UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2004
Commission File No. 000-22490

FORWARD AIR CORPORATION
(Exact name of registrant as specified in its charter)

Tennessee		62-1120025
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

430 Airport Road
Greeneville, Tennessee		37745
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (423) 636-7000

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES |X| NO

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

YES |X| NO

The number of shares outstanding of the registrant’s common stock, $.01 par value, as of October 28, 2004 was 21,488,012.

Table of Contents

Forward Air Corporation

		Page Number

Part I.	Financial Information

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets - September 30, 2004 and December 31, 2003	3

	Condensed Consolidated Statements of Income - Three and nine months ended September 30, 2004 and 2003	4

	Condensed Consolidated Statements of Cash Flows - Nine months ended September 30, 2004 and 2003	5

	Notes to Condensed Consolidated Financial Statements - September 30, 2004	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16

Item 4.	Controls and Procedures	16

Part II.	Other Information

Item 1.	Legal Proceedings	18

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18

Item 3.	Defaults Upon Senior Securities	18

Item 4.	Submission of Matters to a Vote of Security Holders	18

Item 5.	Other Information	18

Item 6.	Exhibits and Reports on Form 8-K	19

Signatures		21

Part I. Financial Information

Item 1. Financial Statements (Unaudited)

Forward Air Corporation
Condensed Consolidated Balance Sheets

			September 30, 2004			December 31, 2003

			(Unaudited)			(Note 1)
			(In thousands, except share data)
Assets

Current assets:
	Cash and cash equivalents			$	100,336		$	83,539
	Short-term investments				4,000			3,000
	Accounts receivable, less allowance of $990 in 2004 and $1,263 in 2003				37,761			31,457
	Other current assets				8,503			5,170

Total current assets					150,600			123,166

Property and equipment					75,114			70,231
	Less accumulated depreciation and amortization				42,304			37,319

Total property and equipment, net					32,810			32,912

Other assets					17,846			19,009

Total assets				$	201,256		$	175,087


Liabilities and Shareholders’ Equity

Current liabilities:
	Accounts payable			$	9,350		$	7,379
	Accrued expenses				13,207			12,882
	Current portion of capital lease obligations				30			29

Total current liabilities					22,587			20,290

Capital lease obligations, less current portion					884			907
Deferred income taxes					8,878			6,182

Shareholders’ equity:
	Preferred stock				—			—
	Common stock, $.01 par value:
		Authorized shares - 50,000,000
		Issued and outstanding shares – 21,486,387 in 2004 and 21,496,885 in 2003			215			215
	Additional paid-in capital				34,389			37,517
	Accumulated other comprehensive income				1			1
	Retained earnings				134,302			109,975

Total shareholders’ equity					168,907			147,708

Total liabilities and shareholders’ equity				$	201,256		$	175,087

The accompanying notes are an integral part of the financial statements.

Forward Air Corporation

Condensed Consolidated Statements of Income
(Unaudited)

		Three months ended								Nine months ended

		September 30, 2004				September 30, 2003				September 30, 2004				September 30, 2003

		(In thousands, except per share data)

Operating revenue			$	71,905			$	60,513			$	204,618			$	176,333

Operating expenses:
	Purchased transportation			30,568				25,519				85,487				74,174
	Salaries, wages and employee benefits			15,609				13,464				45,392				39,886
	Operating leases			3,279				3,250				9,731				9,625
	Depreciation and amortization			1,692				1,888				5,088				5,440
	Insurance and claims			1,297				1,508				4,546				4,140
	Other operating expenses			5,653				4,865				16,428				14,461

Total operating expenses				58,098				50,494				166,672				147,726

Income from operations				13,807				10,019				37,946				28,607

Other income (expense):
	Interest expense			(14	)			(17	)			(42	)			(56	)
	Other, net			305				124				703				431

Total other income				291				107				661				375

Income before income taxes				14,098				10,126				38,607				28,982
Income taxes				5,086				3,797				14,280				10,869

Net income			$	9,012			$	6,329			$	24,327			$	18,113


Income per share:
	Basic		$	0.42			$	0.30			$	1.13			$	0.85

	Diluted		$	0.41			$	0.29			$	1.11			$	0.84

The accompanying notes are an integral part of the financial statements.

Forward Air Corporation

Condensed Consolidated Statements of Cash Flows
(Unaudited)

			Nine months ended

			September 30, 2004				September 30, 2003

			(In thousands)

Operating activities:
Net income				$	24,327			$	18,113
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization				5,088				5,440
	Loss on sale of property and equipment				33				166
	Deferred income taxes				2,696				1,636
	Changes in operating assets and liabilities:
		Accounts receivable			(6,304	)			(1,113	)
		Inventories			64				(13	)
		Prepaid expenses and other current assets			(930	)			(992	)
		Accounts payable and accrued expenses			3,012				(158	)
		Income taxes			(3,183	)			424
		Tax benefit of stock options exercised			1,874				441

Net cash provided by operating activities					26,677				23,944

Investing activities:
Proceeds from disposal of property and equipment					10				138
Purchases of property and equipment					(5,029	)			(2,515	)
Proceeds from sales or maturities of available-for-sale securities					2,000				20,283
Purchases of available-for-sale securities					(3,000	)			(2,999	)
Other					1,163				83

Net cash provided by (used in) investing activities					(4,856	)			14,990

Financing activities:
Payments of long-term debt					—				(360	)
Payments of capital lease obligations					(22	)			(20	)
Proceeds from exercise of stock options					2,955				1,365
Common stock issued under employee stock purchase plan					130				99
Repurchase of common stock					(8,087	)			—

Net cash provided by (used in) financing activities					(5,024	)			1,084

Net increase in cash and cash equivalents					16,797				40,018
Cash and cash equivalents at beginning of period					83,539				33,642

Cash and cash equivalents at end of period				$	100,336			$	73,660

The accompanying notes are an integral part of the financial statements.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2004

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine-month periods ended September 30, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. For further information, refer to the consolidated financial statements and footnotes thereto included in the Forward Air Corporation Annual Report on Form 10-K for the year ended December 31, 2003.

The balance sheet at December 31, 2003 has been derived from the audited financial statements at that date, but does not include all of the financial information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

2. Employee Stock Options

The Company grants options for a fixed number of shares to employees with an exercise price equal to the fair value of the shares at the grant date. The Company accounts for employee stock option grants using the intrinsic value method in accordance with Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and, accordingly, recognizes no compensation expense for the stock option grants. The Company follows the disclosure option of Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure, which requires that the information be disclosed as if the Company accounted for its stock options granted subsequent to December 31, 1994 under the fair value method.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

2. Employee Stock Options (continued)

For purposes of pro forma disclosures, the estimated fair value of the stock options is amortized to expense over the options’ vesting period. The Company’s pro forma information follows (in thousands, except per share data):

		Three months ended						Nine months ended

		September 30, 2004			September 30, 2003			September 30, 2004			September 30, 2003

Net income, as reported			$	9,012		$	6,329		$	24,327		$	18,113
Pro forma compensation expense, net of tax				694			604			2,006			2,359

Pro forma net income			$	8,318		$	5,725		$	22,321		$	15,754


As reported net income per share:
	Basic		$	0.42		$	0.30		$	1.13		$	0.85
	Diluted		$	0.41		$	0.29		$	1.11		$	0.84

Pro forma net income per share:
	Basic		$	0.39		$	0.27		$	1.04		$	0.74
	Diluted		$	0.38		$	0.26		$	1.02		$	0.73

3. Comprehensive Income

Comprehensive income includes any changes in the equity of the Company from transactions and other events and circumstances from non-owner sources. Comprehensive income for the quarter and nine months ended September 30, 2004 was $9.0 million and $24.3 million, respectively, which includes $1,000 in unrealized losses and $-0- in unrealized gains/losses, respectively, on available-for-sale securities. Comprehensive income for the quarter and nine months ended September 30, 2003 was $6.3 million and $18.1 million, respectively, which includes $37,000 in unrealized losses and $10,000 in unrealized gains, respectively, on available-for-sale securities.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

4. Net Income Per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

		Three months ended						Nine months ended

		September 30, 2004			September 30, 2003			September 30, 2004			September 30, 2003

Numerator:
	Numerator for basic and diluted income per share - net income		$	9,012		$	6,329		$	24,327		$	18,113

Denominator:
	Denominator for basic income per share - weighted-average shares			21,564			21,341			21,523			21,279
	Effect of dilutive stock options			428			441			402			392

	Denominator for diluted income per share - adjusted weighted-average shares			21,992			21,782			21,925			21,671

Basic income per share			$	0.42		$	0.30		$	1.13		$	0.85

Diluted income per share			$	0.41		$	0.29		$	1.11		$	0.84

5. Income Taxes

For the three and nine months ended September 30, 2004 and 2003, the effective income tax rate varied from the statutory federal income tax rate of 35% primarily as a result of the effect of state income taxes, net of the federal benefit, and permanent differences. Additionally, the effective tax rate was favorably impacted during the three and nine months ended September 30, 2004 as a result of previously accrued income taxes, resulting from the favorable resolution of certain tax issues upon the closing of open tax years.

6. Commitments and Contingencies

The primary claims in the Company’s business are workers’ compensation, property damage, auto liability and medical benefits. Most of the Company’s insurance coverage provides for self-insurance levels with primary and excess coverage which management believes is sufficient to adequately protect the Company from catastrophic claims. In the opinion of management, adequate provision has been made for all incurred claims up to the self-insured limits, including provision for estimated claims incurred but not reported.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

6. Commitments and Contingencies (continued)

The Company estimates its self-insurance loss exposure by evaluating the merits and circumstances surrounding individual known claims, and by performing hindsight analysis to determine an estimate of probable losses on claims incurred but not reported.

Such losses could be realized immediately as the events underlying the claims have already occurred as of the balance sheet dates.

Because of the uncertainty of the ultimate resolution of outstanding claims, as well as uncertainty regarding claims incurred but not reported, it is possible that management’s provision for these losses could change materially in the near term. However, no estimate can currently be made of the range of additional loss that is at least reasonably possible.

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

Introduction

We provide scheduled ground transportation of cargo on a time-definite basis. As a result of our established transportation schedule and network of terminals, our operating cost structure includes significant fixed costs. Our ability to improve our operating margins will depend on, among other things, our ability to increase the volume of freight moving through our network. Additional information regarding our business is described in our 2003 Annual Report on Form 10-K.

Critical Accounting Policies

A summary of significant accounting policies is disclosed in Note 1 to the Consolidated Financial Statements included in our 2003 Annual Report on Form 10-K. Our critical accounting policies are further described under the caption “Discussion of Critical Accounting Policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2003 Annual Report on Form 10-K. There have been no changes in the nature of our critical accounting policies or the application of those policies since December 31, 2003.

Risk Factors

A summary of factors which could affect results and cause results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf, are further described under the caption “Risk Factors” in the Business portion of our 2003 Annual Report on Form 10-K. There have been no changes in the nature of these factors since December 31, 2003.

Results of Operations

The following table shows the percentage relationship of expense items to operating revenue for the periods indicated. In the accompanying discussion, all percentage figures are percent of operating revenue with the exception of revenue growth rates.

		Three months ended						Nine months ended

		September 30, 2004			September 30, 2003			September 30, 2004			September 30, 2003

Operating revenue			100.0	%		100.0	%		100.0	%		100.0	%
Operating expenses:
	Purchased transportation		42.5			42.2			41.8			42.1
	Salaries, wages and employee benefits		21.7			22.2			22.2			22.6
	Operating leases		4.6			5.4			4.8			5.5
	Depreciation and amortization		2.4			3.1			2.5			3.1
	Insurance and claims		1.8			2.5			2.2			2.3
	Other operating expenses		7.8			8.0			8.0			8.2

Total operating expenses			80.8			83.4			81.5			83.8
Income from operations			19.2			16.6			18.5			16.2
Other income (expense):
	Other, net		0.4			0.2			0.4			0.2

Total other income			0.4			0.2			0.4			0.2

Income before income taxes			19.6			16.8			18.9			16.4
Income taxes			7.1			6.3			7.0			6.1

Net income			12.5	%		10.5	%		11.9	%		10.3	%

Three Months Ended September 30, 2004 compared to Three Months Ended September 30, 2003

Operating revenue increased by $11.4 million, or 18.8%, to $71.9 million in the third quarter of 2004 from $60.5 million in the same period of 2003. This increase resulted from an increase in traditional linehaul revenue of $9.5 million to $60.8 million, an increase in logistics revenue of $1.3 million to $6.1 million and an increase in other accessorial revenue, including warehousing services and terminal handling revenue, of $0.6 million to $5.0 million. Traditional linehaul revenue was impacted by an increase in average weekly tonnage of 17.4% and a 0.9% increase in average revenue per pound including the effect of fuel surcharge versus the third quarter of 2003.

Purchased transportation represented 42.5% of operating revenue in the third quarter of 2004 compared to 42.2% in the same period of 2003. For the third quarter of 2004, traditional linehaul purchased transportation costs represented 40.7% of linehaul revenue versus 41.2% during the same period in 2003. During this period, we were able to increase both the volume and revenue per pound of freight transported which enabled us to more efficiently operate the airport-to-airport network. These increases were offset, in part, by an increase in the number of miles needed to operate our system as well as an increase in the average rate per mile paid. For the third quarter 2004, logistics purchased transportation costs represented 73.5% of logistics revenue versus 69.5% last year. During the period, our average revenue per mile for this service decreased due to an increase in the average length of haul. Our average cost per mile, while down versus last year, did not fall as quickly as the average revenue per mile.

Salaries, wages and employee benefits were 21.7% of operating revenue in the third quarter of 2004 compared to 22.2% for the same period of 2003. The decrease in salaries, wages and employee benefits as a percentage of operating revenue was primarily attributed to a year over year improvement in tonnage and revenue per pound which allowed us to operate our network more efficiently in this quarter versus 2003. Driving these results was a 0.1% decrease in salaries and wages and a 0.4% decrease in worker’s compensation insurance and expenses.

Operating leases, the largest component of which is facility rent, were 4.6% of operating revenue in the third quarter of 2004 compared to 5.4% in the same period of 2003. The decrease in operating leases as a percentage of operating revenue between periods was primarily attributable to an increase in operating revenue as the dollar amount in this category remained flat between the two periods.

Depreciation and amortization expense as a percentage of operating revenue was 2.4% in the third quarter of 2004, compared to 3.1% in the same period of 2003. The decrease in depreciation and amortization expense as a percentage of operating revenue was primarily attributable to an increase in operating revenue and a decrease in depreciation expense from certain assets becoming fully depreciated. These decreases were offset, in part, by new depreciation from capital expenditures during 2004.

Insurance and claims were 1.8% of operating revenue in the third quarter of 2004, compared to 2.5% in the same period of 2003. The decrease in insurance and claims as a percentage of operating revenue resulted from an increase in operating revenue in addition to better claims experience during the period. For the quarter, insurance expenses and claims expenses as a percentage of operating revenue decreased 0.4% and 0.3%, respectively.

Other operating expenses were 7.8% of operating revenue in the third quarter of 2004 compared to 8.0% in the same period of 2003. The decrease in other operating expenses as a percentage of operating revenue was attributable to a 0.2% decrease in loss on sale of operating assets versus the prior period.

Income from operations increased by $3.8 million, or 38.0%, to $13.8 million for the third quarter of 2004 compared with $10.0 million for the same period in 2003. The increase in income from operations was primarily a result of the increase in operating revenue, including fuel surcharge, which was offset by increases in variable costs associated with operating the network.

Interest expense was $14,000, or less than 0.1% of operating revenue, in the third quarter of 2004, compared with $17,000, or less than 0.1%, for the same period in 2003. The decrease in interest expense was attributed to lower average net borrowings during the period.

Other income, net was $305,000, or 0.4% of operating revenue, in the third quarter of 2004, compared to $124,000, or 0.2%, for the same period in 2003. The increase in other income, net resulted from higher interest income attributed to higher yields on higher balances in both cash and cash equivalents and available-for-sale securities during the third quarter of 2003.

The combined federal and state effective tax rate for the third quarter of 2004 was 36.1% of pre-tax income compared to a rate of 37.5% for the same period in 2003. The decrease in the combined tax rate for the third quarter of 2004 was the result of a $201,000 reduction of previously accrued income taxes as a result of the favorable resolution of certain tax issues upon the closing of open tax years.

As a result of the foregoing factors, net income increased by $2.7 million, or 42.9%, to $9.0 million for the third quarter of 2004, compared to $6.3 million for the same period in 2003.

Nine Months Ended September 30, 2004 compared to Nine Months Ended September 30, 2003

Operating revenue increased by $28.3 million, or 16.1%, to $204.6 million in the first nine months of 2004 from $176.3 million in the same period of 2003. This increase resulted from an increase in traditional linehaul revenue of $22.6 million to $172.7 million, an increase in logistics revenue of $3.3 million to $17.3 million and an increase in other accessorial revenue, including warehousing services and terminal handling revenue, of $2.4 million to $14.6 million. Traditional linehaul revenue was impacted by an increase in average weekly tonnage of 13.4% and a 0.9% increase in average revenue per pound including the effect of fuel surcharge versus the first nine months of 2003.

Purchased transportation represented 41.8% of operating revenue in the first nine months of 2004 compared to 42.1% in the same period of 2003. For the first nine months of 2004, traditional linehaul purchased transportation costs represented 40.5% of operating revenue versus 40.7% during the same period in 2003. During the first nine months of this year, we were able to increase both the volume and revenue per pound of freight transported through our airport-to-airport network. These increases were offset, in part, by an increase in the number of miles needed to operate our network as well as the average rate per mile paid. For the first nine months of 2004, logistics purchased transportation costs represented 68.9% of logistics revenue versus 70.6% in 2003.

Salaries, wages and employee benefits were 22.2% of operating revenue in the first nine months of 2004 compared to 22.6% for the same period of 2003. The decrease in salaries, wages and employee benefits as a percentage of operating revenue was attributed to an increase in operating revenue and increased efficiencies. These results led to a 0.2% decrease in salaries and wages and a 0.2% decrease in worker’s compensation insurance and expenses.

Operating leases, the largest component of which is facility rent, were 4.8% of operating revenue in the first nine months of 2004 compared to 5.5% in the same period of 2003. Operating leases as a percentage of operating revenue decreased as a result of an increase in operating revenue as the dollar amount remained flat between the two periods.

Depreciation and amortization expense as a percentage of operating revenue was 2.5% in the first nine months of 2004, compared to 3.1% in the same period of 2003. The decrease in depreciation and amortization expense as a percentage of operating revenue was primarily attributable to an increase in operating revenue and a decrease in depreciation expense from certain assets becoming fully depreciated. These decreases were offset, in part, by new depreciation of capital expenditures during 2004.

Insurance and claims were 2.2% of operating revenue in the first nine months of 2004, compared to 2.3% in the same period of 2003. The decrease in insurance and claims as a percentage of operating revenue resulted, in part, from an increase in operating revenue during the period which was offset by a slight increase in insurance claims during the first nine months. Insurance expense decreased by 0.3% during the period while claims expense increased by 0.2%.

Other operating expenses were 8.0% of operating revenue in the first nine months of 2004 compared to 8.2% in the same period of 2003. The decrease in other operating expenses as a percentage of operating revenue was attributable to an increase in operating revenue. The increase in operating revenue led to a 0.1% decrease in general supplies and expenses, and a 0.2% decrease in taxes and license fees which was offset by a 0.1% increase in miscellaneous corporate expenses.

Income from operations increased by $9.3 million, or 32.5%, to $37.9 million for the first nine months of 2004 compared with $28.6 million for the same period in 2003. The increase in income from operations was primarily a result of the increase in operating revenue, including fuel surcharge, which was offset by an increase in variable operating costs associated with operating the network.

Interest expense was $42,000, or less than 0.1% of operating revenue, in the first nine months of 2004, compared with $56,000, or less than 0.1%, for the same period in 2003. The decrease in interest expense was attributed to lower average net borrowings during the period.

Other income, net was $703,000, or 0.4% of operating revenue, in the first nine months of 2004, compared to $431,000, or 0.2%, for the same period in 2003. The increase in other income, net resulted from higher interest income attributed to higher yields on higher balances in both cash and cash equivalents and available-for-sale securities during the first nine months of 2003.

The combined federal and state effective tax rate for the first nine months of 2004 was 37.0% of pre-tax income compared to a rate of 37.5% for the same period in 2003. The decrease in the combined tax rate for the first nine months of 2004 was the result of a $201,000 reduction of previously accrued income taxes as a result of the favorable resolution of certain tax issues upon the closing of open tax years.

As a result of the foregoing factors, net income increased by $6.2 million, or 34.3%, to $24.3 million for the first nine months of 2004, compared to $18.1 million for the same period in 2003.

Liquidity and Capital Resources

We have historically financed our working capital needs, including capital purchases, with cash flows from operations and borrowings under our bank lines of credit. Net cash provided by operating activities totaled approximately $26.7 million for the nine months ended September 30, 2004, compared with $23.9 million in the same period of 2003.

Net cash used in investing activities was approximately $4.9 million for the nine months ended September 30, 2004 compared with $15.0 million provided by investing activities in the same period of 2003. Investing activities consisted primarily of the purchase and sale or maturities of available-for-sale securities and the purchase of operating equipment and management information systems during the nine months ended September 30, 2004.

Net cash used in financing activities totaled approximately $5.0 million for the nine months ended September 30, 2004 compared with approximately $1.1 million provided by financing activities for the same period of 2003. Financing activities included the repurchase of our common stock, the repayment of capital leases, proceeds received from the exercise of stock options and common stock issued under the employee stock purchase plan. In 2004, we used $8.1 million to repurchase our common stock while we received $3.0 million from the exercise of stock options.

Our credit facility consists of a working capital line of credit. As long as we comply with the financial covenants and ratios, the credit facility permits us to borrow up to $20.0 million less the amount of any outstanding letters of credit. Interest rates for advances under the facility vary based on how our performance measures against covenants related to total indebtedness, cash flows, results of operations and other ratios. The facility bears interest at LIBOR plus 1.0% to 1.9%, expires in April 2005 and is unsecured. At September 30, 2004, we had $-0- outstanding under the line of credit facility and had utilized $4.3 million of availability for outstanding letters of credit. We were in compliance with the financial covenants and ratios under the credit facility at September 30, 2004.

On July 25, 2002, we announced that our Board of Directors approved a stock repurchase program for up to 2,000,000 shares of our common stock. We expect to fund the repurchases of our common stock from cash and cash equivalents and available-for-sale securities and cash generated from operating activities. We repurchased 167,700 of our shares during the third quarter of 2004 and a total of 227,400 for the nine months ended September 30, 2004. Since inception, the Company has repurchased 856,400 shares of our common stock for $20.2 million for an average purchase price of $23.55 per share.

Management believes that our available cash, investments, expected cash generated from future operations and borrowings under available credit facilities will be sufficient to satisfy our anticipated cash needs for at least the next twelve months.

Forward-Looking Statements

This report contains “forward-looking statements,” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are statements other than historical information or statements of current condition and relate to future events or our future financial performance. Some forward-looking statements may be identified by use of such terms as “believes,” “anticipates,” “intends,” “plans,” “estimates,” “projects” or “expects.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The following is a list of factors, among others, that could cause actual results to differ materially from those contemplated by the forward-looking statements: economic factors such as recessions, inflation, higher interest rates and downturns in customer business cycles, our inability to maintain our historical growth rate because of a decreased volume of freight moving through our network or decreased average revenue per pound of freight moving through our network, increasing competition and pricing pressure, surplus inventories, loss of a major customer, the creditworthiness of our customers and their ability to pay for services rendered, our ability to secure terminal facilities in desirable locations at reasonable rates, the inability of our information systems to handle an increased volume of freight moving through our network, changes in fuel prices, claims for property damage, personal injuries or workers’ compensation, employment matters including rising health care costs, enforcement of and changes in governmental regulations, environmental and tax matters, the handling of hazardous materials, the availability and compensation of qualified independent owner-operators and freight handlers needed to serve our transportation needs and our inability to successfully integrate acquisitions. As a result of the foregoing, no assurance can be given as to future financial condition, cash flows or results of operations. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our exposure to market risk related to our remaining outstanding debt and available-for-sale securities is not significant and has not changed materially since December 31, 2003.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of September 30, 2004, the principal executive officer and principal financial officer, under the supervision and with the participation of management, have evaluated the disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) have determined that such controls and procedures are effective.

Changes in Internal Controls

The evaluation referred to above did not identify any change in our internal control over financial reporting that occurred in the period covered by this report that has materially affected or is reasonably likely to materially affect our internal controls over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

We are, from time to time, a party to litigation arising in the normal course of our business, most of which involve claims for personal injury and property damage incurred in connection with the transportation of freight. Management believes that none of these actions, individually or in the aggregate, will have a material adverse effect on our financial condition or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information with respect to purchases we made of shares of our common stock during each month in the quarter ended September 30, 2004:

Period	Total Number of Shares Purchased		Average Price Paid per Share			Total Number of Shares Purchased as Part of Publicly Announced Program		Maximum Number of Shares that May Yet Be Purchased Under the Program (1)

July 1-31, 2004		—			—		688,700		1,311,300
August 1-31, 2004		155,700		$	37.44		844,400		1,155,600
September 1-30, 2004		12,000		$	37.17		856,400		1,143,600

Total		167,700		$	37.42		856,400		1,143,600

(1)	On July 25, 2002, we announced that our Board of Directors approved a stock repurchase program for up to 2,000,000 shares of our common stock.

Item 3. Defaults Upon Senior Securities

Not Applicable

Item 4. Submission of Matters to a Vote of Security Holders

Not Applicable

Item 5. Other Information

Not Applicable

Item 6. Exhibits and Reports on Form 8-K

(a)	Exhibits -

	In accordance with SEC Release No. 33-8212, Exhibits 32.1 and 32.2 are to be treated as “accompanying” this report rather than “filed” as part of the report.

		3.1	Restated Charter of the registrant (incorporated herein by reference to Exhibit 3 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 28, 1999)

		3.2	Amended and Restated Bylaws of the registrant

		4.1	Form of Landair Services, Inc. Common Stock Certificate (incorporated herein by reference to Exhibit 4.1 to the registrant’s Registration Statement on Form S-1, filed with the Securities and Exchange Commission on September 27, 1993)

		4.2	Form of Forward Air Corporation Common Stock Certificate (incorporated herein by reference to Exhibit 4.1 to the registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1998, filed with the Securities and Exchange Commission on November 16, 1998)

		4.3	Rights Agreement, dated May 18, 1999, between the registrant and SunTrust Bank, Atlanta, N.A., including the Form of Rights Certificate (Exhibit A) and the Form of Summary of Rights (Exhibit B) (incorporated herein by reference to Exhibit 4 to the registrant’s Current Report on Form 8-K filed with the Commission on May 28, 1999)

		31.1	Certification Pursuant to 15 U.S.C. Section 10A, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by Bruce A. Campbell, President and Chief Executive Officer of Forward Air Corporation

		31.2	Certification Pursuant to 15 U.S.C. Section 10A, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by Andrew C. Clarke, Chief Financial Officer, Senior Vice President and Treasurer of Forward Air Corporation

		32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Bruce A. Campbell, President and Chief Executive Officer of Forward Air Corporation

32.2

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Andrew C. Clarke, Chief Financial Officer, Senior Vice President and Treasurer of Forward Air Corporation

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Forward Air Corporation

Date: November 2, 2004	By: /s/ Andrew C. Clarke

		Andrew C. Clarke
		Chief Financial Officer
		and Senior Vice President

EXHIBIT INDEX

	No.		Exhibit

	3.1		Restated Charter of the registrant (incorporated herein
			by reference to Exhibit 3 to the registrant’s Current
			Report on Form 8-K filed with the Securities and
			Exchange Commission on May 28, 1999)

	3.2		Amended and Restated Bylaws of the registrant

	4.1		Form of Landair Services, Inc. Common Stock Certificate
			(incorporated herein by reference to Exhibit 4.1 to the
			registrant’s Registration Statement on Form S-1, filed
			with the Securities and Exchange Commission on September
			27, 1993)

	4.2		Form of Forward Air Corporation Common Stock Certificate
			(incorporated herein by reference to Exhibit 4.1 to the
			registrant’s Quarterly Report on Form 10-Q for the
			quarterly period ended September 30, 1998, filed with
			the Securities and Exchange Commission on November 16,
			1998)

	4.3		Rights Agreement, dated May 18, 1999, between the
			registrant and SunTrust Bank, Atlanta, N.A., including
			the Form of Rights Certificate (Exhibit A) and the Form
			of Summary of Rights (Exhibit B) (incorporated herein by
			reference to Exhibit 4 to the registrant’s Current
			Report on Form 8-K filed with the Commission on May 28,
			1999)

	31.1		Certification Pursuant to 15 U.S.C. Section 10A, as
			Adopted Pursuant to Section 302 of the Sarbanes-Oxley
			Act of 2002, executed by Bruce A. Campbell, President
			and Chief Executive Officer of Forward Air Corporation



	31.2		Certification Pursuant to 15 U.S.C. Section 10A, as
			Adopted Pursuant to Section 302 of the Sarbanes-Oxley
			Act of 2002, executed by Andrew C. Clarke, Chief
			Financial Officer, Senior Vice President and Treasurer
			of Forward Air Corporation

	32.1		Certification Pursuant to 18 U.S.C. Section 1350, as
			Adopted Pursuant to Section 906 of the Sarbanes-Oxley
			Act of 2002, executed by Bruce A. Campbell, President
			and Chief Executive Officer of Forward Air Corporation

	32.2		Certification Pursuant to 18 U.S.C. Section 1350, as
			Adopted Pursuant to Section 906 of the Sarbanes-Oxley
			Act of 2002, executed by Andrew C. Clarke, Chief
			Financial Officer, Senior Vice President and Treasurer
			of Forward Air Corporation