Cautionary Note Regarding Forward-Looking Statements

Except for certain historical information contained herein, this report contains certain statements that may be considered "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Section 27A of the Securities Act of 1933, as amended, and such statements are subject to the safe harbor created by those sections. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including without limitation: any projections of revenues, earnings, cash flows, capital expenditures, or other financial items; any statement of plans, strategies, and objectives of management for future operations; any statements concerning proposed acquisition plans, new services, or developments; any statements regarding future economic conditions or performance; and any statements of belief and any statement of assumptions underlying any of the foregoing. Words such as "believe," "may," "could," "expects," "hopes," "estimates," "projects," "intends," "anticipates," and "likely," and variations of these words, or similar expressions, terms, or phrases, are intended to identify such forward-looking statements. Forward-looking statements are inherently subject to risks, assumptions, and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled "Item 1A. Risk Factors," set forth in our form 10-K for the year ended December 31, 2008, as supplemented in Part II below.

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

Introduction

Business Overview

We are a truckload carrier headquartered in Phoenix, Arizona. The transportation services we provide are asset-based dry van truckload carrier services, temperature controlled truckload carrier services, and drayage activities at the ports, along with non-asset-based brokerage services, both on highway and rail. Through our asset-based and non-asset-based capabilities we are able to transport, or arrange for the transportation of, general commodities for customers throughout the United States.

Historically, the primary source of our revenue growth has been our ability to open and develop new regional service centers and brokerage branches in selected geographic areas. Much of this growth prior to 2007 occurred in our core dry van business. Knight Refrigerated and Knight Brokerage, established in 2004 and 2005, respectively, reflect our strategy to bring complementary services to our customers that also bring operational and economic benefits to Knight. In 2008, we further enhanced our services with our drayage activities through Knight Intermodal at the Southern California ports, where we believe our familiarity with the markets, ability to offer intermodal shippers multiple services, and superior technology afford us a competitive advantage over many drayage operations. As part of our growth strategy, we also evaluate acquisition opportunities that meet our financial and operating criteria.

As of June 30, 2009, we operated 35 asset-based service centers (consisting of 29 dry van and six temperature controlled service centers) and 12 non-asset-based brokerage branches. The main factors that affect our results of operation are the number of tractors we operate, our revenue per tractor (which includes primarily our revenue per total mile and our number of miles per tractor), and our ability to control our costs. The results of our brokerage activities were relatively insignificant for the second quarter of 2009 and therefore a detailed discussion of the financial results of these operations will not be separately presented.

Outlook

Our industry is currently facing significant challenges due to weak demand and pricing pressure. Our ability to respond to these challenges is rooted in the following three key attributes: (1) an intense focus on cost control; (2) a strong balance sheet, and (3) diversified service offerings. While we do not underestimate the pricing challenges ahead of us, we believe our model provides us with the flexibility to respond appropriately in this environment.

During 2008 and continuing into 2009, numerous industry competitors have closed down, and many that remained in business have downsized their fleets in response to economic weakness, rising costs, and tight credit conditions. Intense competition has also led to rate reduction. While demand for freight movements remained weak in the second quarter, we did experience an increase in seasonal demand as the quarter progressed.

Our plan during this environment continues to be to provide high levels of localized service through our network of service centers and branches, to ratchet up our already intense focus on controlling costs, and to evaluate strategic opportunities that can create value for our shareholders without undue risk.

While we are cautiously optimistic about modest seasonal recovery in business activity, it is not within our means to foresee when industry supply and demand fundamentals will come back into balance. However, we are confident in our competitive position and our ability to execute our model. We believe we are in a strong financial position and that our strategy for growth is sound. We believe that our level of profitability, fleet renewal strategy, and use of owner-operators should enable us to internally finance attractive levels of fleet growth when demand conditions are right. Based on our growing network, a history of low cost operation and solid execution, and access to substantial capital resources, we are very optimistic about our competitive position and our ability to perpetuate our model based on leading growth and profitability.

Revenue and Expenses

We primarily generate revenue by transporting freight for our customers. Generally, we are paid a predetermined rate per mile or per load for our services. We enhance our revenue by charging for tractor and trailer detention, loading and unloading activities, brokerage operations, and other specialized services, as well as through the collection of fuel surcharges to mitigate the impact of increases in the cost of fuel. The main factors that affect our revenue are the revenue per mile we receive from our customers, the percentage of miles for which we are compensated, and the number of miles we generate with our equipment. These factors relate to, among other things, the general level of economic activity in the United States, inventory levels, specific customer demand, the level of capacity in the trucking industry, and driver availability.

The main factors that impact our profitability in terms of expenses are the variable costs of transporting freight for our customers. These costs include fuel expense, driver-related expenses, such as wages, benefits, training and recruitment, and independent contractor and third party carrier costs, which are recorded on the "Purchased Transportation" line of our consolidated statements of income. Expenses that have both fixed and variable components include maintenance and tire expense and our total cost of insurance and claims. These expenses generally vary with the miles we travel, but also have a controllable component based on safety, fleet age, efficiency, and other factors. Our main fixed costs are the acquisition and financing of long-term assets, such as revenue equipment and service centers and the compensation of non-driver personnel. Effectively controlling our expenses and managing our net cost of revenue equipment acquisition and disposition, including any related gains or losses, are important elements of assuring our profitability. The primary measure we use to evaluate our profitability is operating ratio, excluding the impact of fuel surcharge revenue (operating expenses, net of fuel surcharge, expressed as a percentage of revenue, before fuel surcharge).

Recent Results of Operations and Quarter-End Financial Condition

For the quarter ended June 30, 2009, our results of operations changed as follows versus the same period in 2008:

? Revenue, before fuel surcharge, decreased 6.8%, to $144.3 million from $154.8 million;

? Net income increased 1.0% to $12.6 million, compared to $12.7 million; and

? Net income per diluted share remained at $0.15 for both periods.

Our industry is facing significant challenges due to weak demand for transportation and pricing competition. Despite these challenges, each of our operations posted year-over-year increases in the loads hauled. Refrigerated load count was up over 35% after posting 30% growth in the first quarter of this year. Brokerage, which experienced a decline in shipments in first quarter, turned positive again in the second quarter.

In the second quarter, equipment productivity, as measured by average revenue per tractor, decreased 8.1% to $36,329, compared to $39,527 in the same quarter a year ago. We experienced a high level of bid activity in the first quarter. While the flurry of bid activity has subsided, results from the earlier bids have led to price reduction. Our revenue per total mile decreased 3.8% compared to the same quarter a year ago. Our revenue before fuel surcharge decreased 6.8% in the current quarter, while our operating income improved modestly by 0.3%, compared to the second quarter of 2008. Our operating ratio, net of fuel surcharge (operating expenses, net of fuel surcharge, expressed as a percentage of revenue, before fuel surcharge), was 85.6% for the quarter ended June 30, 2009, a 1.0% improvement compared to 86.6% for the same period a year ago. Operating ratio was helped by lower diesel fuel prices, improvements in claims and insurance expense, and other ongoing internal initiatives to reduce costs.

We decreased our tractor count by 17 units as of June 30, 2009, to 3,751 tractors, compared to 3,768 tractors a year ago. Our average company tractor count declined in the second quarter of this year compared to a year ago, while our owner operator fleet grew by approximately 114 units. Within the company-owned fleet, we expanded the refrigerated fleet while modestly reducing our dry van fleet during the quarter ended June 30, 2009. We believe these changes leave us better positioned for the second half of this year.

For the quarter, we spent $17.0 million in net capital expenditures. At June 30, 2009, our balance sheet remained debt free, our cash and cash equivalents and short term investments totaled $79.4 million, and our shareholders' equity was $498.6 million.

Results of Operations

The following table sets forth the percentage relationships of our expense items to total revenue, including fuel surcharge (Columns A and C), and revenue, before fuel surcharge (Columns B and D), for the three-month and six-month periods ended June 30, 2009 and 2008, respectively. Fuel expense as a percentage of revenue, before fuel surcharge, is calculated using fuel expense, net of fuel surcharge. Management believes that eliminating the impact of this sometimes volatile source of revenue affords a more consistent basis for comparing our results of operations from period to period.

                               (A)                                 (B)                                 (C)                                 (D)
                   (Fuel surcharge included in        (Fuel surcharge excluded from        (Fuel surcharge included in        (Fuel surcharge excluded from
                            revenue)               revenue and netted to fuel expense)              revenue)               revenue and netted to fuel expense)
                           Three-Month                         Three-Month                          Six-Month                           Six-Month
                          Period Ended                        Period Ended                        Period Ended                        Period Ended
                            June 30,                            June 30,                            June 30,                            June 30,

                     2009              2008           2009                    2008           2009              2008           2009                    2008

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

Operating
expenses: *
Salaries, wages
and benefits            30.9              26.1            34.7                    34.7          31.6              27.2            35.4                    35.1
Fuel                    20.7              35.3            10.9                    13.9          20.1              33.0            10.5                    13.5
Operations and
maintenance              6.6               5.2             7.4                     6.9           6.7               5.2             7.5                     6.7
Insurance and
claims                   3.3               3.7             3.7                     5.0           3.4               3.9             3.9                     5.0
Operating taxes
and licenses             2.1               1.9             2.4                     2.5           2.3               2.0             2.5                     2.5
Communications           0.8               0.7             1.0                     1.0           0.9               0.8             1.0                     1.0
Depreciation and
amortization            10.9               8.3            12.2                    11.0          11.4               8.9            12.7                    11.5
Lease expense -
revenue
equipment                0.0               0.0             0.0                     0.0           0.0               0.0             0.0                     0.0
Purchased
transportation           9.4               7.1            10.6                     9.4           8.4               7.2             9.4                     9.3
Miscellaneous
operating
expenses                 2.4               1.6             2.7                     2.2           2.3               1.5             2.6                     2.1
Total operating
expenses                87.1              89.9            85.6                    86.6          87.1              89.7            85.5                    86.7
Income from
operations              12.9              10.1            14.4                    13.4          12.9              10.3            14.5                    13.3
Net interest
income                   0.2               0.1             0.2                     0.1           0.2               0.1             0.2                     0.1
Other income             0.0               0.1             0.0                     0.2           0.0               0.1             0.0                     0.1
Income before
income taxes            13.1              10.3            14.6                    13.7          13.1              10.5            14.7                    13.5
Income taxes             5.3               4.1             5.9                     5.5           5.3               4.2             6.0                     5.4
Net income               7.8 %             6.2 %           8.7 %                   8.2 %         7.8 %             6.3 %           8.7 %                   8.1 %

* There are minor rounding differences in the table.

A discussion of our results of operations for the six and three months ended June 30, 2009 and June 30, 2008 is set forth below.

Comparison of Six Months and Three Months Ended June 30, 2009 to Six Months and Three Months Ended June 30, 2008.

Total revenue for the six months ended June 30, 2009 decreased 18.7% to $310.8 million from $382.5 million for the same period in 2008. Total revenue included $33.4 million of fuel surcharge revenue in the 2009 period compared to $86.4 million in the 2008 period. Total revenue for the quarter ended June 30, 2009 decreased 21.4% to $162.1 million, from $206.1 million for the same period in 2008. Total revenue for the quarter included $17.8 million of fuel surcharge revenue in the 2009 period, compared to $51.3 million in the 2008 period. In discussing our results of operations, we use revenue, before fuel surcharge, and fuel expense, net of fuel surcharge, because management believes that eliminating the impact of this sometimes volatile source of revenue affords a more consistent basis for comparing our results of operations from period to period. We also discuss the changes in our expenses as a percentage of revenue, before fuel surcharge, rather than absolute dollar changes. We do this because we believe the high variable cost nature of our business makes a comparison of changes in expenses as a percentage of revenue, before fuel surcharge, more meaningful than absolute dollar changes.

Revenue, before fuel surcharge, decreased 6.3% to $277.4 million for the six months ended June 30, 2009 from $296.1 million for the same period in 2008. Revenue, before fuel surcharge, decreased 6.8% to $144.3 million for the quarter ended June 30, 2009, from $154.8 million for the same period in 2008. The industry wide supply of truckload equipment continued to outpace demand in the second quarter, resulting in an 8.1% decrease in equipment utilization. At the end of June we operated 17 fewer trucks compared to year ago, while year-to-date we have increased truck count by 52 units since year-end. Our non-paid empty mile percentage increased to 11.7% from 11.2% in the year ago period, which was attributable to weak freight demand and a shorter length of haul. For the six months ended June 30, 2009, our average length of haul decreased to 474 miles from 525 miles in the same period last year. The drayage activities in our intermodal business had a modestly negative effect on our average length of haul during the first half of 2009.

Salaries, wages and benefits expense as a percentage of revenue, before fuel surcharge, increased to 35.4% for the six months ended June 30, 2009, compared to 35.1% for the same period in 2008. Salaries, wages and benefits expense as a percentage of revenue, before fuel surcharge, remained constant at 34.7% for both quarters ended June 30, 2009 and 2008. The year-to-date increase is primarily due to the combination of a decrease in revenue, lower equipment utilization, and an increase in workers compensation costs. A decrease in the percentage of our company fleet being operated by company drivers, as opposed to independent contractors, helped off-set the increase in salary expense for the quarter. At June 30, 2009, 92.0% of our fleet was operated by company drivers, compared to 95.2% at June 30, 2008. For our employees, we record accruals for workers' compensation benefits as a component of our claims reserve, and the related expense is reflected in salaries, wages and benefits in our consolidated statements of income.

Fuel expense, net of fuel surcharge, as a percentage of revenue before fuel surcharge, decreased to 10.5% for the six months ended June 30, 2009, from 13.5% for the same period in 2008. For the quarter ended June 30, 2009, fuel expense, net of fuel surcharge, as a percentage of revenue before fuel surcharge, decreased to 10.9% from 13.9% for the same period in 2008. The decrease in fuel expense is due to lower diesel fuel prices combined with ongoing success of internal initiatives to improve fuel efficiency. These initiatives enabled us to show improvements in reducing idle time, controlling out-of-route miles, and improving our discipline with respect to fuel purchases and fuel stop routing. We maintain a fuel surcharge program to assist us in recovering a portion of our fuel expense. Fuel surcharge revenue was $33.4 million for the six months ended June 30, 2009, compared to $86.4 million for the same period in 2008. For the quarter ended June 30, 2009, fuel surcharge revenue was $17.9 million compared to $51.3 million for the same quarter in 2008. Declining fuel prices led to a significant decrease in fuel surcharge revenue during the first six months of 2009.

Operations and maintenance expense as a percentage of revenue, before fuel surcharge, increased to 7.5% for the six months ended June 30, 2009, compared to 6.7% for the same period in 2008. For the quarter ended June 30, 2009, operations and maintenance expense as a percentage of revenue, before fuel surcharge, increased to 7.4% compared to 6.9% for the same quarter in 2008. Operations and maintenance increased as a percentage of revenue primarily because of a modest increase in fleet age and a decrease in revenue per tractor that less efficiently covered the fixed portion of these costs. These items more than offset an increase in the percentage of our fleet provided by independent contractors, who pay for the maintenance of their own vehicles.

Insurance and claims expense as a percentage of revenue, before fuel surcharge, decreased to 3.9% for the six months ended June 30, 2009, compared to 5.0% for the same period in 2008. For the quarter ended June 30, 2009, insurance and claims expense as a percentage of revenue, before fuel surcharge, decreased to 3.7% compared to 5.0% for the same quarter in 2008. During the quarter, we saw benefits from continued improvement in insurance and claims expense. Over the last 24 months we have implemented the Smith Systems training throughout our service center network. We believe such training program and other management efforts have been instrumental factors in reducing the severity and frequency of accidents.

Operating taxes and licenses expense as a percentage of revenue, before fuel surcharge, remained constant at 2.5% for the six-month periods ended June 30, 2009 and 2008. For the quarter ended June 30, 2009, operating taxes and licenses expense decreased slightly to 2.4%, compared to 2.5% for the same periods in 2008.

Communications expense as a percentage of revenue, before fuel surcharge, remained constant at 1.0% for the six-month and three-month periods ended June 30, 2009 and 2008.

Depreciation and amortization expense as a percentage of revenue, before fuel surcharge, increased to 12.7% for the six-month period ended June 30, 2009, compared to 11.5% for the same period in 2008. For the quarter ended June 30, 2009, depreciation and amortization expense as a percentage of revenue, before fuel surcharge, increased to 12.2% compared to 11.0% for the same quarter in 2008. The increase in depreciation and amortization expense is primarily due to decrease in revenue and lower equipment utilization.

Purchased transportation represents the amount that independent contractors, as well as contracted carriers for our brokerage division, are paid to haul freight for us on a mutually agreed upon per-mile or per-shipment basis. Purchased transportation expense as a percentage of revenue, before fuel surcharge, increased to 9.4% for the six months ended June 30, 2009, from 9.3% for the same period in 2008. For the quarter ended June 30, 2009, purchased transportation expense as a percentage of revenue, before fuel surcharge, increased to 10.6% compared to 9.4% for the same quarter in 2008. The increase in this category is mainly due to an increase in the number of independent contractors we are using in our truckload operations. The number of independent contractors at June 30, 2009 increased to 299 as of June 30, 2009, compared to 185 a year ago. As of June 30, 2009, 8.0% of our fleet was comprised of independent contractors, compared to 4.8% a year ago. While the number of independent contractors increased, outside carrier services for our non-asset based operations has decreased due to lowered demand for brokerage freight. Demand for brokerage freight started out especially weak in the beginning of the year, but picked up in the second quarter.

Miscellaneous operating expenses as a percentage of revenue, before fuel surcharge, increased to 2.6% for the six-month period ended June 30, 2009, compared to 2.1% for the same period in 2008. For the quarter ended June 30, 2009, miscellaneous operating expenses as a percentage of revenue, before fuel surcharge, increased to 2.7% compared to 2.2% for the same quarter in 2008. The increase is due to the combination of increases in bad debt expense, rent expense, and general administrative expense. Gains from sale of used equipment are included in miscellaneous operating expenses. Gains from sale of equipment decreased slightly to $437,000 in the second quarter of 2009, compared to $473,000 for the same period a year ago.

As a result of the above factors, our operating ratio, net of fuel surcharge (operating expenses, net of fuel surcharge, expressed as a percentage of revenue, before fuel surcharge), decreased to 85.5% for the six months ended June 30, 2009, from 86.7% for the same period in 2008. For the quarter ended June 30, 2009, our operating ratio decreased to 85.6% from 86.6% for the same quarter in 2008.

Net interest income and other income as a percentage of revenue, before fuel surcharge, remained constant at 0.2% for the six months ended June 30, 2009 and 2008. For the quarter ended June 30, 2009, net interest income and other income as a percentage of revenue, before fuel surcharge, decreased to 0.2%, from 0.3% for the same period in 2008. Other income in the prior year included an earn-out distribution of $225,000 for the sale of our investment in Concentrek, which was sold in 2005. We had no outstanding debt at June 30, 2009 or 2008.

Income taxes have been provided for at the statutory federal and state rates, adjusted for certain permanent differences between financial statement income and income for tax reporting. Our effective income tax rates have increased slightly to 40.5% for the six month and three month periods ended June 30, 2009, compared to 39.9% for the six month period ended June 30, 2008 and 40.0% for the three month period ended June 30, 2008.

As a result of the preceding changes, our net income, as a percentage of revenue before fuel surcharge, increased to 8.7% for the six month and three month periods ended June 30, 2009, compared to 8.1% for the six month period ended June 30, 2008, and 8.2% for the three month period ended June 30, 2008.

Liquidity and Capital Resources

The growth of our business has required, and will continue to require, a significant investment in new revenue equipment. Our primary source of liquidity has been funds provided by operations.

Net cash provided by operating activities was $41.3 million for the six months ended June 30, 2009, compared to $53.1 million for the same period in 2008. Excluding the increase in our short-term investments due to investing more cash, our net cash provided by operating activities would have been $66.0 million for the six months ended June 30, 2009, compared to $57.1 million for . . .