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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-24806
U.S. XPRESS ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Nevada 62-1378182
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
4080 Jenkins Road
Chattanooga, Tennessee 37421
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (423) 510-3000
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act: Class A Common
Stock, $0.01 Par Value
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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. [_]
The aggregate market value of the voting stock held by non-affiliates of the
registrant was $36,641,976 as of March 15, 2001 (based upon the $6.375 per share
average of the closing bid and asked price on that date as reported by NASDAQ).
In making this calculation the registrant has assumed, without admitting for any
purpose, that all executive officers, directors, and holders of more than 10% of
a class of outstanding common stock, and no other persons, are affiliates.
As of March 15, 2001, the registrant had 10,687,550 shares of Class A Common
Stock and 3,040,262 shares of Class B Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: The information set forth under Part III,
Items 10, 11, 12, and 13 of this Report is incorporated by reference from the
registrant's definitive proxy statement dated April 12, 2001 for the 2001 annual
meeting of stockholders.
PART I
ITEM 1. BUSINESS
This report contains forward-looking statements relating to future events or the
future financial performance of the Company. Such forward-looking statements are
within the meaning of that term in Section 27A of the Securities Act and Section
21E of the Exchange Act. Such statements may include, but not be limited to,
projections of revenues, income or loss, capital expenditures, acquisitions,
plans for growth and future operations, financing needs or plans or intentions
relating to acquisitions by the Company, as well as assumptions relating to the
foregoing. Forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. Future events
and actual results could differ materially from those set forth in, contemplated
by or underlying the forward-looking statements.
General
U.S. Xpress Enterprises, Inc. (the "Company") provides transportation and
logistics services in the continental United States, Canada and Mexico. The
Company is one of the five largest publicly owned truckload carriers in the
United States. The Company is a leader in the time definite and expedited
services segment of the truckload market and in the adoption of proven new
technologies to improve service and reduce costs.
The Company has two operating segments, U.S. Xpress, Inc. ("U.S. Xpress") and
CSI/Crown, Inc. ("CSI/Crown"). U.S. Xpress accounted for approximately 92.6% of
the Company's 2000 revenues. See Note 14 of the Company's 2000 Consolidated
Financial Statements for quantitative segment information.
The Company also offers logistics services through its global transportation
joint ownership of Transplace.com, LLC, ("Transplace"), an Internet-based
logistics company. During 2000, the Company, along with five other large
transportation companies, merged their logistics business units into Transplace.
The Company has a 13% equity interest in Transplace.
U.S. Xpress provides three principal services: i) time-definite and expedited
services with lengths of haul of 400 to 3,000 miles; ii) regional services with
lengths of haul of 400 to 1,200 miles in the Western, Midwestern and
Southeastern regions of the United States; and iii) dedicated services.
CSI/Crown is a leading provider of logistics services to the floorcovering
industry. Services include: i) consolidation and distribution of less-than-
truckload shipments; ii) coordination of line-haul transportation to Company
operated service centers and third-party agent facilities for local delivery;
iii) warehousing and distribution services; and iv) retail sales of installation
supplies, including the Company's private-label "Installer's Choice" brand of
floorcovering installation products.
The Company's mission is to provide high levels of service to customers
utilizing proven technologies and skilled employees. The Company's operating and
growth strategies are focused on its target markets, while capitalizing on
evolving trends and growth markets in the transportation industry. These
strategies include:
1) Position the Company as the premier high service provider. The Company
specializes in providing time-definite and expedited truckload services to
customers that operate supply chain management systems, and particularly those
that manage their flow of raw materials, in-process products and finished goods
on a "just-in-time" basis. The Company was one of the first in the industry to
establish time-definite pickups and deliveries as a standard for service
quality. Time-definite service is a critical element in efficient supply chain
and distribution systems management. In addition, the Company provides
expedited service throughout the continental United States and in parts of
Canada and Mexico. This is particularly important to shippers that operate
multiple, geographically diverse facilities. In addition, the Company has
consistently been a leader in the truckload industry in providing customers with
easy access to operating and service-related technologies that provide value to
shippers. The Company's electronic commerce ("E-Commerce") capabilities, in
particular, differentiate the Company from many other truckload suppliers. The
Company provides its customers with the ability to use E-Commerce through the
Internet, private networks and third-party networks.
2) Expand core carrier relationships with shippers. Most of the larger shippers
are reducing the number of carriers they use and are expanding relationships
with their most capable carriers. Those companies selected for the most
significant supplier relationships with shippers are called "core carriers".
The Company offers long-haul, mid-range and regional truckload services, time-
definite and expedited services and dedicated fleet services. This range of
capabilities, coupled with capacity of 4,861 U.S.
2
Xpress owned, leased and owner-operator tractors at December 31, 2000, has
positioned the Company as a core carrier for many of the largest shippers in
North America. In seeking these relationships, the Company emphasizes its
service capabilities and capacity, as well as its commitment to flexibility,
responsiveness and analytical planning. Customers that have designated the
Company as a core carrier include: E.I. DuPont, Federal Express, Proctor and
Gamble, Hewlett-Packard, Burlington Air Express, and Kimberly Clark.
3) Position the Company as a driver-friendly employer. The labor market for
qualified professional truck drivers is extremely competitive, providing an
advantage to driver-friendly employers like the Company. The Company focuses
significant resources and attention on the successful recruiting, hiring,
training and retention of qualified solo and team drivers. At December 31,
2000, the Company operated 4,861 tractors in its fleet, an increase of 2.7% from
December 31, 1999. Management believes that its success in hiring and retaining
qualified drivers is due to its high-quality equipment; high utilization, which
translates into better take-home pay for drivers; "driver-friendly freight" that
does not require labor or lengthy delays; flexible work schedules that enable
drivers to better meet their personal obligations and lifestyles; and creative
recruiting strategies that recognize the changing demographics of the American
work force and that seek to expand the diversity of the driver fleet. Ongoing
success in recruiting, training and retaining sufficient drivers is critical to
the Company in achieving its growth objectives.
4) Pursue acquisition opportunities. The Company has grown significantly through
eleven strategic acquisitions in the 1990's. U.S. Xpress now includes the
operations of Southwest Motor Freight, Hall Systems, National Freight Systems,
Michael Lima Transportation, JTI, Inc., Victory Express, Inc and PST Vans, Inc.
CSI/Crown's operations include several acquired companies, including: Crown
Transport Systems and CSI/Reeves; and assets purchased from Great Southern
Xpress and Rosedale Transport. These acquisitions have significantly expanded
the Company's capabilities and capacity and have been a significant contributor
to the Company's growth. While acquisitions remain an important part of the
Company's long-term strategy, the Company is placing its primary emphasis in
2001 on internal growth and improving its operating results.
Services
Time Definite Service
The Company's principal service specialty is time-definite service, which is the
pickup and delivery of freight to specific schedules over distances ranging from
400 to 3,000 miles. Time-definite transportation requires pickups and
deliveries be performed to exact appointment times or within a specified number
of minutes. This service is an essential point of differentiation from many
other transportation companies, which typically provide service only within time
"windows" ranging from a few hours to a few days. Time-definite service is
particularly important to the Company's customers that operate in a just-in-time
environment, distribution and retail inventory systems and to customers in the
air freight and logistics industries.
Expedited Service
The Company's expedited service consists of the pick up and delivery of freight
on prescribed schedules at transit times comparable to deferred airfreight
service. The Company is able to meet these transit times using team drivers or
relays at much lower cost than deferred airfreight. In 2000, revenue from
expedited services to manufacturers, distributors, and airfreight companies was
$189.4 million.
Regional Service
About 70% of the freight transported in the U.S. moves over distances of less
than 1,000 miles. In addition, the average length of haul of shipments is
shrinking as manufacturers and distributors increasingly bring the various
elements of their supply and distribution chains into closer geographical
proximity. These factors make regional service capabilities an important aspect
in qualifying the Company for core carrier relationships. The Company provides
regional service involving shipments of 400-1,200 miles in the Western,
Midwestern and Southeastern regions of the United States. In 2000, revenues
from regional service totaled $126.3 million.
Dedicated Services
Some shippers use transportation or logistics companies to manage or operate
their private trucking operations. Many of these shippers have historically
operated their own fleets to transport their products. The Company's management
expertise, capacity and systems have positioned it to provide dedicated services
in which specific tractors and drivers are assigned to a specific customer
account. Through dedicated service relationships, customers obtain assurance of
capacity to meet their requirements. U.S. Xpress benefits by generating better
equipment utilization, increased business volume from important customers and by
3
improving planning of resources. Driver safety is enhanced because the same
drivers travel the same lanes repeatedly. Drivers also benefit through enhanced
scheduling, reduced downtime between loads and more predictability of their off-
duty time. These dedicated accounts represented approximately $66.0 million in
revenues in 2000.
Floorcovering Logistics
CSI/Crown is a leading provider of logistics services to the floorcovering
industry. CSI/Crown picks up floorcovering products from manufacturers;
consolidates shipments into truckloads bound for specific destinations;
contracts with U.S. Xpress and other truckload carriers to deliver the products
to CSI/Crown service centers or to contract agents and delivery services; and
delivers the products to floorcovering distributors, retailers, and large-scale
end users in all 50 states, Canada and Mexico. In addition, CSI/Crown provides
warehouse facilities and other specialized services such as custom carpet
cutting and selling floorcovering installation supplies. CSI/Crown also
provides dedicated services by assigning specific equipment to specific
customers and uses the equipment to promote the customers' brands on the
equipment. In this way, customers obtain the benefits of assured capacity and
brand promotion without incurring the management costs and inherent
inefficiencies of operating a private fleet. CSI/Crown benefits by being assured
consistent volume for its dedicated equipment and drivers.
Marketing and Customers
The Company's success in marketing its services is a result of commitment to
service, capabilities, capacity, flexibility, responsiveness, analytical
planning and information technology management. The Company's marketing
department and sales personnel identify new business prospects and implement
programs to obtain and retain customer accounts.
Mr. Quinn, the Company's Co-Chairman, and Mr. Wardeberg, the Executive Vice
President of Marketing, are directly involved in marketing the Company's
services at the national account level while supporting local sales activities.
In addition, the Company employs 31 full-time marketing and national account
representatives, who have responsibility for specific geographic areas.
The Company's top 50 customers, most of which have designated the Company as a
core carrier, accounted for approximately 63% of revenues in 2000. During 2000,
no single customer accounted for more than 4.2% of the Company's revenue.
Equipment
The Company determines the specifications of equipment purchases based on such
factors as vehicle and component quality, warranty service, driver preferences,
new vehicle prices and the likely resale market. Because the fleet is
standardized and has warranty agreements with original equipment suppliers, the
Company has minimized parts inventories and maintenance costs. The Company has
negotiated repurchase commitments from its primary equipment vendors for
disposal of a substantial portion of its equipment. These agreements reduce the
Company's risks related to equipment disposal values.
The following table shows the type and age of U.S. Xpress company-owned and
leased equipment at December 31, 2000:
Model Year Tractors Trailers
---------- -------- --------
2001 285 195
2000 1,074 2,217
1999 2,202 3,387
1998 674 1,402
1997 - 1,361
1996 13 1,797
1995 & Prior 4 1,512
----- ------
Total 4,252 11,871
===== ======
4
Tractors
In the early 1990s, the Company's management and drivers worked with the
Company's principal tractor supplier, Freightliner, to design improvements in
its conventional tractors, such as more spacious and functional sleeper
compartments and improved aerodynamics. In 1996, the Company was among the
first to purchase the new Freightliner Century Class tractors, which provided
superior levels of operating safety, fuel efficiency, information management
capabilities and driver comforts.
The Company now purchases or leases Freightliner Century Class tractors or Volvo
VN 770s for substantially all of the additions and replacements to its fleet.
Tractors are typically replaced every 36 to 40 months, generally well in advance
of the need for major engine overhauls. This schedule can be accelerated or
delayed based on resale values in the used truck market and the differential
between those values and new truck prices. All Company tractors are equipped
with Eaton Vorad anti-collision systems, electronic speed controls, anti-lock
braking systems for improved safety, and Qualcomm and in cab e-mail for improved
communications. Over 95% of the tractor fleet is equipped with Eaton automatic
shift transmissions and approximately 80% of the fleet with automatic traction
control. All engines have fuel incentive programming for increased fuel
economy.
Trailers
The Company's dry van trailers have cubic capacity that is among the largest in
the industry. In 1997, the Company began purchasing composite plate trailers
from Wabash National Corporation that are more durable, have greater cubic
capacity and stiffer sidewalls, and do not fracture as easily as conventional
aluminum trailers. The Company currently purchases Wabash Duraplate trailers
for substantially all of the additions and replacements to its fleet. In
addition, approximately 90% of the trailers are equipped with air ride
suspension leading to softer rides that result in less load damage.
Competition
The transportation services business is extremely competitive. The Company
competes primarily with other truckload carriers and providers of deferred
airfreight service. Competition from railroads and providers of intermodal
transportation likely would increase if service standards for these modes were
dramatically improved.
Generally, competition for the freight transported by the Company is based on
service, efficiency and pricing. Historically, increased competition has
created downward pressure on the truckload industry's pricing structure.
Prolonged weakness in freight markets or downward pressure on freight rates
could adversely affect the Company's results of operations or financial
condition. Some competitors have greater financial resources, operate more
equipment and transport more freight than the Company.
Regulation
The Company is a motor carrier that is subject to safety regulations promulgated
by the Federal Motor Carrier Safety Administration of the Department of
Transportation and various laws and regulations enforced by state agencies.
These regulatory authorities have broad powers, generally governing activities
such as authority to engage in motor carrier operations, accounting systems,
certain mergers, consolidations, acquisitions and periodic financial reporting.
Subject to federal, state and provincial regulatory authorities, the Company may
transport most types of freight to and from any point in the United States, and
certain Canadian provinces, over any route selected by the Company. The
trucking industry is subject to possible regulatory and legislative change that
could affect the economics of the industry.
The Company's operations are also subject to various federal, state and local
environmental laws dealing with transportation, storage, presence, use, disposal
and handling of hazardous materials, discharge of storm water and underground
fuel storage tanks. The Company believes that its operations are in substantial
compliance with current laws and regulations and does not know of any existing
condition that would cause non-compliance with applicable environmental
regulations to have a material adverse effect on the Company's business or
operating results.
5
Safety and Risk Management
The Company is committed to safe operations. The Company's emphasis on safety
is demonstrated through equipment specifications and active safety and loss
prevention programs. These programs reinforce the importance of driving
safely, abiding by all laws and regulations such as speed limits and driving
hours, performing regular equipment inspections and acting as good citizens on
the road. The Company's accident review committee meets regularly to review any
new accidents, take appropriate action related to drivers, examine accident
trends and implement changes in procedures or communications to address any
safety issues.
Management's emphasis on safety also is demonstrated through its equipment
specifications, such as anti-lock brakes, electronic engines, special mirrors,
conspicuity tape and the implementation of Eaton Vorad collision avoidance
systems on all tractors. The Eaton Vorad system is designed to provide drivers
with visible and audible warnings when other vehicles are beside them and when
vehicles ahead are traveling at slower speeds than the truck. The system
provides drivers with additional response time to prevent accidents.
The Company requires prospective drivers to meet higher qualification standards
than those required by the DOT. The DOT requires the Company's drivers to obtain
national commercial driver's licenses pursuant to the regulations promulgated by
the DOT. The DOT also requires that the employer implement a drug-testing
program in accordance with DOT regulations. The Company's program includes pre-
employment, random, reasonable cause, post-accident and post-injury drug
testing.
Interstate motor carrier operations are subject to safety requirements
prescribed by the DOT. Such matters as equipment weight and dimensions are also
subject to federal and state regulations. DOT evaluates carriers and provides
safety fitness ratings based on conformance with requirements and accident
frequency. U.S. Xpress and CSI/Crown each have satisfactory safety fitness
ratings.
The Company secures appropriate insurance coverage at cost-effective rates. The
primary claims arising in the Company's business consist of cargo loss and
damage and auto liability (personal injury and property damage). The Company
currently purchases primary and excess coverage for these types of claims at
levels that management believes are sufficient to adequately protect the Company
from significant claims. The Company also maintains primary and excess coverage
for damage to physical properties and equipment damage resulting from collisions
or other losses.
Human Resources
At December 31, 2000, the Company and its subsidiaries employed 7,388 full-time
associates, of whom 5,557 were drivers, 228 were mechanics and other maintenance
personnel, 1,214 were office associates for U.S. Xpress, the truckload division,
and 389 were employed by CSI/Crown, the non-truckload division. U.S. Xpress
also had contracts with independent contractors (owner-operators) for the
services of 721 tractors that provide both tractor and qualified drivers. None
of the Company's employees are represented by a union or collective bargaining
agreement, and the Company considers relations with its employees to be good.
Driver Recruiting, Training and Retention
The Company recognizes that it is paramount to recruit, train, and retain a
professional driver workforce. The Company also realizes that competition for
qualified drivers will remain high and will be impacted by declining
unemployment rates, changes in workforce demographics, and reduced government
funding of training programs. Although the Company has experienced no
significant inability to attract qualified drivers, no assurance can be given
that a shortage of qualified drivers in the future will not adversely affect the
Company.
All Company drivers must meet or exceed specific guidelines relating to their
safety records, driving experience, and personal evaluations, including a
physical examination and mandatory drug testing as outlined in DOT regulations.
After an offer of employment is extended, a driver must successfully complete
training in all aspects of Company policies and operations, safety philosophy,
and fuel efficiency. All drivers must successfully complete a Company driving
exam and possess a valid Commercial Drivers License. The Company maintains an
ongoing safety and efficiency program to ensure that drivers comply with safe
and efficient operating procedures.
6
Senior management is actively involved with the development and retention of
drivers. Recognizing the shortage of new drivers entering the industry, the
Company has since January 1998 operated a professional driving school at its
facility in Medway, Ohio. The school was certified in 1998 by the Professional
Truck Driving Institute of America and re-certified in 2000, through 2005. The
Company also contracts with driver schools managed by independent organizations
as well as community college programs throughout the United States. The Company
believes that the continued and effective development of the driver training
schools and training program will provide the Company with an additional source
of drivers.
Management believes that there are several key elements to recruiting and
retaining experienced professional drivers, such as an attractive compensation
and benefits package, meeting reasonable driver expectations, providing
equipment with desirable driver amenities, and providing a company-wide culture
of support for driver needs. Drivers are compensated on the basis of miles
driven. The starting rate per mile is determined by the driver's experience
level and will increase with the driver's length of service with the Company.
Additional compensation may be earned through loading/unloading or stop pay, and
mileage bonuses. Drivers employed by the Company participate in Company
sponsored health, life, dental, and vision plans and are eligible to participate
in a 401(k) Retirement Plan and an Employee Stock Purchase Plan. Additional
benefits include paid holidays, vacation pay, and pre-paid phone cards.
The Company believes that meeting and managing driver's reasonable expectations
is critical to driver satisfaction and retention. From the solicitation of
driver friendly freight (no loading/unloading, decreased dwell time, drop/hook,
etc.), to training recruiters to provide candidates with a realistic view of
work requirements and the lifestyle of a long-haul driver, to getting drivers
home on a regular basis, the Company is dedicated to meeting our commitments.
The Company's late model Freightliner and Volvo conventional tractors are
designed for driver comfort and safety. Standard equipment includes automatic
transmissions, air ride suspensions, double sleeper bunks, air conditioning,
power steering, electronic engine brakes, and Eaton Vorad collision avoidance
systems.
Management believes that maintaining a culture of driver support through
flexible work schedules that enable drivers to accommodate personal obligations
and lifestyles, leveraging technology (in cab e-mail, Internet services, etc.)
that enables drivers to remain in touch with their families when on the road,
managing driver home time, seeking drivers' input in the decision making process
and seeking mutually satisfactory solutions, and providing career advancement
opportunities for drivers are key factors for developing one of the Company's
most valuable assets.
Independent Contractors
The Company recognizes the benefits of augmenting its service capacity through
the use of independent contractors. Independent contractors provide their own
tractors and pay for all the expenses of operating their own equipment,
including wages and benefits, fuel, physical damage insurance, maintenance,
highway use taxes and debt service. Therefore, less capital is required for the
Company's growth. The Company has an aggressive independent contractor
recruiting program, with 721 contractors under contract at December 31, 2000.
The Company intends to continue adding independent contractors.
Fuel
The Company purchases the majority of its fuel through a network of fuel stops
throughout the United States. The Company manages its fuel cost by routing the
Company's drivers to fuel stops with which the Company has negotiated volume
discounts. Bulk fueling facilities are maintained at certain of the Company's
terminals to further reduce fuel costs.
During 2000, fuel prices increased significantly. The Company recovered a
portion of the increased cost from customers through fuel surcharges, which are
included in most customer contracts. However, a portion of the fuel cost
increase was not recovered, which adversely impacted the Company's profitability
in 2000.
The Company maintains fuel storage tanks at certain of its terminals. Leakage
or damage to these tanks could subject the Company to environmental clean-up
costs. The Company believes it is in compliance with all laws and regulations
relating to maintenance of such fuel storage tanks.
7
ITEM 2. PROPERTIES
The following table provides information regarding the Company's facilities at
December 31,2000:
Company Location Facility Functions Owned or Leased
- ---------------- ------------------ ---------------
U.S. Xpress:
Austell, Georgia Drop Yard Leased
Bayonne, New Jersey Drop Yard Leased
Birmingham, Alabama Terminal Leased
Boise, Idaho Drop Yard Leased
Bordentown, New Jersey Drop Yard Leased
Bowling Green, Kentucky Drop Yard Leased
Chattanooga, Tennessee Corporate Office Leased
Chicago, Illinois Drop Yard Leased
Colton, California Terminal, Maintenance, Customer Service, Owned
Fleet Services, Driver Training
Dallas, Texas Drop Yard Leased
Denver, Colorado Drop Yard Leased
El Paso, Texas Drop Yard Leased
Greenville, South Carolina Drop Yard Leased
Hayward, California Drop Yard Leased
Houston, Texas Drop Yard Leased
Jacksonville, Florida Drop Yard Leased
Kent, Washington Drop Yard Leased
Knoxville, Tennessee Drop Yard Leased
Lincoln, Nebraska Terminal, Maintenance, Customer Service, Owned
Fleet Services, Driver Training, Independent Contractor
Recruiting
Laredo, Texas Drop Yard Leased
Medway, Ohio Terminal, Maintenance, Customer Service, Leased
Fleet Services, Driver School, Driver Recruiting
Memphis, Tennessee Drop Yard Leased
Oklahoma City, Oklahoma Terminal, Maintenance, Customer Service, Leased
Fleet Services, Driver Training, Driver Recruiting
Phoenix, Arizona Drop Yard Leased
Sacramento, California Terminal, Fleet Services Leased
Salt Lake City, Utah Terminal, Maintenance, Customer Service, Owned
Fleet Services, Driver Training
Sioux City, South Dakota Terminal Leased
Troutdale, Oregon Drop Yard Leased
Tunnel Hill, Georgia Terminal, Maintenance, Fleet Services, Leased
Driver Training
CSI/Crown:
Akron, Ohio Distribution Center Leased
Albany, New York Distribution Center Leased
Baltimore, Maryland Distribution Center Leased
Calhoun, Georgia Distribution Center Owned
Denver, Colorado Distribution Center Leased
Detroit, Michigan Distribution Center Leased
Eagan, Minnesota Distribution Center Leased
8
Company Location Facility Functions Owned or Leased
- ---------------- ------------------ ---------------
CSI/Crown (cont.):
Fresno, California Distribution Center Leased
Grand Prairie, Texas Distribution Center Leased
Hayward, California Distribution Center Leased
Houston, Texas Distribution Center Leased
La Mirada, California Distribution Center Leased
LeMont, Illinois Distribution Center Leased
Oklahoma City, Oklahoma Distribution Center Leased
Pittsburgh, Pennsylvania Distribution Center Leased
Rancho Cordova, California Distribution Center Leased
Rochester, New York Distribution Center Leased
Salt Lake City, Utah Distribution Center Leased
San Antonio, Texas Distribution Center Leased
San Diego, California Distribution Center Leased
Tunnel Hill, Georgia Corporate Office, Distribution Center Leased
In late 1998, the Company entered into a long-term lease of a newly constructed
corporate office and operations facility in Chattanooga, Tennessee. The new
facility encompasses nearly 100,000 square feet of office space and includes
state-of-the-art information management and communications systems.
CSI/Crown is based in Tunnel Hill, Georgia, approximately 25 miles from the
Chattanooga location. The Tunnel Hill facility includes a 101-door loading dock
facility in which floorcovering shipments from multiple manufacturers are
consolidated into truckloads for delivery to Company-owned and agent-operated
distribution service centers. All CSI/Crown facilities operate as distribution
centers performing consolidation, warehousing, and local distribution.
In the opinion of the Company, its facilities are suitable and adequate for the
Company's needs.
ITEM 3. LEGAL PROCEEDINGS
In November 2000, the Company signed an agreement with SouthTrust Bank
("SouthTrust") to purchase certain assets of Dedicated Transportation Services,
Inc., ("DTSI") a customer of the Company's, at foreclosure by SouthTrust as
secured creditor of DTSI. After the agreement was signed, SouthTrust advised the
Company that it had received a higher offer for the assets from another party,
and that it would cancel the agreement with the Company, unless the Company
matched the higher offer, and SouthTrust sold the assets of DTSI to the other
party.
In December 2000, SouthTrust filed a lawsuit against the Company, concerning
events which occurred after SouthTrust terminated the agreement with the
Company. In its lawsuit, SouthTrust claims the Company acted wrongfully and
attempted to interfere with SouthTrust's sale of DTSI's assets. The lawsuit
seeks damages in an unspecified amount from the Company, and seeks to have the
court declare that actions taken by SouthTrust in connection with the sale of
assets were lawful and did not violate any legal rights of the Company. The
Company believes that the SouthTrust lawsuit is without merit and intends to
vigorously defend itself.
The Company is party to certain other legal proceedings incidental to its
business. The ultimate disposition of these matters and the ultimate disposition
of the SouthTrust litigation, in the opinion of management, based in part on the
advice of legal counsel, is not expected to have a material adverse effect on
the Company's financial position or results of operations.
9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended December 31, 2000, no matters were submitted to a vote
of security holders.
Executive Officers of the Company
Information with respect to the executive officers of the Company is set forth
below:
Name Age Position
- ---- --- --------
Cort J. Dondero 50 Director, Executive Vice President, Chief Operating Officer
Max L. Fuller 48 Co-Chairman of the Board of Directors, Vice President and Secretary
Ray M. Harlin 51 Director, Executive Vice President - Finance and Chief Financial Officer
Patrick E. Quinn 54 Co-Chairman of the Board of Directors, President and Treasurer
Cort J. Dondero has served as Executive Vice President and Chief Operating
Officer of the Company since July 2000. Previously, Mr. Dondero was President
of Trimac Logistics, Inc. from 1999 to July 2000 and President and founder of
Service and Administrative Institute from 1988 to 1999. Mr. Dondero has been a
director of the Company since July 2000.
Max L. Fuller has served as Co-Chairman of the Board of the Company since March
1994 and Vice President and Secretary of the Company since 1985. Mr. Fuller was
first elected a director of the Company in 1985.
Ray M. Harlin joined the Company in 1997 as Executive Vice President - Finance
and Chief Financial Officer. He was elected a Director in August 1997. Mr.
Harlin was employed for 25 years with the public accounting firm of Arthur
Andersen LLP. He was a partner with that firm for the last 14 years.
Patrick E. Quinn has served as Co-Chairman of the Board of the Company since
March 1994 and President and Treasurer of the Company since 1985. Mr. Quinn was
first elected a director of the Company in 1985.
10
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Common Stock and Stockholder Data
The Company's Class A Common Stock is traded on the NASDAQ National Market
System under the symbol XPRSA. No market exists for the Company's Class B
Common Stock. At March 15, 2001, there were 199 registered stockholders and an
estimated 1,648 beneficial owners of the Company's Class A Common Stock and 2
beneficial owners of the Company's Class B Common Stock. At March 15, 2001
there were 10,687,550 shares of Class A Common Stock outstanding and 3,040,262
shares of Class B Common Stock outstanding. On March 15, 2001, the closing price
for the Common Stock was $6.375. Listed below is the trading activity for each
quarter in the last two fiscal years:
Quarter Ending High Low
- -------------- ---- ---
March 31, 1999 17.75 11.00
June 30, 1999 12.88 8.50
September 30, 1999 11.25 5.38
December 31, 1999 9.19 5.88
March 31, 2000 10.00 5.12
June 30, 2000 8.87 6.25
September 30, 2000 8.75 5.87
December 31, 2000 7.50 5.13
Dividends
The Company does not pay cash dividends and intends to continue to retain
earnings to finance the growth of the Company for the foreseeable future.
11
ITEM 6. SELECTED FINANCIAL DATA
(In thousands, except per share and operating data)
Nine Months Ended Year Ended
Year Ended December 31, December 31, March 31,
---------------------------------------- ----------------- ----------
2000 1999 1998 1997(4) 1997
-------- -------- -------- ----------------- ----------
Income Statement Data(1)
Operating revenue:
U.S. Xpress $733,583 $656,029 $513,154 $290,800 $307,928
CSI/Crown 58,161 57,713 74,533 57,645 65,845
Intercompany (4,659) (5,530) (6,286) (6,173) (10,954)
-------- -------- -------- -------- --------
Consolidated $787,085 $708,212 $581,401 $342,272 $362,819
======== ======== ======== ======== ========
Income from operations $ 19,931 $ 31,527 $ 44,405 $ 26,151 $ 19,776
Income before income taxes $ 4,482 $ 19,139 $ 34,497 $ 21,983 $ 14,236
Net income $ 2,065 $ 11,381 $ 20,717 $ 13,191 $ 7,878
Earnings per share - basic $ .15 $ .77 $ 1.38 $ .98 $ .65
Weighted average number
of shares outstanding - basic 14,095 14,785 15,038 13,467 12,082
Earnings per share - diluted $ .15 $ .77 $ 1.37 $ .97 $ .65
Weighted average number
of shares outstanding - diluted 14,148 14,852 15,162 13,582 12,168
Truckload Operating Data(2)
Total revenue miles (in thousands) 573,271 533,628 418,665 241,541 261,596
Average revenue per mile $ 1.22 $ 1.19 $ 1.18 $ 1.16 $ 1.15
Tractors at end of period 4,861 4,734 4,425 2,839 2,246
Trailers at end of period 11,871 11,718 10,413 5,875 5,520
Average revenue per tractor,
per week $ 2,726 $ 2,633 $ 2,661 $ 2,734 $ 2,761
Total loads 603,189 578,572 464,586 239,730 254,214
Average tractors during period 4,932 4,651 3,572 2,615 2,111
Total miles (in thousands) 632,023 587,917 459,643 265,102 282,985
Balance Sheet Data
Working capital $ 72,870 $ 87,836 $ 98,306 $ 44,813 $ 33,829
Total assets 420,242 409,037 426,539 233,777 178,084
Long-term debt,
net of current maturities 179,908 181,256 202,450 52,120 59,318
Stockholders' equity(3) 156,935 161,527 153,667 128,493 63,162
(1) Data for U.S. Xpress includes data for all truckload operations, including
the following from their date of acquisition: JTI, Inc. in April 1997;
Victory Express, Inc. in January 1998; and PST Vans, Inc. in August 1998.
(2) Average revenue per mile and average revenue per tractor per week are net of
fuel surcharges. Tractor and trailer data includes owned, leased equipment,
and owner operators.
(3) Reflects the sale by the Company of 2,885,000 shares of Class A Common Stock
during the 1997 transition period. Reflects in fiscal 1999 and 1998, the
issuance of 41,901 and 994,447 shares of Class A Common Stock in connection
with the purchase of PST. Reflects the repurchase of 925,100, 485,000 and
1,134,289 shares of Class A Common Stock in fiscal 2000, 1999 and 1998,
respectively.
(4) Effective December 31, 1997, the Company changed its fiscal year-end to
December 31 from March 31. As a result, the transition period ended
December 31, 1997 is a nine-month period.
12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The following table sets forth, for the periods indicated, the components of the
consolidated statements of operations expressed as a percentage of operating
revenue:
Year Ended December 31,
-----------------------
2000 1999 1998
------ ------ ------
Operating Revenue 100.0% 100.0% 100.0%
----- ----- -----
Operating Expenses:
Salaries, wages and benefits 36.5 38.8 40.2
Fuel and fuel taxes 17.3 14.2 13.3
Vehicle rents 7.6 7.7 5.6
Depreciation and amortization, net of gain/loss 4.4 4.1 4.5
Purchased transportation 13.2 11.8 10.5
Operating expense and supplies 6.5 6.3 6.4
Insurance premiums and claims 4.1 4.0 3.6
Operating taxes and licenses 1.7 2.1 1.7
Communications and utilities 1.4 1.7 1.5
General and other operating expenses 4.8 4.8 5.1
----- ----- -----
Total operating expenses 97.5 95.5 92.4
----- ----- -----
Income from Operations 2.5 4.5 7.6
Interest expense, net 1.9 1.8 1.6
----- ----- -----
Income before income tax provision .6 2.7 6.0
Income taxes .3 1.1 2.4
----- ----- -----
Net Income .3% 1.6% 3.6%
===== ===== =====
13
Comparison of the Year Ended December 31, 2000 to the Year Ended
December 31, 1999
Operating revenue in 2000 increased $78.9 million, or 11.1%, to $787.1 million,
compared to $708.2 million in 1999. U.S. Xpress revenue increased $78.4
million, or 12.1%, due primarily to a 7.4% increase in revenue miles, a 2.3%
increase in average revenue per mile, net of fuel surcharges, to $1.220 from
$1.193 in 1999, and a $27.4 million increase in fuel surcharge revenue. Revenue
miles increased due to an increase in the average number of tractors by 281, or
6.0%, to 4,932 from 4,651, and a 3.5% increase in utilization as measured by
revenue per tractor per week. CSI/Crown revenues increased $.4 million due
primarily to a 6.5% linehaul rate increase.
Operating expenses represented 97.5% of operating revenue for 2000, compared to
95.5% during 1999.
Salaries, wages and benefits as a percentage of revenue were 36.5% during 2000,
compared to 38.8% during 1999. The decrease was primarily attributable to the
increase in the number of owner-operators, which accounted for 13.6% of the
Company's total fleet in 2000, compared to 10.5% during 1999. The average
number of owner-operators increased to 673 in 2000, compared to 487 in 1999.
All owner-operator expenses are reflected as purchased transportation.
Fuel and fuel taxes as a percentage of operating revenue were 17.3% during 2000,
compared to 14.2% during 1999. This increase was due to the 32.0% increase in
average fuel cost per mile during 2000, compared to 1999, the effect of which
was partially offset by the increased use of owner-operators who are responsible
for their fuel expense. The Company's exposure to increases in fuel prices is
partially mitigated by fuel surcharges to its customers.
Vehicle rents as a percentage of operating revenue were 7.6% during 2000,
compared to 7.7% during 1999. Depreciation and amortization as a percentage of
operating revenue was 4.4% for 2000, compared to 4.1% during 1999. The Company
includes gains and losses from the sale of revenue equipment in depreciation
expense. Net gains from the sale of revenue equipment for 2000 were $.3 million
compared to a gain of $.8 million in 1999. Overall, as a percentage of
operating revenue, vehicle rents and depreciation were 12.0% during 2000,
compared to 11.8% during 1999.
Purchased transportation as a percentage of operating revenue was 13.2% during
2000, compared to 11.8% during 1999. The increase was primarily due to an
increase in the average owner-operator fleet to 673 for 2000 compared to 487 in
1999. Owner-operators provide a tractor and driver incurring substantially all
of their operating expenses in exchange for a fixed payment per mile, which is
included in purchased transportation. Owner-operator miles increased to 95.3
million miles in 2000, compared to 66.9 million miles in 1999.
Insurance premiums and claims as a percentage of operating revenue were 4.1%
during 2000, compared to 4.0% during 1999. The increase is due primarily to an
increase in premiums, and increases in claims and losses related to cargo and
physical damage.
Operating taxes and licenses as a percentage of operating revenue were 1.7%
during 2000, compared to 2.1% in 1999. This decrease was primarily due to a
3.5% increase in utilization, as measured by revenue per tractor per week.
Communications and utilities as a percentage of operating revenue were 1.4%
during 2000, compared to 1.7% in 1999. This decrease was primarily due to the
redesign of voice and data networks, which eliminated several communication
circuits.
General and other operating expenses as a percentage of operating revenue were
4.8% during 2000, compared to 4.8% during 1999. During 2000, the Company
recorded a one-time charge of $2.0 million, due to the write-off of outstanding
receivables and other related expenses of a long-term customer. During 1999, the
Company recorded a one-time charge of $1.3 million related to the settlement of
litigation with a professional employer organization that formerly administered
the Company's payroll and benefit systems.
Interest expense increased $3.0 million, or 24.7%, to $15.4 million, compared to
$12.4 million during 1999. The increase was primarily due to the average
interest rate on the Company's line of credit increasing 29.3% to 8.1% during
2000, compared to 6.3% in 1999.
Income from operations for 2000 decreased $11.6 million, or 36.8%, to $19.9
million from $31.5 million during 1999. As a percentage of operating revenue,
income from operations was 2.5% for 2000 and 4.5% for 1999.
The Company's effective tax rate increased to 53.9% in 2000 compared to 40.5%
for 1999, due primarily to non-deductible goodwill amortization being a larger
percentage of income before income taxes.
14
Comparison of the Year Ended December 31, 1999 to the
Year Ended December 31, 1998
Operating revenue in 1999 increased $126.8 million, or 21.8%, to $708.2 million,
compared to $581.4 million in 1998. U.S. Xpress revenue increased $143.6
million due primarily to a 27.5% increase in revenue miles and increase in
average revenue per loaded mile, net of fuel surcharges, to $1.193, versus
$1.177 in 1998, due principally to per mile rate increases. Weighted average
tractors increased to 4,651 during 1999, compared to 3,572 during 1998, due in
part to the acquisition of PST Vans in August 1998. CSI/Crown revenues decreased
$16.8 million or 22.6% resulting from a program to eliminate unprofitable
operations, including the closure of certain under-performing facilities.
Operating expenses represented 95.5% of operating revenue for 1999, compared to
92.4% during 1998.
Salaries, wages and employee benefits as a percentage of revenue were 38.8%
during 1999, compared to 40.2% during 1998. The decrease was primarily
attributable to an increase in the average number of owner-operators to 487 in
1999, compared to 152 in 1998. All owner-operator expenses are reflected as
purchased transportation. CSI/Crown salaries, wages and benefits decreased
23.3% during 1999, compared to 1998 due to facility closures described above and
efficiencies gained through a new bar-coding process.
Fuel and fuel taxes as a percentage of operating revenue were 14.2% during 1999,
compared to 13.3% during 1998. This increase was primarily due to a 9.1%
increase in the average fuel cost per mile, the effect of which was offset by
the increased use of owner-operators who are responsible for their fuel expense.
The Company's exposure to increases in fuel prices is partially mitigated by
fuel surcharges to its customers and, on a limited basis, by fuel purchase
contracts.
Vehicle rents as a percentage of operating revenue were 7.7% during 1999,
compared to 5.6% during 1998. The increase resulted from increased operating
leases for tractors to 3,041 and trailers to 5,426 at December 31, 1999,
compared to 1,809 leased tractors and 2,383 leased trailers at December 31,
1998. Depreciation and amortization as a percentage of operating revenue was
4.1% for 1999, compared to 4.5% during 1998. The Company includes gains and
losses from the sale of revenue equipment in depreciation expense. Net gains
from the sale of revenue equipment for 1999 were $0.8 million compared to a loss
of $.2 million in 1998. Overall, as a percentage of operating revenue, vehicle
rents and depreciation were 11.8% during 1999, compared to 10.1% in 1998.
Increasing the ratio of leased to owned revenue equipment effectively shifts
financing expenses from interest to "above the line" operating expenses.
Purchased transportation as a percentage of operating revenue was 11.8% during
1999, compared to 10.5% in 1998. This increase was primarily due to an increase
in the average owner-operator fleet to 487 for 1999 compared to 152 in 1998.
Owner-operators provide a tractor and driver incurring substantially all of
their operating expenses in exchange for a fixed payment per mile, which is
included in purchased transportation. Owner-operator miles increased from 26.2
million miles during 1998 to 66.9 million miles in 1999. The effect of the
increase in owner-operators was offset by a $7.8 million decrease in purchased
transportation related to the decrease in revenue and related purchased
transportation by CSI/Crown.
Insurance premiums and claims as a percentage of operating revenue was 4.0%
during 1999, compared to 3.6% in 1998. The increase results from an increase
effective January 1, 1999 in cargo insurance cost and increases experienced in
physical damage and liability insurance cost related principally to the average
cost and frequency of claims below the deductible amounts for liability and for
physical damage per each occurrence.
General and other operating expenses as a percentage of operating revenue were
4.8% during 1999, compared to 5.1% in 1998. This decrease was primarily due to
the 21.8% increase in revenue, while many expenses included in general and other
operating expenses are fixed. This decrease was offset by a $1.3 million charge
as a result of the settlement of litigation with a professional employer
organization that formerly administered the Company's payroll and benefits
systems.
Income from operations for 1999 decreased $12.9 million, or 29.0%, to $31.5
million from $44.4 million in 1998. As a percentage of operating revenue,
income from operations was 4.5% for 1999, and 7.6% in 1998.
Interest expense during 1999 increased $2.5 million, or 25.0%, to $12.4 million,
compared to $9.9 million during 1998. The increase was primarily due to the
increase in outstanding debt to finance the 1998 acquisitions of Victory Express
and PST Vans.
The Company's effective tax rate increased to 40.5% in 1999 compared to 40.0%
for 1998, due primarily to the increased amount of non-deductible goodwill
amortization resulting from the 1998 acquisitions of Victory Express and PST
Vans.
15
Special Considerations
The trucking industry is affected by economic risks and uncertainties, some of
which are beyond its control. These include economic recessions and downturns
in customers' business cycles, increases in fuel prices, the availability of
qualified drivers and fluctuations in interest rates.
The trucking industry is highly competitive and includes numerous regional,
inter-regional and national truckload carriers. Some of these carriers have
greater financial resources, equipment and freight capacity than the Company.
Management believes its strategies of controlled growth and focused marketing
will continue to provide freight at sufficient volumes and prices to remain
profitable. Changes in economic conditions could reduce both the amount of
freight available and freight rates, which could have a material adverse effect
on the Company's results.
Fuel is one of the Company's largest expenditures. Shortages of fuel or
increases in fuel prices could have a materially adverse effect on the
operations and profitability of the Company. Many of the Company's customer
contracts contain fuel surcharge provisions to mitigate increases in the cost of
fuel (the Company recognized $29.5 million of fuel surcharge revenue for the
year ended December 31, 2000, compared to $2.1 million for the same period in
1999). Additionally, at times, fuel purchase contracts are used to mitigate the
effects of increases in the prices of fuel. During the latter part of 1999,
fuel prices steadily increased, and they remained at significantly higher levels
in 2000.
Competition for available qualified drivers in the truckload industry is
intense, and will likely remain so for the foreseeable future. The Company and
many of its competitors experience high rates of turnover and occasionally have
difficulty in attracting and retaining qualified drivers in sufficient numbers
to operate all available equipment. Management believes the Company's current
pay structure, benefits, policies and procedures related to drivers are
effective in attracting and retaining drivers. However, there can be no
assurance that it will not be affected by a shortage of qualified drivers in the
future. The inability to attract and retain qualified drivers would have a
material adverse effect on the Company's results.
The trucking industry is extremely capital intensive. The Company depends on
operating leases, lines of credit, secured equipment financing and cash flows
from operations to finance the expansion and maintenance of its modern and cost
efficient revenue equipment and facilities. At present, the Company is more
highly leveraged than some of its competitors. If the Company were unable in the
future to obtain financing at acceptable levels, it could be forced to limit the
growth or replacement of its equipment and facilities. A significant increase
in interest rates could have a material adverse effect on the Company's results.
Liquidity and Capital Resources
The Company's primary sources of liquidity and capital resources during 2000
were funds provided by operations, borrowings under lines of credit, proceeds
from sales of used revenue equipment, and the use of long-term operating leases
for revenue equipment acquisitions. On December 31, 2000, the Company had in
place a $225.0 million credit facility with a group of banks with a weighted
average interest rate of 8.34%, of which $48.3 million was available for
borrowing. The line of credit was amended in January 2001. Under the terms of
the amended agreement, the facility will be reduced to $215.0 million on June
30, 2001. The loan matures January 15, 2002. Interest on outstanding
borrowings is based upon the London Interbank Offered Rate plus applicable
margins, as defined in the credit agreement. The note is collateralized by
substantially all of the assets of the Company. In September 2000 the Company
entered into a long-term loan agreement for $10.0 million to finance the new
Colton, California terminal facility. The term of the loan is 10 years, with
amortization based on 20 years, and carries a variable interest rate that is
based on the 30-day commercial paper rate, plus a margin. This rate can be
converted to a fixed rate at any time up to September 2002. In 2001, the
Company's primary sources of liquidity are expected to be funds provided by
operations, borrowings under lines of credit, proceeds from sale of used revenue
equipment and long-term operating lease financing for the acquisition of revenue
equipment.
Cash generated from operations increased to $54.7 million in 2000 from $34.5
million in 1999. Net cash used in investing activities was $49.2 million in 2000
and $15.6 million in 1999. Such amounts were used primarily to acquire new
revenue equipment, and in 2000, for the acquisition and construction of the new
Colton, California terminal facility. During 2000, the Company made a $5 million
cash investment to acquire a 13% equity interest in Transplace. In 2000, $56.2
million was used to acquire
16
additional property and equipment, compared to $74.6 million for 1999. Proceeds
from the sale of property and equipment were $12.0 million in 2000, compared to
$60.8 million in 1999.
Net cash used in financing activities was $5.7 million in 2000 and $25.3 million
in 1999. Borrowings under the line of credit were reduced by $9.8 million in
2000 and $21.0 million in 1999. As authorized by the Company's board of
directors, 925,100 shares of the Company's Class A Common Stock were repurchased
in 2000 for $7.1 million, and 485,000 shares were repurchased in 1999 for $4.5
million.
Management believes that funds provided by operations, borrowings under lines of
credit and long-term operating lease financing will be sufficient to fund its
cash needs and anticipated capital expenditures through 2001.
Inflation
Inflation has not had a material effect on the Company's results of operations
or financial condition during the past three years. However, inflation higher
than experienced during the past three years could have an adverse effect on the
Company's future results.
Seasonality
In the trucking industry, shipments generally show a seasonal pattern as
customers increase shipments prior to and reduce shipments during and after the
winter holiday season. Additionally, shipments can be adversely impacted by
winter weather conditions.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (the
"Statement"). The Statement establishes accounting and reporting standards
requiring that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the balance sheet as
either an asset or liability measured at its fair value. The Statement requires
that changes in the derivative's fair value be recognized currently in earnings,
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
must formally document, designate and assess the effectiveness of transactions
that receive hedge accounting.
As amended by SFAS No. 137, SFAS 133 is effective for fiscal years beginning
after June 15, 2000. The Company adopted SFAS 133 effective January 1, 2001.
The adoption did not have a material impact on the Company's financial
statements. However, it could increase the volatility in earnings and other
comprehensive income for future periods.
17
ITEM 7A. QUANTITIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Interest Rate Risk
The Company has interest rate exposure arising from the Company's line of credit
which has variable interest rates. At December 31, 2000 the Company had
$178.0 million of variable rate debt. The Company has interest rate swap
agreements which convert floating rates to fixed rates for a total notional
amount of $45.0 million. If interest rates on the Company's variable rate debt,
after considering interest rate swaps, were to increase by 10% from their
December 31, 2000 rates for the next twelve months, the increase in interest
expense would be approximately $1.2 million.
Commodity Price Risk
Fuel is one of the Company's largest expenditures. The price and availability
of diesel fuel fluctuates due to changes in production, seasonality and other
market factors generally outside the Company's control. Many of the Company's
customer contracts contain fuel surcharge provisions to mitigate increases in
the cost of fuel. However, there is no assurance that such fuel surcharges
could be used to offset future increases in fuel prices.
18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Public Accountants
To U.S. Xpress Enterprises, Inc.:
We have audited the accompanying consolidated balance sheets of U.S. Xpress
Enterprises, Inc. (a Nevada corporation) and subsidiaries as of December 31,
2000 and 1999, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 2000. 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 auditing standards generally accepted
in the United States. 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 U.S. Xpress Enterprises, Inc.
and subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000 in conformity with accounting principles generally accepted in
the United States.
/s/ ARTHUR ANDERSEN LLP
Chattanooga, Tennessee
February 5, 2001
19
U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Year Ended December 31,
----------------------------
2000 1999 1998
-------- -------- --------
Operating Revenue $787,085 $708,212 $581,401
-------- -------- --------
Operating Expenses:
Salaries, wages and benefits 287,225 275,070 233,953
Fuel and fuel taxes 135,992 100,295 77,046
Vehicle rents 59,440 54,522 32,399
Depreciation and amortization, net of gain/loss on
disposition of equipment 34,430 29,250 26,007
Purchased transportation 104,279 83,897 60,773
Operating expenses and supplies 51,382 44,629 37,575
Insurance premiums and claims 32,657 28,431 20,159
Operating taxes and licenses 13,542 14,709 9,830
Communications and utilities 11,216 12,174 9,002
General and other operating expenses (Note 3) 36,991 33,708 30,252
-------- -------- --------
Total operating expenses 767,154 676,685 536,996
-------- -------- --------
Income from Operations 19,931 31,527 44,405
Interest Expense, net 15,449 12,388 9,908
-------- -------- --------
Income Before Income Tax Provision 4,482 19,139 34,497
Income Tax Provision 2,417 7,758 13,780
-------- -------- --------
Net Income $ 2,065 $ 11,381 $ 20,717
======== ======== ========
Earnings Per Share - basic $ .15 $ .77 $ 1.38
======== ======== ========
Weighted average shares - basic 14,095 14,785 15,038
======== ======== ========
Earnings Per Share - diluted $ .15 $ .77 $ 1.37
======== ======== ========
Weighted average shares - diluted 14,148 14,852 15,162
======== ======== ========
The accompanying notes are an integral part of these consolidated statements.
20
U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share amounts)
December 31,
--------------------
2000 1999
-------- --------
Assets
Current Assets
Cash and cash equivalents $ 34 $ 259
Customer receivables, net of allowance of $4,019 and $3,255 89,184 101,870
Other receivables 14,294 9,807
Operating and installation supplies 4,312 6,078
Deferred income taxes 2,249 2,148
Other current assets 6,715 4,170
-------- --------
Total current assets 116,788 124,332
-------- --------
Property and Equipment, at cost 315,480 275,880
Less accumulated depreciation and amortization (96,578) (69,547)
-------- --------
Net property and equipment 218,902 206,333
-------- --------
Other Assets
Goodwill, net 67,498 70,161
Investment in Transplace 5,815 --
Other 11,239 8,211
-------- --------
Total other assets 84,552 78,372
-------- --------
Total Assets $420,242 $409,037
======== ========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 19,060 $ 16,556
Book overdraft 2,940 886
Accrued wages and benefits 8,523 7,268
Claims and insurance accruals 8,704 5,530
Other accrued liabilities 3,190 5,074
Current maturities of long-term debt 1,501 1,182
-------- --------
Total current liabilities 43,918 36,496
-------- --------
Long-Term Debt, net of current maturities 179,908 181,256
-------- --------
Deferred Income Taxes 36,902 26,526
-------- --------
Other Long-Term Liabilities 2,579 3,232
-------- --------
Commitments and Contingencies (Notes 8 and 10)
Stockholders' Equity
Preferred Stock, $.01 par value, 2,000,000 shares authorized, no shares issued -- --
Common Stock Class A, $.01 par value, 30,000,000 shares authorized,
13,210,467 and 13,087,545 shares issued at December 31, 2000 and
1999, respectively 132 131
Common Stock Class B, $.01 par value, 7,500,000 shares authorized, 3,040,262
shares issued and outstanding 30 30
Additional paid-in capital 105,124 104,259
Retained earnings 76,797 74,732
Treasury Stock, Class A, at cost (2,544,389 and 1,619,289 shares at
December 31, 2000 and 1999, respectively) (24,483) (17,392)
Notes receivable from stockholders (233) (233)
Unamortized compensation on restricted stock (432) --
-------- --------
Total stockholders' equity 156,935 161,527
-------- --------
Total Liabilities and Stockholders' Equity $420,242 $409,037
======== ========
The accompanying notes are an integral part of these consolidated balance
sheets.
21
U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
------------------------------
2000 1999 1998
-------- -------- --------
Cash Flows from Operating Activities:
Net income $ 2,065 $ 11,381 $ 20,717
Adjustments to reconcile net income to net cash
provided by operating activities:
Deferred income tax provision 713 1,181 8,882
Depreciation and amortization 34,711 30,014 25,770
(Gain)/loss on sales of equipment (281) (764) 237
Changes in operating assets and liabilities, net of acquisitions:
Receivables 6,655 4,113 (8,889)
Operating and installation supplies 1,807 (616) (260)
Other assets (6,436) (4,004) (8,136)
Accounts payable and other accrued liabilities 14,089 (7,424) (7,550)
Accrued wages and benefits 1,306 606 (906)
Other 86 56 47
-------- -------- --------
Net cash provided by operating activities 54,715 34,543 29,912
-------- -------- --------
Cash Flows from Investing Activities:
Payments for purchases of property and equipment (56,187) (74,622) (96,822)
Proceeds from sales of property and equipment 11,966 60,773 60,461
Acquisition of businesses, net of cash acquired -- (1,798) (62,626)
Investment in Transplace (5,000) -- --
-------- -------- --------
Net cash used in investing activities (49,221) (15,647) (98,987)
-------- -------- --------
Cash Flows from Financing Activities:
Net borrowings (payments) under lines of credit (9,801) (21,000) 169,500
Payments of long-term debt (1,229) (852) (84,174)
Borrowings under long-term debt agreement 10,000 -- --
Book overdraft 2,054 886 --
Proceeds from exercise of stock options 8 -- 91
Proceeds from issuance of common stock 340 242 403
Purchase of Class A Common Stock (7,091) (4,526) (12,866)
-------- -------- --------
Net cash provided by (used in) financing activities (5,719) (25,250) 72,954
-------- -------- --------
Net Increase (Decrease) in Cash and Cash Equivalents (225) (6,354) 3,879
Cash and Cash Equivalents, beginning of period 259 6,613 2,734
-------- -------- --------
Cash and Cash Equivalents, end of period $ 34 $ 259 $ 6,613
======== ======== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest,
net of capitalized interest $ 16,003 $ 12,838 $ 10,062
======== ======== ========
Cash (refunded) paid during the period for income taxes, net $ (1,452) $ 6,967 $ 2,600
======== ======== ========
The accompanying notes are an integral part of these consolidated statements.
22
U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in thousands)
Notes Unamortized
Common Stock Additional Receivable Compensation
---------------- Paid-In Retained Treasury From On Restricted
Class A Class B Capital Earnings Stock Stockholders Stock Total
------- ------- -------- ---------- ------------- ------------- -------------- ---------
Balance, December 31, 1997 $120 $30 $ 85,942 $42,634 $ -- $(233) $ -- $128,493
Net income -- -- -- 20,717 -- -- -- 20,717
Issuance of 2,661 shares of
Class A Common Stock for
non-employee director
compensation -- -- 47 -- -- -- -- 47
Proceeds from exercise of 15,167
stock options -- -- 91 -- -- -- -- 91
Issuance of 26,008 shares of
Class A Common Stock for
employee stock purchase plan -- -- 403 -- -- -- -- 403
Issuance of 994,447 shares of
Class A Common Stock for
PST acquisition 10 -- 16,772 -- -- -- -- 16,782
Repurchase of 1,134,289 shares
of Class A Common Stock -- -- -- -- (12,866) -- -- (12,866)
------- ------- -------- ---------- ------------ ------------ ------------- --------
Balance, December 31, 1998 130 30 103,255 63,351 (12,866) (233) -- 153,667
Net income -- -- -- 11,381 -- -- -- 11,381
Issuance of 5,068 shares of
Class A Common Stock for
non-employee director
compensation -- -- 56 -- -- -- -- 56
Issuance of 22,709 shares of
Class A Common Stock for
employee stock purchase plan -- -- 242 -- -- -- -- 242
Issuance of 41,901 shares of
Class A Common Stock for
PST acquisition 1 -- 706 -- -- -- -- 707
Repurchase of 485,000 shares of
Class A Common Stock -- -- -- -- (4,526) -- -- (4,526)
------- ------- -------- ---------- ------------ ------------ ------------- --------
Balance, December 31, 1999 131 30 104,259 74,732 (17,392) (233) -- 161,527
Net income -- -- -- 2,065 -- -- -- 2,065
Issuance of 5,322 shares of
Class A Common Stock for
non-employee director
compensation -- -- 38 -- -- -- -- 38
Proceeds from exercise of 1,200
options -- -- 8 -- -- -- -- 8
Issuance of 56,400 shares of
Class A Common Stock for
employee stock purchase plan -- -- 340 -- -- -- -- 340
Issuance of 60,000 shares of
restricted Class A Common
Stock to officers 1 -- 479 -- -- -- (480) --
Amortization of restricted stock -- -- -- -- -- -- 48 48
Repurchase of 925,100 shares of
Class A Common Stock -- -- -- -- (7,091) -- -- (7,091)
------- ------- -------- ---------- ------------ ------------ ------------- --------
Balance, December 31, 2000 $132 $30 $105,124 $76,797 $(24,483) $(233) $(432) $156,935
======= ======= ======== ========== ============ ============ ============= ========
The accompanying notes are an integral part of these consolidated statements.
23
U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
1. Organization and Operations
U.S. Xpress Enterprises, Inc. (the "Company") provides transportation services
through two business segments. U.S. Xpress, Inc. ("U.S. Xpress") is a truckload
carrier serving the continental United States and parts of Canada and Mexico.
CSI/Crown, Inc. ("CSI/Crown") provides transportation services primarily to the
floorcovering industry. The Company also owns 13% of Transplace.com, LLC
("Transplace"), an Internet-based global transportation logistics company.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany transactions and accounts have
been eliminated.
Use of Estimates in the 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
Cash and cash equivalents include all highly liquid investment instruments with
an original maturity of three months or less.
Recognition of Revenue
For financial reporting purposes, the Company generally recognizes revenue and
direct costs when shipments are completed.
Concentration of Credit Risk
Concentrations of credit risk with respect to customer receivables are limited
due to the large number of entities comprising the Company's customer base and
their dispersion across many different industries. The Company performs ongoing
credit evaluations and generally does not require collateral.
Operating and Installation Supplies
Operating supplies consist primarily of tires, parts, materials and supplies for
servicing the Company's revenue and service equipment. Installation supplies
consist of various accessories used in the installation of floorcoverings and
are held for sale at various CSI/Crown distribution centers. Operating and
installation supplies are recorded at the lower of cost (on a first-in, first-
out basis) or market. Tires and tubes purchased as part of revenue and service
equipment are capitalized as part of the cost of the equipment. Replacement
tires and tubes are charged to expense when placed in service.
Property and Equipment
Property and equipment are carried at cost. Depreciation of property and
equipment is computed using the straight-line method for financial reporting
purposes and accelerated methods for tax purposes over the estimated useful
lives of the related assets (net of salvage value). The cost and lives are as
follows:
24
Cost
------------------
Lives 2000 1999
----------- -------- --------
Land and buildings 10-30 years $ 24,952 $ 16,677
Revenue and service equipment 3-7 years 249,773 223,991
Furniture and equipment 3-7 years 21,299 19,169
Leasehold improvements 5-6 years 19,456 16,043
-------- --------
$315,480 $275,880
======== ========
The Company recognized $30,593, $27,101 and $24,097 in depreciation expense in
2000, 1999 and 1998, respectively. Gains (losses) on sales of equipment of
$281, $764 and $(237) for 2000, 1999 and 1998, respectively, are included in
depreciation and amortization expense in the Consolidated Statements of
Operations. During 2000, the Company capitalized $483 of interest.
Upon the retirement of property and equipment, the related asset cost and
accumulated depreciation are removed from the accounts and any gain or loss is
reflected in the Company's statement of operations with the exception of gains
on trade-ins, which are included in the basis of the new asset. Expenditures for
normal maintenance and repairs are expensed. Renewals or betterments that
affect the nature of an asset or increase its useful life are capitalized.
Goodwill
The excess of the consideration paid by the Company over the estimated fair
value of identifiable net assets acquired has been recorded as goodwill and is
being amortized on the straight-line basis over periods ranging from 20 to 40
years. The Company continually evaluates whether subsequent events and
circumstances have occurred that indicate the remaining estimated useful life of
goodwill might warrant revision or that the remaining balance may not be
recoverable. When factors indicate that goodwill should be evaluated for
possible impairment, the Company uses an estimate of the future undiscounted net
cash flows of the related businesses over the remaining life of the goodwill in
measuring whether goodwill is recoverable. The Company recognized $1,999, $1,977
and $1,244 of goodwill amortization expense in 2000, 1999 and 1998,
respectively. Accumulated amortization was $6,416, and $4,572 at December 31,
2000 and 1999, respectively.
Computer Software
The Company accounts for computer software in accordance with the AICPA's
Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use". Computer software is included
in other long-term assets and is being amortized on a straight-line basis over
three years. The Company recognized $1,732, $761 and $430 of amortization
expense in 2000, 1999 and 1998, respectively. Accumulated amortization was
$3,461 and $2,072 at December 31, 2000 and 1999, respectively.
Book Overdraft
Book overdraft represents outstanding checks in excess of current cash levels.
The Company will fund the book overdraft from its line of credit and operating
cash flows.
Investment in Transplace
On July 1, 2000, the Company and five other large transportation companies
merged their logistics business units into a commonly owned, Internet-based
global transportation logistics company, Transplace. As Transplace is a limited
liability corporation, the Company accounts for its 13% ownership in Transplace
under the equity method of accounting. The Company's equity in the earnings of
Transplace for 2000 was immaterial.
Claims and Insurance Accruals
Claims and insurance accruals consist of cargo loss, damage, liability (personal
injury and property damage) and workers' compensation in excess of established
deductible levels and group health claims. Claims in excess of deductible levels
are covered by insurance in amounts the Company considers adequate. Current
deductible levels range from $3 for liability to $350 for group health claims.
Claims accruals represent the uninsured portion of pending claims at December
31, 2000 and 1999, plus an estimated liability for incurred but not reported
claims. Accruals for cargo loss, damage, liability and workers' compensation
claims are estimated based on the Company's evaluation of the type and severity
of individual claims. Accruals for group health insurance claims are based on
the Company's estimate of outstanding claims determined by the Company's past
claims experience.
25
Other Long-Term Liabilities
Periodically, the Company receives volume rebates from vendors related to
certain operating leases for new revenue and service equipment. Additionally,
certain equipment leases include spare tires, which increase tire inventories.
The Company defers recognition of these rebates and amortizes such amounts as a
reduction of vehicle rent expense over the respective lease terms. At December
31, 2000 and 1999, other long-term liabilities include deferred credits of
$2,231 and $2,814, respectively.
Derivative Financial Instruments
The Company has only limited involvement with derivative financial instruments
and does not use them for trading purposes. Interest rate swap agreements, which
are used by the Company to manage its interest rate exposure, are accounted for
on the accrual basis. Amounts to be paid or received under interest rate swap
agreements are recorded in interest expense in the period in which they accrue.
Comprehensive Income
Comprehensive income is the total of net income and all other non-owner changes
in stockholders' equity. For all periods presented, comprehensive income is the
same as net income in the accompanying Consolidated Financial Statements.
Earnings Per Share
The difference between basic and diluted earnings per share is due to the
assumed conversion of dilutive outstanding options resulting in approximately
53,000, 67,000 and 124,000 equivalent shares in 2000, 1999 and 1998,
respectively.
Stock-Based Compensation
The Company accounts for its stock-based compensation plans under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB No. 25"). Effective fiscal 1997, the Company adopted the disclosure
option of Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation."
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (the
"Statement"). The Statement establishes accounting and reporting standards
requiring that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the balance sheet as
either an asset or liability measured at its fair value. The Statement requires
that changes in the derivative's fair value be recognized currently in earnings,
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
must formally document, designate and assess the effectiveness of transactions
that receive hedge accounting.
As amended by SFAS No. 137, SFAS 133 is effective for fiscal years beginning
after June 15, 2000. The Company adopted SFAS 133 effective January 1, 2001.
The adoption did not have a material impact on the Company's financial
statements. However, it could increase the volatility in earnings and other
comprehensive income for future periods.
Reclassifications
Certain reclassifications have been made in the prior year financial statements
to conform to the 2000 presentation.
3. Certain Transactions
In December 2000, the Company recorded a one-time, pre-tax charge of $2,000 to
general and other operating expenses related to the write-off of outstanding
receivables with Dedicated Transportation Services, Inc. ("DTSI") and other
related expenses.
On May 27, 1999, a settlement agreement and release was completed between the
Company and Employee Solutions, Inc. ("ESI"), pursuant to which certain pending
claims between the Company and ESI were resolved. As a result of the settlement,
the Company recorded a charge to general and other operating expenses of $1,250
in 1999.
26
4. Acquisitions
All acquisitions have been accounted for under the purchase method of
accounting. The results of operations of the acquired businesses are included
in the financial statements from the dates of acquisition. Under the terms of
the purchase agreements for acquisitions prior to 1999 and in settlement of
certain contingent purchase price arrangements, the Company incurred
approximately $4,000 of additional consideration in 1999, of which approximately
$1,800 was paid in cash.
Effective January 29, 1998, the Company acquired Victory Express, Inc.
("Victory"), a non-union truckload carrier based in Medway, Ohio, for $51,000 in
cash and assumption of approximately $2,000 in debt.
Effective August 28, 1998, the Company acquired all of the outstanding shares of
PST Vans, Inc. ("PST"), a non-union truckload carrier based in Salt Lake City,
Utah, for $12,281 in cash, 1,036,348 shares of Class A Common Stock, and the
assumption of $52,000 in debt.
5. Income Taxes
The income tax provision for 2000, 1999 and 1998 consisted of the following:
2000 1999 1998
------ ------ -------
Current:
Federal $1,586 $5,979 $ 4,171
State 118 598 727
------ ------ -------
1,704 6,577 4,898
Deferred 713 1,181 8,882
------ ------ -------
$2,417 $7,758 $13,780
====== ====== =======
A reconciliation of the income tax provision as reported in the consolidated
statements of operations to the amounts computed by applying federal statutory
rates is as follows:
2000 1999 1998
------ ------ -------
Federal income tax at statutory rate $1,524 $6,699 $12,074
State income taxes, net of federal income tax benefit 78 395 1,366
Nondeductible goodwill amortization 553 548 349
Other, net 262 116 (9)
------ ------ -------
Income tax provision $2,417 $7,758 $13,780
====== ====== =======
The tax effect of temporary differences that give rise to significant portions
of deferred tax assets and liabilities at December 31, 2000 and 1999 consisted
of the following:
2000 1999
------- -------
Deferred tax assets:
Allowance for doubtful accounts $ 567 $ 601
Insurance reserves 2,307 2,157
Alternative minimum tax credit carryforwards 4,808 2,369
Claims and other reserves 200 340
Net operating loss carryforwards 5,687 6,229
Other 794 597
------- -------
Total deferred tax assets $14,363 $12,293
======= =======
Deferred tax liabilities:
Book over tax basis of property and equipment $47,444 $34,980
Deductible goodwill amortization 674 575
Prepaid license fees 269 468
Other 629 648
------- -------
Total deferred tax liabilities $49,016 $36,671
======= =======
27
At December 31, 2000, the Company has approximately $16,500 of net operating
loss ("NOL") carryforwards from the PST acquisition, which expire in 2010 and
2011. The utilization of the NOL carryforwards is limited to future taxable
income generated from PST. Management believes it will be able to utilize the
NOL carryforwards prior to their expiration. The Company also has approximately
$4,808 of alternative minimum tax ("AMT") credit carryforwards. AMT credits may
generally be carried forward indefinitely and used in future years to the extent
the Company's regular tax liability exceeds the AMT liability for such future
years.
6. Long-Term Debt
Long-term debt at December 31, 2000 and 1999 consisted of the following:
2000 1999
-------- --------
Obligation under line of credit with a group of banks, weighted average
interest rate of 8.34% at December 31, 2000, maturing January 2002 $168,000 $178,000
Mortgage note payable, interest rate of 8.89% at December 31, 2000,
due in monthly installments through October 2010, with final
payment of $7.1 million in October 2010 9,969 --
Capital lease obligation maturing January 2008 1,676 1,760
Other 1,764 2,678
-------- --------
181,409 182,438
Less: current maturities of long-term debt (1,501) (1,182)
-------- --------
$179,908 $181,256
======== ========
During 1998, the Company entered into a line of credit with a syndicate of banks
with aggregate capacity up to $225,000. In January 2001, the line of credit
agreement was amended. Under the terms of the amended agreement, the facility
will be reduced to $215,000 on June 30, 2001. Borrowings (including letters of
credit) under the line are limited to a specified percentage of eligible
accounts receivable and the net book value of revenue equipment. Letters of
credit are limited to an aggregate of $10,000 under the line. The credit
agreement is collateralized by substantially all of the assets of the Company.
Letters of credit outstanding against the line of credit were $8,677, and
$48,323 was available under the facility at December 31, 2000.
Borrowings under the line of credit bear interest, at the option of the Company,
equal to either: (i) the greater of the bank's prime rate or the federal funds
rate plus .50%, (ii) the rate offered in the Eurodollar market for amounts and
periods comparable to the relevant loan plus a margin that is determined by a
financial covenant, or (iii) the rate offered to the Company for a loan of a
specific amount and maturity by any of the participating banks under a
competitive bid process. At December 31, 2000, the margin applicable to the
Eurodollar interest rate was equal to 1.75%.
Borrowings under the mortgage note payable bear interest based on the 30-day
commercial paper rate, plus a margin. This rate can be converted to a fixed
rate at any time up to September 2002.
The line of credit agreement subjects the Company to certain restrictions and
financial covenants related to, among other matters, dividends, net worth,
additional borrowings, acquisitions and dispositions, and maintenance of certain
financial ratios.
The aggregate annual maturities of long-term debt for each of the next five
years are:
2001 $ 1,501
----------------
2002 168,549
----------------
2003 648
----------------
2004 479
----------------
2005 561
----------------
28
7. Derivative Financial Instruments
Interest rate swap agreements are used to manage well-defined interest rate
risks. Under interest rate swap agreements, the Company agrees with other
parties to exchange, at specified intervals, the difference between fixed rate
and variable rate interest amounts calculated by reference to an agreed-upon
notional amount. Under these agreements, the Company receives interest payments
at rates equal to LIBOR reset quarterly, and pays interest at fixed rates shown
below:
Notional Fixed Rate Variable Rate Effective Expiration
Amounts Component Component Date Date
-------- ---------- ------------- ---------------- ----------------
$10,000 5.730% 6.751% February 6, 1998 February 6, 2003
15,000 5.705 6.751 February 6, 1998 February 6, 2003
10,000 5.145 6.751 August 6, 1999 February 6, 2003
10,000 5.565 6.618 September 8, 1998 September 8, 2003
The Company is exposed to credit losses in the event of non-performance by the
counterparties to its interest rate swap agreements. The Company anticipates,
however, that the counterparties will be able to fully satisfy their obligations
under the contracts. The Company does not obtain collateral or other security
to support financial instruments subject to credit risk, but monitors the
credit-standing of counterparties.
The fair value of the interest rate swap agreements is defined as the amount the
Company would receive or would be required to pay to terminate further
obligations under the agreements. At December 31, 2000, the Company estimates
the amount it would receive to terminate the agreements approximates $159.
8. Leases
The Company leases certain revenue and service equipment and office and terminal
facilities under long-term non-cancelable operating lease agreements expiring at
various dates through December 2005. Rental expense under non-cancelable
operating leases was approximately $65,950, $60,335 and $37,213 for 2000, 1999
and 1998, respectively.
The Company is party to a long-term lease of a corporate office and operations
facility, which is scheduled to expire in January 2003. Payments under the
lease are based on LIBOR rates applied to the cost of the facility funded by the
lessor. The Company has an option to renew the lease for up to three three-year
extensions, subject to certain conditions. If the Company does not purchase the
property at the end of the lease term, whether caused by expiration, default or
otherwise, the Company would guarantee a residual value to the lessor of up to
the lessor's net investment in the property. Under the lease, the Company is
required to maintain compliance with certain financial covenants.
Approximate aggregate minimum future rentals payable under these operating
leases for each of the next five years are:
2001 $63,428
---------------
2002 35,440
---------------
2003 17,985
---------------
2004 8,753
---------------
2005 3,308
---------------
9. Related Party Transactions
The Company leases certain office and terminal facilities from entities owned by
the two principal stockholders of the Company. The lease agreements are for
five-year terms and provide the Company with the option to renew the lease
agreements for four three-year terms. Rent expense of approximately $851, $868
and $1,480 was recognized in connection with these leases during 2000, 1999 and
1998, respectively.
29
The two principal stockholders of the Company and certain partnerships
controlled by their families own 100% of the outstanding common stock of Paragon
Leasing LLC ("Paragon"). Paragon leases certain revenue and service equipment to
the Company on a temporary basis. Rent expense of approximately $473, $590 and
$1,162 was recognized in connection with these leases during 2000, 1999 and
1998, respectively.
The two principal stockholders of the Company and certain partnerships
controlled by their families own 45% of the outstanding common stock of
Transcommunications, Inc. ("Transcom"). Beginning in 1999, the Company began
utilizing Transcom charge cards for over-the-road fuel purchases. The Company
paid Transcom $212 and $204 in fees for these services in 2000 and 1999,
respectively. Transcom also makes a debit card system available to the
Company's drivers through which phone calls and Internet e-mail can be credited
while the driver is on the road. Total payments by the Company to Transcom for
these services were approximately $511, $441 and $209 in 2000, 1999 and 1998,
respectively.
On July 1, 2000, the Company and five other large transportation companies
contributed their non-asset based logistics business units into a commonly
owned, Internet-based transportation logistics company, Transplace. During the
last six months of 2000 the Company earned revenues of approximately $12.6
million from Transplace for providing transportation services.
10. Commitments and Contingencies
In November 2000, the Company signed an agreement with SouthTrust to purchase
certain assets of DTSI, a customer of the Company, at foreclosure by SouthTrust
as secured creditor of DTSI. After the agreement was signed, SouthTrust advised
the Company that it had received a higher offer for the assets from another
party, and that it would cancel the agreement with the Company, unless the
Company matched the higher offer, and SouthTrust sold the assets of DTSI to the
other party.
In December 2000, SouthTrust filed a lawsuit against the Company concerning
events which occurred after SouthTrust terminated the agreement with the
Company. In its lawsuit, SouthTrust claims the Company acted wrongfully and
attempted to interfere with SouthTrust's sale of DTSI's assets. The lawsuit
seeks damages in an unspecified amount from the Company and seeks to have the
court declare that actions taken by SouthTrust in connection with the sale of
assets were lawful and did not violate any legal rights of the Company. The
Company believes that the SouthTrust lawsuit is without merit and intends to
vigorously defend itself.
The Company is party to certain other legal proceedings incidental to its
business. The ultimate disposition of these matters, in the opinion of
management, based in part on the advice of legal counsel, is not expected to
have a material adverse effect on the Company's financial position or results of
operations.
Letters of credit of $8,677 were outstanding at December 31, 2000. The letters
of credit are maintained primarily to support the Company's insurance program
(see Note 2). The Company pays commitment fees of 1.75% on the outstanding
portion of the letters of credit.
11. Employee Benefit Plan
The Company has a 401(k) retirement plan covering substantially all employees of
the Company, whereby participants may contribute a percentage of their
compensation, as allowed under applicable laws. The plan provides for a
matching contribution by the Company. Participants are 100% vested in
participant contributions and become vested in employer matching contributions
over a period of six years. The Company recognized $1,127, $1,425 and $1,263 in
expense under this employee benefit plan for 2000, 1999 and 1998, respectively.
12. Stockholders' Equity
Common Stock
Holders of Class A Common Stock are entitled to one vote per share. Holders of
Class B Common Stock are entitled to two votes per share. Once the Class B
Common Stock is no longer held by the two principal stockholders of the Company
or their families as defined, the stock is automatically converted into Class A
Common Stock on a share per share basis.
Preferred Stock
Effective December 31, 1993, the Board of Directors approved the designation of
2,000,000 shares of preferred stock with par value
30
of $.01 per share. The Board of Directors has the authority to issue these
shares and to determine the rights, terms and conditions of the preferred stock
as needed.
Stock Buyback
As authorized by its Board of Directors, the Company purchased 925,100, 485,000
and 1,134,289 shares of the Company's outstanding Class A Common Stock in the
open market and in private transactions at a cost of $7,091, $4,526 and $12,866
for 2000, 1999 and 1998, respectively.
Incentive Stock Plan
The Company maintains the U.S. Xpress Enterprises, Inc. Incentive Stock Plan
(the "Plan"). The Plan provides for the issuance of shares of restricted common
stock of the Company, as well as both incentive and nonstatutory stock options.
There may be issued under the Plan (as restricted stock, in payment of
performance grants, or pursuant to the exercise of stock options) an aggregate
of not more than the greater of (a) 1,038,138 shares of Class A Common Stock, or
(b) 8% of the total number of common shares of the Company outstanding at any
given time. Participants of the Plan may include key employees as selected by
the compensation committee of the Board of Directors. Under the terms of the
Plan, the Company may issue restricted shares of common stock, grant options, or
issue performance grants to participants in amounts and for such prices as
determined by the compensation committee. All options will vest immediately in
the event of a change in control of the Company, or upon the death, disability,
or retirement of the employee.
Under a 1993 sale of restricted stock to certain stockholder employees, notes
receivable from stockholders were issued. The notes bear interest at 6% and are
due to the Company upon demand.
On July 1, 2000, 60,000 restricted shares of Class A Common Stock were issued to
certain executive officers. The restrictions on these 60,000 shares expire over
a five-year period beginning July 3, 2001. Restrictions on these shares expire
in the event of a change in control of the Company, or upon the death,
disability or retirement of the employee.
Non-Employee Directors Stock Plan
In August 1995, the Company adopted the 1995 Non-Employee Directors Stock Award
and Option Plan (the "Directors Stock Plan") providing for the issuance of stock
options to non-employee directors upon their election to the Company's Board of
Directors. The Directors Stock Plan also provides non-employee directors the
option to receive certain board-related compensation in the form of the
Company's Class A Common Stock in lieu of cash. The number of shares of Class A
Common Stock available for option or issue under the Directors Stock Plan may
not exceed 50,000 shares.
The Directors Stock Plan provides for the grant of 1,200 options to purchase the
Company's Class A Common Stock to each non-employee director upon the election
or re-election of each such director to the board. The exercise price of
options issued under the Directors Stock Plan is set at the fair market value of
the Company's stock on the date granted. Options vest ratably on each of the
first, second and third anniversaries of the date of grant.
If a board member elects to receive board-related compensation in the form of
stock, the number of shares issued to each director in lieu of cash is
determined based on the amount of earned compensation divided by the fair market
value of the Company's stock on the date compensation is earned.
Employee Stock Purchase Plan
In August 1997, the Company adopted an Employee Stock Purchase Plan (the "ESPP")
through which employees meeting certain eligibility criteria may purchase shares
of the Company's common stock at a discount. Under the ESPP, eligible employees
may purchase shares of the Company's common stock, subject to certain
limitations, at a 15% discount. Common stock is purchased for employees in
January and July of each year. Employees may not purchase more than 1,250
shares in any six-month period or purchase stock having a market value of more
than $25 per calendar year. The Company has reserved 300,000 shares for issuance
under the ESPP. In January and July 2000, employees purchased 30,899 and 25,501
shares of the Company's Class A Common Stock at $6.27 and $5.74 per share,
respectively. In January and July 1999, employees purchased 9,752 and 12,957
shares of the Company's Class A Common Stock at $12.75 and $9.09 per share,
respectively. In January and July 1998, employees purchased 17,001 and 9,007
shares of the Company's Class A Common Stock at $16.15 and $14.24 per share,
respectively, At December 31, 2000, 194,883 shares were available for purchase
under the ESPP. In January 2001, employees purchased 22,042 shares of the
Company's Class A Common Stock at $4.73 per share.
31
Stock Options
Stock options generally vest over periods ranging from three to six years and
expire ten years from the date of grant. A summary of the Company's stock
option activity for 2000, 1999 and 1998 follows:
Weighted Average
Shares Option Price Exercise Price
-------- ---------------- ----------------
Outstanding at December 31, 1997 271,243 $ 4.72 -- 19.13 $11.10
Granted at market price 108,550 12.25 -- 20.88 12.63
Exercised (15,167) 4.72 -- 6.88 6.02
Canceled or expired (7,500) 6.88 -- 19.13 15.04
-------
Outstanding at December 31, 1998 357,126 4.72 -- 20.88 11.70
Granted at market price 51,300 10.13 -- 15.00 13.13
Canceled or expired (14,000) 12.25 -- 19.13 14.71
-------
Outstanding at December 31, 1999 394,426 4.72 -- 20.88 11.78
Granted at market price 387,150 6.50 -- 8.06 7.11
Exercised (1,200) -- 6.63 6.63
Canceled or expired (73,950) 6.50 -- 20.88 10.84
-------
Outstanding at December 31, 2000 706,426 4.72 -- 20.88 9.33
=======
For SFAS No. 123 purposes, the fair value of each option grant and each stock
purchase right under the ESPP has been estimated as of the date of grant using
the Black-Scholes pricing model with the following weighted average assumptions
for 2000, 1999 and 1998, respectively: risk-free interest rate of 6.44%, 5.26%
and 4.52%, expected life of five years, expected dividend yield of 0% and
expected volatility of 60%, 60% and 61%. Using these assumptions, the fair
value of the awards granted in 2000, 1999 and 1998 is $776, $473 and $756,
respectively, which would be amortized as compensation expense over the vesting
period. Had compensation cost for the plan been determined in accordance with
SFAS No. 123, utilizing the assumptions detailed above, the Company's pro forma
net income would have been $1,592, $11,083 and $20,500 for 2000, 1999 and 1998,
respectively. Pro forma basic earnings per share would have been $0.11, $0.75
and $1.36 for 2000, 1999 and 1998, respectively. Pro forma diluted earnings per
share would have been $0.11, $0.75 and $1.35 for the same periods.
The pro forma effect on net income in this pro forma disclosure may not be
representative of the pro forma effect on net income in future years, because it
does not take into consideration pro forma compensation expense related to
grants made prior to March 31, 1996.
The weighted average fair value of options granted during 2000, 1999 and 1998
was $4.10, $7.42 and $6.45, respectively. Of the options outstanding at
December 31, 2000, 494,476 have exercise prices between $4.72 and $8.06, with a
weighted average exercise price of $6.73 and a weighted average remaining
contractual life of 7.9 years. Of these options, 132,576 are exercisable at a
weighted average exercise price of $5.59. Options to exercise 90,850 shares
have exercise prices between $9.50 and $12.25, with a weighted average exercise
price of $11.93 and a weighted average remaining contractual life of 7.8 years.
Of these options, 41,855 are exercisable at a weighted average exercise price of
$12.05. Options to exercise the remaining 121,100 shares have exercise prices
between $15.00 and $20.88, with a weighted average exercise price of $17.97 and
a weighted average remaining contractual life of 7.0 years. Of these options,
61,300 were exercisable at a weighted average exercise price of $18.56. As of
December 31, 2000, 235,731 of the options outstanding were exercisable with a
weighted average exercise price of $10.11 per share. As of December 31, 1999,
209,564 of the options outstanding were exercisable with a weighted average
exercise price of $9.13 per share. As of December 31, 1998, 128,423 of the
options outstanding were exercisable with a weighted average exercise price of
$7.86 per share.
13. Fair Value of Financial Instruments
The carrying values of cash and cash equivalents, customer and other
receivables, accounts payable and accrued liabilities are reasonable estimates
of their fair values because of the short maturity of these financial
instruments. Based on the borrowing rates available to the Company for long-
term debt with similar terms and average maturities, the carrying amounts
approximate the fair value of such financial instruments.
32
14. Operating Segments
The Company has two reportable segments based on the types of services it
provides to its customers: U.S. Xpress, which provides truckload operations
throughout the continental United States and parts of Canada and Mexico, and
CSI/Crown, which provides transportation services to the floorcovering industry.
The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. All intersegment sales prices are
market based. The Company evaluates performance based on operating income of
the respective business units.
U.S. Xpress CSI/Crown Consolidated
----------- --------- ------------
1998
- ----
Revenues - external customers $506,868 $74,533 $581,401
Intersegment revenues 6,286 0 6,286
Operating income 41,837 2,568 44,405
Depreciation and amortization 24,874 896 25,770
Total assets 406,386 20,153 426,539
Capital expenditures 95,653 1,169 96,822
1999
- ----
Revenues - external customers $650,499 $57,713 $708,212
Intersegment revenues 5,530 0 5,530
Operating income 28,869 2,658 31,527
Depreciation and amortization 28,932 1,082 30,014
Total assets 390,922 18,115 409,037
Capital expenditures 74,180 442 74,622
2000
- ----
Revenues - external customers $728,924 $58,161 $787,085
Intersegment revenues 4,659 0 4,659
Operating income 17,107 2,824 19,931
Depreciation and amortization 33,447 1,264 34,711
Total assets 400,221 20,021 420,242
Capital expenditures 55,455 732 56,187
The difference in consolidated operating income as shown above and consolidated
income before income tax provision on the consolidated statements of operations
is net interest expense of $15,449, $12,388 and $9,908 in 2000, 1999 and 1998,
respectively.
33
15. Quarterly Financial Data (Unaudited)
Quarter Ended
-----------------------------------------------------------------------
March 31 June 30 September 30 December 31 Total
---------- --------- -------------- ------------- --------
Year Ended December 31, 2000
Operating revenue $191,841 $202,427 $197,135 $195,682 $787,085
Income from operations 4,842 9,122 6,626 (659) 19,931
Income before income taxes 1,447 5,150 2,481 (4,596) 4,482
Net income 868 3,084 1,368 (3,255) 2,065
Earnings per share - basic (1) 0.06 0.22 0.10 (0.24) 0.15
Earnings per share - diluted (1) 0.06 0.22 0.10 (0.24) 0.15
Year Ended December 31, 1999
Operating revenue $161,266 $176,439 $180,702 $189,805 $708,212
Income from operations 9,359 9,316 6,538 6,314 31,527
Income before income taxes 6,194 6,212 3,433 3,300 19,139
Net income 3,717 3,727 2,058 1,879 11,381
Earnings per share - basic 0.25 0.25 0.14 0.13 .77
Earnings per share - diluted 0.25 0.25 0.14 0.13 .77
(1) The sum of quarterly earnings per share differs from annual earnings per
share because of differences in the weighted average number of common
shares used in the quarterly and annual computations.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
No items have occurred within the 24 months prior to December 31, 2000 involving
a change of accountants or disagreements on accounting and financial disclosure
matters.
34
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The section entitled "Nominees for Directorships" in the Proxy Statement of the
registrant for the annual meeting of shareholders to be held May 8, 2001 is
incorporated herein by reference. Information regarding the executive officers
of the registrant is presented in Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the caption "Executive Compensation and Other
Information" of the Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the caption "Voting Securities and Principal
Holders Thereof" of the Proxy Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the caption "Election of Directors" and "Certain
Transactions" of the Proxy Statement is incorporated herein by reference.
35
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements:
The financial statements are set forth in Part II, Item 8.
2. Financial Statement Schedules:
Report of Independent Public Accountants
Schedule II - - Valuation and Qualifying Accounts
3. Exhibits:
See the Exhibit Index listing on Page 40 of this Form 10-K.
(b) Reports on Form 8-K
A Form 8-K was filed on July 17, 2000 with the Securities and Exchange
Commission to report the completion of the acquisition of a 13% membership
interest in Transplace.com.
36
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To U.S. Xpress Enterprises, Inc.:
We have audited in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements of U.S. XPRESS ENTERPRISES,
INC. (a Nevada corporation) AND SUBSIDIARIES included in this Form 10-K and have
issued our report thereon dated February 5, 2001. Our audit was made for the
purpose of forming an opinion on the financial statements taken as a whole.
Schedule II is the responsibility of the Company's management and is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not part of the basic consolidated financial statements. This schedule
has been subjected to the auditing procedures applied in the audit of the basic
consolidated financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Chattanooga, Tennessee
February 5, 2001
37
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED
DECEMBER 31, 1998, 1999 AND 2000
(In Thousands)
Balance at
Beginning Charged to Charged to Balance at End
Description of Period Cost/Expenses Other (1) Deductions(2) of Period
- ----------- ---------- ------------- ---------- ----------- --------------
FOR THE YEAR ENDED 12/31/98
Reserve for doubtful accounts $2,900 $ 641 $2,219 $2,009 $3,751
FOR THE YEAR ENDED 12/31/99
Reserve for doubtful accounts $3,751 $1,419 $ 683 $2,598 $3,255
FOR THE YEAR ENDED 12/31/00
Reserve for doubtful accounts $3,255 $4,500 $ 204 $3,940 $4,019
(1) For the year ended 12/31/98
Recoveries on accounts written off $ 168
Balance acquired through purchase of Victory 252
Balance acquired through purchase of PST Vans 1,799
------
$2,219
======
For the year ended 12/31/99
Recoveries on accounts written off $ 283
Final adjustment resulting from purchase of PST Vans 400
------
$ 683
======
For the year ended 12/31/00
Recoveries on accounts written off $ 204
======
(2) Accounts written off
38
(c) Exhibits
Exhibit No. Description
- ----------- -----------
(1) 3.1 Restated Articles of Incorporation of the Company.
(1) 3.2 By-Laws of the Company.
(1) 4.1 Restated Articles of Incorporation of the Company filed as Exhibit 3.1 and incorporated herein
by reference.
(1) 4.2 By-Laws of the Company filed as Exhibit 3.2 and incorporated herein by reference.
(1) 4.3 Stock Purchase Agreement dated June 10, 1993 by and among Max L. Fuller, Patrick E. Quinn and
the Company.
(1) 4.4 Agreement of Right of First Refusal with regard to Class B Shares of the Company dated May 11,
1994 by and between Max L. Fuller and Patrick E. Quinn.
(1) 10.1 Accounts Financing Agreement (Security Agreement) dated February 2, 1988, as amended, between
Congress Financial Corp. (Southern) and Southwest Motor Freight, Inc.
(1) 10.2 Security Agreement dated December 18, 1985, as amended, by and between Exchange National Bank
of Chicago and U.S. Xpress, Inc.
(1) 10.3 Security Agreement dated September 17, 1987, as amended, by and between Exchange National Bank
of Chicago and Crown Transport Systems, Inc.
(1) 10.4 1993 Incentive Stock Plan of the Company.
(1) 10.5 Stock Option Agreement Under 1993 Incentive Stock Plan.
(1) 10.6 Stock Rights and Restrictions Agreement for Restricted Stock Award Under 1993 Incentive Stock
Plan.
(1) 10.7 Self-Funded Employee Benefits Plan Document of the Company.
(1) 10.8 Service Agreement dated May 2, 1994 by and between TTC, Illinois, Inc. and the Company for the
provision of leased personnel to the Company.
(1) 10.9 Salary Continuation Agreement dated June 10, 1993 by and between the Company and Max L. Fuller.
(1) 10.10 Salary Continuation Agreement dated June 10, 1993 by and between the Company and Patrick E.
Quinn.
(1) 10.11 Stock Purchase Agreement dated November 28, 1990 by and between the Company and Clyde Fuller for the
acquisition by the Company of the capital stock of Southwest Motor Freight, Inc. held by Mr. Fuller, such
stock constituting all of the issued and outstanding capital stock of Southwest Motor Freight, Inc.
(1) 10.12 Stock Purchase Agreement dated September 30, 1992 by and between the Company and Clyde Fuller for the
acquisition by the Company of the capital stock of Chattanooga Leasing, Inc. held by Mr. Fuller, such stock
constituting all of the issued and outstanding capital stock of Chattanooga Leasing, Inc.
(1) 10.13 Articles of Merger and Plan of Merger filed February 24, 1993, pursuant to which Chattanooga Leasing, Inc.
was merged with and into Southwest Motor Freight, Inc.
39
Exhibit No. Description
- ----------- -----------
(1) 10.14 Stock Purchase Agreement dated January 1, 1993 by and among Max L. Fuller, Patrick E. Quinn and the Company
for the acquisition by the Company of the capital stock of U.S. Xpress, Inc. held by Messrs. Fuller and
Quinn, such stock constituting all of the issued and outstanding capital stock of U.S. Xpress, Inc.
(1) 10.15 Stock Purchase Agreement dated January 1, 1993 by and among Max L. Fuller, Patrick E. Quinn and the Company
for the acquisition by the Company of the capital stock of U.S. Xpress Leasing, Inc. held by Messrs. Fuller
and Quinn, such stock constituting all of the issued and outstanding capital stock of U.S. Xpress Leasing,
Inc.
(1) 10.16 Stock Purchase Agreement dated March 10, 1994 by and between the Company and L.D. Miller, III for the
acquisition by the Company of the capital stock of Crown Transport Systems, Inc. held by Mr. Miller, such
stock constituting 40% of the issued and outstanding capital stock of Crown Transport Systems, Inc.
(1) 10.17 Stock Purchase Agreement dated March 17, 1994 by and between the Company, Patrick E. Quinn and Max L. Fuller
for the acquisition by the Company of the capital stock of Crown Transport Systems, Inc. held by Messrs.
Quinn and Fuller, such stock constituting 60% of the issued and outstanding capital stock of Crown Transport
Systems, Inc.
(1) 10.18 Stock Purchase Agreement dated March 18, 1994 by and between the Company and Ken Adams for the acquisition
by the Company of 50% of the capital stock of Hall Systems, Inc. held by Mr. Adams and the grant of an
option to the Company to purchase the remaining 50% of the capital stock of Hall Systems, Inc. from Mr.
Adams, exercisable beginning April 1, 1997.
(2) 10.19 Software Acquisition Agreement dated September 15, 1994 by and among Qualcomm Incorporated, Xpress Data
Services, Inc., U.S. Xpress Enterprises, Inc., Patrick E. Quinn, Max L. Fuller, Information Management
Solutions, Inc. and James Coppinger.
(3) 10.20 Stock Purchase Agreement dated October 31, 1994 by and between the Company and Ken Frohlich for the
acquisition by the Company of the capital stock of National Freight Systems, Inc. held by Mr. Frohlich, such
stock constituting all of the issued and outstanding capital stock of National Freight Systems, Inc.
(4) 10.21 Asset Purchase Agreement with respect to acquisition of CSI/Reeves, Inc.
(5) 10.22 Stock Purchase Agreement with respect to Hall Systems, Inc.
(5) 10.23 Credit Agreement with NationsBank.
(6) 10.24 Amendment No. 1 to Credit Agreement with NationsBank.
(7) 10.25 Asset Purchase Agreement dated June 18, 1996 with respect to acquisition of Michael Lima
Transportation, Inc.
(7) 10.26 Asset Purchase Agreement dated April 1, 1997 with respect to acquisition of assets from
Rosedale Transport, Inc. and Rosedale Transport, Ltd.
(7) 10.27 Asset Purchase Agreement dated April 25, 1997 with respect to acquisition of JTI, Inc.
(8) 10.28 Loan and Security Agreement dated June 24, 1997 by and between Wachovia Bank, N.A. and U.S.
Xpress Leasing.
40
Exhibit No. Description
- ----------- -----------
(9) 10.29 Stock Purchase Agreement dated as of December 24, 1997 by and between U.S. Xpress Enterprises, Inc. and
Richard H. Schaffer, Richard H. Schaffer Irrevocable Trust dated December 24, 1991 and Richard H. Schaffer
Irrevocable Non-Withdrawal Trust dated December 24, 1991.
(9) 10.30 Credit Agreement dated as of January 15, 1998 among U.S. Xpress Enterprises, Inc., Wachovia Bank, N.A.,
NationsBank, N.A., BankBoston, N.A., SunTrust Bank, Chattanooga, N.A. and the banks listed therein.
(10) 10.31 Investment and Participation Agreement between U.S. Xpress Enterprises, Inc. and Wachovia
Capital Markets, Inc.
(10) 10.32 Acquisition, Agency, Indemnity and Support Agreement between U.S. Xpress Enterprises, Inc. and
Wachovia Capital Markets, Inc.
(10) 10.33 Lease Agreement between U.S. Xpress Enterprises, Inc. and Wachovia Capital Markets, Inc.
(11) 10.34 Agreement and Plan of Merger dated as of July 7, 1998 among U.S. Xpress Enterprises, Inc., PST
Acquisition Corp. and PST Vans, Inc.
(12) 10.35 First Amendment to Credit Agreement dated as of January 15, 1998 among U.S. Xpress Enterprises, Inc.,
Wachovia Bank, N.A., NationsBank, N.A., BankBoston, N.A., SunTrust Bank, Chattanooga, N.A. and the banks
listed therein.
(12) 10.36 Second Amendment to Credit Agreement dated as of January 15, 1998 among U.S. Xpress Enterprises, Inc.,
Wachovia Bank, N.A., NationsBank, N.A., BankBoston, N.A., SunTrust Bank, Chattanooga, N.A. and the banks
listed therein.
(12) 10.37 Third Amendment to Credit Agreement dated as of January 15, 1998 among U.S. Xpress Enterprises, Inc.,
Wachovia Bank, N.A., NationsBank, N.A., BankBoston, N.A., SunTrust Bank, Chattanooga, N.A. and the banks
listed therein.
(12) 10.38 Fourth Amendment to Credit Agreement dated as of January 15, 1998 among U.S. Xpress Enterprises, Inc.,
Wachovia Bank, N.A., NationsBank, N.A., BankBoston, N.A., SunTrust Bank, Chattanooga, N.A. and the banks
listed therein.
(13) 10.39 First Amendment to the Investment and Participation Agreement dated as of November 12, 1999, among U.S.
Xpress Enterprises, Inc. and Wachovia Capital Investments, Inc.
(13) 10.40 Second Amendment to the Investment and Participation Agreement dated as of March 30, 2000, among U.S. Xpress
Enterprises, Inc. and Wachovia Capital Investments, Inc.
(13) 10.41 Third Amendment to the Investment and Participation Agreement dated as of June 13, 2000, among U.S. Xpress
Enterprises, Inc. and Wachovia Capital Investments, Inc.
(13) 10.42 U.S. Xpress Enterprises Employment Agreement with Cort J. Dondero dated as of June 13, 2000 by and between
U.S. Xpress Enterprises, Inc. and Cort J. Dondero.
(13) 10.43 Initial Subscription Agreement of Transplace.com, LLC, entered into as of April 19, 2000 by Transplace.com,
LLC, a Nevada Limited Liability Company, and Covenant Transport, Inc., J.B. Hunt Transport Services, Inc.,
M.S. Carriers, Inc., Swift Transportation Co., Inc., U.S. Xpress Enterprises, Inc., and Werner Enterprises,
Inc.
41
Exhibit No. Description
- ----------- -----------
(13)10.44 Operating Agreement of Transplace.com, LLC, made and entered into as of April 19, 2000 by Transplace.com,
LLC, a Nevada Limited Liability Company, and Covenant Transport, Inc., J.B. Hunt Transport Services, Inc.,
M.S. Carriers, Inc., Swift Transportation Co., Inc., U.S. Xpress Enterprises, Inc., and Werner Enterprises,
Inc. and Transplace.com, LLC.
10.45 Amended and Restated Credit Agreement dated as of January 31, 2001 among U.S. Xpress Enterprises, Inc.,
Wachovia Bank, N.A., Bank of America, N.A., Fleet National Bank, SunTrust Bank, and the banks listed
therein.
21 List of the current subsidiaries of the Company.
23 Consent of Independent Public Accountants.
__________________________________
(1) Filed in Registration Statement on Form S-1 dated May 20, 1994. (SEC File No. 33-79208)
(2) Filed in Pre-Effective Amendment No. 2 to Registration Statement on Form S-1 dated October 4, 1994. (SEC File
No. 33-79208)
(3) Filed in Form 10-Q dated November 17, 1994 (Commission File No. 0-24806)
(4) Filed in Form 10-Q dated November 10, 1995 (Commission File No. 0-24806)
(5) Filed in Form 10-Q dated February 13, 1996 (Commission File No. 0-24806)
(6) Filed in Form 10-Q dated November 14, 1996 (Commission File No. 0-24806)
(7) Filed in Form 10-K dated March 31, 1997 (Commission File No. 0-24806)
(8) Filed in Registration Statement Form S-1 dated August 19, 1997.
(9) Filed in Form 8-K dated January 29, 1998 (Commission File No. 0-24806)
(10) Filed in Form 10-Q dated March 31, 1998 (Commission File No. 0-24806)
(11) Filed in Form S-4 dated July 30, 1998 (Commission File No. 333-59377)
(12) Filed in Form 10-Q dated March 31, 2000 (Commission File No. 0-24806)
(13) Filed in Form 10-Q dated June 30, 2000 (Commission File No. 0-24806)
42
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on the second day
of April 2001.
U.S. XPRESS ENTERPRISES, INC.
Date: April 2, 2001 By: /s/ Ray M. Harlin
------------------- -----------------------
Ray M. Harlin
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Patrick E. Quinn Co-Chairman of the Board of Directors, April 2, 2001
- ---------------------------- President and Treasurer
Patrick E. Quinn
/s/ Max L. Fuller Co-Chairman of the Board of Directors, April 2, 2001
- ---------------------------- Vice President and Secretary
Max L. Fuller
/s/ Ray M. Harlin Director, Executive Vice President April 2, 2001
- ---------------------------- of Finance and Chief Financial
Ray M. Harlin Officer (principal financial and
accounting officer)
/s/ Cort J. Dondero Director and Chief Operating Officer April 2, 2001
- ---------------------------
Cort J. Dondero
/s/ Robert J. Sudderth, Jr. Director April 2, 2001
- ---------------------------
Robert J. Sudderth, Jr.
/s/ A. Alexander Taylor, II Director April 2, 2001
- ---------------------------
A. Alexander Taylor, II
43