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
      1934For
      the quarterly period ended March 31, 2008or[  ]
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      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
              incorporation
      or organization)
            (I.R.S.
      Employer
              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   o 
 No





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.  See definition of
"accelerated filer" and "large accelerated filer" in Rule 12b-2 of the Exchange
Act (Check one):





Large
      accelerated filer  x
            Accelerated
      filer  o
            Non-accelerated
      filer  o





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).    o Yesx 
 No





The
number of shares outstanding of registrant's Common Stock, par value $0.01 per
share, as of April 30, 2008 was 85,564,066 shares.











KNIGHT
TRANSPORTATION, INC.





TABLE OF CONTENTS











PART
      I – FINANCIAL INFORMATION
            Page
      NumberItem
      1.
            Financial
      StatementsCondensed
      Consolidated Unaudited Balance Sheets as of March 31, 2008 and December
      31, 2007
            1Condensed
      Consolidated Unaudited Statements of Income for the three months
      ended March 31, 2008 and 2007
            3Condensed
      Consolidated Unaudited Statements of Cash Flows for the three months ended
      March 31, 2008 and 2007
            4Notes
      to Condensed Consolidated Unaudited Financial Statements
            6Item
      2.
            Management's
      Discussion and Analysis of Financial Conditionand
      Results of Operations
            10Item
      3.
            Quantitative
      and Qualitative Disclosures About Market Risk
            17Item
      4.
            Controls
      and Procedures
            17Part
      II – OTHER INFORMATIONItem
      1.
            Legal
      Proceedings
            18Item
      1A.
            Risk
      Factors
            18Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            18Item
      3.
            Defaults
      Upon Senior Securities
            18Item
      4.
            Submission
      of Matters to a Vote of Security Holders
            19Item
      5.
            Other
      Information
            19Item
      6.
            Exhibits
            19Signatures
            
            20





Table of Contents
  PART
I  -  FINANCIAL INFORMATION
 
 Item
1.                                Financial
Statements
 
 KNIGHT TRANSPORTATION, INC. AND SUBSIDIARIES
                Condensed
      Consolidated Unaudited Balance Sheets
                As
      of March 31, 2008 and December 31, 2007
                (In
      thousands)March
      31,
                2008
              
              
              December
      31,
                2007ASSETSCurrent
      Assets:Cash and cash
      equivalents
              
              $
              21,465
              
              
              $
              23,688Short term
    investment
              
              
              7,140
              
              
              
              7,620Accounts receivable,
      net
              
              
              84,954
              
              
              
              88,535Notes receivable,
    net
              
              
              156
              
              
              
              19Other current
    assets
              
              
              17,913
              
              
              
              24,994Prepaid expenses
              
              
              9,192
              
              
              
              8,776Income tax
    receivable
              
              
              -
              
              
              
              3,558Deferred tax
asset
              
              
              10,372
              
              
              
              10,157Total current
    assets
              
              
              151,192
              
              
              
              167,347Property
      and Equipment:Land and
    improvements
              
              
              26,828
              
              
              
              26,878Buildings and
      improvements
              
              
              49,275
              
              
              
              46,685Furniture and
      fixtures
              
              
              7,016
              
              
              
              6,910Shop and service
      equipment
              
              
              4,702
              
              
              
              3,935Revenue equipment
              
              
              529,554
              
              
              
              521,085Leasehold
      improvements
              
              
              913
              
              
              
              776618,288
              
              
              
              606,269Less:  Accumulated
      depreciation and amortization
              
              
              (155,807
              )
              
              
              (146,721
              )Property
      and equipment, net
              
              
              462,481
              
              
              
              459,548Notes
      receivable – long-term
              
              
              328
              
              
              
              887Goodwill
              
              
              10,367
              
              
              
              10,372Intangible
      assets, net
              
              
              222
              
              
              
              238Other
      assets & restricted cash
              
              
              4,971
              
              
              
              4,972Total assets
              
              $
              629,561
              
              
              $
              643,364
 
 The
accompanying notes are an integral part of these condensed consolidated
unaudited financial statements.


1
 Table of Contents


KNIGHT
      TRANSPORTATION, INC. AND SUBSIDIARIES
                Condensed
      Consolidated Unaudited Balance Sheets (continued)
                As
      of March 31, 2008 and December 31, 2007
                (In
      thousands, except par values)March
      31,
                2008
              
              
              December
      31,
                2007LIABILITIES
      AND SHAREHOLDERS' EQUITYCurrent
      Liabilities:Accounts
    payable
              
              $
              9,209
              
              
              $
              17,744Accrued payroll and purchased
      transportation
              
              
              8,921
              
              
              
              7,992Accrued
      liabilities
              
              
              7,556
              
              
              
              8,048Claims accrual
              
              
              28,581
              
              
              
              28,662Total current
      liabilities
              
              
              54,267
              
              
              
              62,446Deferred
      tax liabilities
              
              
              95,903
              
              
              
              93,368Total
    liabilities
              
              
              150,170
              
              
              
              155,814Commitments
      and ContingenciesShareholders'
      Equity:Preferred stock, $0.01 par
      value; 50,000 shares authorized; none issued and
    outstanding
              
              
              -
              
              
              
              -Common stock, $0.01 par value;
      300,000 shares authorized;
                85,520 and 86,697 shares
      issued and outstanding at March
                31, 2008 and December 31, 2007,
      respectively
              
              
              855
              
              
              
              867Additional paid-in
      capital
              
              
              103,533
              
              
              
              102,450Retained
    earnings
              
              
              375,003
              
              
              
              384,233Total shareholders'
      equity
              
              
              479,391
              
              
              
              487,550Total liabilities and
      shareholders' equity
              
              $
              629,561
              
              
              $
              643,364
 
 The
accompanying notes are an integral part of these condensed consolidated
unaudited financial statements.





2
 Table of Contents








KNIGHT TRANSPORTATION, INC. AND SUBSIDIARIES
              Condensed
      Consolidated Unaudited Statements of Income
              (In
      thousands, except per share data)Three
      Months Ended
              March
      31,2008
            
            
            2007REVENUE:Revenue, before fuel
      surcharge
            
            $
            141,302
            
            
            $
            144,825Fuel surcharge
            
            
            35,109
            
            
            
            21,709Total revenue
            
            
            176,411
            
            
            
            166,534OPERATING
      EXPENSES:Salaries, wages and
      benefits
            
            
            50,011
            
            
            
            48,840Fuel
            
            
            53,557
            
            
            
            39,634Operations and
      maintenance
            
            
            9,301
            
            
            
            9,272Insurance and
      claims
            
            
            7,066
            
            
            
            8,006Operating taxes and
      licenses
            
            
            3,652
            
            
            
            3,557Communications
            
            
            1,414
            
            
            
            1,418Depreciation and
      amortization
            
            
            16,953
            
            
            
            15,931Lease expense – revenue
      equipment
            
            
            54
            
            
            
            106Purchased
      transportation
            
            
            12,921
            
            
            
            10,732Miscellaneous operating
      expenses
            
            
            2,755
            
            
            
            1,784Total operating
      expenses
            
            
            157,684
            
            
            
            139,280Income from
      operations
            
            
            18,727
            
            
            
            27,254Interest
      income
            
            
            254
            
            
            
            182Other
      income
            
            
            -
            
            
            
            188Income before income
      taxes
            
            
            18,981
            
            
            
            27,624Income
      taxes
            
            
            7,564
            
            
            
            11,005Net income
            
            $
            11,417
            
            
            $
            16,619Earnings
      per common share and common share equivalent:Basic
            
            $
            0.13
            
            
            $
            0.19Diluted
            
            $
            0.13
            
            
            $
            0.19Weighted
      average number of common shares and common share equivalents
      outstanding:Basic
            
            
            86,335
            
            
            
            86,173Diluted
            
            
            86,792
            
            
            
            87,167





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


3
 Table of Contents





KNIGHT TRANSPORTATION, INC. AND SUBSIDIARIES
              Condensed
      Consolidated Unaudited Statements of Cash Flows
              (In
      thousands)Three
      Months Ended
              March
      31,2008
            
            
            2007Cash
      Flows From Operating Activities:Net
      income
            
            $
            11,417
            
            
            $
            16,619Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation and
      amortization
            
            
            16,953
            
            
            
            15,931Gain on sales of
      equipment
            
            
            (672
            )
            
            
            (1,450
            )Earn-out on sold
      investment
            
            
            -
            
            
            
            (188
            )Non-cash compensation expense
      for issuance of stock to certain members of board of
    directors
            
            
            -
            
            
            
            39Provision for allowance for
      doubtful accounts
            
            
            245
            
            
            
            306Excess tax benefits related to
      stock-based compensation
            
            
            (98
            )
            
            
            (230
            )Stock option
      expense
            
            
            665
            
            
            
            652Deferred income
      taxes
            
            
            2,320
            
            
            
            1,516Changes
      in assets and liabilities:Decrease in short-term
      investments
            
            
            480
            
            
            
            -Decrease in trade
      receivables
            
            
            3,310
            
            
            
            2,838(Increase) decrease in other
      current assets
            
            
            (500
            )
            
            
            154Increase in prepaid
      expenses
            
            
            (416
            )
            
            
            (784
            )Decrease in income tax
      receivable
            
            
            3,558
            
            
            
            -Decrease (increase) in other
      assets and restricted cash
            
            
            7
            
            
            
            (320
            )Increase (decrease) in accounts
      payable
            
            
            1,473
            
            
            
            (4,550
            )Increase in accrued
      liabilities, claims accrual and other
            
            
            466
            
            
            
            7,503Net cash provided by operating
      activities
            
            
            39,208
            
            
            
            38,036Cash
      Flow From Investing Activities:Purchase of property and
      equipment
            
            
            (37,104
            )
            
            
            (31,716
            )Proceeds from sales of
      equipment
            
            
            15,479
            
            
            
            12,781Decrease in notes
      receivable
            
            
            448
            
            
            
            115Acquisition-related contingent
      payment
            
            
            -
            
            
            
            (12
            )Proceeds/earn-out from sale of
      investment in Concentrek, Inc.
            
            
            -
            
            
            
            188Net cash used in investing
      activities
            
            
            (21,177
            )
            
            
            (18,644
            )





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








4
 Table of Contents




KNIGHT
      TRANSPORTATION, INC. AND SUBSIDIARIES
                  Condensed
      Consolidated Unaudited Statements of Cash Flows (continued)
                  (In
      thousands)Three
      Months Ended
                  March
      31,2008
                
                
                2007Cash
      Flow From Financing Activities:Dividends paid
                
                
                (2,575
                )
                
                
                (1,724
                )Payments to acquire treasury
      stock
                
                
                (18,084
                )
                
                
                -Excess tax benefits related to
      stock-based compensation
                
                
                98
                
                
                
                230Proceeds from exercise of
      stock options
                
                
                307
                
                
                
                670Net cash used in financing
      activities
                
                
                (20,254
                )
                
                
                (824
                )Net
      (decrease) increase in cash and cash equivalents
                
                
                (2,223
                )
                
                
                18,568Cash
      and cash equivalents, beginning of period
                
                
                23,688
                
                
                
                1,582Cash
      and cash equivalents, end of period
                
                
                21,465
                
                
                $
                20,150Supplemental
      Disclosures:Non-cash investing and
      financing transactions:Equipment acquired in accounts
      payable
                
                $
                416
                
                
                $
                1,255FIN 48 adoption tax
      liability
                
                
                -
                
                
                
                394Retirement of treasury
      stock
                
                
                18,084
                
                
                
                -Transfer from property and
      equipment to assets held forsale
                
                
                4,878
                
                
                
                5,277Cash Flow
      Information:Income taxes
    paid
                
                $
                1,038
                
                
                $
                5,073
  The
accompanying notes are an integral part of these condensed consolidated
unaudited financial statements.


5
 Table of Contents






KNIGHT TRANSPORTATION, INC. AND SUBSIDIARIES





NOTES
TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS





Note
1.                                Financial
Information





References
in this Report on Form 10-Q to "we," "us," "our," "Knight," or the "Company" or
similar terms refer to Knight Transportation, Inc. and its consolidated
subsidiaries. All material inter-company balances and transactions have been
eliminated in consolidation.





The
accompanying condensed consolidated unaudited financial statements of Knight
Transportation, Inc. and its subsidiaries have been prepared in accordance with
accounting principles generally accepted in the United States of America and
Regulation S-X, instructions to Form 10-Q, and other relevant rules and
regulations of the Securities and Exchange Commission (the "SEC"), as applicable
to the preparation and presentation of interim financial information. Certain
information and footnote disclosures have been omitted or condensed pursuant to
such rules and regulations.  We believe 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.  These condensed
consolidated unaudited financial statements and notes thereto should be read in
conjunction with our consolidated financial statements and notes thereto
included in our Annual Report on Form 10-K for the year ended December 31,
2007.





Note
2.                                Stock-Based
Compensation





At March
31, 2008, we had one stock-based employee compensation plan known as the Knight
Transportation, Inc. 2003 Stock Option Plan, dated June 1, 2003, as amended from
time to time (the "2003 Plan").  On January 1, 2006 we adopted
Statement of Financial Accounting Standards ("SFAS") No. 123 (revised 2004),
"Share-Based Payment" ("SFAS 123R"), which requires the measurement and
recognition of compensation expense for all share-based payment awards made to
employees and directors, including employee stock options and employee stock
purchases related to the 2003 Plan, to be based on estimated fair
values.  Total SFAS 123R compensation cost for the three months ended
March 31, 2008 and 2007, respectively, are as follows:





Three
      Months Ended
              March
      31,
              (in
      thousands)2008
            
            
            2007Gross
      stock compensation expense, net of forfeitures
            
            $
            665
            
            
            $
            652Income
      tax
            
            $
            (265
            )
            
            $
            (259
            )Net
      stock compensation expense after tax
            
            $
            400
            
            
            $
            393





We
received approximately $307,000 in cash from the exercise of stock options
during the three months ended March 31, 2008, compared to $670,000 for the same
period in 2007.





As of
March 31, 2008, there was $19.5 million of unrecognized compensation cost
related to unvested share-based compensation awards granted under the 2003
Plan.  That cost is expected to be recognized over a weighted-average
period of three years, and a total period of seven years.


6
 Table of Contents


The fair value of each option grant is
estimated on the date of grant using the Black-Scholes option valuation model
that uses the assumptions noted in the following table:





Three
      Months Ended
              March
      31,2008
            
            
            2007Dividend
      yield (1)
            
            
            .81
            %
            
            
            .45
            %Expected
      volatility (2)
            
            
            33.51
            %
            
            
            32.29
            %Risk-free
      interest rate (3)
            
            
            2.93
            %
            
            
            4.5
            %Expected
      terms (4)
            
            6.20
      years
            
            
            6.58
      yearsWeighted
      average fair value of options granted
            
            $
            5.18
            
            
            $
            7.90





(1)
            The
      dividend yield is based on our historical experience and future
      expectation of dividend payouts.  The increase in the dividend
      yield from the 2007 to the 2008 period is due to an increase in dividends
      paid to common stock shareholders.  We increased our quarterly
      cash dividend from $0.02 per share to $0.03 per share in the second
      quarter of 2007.(2)
            We
      analyzed the volatility of our stock using historical data from January 1,
      2003 through the end of the most recent period to estimate the expected
      volatility.(3)
            The
      risk-free interest rate assumption is based on U.S. Treasury securities at
      a constant maturity with a maturity period that most closely resembles the
      expected term of the stock option award.(4)
            The
      expected terms of employee stock options represents the weighted-average
      period the stock options are expected to remain outstanding and has been
      determined based on an analysis of historical exercise behavior from
      January 1, 2003 through the end of the most recent
  period.





A summary
of the award activity under the 2003 Plan as of March 31, 2008, and changes
during the three-month period is presented below:





Option
      Totals
            
            
            Weighted
      Average Exercise
              Price
      Per Share ($)Outstanding
      12/31/2007
            
            
            4,182,780
            
            
            
            14.06Granted
            
            
            916,602
            
            
            
            14.79Exercised
            
            
            (41,435
            )
            
            
            7.42Forfeited
            
            
            (91,819
            )
            
            
            15.78Outstanding
      as of 03/31/2008
            
            
            4,966,128
            
            
            
            14.22





Note
3.                                Earnings
Per Share (in thousands, except per share data)





A
reconciliation of the basic and diluted earnings per share computations for the
three months ended March 31, 2008 and 2007, respectively, is as
follows:





Three
      Months Ended
              March
      31,2008
            
            
            2007Weighted
      average common shares outstanding – basic
            
            
            86,335
            
            
            
            86,173Effect
      of stock options
            
            
            457
            
            
            
            994Weighted
      average common share and common share equivalents outstanding –
      diluted
            
            
            86,792
            
            
            
            87,167Net
      income
            
            $
            11,417
            
            
            $
            16,619Earnings
      per common share and common share equivalentBasic
            
            $
            0.13
            
            
            $
            0.19Diluted
            
            $
            0.13
            
            
            $
            0.19





7
 Table of Contents


Certain
shares of common stock were excluded from the computation of diluted earnings
per share because the options' exercise prices were greater than the average
market price of the common shares, and therefore, the effect would be
anti-dilutive.  A summary of those options follows:





Three
      Months Ended
              March
      31,2008
            
            2007Number
      of anti-dilutive shares
            1,315,510
            
            516,350





Note
4.                               
Segment Information





We have
determined that we have two operating segments. Our operating segments consist
of (i) our truckload transportation (asset-based) segment and (ii) our brokerage
segment (non-asset-based).  Our asset-based, truckload transportation
segment includes our dry van and temperature controlled operations with service
centers located throughout the United States.  Each of the asset-based
service centers have similar economic characteristics, as they all provide
truckload carrier services of general commodities to a similar class of
customers. As a result, we have determined that it is appropriate to aggregate
these service centers into one reportable operating segment consistent with the
guidance in SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information."  Accordingly, we have not presented separate
financial information for each of these service centers.We have also determined
that our brokerage subsidiary qualifies as an operating segment under SFAS No.
131.  However, because its results of operations are not material to
our consolidated financial statements as a whole, we have not presented separate
financial information for this segment. For the three months ended March 31,
2008, our brokerage segment accounted for 5.5% of our consolidated revenue, 3.7%
of our consolidated net income, and 1.0% of our consolidated
assets.





Note
5.                               
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
any currently pending or threatened legal proceedings will not have a material
adverse effect upon our financial position or results of
operations.





Note
6.                               
Dividends





On
February 15, 2008, we declared a cash dividend of $0.03 per share of our common
stock, which represents a $0.01 per share increase from the dividend paid in the
first quarter of 2007.  The dividend was payable to shareholders of
record on March 7, 2008, and was paid on March 28, 2008.  We currently
expect to continue to pay quarterly cash dividends in the
future.  Future payment of cash dividends, and the amount of any such
dividends, will depend upon our financial condition, results of operations, cash
requirements, tax treatment, and certain corporate law requirements, as well as
other factors deemed relevant by our Board of Directors.






8
 Table of Contents





Note
7.                                Goodwill
& Intangible Assets





Goodwill
represents the excess of the purchase price of our acquisitions over the fair
value of the assets acquired. The tax benefit from the recognition on the tax
return of the amortization of the excess tax goodwill over book goodwill is
treated as a reduction in the book basis of goodwill.  The changes in
the carrying amount of goodwill and intangible assets for the three months ended
March 31, 2008 follow:





Goodwill:
            
            In
      ThousandsBalance
      at December 31, 2007
            
            $
            10,372Amortization
      relating to deferred excess tax goodwill
            
            
            (5
            )Balance
      at March 31, 2008
            
            $
            10,367








Intangible
      Assets:
            
            In
      ThousandsBalance
      at December 31, 2007
            
            $
            238Amortization
            
            
            (16
            )Balance
      at March 31, 2008
            
            $
            222





Intangible
assets are being amortized on a straight-line method over a five year
period.  Annual amortization expense is expected to be $62,000 for
fiscal years 2008 to 2010 and $52,000 for fiscal year 2011.





Note
8.                                Other
Assets





In 2003,
we signed a partnership agreement with Transportation Resource Partners ("TRP"),
who makes privately negotiated equity investments.  Per the original
partnership agreement, we were committed to pledge $5.0 million out of
approximately $260.0 million total. In early 2006, we increased the commitment
amount to $5.5 million.  Our investment in TRP is accounted for using
the cost method.  At March 31, 2008, our ownership interest was
approximately 2.1%, the carrying book balance of our investment was $3.8
million, and our outstanding commitment to TRP was approximately $1.0
million.




Note
9.                               
Assets Held for Sale





Included
in "Other current assets" on the Balance Sheet is $13.7 million of revenue
equipment that will not be utilized in continuing operations and is being held
for sale. Assets held for sale are no longer subject to depreciation, and are
recorded at the lower of depreciated value or fair market value less selling
costs. We periodically review the carrying value of these assets for possible
impairment.  No impairments were recorded in the three months ended
March 31, 2008. We expect to sell these assets and replace them with new assets
within twelve months.





Note
10.                               Income
Taxes





We
adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes
("FIN 48"), effective January 1, 2007. This interpretation was issued to clarify
accounting for income taxes recognized in financial statements by prescribing a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return. The cumulative effect, if any, of applying FIN 48 is to be reported
as an adjustment to the opening balance of retained earnings in the year of
adoption. As a result of FIN 48 implementation, we recorded a $394,000 net
decrease in retained earnings on January 1, 2007.  During 2007, we
resolved certain tax positions relating to the 2006 tax year, leaving
unrecognized tax benefits of approximately $195,000 as of March 31, 2008. The
total amount of unrecognized tax benefits that, if recognized, would favorably
affect the effective tax rate in future periods was approximately $126,000 as of
March 31, 2008.





9
 Table of Contents





Potential
interest and penalties accrual related to unrecognized tax benefits are
recognized as a component of income tax expense. Interest of $3,891 was accrued
to income tax expense in the quarter ended March 31, 2008. Cumulative interest
and penalties accrued as of March 31, 2008, was $51,000 and $49,000,
respectively.





We are
subject to U.S. Federal and state income tax examinations with various statues
of limitations. The 2004 through 2007 tax years generally remain subject to
examination by federal authority, and the 2003 through 2007 tax years generally
remain subject to examination by state tax authorities. We do not believe the
unrecognized tax benefits will change significantly within the next 12
months.





Note
11.                                Company
Share Repurchase Program





On
November 8, 2007, our Board of Directors unanimously authorized the repurchase
of up to 3.0 million shares of the Company's Common Stock.  The
repurchase authorization will remain in effect until the share limit is reached
or the program is terminated.  The repurchase authorization is
intended to afford the Company the flexibility to acquire shares
opportunistically in future periods and does not indicate an intention to
repurchase any particular number of shares within a definite
timeframe.  Any repurchases would be effected based upon share price
and market conditions.





Under our
share repurchase program, repurchased shares are constructively retired and
returned to unissued status. We consider several factors in determining when to
execute the share repurchases, including among other things, our current cash
needs, our capacity for leverage, our cost of borrowings, and the market price
of our common stock.





In the
quarter ended March 31, 2008, we purchased 1,218,500 shares of our common stock
in the open market for approximately $18.1 million. The shares acquired have
been retired, and are available for future issuance. The purchases were made in
accordance with Security and Exchange Commission Rule 10b-18, which limits the
amount and timing of repurchases.  As of March 31, 2008, there were
1,781,500 shares remaining for future purchases under our repurchase
program.





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, this report contains
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Section 27A of the
Securities Act of 1933, as amended, that involve risks, assumptions, and
uncertainties that 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
revenues, earnings, cash flows, capital expenditures, or other financial items;
any statement of plans, strategies, and objectives of management for future
operations; any statements concerning proposed acquisition plans, 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 "Item 1A. Risk
Factors," set forth in our form 10-K for the year ended December 31,
2007.





10
 Table of Contents








All
such forward-looking statements speak only as of the date of this Form
10-Q.  You are cautioned not to place undue reliance on such
forward-looking statements.  The Company expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in the
Company's expectations with regard thereto or any change in the events,
conditions, or circumstances on which any such statement is based.





Introduction





Business
Overview





Our
headquarters are located in Phoenix, Arizona. The transportation services we
provide are asset-based dry van truckload and temperature controlled truckload
carrier services, along with non-asset-based brokerage
services.  Through our asset-based and non-asset-based capabilities we
are able to transport, or arrange for the transportation of, general commodities
for customers throughout the United States.  We generally focus our
dry van and temperature controlled operations on regional short-to-medium
lengths of haul.  The results of our brokerage activities were
relatively immaterial for the first quarter of 2008 and therefore a detailed
discussion of the financial results of these operations will not be separately
presented.  As of March 31, 2008, we operated 31 asset-based service
centers (consisting of 27 dry van and four temperature controlled service
centers) and 13 non-asset-based brokerage branches.  The main factors
that affect our results of operation are the number of tractors we operate, our
revenue per tractor (which includes primarily our revenue per total mile and our
number of miles per tractor), and our ability to control our costs.





Operating
and Growth Strategy





The
primary source of our revenue growth has been our ability to open and develop
new regional service centers and brokerage branches in selected geographic
areas. In the first quarter of 2008, we added a non-asset-based brokerage branch
in Gulfport, Mississippi.  In April 2008, we opened an asset-based
temperature controlled service center in Dallas, Texas, and we also expect to
open two asset-based dry van service centers in the current quarter. As part of
our growth strategy, we also evaluate acquisition opportunities that meet our
financial and operating criteria.





In the
last few quarters, our growth slowed as a result of economic conditions. During
the first quarter of 2008, we reduced our total tractor count by 84
tractors.  Year over year, our average fleet size grew by 44
tractors.  In the short term, we will closely evaluate our fleet size
and make adjustments as needed to provide customers the service they expect
while generating adequate returns.  Included in the evaluation of
fleet size is the opportunity to improve existing levels of equipment
utilization.  Over the long term, we are optimistic about our
competitive position in the industry and expect that proper execution of our
decentralized growth model will position us to emerge from the downturn in the
economy with the ability to add more capacity and gain more market
share.





Looking
forward, we believe that the supply of for-hire trucks has ceased to expand and,
in fact, is now retracting.  Continued high fuel prices and continued
pressure on freight pricing and fuel surcharges, should expedite the retraction
towards market equilibrium.  In addition, we hope that the various
forms of stimulus to the broader economy, that were not present a year ago, will
have a positive impact on freight demand as the year
progresses.  Although it is difficult to predict the timing with any
certainty, we expect a reduction of trucking capacity and an increase in
economic activity to have a positive impact on freight rates and equipment
utilization over time.








11
 Table of Contents





Revenue
and Expenses





We
primarily generate revenue by transporting freight for our
customers.  Generally, we are paid a predetermined rate per mile or
per load for our services.  We enhance our revenue by charging for
tractor and trailer detention, loading and unloading activities, brokerage
operations, 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 to, among other things, 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.





The main factors that impact our
profitability in terms of expenses are the variable costs of transporting
freight for our customers. These costs include fuel expense, driver-related
expenses, such as wages, benefits, training and recruitment, and independent
contractor and third party carrier costs, which are recorded on the "Purchased
Transportation" line of our consolidated statements of income. 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 service centers and
the compensation of non-driver personnel. Effectively controlling our expenses
and managing our net cost of revenue equipment acquisition and disposition,
including any related gains or losses, are important elements 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, net of fuel surcharge, expressed as a percentage of revenue, before
fuel surcharge).





Recent
Results of Operations and Quarter-End Financial Condition





For the
quarter ended March 31, 2008, our results of operations changed as follows
versus the same period in 2007:





o
            Revenue,
      before fuel surcharge, decreased 2.4%, to $141.3 million from $144.8
      million;o
            Net
      income decreased to $11.4 million, compared to $16.6 million;
      ando
            Net
      income per diluted share decreased to $0.13, compared to
      $0.19.





The
challenging truckload freight environment continued in the first quarter and was
accompanied by diesel fuel prices reaching unprecedented highs. Pricing and
equipment utilization continued to be negatively affected as the supply of
for-hire trucks outpaced freight demand in our regional markets.  For
the quarter, average freight revenue per tractor declined 6.1% and our empty
mile factor improved to 11.9% from 13.1%, an improvement of 9.2%, despite a
slightly shorter average length of haul.  The decrease in asset
productivity was the most significant factor that negatively impacted our first
quarter results of operations.  Lower revenue per tractor less
efficiently covered fixed costs, leading to increases in salaries, depreciation,
and certain other expenses as a percentage of revenue.  Although
freight demand in the quarter did not exceed that of the same quarter a year
ago, we did experience a narrowing of the year over year difference as the
quarter progressed.





Average
revenue per tractor per week, before fuel surcharge, decreased to $2,744 in the
first quarter of 2008, compared to $2,922 in the same quarter a year
ago.  Our operating ratio, net of fuel surcharge (operating expenses,
net of fuel surcharge, expressed as a percentage of revenue, before fuel
surcharge), was 86.7% for the quarter ended March 31, 2008, as compared to 81.2%
for the same period a year ago. Our average length of haul decreased to 527
miles, compared to 537 miles for the same period a year ago.





12
 Table of Contents





During
the quarter, average number of tractors operated increased to 3,723, from 3,679
for the same period a year ago. Tractor count at March 31, 2008 decreased to
3,674, from 3,760 a year ago. For the quarter, we spent $21.6 million in net
capital expenditures.  At March 31, 2008, our balance sheet remained
debt free, our cash and cash equivalents and short term investments totaled
$28.6 million, and our shareholders' equity was $479.4 million.





Results
of Operations





The
following table sets forth the percentage relationships of our expense items to
total revenue, including fuel surcharge (Columns A), and revenue, before fuel
surcharge (Columns B), for the three months ended March 31, 2008 and 2007,
respectively.  Fuel expense as a percentage of revenue, before fuel
surcharge, is calculated using fuel expense, net of fuel
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.





(A)
              Three
      Months Ended
              March
      31,
            
            
            
            
            (B)
              Three
      Months Ended
              March
      31,2008
            
            
            2007
            
            
            
            
            2008
            
            
            2007Total revenue, including fuel
      surcharge
            
            
            100.0
            %
            
            
            100.0
            %
            
            Revenue, before fuel
    surcharge
            
            
            100.0
            %
            
            
            100.0
            %Operating
      expenses:
            
            
            
            
            
            
            
            
            
            Operating
      expenses:Salaries, wages and
      benefits
            
            
            28.3
            
            
            
            29.3
            
            
            Salaries, wages and
      benefits
            
            
            35.4
            
            
            
            33.7Fuel (1)
            
            
            30.4
            
            
            
            23.8
            
            
            Fuel (2)
            
            
            13.1
            
            
            
            12.4Operations and
      maintenance
            
            
            5.3
            
            
            
            5.5
            
            
            Operations and
      maintenance
            
            
            6.6
            
            
            
            6.4Insurance and
      claims
            
            
            4.0
            
            
            
            4.8
            
            
            Insurance and
      claims
            
            
            5.0
            
            
            
            5.5Operating taxes and
      licenses
            
            
            2.1
            
            
            
            2.1
            
            
            Operating taxes and
      licenses
            
            
            2.6
            
            
            
            2.5Communications
            
            
            0.8
            
            
            
            0.9
            
            
            Communications
            
            
            1.0
            
            
            
            1.0Depreciation and
      amortization
            
            
            9.6
            
            
            
            9.6
            
            
            Depreciation and
      amortization
            
            
            12.0
            
            
            
            11.0Lease expense – revenue
      equipment
            
            
            0.0
            
            
            
            0.1
            
            
            Lease expense – revenue
      equipment
            
            
            0.0
            
            
            
            0.1Purchased
      transportation
            
            
            7.3
            
            
            
            6.4
            
            
            Purchased
      transportation
            
            
            9.1
            
            
            
            7.4Miscellaneous operating
      expenses
            
            
            1.6
            
            
            
            1.1
            
            
            Miscellaneous operating
      expenses
            
            
            1.9
            
            
            
            1.2Total
      operating expenses
            
            
            89.4
            
            
            
            83.6
            
            
            Total
      operating expenses
            
            
            86.7
            
            
            
            81.2Income
      from operations
            
            
            10.6
            
            
            
            16.4
            
            
            Income
      from operations
            
            
            13.3
            
            
            
            18.8Net
      interest and other income
            
            
            0.2
            
            
            
            0.2
            
            
            Net
      interest and other income
            
            
            0.2
            
            
            
            0.3Income
      before income taxes
            
            
            10.8
            
            
            
            16.6
            
            
            Income
      before income taxes
            
            
            13.5
            
            
            
            19.1Income
      taxes
            
            
            4.3
            
            
            
            6.6
            
            
            Income
      taxes
            
            
            5.4
            
            
            
            7.6Net
      Income
            
            
            6.5
            %
            
            
            10.0
            %
            
            Net
      Income
            
            
            8.1
            %
            
            
            11.5
            %





(1)
            Gross
      fuel expense without fuel surcharge revenue.(2)
            Net
      fuel expense including fuel surcharge revenue.*
            There
      are minor rounding differences in the
table.





A
discussion of our results of operations for the three months ended March 31,
2008 and March 31, 2007 is set forth below.





Comparison of Three Months Ended
March 31, 2008 to Three Months Ended March 31, 2007





Total
revenue for the three months ended March 31, 2008 increased 5.9% to $176.4
million from $166.5 million for the same period in 2007. Total revenue included
$35.1 million of fuel surcharge revenue in the 2008 period compared to $21.7
million in the 2007 period.  In discussing our results of operations,
we use revenue, before fuel surcharge, and fuel expense, net of fuel 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 high variable cost nature of our business makes a comparison of changes in
expenses as a percentage of revenue, before fuel surcharge, more meaningful than
absolute dollar changes.





13
 Table of Contents





Revenue,
before fuel surcharge, decreased 2.4% to $141.3 million for three months ended
March 31, 2008 from $144.8 million for the same period in 2007. The industry
wide supply of truckload equipment continued to outpace demand in the first
quarter, which resulted in lower equipment utilization. Demand for truckload
freight started especially weak during the first part of the quarter ended March
31, 2008, and strengthened somewhat in the last five to six weeks of the
quarter.




Salaries,
wages and benefits expense as a percentage of revenue, before fuel surcharge,
increased to 35.4% for the quarter ended March 31, 2008, from 33.7% for the same
period in 2007. The increase is primarily due to a decrease in equipment
utilization and lower revenue per mile. For our employees, we record accruals
for workers' compensation benefits as a component of our claims reserve, and the
related expense is reflected in salaries, wages and benefits in our consolidated
statements of income.





Fuel
expense, net of fuel surcharge, as a percentage of revenue before fuel
surcharge, increased to 13.1% for the quarter ended March 31, 2008, from 12.4%
for the same period in 2007. The U.S. national average price for diesel fuel
increased by $0.96 per gallon in the first quarter of 2008 versus the first
quarter of 2007.  Rising fuel prices were partially off-set by a 9.2%
improvement in our empty mile factor and a 61.7% increase in fuel surcharge
revenue. We maintain a fuel surcharge program to assist us in recovering a
portion of our fuel expense. Fuel surcharge revenue was $35.1 million for the
quarter ended March 31, 2008, compared to $21.7 million for the same period in
2007.





Operations
and maintenance expense, as a percentage of revenue, before fuel surcharge,
increased slightly to 6.6% for the quarter ended March 31, 2008, compared to
6.4% for the same period in 2007. The increase is mainly due to lower equipment
utilization and lower revenue per mile. Independent contractors pay for the
maintenance of their own vehicles.





Insurance
and claims expense as a percentage of revenue, before fuel surcharge, decreased
to 5.0% for the quarter ended March 31, 2008, compared to 5.5% for the same
period in 2007. The decrease is attributed to a reduction in the frequency of
claims incurred in the current quarter.





Operating
taxes and licenses expense as a percentage of revenue, before fuel surcharge,
increased slightly to 2.6% for the quarter ended March 31, 2008, compared to
2.5% for the same period in 2007.





Communications
expense as a percentage of revenue, before fuel surcharge, remained constant at
1.0% for the quarter ended March 31, 2008 and 2007.





Depreciation
and amortization expense as a percentage of revenue, before fuel surcharge,
increased to 12.0% for the quarter ended March 31, 2008, compared to 11.0% for
the same period in 2007. The increase is attributed to declining revenue
per mile, lower equipment utilization, and a slight increase in the average
number of tractors operated during the quarter. The average tractors
operated in the 2008 period increased 1.2% from a year ago.





Lease
expense for revenue equipment as a percentage of revenue, before fuel surcharge,
decreased to less than 0.1% for the quarter ended March 31, 2008, compared to
0.1% for the same period in 2007.  As of March 31, 2008, we had 13 tractors
under operating leases.








14
 Table of Contents





Purchased
transportation represents the amount that independent contractors, as well as
contracted carriers for our brokerage division, are paid to haul freight for us
on a mutually agreed upon per-mile or per-shipment basis. Purchased
transportation expense as a percentage of revenue, before fuel surcharge,
increased to 9.1% for the quarter ended March 31, 2008, from 7.4% for the same
period in 2007. The increase in this category is due to payments to outside
carriers for transportation services arranged by our brokerage division, which
has experienced considerable growth over the last year. Excluding purchased
transportation activities from our brokerage division, this expense as a
percentage of revenue, before fuel surcharge, would have decreased to 3.5% for
the quarter ended March 31, 2008, compared to 4.5% for the same period in 2007.
This decrease is attributable to a change in the ratio of our company fleet to
owner operated fleet. As of March 31, 2008, 5.3% of our fleet was comprised of
independent contractors, compared to 6.3% a year ago.





Miscellaneous
operating expenses as a percentage of revenue, before fuel surcharge, increased
to 1.9% for the quarter ended March 31, 2008, compared to 1.2% for the same
period in 2007.  Gains from sale of used equipment are included in
miscellaneous operating expenses.  A softening market for used tractors and
trailers lowered our gains from sale of used equipment by more than 50%, to
$672,000 in the first quarter of 2008, compared to $1.5 million for the same
period a year ago. Excluding gains from sale of used equipment, miscellaneous
operating expenses increased slightly to 2.4% for the 2008 period, compared to
2.2% for the same period in 2007.





As a
result of the above factors, our operating ratio, net of fuel surcharge
(operating expenses, net of fuel surcharge, expressed as a percentage of
revenue, before fuel surcharge), increased to 86.7% for the quarter ended March
31, 2008, from 81.2% for the same period in 2007.





Net
interest income and other income as a percentage of revenue, before fuel
surcharge, decreased to 0.2% for the quarter ended March 31, 2008, from 0.3% for
the same period in 2007. Other income for the 2007 period included an earn-out
distribution of $188,000 for the sale of our investment in Concentrek, which was
sold in 2005.   We had no outstanding debt at March 31, 2008 or
2007.





Income
taxes have been provided for at the statutory federal and state rates, adjusted
for certain permanent differences between financial statement income and income
for tax reporting. For the quarter ended March 31, 2008, our effective tax rate
remained relatively constant at 39.9% of our income before taxes, compared to
39.8% for the same period in 2007.





As a
result of the preceding changes, our net income, as a percentage of revenue
before fuel surcharge, decreased to 8.1% for the quarter ended March 31, 2008,
compared to 11.5% for the same period in 2007.





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 source of liquidity
has been funds provided by operations.





While net
income decreased $5.2 million for the quarter ended March 31, 2008, cash flow
from operations increased $1.2 million from a year ago. Net cash provided by
operating activities increased to $39.2 million for the quarter ended March 31,
2008, compared to $38.0 million for the same period in 2007. The increase in
cash flow from operations is mostly attributed to a $3.6 million decrease in
income tax receivable.








15
 Table of Contents





Net cash
used in investing activities was $21.2 million for the quarter ended March 31,
2008, compared to $18.6 million for the 2007 period. The increase is mainly due
to an increase in capital expenditures for revenue equipment in the 2008 period.
Capital expenditures for the purchase of revenue equipment, office equipment,
land and leasehold improvements, net of equipment sales, totaled $21.6 million
for the quarter ended March 31, 2008, compared to $18.9 million for the 2007
period. About 50% of the capital expenditures for the 2008 period represent the
payment for certain tractors which were received, and accrued for, on the
December 31, 2007 Balance Sheet.  We currently anticipate total
capital expenditures, net of equipment sales, of approximately $80.0 to $90.0
million for the year. This will be used primarily to acquire new revenue
equipment.





Net cash
used in financing activities was approximately $20.3 million for the quarter
ended March 31, 2008, compared to $824,000 for the same period in
2007.  The increase in cash used in financing activities is primarily
due to $18.1 million used to repurchase 1,218,500 shares of our common stock.
Cash dividends paid in the current quarter also increased $851,000, due to an
increase in dividends paid to common stock shareholders.  We increased
our quarterly cash dividend from $0.02 per share to $0.03 per share in the
second quarter of 2007.





At March
31, 2008, we did not have any outstanding debt. We currently maintain a line of
credit that permits revolving borrowings and letters of credit totaling $50.0
million. At March 31, 2008, the line of credit consisted solely of issued but
unused letters of credit totaling $36.9 million. These letters of credit are
issued to various regulatory authorities in connection with our self-insurance
programs. We are obligated to comply with certain financial covenants under our
line of credit agreement, and we were in compliance with these covenants at
March 31, 2008.





As of
March 31, 2008, we held $28.6 million in cash and cash equivalents and short
term investments. Management believes we will be able to finance our near term
needs for working capital over the next twelve months, as well as acquisitions
of revenue equipment during such period, with cash balances, cash flows from
operations, and borrowings, if any, available under our existing line of credit.
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 several 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.





Off-Balance
Sheet Transactions





Our
liquidity is not materially affected by off-balance sheet
transactions.  Like many other trucking companies, we have
periodically utilized operating leases to finance our revenue equipment
purchases.  As of March 31, 2008, we had 13 tractors held under
operating leases.  Vehicles held under operating leases were 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."





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 us in the future, actual
results may differ from these estimates and assumptions.  Our critical
accounting policies are those that affect, or could affect our financial
statements materially and involve a significant level of judgment by management.The accounting policies we
deem most critical to us include, revenue recognition, depreciation, claims
accrual, accounting for income taxes and share based payments. There have been
no significant changes to our critical accounting policies and estimates during
the three months ended March 31, 2008, compared to those disclosed in Item 7,
"Management’s Discussion and Analysis of Financial Condition and Results of
Operation," included in our 2007 Annual Report on Form 10-K.






16
 Table of Contents







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 SEC 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
currently do not use derivative financial instruments for risk management
purposes and do not use them for either speculation or trading. Because our
operations are confined almost entirely to the United States, we are not subject
to a material amount of foreign currency risk.





Interest
Rate Risk





We are
subject to interest rate risk to the extent we borrow against our line of credit
or incur debt in the acquisition of revenue equipment. We attempt to manage our
interest rate risk by managing the amount of debt we carry. We did not have any
debt outstanding at March 31, 2008, and therefore had no market risk related to
debt.





Commodity
Price Risk





We also
are subject to commodity price risk with respect to purchases of fuel. The price
and availability of diesel fuel can fluctuate due to market factors that are
beyond our control.  We believe fuel surcharges are effective at
mitigating the risk of high fuel prices, although we do not recover the full
amount of fuel price increases.  As of March 31, 2008, we did not have
any derivative financial instruments to reduce our exposure to fuel price
fluctuations.





Item
4.                                Controls
and Procedures





We have
established disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended) to ensure
that material information relating to us, including our consolidated
subsidiaries, is made known to the officers who certify our financial reports
and to other members of senior management and the Board of
Directors.  Our management, with the participation of our principal
executive officer and principal financial officer, conducted an evaluation of
the effectiveness of our disclosure controls and procedures.  Based on
this evaluation, as of the end of the period covered by this Quarterly Report on
Form 10-Q, our principal executive officer and principal financial officer have
concluded that our disclosure controls and procedures are effective to ensure
that the information required to be disclosed by us in the reports that we file
or submit under the Exchange Act is (i) recorded, processed, summarized, and
reported within the time periods specified in the SEC rules and forms, and (ii)
accumulated and communicated to management, including our principal executive
officer and principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure.





17
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There was
no change in our internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March
31, 2008, that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.





We have
confidence in our disclosure controls and procedures and internal control over
financial reporting.  Nevertheless, our management, including our
principal executive officer and principal financial officer, does not expect
that our disclosure controls and procedures and internal control over financial
reporting will prevent all errors, misstatements, or fraud.  A control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are
met.  Further, the design of a 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 control systems, no evaluation of controls can provide
absolute assurance that all of our control issues and instances of fraud, if
any, have been detected.


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
1A.                                Risk
Factors
 
 While we
attempt to identify, manage, and mitigate risks and uncertainties associated
with our business, some level of risk and uncertainty will always be
present.  Our Annual Report on Form 10-K for the year ended December
31, 2007, in the section entitled "Item 1A.  Risk
Factors," describes some of the risks and uncertainties associated with
our business.  These risks and uncertainties have the potential to
materially affect our business, financial condition, results of operations, cash
flows, projected results, and future prospects.
  Item 2.   Unregistered
Sales of Equity Securities and Use of Proceeds


Period
            
            Total
      Number
              of
      Shares
              Purchased
            
            Average
              Price
      Paid
              per
      Share
            
            Total
      Number of
              Shares
      Purchased
              as
      Part of Publicly
              AnnouncedProgram
            
            Maximum
      Number of
              Shares
      that May Yet
              Be
      Purchased Under
              the
      Program1/1/08
      - 1/31/08
            
            669,000
            
            $14.78
            
            669,000
            
            2,331,0002/1/08
      - 2/29/08
            
            -
            
            -
            
            -
            
            2,331,0003/1/08
      - 3/31/08
            
            549,500
            
            $14.91
            
            549,500
            
            1,781,500Total
            
            1,218,500
            
            $14.84
            
            1,218,500
            
            1,781,500





On
November 8, 2007, our Board of Directors unanimously authorized the repurchase
of up to 3.0 million shares of our Common Stock.  The repurchase
authorization will remain in effect until the share limit is reached or the
program is terminated.  See Note 12 for additional information with
respect to our share repurchase program.





Item
3.                                Defaults
Upon Senior Securities





Not
Applicable





18
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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.
            
            DescriptionExhibit
      3
            
            Articles
      of Incorporation and Bylaws(3.1)
            Second
      Amended and Restated Articles of Incorporation of the Company.
      (Incorporated by reference to Appendix A to the Company's Definitive Proxy
      Statement on Schedule 14A filed April 20, 2007.)(3.2)
            Sixth
      Amended and Restated Bylaws of the Company. (Incorporated by reference to
      Exhibit 3 to the Company’s Report on Form 8-K dated December 18, 2007 and
      filed on December 19, 2007.)Exhibit
      4
            
            Instruments
      defining the rights of security holders, including
    indentures(4.1)
            Articles
      4, 10, and 11 of the Second Amended and 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 Sixth Amended and Restated Bylaws of the
      Company.  (Incorporated by reference to Exhibit 3.2 to this
      Report on Form 10-Q.)(4.3)
            Knight
      Transportation, Inc. Amended and Restated 2003 Stock Option Plan.
      (Incorporated by reference to the Company's Definitive Proxy Statement on
      Schedule 14A filed December 1, 2005.)Exhibit
      10
            
            Material
      Contracts(10.1)*
            Form
      of Indemnity Agreement between Knight Transportation, Inc. and each
      director, first effective February 5, 1997.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.*Filed
      herewith.









19
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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:
      May 12, 2008
            By:
            /s/
      Kevin P. KnightKevin
      P. KnightChief
      Executive Officer, in his capacity as such and
              on
      behalf of the registrantDate:
      May 12, 2008
            By:
            /s/
      David A. JacksonDavid
      A. JacksonChief
      Financial Officer, in his capacity as such and
              on
      behalf of the registrant