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 June 30, 2004

                                       or

[ ]  TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934.
For the transition period from         to

Commission File Number: 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 July 30, 2004 was 56,380,470 shares.




                           KNIGHT TRANSPORTATION, INC.

                                      INDEX


PART I - FINANCIAL INFORMATION                                                                     Page Number
                                                                                             
Item 1.            Financial Statements

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

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

                   Condensed Consolidated Statements of Cash Flows for the                               4
                      six months ended June 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
                                                                                                         22
Item 1.            Legal Proceedings

Item 2.            Changes in 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 and Reports on Form 8-K                                                      22

Signatures                                                                                               25





PART I  -  FINANCIAL INFORMATION


Item 1.             Financial Statements


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


                                                       June 30, 2004                December 31, 2003
                                                   ------------------------        -----------------------
                                                                             
ASSETS

CURRENT ASSETS:

   Cash and cash equivalents                       $           36,480              $          40,550
   Accounts receivable, net                                    47,460                         38,751
   Notes receivable, net                                          295                            515
   Inventories and supplies                                     1,732                          1,336
   Prepaid expenses                                             4,060                          7,490
   Income tax receivable                                           -                           1,761
   Deferred tax asset                                           6,077                          5,667
                                                   ------------------------        -----------------------

         Total current assets                                  96,104                         96,070
                                                   ------------------------        -----------------------

PROPERTY AND EQUIPMENT:
   Land and improvements                                       14,976                         13,911
   Buildings and improvements                                  21,191                         17,166
   Furniture and fixtures                                       5,267                          4,916
   Shop and service equipment                                   2,600                          2,409
   Revenue equipment                                          292,416                        256,803
   Leasehold improvements                                         783                            968
                                                   ------------------------        -----------------------

                                                              337,233                         296,173
   Less:  Accumulated depreciation
             and amortization                                 (89,082)                        (83,238)
                                                   ------------------------        -----------------------

PROPERTY AND EQUIPMENT, net                                   248,151                         212,935
                                                   ------------------------        -----------------------

NOTES RECEIVABLE - long-term                                     144                              362
GOODWILL                                                       7,504                            7,504
OTHER ASSETS                                                   5,307                            4,355

                                                   $         357,210               $          321,226
                                                   ========================        =======================


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

                                       1

                  KNIGHT TRANSPORTATION, INC. AND SUBSIDIARIES

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

                                                                           June 30, 2004              December 31, 2003
                                                                      ------------------------    ---------------------------
                                                                                            
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

            Accounts payable                                          $       5,251               $          3,408
            Accrued payroll                                                   4,912                          3,448
            Accrued liabilities                                              11,600                          4,493
            Claims accrual                                                   18,065                         14,805
                                                                      ------------------------    ---------------------------

         Total current liabilities                                           39,828                         26,154


DEFERRED INCOME TAXES                                                        55,540                         55,149
                                                                      ------------------------    ---------------------------

         Total liabilities                                                   95,368                         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; 56,375 and 56,234
              issued  and  outstanding at June 30, 2004
              and December 31, 2003, respectively                               564                            563
            Additional paid-in capital                                       78,946                         77,754
            Retained earnings                                               182,332                        161,606
                                                                      ------------------------    ---------------------------

            Total shareholders' equity                                      261,842                        239,923
                                                                      ------------------------    ---------------------------

                                                                      $     357,210               $        321,226
                                                                      ========================    ===========================


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

                                       2


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

                                                        Three Months Ended                       Six Months Ended
                                                              June 30,                               June 30,

                                                     2004                2003                2004                2003
                                                     ----                ----                ----                ----
                                                                                                  
REVENUE
      Revenue, before fuel surcharge                 $100,168            $81,790            $190,411             $155,341
      Fuel surcharge                                    6,980              3,319              11,049                6,977
                                                  ------------       ------------        ------------         ------------
             Total revenue                            107,148             85,109             201,460              162,318
                                                  ------------       ------------        ------------         ------------
OPERATING EXPENSES:
      Salaries, wages and benefits                     32,333             26,398              62,463               50,189
      Fuel                                             20,418             13,638              37,132               27,866
      Operations and maintenance                        6,128              5,033              11,789                9,721
      Insurance and claims                              5,714              4,274              10,603                8,101
      Operating taxes and licenses                      2,366              2,289               4,590                4,415
      Communications                                      872                747               1,741                1,467
      Depreciation and amortization                     9,573              7,266              18,471               14,052
      Lease expense - revenue
       equipment                                        1,035              1,948               2,268                3,923
      Purchased transportation                          7,549              6,542              14,137               12,054
      Miscellaneous operating
       expenses                                         2,228              2,016               3,947                3,719
                                                  ------------       ------------        ------------         ------------
                                                       88,216             70,151             167,141              135,507
                                                  ------------       ------------        ------------         ------------
      Income from operations                           18,932             14,958              34,319               26,811
                                                  ------------       ------------        ------------         ------------

OTHER INCOME (EXPENSE):
      Interest income                                      83                173                 207                  309
      Interest expense                                      -               (181)                  -                 (383)
                                                  ------------       ------------        ------------         ------------
                                                           83                 (8)                207                  (74)
                                                  ------------       ------------        ------------         ------------
      Income before taxes                              19,015             14,950              34,526               26,737

INCOME TAXES                                           (7,600)            (6,000)            (13,800)             (10,710)
                                                  ------------       ------------        ------------         ------------
      Net income                                      $11,415             $8,950             $20,726              $16,027
                                                  ============       ============        ============         ============

Net income per common share and
common share equivalent:
                    Basic                               $0.20              $0.16               $0.37                $0.29
                                                  ============       ============        ============         ============
                    Diluted                             $0.20              $0.16               $0.36                $0.28
                                                  ============       ============        ============         ============
Weighted average number of common
shares and common share equivalents
outstanding:
                    Basic                              56,340             56,001              56,298               55,895
                                                  ============       ============        ============         ============
                    Diluted                            57,479             57,342              57,435               57,248
                                                  ============       ============        ============         ============

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

                                       3


                  KNIGHT TRANSPORTATION, INC. AND SUBSIDIARIES
           Condensed Consolidated Statements of Cash Flows (unaudited)
                                 (In thousands)


                                                                         Six Months Ended
                                                                             June 30,

                                                                  2004                      2003
                                                                  ----                      ----
CASH FLOWS FROM OPERATING ACTIVITIES
                                                                                  
Net income                                                     $   20,726               $    16,027

Adjustments to reconcile net income to net cash
Provided by operating activities:
       Depreciation and amortization                               18,471                    14,052
       Non-cash compensation expense for issuance of
         stock to certain members of board of directors                13                        18
       Allowance for doubtful accounts                                224                       314
       Interest rate swap agreement - fair value change                -                        167
       Tax benefit from exercise of stock options                     550                     1,400
       Deferred income taxes                                          (20)                    1,806
Changes in assets and liabilities:
       Increase in trade receivables                               (8,932)                   (1,636)
       Increase in inventories and supplies                          (396)                      (15)
       Decrease (increase) in prepaid expenses                      3,430                      (352)
       Decrease in income tax receivable                            1,761                        -
       Increase in other assets                                      (952)                     (925)
       (Decrease) increase in accounts payable                       (604)                    1,970
       Increase in accrued liabilities and claims accrual          11,831                     4,326
                                                           ------------------        ------------------
       Net cash provided by operating activities                   46,102                    37,152
                                                           ------------------        ------------------
CASH FLOW FROM INVESTING ACTIVITIES:

       Purchase of property and equipment                         (51,240)                  (37,925)
       Investment in/advances to other companies                       -                       (213)
       Cash received from advance to other company                     -                      1,600
       Decrease in notes receivable, net                              438                       885
                                                           ------------------        ------------------
       Net cash used in investing activities                      (50,802)                  (35,653)
                                                           ------------------        ------------------

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

                                       4


                  KNIGHT TRANSPORTATION, INC. AND SUBSIDIARIES
     Condensed Consolidated Statements of Cash Flows (unaudited) (continued)
                                 (In thousands)


                                                                                      Six Months Ended
                                                                                          June 30,

                                                                             2004                          2003
                                                                             ----                          ----
                                                                                             
CASH FLOW FROM FINANCING ACTIVITIES:

     Payments on long-term debt                                                        -                         (1,954)
     Proceeds from exercise of stock options                                          630                         1,447
                                                                     ----------------------        ---------------------

     Net cash used in financing activities                                            630                          (507)
                                                                     ----------------------        ---------------------

NET (DECREASE) INCREASE IN CASH AND
     CASH EQUIVALENTS                                                              (4,070)                          992
CASH AND CASH EQUIVALENTS,
     Beginning of period                                                           40,550                        36,198
                                                                     ----------------------        ---------------------

CASH AND CASH EQUIVALENTS, end of period                                   $       36,480                $       37,190
                                                                     ======================        =====================


SUPPLEMENTAL DISCLOSURES:

     Noncash investing and financing transactions:
       Equipment acquired in accounts payable                              $        2,522                $        1,133
       Net book value of equipment traded                                          16,974                        15,810

     Cash Flow Information:
       Income taxes paid                                                   $        5,746                $        6,593
       Interest paid                                                                   -                            214


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

                                       5


                  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 quarter  ended
March 31, 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 June 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 six-month  periods ended
June 30, 2004 and 2003, respectively (in thousands, except per share data):

                                       6



                                                   Three Months Ended                       Six Months Ended
                                                        June 30,                                June 30,

                                                2004                2003                2004               2003
                                                ----                ----                ----               ----
                                                                                          
Net income, as reported                           $ 11,415             $ 8,950           $ 20,726            $ 16,027

Deduct total stock-based
compensation expense determined
under fair-value based method for
all awards, net of tax                                (326)               (151)              (586)               (302)
                                           ----------------    ----------------    ---------------    ----------------

Pro forma net income                              $ 11,089             $ 8,799           $ 20,140            $ 15,725
                                           ================    ================    ===============    ================

   Diluted earnings per share:
                  As reported                        $0.20               $0.16              $0.36               $0.28
                                           ================    ================    ===============    ================
                  Pro forma                          $0.19               $0.15              $0.35               $0.27
                                           ================    ================    ===============    ================

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 4.0%;  expected
life of 6.5 years;  expected  volatility of 49%; expected dividend yield rate of
zero;  and  expected  forfeitures  of  3.68%.  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 52%; expected dividend yield
rate of zero; and expected forfeitures of 3.04%.

Note 3.  Net Income Per Share

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

                                                   Three Months Ended                       Six Months Ended
                                                        June 30,                                June 30,

                                                2004                2003                2004               2003
                                                ----                ----                ----               ----
                                                                                          
Weighted average common
    shares outstanding  - Basic                     56,340              56,001             56,298              55,895

Effect of stock options                              1,139               1,341              1,137               1,353
                                           ----------------    ----------------    ---------------    ----------------

Weighted average common
 share and common share
 equivalents outstanding -
 Diluted                                            57,479              57,342             57,435              57,248
                                           ================    ================    ===============    ================

Net income                                        $ 11,415             $ 8,950           $ 20,726            $ 16,027
                                           ================    ================    ===============    ================

  Net income per common share
  and common share equivalent
             Basic                                   $0.20               $0.16              $0.37               $0.29
                                           ================    ================    ===============    ================
             Diluted                                 $0.20               $0.16              $0.36               $0.28
                                           ================    ================    ===============    ================


                                       7

Note 4.  Comprehensive Income

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

                                                   Three Months Ended                       Six Months Ended
                                                        June 30,                                June 30,

                                                2004                2003                2004               2003
                                                ----                ----                ----               ----
                                                                                          
Net Income                                         $11,415              $8,950            $20,726             $16,027

Other comprehensive income:
Interest rate swap agreement - fair
market value adjustment                                  -                  83                  -                 167
                                           ----------------    ----------------    ---------------    ----------------

Comprehensive income                               $11,415              $9,033            $20,726             $16,194
                                           ================    ================    ===============    ================


Note 5.  Segment Information

Although we have seventeen operating divisions,  we have determined that we have
one reportable segment. Sixteen 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 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,
                                       8

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.  The stock split  increased
the weighted average number of diluted shares  outstanding for the quarter ended
June 30, 2004 to 57.5 million. Earnings per share for all periods presented have
been adjusted to reflect the stock split.

                                       9

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. 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 16 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
          almost  exclusively on operating  dry-vans 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.

     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.
                                       10

     o    Using  Technology to Enhance Our  Business.  Our tractors are equipped
          with a 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
regional  facilities in certain geographic areas and operate these facilities at
a  profit.   We  opened  our  most  recent  regional   facilities  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 171 through June 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.

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.

     For much of 2001,  2002, and 2003,  economic  activity in the United States
was somewhat  sluggish,  which limited to some extent our ability to obtain rate
increases.  During the first half of 2004,  however,  the United States  economy
experienced  strong growth.  Business inventory levels also improved 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 has
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 operating  terminals,  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, 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.

                                       11


Recent Results of Operations and Quarter-End Financial Condition

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

     o    Revenue,  before fuel  surcharge,  increased  22.5%, to $100.2 million
          from $81.8 million;

     o    Net income increased 27.5%, to $11.4 million from $9.0 million; and

     o    Net income per diluted share increased 25.0% to $0.20 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 7.8% to $3,052 in the second
quarter of 2004 from $2,831 in the second quarter of 2003. This  improvement was
driven by a 5.9%  increase in average  revenue per loaded mile  (excluding  fuel
surcharge)  to $1.516  from  $1.431 and a 1.3%  increase  in  average  miles per
tractor to 29,125 from 28,763.  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 0.9%  increase  in our  percentage  of  non-revenue  miles to 10.9% for the
second  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 highest
rates.

     At June 30, 2004,  our balance  sheet  reflected  $36.5 million in cash and
cash equivalents, no long-term debt, and shareholders' equity of $261.8 million.
For the quarter,  we generated  $25.9 million in cash flow from  operations  and
used  $30.8  million  for net  capital  expenditures  (net of net book  value of
equipment traded of $17.0 million).

                                       12


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 six-month periods ended June 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.

                                                          (Revenue, before)                                  (Revenue, before)
                                 (Total revenue)          (fuel surcharge)          (Total revenue)            (fuel surcharge)
                                   Three-Month              Three-Month                Six-Month                 Six-Month
                                  Period Ended             Period Ended              Period Ended              Period Ended
                               ------------------        ------------------        ------------------        ------------------
                                    June 30,                 June 30,                  June 30,                    June 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        31.0          32.3        32.3          31.0        30.9          32.8        32.3
Fuel                            19.1        16.0          13.4(1)     12.6(1)       18.4        17.2          13.7(1)     13.4(1)
Operations and maintenance       5.7         5.9           6.1         6.2           5.9         6.0           6.2         6.3
Insurance and claims             5.3         5.0           5.7         5.2           5.3         5.0           5.6         5.2
Operating taxes and licenses     2.2         2.7           2.4         2.8           2.3         2.7           2.4         2.8
Communications                   0.8         0.9           0.9         0.9           0.9         0.9           0.9         0.9
Depreciation and amortization    8.9         8.5           9.6         8.9           9.2         8.7           9.7         9.0
Lease expense - revenue
 equipment                       1.0         2.3           1.0         2.4           1.1         2.4           1.2         2.5
Purchased transportation         7.0         7.7           7.5         8.0           7.0         7.4           7.4         7.8
Miscellaneous
 operating expenses              2.1         2.4           2.2         2.5           2.0         2.3           2.1         2.4
                              ------       ------        ------      ------        ------      ------        ------      ------
Total Operating
 Expenses                       82.3        82.4          81.1        81.7          83.0        83.5          82.0        82.7
                              ------       ------        ------      ------        ------      ------        ------      ------
Income from operations          17.7        17.6          18.9        18.3          17.0        16.5          18.0        17.3
Net interest expense             0.0         0.0           0.0         0.0           0.0         0.0           0.0         0.0
                              ------       ------        ------      ------        ------      ------        ------      ------
Income before income taxes      17.7        17.6          18.9        18.3          17.7        16.5          18.0        17.3
Income taxes                     7.1         7.0           7.5         7.4           6.8         6.6           7.1         7.0
                              ------       ------        ------      ------        ------      ------        ------      ------
Net income                      10.7        10.6          11.4        10.9          10.3         9.9          10.9        10.3
                              ======       ======        ======      ======        ======      ======        ======      ======

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

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

Comparison  of Six Months and Three Months Ended June 30, 2004 to Six Months and
Three Months Ended June 30, 2003

     Our total revenue for the six months ended June 30, 2004 increased 24.2% to
$201.5  million from $162.3  million for the same period in 2003.  Total revenue
included $11.0 million of fuel surcharge  revenue in the 2004 period compared to
$7.0 million in the 2003 period.  Our total  revenue for the quarter  ended June
30,  2004  increased  25.9% to $107.1  million  from $85.1  million for the same
quarter in 2003. Total revenue  included $7.0 million of fuel surcharge  revenue
in the 2004 quarter compared to $3.3 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

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 22.6% to $190.4 million in the
six months ended June 30, 2004 from $155.3  million for the same period in 2003.
Revenue,  before fuel  surcharge,  increased  by 22.5% to $100.2  million in the
quarter  ended  June 30,  2004 from $81.8  million in the same  quarter in 2003.
These increases primarily resulted from the expansion of our customer base as we
continue to open additional regional  facilities,  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  2,589  tractors
(including 251 owned by independent contractors) as of June 30, 2004, from 2,267
tractors (including 234 owned by independent contractors) as of June 30, 2003, a
14.6%  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 32.8% for the six months  ended June 30,  2004 from
32.3% for the same  period  in 2003.  This  increase  was  primarily  due to the
increases  in driver pay rates  implemented  during the  previous  nine  months.
Salaries,  wages and  benefits  expense  remained  constant as a  percentage  of
revenue, before fuel surcharge, at 32.3% for the quarter ended June 30, 2004 and
2003. This expense remained  constant for the quarter as the increases in driver
pay rates that we  implemented  were offset by increases in average  revenue per
tractor  per week.  As of June 30,  2004,  90.3% of our fleet  was  operated  by
Company  drivers,  compared to 89.7% as of June 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 13.7% for the six months  ended June 30,  2004 from
13.4% for the same period in 2003.  For the quarter  ended June 30,  2004,  fuel
expense,  net of fuel  surcharge,  increased,  as a percentage of revenue before
fuel  surcharge,  to 13.4% from 12.6% for the same quarter in 2003.  The Company
maintains  a fuel  surcharge  program  to assist us in  recovering  a portion of
increased fuel costs.  The increases  noted above were due mainly to higher than
average fuel prices in the 2004  periods,  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 18.4% for the six
months  ended  June 30,  2004 from  17.2% for the same  period in 2003.  For the
quarter  ended June 30, 2004,  fuel expense,  as a percentage of total  revenue,
including fuel  surcharge,  increased to 19.1% from 16.0% 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  remained  relatively  constant  as a
percentage of revenue,  before fuel surcharge,  at 6.2% for the six months ended
June 30,  2004,  compared to 6.3% for the same  period in 2003.  For the quarter
ended June 30, 2004, operations and maintenance expense also remained relatively
constant as a percentage of revenue,  before fuel surcharge, at 6.1% compared to
6.2% for the same quarter in 2003.

     Insurance and claims expense  increased as a percentage of revenue,  before
fuel surcharge, to 5.6% for the six months ended June 30, 2004, compared to 5.2%
for the same  period  in 2003.  Insurance  and  claims  expense  increased  as a
percentage of revenue, before fuel surcharge, to 5.7% for the quarter ended June
30, 2004,  compared to 5.2% 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 both the quarter and six months ended June
30,  2004 from  2.8% for the same  periods  in 2003.  These  decreases  resulted
primarily from the  improvements  in average revenue per tractor per week in the
2004 periods described above, which more efficiently  covered this largely fixed
cost.
                                       14

     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 9.7% for the six months ended June 30, 2004 from
9.0% for the same period in 2003.  Depreciation and amortization  expense,  as a
percentage of revenue before fuel  surcharge,  increased to 9.6% for the quarter
ended June 30, 2004 from 8.9% 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 June 30, 2004, 91% of our Company fleet was
comprised of purchased  vehicles,  compared to 76% at June 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 1.2% for the six months ended June 30, 2004, compared to
2.5% for the same  period in 2003.  Lease  expense for  revenue  equipment  as a
percentage of revenue, before fuel surcharge,  decreased to 1.0% for the quarter
ended  June 30,  2004,  compared  to 2.4% 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 7.4% for the six months ended June 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 7.5% for the quarter
ended  June  30,  2004  compared  to 8.0% 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 June
30, 2004, 9.7% of our fleet was operated by independent contractors, compared to
10.3% at June 30, 2003.

     Miscellaneous  operating  expenses as a percentage of revenue,  before fuel
surcharge,  decreased  to 2.1% for the six months  ended June 30, 2004 from 2.4%
for the same period in 2003. Miscellaneous operating expenses as a percentage of
revenue, before fuel surcharge, decreased to 2.2% for the quarter ended June 30,
2004 from 2.5% for the same quarter in 2003.  These decreases were primarily due
to the  improvements in average revenue per tractor per week in the 2004 periods
described above.

     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 82.0% for the six months ended June 30, 2004,  compared to 82.7%
for same period in 2003.  For the quarter  ended June 30,  2004,  our  operating
ratio was 81.1% compared to 81.7% 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 7.1% for the six months ended June 30, 2004, from 7.0% for the same
period in 2003.  For the quarter ended June 30, 2004,  income tax expense,  as a
percentage of revenue,  before fuel  surcharge,  increased to 7.5% from 7.4% for
the same quarter in 2003. These increases were primarily due to the increases in
our income before income taxes.

     As a result of the preceding  changes,  our net income,  as a percentage of
revenue before fuel surcharge, was 10.9% for the six months ended June 30, 2004,
compared  to 10.3% for the same period in 2003.  For the quarter  ended June 30,
2004,  our net income,  as a percentage of revenue  before fuel  surcharge,  was
11.4% compared to 10.9% in the same quarter in 2003.

                                       15

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  $46.1 million
for the six months ended June 30, 2004,  compared to $37.2  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  (net  of
trade-ins),  office equipment,  land and leasehold  improvements,  totaled $51.2
million for the six months ended June 30, 2004 compared to $37.9 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.

     Net cash provided by financing  activities was  approximately  $0.6 million
for the six months ended June 30, 2004,  compared to net cash used for financing
activities  of  approximately  $0.5  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.

     At June 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 June 30, 2004, the line of credit  consisted
solely  of  issued  but  unused   letters  of  credit   totaling  $9.6  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 June 30, 2004.

     As of June 30, 2004,  we held $36.5  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.

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 June 30, 2004, we leased 217 tractors under  operating  leases
with varying  termination dates ranging from August 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 $2.3  million  for the six months  ended  June 30,  2004,
compared  to $3.9  million  for the  same  period  of  2003.  The  total  amount
outstanding under operating leases as of

                                       16

June 30, 2004,  was $3.8  million,  with $1.7 million due in the next 12 months.
The effective annual interest rates under these operating leases range from 5.2%
to 5.9%.

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 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

                                       17

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'  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

                                       18

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  six  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.
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  six  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 are not
successful 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.

     Driver Retention.  Difficulty in attracting or retaining qualified drivers,
including independent contractors,  or a downturn in customer business cycles or
shipping  demands 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."

                                       19

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 June 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 six months ended
June 30, 2004,  fuel expense,  net of fuel surcharge,  represented  16.7% of our
total operating expenses, net of fuel surcharge,  compared to 16.3% 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 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 July 9,
2004, the price of heating oil on the NYMX was $1.09 for October 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  $900,000.  However,  our net savings on fuel costs resulting from
lower fuel prices  under our volume  diesel  fuel  purchase  contracts  would be
approximately  $1.4  million,  after  taking  the  loss  on the  contracts  into
consideration. We have valued these items at fair value in the accompanying June
30, 2004 consolidated financial statements.

                                       20

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 second 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


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.   Changes in 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

     The Company's  Annual Meeting of Shareholders  was held on May 21, 2004. At
the Annual Meeting,  the shareholders  elected Kevin Knight,  Randy Knight,  and
Michael  Garnreiter to serve as Class III directors for three-year  terms.  Gary
Knight, G.D. Madden,  Matt Salmon,  Timothy Kohl, Donald Bliss, and Mark Scudder
also continued as directors of the Company after the Annual Meeting.

Shareholders  representing  34,715,597  shares,  or approximately  92.5%, of the
Company's  outstanding Common Stock as of the record date were present in person
or by proxy at the Annual Meeting. A tabulation of the vote with respect to each
nominee follows:
                                                                    Votes
                           Votes Cast           Votes For         Withheld
                          -----------        -------------      ------------
Kevin Knight              34,715,597           28,729,658         5,985,939

Randy Knight              34,715,597           28,870,205         5,845,392

Michael Garnreiter        34,715,597           33,756,145           959,452

Item 5.   Other Information

          Not Applicable

Item 6.   Exhibits and Reports on Form 8-K

          (a) 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.)

                                       22

                    (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.)

                      (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

                                       23


                     (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

          (b) Reports on Form 8-K

               During the quarter  ended June 30, 2004,  the Company filed with,
          or  furnished  to,  the  Securities  and  Exchange   Commission   (the
          "Commission") the following Current Reports on Form 8-K:

          Current  Report  on Form 8-K  dated  April 12,  2004  (filed  with the
          Commission on the same date)  reporting the  appointment of Deloitte &
          Touche LLP as the  Company's  principal  independent  accountants  for
          fiscal 2004; and

          Current  Report on Form 8-K dated  April 21,  2004  (furnished  to the
          Commission  on April  22,  2004)  reporting  the  issuance  of a press
          releasing  announcing the Company's  financial results for the quarter
          ended March 31, 2004.


                                       24



                                   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: August 6, 2004          By: /s/ Kevin P. Knight
                                 ---------------------------------
                                  Kevin P. Knight
                                  Chief Executive Officer, in his capacity as
                                  such and on behalf of the registrant


Date: August 6, 2004          By: /s/ David A. Jackson
                                 ---------------------------------
                                  David A. Jackson
                                  Chief Financial Officer, in his capacity as
                                  such and on behalf of the registrant



Date: August 6, 2004          By: /s/ Robert Johnson
                                 ---------------------------------
                                  Robert Johnson
                                  Chief Accounting Officer, in his capacity as
                                  such and on behalf of the registrant







                                       25