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 September 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 third quarter of 2009, and therefore, a detailed discussion of the financial results of these operations will not be separately presented.

Outlook

Our industry continues to face 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.

During 2008 and continuing into and throughout 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 reductions in the first half of 2009. In the third quarter, we experienced sequential improvement in freight demand, but it is not at a level to significantly influence higher rates. It appears to us that sometime between June and July, freight volumes bottomed out and then made gradual improvement as compared to a year ago. However, we are not expecting robust demand in the near-term.

Our plan during this environment is to refine our operating model to create additional efficiencies, 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. We believe this plan will prepare us to capitalize on growth opportunities that will enhance the returns for our shareholders over time.

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 September 30, 2009, our results of operations changed as follows versus the same period in 2008:

Revenue, before fuel surcharge, decreased 3.6%, to $150.2 million from
o $155.9 million;

Net income decreased 18.1% to $13.1 million, compared to $16.0 million;
o and

o Net income per diluted share decreased 15.6%, to $0.16, from $0.19.

Despite significant challenges due to weak demand for transportation and pricing competition, our year-over-year consolidated load count increased by 10.2% in the third quarter. Refrigerated load count increased 43% after posting more than 30% growth in the first and second quarters of this year. Brokerage, which experienced a decline in shipments in the first quarter, turned positive again in the second and third quarters of this year.

In the third quarter, equipment productivity, as measured by average revenue, before fuel surcharge, per tractor, decreased 4.5% to $37,248, compared to $38,990 in the same quarter a year ago. The 4.5% decrease in equipment productivity in the third quarter compared favorably to an 8.1% year-over-year decrease in the second quarter 2009. Revenue per total mile, before fuel surcharge, decreased 3.1% from the same period a year ago when revenue per total mile, before fuel surcharge, peaked for our company. Miles per tractor decreased 1.4% when compared to the same period a year ago, an improvement compared with the 4.5% decrease in the second quarter of 2009. Our non-paid empty mile percentage decreased to 11.8% from 11.9% in the year ago period. Our average length of haul decreased 10.7% to 465 miles from 521 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.

Our tractor count decreased to 3,752 tractors as of September 30, 2009, compared to 3,800 tractors a year ago. The net decrease of 48 units is comprised of a 220 unit decrease in company owned tractors, off-set by a 172 unit increase in owner operator tractors. While our tractor count has decreased slightly year-over-year, our fleet size has remained relatively constant from the second to third quarter this year. With freight demand seemingly have bottomed, we decided to maintain our fleet size and prepare for the opportunity for growth rather than reduce the fleet size, which might have improved our operating ratio in the third quarter. Our consolidated operating ratio, net of fuel surcharge (operating expenses, net of fuel surcharge, expressed as a percentage of revenue, before fuel surcharge), was 86.2% for the quarter ended September 30, 2009, compared to 83.2% for the same period a year ago.

For the quarter, we spent $27.9 million in net capital expenditures. At September 30, 2009, our balance sheet remained debt free, our cash and cash equivalents and short term investments totaled $72.5 million, and our shareholders' equity was $509.7 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 nine-month periods ended September 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.

                                                           (B)                                                       (D)
                                                     (Fuel surcharge                                           (Fuel surcharge
                              (A)                     excluded from                     (C)                     excluded from
                        (Fuel surcharge            revenue and netted             (Fuel surcharge            revenue and netted
                     included in revenue)           to fuel expense)           included in revenue)           to fuel expense)
                          Three-Month                  Three-Month                  Nine-Month                   Nine-Month
                         Period Ended                 Period Ended                 Period Ended                 Period Ended
                         September 30,                September 30,                September 30,                September 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              30.1          26.0           34.7         35.0            31.1          26.8           35.2         35.1
Fuel                      22.5          33.8           10.7         10.9            21.0          33.3           10.5         12.6
Operations and
maintenance                6.5           5.5            7.5          7.4             6.6           5.3            7.5          7.0
Insurance and
claims                     3.1           2.9            3.6          4.0             3.3           3.5            3.8          4.6
Operating taxes
and licenses               2.2           1.8            2.5          2.4             2.2           1.9            2.5          2.5
Communications             0.8           0.7            0.9          1.0             0.9           0.7            1.0          1.0
Depreciation and
amortization              10.5           8.4           12.1         11.3            11.1           8.7           12.5         11.4
Lease expense -
revenue
equipment                  0.0             -            0.0            -             0.0             -            0.0            -
Purchased
transportation            10.5           6.3           12.1          8.5             9.1           6.9           10.3          9.0
Miscellaneous
operating
expenses                   1.8           2.1            2.1          2.7             2.1           1.8            2.4          2.3
Total operating
expenses                  88.0          87.5           86.2         83.2            87.4          88.9           85.7         85.5
Income from
operations                12.0          12.5           13.8         16.8            12.6          11.1           14.3         14.5
Net interest
income                     0.2           0.1            0.3          0.2             0.2           0.2            0.2          0.3
Other income               0.2             -            0.2            -             0.1             -            0.1            -
Income before
income taxes              12.4          12.6           14.3         17.0            12.9          11.3           14.6         14.8
Income taxes               4.8           5.0            5.6          6.7             5.2           4.5            5.8          5.9
Net income                 7.6 %         7.6 %          8.7 %       10.3 %           7.7 %         6.8 %          8.8 %        8.9 %

* There are minor rounding differences in the table.

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

Comparison of Nine Months and Three Months Ended September 30, 2009 to Nine Months and Three Months Ended September 30, 2008.

Total revenue for the nine months ended September 30, 2009 decreased 18.3% to $483.9 million from $592.2 million for the same period in 2008. Total revenue included $56.4 million of fuel surcharge revenue in the 2009 period compared to $140.2 million in the 2008 period. Total revenue for the quarter ended September 30, 2009 decreased 17.4% to $173.1 million, from $209.7 million for the same period in 2008. Total revenue for the quarter included $22.9 million of fuel surcharge revenue in the 2009 period, compared to $53.8 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 5.4% to $427.6 million for the nine months ended September 30, 2009 from $452.0 million for the same period in 2008. Revenue, before fuel surcharge, decreased 3.6% to $150.2 million for the quarter ended September 30, 2009, from $155.9 million for the same period in 2008. The industry wide supply of truckload equipment continued to outpace demand in the third quarter, resulting in a 4.5% decrease in equipment utilization. This is an improvement from second quarter, when equipment utilization was down 8.1% compared to a year ago. At the end of September we operated 48 fewer trucks compared to year ago, although year-to-date we have increased truck count by 53 units. Our non-paid empty mile percentage remained relatively constant at 11.8% for the quarter ended September 30, 2009, compared to 11.9% in the year ago period. For the nine months ended September 30, 2009, our average length of haul decreased to 473 miles from 524 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 2009 period.

Salaries, wages and benefits expense as a percentage of revenue, before fuel surcharge, remained relatively constant at 35.2% for the nine months ended September 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, decreased to 34.7% for the quarter ended September 30, 2009, compared to 35.0% for the same period in 2008. The third quarter decrease is primarily due to a decrease in the percentage of our company fleet being operated by company drivers, as opposed to independent contractors. At September 30, 2009, 91.6% of our fleet was operated by company drivers, compared to 96.2% at September 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 nine months ended September 30, 2009, from 12.6% for the same period in 2008. For the quarter ended September 30, 2009, fuel expense, net of fuel surcharge, as a percentage of revenue before fuel surcharge, decreased to 10.7% from 10.9% for the same period in 2008. The decrease in fuel expense is mainly due to lower diesel fuel prices, along with internal initiatives to improve fuel efficiency and an increase of independent contractors in the fleet. Independent contractors purchase their own fuel. We maintain a fuel surcharge program to assist us in recovering a portion of our fuel expense. Fuel surcharge revenue was $56.4 million for the nine months ended September 30, 2009, compared to $140.2 million for the same period in 2008. For the quarter ended September 30, 2009, fuel surcharge revenue was $22.9 million compared to $53.8 million for the same quarter in 2008. Declining fuel prices have led to significant decreases in fuel expense and fuel surcharge revenue this year.

Operations and maintenance expense as a percentage of revenue, before fuel surcharge, increased to 7.5% for the nine months ended September 30, 2009, compared to 7.0% for the same period in 2008. For the quarter ended September 30, 2009, operations and maintenance expense as a percentage of revenue, before fuel surcharge, increased slightly to 7.5% compared to 7.4% for the same quarter in 2008. Operations and maintenance expense as a percentage of revenue increased 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 3.8% for the nine months ended September 30, 2009, compared to 4.6% for the same period in 2008. For the quarter ended September 30, 2009, insurance and claims expense, expressed as a percentage of revenue before fuel surcharge, decreased to 3.6% compared to 4.0% for the same quarter in 2008. During the quarter, we continued to benefit from improvements in insurance and claims expense. We have implemented the Smith System training throughout our service center network. We believe this training program and other management efforts have been instrumental in reducing the severity and frequency of accidents. As of September 30, 2009, our claims reserve decreased approximately $4.2 million from year-end December 31, 2008. This decrease is primarily due to the settlement of two previously-accrued catastrophic claims in the aggregate of $3.5 million from a prior year, combined with a reduction in insurance accruals resulting from a decrease in the frequency and severity of claims.

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

Communications expense as a percentage of revenue, before fuel surcharge, remained constant at 1.0% for the nine-month periods ended September 30, 2009 and 2008. For the quarter ended September 30, 2009, communication expense remained relatively constant at 0.9%, compared to 1.0% for the same period in 2008.

Depreciation and amortization expense as a percentage of revenue, before fuel surcharge, increased to 12.5% for the nine-month period ended September 30, 2009, compared to 11.4% for the same period in 2008. This increase is primarily due to a decrease in revenue and lower equipment utilization in the current year. For the quarter ended September 30, 2009, depreciation and amortization expense as a percentage of revenue, before fuel surcharge, increased to 12.1% compared to 11.3% for the same quarter in 2008. In the third quarter of 2009, the percentage of our tractor fleet operated by independent contractors increased to 8.4% from 3.8% in the third quarter of 2008, which offset a small portion of the increase in depreciation and amortization expense for the current quarter.

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. Demand for brokerage freight started out rather weak in the beginning of the year but picked up in the second and third quarter. Purchased transportation expense as a percentage of revenue, before fuel surcharge, increased to 10.3% for the nine months ended September 30, 2009, from 9.0% for the same period in 2008. For the quarter ended September 30, 2009, purchased transportation expense as a percentage of revenue, before fuel surcharge, increased to 12.1% compared to 8.5% 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 September 30, 2009 increased to 317, compared to 145 a year ago. As of September 30, 2009, 8.4% of our fleet was comprised of independent contractors, compared to 3.8% a year ago.

Miscellaneous operating expenses as a percentage of revenue, before fuel surcharge, remained relatively constant at 2.4% for the nine-month period ended September 30, 2009, compared to 2.3% for the same period in 2008. For the quarter ended September 30, 2009, miscellaneous operating expenses as a percentage of revenue, before fuel surcharge, decreased to 2.1% compared to 2.7% for the same quarter in 2008. The decrease in the current quarter is due to the combination of internal initiatives to control costs and an increase in our gains from sale of equipment, which is included in the miscellaneous operating expense line. Gains from sale of equipment increased to $833,000 in the third quarter of 2009, compared to $367,000 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), increased to 85.7% for the nine months ended September 30, 2009, from 85.5% for the same period in 2008. For the quarter ended September 30, 2009, our operating ratio increased to 86.2% from 83.2% for the same quarter in 2008.

Net interest income and other income as a percentage of revenue, before fuel surcharge, remained constant at 0.3% for the nine months ended September 30, 2009 and 2008. For the quarter ended September 30, 2009, net interest income and other income as a percentage of revenue, before fuel surcharge, increased to 0.5%, from 0.2% for the same period in 2008. Other income in the current quarter is comprised of an insurance settlement for damage from a fire to one of our buildings. We had no outstanding debt at September 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 increased slightly to 40.0% for the nine-month period ended September 30, 2009, compared to 39.8% . . .