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

Overview

The primary source of our operating revenue is freight revenue, which we generate by transporting freight for our customers. Generally, we are paid by the mile for our services. We also derive freight revenue from loading and unloading activities, equipment detention and other accessorial services. Our operating revenue also includes revenue from fuel surcharges and non-freight revenue services, primarily brokerage revenue. The main factors that affect our freight revenue are the rate 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 United States economy, inventory levels, the level of truck capacity in the temperature-sensitive market, and specific customer demand. We monitor our revenue production primarily through revenue per tractor per week. We also analyze our rate per total mile, non-revenue miles percentage, the miles per tractor we generate, our accessorial revenue and our other sources of operating revenue.

In discussing our results of operations, we have included in certain instances a discussion of freight revenue, which excludes fuel surcharge and non-freight revenue. We do this because we believe that eliminating these sources of revenue provides a more consistent basis for comparing our results of operations from period to period.

Our operating results for the first six months of 2005 reflect improved average freight revenue per total mile compared with the first six months of 2004. The improvement in asset productivity helped us overcome the continuing challenges of a tight driver market and high fuel prices. In the first six months of 2005, we increased our operating revenue 22.3% and our freight revenue 13.1% compared with the first six months of 2004. We were able to increase our freight revenue by increasing our freight rates, the size of our fleet, our detention charges and our business with existing and new customers. We increased our average operating revenue per tractor per week 12.4% in the first six months of 2005. Our average freight revenue per tractor per week increased 4.1%, due to a 7.7% improvement in average freight revenue per total mile, partially offset by a 3.4% decrease in average miles per tractor. Our weighted average number of tractors increased 8.7% in the first six months of 2005 over the first six months of 2004.

Our profitability on the expense side is impacted by variable costs of transporting freight for our customers, fixed costs and expenses containing both fixed and variable components. The variable costs include fuel expense, driver-related expenses, such as wages, benefits, training, and recruitment, and independent contractor 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 relate to the acquisition and financing of long-term assets, such as revenue equipment and operating terminals. Although certain factors affecting our expenses are beyond our control, we monitor them closely and attempt to anticipate changes in these factors in managing our business. For example, fuel prices fluctuated dramatically and quickly at various times during 2004 and the first six months of 2005. We manage our exposure to changes in fuel prices primarily through fuel surcharge programs with our customers, as well as volume fuel purchasing arrangements with national fuel centers and bulk purchases of fuel at our terminals. The transportation industry is currently experiencing substantial difficulty in attracting and retaining qualified drivers. Effective January 1, 2005, we increased the amount paid to company drivers by 1 cent per mile and increased the incentives paid to independent contractors. We also instituted a second pay increase of 2 cents per mile for company drivers effective April 1, 2005. We continue to offer driver compensation that we believe ranks near the top of the industry. Like other companies in our industry, our insurance costs have increased dramatically over the last few years. In order to control increases in insurance premiums, we have increased our self-insured retention levels periodically during the last several years. We are responsible for the first $1.0 million on each auto liability claim and beginning June 1, 2005, we also are responsible for up to $1.0 million in the aggregate for all auto liability claims between $1.0 million and $2.0 million. We are also responsible for the first $750,000 on each workers’ compensation claim.

8

Additionally, we operate in a highly competitive and regulated industry that is currently responding to significant regulatory changes regarding drivers’ hours-of-service. The United States Department of Transportation, or DOT, adopted revised hours-of-service regulations effective in January 2004. In response, we negotiated delay time charges with the majority of our customers. In July 2004, the United States Court of Appeals for the District of Columbia vacated the new hours-of-service regulations in their entirety and remanded the matter to the Federal Motor Carriers Safety Administration, or FMCSA, for reconsideration. In October 2004, the Surface Transportation Extension Act of 2004 (Part V) extended the current hours-of-service regulations until the earlier of the FMCSA developing a revised set of regulations or September 30, 2005. The regulations did not have a significant impact on our operations or financial results for 2004 or the first six months of 2005.

By increasing our revenue and controlling our expenses, we improved our operating ratio (operating expenses as a percentage of operating revenue) to 91.0% in the first six months of 2005 from 92.9% in the first six months of 2004. We increased our earnings per diluted share to $0.79 in the first six months of 2005 from $0.52 in the first six months of 2004.

Our business requires substantial, ongoing capital investments, particularly for new tractors and trailers. At June 30, 2005, we had approximately $34.7 million of long-term debt, including current maturities, and $180.0 million in stockholders’ equity. In the first six months of 2005, we spent approximately $24.1 million, net of trade-ins, to purchase 302 tractors and 436 trailers. We also recognized a gain of $2.1 million on the disposition of used equipment in the first six months of 2005. We estimate that capital expenditures, net of trade-ins, will be approximately $57 million for the remainder of 2005, primarily for new revenue equipment. Based on our current operating performance, the market for used trucks, our liquidity and our expectations concerning tractors manufactured in 2007, we have decided to accelerate our tractor fleet replacement during 2005 and 2006 to allow flexibility with purchasing tractors in 2007 when the next round of diesel emissions reduction directives of the Environmental Protection Agency, or EPA, go into effect. We expect to fund these capital expenditures with cash flows from operations and borrowings under our $45 million revolving credit facility.

9

Results of Operations

Comparison of Three Months Ended June 30, 2005 to Three Months Ended June 30, 2004

The following table sets forth for the periods indicated the components of our operating revenue and the dollar and percentage change for each component:

The following table sets forth for the periods indicated the dollar and percentage increase or decrease of the items in our unaudited consolidated condensed statements of operations, and those items as a percentage of operating revenue:

Our operating revenue increased $20.9 million, or 22.7%, to $112.8 million in the 2005 period from $91.9 million in the 2004 period. Freight revenue increased $11.8 million, or 14.0%, to $96.0 million in the 2005 period from $84.2 million in the 2004 period. We were able to increase our freight revenue by increasing our freight rates, the size of our fleet, our detention charges and our business with existing and new customers. Our fuel surcharge revenue increased $7.1 million, or 126.1%, to $12.7 million in the 2005 period from $5.6 million in the 2004 period primarily due to higher average fuel prices in the 2005 period more fully discussed below under “fuel and fuel taxes.”  The increase in non-freight revenue in the 2005 period resulted from

10

increased logistics services provided by MWL, as well as the formation by the Company of a logistics division in March 2005. Our average operating revenue per tractor per week increased 13.8% in the 2005 period from the 2004 period. Our average freight revenue per tractor per week increased 5.7% in the 2005 period from the 2004 period, due to a 8.0% increase in average freight revenue per total mile partially offset by a 2.1% decrease in average miles per tractor. Our weighted average number of tractors increased 7.9% in the 2005 period from the 2004 period.

Salaries, wages and benefits consist of compensation for our employees, including both driver and non-driver employees, employees’ health insurance, 401(k) plan contributions, and other fringe benefits. These expenses vary depending upon the ratio of company drivers to independent contractors, our efficiency, our experience with employees’ health insurance claims, changes in health care premiums, and other factors. The increase in salaries, wages and benefits resulted primarily from an increase in the size of our company-owned fleet and increases in the amount paid to company drivers of 1 cent per mile effective January 1, 2005 and 2 cents per mile effective April 1, 2005. Additionally, our employees’ health insurance expense increased $806,000 in the 2005 period due to less favorable claims experience which increased our estimated costs of our self-insured medical claims from the 2004 period.

Purchased transportation consists of payments to independent contractor providers of revenue equipment and to carriers for transportation services arranged by the Company. This category will vary depending upon the ratio of company drivers versus independent contractors, the amount of fuel surcharges passed through to independent contractors and the amount paid to carriers by the Company. Payments to carriers for transportation services arranged by the Company were $2.8 million in the 2005 period and $1.3 million in the 2004 period. The amount of fuel surcharges passed through to independent contractors increased $1.3 million in the 2005 period. Purchased transportation expense, excluding fuel surcharges passed through to independent contractors and carrier payments by the Company, decreased $2.0 million, or 11.8%, in the 2005 period from the 2004 period. This decrease was primarily due to a decrease in the number of independent contractor-owned tractors in our fleet, partially offset by an increase in incentives paid to independent contractors effective January 1, 2005.

Fuel and fuel taxes, which we refer to as fuel expense, net of fuel surcharge revenue of $12.7 million in the 2005 period and $5.6 million in the 2004 period, increased $1.2 million, or 11.4%, to $12.2 million in the 2005 period from $11.0 million in the 2004 period. Our fuel prices, which remain high based on historical standards, significantly increased to an average of $2.15 per gallon in the 2005 period from an average of $1.64 per gallon in the 2004 period. The elevated level of fuel prices is expected to continue for the remainder of 2005. We have fuel surcharge provisions in substantially all of our transportation contracts and attempt to recover these increased expenses through fuel surcharges and higher rates. We expect our fuel costs to increase in the future because we believe that government mandated emissions standards, which became effective October 1, 2002, have resulted in less fuel-efficient engines, and that more restrictive emissions standards that take effect in 2007 will result in further declines in engine efficiency.

Depreciation relates to owned tractors, trailers, communications units, and terminal facilities. Gains or losses on dispositions of revenue equipment are set forth in a separate line item, rather than included in this category. The increase in depreciation was due to an increase in revenue equipment and the relative percentage of company-owned tractors to independent contractor-owned tractors in the 2005 period. We expect our annual cost of tractor and trailer ownership will increase in future periods as a result of our accelerated tractor fleet replacement and higher prices of new equipment, which would result in greater depreciation over the useful life.

Insurance and claims consist of the costs of insurance premiums and the accruals we make for claims within our self-insured retention amounts, primarily for personal injury, property damage, physical damage to our equipment, cargo claims, and workers’ compensation claims. These expenses will vary primarily based upon the frequency and severity of our accident experience, our self-insured retention levels, and the market for insurance. The increase in insurance and claims in the 2005 period was comprised of a $311,000 increase in the cost of self-insured accident claims and a $99,000 increase in insurance premiums. We are responsible for the first $1.0 million on each auto liability claim and beginning June 1, 2005, we also are responsible for up to $1.0 million in the aggregate for all auto liability claims between $1.0 million and $2.0 million. We are also

11

responsible for the first $750,000 on each workers’ compensation claim. Our significant self-insured retention and our risk on the first $1.0 million of auto liability claims in the $1.0 million to $2.0 million corridor expose us to the possibility of significant fluctuations in claims expense between periods depending on the frequency, severity, and timing of claims and to adverse financial results if we incur large or numerous losses. In the event of an uninsured claim above our insurance coverage, or an increase in the frequency or severity of claims within our self-insured retention, our financial condition and results of operations could be materially and adversely affected.

In the 2005 period, increases in the market value for used revenue equipment caused our gain on disposition of revenue equipment to increase to $1.2 million from $650,000 in the 2004 period. Future gains or losses on disposition of revenue equipment are impacted by the market for used revenue equipment, which is beyond our control.

As a result of the foregoing factors, we improved our operating expenses as a percentage of operating revenue, or “operating ratio,” to 90.0% in the 2005 period from 91.4% in the 2004 period. Our operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharge revenue, improved to 88.8% in the 2005 period from 90.9% in the 2004 period.

Interest expense primarily consists of interest on our unsecured committed credit facility and senior unsecured notes. These expenses are partially offset by interest income from the financing we provide to independent contractors under our tractor purchase program and from our investment in short-term marketable securities. Net interest expense was consistent in the 2005 and 2004 periods.

Our effective income tax rate was 39.2% in the 2005 period compared with 38.0% in the 2004 period. We expect our effective income tax rate to be approximately 39% for the remainder of 2005.

As a result of the factors described above, net income increased 40.5%, to $6.8 million in the 2005 period from $4.8 million in the 2004 period. Net earnings per share increased to $0.46 per diluted share in the 2005 period from $0.33 per diluted share in the 2004 period.

12

The following table sets forth for the periods indicated the dollar and percentage increase or decrease of the items in our unaudited consolidated condensed statements of operations, and those items as a percentage of operating revenue:

Our operating revenue increased $39.3 million, or 22.3%, to $215.7 million in the 2005 period from $176.4 million in the 2004 period. Freight revenue increased $21.6 million, or 13.1%, to $186.4 million in the 2005 period from $164.7 million in the 2004 period. We were able to increase our freight revenue by increasing our freight rates, the size of our fleet, our detention charges and our business with existing and new customers. Our fuel surcharge revenue increased $12.7 million, or 132.1%, to $22.4 million in the 2005 period from $9.6 million in the 2004 period primarily due to higher average fuel prices in the 2005 period. The increase in non-freight revenue in the 2005 period resulted from increased logistics services provided by MWL, as well as the formation by the Company of a logistics division in March 2005. Our average operating revenue per tractor

13

per week increased 12.4% in the 2005 period from the 2004 period. Our average freight revenue per tractor per week increased 4.1% in the 2005 period from the 2004 period, due to a 7.7% increase in average freight revenue per total mile, partially offset by a 3.4% decrease in average miles per tractor. Our weighted average number of tractors increased 8.7% in the 2005 period from the 2004 period.

The increase in salaries, wages and benefits resulted primarily from an increase in the size of our company-owned fleet and increases in the amount paid to company drivers of 1 cent per mile effective January 1, 2005 and 2 cents per mile effective April 1, 2005. Additionally, our employees’ health insurance expense increased $762,000 in the 2005 period due to less favorable claims experience which increased our estimated costs of our self-insured medical claims from the 2004 period.

Purchased transportation expense increased $3.0 million, or 7.9%, in the 2005 period from the 2004 period. This expense, excluding fuel surcharges passed through to independent contractors and carrier payments by the Company, decreased $2.9 million, or 8.5%, in the 2005 period from the 2004 period. This decrease was primarily due to a decrease in the number of independent contractor-owned tractors in our fleet, partially offset by a 1 cent per mile increase in the amount paid to independent contractors effective April 1, 2004 and an increase in incentives paid to independent contractors effective January 1, 2005. Payments to carriers for transportation services arranged by the Company were $4.6 million in the 2005 period and $1.3 million in the 2004 period. The amount of fuel surcharges passed through to independent contractors increased $2.5 million in the 2005 period.

Fuel and fuel taxes, which we refer to as fuel expense, net of fuel surcharge revenue of $22.4 million in the 2005 period and $9.6 million in the 2004 period, increased $2.4 million, or 11.1%, to $24.3 million in the 2005 period from $21.8 million in the 2004 period. Our fuel prices, which remain high based on historical standards, significantly increased to an average of $2.05 per gallon in the 2005 period from an average of $1.56 per gallon in the 2004 period.

The increase in depreciation was due to an increase in revenue equipment and the relative percentage of company-owned tractors to independent contractor-owned tractors in the 2005 period.

The increase in insurance and claims in the 2005 period was comprised of a $293,000 increase in the cost of self-insured accident claims and a $124,000 increase in insurance premiums.

In the 2005 period, increases in the market value for used revenue equipment caused our gain on disposition of revenue equipment to increase to $2.1 million from $1.2 million in the 2004 period.

As a result of the foregoing factors, we improved our operating expenses as a percentage of operating revenue, or “operating ratio,” to 91.0% in the 2005 period from 92.9% in the 2004 period. Our operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharge revenue, improved to 89.9% in the 2005 period from 92.5% in the 2004 period.

The increase in net interest expense was primarily the result of higher average debt balances outstanding in the 2005 period, partially offset by an increase in interest income from financing provided to independent contractors.

Our effective income tax rate was 39.6% in the 2005 period compared with 38.0% in the 2004 period.

As a result of the factors described above, net income increased 53.4%, to $11.6 million in the 2005 period from $7.5 million in the 2004 period. Net earnings per share increased to $0.79 per diluted share in the 2005 period from $0.52 per diluted share in the 2004 period.

14

Liquidity and Capital Resources

Our business requires substantial, ongoing capital investments, particularly for new tractors and trailers. Our primary sources of liquidity are funds provided by operations, our unsecured senior notes and our revolving credit facility. A portion of our tractor fleet is provided by independent contractors who own and operate their own equipment. We have no capital expenditure requirements relating to those drivers who own their tractors or obtain financing through third parties. However, to the extent we purchase tractors and extend financing to the independent contractors through our tractor purchase program, we have an associated capital expenditure requirement.

The table below reflects our net cash flows provided by operating activities, net cash flows used for investing activities, and total long-term debt, including current maturities, for the periods indicated.

In the first six months of 2005, we spent approximately $24.1 million, net of trade-ins, to purchase 302 tractors and 436 trailers. We also recognized a gain of $2.1 million on the disposition of used equipment in the first six months of 2005. We estimate that capital expenditures, net of trade-ins, will be approximately $57 million for the remainder of 2005, primarily for new revenue equipment. Based on our current operating performance, the market for used trucks, our liquidity and our expectations concerning tractors manufactured in 2007, we have decided to accelerate our tractor fleet replacement during 2005 and 2006 to allow flexibility with purchasing tractors in 2007 when the next round of diesel emissions reduction directives of the EPA go into effect. We expect to fund these capital expenditures with cash flows from operations and borrowings under our revolving credit facility. We believe our sources of liquidity are adequate to meet our current and anticipated needs for at least the next twelve months. Over the longer term, based upon anticipated cash flows, current borrowing availability, and sources of financing we expect to be available to us, we do not anticipate any significant liquidity constraints in the foreseeable future.

We have outstanding Series A Senior Unsecured Notes with an aggregate principal balance of $14.3 million at June 30, 2005. These notes mature in October 2008, require annual principal payments of $3.57 million that began in October 2002, and bear interest at a fixed rate of 6.78%. We also have outstanding Series B Senior Unsecured Notes with an aggregate principal balance of $7.1 million at June 30, 2005. These notes mature in April 2010, require annual principal payments of $1.43 million that began in April 2004, and bear interest at a fixed rate of 8.57%.

We maintain an unsecured committed credit facility in the amount of $45.0 million. We entered into an amendment to the credit facility in June 2005. The amendment reduced the number of banks subject to the agreement to one, adjusted our financial covenants and extended the maturity of the facility from April 2006 to April 2008. The extension of the maturity is reflected in the contractual obligations summary following. At June 30, 2005, the credit facility had an outstanding principal balance of $13.2 million, outstanding letters of credit of $4.2 million, and remaining borrowing availability of $27.6 million. This facility bears interest at a variable rate based on the London Interbank Offered Rate or the bank’s Prime Rate, in each case plus applicable margins. The weighted average interest rate for the credit facility was 4.7% at June 30, 2005.

Our credit facility prohibits us from paying, in any fiscal year, dividends in excess of 25% of our net income from the prior fiscal year. The debt agreements discussed above also contain restrictive covenants which, among other matters, require us to maintain certain financial ratios, including debt-to-equity, cash flow

15

leverage, interest coverage, and fixed charge coverage. We were in compliance with all of these covenants at June 30, 2005.

We had $10.5 million in direct financing receivables from independent contractors under our tractor purchase program as of June 30, 2005, compared with $10.3 million in receivables as of December 31, 2004. These receivables, which are collateralized by the tractors financed, are used to attract and retain qualified independent contractors. We deduct payments from the independent contractors’ settlements weekly and, as a result, have experienced minimal collection issues for these receivables.

The following is a summary of our contractual obligations as of June 30, 2005. We have entered into agreements to purchase $72.0 million of revenue equipment in the remainder of 2005, which is included in the following summary. We also plan to purchase an additional $14.8 million and $38.5 million of revenue equipment in 2005 and 2006, respectively, for which we have not entered into binding agreements.

Related Parties

MWL, our 45% owned affiliate, is a third-party provider of logistics services to the transportation industry. In the first six months of 2005 and the first six months of 2004, we received $10.6 million and $9.9 million, respectively, of our revenue from transportation services arranged by MWL. We have applied the provisions of FASB Interpretation No. 46, “Consolidation of Variable Interest Entities,” as revised, to our investment in MWL effective March 31, 2004. As a result, the accounts of MWL are included in our consolidated balance sheet as of June 30, 2005, and in our consolidated statement of operations beginning April 1, 2004. We accounted for our investment in MWL’s operating results using the equity method of accounting prior to April 1, 2004.

We purchase fuel and obtain tires and related services from Bauer Built, Incorporated, or BBI. Jerry M. Bauer, one of our directors, is the president and a stockholder of BBI. We paid BBI $550,000 in the first six months of 2005 and $416,000 in the first six months of 2004 for fuel and tire services. In addition, we paid $711,000 in the first six months of 2005 and $614,000 in the first six months of 2004 to tire manufacturers for tires that we purchased from the tire manufacturers but were provided by BBI. BBI received commissions from the tire manufacturers related to these purchases. Other than any benefit received from his ownership interest, Mr. Bauer receives no compensation or other benefits from our business with BBI.

Off-Balance Sheet Arrangements

We did not have any material off-balance sheet arrangements at June 30, 2005.

Inflation and Fuel Costs

Most of our operating expenses are inflation-sensitive, with inflation generally producing increased costs of operations. During 2004 and the first six months of 2005, the most significant effects of inflation have been on revenue equipment prices, accident claims, health insurance, and employee compensation. We attempt to limit the effects of inflation through increases in freight rates and cost control efforts.

16

In addition to inflation, fluctuations in fuel prices can affect our profitability. We require substantial amounts of fuel to operate our tractors and power the temperature-control units on our trailers. Substantially all of our contracts with customers contain fuel surcharge provisions. Although we historically have been able to pass through most long-term increases in fuel prices and taxes to customers in the form of surcharges and higher rates, increases usually are not fully recovered. Fuel prices were high throughout 2004 and increased further in the first six months of 2005, which has increased our cost of operating. The elevated level of fuel prices is expected to continue for the remainder of 2005.

Seasonality

Our tractor productivity generally decreases during the winter season because inclement weather impedes operations and some shippers reduce their shipments. At the same time, operating expenses generally increase, with fuel efficiency declining because of engine idling and harsh weather creating higher accident frequency, increased claims, and more equipment repairs.

Critical Accounting Policies

We believe that the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Insurance and Claims. We self-insure, in part, for losses relating to workers’ compensation, auto liability, general liability, cargo and property damage claims, along with employees’ health insurance with varying risk retention levels. We maintain insurance coverage for per-incident and total losses in excess of these risk retention levels in amounts we consider adequate based upon historical experience and our ongoing review. However, we could suffer a series of losses within our self-insured retention limits or losses over our policy limits, which could negatively affect our financial condition and operating results. We are responsible for the first $1.0 million on each auto liability claim and beginning June 1, 2005, we also are responsible for up to $1.0 million in the aggregate for all auto liability claims between $1.0 million and $2.0 million. We are also responsible for the first $750,000 on each workers’ compensation claim. We have $4.2 million in letters of credit to guarantee settlement of claims under agreements with our insurance carriers and regulatory authorities. The insurance and claims accruals in our consolidated balance sheets were $11.8 million as of June 30, 2005, and $13.7 million as of December 31, 2004. We reserve currently for the estimated cost of the uninsured portion of pending claims. We periodically evaluate and adjust these reserves based on our evaluation of the nature and severity of outstanding individual claims and our estimate of future claims development based on historical claims development factors. We believe that our claims development factors have historically been reasonable, as indicated by the adequacy of our insurance and claims accruals compared to settled claims. Actual results could differ from these current estimates. If our claims settlement experience worsened causing our historical claims development factors to increase by 5%, our estimated outstanding loss reserves as of June 30, 2005 would have needed to increase by approximately $1.9 million.

Property and Equipment. The transportation industry requires significant capital investments. Our net property and equipment was $226.7 million as of June 30, 2005 and $215.7 million as of December 31, 2004. Our depreciation expense was $18.3 million for the first six months of 2005 and $15.9 million for the first six months of 2004. We compute depreciation of our property and equipment for financial reporting purposes based on the cost of each asset, reduced by its estimated salvage value, using the straight-line method over its estimated useful life. We determine and periodically evaluate our estimate of the projected salvage values and useful lives primarily by considering the market for used equipment, prior useful lives, and changes in technology. We have not changed our policy regarding salvage values as a percentage of initial cost or useful lives of tractors and trailers within the last ten years. We believe that our policies and past estimates have been reasonable. Actual results could differ from these estimates. A 5% decrease in estimated salvage values would have decreased our net property and equipment as of June 30, 2005 by approximately $5.4 million, or 2.4%.

Impairment of Assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment

17

to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less the costs to sell.

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards, or SFAS, No. 123 (revised 2004), “Share-Based Payment.”  SFAS No. 123, as revised, requires entities to recognize the grant-date fair value of stock options and other equity-based compensation issued to employees in the income statement. The statement eliminates entities’ ability to account for share-based compensation transactions using the intrinsic value method of accounting in Accounting Principles Board, or APB, Opinion No. 25, “Accounting for Stock Issued to Employees,” which was permitted under SFAS No. 123, as originally issued. In April 2005, the Securities and Exchange Commission deferred the effective date of SFAS No. 123, as revised, to the beginning of the first annual reporting period beginning after June 15, 2005. Accordingly, we will recognize the grant-date fair value of stock options in our consolidated statements of operations beginning in our first quarter of 2006. The average annual stock-based employee compensation expense, net of related tax effects, for 2002 through 2004 was $185,000. Therefore, the adoption of this pronouncement is not expected to have a significant impact on our results of operations or financial position. However, the ultimate amount of increased compensation expense will be dependent upon whether we adopt SFAS No. 123, as revised, using the modified prospective or retrospective method, the number of option shares granted during the year, their timing and vesting period, and the method used to calculate the fair value of the awards, among other factors.

In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets: an Amendment of APB Opinion No. 29.”  The amendments made by SFAS No. 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. The amendments also eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have commercial substance. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of this pronouncement is not expected to have a significant impact on our results of operations or financial position.

In March 2005, the FASB issued Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations.”  The Interpretation clarifies that the term “conditional asset retirement obligations” as used in SFAS No. 143, “Accounting for Asset Retirement Obligations,” refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within the control of the entity. The Interpretation states that conditional obligations meet the definition of an asset retirement obligation in SFAS No. 143 and therefore should be recognized if their fair value can be reasonably estimated. Interpretation No. 47 is effective no later than the end of fiscal years ending after December 15, 2005. The adoption of Interpretation No. 47 is not expected to have a significant impact on our results of operations or financial position.

Forward-Looking Statements and Risk Factors

This Quarterly Report on Form 10-Q contains certain forward-looking statements. Such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements not of historical fact may be considered forward-looking statements. Written words such as “may,” “expect,” “believe,” “anticipate,” “plan,” “goal,” or “estimate,” or other variations of these or similar words, identify such statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially, depending on a variety of factors and risks, including but not limited to those discussed below.

Our business is subject to general economic and business factors that are largely out of our control, any of which could have a materially adverse effect on our operating results. Our business is dependent upon a number of factors that may have a materially adverse effect on the results of our operations, many of which are beyond our control. These factors include difficulty in attracting and retaining qualified drivers and

18

independent contractors, significant increases or rapid fluctuations in fuel prices, excess capacity in the trucking industry, strikes or other work stoppages, surpluses in the market for used equipment, interest rates, fuel taxes, license and registration fees, insurance premiums, and self-insurance levels. We also are affected by recessionary economic cycles and downturns in customers’ business cycles, particularly in market segments and industries where we have a significant concentration of customers. Economic conditions may adversely affect our customers and their ability to pay for our services. It is not possible to predict the effects of actual or threatened armed conflicts or terrorist attacks and subsequent events on the economy or on consumer confidence in the United States, or the impact, if any, on our future results of operations. In addition, our results of operations may be affected by seasonal factors.

We operate in a highly competitive and fragmented industry, and numerous competitive factors could impair our ability to maintain our current profitability. We compete with many other truckload carriers that provide temperature-sensitive service of varying sizes and, to a lesser extent, with less-than-truckload carriers, railroads, and other transportation companies, many of which have more equipment, a wider range of services, and greater capital resources than we do or have other competitive advantages. In particular, several of the largest truckload carriers that offer primarily dry-van service also offer temperature-sensitive service, and these carriers could attempt to increase their business in the temperature-sensitive market. Many of our competitors periodically reduce their freight rates to gain business, especially during times of reduced growth rates in the economy, which may limit our ability to maintain or increase freight rates or maintain significant growth in our business. In addition, many customers reduce the number of carriers they use by selecting so-called “core carriers” as approved service providers, or conduct bids from multiple carriers for their shipping needs, and in some instances we may not be selected as a core carrier or to provide service under such bids.

We derive a significant portion of our revenue from our major customers, the loss of one or more of which could have a materially adverse effect on our business. A significant portion of our revenue is generated from our major customers. For the first six months of 2005, our top 30 customers, based on revenue, accounted for approximately 76% of our revenue; our top ten customers accounted for approximately 50% of our revenue; our top five customers accounted for approximately 38% of our revenue; and our top two customers accounted for approximately 22% of our revenue. We do not expect these percentages to change materially for the remainder of 2005. Generally, we enter into one-year contracts with our major customers, the majority of which do not contain any firm obligations to ship with us. We cannot assure you that, upon expiration of existing contracts, these customers will continue to use our services or that, if they do, they will continue at the same levels. In addition, our volumes and rates with our customers could decrease as a result of bid processes or other factors. A reduction in or termination of our services by one or more of our major customers could have a materially adverse effect on our business and operating results.

Ongoing insurance and claims expenses could significantly affect our earnings. Our future insurance and claims expense might exceed historical levels, which could reduce our earnings. We self-insure for a portion of our claims exposure resulting from workers’ compensation, auto liability, general liability, cargo and property damage claims, as well as employees’ health insurance. We also are responsible for our legal expenses relating to such claims. We reserve currently for anticipated losses and expenses. We periodically evaluate and adjust our claims reserves to reflect our experience. However, ultimate results may differ from our estimates, which could result in losses over our reserved amounts. We are responsible for the first $1.0 million on each auto liability claim and beginning June 1, 2005, we also are responsible for up to $1.0 million in the aggregate for all auto liability claims between $1.0 million and $2.0 million. We are also responsible for the first $750,000 on each workers’ compensation claim. The number or severity of claims for which we are self-insured, or the timing of such claims within a given period, could have a materially adverse effect on our operating results.

We maintain insurance above the amounts for which we self-insure with licensed insurance carriers. Although we believe the aggregate insurance limits should be sufficient to cover reasonably expected claims, it is possible that one or more claims could exceed our aggregate coverage limits. Insurance carriers have raised premiums for many businesses, including trucking companies. As a result, our insurance and claims expense could increase, or we could raise our self-insured retention when our policies are renewed. If these expenses increase, or if we experience a claim in excess of our coverage limits, or we experience a claim for which coverage is not provided, results of our operations and financial condition could be materially and adversely affected.

19