages and benefits expense increased as a percentage of revenue,
before fuel  surcharge,  to 32.7% for the nine months ended  September  30, 2004
from 32.2% for the same period in 2003.  Salaries,  wages and  benefits  expense
increased as a percentage of revenue,  before fuel  surcharge,  to 32.5% for the
quarter  ended  September  30,  2004,  compared to 31.9% for the same quarter of
2003.  These  increases  were primarily due to the increases in driver pay rates
implemented  during the previous nine months. As of September 30, 2004, 90.7% of
our fleet was operated by Company drivers, compared to 90.2% as of September 30,
2003. For our employees,  we record accruals for workers'  compensation benefits
as a component of our claims  accrual,  and the related  expense is reflected in
salaries, wages and benefits in our consolidated statements of income.

     Fuel expense, net of fuel surcharge,  increased, as a percentage of revenue
before fuel  surcharge,  to 13.5% for the nine months ended  September  30, 2004
from 13.3% for the same period in 2003.  For the quarters  ended  September  30,
2004 and 2003, fuel expense,  net of fuel  surcharge,  remained  constant,  as a
percentage  of revenue  before  fuel  surcharge,  at 13.1%.  We  maintain a fuel
surcharge  program to assist us in recovering a portion of increased fuel costs.
The increase for the nine month period noted above was due mainly to higher than
average  fuel prices in the 2004  period,  partially  offset by  increased  fuel
surcharge  collections  and improved  revenue per mile. As a percentage of total
revenue,  including fuel surcharge, fuel expense increased to 18.7% for the nine
months ended  September 30, 2004 from 16.9% for the same period in 2003. For the
quarter  ended  September  30, 2004,  fuel  expense,  as a  percentage  of total
revenue,  including  fuel  surcharge,  increased  to 19.2%  from  16.3%  for the
corresponding  quarter in the prior year.  These increases were due primarily to
higher fuel prices.  See "Quantitative  and Qualitative  Disclosure About Market
Risk - Commodity Price Risk," below.

     Operations and maintenance  expense increased,  as a percentage of revenue,
before fuel  surcharge,  to 6.4% for the nine months ended  September  30, 2004,
compared to 6.3% for the same period in 2003.  For the quarter  ended  September
30, 2004,  operations  and  maintenance  expense  increased,  as a percentage of
revenue, before fuel surcharge, to 6.8% compared to 6.4% for the same quarter in
2003.  These  increases were primarily due to the timing of maintenance and tire
replacement  activity on our revenue  equipment,  along with increases in driver
hiring costs.

     Insurance and claims expense  increased as a percentage of revenue,  before
fuel surcharge,  to 5.4% for the nine months ended September 30, 2004,  compared
to 5.1% for the same period in 2003. Insurance and claims expense increased as a
percentage  of revenue,  before fuel  surcharge,  to 5.1% for the quarter  ended
September  30,  2004,  compared  to 4.9% for the  same  quarter  in 2003.  These
increases were primarily a result of higher  insurance  premiums and an increase
in claims incurred by the Company.

     Operating  taxes and licenses  expense as a percentage  of revenue,  before
fuel surcharge,  decreased to 2.4% for nine months ended September 30, 2004 from
2.8% for the same period in 2003. For the quarter ended September 30, 2004, this
expense  decreased,  as a percentage of revenue before fuel  surcharge,  to 2.3%
from 2.8% for the same quarter of 2003. These decreases  resulted primarily from
the

                                       14
<PAGE>
improvements  in  average  revenue  per  tractor  per week in the  2004  periods
described above, which more efficiently covered this largely fixed cost.

     Communications  expenses as a percentage of revenue, before fuel surcharge,
remained constant at 0.9% for each of the 2004 and 2003 periods.

     Depreciation  and amortization  expense,  as a percentage of revenue before
fuel  surcharge,  increased to 9.8% for the nine months ended September 30, 2004
from 9.1% for the same period in 2003. Depreciation and amortization expense, as
a percentage of revenue before fuel surcharge, increased to 9.9% for the quarter
ended September 30, 2004 from 9.2% for the same quarter in 2003. These increases
were  primarily  related to an increase in the  percentage  of our Company fleet
comprised of purchased vehicles. At September 30, 2004, 96% of our Company fleet
was comprised of purchased vehicles,  compared to 76% at September 30, 2003. Our
Company fleet  includes  purchased  vehicles and vehicles  held under  operating
leases,  while our total fleet includes vehicles in our Company fleet as well as
vehicles provided by independent contractors.

     Lease expense for revenue equipment as a percentage of revenue, before fuel
surcharge,  decreased  to 1.0% for the nine months  ended  September  30,  2004,
compared  to 2.4% for the  same  period  in  2003.  Lease  expense  for  revenue
equipment as a percentage of revenue,  before fuel surcharge,  decreased to 0.6%
for the quarter ended September 30, 2004,  compared to 2.3% for the same quarter
in 2003. These decreases primarily resulted from the reduction in the percentage
of the Company fleet comprised of vehicles held under operating leases discussed
above.

     Purchased  transportation  expense as a percentage of revenue,  before fuel
surcharge,  decreased  to 7.3% for the nine  months  ended  September  30,  2004
compared to 7.8% for the same period in 2003. Purchased  transportation  expense
as a percentage  of revenue,  before fuel  surcharge,  decreased to 7.1% for the
quarter ended  September 30, 2004 compared to 7.7% for the same quarter in 2003.
These  decreases  were primarily the result of the  improvements  in revenue per
mile during the 2004 periods described above,  along with the slight decrease in
the percentage of our total fleet  comprised of independent  contractors.  As of
September 30, 2004,  9.3% of our fleet was operated by independent  contractors,
compared to 9.8% at September 30, 2003.

     Miscellaneous  operating  expenses as a percentage of revenue,  before fuel
surcharge,  decreased to 2.0% for the nine months ended  September 30, 2004 from
2.3% for the same  period  in  2003.  This  decrease  was  primarily  due to the
improvements  in  average  revenue  per  tractor  per week in the  2004  periods
described above.  Miscellaneous  operating  expenses as a percentage of revenue,
before  fuel  surcharge,  remained  constant  at  2.1%  for the  quarters  ended
September 30, 2004 and 2003.

     As a result of the above factors,  our operating ratio (operating expenses,
net of fuel  surcharge,  expressed  as a  percentage  of  revenue,  before  fuel
surcharge) was 81.4% for the nine months ended  September 30, 2004,  compared to
82.2% for same period in 2003.  For the quarter ended  September  30, 2004,  our
operating ratio was 80.4% compared to 81.3% for same quarter in 2003.

     Income taxes have been provided at the  statutory  federal and state rates,
adjusted for certain permanent  differences  between financial  statement income
and  income for tax  reporting.  Our  effective  tax rate was 40.0% for 2004 and
2003.  As a percentage  of revenue,  before fuel  surcharge,  income tax expense
increased to 7.5% for the nine months ended  September  30, 2004,  from 7.1% for
the same period in 2003.  For the quarter ended  September 30, 2004,  income tax
expense,  as a percentage of revenue,  before fuel surcharge,  increased to 7.9%
from 7.5% for the same quarter in 2003.  These  increases  were primarily due to
the increases in our income before income taxes.

                                       15
<PAGE>
     As a result of the preceding  changes,  our net income,  as a percentage of
revenue before fuel surcharge, was 11.2% for the nine months ended September 30,
2004,  compared  to 10.6% for the same  period in 2003.  For the  quarter  ended
September  30,  2004,  our net income,  as a percentage  of revenue  before fuel
surcharge, was 11.8% compared to 11.2% in the same quarter in 2003.

Liquidity and Capital Resources

     The growth of our business has required,  and will  continue to require,  a
significant  investment  in  new  revenue  equipment.  Our  primary  sources  of
liquidity have been funds  provided by operations,  and to a lesser extent lease
financing arrangements, issuances of equity securities, and borrowings under our
line of credit.

     Net cash provided by operating  activities was approximately  $74.7 million
for the nine months ended September 30, 2004,  compared to $60.1 million for the
same period in 2003.  The increase for the 2004 period was  primarily the result
of an increase in revenue and the improvement in our operating ratio.

     Capital  expenditures  for  the  purchase  of  revenue  equipment,   office
equipment,  land and leasehold improvements,  totaled $92.7 million for the nine
months ended September 30, 2004 compared to $53.1 million for the same period in
2003. During the 2004 period,  we acquired a significant  number of tractors and
trailers for cash,  including some that previously had been held under operating
leases, and continued to upgrade our network of terminal facilities.

     Net cash provided by financing  activities was  approximately  $1.1 million
for the nine months  ended  September  30,  2004,  compared to net cash used for
financing  activities of approximately $1.1 million for same period in 2003. Net
cash provided by financing during the 2004 period was the result of stock option
exercises.  The net cash used for financing during the 2003 period was primarily
for the payments on our line of credit and long-term debt,  which was retired in
full during the fourth quarter of 2003,  offset by proceeds from the exercise of
stock options.

     At  September  30, 2004,  we did not have any  borrowings  outstanding.  We
currently  maintain a line of credit,  which permits  revolving  borrowings  and
letters of credit  totaling  $11.0  million.  At September 30, 2004, the line of
credit  consisted  solely of issued but unused  letters of credit  totaling $9.8
million.  Historically this line of credit had been maintained at $50.0 million.
However, due to our continued strong positive cash position, and in an effort to
minimize bank fees, we do not believe a revolving  credit facility or term loans
are  necessary  to meet our current and  anticipated  near-term  cash needs.  We
believe any necessary  increase in our line of credit to provide for a revolving
line or credit or term loans  could be  accomplished  quickly as needed.  We are
obligated to comply with certain  financial  covenants  under our line of credit
and were in compliance with these covenants at September 30, 2004.

     As of  September  30,  2004,  we  held  $24.4  million  in  cash  and  cash
equivalents.  Management believes we will be able to finance our near term needs
for working capital over the next twelve months, as well as capital expenditures
during  such  period,  with cash  balances,  cash  flows  from  operations,  and
borrowings and operating lease financing believed to be available from financing
sources.  We will continue to have  significant  capital  requirements  over the
long-term, which may require us to incur debt or seek additional equity capital.
The  availability  of  additional  capital  will depend upon  prevailing  market
conditions, the market price of our common stock and other factors over which we
have  limited  control,  as well  as our  financial  condition  and  results  of
operations.  Nevertheless,  based on our recent operating results,  current cash
position, anticipated future cash flows, and sources of financing that we expect
will  be  available  to  us,  we do not  expect  that  we  will  experience  any
significant liquidity constraints in the foreseeable future.

                                       16
<PAGE>
Off-Balance Sheet Transactions

     Our liquidity is not materially affected by off-balance sheet transactions.
Like  many  other  trucking  companies,   from  time-to-time  we  have  utilized
non-cancelable  operating  leases to finance a portion of our revenue  equipment
acquisitions.  At September  30,  2004,  we leased 97 tractors  under  operating
leases with varying  termination  dates ranging from October 2004 to April 2006.
Vehicles held under operating  leases are not carried on our balance sheet,  and
lease  payments  in  respect  of  such  vehicles  are  reflected  in our  income
statements  in the line item  "lease  expense - revenue  equipment."  Our rental
expense  related to operating  leases was $2.9 million for the nine months ended
September  30, 2004,  compared to $5.8 million for the same period of 2003.  The
total amount  outstanding  under operating  leases as of September 30, 2004, was
$2.1 million,  with $1.1 million due in the next 12 months. The effective annual
interest rates under these operating leases are approximately 5.2%.

Critical Accounting Policies and Estimates

     The  preparation  of financial  statements  in accordance  with  accounting
principles  generally  accepted in the United  States of America  requires  that
management  make a number of assumptions  and estimates that affect the reported
amounts  of  assets,  liabilities,  revenue  and  expenses  in our  consolidated
financial  statements and accompanying notes.  Management bases its estimates on
historical  experience and various other assumptions  believed to be reasonable.
Although  these  estimates are based on  management's  best knowledge of current
events and actions that may impact the Company in the future, actual results may
differ from these estimates and assumptions.  Our critical  accounting  policies
are  those  that  affect  our  financial  statements  materially  and  involve a
significant level of judgment by management.

     Revenue Recognition.  We recognize revenue, including fuel surcharges, upon
delivery of a shipment.

     Revenue Equipment.  Property and equipment are stated at cost. Depreciation
on property and  equipment is calculated  by the  straight-line  method over the
estimated  useful life down to an  estimated  salvage  value of the property and
equipment.  We periodically  evaluate the useful lives and salvage values of our
property and equipment  based upon,  among other  things,  our  experience  with
similar assets,  including gains or losses upon dispositions of such assets. Our
determinations with respect to salvage values are based upon the expected market
values of equipment at the end of the expected  life. We presently do not expect
any  decrease in the  salvage  values of our  revenue  equipment  as a result of
conditions in the used  equipment  market or otherwise.  We do not conduct "fair
value" assessments of our capital assets in the ordinary course of business and,
unless a  triggering  event under SFAS 144 occurs,  we do not expect to do so in
the future.

     Tires on  revenue  equipment  purchased  are  capitalized  as a part of the
equipment cost and depreciated over the life of the vehicle.  Replacement  tires
and recapping costs are expensed when placed in service.

     Claims Reserves and Estimates. Reserves and estimates for claims is another
of our critical accounting  policies.  The primary claims arising for us consist
of  cargo   liability,   personal  injury,   property   damage,   collision  and
comprehensive, workers' compensation, and employee medical expenses. We maintain
self-insurance  levels  for  these  various  areas of risk and have  established
reserves to cover these self-insured liabilities.  We also maintain insurance to
cover liabilities in excess of the self-insurance  amounts.  The claims reserves
represent  accruals  for the  estimated  uninsured  portion of  pending  claims,
including  adverse  development  of known  claims,  as well as incurred  but not
reported claims. These estimates are based on historical information,  primarily
our own claims  experience and the experience of our third party  administrator,
along with certain  assumptions  about future events.  Changes in assumptions as
well as changes in actual  experience  could cause these  estimates to change in
the near

                                       17
<PAGE>
term.  The  significant  recent  increases  in our  self-insured  retention  for
personal  injury and property damage claims amplify the importance and potential
impact of these estimates.

     Estimates also are involved in other aspects of our business. For instance,
we make similar types of estimates concerning the collectibility of our accounts
receivable and the  concentration of our credit exposure based on our historical
experience and certain assumptions about future events.

     Accounting for Income Taxes. Significant management judgment is required in
determining our provision for income taxes and in determining  whether  deferred
tax  assets  will be  realized  in full or in  part.  Deferred  tax  assets  and
liabilities  are measured  using enacted tax rates  expected to apply to taxable
income in the years in which  those  temporary  differences  are  expected to be
recovered  or settled.  When it is more likely than not that all or some portion
of specific deferred tax assets will not be realized, a valuation allowance must
be established for the amount of the deferred tax assets that are determined not
to be  realizable.  A valuation  allowance  for deferred tax assets has not been
deemed  necessary due to the Company's  profitable  operations.  We  continually
evaluate  strategies that would allow for the future utilization of our deferred
tax assets and  currently  believe we have the  ability to enact  strategies  to
fully realize our deferred tax assets should our earnings in future  periods not
support the full realization of the deferred tax assets.

Factors That May Affect Future Results

     The following issues and uncertainties,  among others, should be considered
in evaluating our business outlook:

     Business  Uncertainties.  Our future results may be affected by a number of
factors  over which we have little or no control.  Fuel  prices,  insurance  and
claims  costs,   interest  rates,   the   availability  of  qualified   drivers,
fluctuations  in the resale  value of revenue  equipment,  economic and customer
business cycles and shipping demands are factors over which we have little or no
control.  Significant  increases or rapid fluctuations in fuel prices,  interest
rates or insurance costs or claims,  to the extent not offset by fuel surcharges
and increases in freight rates, and the resale value of revenue equipment, could
reduce our profitability.  Weakness in the general economy, including a weakness
in consumer demand for goods and services,  could adversely affect our customers
and our growth and revenues, if customers reduce their demand for transportation
services.  Weakness in customer  demand for our  services or in the general rate
environment  may also  restrain  our  ability to  increase  rates or obtain fuel
surcharges.  It is also not possible to predict the effects of terrorist attacks
and  subsequent  events on the economy or on customer  confidence  in the United
States, or the impact, if any, on our future results of operations.

     Managing  Growth.  We have  experienced  significant  and  rapid  growth in
revenue and profits since the inception of our business in 1990. There can be no
assurance  that our business will  continue to grow in a similar  fashion in the
future or that we can  effectively  adapt our  management,  administrative,  and
operational  systems to respond to any future growth.  Further,  there can be no
assurance  that our operating  margins will not be adversely  affected by future
changes in and  expansion of our business or by changes in economic  conditions.
In addition,  we have recently commenced operation of a refrigerated division as
part of our growth  strategy and are subject to the risks inherent in entering a
new market,  including but not limited to: unfamiliarity with pricing,  service,
and operational issues; the risk that customer relationships may be difficult to
obtain or that we may have to reduce rates to gain customer  relationships;  the
risk that the specialized refrigerated equipment may not be adequately utilized;
and the risk that cargo claims may exceed our past experience.

     Insurance. Our future insurance and claims expenses might exceed historical
levels,  which could reduce our  earnings.  Insurance  premiums  have  increased
significantly  over the past several years,  which we have managed,  in part, by
increasing the levels of our  self-insured  retention.  We are  self-insured for
personal injury and property damage  liability,  cargo liability,  collision and
comprehensive up to a maximum limit of $2.0 million per occurrence.  Our maximum
self-retention for workers'

                                       18
<PAGE>
compensation   where  a  traffic  accident  is  not  involved  is  $500,000  per
occurrence.  We maintain insurance with licensed  insurance  companies above the
amounts for which we  self-insure.  Our  insurance  policies  provide for excess
personal injury and property damage liability up to a total of $40.0 million per
occurrence  and  cargo   liability,   collision,   comprehensive   and  workers'
compensation  coverage  up to a total  of  $10.0  million  per  occurrence.  Our
personal injury and property damage policies also include  coverage for punitive
damages where such coverage is allowed.

     If these costs were to increase  further,  or if the  severity or number of
claims  were to  increase,  our  earnings  could  be  materially  and  adversely
affected.

     Revenue  Equipment.  Our growth has been made possible through the addition
of new revenue  equipment.  Difficulty  in financing  or  obtaining  new revenue
equipment  (for  example,  delivery  delays from  manufacturers,  a  significant
decline in used revenue equipment  values, or the  unavailability of independent
contractors) could restrict future growth.

     EPA emissions control regulations require that diesel engines  manufactured
in October  2002 and  thereafter  must  satisfy  considerably  more  restrictive
emissions   standards.   Furthermore,   even  more  restrictive   engine  design
requirements will take effect in 2007. In part to offset the costs of compliance
with the EPA engine design  requirements,  some manufacturers have significantly
increased  new equipment  prices and further  increases may result in connection
with the implementation of the 2007 standards.  If new equipment prices increase
more than  anticipated,  we may be  required to increase  our  depreciation  and
financing  costs and/or  retain some of our equipment  longer,  with a resulting
increase in maintenance expenses. To the extent we are unable to offset any such
increases  in  expenses  with rate  increases  or cost  savings,  our results of
operations would be adversely affected.

     In addition to increases in equipment costs, the EPA-compliant  engines are
generally less fuel  efficient  than those in later model tractors  manufactured
before October 2002,  and compliance  with the 2007 EPA standards is expected to
result in  further  declines  in fuel  economy.  To the  extent we are unable to
offset  resulting  increases  in fuel  expenses  with higher  rates or surcharge
revenue, our results of operations would be adversely affected.

     Inflation.  Many of our operating  expenses,  including fuel costs and fuel
taxes,  are sensitive to the effects of inflation,  which could result in higher
operating  costs.   During  the  first  nine  months  of  2004,  we  experienced
fluctuations in fuel costs, as a result of conditions in the petroleum industry.
We maintain an aggressive program to obtain rate and fuel surcharge increases in
an effort to cover a  considerable  portion of increases  in expenses  resulting
from higher fuel costs.  Competitive conditions in the transportation  industry,
including lower demand for transportation  services,  could limit our ability to
continue to obtain rate  increases or fuel  surcharges.  Due to our  significant
operations  in the  West  Coast  region,  we are  particularly  affected  by the
substantially  higher fuel prices  currently  prevailing  in that portion of the
country.  Generally,  West Coast fuel prices are on average  approximately $0.10
per gallon higher than the national  average.  For much of the first nine months
of  2004,   however,   this  regional  difference  has  been  considerably  more
pronounced.  As fuel  surcharges  generally  are based on  national  fuel  price
averages,  this fuel price disparity  disproportionately  affects carriers, like
us, with  substantial  operations on the West Coast. We continue to address this
situation by implementing a higher West Coast surcharge on our tariff  customers
and  negotiating  with our contract  customers to obtain  higher fuel  surcharge
rates.  To the extent we do not have continuing  success in these  negotiations,
our results of  operations  may be adversely  affected.  See  "Quantitative  and
Qualitative Disclosure About Market Risk - Commodity Price Risk," below.

     We also have  periodically  experienced  some wage  increases  for drivers.
Increases in driver  compensation  could continue during 2004 and may affect our
operating income,  unless we are able to pass those increased costs to customers
through rate increases.

                                       19
<PAGE>
     Driver Retention.  Difficulty in attracting or retaining qualified drivers,
including independent  contractors,  also could have a materially adverse effect
on our growth and  profitability.  If a shortage of drivers  should occur in the
future,  or if  we  were  unable  to  continue  to  attract  and  contract  with
independent contractors, we could be required to make further adjustments to our
driver compensation  package,  which could adversely affect our profitability if
not offset by a corresponding increase in rates.

     For other risks and uncertainties  that might affect our future operations,
please  review  Part  II of our  Annual  Report  on  Form  10-K -  "Management's
Discussion  and Analysis of  Financial  Conditions  and Results of  Operations -
Factors That May Affect Future  Results."

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     We are  exposed to market risk  changes in  interest  rate on debt and from
changes in commodity prices.

     Under Financial  Accounting  Reporting Release Number 48 and Securities and
Exchange  Commission  rules  and  regulations,   we  are  required  to  disclose
information  concerning  market  risk with  respect to foreign  exchange  rates,
interest rates, and commodity  prices. We have elected to make such disclosures,
to the  extent  applicable,  using a  sensitivity  analysis  approach,  based on
hypothetical changes in interest rates and commodity prices.

     We generally have not had occasion to use derivative financial  instruments
for risk  management  purposes  and do not use them for  either  speculation  or
trading.  Because our operations  are confined to the United States,  we are not
subject to foreign currency risk.

     Interest Rate Risk

         We are subject to interest rate risk to the extent the Company borrows
against its line of credit or incurs debt in the acquisition of revenue
equipment. We attempt to manage our interest rate risk by managing the amount of
debt we carry. At September 30, 2004, we did not have any outstanding
borrowings. In the opinion of management, an increase in short-term interest
rates could have a materially adverse effect on our financial condition if our
debt levels increase. Management does not foresee or expect in the near future
any significant changes in our exposure to interest rate fluctuations or in how
that exposure is managed by us.

     Commodity Price Risk

     We are also  subject to  commodity  price risk with respect to purchases of
fuel.  Prices and  availability of petroleum  products are subject to political,
economic and market factors that are generally outside our control.  Because our
operations are dependent upon diesel fuel,  significant increases in diesel fuel
costs  could  materially  and  adversely  affect our results of  operations  and
financial  condition  if we are unable to pass  increased  costs on to customers
through  rate  increases  or fuel  surcharges.  Historically,  we have sought to
recover a portion of our short-term fuel price increases from customers  through
fuel  surcharges.  Fuel  surcharges  that can be  collected  do not always fully
offset an increase in the cost of diesel  fuel.  Based on our recent  historical
experience,  we  believe  that  we  generally  pass  through  to  our  customers
approximately 80% to 90% of increases in fuel prices.  For the nine months ended
September 30, 2004, fuel expense,  net of fuel surcharge,  represented  16.6% of
our total operating expenses,  net of fuel surcharge,  compared to 16.2% for the
same period in 2003.

     We are party to three fuel  contracts  relating to the price of heating oil
on the New York  Mercantile  Exchange  ("NYMX")  that we  entered  into  between
October 2000 and February 2002 in connection  with volume diesel fuel purchases.
If the price of heating  oil on the NYMX falls  below $0.58 per gallon we may be
required  to pay the  difference  between  $0.58 and the index price (1) for 1.0
million

                                       20
<PAGE>
gallons per month for any selected twelve months through March 31, 2005, and (2)
for 750,000 gallons per month for the twelve months of 2005. At October 8, 2004,
the price of heating oil on the NYMX was $1.45 for November 2004 contracts.  For
each $0.05 per gallon the price of heating oil would fall below $0.58 per gallon
during the  relevant  periods,  our  potential  loss on the  contracts  would be
approximately  $750,000.  However,  our net savings on fuel costs resulting from
lower fuel prices  under our volume  diesel  fuel  purchase  contracts  would be
approximately  $1.6  million,  after  taking  the  loss  on the  contracts  into
consideration.  We have valued these contracts at fair value in the accompanying
September 30, 2004 consolidated financial statements.

Item 4. Controls and Procedures

     As required by Rule 13a-15 under the Exchange  Act, the Company has carried
out an  evaluation  of the  effectiveness  of the  design and  operation  of the
Company's disclosure controls and procedures as of the end of the period covered
by this report.  This  evaluation was carried out under the supervision and with
the  participation  of the Company's  management,  including our Chief Executive
Officer and our Chief Financial Officer.  Based upon that evaluation,  our Chief
Executive  Officer and Chief  Financial  Officer  concluded  that our disclosure
controls and  procedures  were  effective as of the end of the period covered by
this report. During the Company's third fiscal quarter, there were no changes in
the Company's  internal  control over financial  reporting that have  materially
affected,  or that are  reasonably  likely to materially  affect,  the Company's
internal control over financial reporting.

     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 and Chief Financial  Officer as appropriate,  to allow timely
decisions regarding disclosures.

     The  Company  has  confidence  in its  internal  controls  and  procedures.
Nevertheless,  the Company's  management,  including the Chief Executive Officer
and 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.


                                       21
<PAGE>
<TABLE>
<S>        <C>        <C>
PART II  - OTHER INFORMATION

Item 1.    Legal Proceedings

     We  are  a  party  to  ordinary,   routine  litigation  and  administrative
proceedings  incidental to our business.  These  proceedings  primarily  involve
claims for personal injury or property damage incurred in the  transportation of
freight and for personnel matters.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

           Not Applicable

Item 3.    Defaults Upon Senior Securities

           Not Applicable

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

           Not Applicable

Item 5.    Other Information

           Not Applicable

Item 6.    Exhibits

           Exhibits required by Item 601 of Regulation S-K

           Exhibit No.    Description

           Exhibit 3      Articles of Incorporation and Bylaws

             (3.1)        Restated Articles of Incorporation of the Company (Incorporated
                          by reference to Exhibit 3.1 to the Company's Registration
                          Statement on Form S-1. No 33-83534.)

             (3.1.1)      First Amendment to Restated Articles of Incorporation of the
                          Company (Incorporated by reference to Exhibit 3.1.1 to the
                          Company's report on Form 10-K for the period ended
                          December 31, 2000.)

             (3.1.2)      Second Amendment to Restated Articles of Incorporation of the
                          Company (Incorporated by reference to Exhibit 3.1.2 to the
                          Company's Registration Statement on Form S-3 No. 333-72130.)

             (3.1.3)      Third Amendment to Restated Articles of Incorporation of the
                          Company.(Incorporated by reference to Exhibit 3.1.3 to the
                          Company's Report on Form 10-K for the period ended
                          December 31, 2002.)

                                       22
<PAGE>
             (3.2)        Restated Bylaws of the Company (Incorporated by reference to
                          Exhibit 3.2 to the Company's  Registration  Statement on Form S-3
                          No. 333-72130.)

             (3.2.1)      First Amendment to Restated Bylaws of the Company
                          (Incorporated by reference to Exhibit 3.2.1 to the Company's
                          Report on Form 10-K for the period ended December 31, 2002.)

           Exhibit 4      Instruments defining the rights of security
                          holders, including indentures

             (4.1)        Articles 4, 10 and 11 of the Restated  Articles of  Incorporation of
                          the Company.  (Incorporated  by reference to Exhibit 3.1 to this
                          Report on Form 10-Q.)

             (4.2)        Sections 2 and 5 of the Restated Bylaws of the Company.
                          (Incorporated by reference to Exhibit 3.2 to this Report on Form
                          10-Q.)

           Exhibit 11     Schedule of Computation of Net Income Per Share (Incorporated by
                          reference from Note 3, Net Income Per Share, in the Notes To
                          Consolidated Financial Statements contained in this Report on
                          Form 10-Q.)

           Exhibit 31     Section 302 Certifications

            (31.1)        Certification pursuant to Item 601(b)(31) of Regulation S-K,
                          as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                          2002, by Kevin P. Knight, the Company's Chief Executive Officer

            (31.2)        Certification pursuant to Item 601(b)(31) of Regulation S-K,
                          as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                          2002, by David A. Jackson, the Company's Chief Financial Officer

           Exhibit 32     Section 906 Certifications

            (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
                          Kevin P. Knight, the Company's Chief 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
                          David A. Jackson, the Company's Chief Financial Officer
</TABLE>

                                       23
<PAGE>



                                   SIGNATURES


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                              KNIGHT TRANSPORTATION, INC.


Date: November 8, 2004   By: /s/ Kevin P. Knight
                            ----------------------------------------------------
                            Kevin P. Knight
                            Chief Executive Officer, in his capacity as such and
                            on behalf of the registrant


Date: November 8, 2004   By: /s/ David A. Jackson
                            ----------------------------------------------------
                            David A. Jackson
                            Chief Financial Officer, in his capacity as such and
                            on behalf of the registrant


Date: November 8, 2004   By: /s/ Robert Johnson
                            ----------------------------------------------------
                            Robert Johnson
                            Chief Accounting Officer, in his capacity as such
                            and on behalf of the registrant

                                       24