KNIGHT TRANSPORTATION INC, 424A, 1996-07-01

KNIGHT TRANSPORTATION INC
424A, 1996-07-01
TRUCKING (NO LOCAL)

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INFORMATION HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION
STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE
ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION
JUNE 14, 1996

1,600,000 SHARES

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IMAGE OMITTED

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Knight Transportation

COMMON STOCK

----------

Of the 1,600,000 shares of Common Stock offered hereby, 800,000 shares are
being sold by Knight Transportation, Inc. ("Knight" or the "Company") and
800,000 shares are being sold by certain of the Company's shareholders (the
"Selling Shareholders"). See "Principal and Selling Shareholders." The Company
will not receive any proceeds from the sale of the Common Stock by the Selling
Shareholders. The Company's Common Stock is traded on the Nasdaq Stock Market
(National Market) under the symbol "KNGT." The closing price of the Company's
Common Stock on June 12, 1996 was $20.50 per share.

----------

SEE "RISK FACTORS" BEGINNING ON PAGE 5 OF THIS PROSPECTUS FOR CERTAIN
INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON
STOCK OFFERED HEREBY.

----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

================================================================================

Price Underwriting Proceeds Proceeds to
to Discounts and to Selling
Public Commissions Company (1) Shareholders
- --------------------------------------------------------------------------------
Per Share $ $ $ $
Total (2) $ $ $ $
- --------------------------------------------------------------------------------

(1) Before deducting estimated expenses of $175,000 payable by the Company.
(2) The Selling Shareholders have granted the Underwriters a 30-day option to
purchase up to 240,000 additional shares of Common Stock solely to cover
over-allotments, if any. To the extent that the option is exercised, the
Underwriters will offer the additional shares to the public at the Price to
Public shown above. If the option is exercised in full, the total Price to
Public, Underwriting Discounts and Commissions and Proceeds to Selling
Shareholders will be $ , $ and $ , respectively.
See "Underwriting."
----------
<PAGE>
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares will be made at the offices of Alex. Brown
& Sons Incorporated, Baltimore, Maryland, on or about , 1996.

ALEX. BROWN & SONS
INCORPORATED
MORGAN KEEGAN & COMPANY, INC.

WILLIAM BLAIR & COMPANY

THE DATE OF THIS PROSPECTUS IS , 1996.

AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933 with respect to the Common Stock
offered hereby. This Prospectus, which constitutes part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information with respect to the
Company and the Common Stock, reference is made to the Registration Statement
and the exhibits and schedules filed as a part thereof. Statements made in this
Prospectus as to the contents of any contract, agreement or other document are
not necessarily complete, and, in each instance, reference is made to the copy
of such contract, agreement or document. The Registration Statement and the
exhibits thereto filed by the Company with the Commission may be inspected and
copies may be obtained (at prescribed rates) at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549 and at the Commission's Regional Office located at Suite 1400,
Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661 and
7 World Trade Center, Suite 1300, New York, New York 10048.

Statements made in this Prospectus as to the contents of any contract,
agreement or other document referred to are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference.

----------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
COMPANY'S COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER
MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.

----------------
<PAGE>
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements, including the notes
thereto, appearing elsewhere in this Prospectus. Unless otherwise indicated, all
information in this Prospectus assumes no exercise of the Underwriters'
over-allotment option. Unless the context otherwise requires, references in this
Prospectus to "Knight" or the "Company" refer to Knight Transportation, Inc. and
its consolidated subsidiaries.

THE COMPANY

Knight is a short to medium-haul, dry van truckload carrier providing
regional service primarily in the western United States. The Company transports
general commodities, including consumer goods, packaged foodstuffs, paper
products, beverage containers, and imported and exported commodities. The
Company has recently established operations near Houston, Texas to provide
dedicated services to one of its larger customers and to commence regional
service in Texas and Louisiana. The Company has also initiated operations in
Indianapolis, Indiana, from which it will provide regional and dedicated service
in the Midwest and on the East Coast.

The Company's operating strategy is to achieve significant but controlled
growth by providing high quality services to service-sensitive customers, with
the goal of obtaining sustained, predictable business that will allow the
Company to achieve a high level of equipment utilization and other operating
efficiencies. Knight commenced operations in July 1990, when Kevin, Gary and
Keith Knight joined Randy Knight to establish a new short to medium-haul
truckload carrier. The Knights average more than 20 years of experience in the
truckload industry. The Company's goal is to attain growth and profitability
through intensive management and the creation of simplified, cost effective
operations.

During the five year period ended December 31, 1995, management led the
Company to a 43.0% compounded annual increase in operating revenue and a 61.2%
compounded annual increase in net income. The Company intends to continue to
develop its business by servicing existing and new customers in its core markets
in the western United States, while expanding its operations and providing
regional and dedicated service in Texas and Louisiana as well as in the Midwest
and on the East Coast.

The Company was incorporated in Arizona in 1989. Knight's headquarters are
located at 5601 West Buckeye Road, Phoenix, Arizona 85043, and its telephone
number is (602) 269-2000.

THE OFFERING

Common Stock offered by the Company ................. 800,000 shares
Common Stock offered by the Selling Shareholders .... 800,000 shares
Common Stock to be outstanding after the offering .. 9,902,000 shares(1)
Use of proceeds ..................................... To reduce indebtedness,
acquire revenue equipment,
and for other general
corporate purposes
Nasdaq National Market symbol ....................... KNGT
- ----------

(1) Excludes 648,000 and 75,000 shares reserved for issuance under the Company's
Stock Option Plan and 401(k) Plan, respectively. See "Executive Compensation
and Other Information -- 1994 Stock Option Plan; 401(k) Plan."

3
<PAGE>
<TABLE>
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND OPERATING DATA)

<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------------------------- -------------------
1991 1992 1993 1994 1995 1995 1996
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF INCOME DATA:
Operating revenue .................$13,445 $19,579 $26,381 $37,543 $56,170 $11,908 $16,581
Income from operations ............ 2,287 3,366 5,126 8,112 10,601 2,362 2,835
Net interest expense and other ... (786) (847) (844) (734) (195) (44) (97)
Income before income taxes ........ 1,501 2,519 4,282 7,378 10,406 2,318 2,738
Net income ........................ 861 1,399 2,447 4,094 5,806 1,286 1,588
Net income per share .............. .11 .17 .30 .49 .64 .14 .17
Weighted average outstanding
shares .......................... 8,200 8,200 8,200 8,375 9,141 9,142 9,151

OPERATING DATA:
Operating ratio(1) ................ 83.0% 82.8% 80.6% 78.4% 81.1% 80.2% 82.9%
Average revenue per mile ..........$ 1.20 $ 1.17 $ 1.22 $ 1.29 $ 1.26 $ 1.29 $ 1.24
Average length of haul (miles) .... 448 464 472 482 494 488 483
Empty mile factor ................. 12.8% 14.3% 11.8% 10.1% 10.3% 10.0% 10.4%
Tractors operated at end of
period:
Company ...................... 110 147 199 262 310 285 360
Independent contractor ....... -- -- -- 30 115 55 131
--------- --------- --------- --------- --------- --------- ---------
Total tractors .................... 110 147 199 292 425 340 491
Trailers operated at end of period 260 323 489 639 1,044 664 1,264
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1996
-------------------------
ACTUAL AS ADJUSTED(2)
---------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit) ..................................$(5,807) $ 9,474
Total assets ............................................... 52,791 63,072
Current portion of long-term debt and line of credit ....... 6,003 1,003
Long-term debt, net of current portion ..................... 754 754
Shareholders' equity ....................................... 26,320 41,601
<FN>
- ----------
(1) Operating expenses as a percentage of operating revenue.
(2) Adjusted for the sale of 800,000 shares offered by the Company (at an
assumed public offering price of $20.50 per share) and the application of
the estimated net proceeds as described in "Use of Proceeds".
</FN>
</TABLE>

4
<PAGE>
RISK FACTORS

In addition to the other information contained in this Prospectus, the
following factors should be carefully considered in evaluating an investment in
the Company's Common Stock.

ECONOMIC FACTORS

Fuel prices, insurance costs, liability claims, interest rates, the
availability of qualified drivers, fluctuations in the resale value of revenue
equipment and customers' business cycles and shipping demands are economic
factors over which the Company has little or no control. Significant increases
or rapid fluctuations in fuel prices, interest rates or increases in insurance
costs or liability claims, to the extent not offset by increases in freight
rates, would reduce the Company's profitability. Although the Company's
independent contractors are responsible for paying for their own equipment, fuel
and other operating costs, significant increases in these costs could cause them
to seek higher compensation from the Company or other contractural
opportunities. Difficulty in attracting or retaining qualified drivers or a
downturn in customers' business cycles or shipping demands also could have a
material adverse effect on the growth and profitability of the Company. If the
resale value of the Company's revenue equipment were to decline, the Company
could be forced to retain some of its equipment longer, with a resulting
increase in operating expenses for maintenance and repairs. At this time a
significant portion of the Company's business is concentrated in the Arizona and
California markets and a general economic decline or a natural disaster in
either of these markets could have a material adverse effect on the growth and
profitability of the Company. If the Company is successful in deriving a
significant portion of its revenues from markets in Texas and Louisiana and the
Midwest and on the East Coast in the near future, its growth and profitability
could be materially adversely affected by general economic declines or natural
disasters in those markets. See"--Growth of Business; Expansion of Operations";
"Management's Discussion and Analysis of Financial Condition and Results of
Operations"; and "Business -- Business Strategy; -- Fuel."

COMPETITION

The Company competes primarily with other regional short to medium-haul
truckload carriers, logistics providers, national carriers and other national
equipment providers. Railroads and air freight also provide competition, but to
a lesser degree. The Company believes that the principal competitive factors in
its business are service, pricing and the availability and configuration of
equipment that meets a variety of customers' needs. Recently, the trucking
industry, including the short to medium-haul truckload market, has been affected
by the availability of excess revenue equipment, which has had a negative effect
on both equipment utilization and rates. The entire trucking industry is highly
competitive and fragmented. Competition for the freight transported by the
Company is based on freight rates, service, and efficiency. A number of the
Company's competitors have greater financial resources, own more equipment, and
carry a larger volume of freight than the Company.

AVAILABILITY OF DRIVERS AND INDEPENDENT CONTRACTORS

The Company utilizes the services of both employee drivers and independent
contractors. Competition for employee drivers and independent contractors is
intense within the trucking industry, and the Company has at times experienced
difficulty attracting and retaining qualified drivers and independent
contractors, which has resulted in the temporary idling of revenue equipment.
From time to time, there have been industry-wide shortages of qualified drivers
and independent contractors and there can be no assurance that the Company will
not be affected by a shortage of qualified drivers or independent contractors in
the future. Prolonged difficulty in attracting or retaining qualified drivers or
independent contractors could have a material adverse effect on the Company's
operations and limit its growth. See "Business -- Drivers and Other Employers;
Independent Contractor Program."

DEPENDENCE ON KEY PERSONNEL

The Company is highly dependent on the services of Randy Knight, its
Chairman; Kevin P. Knight, its Chief Executive Officer; Gary J. Knight, its
President; and Keith T. Knight, its Executive Vice President. The loss of one or
more of these officers could have a material adverse effect on the Company's
operations and future profitability. The Company maintains and is the
beneficiary of a "key man" life insurance policy of $1,000,000 on each of Randy,
Kevin, Gary and Keith Knight. See "Management."

GROWTH OF BUSINESS; EXPANSION OF OPERATIONS

The Company has experienced significant and rapid growth in revenues and
profits since the inception of its business in 1990. There can be no assurance
that the Company's business will continue to grow in a similar fashion

5
<PAGE>
in the future or that the Company can effectively adapt its management,
administrative and operational systems to respond to any future growth. Further,
there can be no assurance that the Company's operating margins will not be
adversely affected by future changes in and expansion of the Company's business
or by changes in economic conditions.

In early 1996, the Company commenced regional and dedicated services
operations from facilities located near Houston and in Indianapolis. These
initiatives represent the first established operations of the Company in markets
outside of its primary regional operations in the western United States. The
Company's senior management team has not had extensive experience operating a
truckload carrier in either of the Company's new markets, and the Company may
encounter operating conditions in these new markets that differ substantially
from those previously experienced in its western United States markets. There
can be no assurance that the Company's regional operating strategy as employed
in the western United States can be duplicated successfully or that it will not
take longer than expected or require a more substantial financial commitment
than anticipated in order for the Company to generate positive operating results
in these new markets. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business --Marketing and Customers."

CAPITAL REQUIREMENTS

The trucking industry is capital intensive. The Company has depended on debt
financing and the proceeds of its initial public offering in 1994 to obtain new
revenue equipment, to expand the size of its fleet and to maintain modern
revenue equipment. If the Company were unable in the future to enter into
acceptable financing arrangements, raise additional equity, or borrow sufficient
funds, it would be forced to limit its growth and operate its revenue equipment
for longer periods, which would likely adversely affect the Company's operating
results. See "Use of Proceeds" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources."

ACQUISITION OF REVENUE EQUIPMENT

The Company's strategy for continued growth is dependent on the acquisition
and deployment of additional revenue equipment, and the expansion and
development of operations beyond the western region of the United States. The
Company has recently established operations near Houston to provide dedicated
services to one of its larger customers and to commence regional service in
Texas and Louisiana. The Company has also recently initiated expansion of its
operations by establishing operations in Indianapolis in order to access markets
in the Midwest and on the East Coast. These operations will require the
commitment of additional revenue equipment and personnel, as well as management
resources, for future development. The Company currently has orders for the
purchase of 37 tractors (net of trade-ins) and 264 trailers (net of trade-ins)
during the 12-month period commencing April 1, 1996. There can be no assurance
that the Company will be able to attract and retain enough qualified employee
drivers or engage a sufficient number of independent contractors to meet its
growth targets. Although Knight expects to take delivery of this revenue
equipment during the course of this 12-month period, delays in the availability
of equipment could occur due to a number of factors beyond the Company's
control, including work stoppages at the equipment supplier and equipment and
supply shortages. Any delay or interruption in the availability of equipment in
the future could have a material adverse effect on the Company. Finally, the
Company may be forced to curtail its plans for growth due to the occurrence of
certain changes in economic conditions, particularly decreased demand for
truckload carrier services. See "Business -- Business Strategy; Revenue
Equipment and Maintenance."

DEPENDENCE ON CERTAIN CUSTOMERS

For the year ended December 31, 1995, the Company's 25 largest customers
represented 53.2% of operating revenue, its ten largest customers represented
32.1% of operating revenue and its five largest customers represented 19.4% of
operating revenue. Most of the Company's truckload carriage contracts with
customers are cancellable on 30 days notice. The loss of one or more large
customers could have a material adverse effect on the Company's operating
results. See "Business -- Marketing and Customers."

FUEL

Fuel is one of the Company's largest operating expenses, and the Company has
recently experienced sharp increases in its fuel costs. Increases in fuel taxes
or fuel prices, to the extent not offset by freight rate increases, or any
interruption in the supply of fuel, could have a material adverse effect on the
Company's operating results. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Inflation" and "Business --
Fuel."

6
<PAGE>

REGULATION

Historically, the Interstate Commerce Commission ("ICC") and various state
agencies regulated truckload carriers' operating rights, accounting systems,
rates and charges, safety, mergers and acquisitions, periodic financial
reporting and other matters. In 1995, the passage of certain federal legislation
preempted state regulation of prices, rates, and services of motor carriers and
eliminated the ICC. Several ICC functions were transferred to the Department of
Transportation ("DOT"), but a lack of implementing regulations currently
prevents the Company from assessing the full impact of this action. Generally,
the trucking industry is subject to regulatory and legislative changes that can
have a material effect on operations. The Company's motor carrier operations are
also subject to environmental laws and regulations, including laws and
regulations dealing with underground fuel storage tanks, the transportation of
hazardous materials and other environmental matters. In the event the Company
should fail to comply with applicable regulations, the Company could be subject
to substantial fines or penalties and to civil or criminal liability. There is
no assurance that compliance with regulations promulgated from time to time by
the DOT, Environmental Protection Agency ("EPA") or other regulatory bodies
exercising jurisdiction over the Company will not require the expenditure of
substantial monies. Such expenditures, if they should occur, could adversely
affect the Company's results of operations. See "Business -- Legal Proceedings."

The Company's tractor and trailer fleets are registered in Oklahoma and Utah
and operate primarily in the western United States, including California. The
Company is presently being audited by the State of California's Department of
Motor Vehicles. Although no assessment has yet been made, California is
asserting that all the Company's trailers are subject to apportioned
registration in California and that the Company owes California additional
trailer registration fees in excess of those amounts previously paid. The
Company intends to vigorously contest the position taken by California. The
Company believes that the outcome of the California audit will not have a
materially adverse effect on the Company's financial position or results of
operations. See "Business -- Legal Proceedings."

SELF-INSURED CLAIMS

The Company is self-insured for personal injury and property damage up to a
maximum limit of $100,000 per occurrence, for collision, comprehensive, and
cargo liability up to a combined limit of $25,000 per occurrence, and, in states
in which the Company elects to do so, workers' compensation up to $250,000 per
occurrence. If the Company were to experience numerous claims in significant
amounts for which it is self-insured, or if significant increases in insurance
costs should occur which could not be offset by higher freight rates, the
Company's results of operations could be adversely affected. See "Business --
Safety and Risk Management."

ENVIRONMENTAL HAZARDS

The Company's operations are subject to various environmental laws and
regulations dealing with the transportation, storage, presence, use, disposal
and handling of hazardous materials and hazardous wastes, discharge of
stormwater and underground fuel storage tanks. The Company rarely engages in the
transportation of hazardous substances and underground storage tanks are
situated only on its recently acquired Indianapolis property. However, if the
Company should be involved in a spill or other accident involving hazardous
substances, or if any such substances were found on the Company's properties in
violation of applicable environmental laws and regulations, the Company could be
responsible for clean-up costs, property damage, fines or other penalties, any
one of which could have a material adverse effect on the Company. See "Business
- -- Safety and Risk Management; Regulation; Properties"

SHARES ELIGIBLE FOR FUTURE SALE

Sales of a substantial number of shares of the Common Stock or their
availability for sale in the public market following this offering may have an
adverse effect on prevailing market prices for the Common Stock. Following this
offering, the 1,600,000 shares offered hereby will be freely tradeable unless
acquired by affiliates of the Company. The Selling Shareholders, either in their
individual capacities or through certain related trusts and limited liability
companies established for the benefit of their respective families, will
beneficially own 6,028,900 shares, or 60.9%, of the Company's outstanding Common
Stock, after giving effect to this offering. The Selling Shareholders, along
with the Company and its other officers and directors, have agreed with the
Underwriters not to sell, offer or otherwise dispose of any of their shares for
180 days from the date of this Prospectus without the prior written consent of
Alex. Brown & Sons Incorporated. After the 180 day period, all of such shares
will be eligible for sale under, and subject to the limitations of, Rule 144
under the Securities Act of 1933, as amended (the "Securities Act"). See
"Principal and Selling Shareholders" and "Shares Eligible for Future Sale."

7
<PAGE>

LIMITS ON CHANGES IN CONTROL

The Company's Articles of Incorporation and Bylaws contain certain provisions
that could have the effect of making it more difficult for a party to acquire,
or discouraging a party from attempting to acquire, control of the Company. The
Articles of Incorporation authorize the Board of Directors to issue shares of
preferred stock from time to time in one or more designated series or classes.
The Board of Directors, without the approval of the shareholders, is authorized
to establish voting, dividend, redemption, conversion, liquidation and other
provisions of a particular series or class of preferred stock. In addition, the
Articles of Incorporation contain provisions requiring the approval of the
holders of 67% or more of the Company's issued and outstanding voting stock,
voting as a single class, to sell substantially all of the Company's assets or
effect any plan of merger or consolidation pursuant to which shares of common
stock of the Company are converted into the right to receive cash or other
consideration. See "Description of Capital Stock."

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 800,000 shares offered on
behalf of the Company are estimated to be approximately $15.3 million after
deduction of underwriting discounts and commissions and estimated offering
expenses. It is expected that approximately $10.2 million of the net proceeds
from the shares offered on behalf of the Company will be used to repay its
current line of credit indebtedness incurred primarily to acquire revenue
equipment, with the balance used to acquire additional revenue equipment and for
general corporate purposes. The indebtedness to be repaid has a current interest
rate equal to the London Interbank Offered Rate (LIBOR) plus .75% (having a
weighted average rate of 5.9% as of March 31, 1996) and matures in July 1997.
The Company will not receive any proceeds from the sale of the Common Stock by
the Selling Shareholders.

CAPITALIZATION

The following table sets forth the current portion of long-term debt and the
capitalization of the Company as of March 31, 1996 and as adjusted to give
effect to the sale of the 800,000 shares of Common Stock offered by the Company
hereby (assuming a public offering price of $20.50 per share) and application of
the estimated net proceeds to repay indebtedness as set forth in "Use of
Proceeds."

<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------
ACTUAL AS ADJUSTED
--------- -------------
(IN THOUSANDS)
<S> <C> <C>
Current portion of long-term debt and line of credit balance(1) ....$ 6,003 $ 1,003
========= =============
Long-term debt, net of current portion(2) ..........................$ 754 $ 754
Shareholders' equity:
Preferred stock, $0.01 par value; 50,000,000 shares authorized;
none issued and outstanding .................................... -- --
Common stock, $0.01 par value; 100,000,000 shares
authorized; 9,102,000 shares issued and outstanding;
9,902,000 shares issued and outstanding, as adjusted(3) ....... 91 99
Additional paid-in capital ......................................... 9,762 25,035
Retained earnings .................................................. 16,467 16,467
--------- -------------
Total shareholders' equity ......................................... 26,320 41,601
--------- -------------
Total capitalization ...............................................$27,074 $42,355
========= =============
<FN>

- ----------
(1) As of June 12, 1996, borrowing under the Company's line of credit totaled
$10.2 million.

(2) For information regarding the Company's long-term debt, see Note 4 of Notes
to Consolidated Financial Statements.

(3) Excludes 648,000 and 75,000 shares reserved for issuance under the Company's
Stock Option Plan and 401(k) Plan, respectively. See "Executive Compansation
and Other Information -- 1994 Stock Option Plan; 401(k) Plan."
</FN>
</TABLE>

8
<PAGE>
DIVIDEND POLICY

The Company has never paid cash dividends on its Common Stock. Future payment
of cash dividends will depend upon the financial condition, results of
operations and capital requirements of the Company, as well as other factors
deemed relevant by the Board of Directors. It is the current intention of the
Company's Board of Directors to retain earnings to finance the growth of the
Company's business, rather than to pay cash dividends.

PRICE RANGE OF COMMON STOCK

Following the Company's initial public offering of Common Stock on October
25, 1994, the Company's Common Stock has been traded on the Nasdaq National
Market under the symbol "KNGT." The following table sets forth, for the periods
indicated, the high and low closing sale prices for the Common Stock, as
reported by Nasdaq:

HIGH LOW
---- ---

1994
- ----
Fourth Quarter (from October 25)...................... $15.75 $12.00

1995
- ----
First Quarter ........................................ $16.13 $11.44
Second Quarter ....................................... $13.75 $11.63
Third Quarter ........................................ $16.88 $13.50
Fourth Quarter ....................................... $15.63 $13.00

1996
- ----
First Quarter ........................................ $16.25 $13.13
Second Quarter (through June 12)...................... $20.50 $15.00

9
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
<TABLE>

The following table sets forth certain financial and operating data of the
Company. The selected historical financial data of the Company are qualified by
reference to and should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations " and the Consolidated
Financial Statements and Notes thereto included elsewhere in this Prospectus.
The statements of income data set forth below as of December 31, 1991, 1992 and
1993 and the balance sheet data for the two years ended December 31, 1991 and
1992 have been derived from the Company's Consolidated Financial Statements
which have been audited by Arthur Andersen LLP, independent public accountants,
and are not included herein. The balance sheet data set forth below as of
December 31, 1994 and 1995 and the statements of income data for the three years
ended December 31, 1993, 1994 and 1995 have been derived from the Company's
Consolidated Financial Statements which have been audited by Arthur Andersen
LLP, independent public accountants, and are included elsewhere in this
Prospectus. The interim data as of March 31, 1995 and March 31, 1996 and for the
quarters then ended have been derived from unaudited financial statements. In
the opinion of management, the unaudited financial statements include all
adjustments, consisting of normal recurring adjustments and accruals, necessary
for a fair presentation of the financial position and results of operations of
the Company for these periods. The results of operations for the first quarter
ended March 31, 1996 are not necessarily indicative of results to be expected
for the year ending December 31, 1996. See "Experts."

<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------------------------------- ---------------------
1991 1992 1993 1994 1995 1995 1996
---------- ---------- --------- --------- --------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF INCOME DATA:
Operating revenue .................$13,445 $19,579 $26,381 $37,543 $56,170 $11,908 $16,581
Income from operations ............ 2,287 3,366 5,126 8,112 10,601 2,362 2,835
Net interest expense and other ... (786) (847) (844) (734) (195) (44) (97)
Income before income taxes ........ 1,501 2,519 4,282 7,378 10,406 2,318 2,738
Net income ........................ 861 1,399 2,447 4,094 5,806 1,286 1,588
Net income per share .............. .11 .17 .30 .49 .64 .14 .17
Weighted average outstanding
shares .......................... 8,200 8,200 8,200 8,375 9,141 9,142 9,151
OPERATING DATA:
Operating ratio(1) ................ 83.0% 82.8% 80.6% 78.4% 81.1% 80.2% 82.9%
Average revenue per mile ..........$ 1.20 $ 1.17 $ 1.22 $ 1.29 $ 1.26 $ 1.29 $ 1.24
Average length of haul (miles) ... 448 464 472 482 494 488 483
Empty mile factor ................. 12.8% 14.3% 11.8% 10.1% 10.3% 10.0% 10.4%
Tractors operated at end of
period:
Company ......................... 110 147 199 262 310 285 360
Independent contractors ......... -- -- -- 30 115 55 131
---------- ---------- --------- --------- --------- ---------- ----------
Total tractors .................... 110 147 199 292 425 340 491
Trailers operated at end of period 260 323 489 639 1,044 664 1,264
BALANCE SHEET DATA
(AT END OF PERIOD):
Working capital (deficit)(2) .....$(1,000) $(1,327) $ (787) $ 1,761 $ (293) $(1,247) $(5,807)
Total assets ...................... 12,862 18,724 24,651 32,588 43,099 35,325 52,791
Long-term debt, net of current
portion ......................... 7,151 7,334 9,208 2,117 981 1,847 754
Shareholders' equity .............. 1,334 2,733 5,179 18,903 24,732 20,189 26,320
<FN>

- ----------
(1) Operating expenses as a percentage of operating revenue.

(2) Includes approximately $6,003 of the current portion of the Company's long
term debt and line of credit balance at March 31, 1996.
</FN>
</TABLE>

10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Except for the historical information contained herein, the discussion in
this Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in the sections entitled "Risk
Factors" and "Business", as well as those discussed in this section and
elsewhere in this Prospectus.

GENERAL

The following discussion analyzes the Company's financial condition and
results of operations for the three month periods ended March 31, 1995 and 1996,
and for the three-year period ended December 31, 1995, and should be read in
conjunction with the Company's Consolidated Financial Statements and Notes
thereto contained elsewhere in this Prospectus. Knight was incorporated in 1989
and commenced operations in July 1990. For the five year period ended December
31, 1995, the Company's operating revenue grew at a 43.0% compounded annual
rate, while net income increased at a 61.2% compounded annual rate.

In 1994, the Company initiated an independent contractor program. As of March
31, 1996, the Company had retained 129 independent contractors, who provided the
Company with 131 tractors. As a result of the increase in the use of independent
contractors, the Company has experienced a decrease in salaries, wages and
benefits, fuel and maintenance, and other expenses as a percentage of operating
revenues and a corresponding increase in purchased transportation as a
percentage of operating revenues. Purchased transportation represents the amount
an independent contractor is paid to haul freight for the Company on a mutually
agreed to per-mile basis. The Company's decision to focus fleet expansion on
independent contractors was based on such factors as the Company's reduced
capital requirements since the independent contractors provide their own
tractors, the lower turnover rate that the Company has experienced with
independent contractors, and the Company's success in attracting qualified
independent contractors.

RESULTS OF OPERATIONS

The following table sets forth the percentage relationships of expense items
to operating revenue for the periods indicated:

THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------- -----------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------

Operating revenue ...............100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Salaries, wages and benefits ... 35.9 33.8 29.1 31.3 28.5
Fuel ............................ 14.3 12.7 10.9 11.3 10.4
Operations and maintenance ..... 5.8 6.2 6.6 7.3 5.0
Insurance and claims ............ 4.9 4.9 3.7 4.8 3.7
Operating taxes and licenses ... 4.2 4.9 3.8 4.0 3.6
Communications .................. .5 .5 .5 .5 .8
Depreciation and amortization .. 11.6 10.9 9.7 10.1 10.0
Purchased transportation ........ -- 1.8 14.0 8.8 18.5
Miscellaneous operating expenses 3.4 2.7 2.8 2.1 2.4
-------- -------- -------- -------- --------
Total operating expenses ........ 80.6 78.4 81.1 80.2 82.9
-------- -------- -------- -------- --------
Income from operations .......... 19.4 21.6 18.9 19.8 17.1
Net interest expense ............ 3.2 2.0 .4 .4 .6
-------- -------- -------- -------- --------
Income before income taxes ..... 16.2 19.6 18.5 19.4 16.5
Income taxes .................... 6.9 8.7 8.2 8.7 6.9
-------- -------- -------- -------- --------
Net income ...................... 9.3% 10.9% 10.3% 10.7% 9.6%
======== ======== ======== ======== ========

THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995

Operating revenue for the three months ended March 31, 1996 increased by
39.2% to $16.6 million from $11.9 million over the same period in 1995. The
increase in operating revenue resulted from expansion of the Company's

11
<PAGE>
customer base and increased volume from existing customers, and was facilitated
by the continued expansion of the Company's fleet, including an increase in the
Company's independent contractor fleet. The Company's fleet increased by 44.4%
to 491 tractors (including 131 owned by independent contractors) as of March 31,
1996 from 340 tractors (including 55 owned by independent contractors) as of
March 31, 1995. Average revenue per mile declined to $1.24 per mile for the
three months ended March 31, 1996 from $1.29 per mile for the same period in
1995 and equipment utilization declined to an average of 29,815 miles per
tractor for the three months ended March 31, 1996 from an average of 30,534
miles per tractor for the same period in 1995 due to weakness in the domestic
freight market. These decreases were offset by revenue increases resulting from
the growth of the Company's independent contractor program combined with
additional revenues generated by the Company's expansion of its operations with
the commencement of dedicated service and regional operations near Houston in
early 1996.

Salaries, wages and benefits decreased as a percentage of operating revenue
to 28.5% for the three months ended March 31, 1996 from 31.3% for the same
period in 1995 primarily as a result of the increase in the ratio of independent
contractors to Company drivers. The Company records accruals for workers'
compensation insurance as a component of its claims accrual, and the related
expense is reflected in salaries, wages and benefits expense in its consolidated
statements of income.

Fuel expense decreased as a percentage of operating revenue to 10.4% for the
three months ended March 31, 1996 from 11.3% for the same period in 1995.
Although fuel costs increased slightly, the overall decrease resulted from the
growth of the Company's independent contractor program. Independent contractors
are required to pay their own fuel costs. Increases in fuel costs, which began
in the latter part of the first quarter of 1996, may increase the Company's
operating expenses in subsequent quarters to the extent such increases cannot be
passed through to customers.

Operations and maintenance expense decreased as a percentage of operating
revenue to 5.0% for the three months ended March 31, 1996 from 7.3% for the
corresponding period in 1995. This change resulted from a substantial decline in
trailer lease costs incurred due to an increase in Company owned trailers during
the period and the continued growth in the Company's independent contractor
program.

Insurance and claims expense decreased as a percentage of operating revenue
to 3.7% for the three months ended March 31, 1996 from 4.8% for the same period
in 1995. This decrease was due to a reduction in insurance premium costs and an
overall relative lower level of new claims reserves.

Operating taxes and licenses decreased as a percentage of revenue to 3.6% for
the three months ended March 31, 1996 from 4.0% for the same period in 1995.
This decrease resulted primarily from growth in the independent contractor
program. Independent contractors are required to pay their own mileage taxes.

For the three month period ended March 31, 1996, depreciation and
amortization expense decreased slightly as a percentage of operating revenue to
10.0% from 10.1% for the corresponding period in 1995. This decrease resulted
from the continued growth of the Company's independent contractor program.
Although depreciation and amortization expense decreased as a percentage of
operating revenue, depreciation expense increased due to the Company's expansion
of its trailer fleet during the period.

Purchased transportation increased as a percentage of operating revenue to
18.5% for the three months ended March 31, 1996 from 8.8% for the same period in
1995. This increase was due to the growth of the Company's independent
contractor program from 55 tractors as of March 31, 1995 to 131 as of March 31,
1996.

Communications and miscellaneous operating expenses as a percentage of
revenues for the three months ended March 31, 1996 was slightly higher than the
same period in 1995.

The Company's operating ratio (operating expenses as a percentage of
operating revenue) for the three months ended March 31, 1996 increased to 82.9%
from 80.2% for the same period in 1995. Management believes the increase in the
operating ratio was mainly due to the competitive marketplace resulting in a
lower revenue per mile and lower tractor utilization.

For the three month period ended March 31, 1996, net interest expense as a
percentage of revenue was slightly higher than the same period in 1995,
resulting from increased borrowings to finance the purchase of additional
revenue equipment.

Income taxes have been provided at the statutory federal and state rates,
adjusted for certain permanent differences between financial statement and
income tax reporting.

12
<PAGE>
As a result of the preceding changes, the Company's net income as a
percentage of operating revenue was 9.6% for the three month period ended March
31, 1996 compared to 10.7% for the same period in 1995.

FISCAL 1995 COMPARED TO FISCAL 1994

Operating revenue increased by 49.6% to $56.2 million in 1995 from $37.5
million in 1994. This increase resulted from expansion of the Company's customer
base and increased volume from existing customers and was facilitated by a
substantial increase in the Company's tractor and trailer fleet, including an
increase in the Company's independent contractor fleet, during 1995 compared to
1994. The Company's fleet increased by 45.5% to 425 tractors (including 115
owned by independent contractors) as of December 31, 1995, from 292 tractors
(including 30 owned by independent contractors) as of December 31, 1994. Average
revenue per mile declined to $1.26 per mile for the year ended December 31, 1995
from $1.29 per mile for the same period in 1994 and equipment utilization
declined to an average of 120,714 miles per tractor in 1995 from an average of
128,994 miles per tractor in 1994 due to weakness in the domestic freight
market.

Salaries, wages and benefits expense decreased as a percentage of operating
revenue to 29.1% for 1995 from 33.8% for 1994 as a result of the increase in the
ratio of independent contractors to Company drivers. The Company records
accruals for workers' compensation as a component of its claims accrual, and the
related expense is reflected in salaries, wages and benefits expense in its
consolidated statements of income.

Fuel expense decreased as a percentage of operating revenue to 10.9% for 1995
from 12.7% in 1994. Though fuel costs per mile in 1995 remained consistent with
1994 fuel costs per mile, the decrease was due to the growth of the Company's
independent contractor program. Independent contractors are required to pay
their own fuel costs.

Operations and maintenance expense increased slightly as a percentage of
operating revenue to 6.6% for 1995 from 6.2% in 1994. This change resulted from
the Company's need to lease trailers on a short term basis to ensure an adequate
trailer pool. The Company's need for additional trailers resulted from the rapid
growth of its independent contractor program.

Insurance and claims expense decreased as a percentage of operating revenue
to 3.7% for the year ended December 31, 1995 from 4.9% for the same period in
1994. This decrease was due to a reduction in insurance premium costs and a
lower than expected level of actual claims costs during the period. The claims
accrual represents accruals for the estimated uninsured portion of pending
claims, including the potential for adverse development of known claims and
incurred but not reported claims.

Operating taxes and license expense decreased as a percentage of operating
revenue to 3.8% in 1995 from 4.9% in 1994. This decrease resulted primarily from
growth in the independent contractor program. Independent contractors are
required to pay their own mileage taxes.

Depreciation and amortization expense declined as a percentage of operating
revenue to 9.7% for 1995 from 10.9% for 1994. This change resulted from the
continued growth of the Company's independent contractor program and the
Company's increased use of leased trailers.

Purchased transportation expense increased to 14.0% in 1995 from 1.8% in 1994
due to an increase in the Company's use of independent contractor tractors from
30 as of December 31, 1994 to 115 as of December 31, 1995.

Communications and miscellaneous operating expenses remained steady, with no
significant change taking place in 1995.

The Company's operating ratio (operating expenses as a percentage of
operating revenue) for 1995 was 81.1% as compared to 78.4% for 1994. Management
believes the increase in the operating ratio was due mainly to the competitive
marketplace resulting in a lower revenue per mile and lower tractor utilization.

Net interest expense declined as a percentage of operating revenue to 0.4%
for 1995 from 2.0% for 1994. This change resulted from a decrease in the
Company's debt. The decrease also reflects the full year effect of the
application of the proceeds from the Company's initial public offering to reduce
the Company's debt.

Income taxes have been provided at the statutory federal and state rates,
adjusted for certain permanent differences in income for tax purposes, primarily
resulting from the non-deductible portion of reimbursements to drivers for meals
and other expenses.

13
<PAGE>
As a result of the preceding changes, the Company's net income as a
percentage of operating revenue was 10.3% in 1995 as compared to 10.9% in 1994.

FISCAL 1994 COMPARED TO FISCAL 1993

Operating revenue increased by 42.3% to $37.5 million in 1994 from $26.4
million in 1993. This increase resulted from expansion of the Company's customer
base and increased volume from existing customers. The increase was facilitated
by a substantial increase in the Company's tractor and trailer fleet during 1994
compared to 1993. Operating revenue during 1994 was enhanced by improved tractor
utilization resulting from a reduction of the Company's empty mile factor to
10.1% from 11.8%. This improvement contributed to an increase in average revenue
per mile to $1.29 in 1994 from $1.22 in 1993.

Salaries, wages and benefits expense decreased as a percentage of operating
revenue to 33.8% for 1994 from 35.9% for 1993 as a result of increased driver
productivity, relatively fixed general and administrative salary costs per mile,
higher revenue per mile, and the initiation and growth of the Company's
independent contractor program.

Fuel expense decreased as a percentage of operating revenue to 12.7% for 1994
from 14.3% in 1993 due to the addition of newer, more fuel efficient tractors
and the initiation and growth of the Company's independent contractor program.

Operations and maintenance expense increased slightly as a percentage of
operating revenue to 6.2% for 1994 from 5.8% in 1993. This change resulted from
additional maintenance costs associated with an increase in the average age of
the Company's trailer fleet.

Insurance and claims expense remained approximately 4.9% of operating revenue
for 1994 and 1993. During this period, the Company experienced relatively stable
insurance costs and claims expense.

Operating taxes and license expense increased as a percentage of operating
revenue to 4.9% in 1994 from 4.2% in 1993. This increase was due to more miles
operated in higher tax rate states.

Depreciation and amortization expense declined as a percentage of operating
revenue to 10.9% for 1994 from 11.6% for 1993. The change resulted from an
increase in the Company's revenue per mile and the initiation and development of
the Company's independent contractor program.

Purchased transportation expense increased from zero in 1993 to 1.8% in 1994
due to the implementation of the Company's independent contractor program in
1994.

Miscellaneous operating expenses (primarily administrative costs) decreased
as a percentage of operating revenue to 2.7% in 1994 from 3.4% in 1993. This
change resulted from effective cost containment programs and an increase in
revenue per mile.

As a result of the changes described above, the Company's operating ratio for
1994 improved to 78.4% from 80.6% for 1993.

Net interest expense declined as a percentage of operating revenue to 2.0%
for 1994 from 3.2% for 1993, despite the Company's increased capital
requirements, as a result of a decline in effective interest rates and the
application of the proceeds from the Company's initial public offering to reduce
the Company's debt.

As a result of the preceding changes, the Company's net income as a
percentage of operating revenue increased to 10.9% in 1994 from 9.3% in 1993.

LIQUIDITY AND CAPITAL RESOURCES

The growth of the Company's business has required a significant investment in
new revenue equipment. The Company's primary sources of liquidity have been
funds provided by operations, its initial public offering in 1994, term
borrowings to finance equipment purchases, and the Company's line of credit. Net
cash provided by operating activities totaled approximately $3.5 million and
$1.2 million for the first three months of 1996 and 1995, respectively, and
$10.7 million, $10.1 million and $5.5 million for the years ended December 31,
1995, 1994 and 1993, respectively.

14
<PAGE>
Capital expenditures for the purchase of revenue equipment, office equipment
and leasehold improvements totaled $9.0 million and $3.0 million for the first
three months of 1996 and 1995, respectively, and $13.4 million, $8.2 million and
$9.5 million for the years ended December 31, 1995, 1994 and 1993, respectively.
The Company anticipates that capital expenditures for the acquisition of revenue
equipment to expand the Company's fleet, net of trade-ins, will be approximately
$8.0 million for the last nine months of 1996.

Net cash used in financing activities and net direct equipment financing was
$300,000 for the first three months of 1996 and 1995 and $700,000 and $800,000
for the years ended December 31, 1995 and 1994, respectively. These amounts
remain relatively low due to the Company's ability to finance the majority of
its revenue equipment purchases from operations and, in 1994, the Company's
application of the net proceeds of its initial public offering to repay certain
indebtedness. Net cash provided by financing activities and net direct equipment
financing was $2.5 million for the year ended December 31, 1993. The Company's
financing activities were primarily the result of increasing debt, net of
repayments, and reductions from trade-ins to finance the growth of the Company's
tractor and trailer fleet.

The Company has a $15 million line of credit from its lender and uses that
line to finance the acquisition of revenue equipment and other corporate
purposes to the extent the cost of such acquisitions are not provided by funds
from operations. Under the Company's line of credit, the Company is obligated to
comply with certain financial covenants. The rate of interest on borrowings
against the line of credit will vary depending upon the interest rate election
made by the Company, based on either the London Interbank Offered Rate (LIBOR),
the prime rate, or the lender's certificate of deposit rate. At March 31, 1996
and June 12, 1996, the Company had borrowings under the revolving line of credit
totaling $5.0 million and $10.2 million, respectively. As of March 31, 1996, the
Company was in technical default of certain financial covenants under one of its
credit facilities. The lender has waived those defaults.

Management believes that the net proceeds of this offering, together with
cash flow from operating activities and available borrowings, will be sufficient
to meet the Company's capital needs through the next 18 months. The Company will
continue to have significant capital requirements over the long term, which may
require the Company to incur debt or seek additional equity capital in the
future. The availability of this capital will depend upon prevailing market
conditions, the market price of the Common Stock and other factors over which
the Company has no control, as well as the Company's financial condition and
results of operations.

SEASONALITY

To date, the Company's revenue has not shown any significant seasonal
pattern. Because the Company has operated primarily in Arizona, California and
the western United States, winter weather generally has not adversely affected
the Company's business. Expansion of the Company's operations into Texas and
Louisiana, as well as in the Midwest and on the East Coast, could expose the
Company to greater operating variances due to seasonal weather conditions.

INFLATION

Many of the Company's operating expenses, including fuel costs and fuel
taxes, are sensitive to the effects of inflation, which could result in higher
operating costs. The effects of inflation on the Company's business during the
first three months of 1996 and the years ended December 31, 1995, 1994 and 1993
generally were not significant. See "Business -- Fuel."

15
<PAGE>
INDUSTRY OVERVIEW

The Company operates in the non-local segment of the trucking industry, which
segment had estimated revenues of $330 billion in 1995. The trucking industry
can be further segmented into an estimated $55 billion for-hire truckload
segment and an estimated $110 billion private fleet segment, in which companies
transport goods for their own account. Truckload carriers typically transport
full trailer loads directly from origin to destination without en route
handling.

The truckload industry is highly fragmented, with the ten largest for-hire
truckload carriers accounting for less than 18% of total for-hire truckload
revenues in 1995. A variety of niches have developed within the truckload
industry based upon equipment type, length of haul, geographic region and
service criteria. The truckload transportation industry currently is undergoing
changes that affect both shippers and carriers. An increasing number of shippers
are focusing their capital resources on their primary businesses and are
outsourcing their transportation requirements to independent carriers.
Furthermore, many shippers are seeking to reduce the time and cost of bringing
finished products to the market quickly through the use of just-in-time
inventory management and regional assembly/distribution methods, all of which
make on-time pickup and delivery requirements more important to shippers.
Shippers also are seeking to reduce the number of authorized carriers they use
and to establish service-based, long-term relationships with a small group of
preferred or "core carriers." This helps to ensure higher quality and more
consistent service for the shipper, while providing the carrier the opportunity
for higher equipment utilization and more predictable revenue streams. In this
environment, shippers selectively choose carriers that are financially stable
and, based on measurable attributes, can meet their distribution and service
requirements. For example, carriers must deliver shipments on a timely basis and
possess reliable, quality equipment and offer specialized services to customers.
This trend toward the use of "core carriers" offers significant growth
opportunities for carriers that possess financial stability and critical mass to
support high equipment utilization, a commitment to quality service and
technological capabilities. Carriers that do not possess these capabilities or
that are less efficient have begun to exit the truckload industry through
liquidation or from continued industry consolidation. The Company believes that
this consolidation trend in the industry will continue and that the trend toward
consolidation will provide growth opportunities for efficient, well run
carriers.

Many carriers have focused on regional growth strategies, as over 66% of the
truckload market is in shorter length (less than 500 miles) markets. A regional
focus provides a carrier the opportunity to haul loads from origin to
destination, without any need for intermediate sorting, and increases the
opportunities for providing higher service levels to customers. Furthermore, a
shortage of qualified drivers continues to constrain the truckload market, and
truckload carriers are constantly seeking methods, such as increased driver
compensation and other techniques, to attract and retain drivers. Carriers with
a regional focus participating in the short to medium-haul market generally have
had more success in attracting and retaining drivers because drivers may return
home with more regularity.

16
<PAGE>
BUSINESS

Except for the historical information contained herein, the discussion in
this Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such such
differences include, but are not limited to, those discussed in the sections
entitled "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," as well as those discussed in this section
and elsewhere in this Prospectus.

OVERVIEW

Knight is a short to medium-haul, dry van truckload carrier providing
regional service primarily in the western United States. The Company transports
general commodities, including consumer goods, packaged foodstuffs, paper
products, beverage containers, and imported and exported commodities. The
Company has recently established operations near Houston to provide dedicated
services to one of its larger customers and to commence regional service in
Texas and Louisiana. The Company has also initiated operations in Indianapolis
from which it will provide regional and dedicated service in the Midwest and on
the East Coast.

During the five year period ended December 31, 1995, management led the
Company to a 43.0% compounded annual increase in operating revenue and a 61.2%
compounded annual increase in net income. The Company intends to continue to
develop its business by servicing existing and new customers in its core markets
in the western United States, while expanding its operations and providing
regional and dedicated service in Texas and Lousiana as well as in the Midwest
and on the East Coast.

BUSINESS STRATEGY

Knight's business strategy focuses on four key elements: growth, regional
operations, service and operating efficiencies.

o Growth. Knight's objective is to achieve significant growth through the
controlled expansion of high quality service to existing customers and the
development of new customers in its expanded market areas. The Company has
achieved substantial revenue growth in the western United States, with a
particular emphasis on the Arizona and California markets. The Company has
developed an independent contractor program in order to increase its
tractor fleet, while minimizing capital investment by the Company, and
provide additional service to customers. The Company believes that there
are significant opportunities to continue to increase its business in the
short to medium-haul market by pursuing existing strategies and expanding
its dedicated services.

o Regional Operations. As part of its regional operations focus, in early
1996, the Company established operations near Houston to meet the needs of
one of its larger customers and to commence regional service in Texas and
Louisiana. During the same period, the Company also initiated operations
in Indianapolis in order to expand the Company's customer base in the
short to medium-haul market and provide regional and dedicated service to
customers in the Midwest and on the East Coast.

o Service. Knight's operating strategy is to provide a high level of service
to customers, establishing the Company as a preferred or "core carrier"
for shippers who have time sensitive, high volume or high weight
requirements. The Company's services include multiple pick-ups and
deliveries, dedicated equipment and personnel, pick-ups and deliveries
within narrow time frames, specialized training of drivers, and other
services tailored to customers' needs. The Company has developed an
independent contractor program to increase the size of its revenue
equipment fleet and, thus, provide better service to customers. The
Company has adopted an equipment configuration that meets a wide variety
of customer needs and facilitates customer shipping flexibility. The
Company uses lightweight tractors and high cube trailers capable of
handling both high volume and high weight shipments.

17
<PAGE>
o Operating Efficiencies. The Company employs a number of strategies that it
believes are instrumental to its efforts to achieve and maintain operating
efficiencies. Knight seeks to maintain a simplified operation that focuses
on operating dry vans in particular geographical and shipping markets.
This approach allows the Company to concentrate its marketing efforts to
achieve higher penetration of its targeted service areas. The Company
seeks operating economies by purchasing a generally uniform and compatible
fleet of tractors and trailers that facilitates Knight's ability to serve
a broad range of customer needs and thereby maximizes equipment
utilization and efficiencies in equipment maintenance and positioning.
Knight intends to maintain its new and efficient equipment fleet by
following a regimen of tractor replacement on a three year cycle and
trailer replacement on a five to seven year cycle.

CUSTOMER SERVICE

Knight believes that its principal competitive strength is its ability to
provide consistent, timely, flexible and cost effective service to shippers. The
Company's strategy is to develop and service specified traffic lanes for
customers who ship on a consistent basis, thereby providing a predictable
traffic flow and ensuring high equipment utilization. The short to medium-haul
segment of the truckload carrier market demands timely pickup and delivery and,
in some cases, response on short notice of equipment availability. Although
price is a primary concern to all shippers, the Company seeks to obtain a
competitive advantage by providing high quality service. Knight's services
include multiple pickups and deliveries, dedicated equipment and personnel,
on-time pickup and delivery within narrow time frames, specialized driver
training and other services tailored to customers' needs. To be responsive to
customers' and drivers' needs, the Company often assigns particular drivers and
equipment to prescribed routes, providing better service to customers, while
obtaining higher equipment utilization.

Knight targets a trailer/tractor ratio of 2.7 to 1. Management believes this
ratio promotes efficiency and allows it to serve a large variety of customers'
needs, without significantly changing or modifying equipment. The Company
operates a uniform fleet of 53 foot long, 102 inch wide, high cube trailers,
including 45 refrigerated trailers in its dedicated fleet as of June 1, 1996.
The efficiency and flexibility provided by its fleet configurations permit the
Company to handle both high volume and high weight shipments. Knight's fleet
configuration also allows the Company to move freight on a "drop-and-hook"
basis, increasing asset utilization and providing better service to customers.

DRIVERS AND OTHER EMPLOYEES

The recruitment, training and retention of qualified drivers is essential to
support the Company's continued growth and to meet the service requirements of
the Company's customers. Drivers are selected in accordance with specific
Company quality guidelines relating primarily to safety history, driving
experience, road test evaluations and other personal evaluations, including
physical examinations and mandatory drug and alcohol testing. Once selected, the
Company's drivers are referred to as "driving associates" to emphasize the
driver's important role within the Company. Drivers are trained in all phases of
the Company's policies and procedures, including customer service requirements,
general operations, fuel conservation and equipment maintenance, operation and
safety.

The Company seeks to maintain a qualified driver force by providing
attractive and comfortable equipment, direct communication with senior
management, competitive wages and benefits and other incentives designed to
encourage driver retention and long-term employment. Many drivers are assigned
to dedicated or semi-dedicated fleet operations, thereby enhancing job
predictability. Drivers are recognized for providing superior service and
developing good safety records and must successfully complete driver reviews
administered by the Company's human resources department.

Knight's drivers are compensated on the basis of miles driven and length of
haul. Drivers also are compensated for additional flexible services provided to
the Company's customers. Drivers participate in Knight's 401(k) program and in
Company-sponsored health, life and dental plans. The Company has also adopted a
stock option program in which drivers who meet certain criteria are eligible to
participate. See "Executive Compensation and Other Information--1994 Stock
Option Plan; 401(k) Plan."

As of March 31, 1996, Knight employed 522 persons; of these 399 were drivers,
30 were in maintenance, 11 were in sales and marketing, and 82 were in
administration and management. The Company also had contracted with 129
independent contractors as of March 31, 1996 to provide tractors. None of the
Company's employees is represented by a labor union.

18
<PAGE>
INDEPENDENT CONTRACTOR PROGRAM

The Company initiated and began to develop an independent contractor program
during 1994. Because independent contractors provide their own tractors, the
independent contractor program provides the Company an alternative method of
obtaining additional revenue equipment. The Company intends to continue to
increase its use of independent contractors. As of March 31, 1996, the Company
had 129 independent contractors who owned and operated 131 tractors. Each
independent contractor enters into a contract with the Company pursuant to which
it is required to furnish a tractor and a driver exclusively to transport, load
and unload goods carried by the Company. Independent contractors are paid a
fixed level of compensation based on total trip-loaded and empty miles.
Independent contractors are obligated to maintain their own equipment and pay
for their own fuel. The Company provides trailers for each independent
contractor. The Company also provides maintenance services for its independent
contractor tractors for a charge.

MARKETING AND CUSTOMERS

Knight provides carrier service to manufacturers, retailers, food
distributors, agricultural producers, and other uses of dry van service.
Knight's location in Phoenix allows it to serve the western United States. The
Company's operations near Houston allow it to serve the Texas and Louisiana
region. Similarly, Knight's operations in Indianapolis allow it to serve markets
in the Midwest and on the East Coast. From these same locations, Knight is able
to meet particular customer needs by providing dedicated services. The Company's
standard dedicated fleet services involve management of a significant part of a
customer's transportation operations. Under a dedicated carriage service
agreement, the Company provides drivers, equipment and maintenance, and, in some
instances, transportation management services that supplement the in-house
transportation department. The Company's primary arrangements for dedicated
services in Houston obligate the Company to provide a portion of its customer's
transportation needs from one of the customer's distribution centers. The
Company provides these services through Company furnished revenue equipment and
drivers.

The Company's sales and marketing function is led by its senior management,
who are assisted by other sales professionals. The Company's marketing team
emphasizes the Company's high level of service and ability to accommodate a
variety of customer needs. The Company's marketing efforts are designed to take
advantage of the trend among shippers toward private fleet conversions,
outsourcing transportation requirements, and the use of core carriers to meet
shippers' needs.

For the year ended December 31, 1995, the Company's 25 largest customers
represented 53.2% of operating revenue. The Company believes that a substantial
majority of the Company's 25 largest customers regard Knight as a preferred or
"core" carrier. Most of the Company's truckload carriage contracts are
cancellable on 30 days notice. The loss of one or more large customers could
have a material adverse effect on the Company's operating results.

REVENUE EQUIPMENT AND MAINTENANCE

A substantial majority of the Company's equipment fleet is standardized
equipment manufactured to its specifications. The Company operates a standard
fleet of 53 foot long, 102 inch wide, high cube trailers, and, in its dedicated
fleet, approximately 45 refrigerated trailers. The Company believes that its
equipment acquisition program allows it to meet the needs of a wide range of
customers in the dry van truckload market while, at the same time, controlling
costs relating to maintenance, driver training and operations. The Company
considers a number of factors in deciding which equipment to purchase, including
economy, price, technology, warranty terms, manufacturers' support, safety
features, driver comfort and resale value. To reduce the Company's risk on trade
or resale, the Company has negotiated conditional repurchase commitments with
the manufacturers to allow the Company, at its option, to trade back tractors to
the manufacturer at an agreed price, subject to certain conditions. To date, the
Company has not elected to exercise its rights under these agreements because it
has been able to negotiate more favorable trade-in terms. At March 31, 1996, the
Company operated 360 Company-owned tractors with an average age of 1.4 years and
1,264 trailers with an average age of 2.1 years. The following table shows the
number of units and age of revenue equipment operated by the Company at March
31, 1996:

19
<PAGE>
MODEL YEAR TRACTORS TRAILERS
- ---------------------------------- ---------- ----------

1991 1 200
1992 1 60
1993 33 205
1994 104 50
1995 107 350
1996 114 399
---------- ----------
Total Company-owned 360 1,264
Total independent contractor owned 131 --
---------- ----------
Total 491 1,264
========== ==========

The Company seeks to minimize the operating costs of its tractors and
trailers by maintaining a relatively new fleet featuring cost saving
technologies. The Company's current policy is to replace most of its tractors
within 36 months after the date of purchase. The Company's strategy for
replacing its tractors is based on various factors, including the used equipment
market, technological improvements, fuel efficiency and prevailing interest
rates. The Company's current policy is to replace its trailer fleet over a five
to seven year period. Actual replacement depends upon the condition of
particular equipment, its resale value and other factors. The Company employs a
strict preventive maintenance program designed to minimize equipment down time,
facilitate customer service, and enhance trade value when equipment is replaced.

The Company operates primarily Freightliner tractors, most of which are
powered by electronically controlled diesel engines. These electronically
controlled engines decrease fuel consumption and control speed. All tractors
have air-ride suspension systems and other modern features designed to enhance
performance and provide driver comfort. As of March 31, 1996, the Company had
ordered 37 new tractors (net of trades), and 264 new trailers (net of trades)
intended for use primarily by independent contractors, for delivery over the
12-month period beginning April 1, 1996.

OPERATIONS

The Company's headquarters are located in Phoenix, where the administrative
offices, truck terminal, and dispatching and maintenance services relating to
Knight's Western region operations are located. In early 1996, the Company
established regional operations in Indianapolis and near Houston. Each of the
Company's regional operations includes dispatchers and other support personnel
who are assigned a specific geographic area. Dispatchers work closely with sales
and marketing personnel and drivers to enhance equipment utilization and serve
as the contact, on a daily basis, with customers and shipping and receiving
personnel.

Knight uses an IBM AS/400 computer driven by Innovative Software and the
Octel Voice Communication Systems to monitor pick-ups and deliveries,
communicate with drivers and enhance overall control of Company operations. Each
of the Company's regional operations centers is linked to the Company's Phoenix
headquarters by the IBM AS/400 computer system. The Company provides electronic
data interchange ("EDI") services to shippers requiring such service. The
capabilities of these systems enhance the Company's operating efficiency by
providing cost effective access to detailed information concerning equipment and
shipment status and specific customer requirements, and also permit the Company
to respond promptly and accurately to customer requests. The system also assists
the Company in matching available equipment and loads.

SAFETY AND RISK MANAGEMENT

The Company is committed to ensuring that it has safe drivers and independent
contractors. The Company regularly communicates with drivers to promote safety
and to instill safe work habits through Company media and safety review
sessions. These programs reinforce the importance of driving safety, abiding by
all laws and regulations regarding such matters as speed and driving hours, and
performing equipment inspections. The Company conducts quarterly safety training
meetings for its drivers and independent contractors. In addition, the Company
has an innovative recognition program for driver safety performance.

The Company's Safety Director reviews all accidents, takes appropriate action
related to drivers, examines trends and implements changes in procedures or
communications to address any safety issues. Management's emphasis on safety
also is demonstrated through its equipment specifications and maintenance
programs.

20
<PAGE>
The Company requires prospective drivers to meet higher qualification
standards than those required by the DOT. The DOT requires the Company's drivers
and independent contractors to obtain national commercial driver's licenses
pursuant to regulations promulgated by the DOT. The DOT also requires that the
Company implement a drug testing program in accordance with DOT regulations. The
Company's program includes pre-employment, random, post-accident and post-injury
drug testing.

The primary claims arising in the Company's business consist of cargo loss
and damage, workers' compensation, and auto liability (personal injury and
property damage). The Company is self-insured for personal injury and property
damage up to a maximum limit of $100,000 per occurrence, for collision,
comprehensive and cargo liability up to a combined limit of $25,000 per
occurrence, and, in states in which the Company elects to do so, for workers'
compensation up to $250,000 per occurrence. The Company maintains insurance to
cover liabilities in excess of these amounts. The Company's insurance policies
provide for general liability coverage up to $2,000,000 per occurrence,
automobile liability coverage up to $1,000,000 per occurrence, cargo insurance
coverage up to $2,500,000 per occurrence and additional umbrella liability
coverage up to $14,000,000. The Company also maintains primary and excess
coverage for employee medical expenses and hospitalization, and damage to
physical properties. The Company carefully monitors claims and participates
actively in claims estimate and adjustment. The estimated costs of such
self-insured claims, which include estimates for incurred but not reported
claims, are accrued as liabilities on the Company's balance sheet.

REGULATION

Interstate motor carrier operations are subject to safety requirements
prescribed by the DOT Such matters as weight and dimensions of equipment are
also subject to federal and state regulation. In 1988, the DOT began requiring
national commercial driver's licenses for interstate truck drivers.

The Company's motor carrier operations are also subject to environmental laws
and regulations, including laws and regulations dealing with underground fuel
storage tanks, the transportation of hazardous materials and other environmental
matters. The Company has initiated programs to comply with all applicable
environmental regulations. As part of its safety and risk management program,
the Company periodically performs an internal environmental review to assist the
Company achieve environmental compliance and avoid environmental risk. The
Company's Phoenix facility was designed, after consultation with environmental
advisors, to contain and properly dispose of hazardous substances and petroleum
products used in connection with the Company's business. The Company has rarely
transported environmentally hazardous substances and, to date, has experienced
no claims for hazardous substance shipments. In the event the Company should
fail to comply with applicable regulations, the Company could be subject to
substantial fines or penalties and to civil or criminal liability.

The State of Arizona has enacted laws that provide for a water quality
assurance revolving fund ("WQARF"). The purpose of these laws is to identify and
remediate areas of groundwater contamination resulting from the release of
hazardous substances. Once an area of contamination is identified, the Arizona
Department of Environmental Quality ("ADEQ") designates the area as a WQARF
Study Area in order to determine the extent of contamination and to identify
potentially responsible parties. Responsible parties are liable for the cost of
remediating contamination. In December 1987, ADEQ designated a 25 square mile
area in West Phoenix, which includes the Company's Phoenix location, as a WQARF
Study Area. To date, ADEQ has not identified the Company as a potentially
responsible party or the Company's facility as a facility warranting further
investigation with respect to the WQARF Study Area. The Company has been located
at its present Phoenix facility since 1990. Neither the Company nor its
predecessors have maintained underground petroleum storage tanks at the
Company's Phoenix location. Prior to 1974, the property upon which the Company's
Phoenix facilities are located was farm land.

There are two underground storage tanks located on the Company's recently
acquired Indianapolis property. The tanks are subject to regulation under both
federal and state law and are currently being leased to and operated by an

21
<PAGE>
independent, third party fuel distributor. The Company assumed the lease as part
of its purchase of the property. The lessee has agreed to carry environmental
impairment liability insurance, naming the Company, as lessor, as an insured,
covering the spillage, seepage or other loss of petroleum products, hazardous
wastes, or similar materials onto the leased premises and has agreed to
indemnify the Company, as lessor, against damage from such occurences. The
Indianapolis property is located approximately 0.1 mile east of Reilly Tar and
Chemical Corporation ("Reilly"), a federal superfund site listed on the National
Priorities List. The Reilly site has known soil and groundwater contamination.
There are also other sites in the general vicinity of the Company's Indianapolis
property that have known contamination. Environmental reports obtained by the
Company have disclosed no evidence that activities on the Company's Indianapolis
property have caused or contributed to the area contamination.

The Company is currently engaged in negotiations to purchase a 6.5 acre
parcel of vacant land adjacent to its Indianapolis facility. The Company is
still conducting due diligence concerning the environmental condition of this
property.

The Company believes it is currently in material compliance with applicable
laws and regulations and that the cost of compliance has not materially affected
results of operations. See "-- Legal Proceedings" for additional information
regarding certain regulatory matters.

FUEL

In connection with its operations, the Company negotiates fuel discounts with
truck stop operators and other fuel suppliers. The Company stores no fuel and
has no underground storage tanks at its Phoenix and Houston facilities. However,
a lessee of the Company conducts a fuel service business and stores fuel in
underground storage tanks at Knight's recently acquired Indianapolis property.
The Company has not used derivative products to hedge against increases in fuel
costs and has no current plans to use any derivative products in the future.
Increases in fuel costs, which began in the latter part of the first quarter of
1996, may increase the Company's operating expenses in subsequent quarters to
the extent such increases cannot be passed through to customers. Although the
Company usually seeks rate increases to offset fuel increases, excess capacity
in the trucking industry may limit the Company's ability to maintain rate
increases or pass through increases in fuel costs. Increases in fuel taxes or
fuel prices could have a direct effect on the Company's operating results if
increases cannot be passed on to customers. Similarly, any increases in fuel
taxes or fuel prices could also adversely affect the profitability of
independent contractors and the Company's cost of retaining such contractors, to
the extent such increases could not be passed along to the Company's customers.
See "Risk Factors -- Fuel" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Inflation."

COMPETITION

The Company competes primarily with other regional short to medium-haul
truckload carriers, logistics providers, national carriers and other national
equipment providers. Railroads and air freight also provide competition, but to
a lesser degree. The Company believes that the principal competitive factors in
its business are service, pricing and the availability and configuration of
equipment that meets a variety of customers' needs. Recently, the trucking
industry, including the short to medium-haul truckload market, has been affected
by an availability of excess revenue equipment, which has negatively affected
both equipment utilization and rates. The entire trucking industry is highly
competitive and fragmented. Competition for the freight transported by the
Company is based on freight rates, service and efficiency. A number of the
Company's competitors have greater financial resources, own more equipment, and
carry a larger volume of freight than the Company. The Company also competes
with other motor carriers for the services of drivers and independent
contractor.

PROPERTIES

The Company's headquarters are located at 5601 West Buckeye Road, Phoenix,
Arizona, on approximately 43 acres. The Company owns approximately 35 of the 43
acres and leases the remaining eight acres from Randy Knight, an officer and
director of the Company and one if its principal shareholders. The term of the
Company's lease is for five years, with two options to extend for two additional
five-year terms. Under the lease between the Company and Mr. Knight, the base
rent is $4,828 per month for the initial three years of the lease and increases
by 3% on the third anniversary of the commencement date, the first anniversary
of each option term, and the third anniversary of the commencement of each
option term. See "Certain Relationships and Related Transactions," below, for
additional information.

22
<PAGE>
In early 1996, the Company purchased a three acre operations facility in
Indianapolis. The facility includes a truck terminal, administrative offices,
and dispatching and maintenance services and will serve as a base for expanding
the Company's operations in the Midwest and on the East Coast. The Company is
currently engaged in negotiations to purchase a 6.5 net acre parcel of vacant
land adjacent to its Indianapolis facility in order to provide for future
growth. The Company's operations near Houston are currently located on the
premises of one of the Company's significant customers, for whom it provides
dedicated services.

The Company leases office facilities in California, Oklahoma and Utah, which
it uses for fleet maintenance, record keeping and general operations. The
Company also leases space in various locations for temporary trailer storage.
Management believes that replacement space comparable to these facilities is
readily obtainable, if necessary. As of March 31, 1996, the Company's aggregate
monthly rental for all leased properties was approximately $15,000.

LEGAL PROCEEDINGS

The Company is party to ordinary routine litigation incidental to its
business primarily involving claims for personal injury or property damage
incurred in the transportation of freight. The Company maintains insurance to
cover liabilities in amounts in excess of self-insured retentions.

In 1994, the Company received notice from the Equal Employment Opportunity
Commission ("EEOC") of charges of race discrimination filed by two drivers
seeking employment as dispatchers. The EEOC found reasonable cause to believe
the Company had discriminated against the individuals and a class of similarly
situated individuals based on race. The EEOC also determined that the Company
had engaged in retaliatory conduct against a charging party. The Company has
been notified by the EEOC that conciliation has failed with respect to the two
charges, including the class charge, and the EEOC has filed suit against the
Company alleging unlawful employment practices on the basis of race and unlawful
retaliation. The EEOC is seeking damages on behalf of the individuals involved
and a class of persons the Company is alleged to have failed to hire as
dispatchers. The EEOC is also seeking injunctive relief against alleged unlawful
employment practices, the institution of policies providing for equal
employment, pecuniary relief for the affected class, including back pay,
pre-judgment interest and compensation for past and future services, and
punitive damages. It is the Company's policy to comply with all applicable laws
relating to equal employment opportunity. The Company believes that the EEOC
claims are without merit and that it has defenses to all claims. The Company
intends to vigorously defend the claims.

The Company's tractor and trailer fleets are registered in Oklahoma and Utah
and operate primarily in the western United States, including California. The
Company is presently being audited by the State of California's Department of
Motor Vehicles, with respect to the 1994, 1995, and 1996 "mileage years".
Although no assessment has yet been made, California is asserting that all the
Company's trailers are subject to mileage based apportioned registration, and
that the Company owes trailer registration fees in excess of those amounts
previously paid. The Company intends to vigorously contest the position taken by
California. To the extent the Company is unsuccessful in its efforts, it may be
required to pay additional registration fees for the mileage years involved and
penalties as well as increased registration fees (relative to payments paid with
respect to prior periods) for future periods. The Company believes that the
outcome of the California audit will not have a materially adverse effect on the
Company's financial position or results of operations.

Two of the Company's officers, Kevin P. Knight and Gary J. Knight, are
engaged in arbitration proceedings with their former employer, Swift
Transportation, Inc. ("Swift") with respect to claims by Swift for damages and
injunctive relief in connection with disputes related to their departure in
March 1990 from employment with Swift. The matter has been submitted to the
Superior Court of the State of Arizona for definition of issues and referral for
further arbitration proceedings. The Company is not a party to any of these
proceedings and does not believe these proceedings will affect its business or
financial condition.

23
<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information regarding the directors and
executive officers of the Company.

TERM AS
DIRECTOR
NAME AGE POSITION EXPIRES
- ----------------- ----- -------------------------------------------- ----------
Randy Knight ..... 47 Chairman of the Board, Director 1997
Kevin P. Knight . 39 Chief Executive Officer, Director 1997
Gary J. Knight .. 44 President, Director 1997
Keith T. Knight . 41 Executive Vice President, Director 1997
Clark A. Jenkins 38 Chief Financial Officer, Secretary, Director 1997
Keith L. Turley . 72 Director 1997
Donald A. Bliss . 63 Director 1997

Randy Knight has served as the Company's Chairman of the Board since 1993 and
has been an officer and director of the Company since its inception in 1989.
From 1985 to the present, Mr. Knight has owned and operated Total Warehousing,
Inc., a commercial warehousing and local transportation business located in
Phoenix, Arizona. Mr. Knight was employed by Swift or related companies from
1969 to 1985, where he was a Vice President and shareholder.

Kevin P. Knight has served as the Company's Chief Executive Officer since
1993, and has been an officer and director of the Company since 1990. From 1975
to 1984 and again from 1986 to 1990, Mr. Knight was employed by Swift, where he
was an Executive Vice President and President of Cooper Motor Lines, Inc., a
Swift subsidiary.

Gary J. Knight has served as the Company's President since 1993, and has been
an officer and director of the Company since 1990. From 1975 until 1990, Mr.
Knight was employed by Swift, where he was an Executive Vice President.

Keith T. Knight has served as the Company's Executive Vice President since
1993, and has been an officer and director of the Company since 1990. From 1977
until 1990, Mr. Knight was employed by Swift, where he was a Vice President and
manager of the Los Angeles terminal.

Clark A. Jenkins joined the Company in 1990 and has served as the Company's
Secretary and Chief Financial Officer since 1991. From 1986 to 1990, Mr. Jenkins
was employed by Swift as a Vice President of Finance. Prior to his employment
with Swift, Mr. Jenkins was employed as an accounting manager by Flying J. Inc.,
a fully-integrated oil and gas company.

Keith L. Turley has served as a director of the Company since November 1994.
Mr. Turley has been retired since 1990. From 1985 to 1990, Mr. Turley was
Chairman of the Board, President and Chief Executive Officer of Pinnacle West
Capital Corporation, the parent company of Arizona Public Service, Arizona's
largest privately owned public utility.

Donald A. Bliss was elected to the Board of Directors of the Company in
February 1995. Until December 1994, Mr. Bliss was Vice President and Chief
Executive Officer of US West Communications, a U.S. West company. Mr. Bliss has
also been a Director of Bank of America Arizona since 1988 and of Mutual of
Omaha since 1989, and was a Director of US West Communications from 1987 to
1994.

Randy Knight and Gary J. Knight are brothers and are cousins of Kevin P.
Knight and Keith T. Knight, who are also brothers.

COMPENSATION OF DIRECTORS

Directors who are not employees of the Company receive annual compensation of
$5,000, plus a fee of $500 for attendance at each meeting of the Board of
Directors, and a fee of $250 for committee meetings. Independent directors
appointed to the Board of Directors also receive an automatic grant of a
non-qualified stock option ("NSO") for a number of shares to be designated by
the Board of not less than 2,500 nor more than 5,000 shares. The exercise price

24
<PAGE>
of an NSO is eighty-five percent (85%) of the fair market value of the Company's
stock as of the date of grant. The Board of Directors has granted each of Keith
L. Turley and Donald A. Bliss an NSO for 2,500 shares of the Company's common
stock at exercise prices of $12.54 and $13.18, respectively.

COMPENSATION COMMITTEE. The Compensation Committee of the Board of Directors
was created in November 1994, and is composed of Keith L. Turley and Donald A.
Bliss. The Compensation Committee reviews all aspects of compensation of
executive officers of the Company and makes recommendations on such matters to
the full Board of Directors. The Compensation Committee is composed entirely of
directors who are not officers, employees or ten percent or more shareholders of
the Company.

AUDIT COMMITTEE. The Audit Committee was created in November 1994, and is
composed of Kevin P. Knight, Keith L. Turley, and Donald A. Bliss. The Audit
Committee makes recommendations to the Board of Directors concerning the
selection of independent public accountants, reviews the consolidated financial
statements and internal controls of the Company, and considers such other
matters in relation to the external audit and the financial affairs of the
Company as may be necessary or appropriate in order to facilitate accurate and
timely financial reporting. The Audit Committee also reviews proposals for major
transactions. A majority of the members of the Audit Committee are independent
directors.

25
<PAGE>

EXECUTIVE COMPENSATION AND OTHER INFORMATION

EXECUTIVE COMPENSATION
<TABLE>

The following table sets forth the cash compensation paid to each of the
Company's five most highly paid officers for services in all capacities to the
Company for the year ended December 31, 1995:

SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM COMPENSATION
----------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------- ------------ ---------------
NAME AND FISCAL OTHER ANNUAL OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION SARS COMPENSATION(1)
- ---------------------------- -------- ---------- --------- -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Randy Knight ................ 1995 $253,000 -- -- -- $3,345
Chairman 1994 256,100 -- -- -- 3,040
Kevin P. Knight ............. 1995 253,000 -- -- -- 1,905
Chief Executive Officer 1994 276,100 -- -- -- 1,640
Gary J. Knight .............. 1995 253,000 -- -- -- 2,865
President 1994 256,100 -- -- -- 2,500
Keith T. Knight ............. 1995 253,000 -- -- -- 2,225
Executive Vice President 1994 256,100 -- -- -- 1,900
Clark A. Jenkins ............ 1995 82,524 $17,500 -- -- 625
Chief Financial Officer and
Secretary 1994 74,076 25,000 -- 35,000(2) 500

<FN>

- ----------
(1) In 1995 and 1994, compensation included in "All Other Compensation" for each
of the named executive officers included Company contributions in the
amounts of $625 and $500, respectively, to the Knight Transportation, Inc.
401(k) Plan and Trust Agreement. The balance of compensation included in
"All Other Compensation" represents premiums paid for a $2,000,000 split
dollar life insurance policy maintained for each of the Knights, which will
be refunded to the Company upon termination of the policy.
(2) Options shown for Mr. Jenkins were granted concurrently with the Company's
public offering in 1994. As of December 31, 1995, no additional options had
been granted to any of the above persons since the grant shown above.
</FN>
</TABLE>

<TABLE>

The following table sets forth shares of the Company's Common Stock subject
to exercisable stock options or acquired through the exercise of stock options
as of December 31, 1995:

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES AS OF DECEMBER 31, 1995
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED OPTIONS AT FISCAL YEAR END FISCAL YEAR END
ON VALUE ----------------------------- -----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------- ---------- ---------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
CLARK A. JENKINS(1) -- -- -- 35,000 -- $61,250(2)
<FN>

- ----------

(1) None of the other named executive officers (Randy Knight, Kevin P. Knight,
Gary J. Knight, and Keith T. Knight) held any options during fiscal year
1995.

(2) Based on the $13.75 closing price of the Company's common stock on December
31, 1995. One-third of Mr. Jenkins' outstanding options are exercisable in
October 1997, one third are exercisable in October 1998, and the remainder
are exercisable on October 1999.
</FN>
</TABLE>

The Company maintains an unfunded disability plan for Randy, Kevin, Gary and
Keith Knight. The plan provides for salary continuation of $75,000 per year for
up to 60 months in the event of termination of employment due to a disability.
The plan may be terminated by the Board of Directors at any time after providing
90 days written notice.

26
<PAGE>
1994 STOCK OPTION PLAN

The Company maintains a stock incentive plan (the "Plan") to enable
directors, executive officers and certain key and critical line employees of the
Company, including drivers and other employees, to participate in the ownership
of the Company. The plan will terminate on August 31, 2004. The Plan is designed
to attract and retain directors, executive officers, key employees and critical
line employees of the Company, and to provide incentives to such persons. In
July 1994, 650,000 shares of Common Stock were reserved for grants under the
Plan and, at present, 648,000 shares of Common Stock are available for issuance
of stock grants made under the Plan. Common Stock available for grant will be
automatically adjusted for stock splits, stock dividends, reverse stock splits
and similar transactions.

The Plan has three divisions: Division I, the Stock Option Plan, allows the
Compensation Committee to grant incentive or nonqualified stock options to
employees as a traditional form of incentive compensation. Nonqualified options
may not provide for an exercise price of less than 85% of the fair market value
of a share of the Company's common stock as of the date of grant. No limitation
exists on the number of shares that may be granted to any individual. Unless
otherwise provided in the granting agreements, unexercised options lapse on
termination of employment, except in the case of death or retirement, in which
event the right to exercise is extended. Division II, the Independent Directors
Automatic Stock Option Plan, provides for the automatic grant of a stock option
to an independent director upon such director's appointment to the Board in an
amount not less than 2,500 shares nor more than 5,000 shares. The exercise price
of an option granted under the Independent Directors Automatic Stock Option Plan
is 85% of the fair market value of a share of the Company's Common Stock as of
the date of grant. Up to 25,000 shares of the Company's Common Stock may be
issued to independent directors under the Independent Directors Automatic Stock
Option Plan. Division III, the Employee Incentive Plan, allows the Compensation
Committee to make incentive awards of cash or stock, or a combination thereof,
on an annual basis, to employees who have attained performance goals set by the
Company. Under this division of the Plan, Common Stock may be issued as an
incentive award for the performance of past services. Awards granted under the
Employee Incentive Plan may not exceed $10,000 per employee in any calendar
year. Stock grants made under one division of the Plan reduce the number of
shares that may be awarded under the other divisions of the Plan.

The Plan, other than the Independent Directors Automatic Stock Option Plan
Division, is administered by the Compensation Committee, which is authorized to
select from among the eligible employees of the Company the individuals to whom
options, restricted stock purchase rights, or incentive awards are to be
granted, the number of shares to be awarded and the terms and conditions of the
award. The Independent Directors Automatic Stock Option Plan Division is
administered by those directors who are not entitled to participate in the Plan.
The Compensation Committee also is authorized to adopt, amend and rescind rules
relating to the administration of the Plan. No member of the Compensation
Committee may participate in or take action with respect to any grant of an
option or stock purchase right with respect to such member.

Shares issued by the Company under its Stock Option Plan are registered with
the Securities and Exchange Commission and, in general, are freely tradeable.

401(k) PLAN

The Company sponsors a 401(k) Plan (the "401(k) Plan"). The 401(k) Plan is a
profit sharing plan that permits voluntary employee contributions on a pre-tax
basis under section 401(k) of the Internal Revenue Code. Under the 401(k) Plan a
participant may elect to defer a portion of his compensation and have the
Company contribute a portion of his compensation to the 401(k) Plan. The Company
makes a matching contribution in an amount not to exceed fifty percent (50%) of
a participant's contributions, up to a maximum amount of $750.00 per participant
per plan year. For 1995, the Company's contribution was $625 per participant.
Beginning in 1996, the 401(k) Plan allows the Company to make its matching
contribution in cash or in newly issued shares of the Company's common stock or
in a combination thereof. The Company has reserved 75,000 shares of its Common
Stock for contributions to the 401(k) Plan. Shares to be issued under the 401(k)
Plan are registered with the Securities and Exchange Commission and, in general,
are freely tradeable.

Under the 401(k) Plan, eligible employees have the right to direct the
investment of employee and employer contributions among four mutual funds.
Participants may not direct the investment of their contributions into the
Company's common stock.

Amounts contributed by the Company for a participant will vest over five
years and will be held in trust until distributed pursuant to the terms of the
401(k) Plan. Employees of the Company are eligible to participate in the

27
<PAGE>
401(k) Plan if they meet certain requirements concerning minimum age and period
of service. Distributions from participant accounts will not be permitted before
age 59 1/2 , except in the event of death, disability, certain financial
hardships or termination of employment.

COMPENSATION COMMITTEE INTERLOCKS

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The Compensation
Committee of the Board of Directors consists of Keith L. Turley and Donald A.
Bliss. Mr. Bliss also serves as the Chairman of the Compensation Committee.
Members of the Compensation Committee are neither employees, officers, nor 10
percent or greater shareholders of the Company. See "Certain Relationships and
Related Transactions" for a description of transactions between the Company and
members of the Board of Directors or their affiliates.

CERTAIN RELATIONSHIPS AND TRANSACTIONS

COMPANY'S PURCHASE AND LEASE OF PROPERTIES.

The Company's headquarters is located at 5601 West Buckeye Road, Phoenix,
Arizona, on approximately 43 acres. The Company owns approximately 35 acres and
leases eight acres from Randy Knight, an officer, director and principal
shareholder of the Company. The Company has leased its operating facilities from
Randy Knight. Total payments of approximately $70,100, $10,000, $54,800 and
$14,900 were made by the Company to, or on behalf of, Total Warehousing and
Randy Knight for the years ended December 31, 1993, 1994, and 1995 and for the
three months ended March 31, 1996, respectively.

Under the lease between the Company and Randy Knight, the base rent is $4,828
per month for the initial three years of the lease, and increases by 3% on the
third anniversary of the commencement date, the first day of each option term,
and the third anniversary of the commencement date of each option term. In
addition to base rent, the lease requires the Company to pay its share of all
expenses, utilities, taxes and other charges. Under the lease, the Company and
Total Warehousing will continue jointly to use portions of the premises. The
Company has granted Randy Knight access and utility easements over its owned and
leased properties. The purchase and lease agreements between the Company and
Randy Knight include cross-indemnities relating to liabilities and expenses
arising from the use and occupancy of the property by the parties to the
agreements.

The Company and Total Warehousing have jointly purchased insurance and other
products and services and have shared other costs relating to the operation of
their businesses. Costs have been allocated on a basis consistent with their
respective use of the product or service. In addition, the Company and Total
Warehousing from time to time provide services to each other. The Company
provided maintenance and shipping, insurance and other services for Total
Warehousing and was paid $238,000, $154,000, $62,000 by Total Warehousing for
the years ended December 31, 1993, 1994 and 1995 and none for the three months
ended March 31, 1996, respectively. Total Warehousing provided general
warehousing services to the Company and was paid $53,000, $18,000, $60,000 and
$10,700 by the Company for the years ended December 31, 1993, 1994 and 1995 and
for the three months ended March 31, 1996, respectively.

FUTURE TRANSACTIONS WITH AFFILIATES

Upon completion of its initial public offering, the Company adopted a policy
that future transactions with affiliated persons or entities would be on terms
no less favorable to the Company than those that could be obtained from
unaffiliated third parties on an arm's length basis, and that any such
transactions would be approved by the Company's independent directors.

28
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have outstanding 9,902,000
shares of Common Stock. Of these shares, the 1,600,000 shares to be sold in this
offering (1,840,000 if the over-allotment option is exercised) will be freely
tradeable without restriction or registration under the Securities Act unless
acquired by affiliates of the Company. Of the remaining 8,302,000 shares,
2,282,100 were freely tradeable without restriction or registration prior to
this offering and 6,819,900 are restricted shares ("Restricted Shares") within
the meaning of Rule 144 of the Securities Act and may not be sold in the absence
of registration under the Securities Act unless an exemption from registration
is available, including the exemption contained in Rule 144. There are currently
available for issuance 648,000 shares under the Company's Stock Option Plan and
75,000 shares under its 401(k) Plan. These shares, when and if issued, would be
freely tradeable unless acquired by an affiliate of the Company.

All of the Restricted Shares will become eligible for sale pursuant to Rule
144 under the Act beginning 90 days after the date of this Prospectus if the
conditions of that Rule have been met. The Selling Shareholders, either in their
individual capacities or through certain related trusts and limited liability
companies established for the benefit of their respective families, will
beneficially own 6,028,900 shares, or 60.9%, of the Company's outstanding Common
Stock, after giving effect to this offering and have agreed, along with the
Company and its other officers and directors, with the Underwriters not to sell,
offer or otherwise dispose of any of their shares for 180 days from the date of
this Prospectus without the prior written consent of Alex. Brown & Sons
Incorporated. After the 180 day period, all of such shares will be eligible for
sale under, and subject to the limitations of, Rule 144 under the Securities
Act. See "Principal and Selling Shareholders".

In general, under Rule 144 as currently in effect, an affiliate (or persons
whose shares are aggregated with an affiliate) who has beneficially owned, for
at least two years, shares acquired directly or indirectly from the Company or
from an affiliate of the Company is entitled to sell within any three-month
period a number of shares that does not exceed the greater of 1% of the then
outstanding shares of the Company's Common Stock or the average weekly trading
volume of the Company's Common Stock during the four calendar weeks preceding
such sale. Sales under Rule 144 are also subject to certain manner-of-sale
limitations, notice requirements, and the availability of current public
information about the Company. However, a person who has not been an affiliate
of the Company at any time during the three months preceding a sale and who has
beneficially owned his shares for at least three years is entitled to sell such
shares under Rule 144 without regard to any of the limitations of the Rule.

No predictions can be made of the effect, if any, that market sales of
Restricted Shares or the availability of Restricted Shares for sale will have on
the market price prevailing from time to time. Nevertheless, sales of
substantial amounts of the shares of Common Stock in the public market could
adversely affect the market price of the Company's Common Stock. See "Risk
Factors -- Shares Eligible for Future Sale."

29
<PAGE>
PRINCIPAL AND SELLING SHAREHOLDERS
<TABLE>

The following table sets forth, as of the date of this Prospectus,
information concerning shares of the Company's Common Stock beneficially owned
by (i) each director and proposed director of the Company, (ii) all officers and
directors of the Company as a group, and (iii) each shareholder known by the
Company to be the beneficial owner of more than 5% of the Company's outstanding
Common Stock. The table also sets forth information as to the shares of Common
Stock to be sold by the Selling Shareholders. Unless otherwise indicated, each
person listed has sole voting and investment power over the shares beneficially
owned by him.

<CAPTION>
SHARES TO BE
BENEFICIALLY
SHARES BENEFICIALLY SHARES OWNED AFTER
OWNED BEFORE OFFERING OFFERED OFFERING(1)
--------------------- --------- ---------------------
NAME AND ADDRESS(2) NUMBER PERCENT NUMBER NUMBER PERCENT
- -------------------------------------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Randy Knight(3) .......................1,708,975 18.8% 200,000 1,508,975 15.2%
Kevin P. Knight(4) ....................1,706,975 18.8% 200,000 1,506,975 15.2%
Gary J. Knight(5) .....................1,706,475 18.7% 200,000 1,506,475 15.2%
Keith T. Knight(6) ....................1,706,475 18.7% 200,000 1,506,475 15.2%
Clark A. Jenkins ...................... 650 * -- 650 *
Keith L. Turley(7) .................... 6,100 * -- 6,100 *
Donald A. Bliss(8) .................... 3,500 * -- 3,500 *
William Blair & Company, L.L.C.(9) ... 756,800 8.3% -- 756,800 7.6%
All directors and officers as a group 6,839,150 75.1% 800,000 6,039,150 61.0%
<FN>

- ----------
* Less than one percent
(1) Assumes no exercise of the underwriters' over-allotment option. If the
underwriters' over-allotment is exercised in full, the ownership of each of
the Selling Shareholders will be reduced by an additional 60,000 shares.
(2) The address of each officer and director is 5601 West Buckeye Road, Phoenix,
Arizona 85043. The address of William Blair & Company, L.L.C. ("William
Blair") is 222 West Adams Street, Chicago, Illinois 60606.
(3) Includes 1,404,975 shares beneficially owned by Randy Knight over which he
exercises sole voting and investment power as a Trustee under a Revocable
Trust Agreement dated April 1, 1993; 300,000 shares held by a limited
liability company for which Mr. Knight acts as manager and whose members
include Mr. Knight and his four children; and 4,000 shares owned by a minor
child and three adult children who share the same household.
(4) Includes 1,704,975 shares beneficially owned by Kevin P. Knight over which
he and his wife, Sydney Knight, exercise sole voting and investment power as
Trustees under a Revocable Trust Agreement dated March 25, 1994, and 2,000
shares owned by four minor children.
(5) Includes 1,704,975 shares beneficially owned by Gary J. Knight over which he
exercises sole voting and investment power as a Trustee under a Revocable
Trust Agreement dated May 19, 1993, and 1,500 shares owned by three minor
children who share the same household.
(6) Includes 1,704,975 shares beneficially owned by Keith T. Knight over which
he and his wife, Fawna Knight, exercise sole voting and investment power as
Trustees under a Revocable Trust Agreement dated March 13, 1995, and 1,500
shares owned by three minor children who share the same household.
(7) Includes 2,500 shares that Mr. Turley has the right to acquire through the
exercise of a stock option.
(8) Includes 2,500 shares that Mr. Bliss has the right to acquire through the
exercise of a stock option.
(9) William Blair has sole voting power over 210,150 shares and sole dispositive
power over 756,800 shares. It has shared dispositive power over no shares.
William Blair has advised the Company that all such shares are held by
individual and institutional clients for which William Blair & Company
Investment Management Services, a department of William Blair, serves as
investment adviser. William Blair has further advised the Company that
William Blair is the owner of record and disclaims beneficial ownership of
such shares. William Blair is one of the Representatives of the Underwriters
of this offering. See "Underwriting."
</FN>

</TABLE>

30
<PAGE>
DESCRIPTION OF CAPITAL STOCK

COMMON STOCK

The Company is authorized to issue 100,000,000 shares of Common Stock, par
value $0.01 per share, of which 9,102,000 shares were issued and outstanding
immediately prior to this offering. Upon completion of this offering, 9,902,000
shares will be issued and outstanding.

The issued and outstanding shares of Common Stock are, and the shares offered
hereby when issued will be, fully paid and non-assessable. Holders of Common
Stock do not vote as a class, except as required by law, and, except for certain
cumulative voting rights, each share is entitled to one vote on all matters
submitted to a vote of the shareholders. Under the Arizona State Constitution,
cumulative voting is required for the election of directors. This means that a
shareholder has the right to cast as many votes in the aggregate as he is
entitled to vote under the Articles of Incorporation multiplied by the number of
directors to be elected. A shareholder may cast all his votes for one director
candidate or distribute such votes among two or more director candidates, as he
sees fit.

Holders of Common Stock are entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds legally
available therefor and, in the event of liquidation, dissolution or winding up
of the Company, to share ratably in all assets remaining after payments of
liabilities and liquidation preferences to the holders of any preferred stock
then outstanding.

The holders of Common Stock have no preemptive or conversion rights and are
not subject to assessments by the Company. There are no redemption or sinking
funds provisions applicable to Common Stock and holders of Common Stock have no
preference in liquidation. The rights of the holders of Common Stock are subject
to the rights of holders of any preferred stock that may be issued in the
future.

PREFERRED STOCK

The Company's Articles of Incorporation authorize the Board of Directors to
issue 50,000,000 preferred shares, par value $0.01 (the "Preferred Shares"), in
one or more classes and to establish the preferences and rights (including the
right to vote and the right to convert into the Common Stock) of any class of
Preferred Shares issued. No Preferred Shares will be issued or outstanding as of
the closing of the offering, and the Company has no present plans to issue
Preferred Shares.

CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION AND BYLAWS

A number of provisions of the Articles of Incorporation and Bylaws deal with
matters of corporate governance and the rights of shareholders. The Articles of
Incorporation provide the Board of Directors the ability to issue shares of
preferred stock and to set the voting rights, preferences and other terms
thereof. The ability of the Board of Directors to authorize the issuance of
preferred stock may have an anti-takeover effect and may discourage takeover
attempts not first approved by the Board of Directors (including a takeover
which certain shareholders may deem to be in their best interests). To the
extent takeover attempts are discouraged, fluctuations in the market price of
the Company's Common Stock, which may result from actual or rumored takeover
attempts, will be inhibited.

Knight's Articles of Incorporation provide that the consent of those persons
holding 67% of the Company's issued and outstanding voting shares, voting as a
single class, is required to approve any transaction to sell substantially all
of the Company's assets or to merge or consolidate the Company with another
corporation in a transaction in which shares of the Company's stock are
converted into cash or the right to receive other consideration in exchange for
their shares of the Company.

Indemnification. The Articles of Incorporation and the Bylaws of the Company
provide that directors of the Company will be indemnified by the Company to the
fullest extent not prohibited by Arizona law, as it now exists or may in the
future be amended, against all expenses and liabilities reasonably incurred in
connection with service for or on behalf of the Company. The Articles of
Incorporation also require that the Company advance expenses to defend any
claim, subject to a director agreeing to reimburse the Company for such advances
in the event indemnity is not permitted. The Articles of Incorporation and the
Bylaws also provide that the right of directors to indemnification is not
exclusive of any other right now possessed or hereafter acquired under any
statute, agreement or otherwise.

31
<PAGE>
The Company has entered into agreements to provide indemnification for its
directors (including actions in their capacity as officers) in addition to the
indemnification provided for in the Articles of Incorporation and the Bylaws.
These agreements, among other things, indemnify the Company's directors to the
fullest extent not prohibited by Arizona law, for certain expenses (including
attorneys' fees), judgments, fines and settlement amounts incurred by such
person in any action or proceeding, including any action by or in the right of
the Company, on account of services as a director or officer of the Company or
any subsidiary of the Company, or as a director or officer of any other company
or enterprise to which the person provides services at the request of the
Company, subject to reimbursement if it is subsequently determined that
indemnification is not permitted. The Company must also advance the costs and
expenses of directors seeking to enforce their rights under the indemnification
agreements, and cover directors under the Company's directors and officers
liability insurance, to the extent insurance coverage is available on reasonable
terms. Although the form of the indemnification agreements offers substantially
the same scope of coverage afforded by provisions in the Articles of
Incorporation and the Bylaws, it provides greater assurance to directors that
indemnification will be available, because, as a contract, it cannot be modified
unilaterally by the Board of Directors or by the shareholders to eliminate the
rights it provides. This provision does not affect a director's responsibilities
under certain other laws, such as the federal securities laws or state or
federal environmental laws. There is no pending litigation or proceeding
involving any director of the Company as to which indemnification is being
sought, and the Company is not aware of any pending or threatened litigation
that may result in claims for indemnification by a director, officer, employee
or other agent.

Limitation of Liability. The Articles of Incorporation provide that directors
of the Company will not be personally liable for monetary damages to the Company
for certain breaches of their fiduciary duty as directors, unless they violated
their duty of loyalty to the Company or its shareholders, acted in bad faith,
knowingly or intentionally violated the law, authorized the unlawful payment of
dividends or redemptions, derived an improper personal benefit from their action
as directors, or engaged in certain transactions involving a conflict of
interest. This provision has no effect on the availability of equitable remedies
or non-monetary relief, such as an injunction or rescission for breach of the
duty of care. In addition, the provision applies only to claims against a
director arising out of his role as a director and not in any other capacity
(such as an officer or employee of the Company). Further, liability of a
director for violations of the federal securities laws or environmental laws
will not be limited by this provision. Directors will, however, not be
personally liable for monetary damages arising from decisions involving
violations of the duty of care, including conduct that could be considered
grossly negligent.

TRANSFER AGENT

First Interstate Bank of Arizona, N.A. has been appointed transfer agent
and registrar for the Company's Common Stock.

32
<PAGE>
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters"), through their Representatives,
Alex. Brown & Sons Incorporated, Morgan Keegan & Company, Inc. and William Blair
& Company, L.L.C. (the "Representatives"), have severally agreed to purchase
from the Company and the Selling Shareholders the following respective numbers
of shares of Common Stock at the initial public offering price less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus.

UNDERWRITER AMOUNT
- ------------------------------------ ------------
Alex. Brown & Sons Incorporated ...............................
Morgan Keegan & Company, Inc. .................................
William Blair & Company, L.L.C. ...............................

------------
Total .......................................................... 1,600,000
============

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase all of the shares of Common Stock offered hereby if any of such shares
are purchased.

The Company and the Selling Shareholders have been advised by the
Representatives of the Underwriters that the Underwriters propose to offer the
shares of Common Stock directly to the public at the public offering price set
forth on the cover page of this Prospectus and to certain dealers at such price
less a concession not in excess of $. per share. The Underwriters may allow, and
such dealers may reallow, a concession not in excess of $. per share to certain
other dealers. After commencement of the offering, the public offering price and
other selling terms may be changed by the Representatives.

The Selling Shareholders have granted to the Underwriters an option,
exercisable not later than 30 days after the date of this Prospectus, to
purchase up to 240,000 additional shares of Common Stock at the public offering
price set forth on the cover page of this Prospectus. To the extent that the
Underwriters exercise such option, each of the Underwriters will have a firm
commitment to purchase approximately the same percentage thereof that the number
of shares of Common Stock to be purchased by it in the above table bears to
1,600,000, and the Selling Shareholders will be obligated, pursuant to the
option, to sell such shares to the Underwriters. The Underwriters may exercise
such option only to cover over-allotments made in connection with the sale of
the shares of the Common Stock offered hereby. If purchased, the Underwriters
will sell such additional shares on the same terms as those on which the
1,600,000 shares of Common Stock are being offered.

33
<PAGE>
The Underwriting Agreement contains covenants of indemnity and contribution
among the Underwriters, the Company and the Selling Shareholders with respect to
certain civil liabilities, including liabilities under the Securities Act.

The Company, its officers, directors and the Selling Shareholders have agreed
not to offer, sell or otherwise dispose of any additional shares of Common Stock
for a period of 180 days after the date of this Prospectus without the prior
written consent of Alex. Brown & Sons Incorporated, except that the Company may,
without such consent, issue shares as consideration for future acquisitions. The
sales of shares by any affiliate is also restricted by Rule 144. See "Shares
Eligible for Future Sale."

The Representatives have informed the Company that the Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed upon
for the Company by Ryley, Carlock & Applewhite, Phoenix, Arizona. Certain legal
matters in connection with the offering are being passed upon for the
Underwriters by Piper & Marbury L.L.P., Baltimore, Maryland.

EXPERTS

The financial statements included in this prospectus and elsewhere in this
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.

34
<PAGE>
<TABLE>
KNIGHT TRANSPORTATION, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Public Accountants ...............................................................F-2

Consolidated Balance Sheets as of December 31, 1994 and 1995 and
March 31, 1996 (unaudited) ............................................................................F-3

Consolidated Statements of Income for the Years Ended December 31, 1993, 1994 and 1995
and for the Three Months Ended March 31, 1995 (unaudited) and 1996 (unaudited) ........................F-4

Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1993, 1994 and 1995
and for the Three Months Ended March 31, 1996 (unaudited) .............................................F-5

Consolidated Statements of Cash Flows for the Years Ended December 31, 1993, 1994 and 1995 and for the
Three Months Ended March 31, 1995 (unaudited) and 1996 (unaudited) ....................................F-6

Notes to Consolidated Financial Statements .............................................................F-8
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
Knight Transportation, Inc.

We have audited the accompanying consolidated balance sheets of KNIGHT
TRANSPORTATION, INC. (an Arizona corporation) and subsidiary as of December 31,
1994 and 1995, and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three years in the period ended December
31, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Knight Transportation, Inc. and
subsidiary as of December 31, 1994 and 1995, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1995, in conformity with generally accepted accounting principles.

Arthur Andersen LLP
Phoenix, Arizona,
February 7, 1996.

F-2
<PAGE>
<TABLE>
KNIGHT TRANSPORTATION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

<CAPTION>
DECEMBER 31,
----------------------------- MARCH 31
1994 1995 1996
-------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 1) ...............$ 2,146,797 $ 623,656 $ 137,790
Accounts receivable, net (Notes 1, 2 and 4) ..... 4,816,262 7,375,038 8,989,931
Inventories and supplies (Note 1) ................ 306,916 422,589 570,891
Prepaid expenses ................................. 165,563 937,304 1,843,382
Deferred tax asset (Notes 1 and 3) ............... 1,200,400 1,420,000 1,574,000
-------------- -------------- --------------
Total current assets ....................... 8,635,938 10,778,587 13,115,994
-------------- -------------- --------------
PROPERTY AND EQUIPMENT (Notes 1 and 4):
Land and improvements ............................ 2,104,394 2,104,394 2,104,394
Buildings and improvements ....................... 246,384 246,384 246,384
Furniture and fixtures ........................... 658,193 1,158,140 1,260,801
Shop and service equipment ....................... 267,838 367,900 474,210
Revenue equipment ................................ 28,146,990 38,557,223 46,414,015
Leasehold improvements ........................... 392,779 469,854 527,654
-------------- -------------- --------------
31,816,578 42,903,895 51,027,458
Less: Accumulated depreciation ................... (7,984,928) (10,926,067) (11,898,687)
-------------- -------------- --------------
PROPERTY AND EQUIPMENT, net .......................... 23,831,650 31,977,828 39,128,771
OTHER ASSETS ......................................... 120,278 343,079 545,740
-------------- -------------- --------------
$32,587,866 $ 43,099,494 $ 52,790,505
============== ============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable .................................$ 2,323,428 $ 3,202,258 $ 6,214,602
Accrued liabilities .............................. 1,801,242 1,773,293 3,252,046
Claims accrual (Note 6) .......................... 1,701,028 3,093,513 3,452,989
Current portion of long-term debt (Note 4) ...... 1,049,690 1,002,150 1,003,416
Line of credit (Note 4) .......................... -- 2,000,000 5,000,000
-------------- -------------- --------------
Total current liabilities ................... 6,875,388 11,071,214 18,923,053
LONG-TERM DEBT, less current portion (Note 4) ....... 2,117,480 980,787 753,760
DEFERRED INCOME TAXES (Notes 1 and 3) ................ 4,692,400 6,315,200 6,793,600
-------------- -------------- --------------
13,685,268 18,367,201 26,470,413
-------------- -------------- --------------
COMMITMENTS AND CONTINGENCIES (Note 5)
SHAREHOLDERS' EQUITY (Notes 8 and 9):
Preferred stock, $.01 par value; authorized
50,000,000 shares, none issued and outstanding
Common stock, $.01 par value; authorized 100,000,000
shares, issued and outstanding 9,100,000,
9,102,000 and 9,102,000 shares at December 31, 1994,
1995 and March 31, 1996, respectively ........... 91,000 91,020 91,020
Additional paid-in capital ........................ 9,737,767 9,761,747 9,761,747
Retained earnings ................................. 9,073,831 14,879,526 16,467,325
-------------- -------------- --------------
Total shareholders' equity .................. 18,902,598 24,732,293 26,320,092
-------------- -------------- --------------
$32,587,866 $ 43,099,494 $ 52,790,505
============== ============== ==============
<FN>

The accompanying notes are an integral part of these
consolidated balance sheets.
</FN>
</TABLE>

F-3
<PAGE>
<TABLE>
KNIGHT TRANSPORTATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME

<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------- ---------------------------
1993 1994 1995 1995 1996
-------------- -------------- -------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING REVENUE
(Note 1) ....................$26,381,022 $37,542,888 $56,170,279 $11,907,641 $16,580,836
-------------- -------------- -------------- ------------- -------------
OPERATING EXPENSES:
Salaries, wages and benefits 9,470,132 12,676,306 16,359,957 3,725,292 4,729,893
Fuel ......................... 3,784,580 4,767,153 6,101,460 1,347,568 1,720,197
Operations and maintenance .. 1,539,106 2,315,991 3,727,240 872,944 832,574
Insurance and claims ......... 1,291,250 1,842,192 2,097,361 564,921 617,961
Operating taxes and licenses 1,111,038 1,834,348 2,154,739 479,731 591,968
Communications ............... 125,214 185,821 286,469 57,679 123,503
Depreciation and amortization 3,049,300 4,105,079 5,416,390 1,206,493 1,663,110
Purchased transportation
(Note 1) ................... -- 690,824 7,831,506 1,041,200 3,062,882
Miscellaneous operating
expenses ................... 884,181 1,013,008 1,593,711 249,720 403,500
-------------- -------------- -------------- ------------- -------------
21,254,801 29,430,722 45,568,833 9,545,548 13,745,588
-------------- -------------- -------------- ------------- -------------
Income from operations ....... 5,126,221 8,112,166 10,601,446 2,362,093 2,835,248
-------------- -------------- -------------- ------------- -------------

OTHER INCOME (EXPENSE):
Interest income .............. 50,887 105,335 36,620 16,879 1,935
Interest expense ............. (895,484) (839,948) (232,371) (60,720) (99,384)
-------------- -------------- -------------- ------------- -------------
(844,597) (734,613) (195,751) (43,841) (97,449)
-------------- -------------- -------------- ------------- -------------
Income before income taxes .. 4,281,624 7,377,553 10,405,695 2,318,252 2,737,799

INCOME TAXES
(Notes 1 and 3) ............ (1,835,000) (3,283,000) (4,600,000) (1,032,000) (1,150,000)
-------------- -------------- -------------- ------------- -------------
Net income ...................$ 2,446,624 $ 4,094,553 $ 5,805,695 $ 1,286,252 $ 1,587,799
============== ============== ============== ============= =============
Net income per common share
and common share equivalent
(Note 1) ...................$ .30 $ .49 $ .64 $ .14 $ .17
============== ============== ============== ============= =============
Weighted average number
of common shares and common
share equivalents outstanding 8,200,000 8,375,356 9,141,176 9,141,775 9,151,222
============== ============== ============== ============= =============
<FN>

The accompanying notes are an integral part of
these consolidated financial statements.
</FN>
</TABLE>

F-4
<PAGE>
<TABLE>
KNIGHT TRANSPORTATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<CAPTION>
ADDITIONAL
COMMON STOCK PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
----------- ---------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1992 ..8,200,000 $82,000 $ 118,000 $ 2,532,654 $ 2,732,654
Net income ................... -- -- -- 2,446,624 2,446,624
----------- ---------- ------------ ------------- -------------

BALANCE, December 31, 1993 ..8,200,000 82,000 118,000 4,979,278 5,179,278
Issuance of 900,000 shares of
common stock, net of offering
costs of $1,171,233 (Note 8) 900,000 9,000 9,619,767 -- 9,628,767
Net income ................... -- -- -- 4,094,553 4,094,553
----------- ---------- ------------ ------------- -------------

BALANCE, December 31, 1994 ..9,100,000 91,000 9,737,767 9,073,831 18,902,598
Exercise of stock options ... 2,000 20 23,980 -- 24,000
Net income ................... -- -- -- 5,805,695 5,805,695
----------- ---------- ------------ ------------- -------------

BALANCE, December 31, 1995 ..9,102,000 91,020 9,761,747 14,879,526 24,732,293
Net income (unaudited) ....... -- -- -- 1,587,799 1,587,799
----------- ---------- ------------ ------------- -------------

BALANCE, March 31, 1996
(unaudited) ................9,102,000 $91,020 $9,761,747 $16,467,325 $26,320,092
=========== ========== ============ ============= =============
<FN>

The accompanying notes are an integral part of
these consolidated financial statements.
</FN>
</TABLE>

F-5
<PAGE>
<TABLE>
KNIGHT TRANSPORTATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------ ---------------------------
1993 1994 1995 1995 1996
------------- ------------- -------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income .......................$ 2,446,624 $ 4,094,553 $ 5,805,695 $ 1,286,252 $ 1,587,799
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization ... 3,049,300 4,105,079 5,416,390 1,206,493 1,662,601
Allowance for doubtful accounts . 26,394 83,179 162,045 24,000 25,525
Deferred income taxes ............ 929,400 1,316,447 1,403,200 430,800 324,400
Changes in assets and liabilities:
Increase in receivables .......... (1,153,532) (1,642,985) (2,720,821) (401,443) (1,640,418)
Increase in inventories and
supplies ....................... (33,715) (75,410) (115,673) (33,556) (148,302)
(Increase) decrease in prepaid
expenses ....................... 2,371 172,223 (771,741) (464,419) 195,122
(Increase) decrease in other
assets ......................... (89,573) 25,258 (370,499) 19,341 (48,046)
Increase (decrease) in accounts
payable ........................ 79,053 (126,068) 479,426 (1,585,314) 225,815
Increase in accrued liabilities
and claims accrual ............. 263,202 2,150,661 1,364,536 702,799 1,838,229
------------- ------------- -------------- ------------- -------------
Net cash provided by operating
activities ..................... 5,519,524 10,102,937 10,652,558 1,184,953 4,022,725
------------- ------------- -------------- ------------- -------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property and
equipment ...................... (712,092) (3,087,876) (11,360,029) (1,102,055) (4,253,904)
Purchase of temporary investment
-- real estate ................. -- (588,296) -- -- --
Increase in related party
receivable ..................... -- (598,929) -- -- --
Proceeds from sale of temporary
investment -- real estate ...... 170,537 588,296 -- -- --
------------- ------------- -------------- ------------- -------------
Net cash used in investing
activities ..................... (541,555) (3,686,805) (11,360,029) (1,102,055) (4,253,904)
------------- ------------- -------------- ------------- -------------
</TABLE>

F-6
<PAGE>
<TABLE>
KNIGHT TRANSPORTATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------ --------------------------
1993 1994 1995 1995 1996
------------- -------------- ------------- ------------ -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING
ACTIVITIES:
Increase (decrease) in line of
credit and notes payable ....$ (434,654) $ -- $ 2,000,000 $ -- $ 1,887,037
Repayment of debt .............. (4,812,487) (13,717,117) (1,311,348) (332,640) (213,998)
Increase (decrease) in notes
payable -- officers .......... 77,489 (365,625) -- -- --
Decrease in accounts
payable -- equipment ......... -- -- (1,528,322) -- (1,927,726)
Net proceeds from sale of
common stock ................. -- 9,628,767 -- -- --
Proceeds from exercise of stock
options ...................... -- -- 24,000 -- --
------------- -------------- ------------- ------------ -------------
Net cash used in financing
activities ................... (5,169,652) (4,453,975) (815,670) (332,640) (254,687)
------------- -------------- ------------- ------------ -------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS ......... (191,683) 1,962,157 (1,523,141) (249,742) (485,866)
CASH AND CASH EQUIVALENTS,
beginning of year ............ 376,323 184,640 2,146,797 2,146,797 623,656
------------- -------------- ------------- ------------ -------------
CASH AND CASH EQUIVALENTS,
end of year ..................$ 184,640 $ 2,146,797 $ 623,656 $1,897,055 $ 137,790
============= ============== ============= ============ =============
SUPPLEMENTAL DISCLOSURES:
Noncash investing and financing
transactions:
Insurance premium financed ....$ -- $ -- $ -- $ -- $ 1,101,200
Equipment acquired by direct
financing .................... 8,693,184 3,616,298 127,115 -- --
Equipment acquired by accounts
payable ...................... 50,124 1,528,322 1,927,726 1,885,190 4,714,255
Equipment refinanced ........... 930,934 -- -- -- --
Equipment trades receivable ... -- -- -- -- 229,900
Debt reduction from trade-in of
revenue equipment ............ 1,065,941 -- -- -- --
Equipment sale receivable ..... 114,756 -- -- -- --
Land acquired by retirement of
shareholder advance .......... -- 1,110,504 -- -- --

Cash Flow Information:
Income taxes paid ..............$ 925,060 $ 2,139,906 $ 3,368,373 $ -- $ 4,400
============= ============== ============= ============ =============
Interest paid ..................$ 893,540 $ 873,362 $ 228,681 $ 61,401 $ 90,774
============= ============== ============= ============ =============
<FN>

The accompanying notes are an integral part of
these consolidated financial statements.
</FN>
</TABLE>

F-7
<PAGE>
KNIGHT TRANSPORTATION, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

NATURE OF BUSINESS

Knight Transportation, Inc. and Subsidiary (the Company) is a short to
medium-haul, truckload carrier of general commodities operating primarily in
Arizona, California and other western states. The operations are centered in
Phoenix, Arizona, where the Company has its corporate offices, truck terminal,
and dispatching and maintenance services. The Company has recently established
operations near Houston, Texas to provide dedicated services to one of its
larger customers and to commence regional services in Texas and Louisiana. The
Company has also initiated operations in Indianapolis, Indiana, from which it
will provide regional service in the Midwest and on the East Coast. The Company
operates predominantly in one industry, road transportation, subject to
regulation by the Department of Transportation and various state regulatory
authorities.

The Company initiated and began to develop an independent contractor program
during 1994. Because independent contractors provide their own tractors, the
Company views independent contractors as an alternative method of obtaining
additional revenue equipment. The Company intends to continue to increase its
use of independent contractors. The Company had 30, 115 and 131 tractors
operated by independent contractors at December 31, 1994, 1995 and March 31,
1996, respectively.

SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION -- The accompanying consolidated financial
statements include the parent company Knight Transportation, Inc., and its
wholly owned subsidiary. All material intercompany items and transactions have
been eliminated in consolidation. During the first quarter of 1996, the Company
formed three additional wholly-owned subsidiaries, KTTE Holdings, Inc., QKTE
Holdings, Inc., and Knight Dedicated Services Limited Partnership, which is
comprised of KTTE Holdings, Inc. as general partner and QKTE Holdings, Inc. as
the sole limited partner. The unaudited consolidated financial statements as of
March 31, 1996 and for the quarter then ended include these subsidiaries,
although they did not have significant activity.

PREPARATION OF FINANCIAL STATEMENTS -- The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

CASH AND CASH EQUIVALENTS -- The Company considers all highly liquid debt
instruments purchased with original maturities of three months or less to be
cash equivalents.

INVENTORIES AND SUPPLIES -- Inventories and supplies consist of tires and
spare parts which are stated at the lower of cost using the first-in, first-out
(FIFO) method or net realizable value.

PROPERTY AND EQUIPMENT -- Property and equipment are stated at cost.
Depreciation on property and equipment is calculated by the straight-line method
over the following estimated useful lives:

YEARS
-------

Buildings and improvements ............................... 5-20
Furniture and fixtures ................................... 5
Shop and service equipment ............................... 5
Revenue equipment ........................................ 5-7
Leasehold improvements ................................... 10

Revenue equipment is depreciated to a 10% salvage value for all trailers, and
a 15% salvage value for all tractors.

TIRES -- Tires on revenue equipment purchased are capitalized as a part of
the equipment cost and depreciated over the life of the vehicle. Replacement
tires and recapping costs are expensed when placed in service.

INVESTMENTS IN REAL ESTATE -- During 1994 the Company purchased undeveloped
real property in Deer Valley, Utah from an unrelated third party. The Company
then sold the property to its original shareholders at the original cost plus
expenses.

F-8
<PAGE>
KNIGHT TRANSPORTATION, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

REVENUE RECOGNITION -- The Company's typical customer delivery is completed
one day after pickup. Accordingly, the Company recognizes operating revenues
when the freight is picked up for delivery and accrues the estimated direct
costs to complete the delivery. This method of revenue recognition is not
materially different from recognizing revenue based on completion of delivery.

INCOME TAXES -- The Company uses the asset and liability method of accounting
for income taxes. Under the asset and liability method of Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amount of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. Under SFAS No. 109, the effect on deferred tax assets
and liabilities of a change in tax rates is recognized in the period that
includes the enactment date.

CONCENTRATION OF CREDIT RISK -- Financial instruments that potentially
subject the Company to credit risk consist principally of trade receivables. The
Company earns revenues primarily from companies in California and Arizona.

NET INCOME PER COMMON SHARE -- Net income per common share is computed by
dividing net income by the weighted average number of common stock and common
stock equivalents assumed outstanding during the year. Fully diluted net income
per share is considered equal to primary net income per share in all periods
presented.

RECENTLY ISSUED ACCOUNTING STANDARDS -- Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of, which is required to be adopted by the
Company in fiscal 1996, is not expected to have a material effect on the
Company's financial position or its results of operations upon adoption.
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation (SFAS No. 123), is also required to be adopted by the Company in
fiscal 1996. Pursuant to the provisions of SFAS No. 123, the Company will
continue to account for transactions with its employees pursuant to Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees.
Therefore, this statement is not expected to have a material effect on the
Company's financial position or its results of operations when adopted.

FAIR VALUE OF FINANCIAL INSTRUMENTS -- During October 1994, the Financial
Accounting Standards Board issued SFAS No. 119, Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments. This statement
requires the disclosure of estimated fair values for all financial instruments
for which it is practicable to estimate fair value.

For instruments including cash, accounts receivable and payable, accruals and
line of credit, it was assumed that the carrying amount approximated fair value
because of their short maturities.

The fair value of long-term debt, including current portion, is estimated
based on current rates offered to the Company for debt of the same maturities
and approximates the carrying amounts of long-term debt.

INTERIM FINANCIAL INFORMATION -- In management's opinion, the consolidated
financial statements for the three-month periods ended March 31, 1995 and 1996
include all adjustments, consisting of normal recurring adjustments, necessary
to present fairly the Company's financial position, results of operations and
cash flows as of and for the periods then ended. Operating results for the three
month period ending March 31, 1996 are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1996.

F-9
<PAGE>
KNIGHT TRANSPORTATION, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(2) ACCOUNTS RECEIVABLE:

Accounts receivable consist of the following:

DECEMBER 31,
-------------------------- MARCH 31,
1994 1995 1996
------------ ------------- ------------
(UNAUDITED)
Trade customers ........................$4,650,377 $7,206,311 $8,653,547
Other .................................. 298,788 463,675 656,857
------------ ------------- ------------
4,949,165 7,669,986 9,310,404
Less -- Allowance for doubtful accounts (132,903) (294,948) (320,473)
------------ ------------- ------------
Accounts receivable, net ...............$4,816,262 $7,375,038 $8,989,931
============ ============= ============

(3) INCOME TAXES:

As discussed in Note 1, the Company uses SFAS No. 109 in accounting for
income taxes.
<TABLE>

Income tax expense consists of the following:

<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------- ------------------------
1993 1994 1995 1995 1996
------------ ------------- ------------- ------------ -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current income taxes:
Federal ..................$ 722,200 $ 1,464,800 $2,500,500 $ 462,300 $ 667,600
State .................... 183,400 501,753 696,300 138,900 158,000
------------ ------------- ------------- ------------ -----------
905,600 1,966,553 3,196,800 601,200 825,600
------------ ------------- ------------- ------------ -----------
Deferred income taxes:
Federal .................. 675,800 1,142,700 1,173,300 397,500 277,100
State .................... 253,600 173,747 229,900 33,300 47,300
------------ ------------- ------------- ------------ -----------
929,400 1,316,447 1,403,200 430,800 324,400
------------ ------------- ------------- ------------ -----------
Total income tax expense $1,835,000 $ 3,283,000 $ 4,600,000 $1,032,000 $1,150,000
============ ============= ============= ============ ===========
</TABLE>
<TABLE>

The effective income tax rate is different than the amount which would be
computed by applying the United States corporate income tax rate to the income
before income taxes. The differences are summarized as follows:

<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------- -------------------------
1993 1994 1995 1995 1996
------------- ------------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Tax at the statutory rate (34%) $ 1,455,800 $ 2,508,400 $3,537,900 $ 820,400 $1,003,700
State income taxes, net of
federal benefit ................ 288,400 446,000 611,300 113,700 135,500
Other ........................... 90,800 328,600 450,800 97,900 10,800
------------- ------------- ------------ ------------ ------------
Actual tax expense ..............$ 1,835,000 $ 3,283,000 $4,600,000 $1,032,000 $1,150,000
============= ============= ============ ============ ============
</TABLE>

F-10
<PAGE>
KNIGHT TRANSPORTATION, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
<TABLE>

The net effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are as follows:

<CAPTION>
DECEMBER 31,
------------------------- MARCH 31,
1994 1995 1996
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Short-term deferred tax assets:
Insurance accruals .........................$ 680,400 $1,237,400 $1,381,200
AMT credit ................................. 365,900 -- --
Other ...................................... 154,100 182,600 192,800
------------ ------------ ------------
Total short-term deferred tax assets ......$1,200,400 $1,420,000 $1,574,000
============ ============ ============
Long-term deferred tax liabilities:
Property and equipment depreciation .......$4,584,300 $6,072,500 $6,491,600
Prepaid expenses deducted for tax purposes 108,100 242,700 302,000
------------ ------------ ------------
Total long-term deferred tax liabilities ..$4,692,400 $6,315,200 $6,793,600
============ ============ ============
</TABLE>

(4) LONG-TERM DEBT:
<TABLE>

Long-term debt consists of the following:

<CAPTION>
DECEMBER 31,
--------------------------- MARCH 31,
1994 1995 1996
------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Notes payable to a commercial lending institution with
varying payments to 1998; collateralized by tractors,
fixed interest rates from 6.4% to 7.0% ...................$ 2,406,074 $ 1,687,177 $ 1,499,806
Note payable to a financial institution with varying
payments to 1997; collateralized by trailers, fixed
interest rate of 7% ...................................... 275,160 168,645 142,018
Notes payable to a commercial lending institution with
varying payments to 1997; collateralized by trailers,
variable interest rate of the London Interbank Offered
Rate (LIBOR) plus 2.95%.
The entire balance was paid off in 1995 .................. 485,936 -- --
Asset under capital lease, monthly payment of $2,959
for 5 years commencing December 1995 ..................... -- 127,115 115,352
------------- ------------- -------------
3,167,170 1,982,937 1,757,176
Less -- Current portion ................................... (1,049,690) (1,002,150) (1,003,416)
------------- ------------- -------------
$ 2,117,480 $ 980,787 $ 753,760
============= ============= =============
</TABLE>

Maturities of long-term debt as of December 31, 1995, are as follows:

YEARS ENDING
DECEMBER 31 AMOUNT
-------------- -------------
1996 $ 1,002,150
1997 883,708
1998 97,079
-------------
$ 1,982,937
=============

F-11
<PAGE>
KNIGHT TRANSPORTATION, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of December 31, 1995, the Company had a $10,000,000 revolving line of
credit with principal due at maturity, July 1997, and interest payable monthly
using one of three variable interest rate options selected by the Company at the
time of borrowing (prime, LIBOR plus .9%, or Certificate of Deposit plus 2.15%).
Effective March 31, 1996, the Company's maximum borrowing capacity under the
line of credit increased to $15 million and its LIBOR interest rate option was
adjusted to LIBOR plus .75%. Borrowings under the line of credit are limited to
80% of eligible accounts receivable, as defined, and 50% of net fixed assets, as
defined and amounted to $2,000,000 at December 31, 1995, and $5,000,000 at March
31, 1996.

Under the terms of the line of credit, the Company is required to maintain
certain financial ratios. These ratios are the total liabilities to net worth
ratio, current ratio, and certain debt service ratios. The Company is also
required to maintain certain other financial conditions relating to corporate
structure, ownership and management. As of December 31, 1995, the Company was in
compliance with all covenants. As of March 31, 1996, the Company was in
technical default of certain financial covenants, for which it has received a
letter of waiver from the lender.

The weighted average interest rate on these notes payable was 7.08%, 7.50%
and 6.66% at December 31, 1994, 1995 and March 31, 1996, respectively.

(5) COMMITMENTS AND CONTINGENCIES:

LEASES

The Company leased its facilities from Total Warehousing, Inc., a related
party, on a 32-month cancellable lease through October 1994. Beginning November
1994 the Company entered into a five year lease with a shareholder (see Note 7).
In addition, the Company leased three tractors under an operating lease at
$3,885 per month during 1994. These tractors were purchased and traded in June
1994.

PURCHASE COMMITMENTS

As of December 31, 1995, and March 31, 1996, the Company had purchase
commitments for additional tractors and trailers for an estimated purchase price
of $13,000,000, and $12,200,000, respectively.

Although Knight expects to take delivery of this revenue equipment, delays in
the availability of equipment could occur due to factors beyond the Company's
control. Any delay or interruption in the availability of equipment in the
future could have a material adverse effect on the Company.

The Company is in the process of acquiring both a terminal facility in
Indianapolis, Indiana for approximately $1,000,000 and approximately 15 acres of
land adjacent to the Company's Phoenix facility for approximately $1,000,000.

DISABILITY PLAN

The Company has a disability plan for certain of its key employees. The plan
provides disability benefits of $75,000 annually for sixty months if a key
employee terminates by reason of disability. The plan is subject to termination
at any time by the Board of Directors.

OTHER

The Company's tractor and trailer fleets are registered in Oklahoma and Utah
and operate primarily in the western United States, including California. The
Company is presently being audited by the State of California's Department of
Motor Vehicles with respect to 1994, 1995 and 1996 mileage years. Although no
assessment has yet been made, California is asserting that all the Company's
trailers are subject to apportioned registration, and the Company owes
additional trailer registration fees in excess of the amounts previously paid.
The Company believes that the outcome of the California audit will not have a
materially adverse effect on the Company's financial position or results of
operations. The Company intends to vigorously contest the position taken by
California. To the extent the Company is not successful in its efforts, it may
be required to pay additional registration fees for the mileage years involved
and possible penalties as well as increased registration fees (relative to
payments previously paid) for future periods.

F-12
<PAGE>
KNIGHT TRANSPORTATION, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company is involved in certain administrative legal proceedings arising
in the normal course of business. In the opinion of management, the Company's
potential exposure under the pending proceedings is adequately provided for in
the accompanying consolidated financial statements.

(6) CLAIMS ACCRUAL:

Under an agreement with its insurer, the Company acts as a self-insurer for
bodily injury and property damage claims up to $100,000 per single occurrence.
Beginning in 1995, the Company is self-insured for workers' compensation for
claims up to $250,000 per single occurrence in states in which the Company has
elected to do so. The Company is also self-insured for collision, comprehensive
and cargo liability up to $25,000 per occurrence. Liability in excess of these
amounts is assumed by the insurer, subject to certain coverage limitations.
Exposure greater than individual coverage limitations is insured under the
Company's umbrella liability policy.

The claims accrual represents accruals for the estimated uninsured portion of
pending claims including adverse development of known claims and incurred but
not reported claims. These estimates are based on historical information along
with certain assumptions about future events. Changes in assumptions as well as
changes in actual experience could cause these estimates to change in the near
term. The agreements with the underwriters are collateralized by letters of
credit totaling $650,000. These letters of credit reduces the available
borrowings under the Company's line of credit (see Note 4).

(7) RELATED PARTY TRANSACTIONS:

The Company leased facilities from Total Warehousing, Inc. (TWI) under a
32-month lease that was terminated in 1994. Terms of the lease called for rent
of $7,500 per month until June 1992, and $5,000 per month from July 1992 until
the end of the lease. TWI is owned by a shareholder of the Company. In March
1994, the Company leased approximately eight acres from a shareholder and
officer, "the Shareholder", under a five year lease, with an option to extend
for two additional five-year terms. The lease terms include base rent of $4,828
per month for the initial three years of the lease, and increases of 3% on the
third anniversary of the commencement date, the first day of each option term,
and the third anniversary of the commencement date of each option term. In
addition to base rent, the lease requires the Company to pay its share of all
expenses, utilities, taxes and other charges. The rent expense paid to TWI under
the former lease was $70,100 for the year ended December 31, 1993, and $10,000
for the year ended December 31, 1994. Rent expense paid to the Shareholder was
approximately $54,800 and $14,900 for the year ended December 31, 1995 and the
three months ended March 31, 1996, respectively.

In September 1994, the Company purchased for $1,285,000 approximately 20
acres of property from the Shareholder.

The Company provided maintenance and shipping for TWI and was paid $238,000,
$154,000, $62,000, $45,800 and none for the years ended December 31, 1993, 1994,
1995 and the three months ended March 31, 1995 and 1996, respectively. TWI
provided general warehousing services to the Company and was paid $53,000,
$18,000, $60,000, $3,300 and $10,700 for the years ended December 31, 1993,
1994, 1995 and the three months ended March 31, 1995 and 1996, respectively.

(8) SHAREHOLDERS' EQUITY:

The Company's authorized capital stock consists of 100,000,000 shares of $.01
par value common stock. In addition, the Company has authorized 50,000,000
shares of $.01 par value preferred stock, none of which was issued or
outstanding at December 31, 1994, 1995 and March 31, 1996.

In October 1994, the Company issued 900,000 shares of common stock at $12.00
per share in its initial public offering. The offering consisted of 1,800,000
shares comprised of 900,000 newly-issued Company shares and 900,000 shares from
shareholders.

F-13
<PAGE>
KNIGHT TRANSPORTATION, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(9) EMPLOYEE BENEFIT PLANS:

1994 STOCK OPTION PLAN

The Company established the 1994 Stock Option Plan (the 1994 Plan) with
650,000 shares of common stock reserved for issuance thereunder. The Plan will
terminate on August 31, 2004. The Compensation Committee of the Board of
Directors administers the stock incentive plan, and has the discretion to
determine the employees, officers and independent directors who will receive
awards, the type of awards to be granted (incentive stock options, nonqualified
stock options and restricted stock grants) and the term, vesting and exercise
price. Incentive stock options will be designed to comply with the applicable
provisions of the Internal Revenue Code (the Code) and will be subject to
restrictions contained in the Code, including a requirement that exercise prices
are equal to at least 100% of the fair market value of the common shares on the
grant date and a ten-year restriction on the option term.

Independent directors are not permitted to receive incentive stock options.
Non-qualified stock options may be granted to directors, including independent
directors, officers, and employees and will provide for the right to purchase
common stock at a specified price, which may not be less than 85% of the fair
market value on the date of grant, and usually will become exercisable in
installments after the grant date. Non-qualified stock options may be granted
for any reasonable term. The 1994 Plan provides that each independent director
shall receive, on the date of his appointment to the Board of Directors,
non-qualified options to purchase not less than 2,500 nor more than 5,000 shares
of common stock, at an exercise price equal to the fair market value of the
common stock on the date of the grant.

No options were exercisable at December 31, 1995.

The following summarizes the activity for the 1994 Plan:

NUMBER OF OPTION PRICE
SHARES PER SHARE
----------- ---------------
Options outstanding at December 31, 1994 251,250 $12.00-$12.54
Granted .................................. 25,000 12.00- 14.50
Canceled .................................(12,000) 12.00
Exercised ................................ (2,000) 12.00
----------- ---------------
Options outstanding at end of year ......262,250 $12.00-$14.50
=========== ===============
Options available for grant ..............385,750
===========

401(k) PROFIT SHARING PLAN

The Company has a 401(k) profit sharing plan (the Plan) for all employees who
are 19 years of age or older and have completed one year of service. The Plan as
amended in 1995 provides for an annual matching contribution not to exceed 50%
of the employee's salary contribution up to $750. Contributions made by the
Company were equal to 35%, 40%, 50% and 50% for the plan years ended December
31, 1993, 1994, 1995, and 1996, respectively, of the amount of the employee's
salary deduction not to exceed $350, $500, $625 and $625 annually per employee
for the plan years ended December 31, 1993, 1994, 1995 and 1996, respectively.
The Plan also provides for a discretionary matching contribution not limited to
the amount permitted under the Internal Revenue Code as deductible expenses. For
the years ended December 31, 1993, 1994 and 1995 and the three months ended
March 31, 1995 and 1996, there were no discretionary contributions. Employees'
rights to employer contributions vest after five years from their date of
employment. The Company's matching contribution was approximately $23,500,
$40,300, $60,000, $20,900 and $24,800 for the years ended December 31, 1993,
1994, 1995 and the three months ended March 31, 1995 and 1996, respectively.

F-14
<PAGE>
KNIGHT TRANSPORTATION, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(10) MAJOR CUSTOMERS:

The Company's three largest customers for the years ended December 31, 1993,
1994 and 1995 and the three months ended March 31, 1995 and 1996, respectively,
represent 24%, 19%, 11%, 15% and 10% of operating revenues. The single largest
customer's revenues represent 11%, 9%, 4%, 5% and 5% of operating revenues for
the years ended December 31, 1993, 1994 and 1995, and the three months ended
March 31, 1995 and 1996, respectively.

F-15
<PAGE>
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR SINCE
THE DATES AS OF WHICH INFORMATION IS SET FORTH HEREIN.

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TABLE OF CONTENTS
PAGE
----
Prospectus Summary ........................................................ 3
Risk Factors .............................................................. 5
Use of Proceeds ........................................................... 8
Capitalization ............................................................ 8
Dividend Policy ........................................................... 9
Price Range of Common Stock ............................................... 9
Dilution .................................................................. 9
Selected Consolidated Financial and ....................................... 10
Operating Data
Management's Discussion and Analysis of
Financial Condition and Results of Operations ............................ 11
Industry Overview ......................................................... 16
Business .................................................................. 17
Management ................................................................ 24
Executive Compensation and Other .......................................... 26
Information
Certain Relationships and Transactions .................................... 28
Shares Eligible for Future Sale ........................................... 29
Principal and Selling Shareholders ........................................ 30
Description of Capital Stock .............................................. 31
Underwriting .............................................................. 33
Legal Matters ............................................................. 34
Experts ................................................................... 34
Available Information ..................................................... 34
Index to Consolidated Financial
Statements ............................................................... F-1

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1,600,000 SHARES

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IMAGE OMITTED

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COMMON STOCK

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P R O S P E C T U S
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ALEX. BROWN & SONS
INCORPORATED

MORGAN KEEGAN & COMPANY, INC.

WILLIAM BLAIR & COMPANY

, 1996

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