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SECURITIES AND EXCHANGE COMMISSION

Form 10-K

Commission file number 0-19791

8550 W. Bryn Mawr Ave., Ste. 700, Chicago, IL 60631

(773) 824-1000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

     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 þ    No o

     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 registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K.    o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes þ    No o

     The number of shares of common stock outstanding at March 1, 2004 was 27,557,589. The aggregate market value of the voting stock of the registrant as of March 1, 2004 was approximately $980,000,000.

DOCUMENTS INCORPORATED BY REFERENCE

     1) Proxy statement to be filed on or about March 31, 2004 (Only those portions referenced herein are incorporated in this Form 10-K).

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PART I

(Thousands of dollars, except share and per share amounts)

Item 1 — Business

General Development of Business

      USF Corporation (“USF”) provides comprehensive supply chain management services in four business segments through our operating subsidiaries. In the less-than-truckload (“LTL”) segment, carriers provide regional and inter-regional delivery throughout the United States (“US”), certain areas of Canada and throughout Mexico. Our truckload (“TL”) segment offers premium regional and national truckload services. The logistics (“Logistics”) segment provides dedicated carriage, cross-dock operations, supply chain management, contractual warehousing, domestic ocean freight forwarding and reverse logistics services. Our corporate and other segment performs support activities for our business segments including executive, information technology (“IT”), corporate sales and various financial management functions. Principal subsidiaries in the LTL segment are USF Holland Inc. (“Holland”), USF Bestway Inc. (“Bestway”), USF Red Star Inc. (“Red Star”), USF Reddaway Inc. (“Reddaway”) and USF Dugan Inc. (“Dugan”). USF Glen Moore Inc. (“Glen Moore”) is our TL carrier. Logistics consists of USF Logistics Services Inc. and USF Processors Inc.

      In December 2003, we began offering transportation and logistics services in Mexico and across the United States/ Mexico border through a joint venture with the shareholders of Autolineas Mexicanas S.A. de C.V. (“ALMEX”). ALMEX, a nationwide LTL carrier in Mexico, has a network of 52 terminals providing service to virtually the entire country.

      During 1999, we acquired all of the outstanding shares of Processors Unlimited Company, Ltd., a provider of reverse logistics services to the grocery and drug industries; and Underwood Trucking, an Indiana-based truckload carrier. Total consideration for all 1999 acquisitions amounted to approximately $39,000 of cash and debt assumed. During 2000, we acquired Tri-Star Corporation, Inc., a Tennessee-based truckload carrier. Total consideration for the 2000 acquisition amounted to approximately $17,000 of cash and debt assumed.

      In February 2003, we acquired the stock of System 81 Express, Inc., a truckload carrier based in Tennessee that owned or operated approximately 140 tractors and 260 trailers, for approximately $4,700 in cash and assumed debt. In addition, contingent performance based payments totaling $314 were subsequently made to the former owners of System 81 Express.

      In April 2003, we paid $3,000 in cash for certain assets and the business of Plymouth Rock Transportation Corporation, a Massachusetts-based LTL carrier that provided overnight freight service to 11 Northeastern states. Contingent purchase price payments over four years totaling up to approximately $3,000 may be made to the former owners of Plymouth Rock Transportation Corporation if certain revenue goals are achieved.

      During the first quarter of 2002 we relinquished our 50% interest in our consolidated subsidiary, USF Asia (“Asia”). We recorded a $12,760 charge, which included a $10,000 negotiated payment to our former partner. The remaining $2,760 represented the relinquishment of our net assets to our former partner. We initiated our commitment to dispose of our Asia operation in the fourth quarter of 2001. Accordingly, as required by Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, we applied the provisions of Accounting Principles Board (“APB”) Opinion No. 30, “Reporting the Results of Operations — Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions.” The Asia operation was a component of our freight forwarding segment. APB No. 30 required presentation of

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a business disposal in discontinued operations only when a company disposed of an entire segment. We therefore did not present the Asia operation in discontinued operations.

      From 1997 to 2001 we made several acquisitions in our freight forwarding segment. Total consideration amounted to approximately $96,000 of cash and debt assumed.

      During 2002, we decided to focus on our core competencies of providing high value comprehensive supply chain management services, and in October 2002 disposed of our non-core freight forwarding business that included several companies operating domestically under the name USF Worldwide Inc. (“Worldwide”) and in Great Britain under the name USF Worldwide Logistics (UK) Ltd. (“LTD”). During the fourth quarter of 2002, we recorded an after-tax charge for the disposal of Worldwide amounting to $13,239. As a result, our consolidated financial statements have been restated to reflect the non-core freight forwarding segment (excluding Asia operations) as discontinued operations for all periods presented. Prior to the disposal, year to date 2002 losses after-tax benefits amounted to $16,978. In December 2002, we reacquired the ocean freight forwarding businesses of Worldwide for total consideration of $3,000. These businesses are recorded in continuing operations in the logistics segment.

      Segment financial information is included in Note 13 to the Consolidated Financial Statements found later in this Form 10-K.

LTL Trucking

      LTL shipments are defined as shipments of less than 10,000 pounds. Typically, LTL carriers transport freight along scheduled routes from multiple shippers to multiple consignees utilizing a network of terminals together with fleets of line-haul and pickup and delivery tractors and trailers. Freight is picked up from customers by local drivers and consolidated for shipment. The freight is then loaded into intercity trailers and transferred by line-haul drivers to the terminal servicing the delivery area. There, the freight is transferred to local trailers and delivered to its destination by local drivers.

      LTL carriers are generally categorized as regional, interregional or long-haul carriers, depending on the distance freight travels from pickup to final delivery. Regional LTL carriers usually have average lengths of haul of 500 miles or less and tend to provide either overnight or second-day service. Regional LTL carriers usually are able to load freight for direct transport to a destination terminal, thereby avoiding the costly and time-consuming use of relay or breakbulk terminals (where freight is rehandled and reloaded to its ultimate destination). In contrast, long-haul LTL carriers (average lengths of haul in excess of 1,000 miles) operate networks of relay or breakbulk and satellite terminals (hub-spoke systems) and rely heavily on interim handling of freight. Interregional carriers (500 to 1,000 miles per average haul) also rely on breakbulk terminals but to a lesser degree than long-haul carriers.

      Our LTL trucking subsidiaries principally compete against regional, interregional and long-haul LTL carriers. To a lesser degree, we compete against truckload carriers, overnight package companies, railroads and airlines. Significant barriers to entry into the regional LTL market exist as a result of the substantial capital requirements for terminals, tractors and trailers. LTL is a competitive market with intense pricing pressure and increasing costs that present a challenge to profit margins.

      Our LTL trucking subsidiaries’ three primary service products are USF Premier^SM (“Premier”), USF PremierPlus^SM (“PremierPlus”) and USF Guaranteed^SM (“Guaranteed”). Premier service is overnight and second-day deliveries generally within each of our LTL trucking subsidiaries’ regional service areas. PremierPlus service is interregional longer haul service between two of our LTL trucking subsidiaries. Guaranteed service includes deliveries within our regional and interregional service areas with a guaranteed

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date of delivery. Revenue for our Premier, PremierPlus and Guaranteed services accounted for approximately 87%, 12% and 1%, respectively, of the total LTL trucking revenue in 2003. Our Premier and PremierPlus revenue included both LTL and TL shipments. The average length of haul, for combined inter- and intra-regional service was approximately 493 miles.

      Holland is the largest of our operating subsidiaries, transporting LTL shipments interstate throughout the Central US, Eastern Canada and into the Southeastern US. Holland operates from 57 terminals and uses predominantly single 48 and 53 foot trailers. Its average length of Premier line-haul in 2003 was approximately 385 miles.

Truckload Trucking

      TL shipments are defined as shipments of 10,000 or more pounds. Typically, TL carriers transport freight along irregular routes from single shippers to single consignees, without the necessity of a network of terminals, using fleets of line-haul sleeper tractors and trailers. Full truckload freight is picked up from the customer and delivered to its final destination by either an employee driver or an independent owner-operator under a leasing agreement.

      Glen Moore transports TL shipments interstate throughout the US generally from the Northeastern and Southeastern states to the West Coast and into the North Central states. It also operates over shorter distances in certain of its dedicated customer lanes. At the end of 2003, Glen Moore operated 857 tractors and 3,001 trailers. The company primarily utilizes sleeper line-haul tractors and 53 foot trailers. Its average length of haul in 2003 was approximately 200 miles for its short haul dedicated business and approximately 700 miles for its traditional long-haul business.

Logistics Subsidiaries

      Logistics provides dedicated carriage, cross-dock operations, supply chain management, contractual warehousing, domestic ocean freight forwarding and reverse logistics services to the retail and industrial markets with a focus on consolidation/distribution and fulfillment programs.

      Logistics has grown through acquisitions in the warehousing industry and start up operations designed to serve large customers’ special needs in the steel industry, wholesale food industry, specialized retail customers and other freight management operations. Our cross-docking operation, which accounts for 41% of Logistics’ revenue, has increased in size through a combination of geographic acquisitions and internal expansion to meet the needs of its retail customers. It operates out of 19 centers in the larger metropolitan areas of the US.

Seasonality

      Our results, consistent with the trucking industry in general, typically show seasonal patterns with tonnage and revenue declining during the winter months. Also, inclement weather in the winter months can negatively affect our results.

Customers

      We are not dependent upon any particular industry. We provide services to a wide variety of customers including many large, publicly held companies. For the year ended December 31, 2003, no single customer accounted for more than 3.5% of our revenue and our 50 largest customers as a group accounted for approximately 30% of total revenue.

Fuel

      The motor carrier industry is dependent upon the availability of diesel fuel. Shortages of fuel, increases in fuel costs or fuel taxes, or rationing of petroleum products could have a material adverse effect on our profitability. Our LTL regional trucking subsidiaries periodically assess a fuel surcharge to offset increases in

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fuel prices. Fuel surcharges in the TL industry are more difficult to implement and collect. In most cases, TL operators generally recover the increases in fuel costs through increases in rates charged for their services. We have not experienced any difficulty in maintaining fuel supplies sufficient to support our operations. We do not use derivatives to manage risk associated with our fuel costs.

Regulation

      We operate under regulatory requirements from the Department of Transportation, the Environmental Protection Agency and various other federal and state agencies. These regulations include driver hours of service rules, drug testing, emission standards, and underground storage tank testing and monitoring. Regulatory and legislative changes may influence operating practices of the trucking industry, the demands for services to shippers, and the costs of providing those services.

      Effective January 1, 2004, the federal government instituted new hours of service rules changing the number of hours drivers can work in a 24 hour day. We have implemented procedures to ensure compliance with the law, as well as to minimize the effect to our cost of operations. We expect minimal impact on our LTL business because of the shorter length of haul.

Insurance and Safety

      We are effectively self-insured on our significant operations up to $5,000 per occurrence for cargo loss and damage, bodily injury and property damage, and up to $2,500 per occurrence for workers’ compensation claims. Additionally, we have obtained third-party insurance for workers’ compensation claims for amounts in excess of $2,500 per occurrence and all other losses in excess of $5,000. As of December 31, 2003, our financial statements included an estimated total liability of $126,314 with respect to these exposures.

      Each of our operating subsidiaries employs safety specialists and maintains safety programs. In addition, we employ specialists to perform compliance checks and conduct safety tests throughout our operations.

      Our insurance expense as a percentage of revenue over the last three years was as follows:

Employees

      At December 31, 2003, we employed approximately 21,000 people, of whom approximately 48% were members of unions. Of these union workers, approximately 90% were employed by Holland or Red Star and belonged to the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (“IBT”). Members of the IBT at Holland and Red Star are presently working under the terms of a five-year, industry-wide labor agreement that expires in March 2008.

Forward-Looking Statements

      Certain statements contained in this document or in documents that we incorporate by reference are “forward-looking statements” as outlined in the Private Securities Litigation Reform Act of 1995, such as statements relating to management’s views with respect to future events and financial performance. These statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical experience or from future results expressed or implied by them. Accordingly, a forward-looking statement is not a prediction of future events or circumstances, and those future events or circumstances may not occur. A forward-looking statement is usually identified by our use of certain terminology, including “believes,” “expects,” “may,” “will,” “should,” “seeks,” “pro forma,” “anticipates,”

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“intends” or “plans” or by discussions of strategies, intentions or outlook. Potential risks and uncertainties include, but are not limited to:

	•	General economic conditions and specific conditions in the markets in which we operate, which can affect demand for our services.
	•	The costs and difficulties in execution of certain of our sales, marketing, and IT functions.
	•	Competition from other transportation and logistics services providers.
	•	Our ability to adapt to technological change and to compete with new or improved services offered by our competitors.
	•	Increases in motor fuel prices (see “Fuel”).
	•	Work stoppages, strikes or slowdowns by our employees.
	•	Changes in government regulation (see “Regulation”).
	•	Effects of weather.
	•	Availability of financing on terms acceptable to us.
	•	Other uncertainties detailed herein and at various times in Securities and Exchange Commission filings and press releases of USF Corporation.

      We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise except as required by applicable laws and regulations.

Available Information

      We make available free of charge on or through our Web site at www.usfc.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission.

Item 2 — Properties

      Our executive offices are located at 8550 West Bryn Mawr Ave., Ste. 700, Chicago, IL 60631. Our 27,500 square foot facility is occupied under a lease terminating in August 2008.

      Our network of 249 terminals (125 are owned and 124 are leased) is a key element in the operation of our LTL trucking subsidiaries. The terminals vary significantly in size according to the markets served. Sales personnel at each terminal are involved in the solicitation of new business. Each terminal maintains a team of dispatchers who communicate with customers and coordinate local pickup and delivery drivers. Terminals also maintain teams of dockworkers, line-haul drivers and administrative personnel. Certain of our larger and geographically located terminals have maintenance facilities and mechanics. Each terminal is directed by a terminal manager who has general supervisory responsibilities and also plays an important role in monitoring costs and service quality.

      Our TL subsidiary operates from 3 terminals (2 are owned and 1 is leased), and our logistics subsidiaries operate from 65 facilities (8 are owned and 57 are leased).

Item 3 — Legal Proceedings

      Our trucking subsidiaries are parties to a number of proceedings brought under the Comprehensive Environmental Response, Compensation and Liability Act, (CERCLA). They have been made parties to these proceedings as an alleged generator of waste disposed of at hazardous waste disposal sites. In each case, the Government alleges that the parties are jointly and severally liable for the cleanup costs. Although joint

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and several liability is alleged, these proceedings are frequently resolved on the basis of the quantity of waste disposed of at the site by the generator. Our potential liability varies greatly from site to site. For some sites the potential liability is de minimis and for others the costs of cleanup have not yet been determined. It is not feasible to predict or determine the outcome of these or similar proceedings brought by state agencies or private litigants. We believe such liability, if any, would not materially adversely affect our financial condition or results of operations.

      Our Dugan subsidiary was the subject of a criminal investigation by the City of Houston and an administrative investigation by the Texas Commission on Environmental Quality arising from inadvertent diesel releases from Dugan’s Northfield facility located in Houston, Texas. The City of Houston and State of Texas filed a misdemeanor complaint against Dugan that has been resolved as of November 12, 2003 based upon Dugan’s payment of the sum of $70 plus court costs. Dugan has taken and continues to take measures to respond to the environmental effects of these releases and to curtail further releases. Dugan has also brought suit against the environmental consultant who reviewed the Northfield facility prior to Dugan’s acquisition of the property in 1998.

      On December 23, 2003, Idealease Services, Inc. (“Idealease”) filed a complaint against Logistics, in the Circuit Court of Cook County in Chicago, Illinois. Idealease is asking the court to require Logistics to specifically perform an alleged contractual obligation to buy back from Idealease a fleet of vehicles it claims is valued at approximately $14,500 or to pay Idealease that amount. Idealease also contends that Logistics is liable for $557 in lease payments and that certain riders to a lease agreement are invalid due to a lack of consideration. Logistics denies the material allegations in the Idealease complaint and plans to vigorously contest the lawsuit in court.

      We are involved in other litigation arising in the ordinary course of business, primarily involving claims for bodily injury, property damage, and workers’ compensation. We believe the ultimate recovery or liability, if any, resulting from such litigation, individually or in total, would not materially adversely affect our financial condition or results of operations.

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

      None.

PART II

Item 5 — Market for Registrant’s Common Equity and Related Stockholder Matters

      Our common stock trades on The Nasdaq Stock Market® under the symbol: USFC. On March 4, 2004, there were approximately 14,000 beneficial holders of our common stock. For the high and low sales prices of our common stock for each full calendar quarter for 2003 and 2002, see Item 7 — Management’s Discussion and Analysis.

      Since July 1992, we have paid a quarterly dividend of $0.093333 per share. Although it is our present intention to continue paying quarterly dividends, the timing, amount and form of future dividends will be determined by our Board of Directors and will depend, among other things, on our results of operations, financial condition, cash requirements, certain legal requirements and other factors deemed relevant. See “Management’s Discussion and Analysis of Results of Operations and Financial Condition — Liquidity and Capital Resources.”

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      The following selected financial data should be read in conjunction with the consolidated financial statements and notes under Item 8 of this Form 10-K.

Selected Consolidated Financial Data

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      In January 2002, we relinquished our interest in USF Asia and incurred a charge of $12,760, which was included in income from continuing operations. In addition, $6,000 in loans were made to USF Asia, which were subsequently written off in the fourth quarter of 2002. Also in 2002, upon adoption of SFAS No. 142, we recorded a goodwill impairment charge of $70,022 at USF Worldwide, our discontinued freight forwarding segment. The charge was shown as a cumulative effect of change in accounting principle.

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EXECUTIVE SUMMARY

      2003 was a challenging year for USF. We experienced softness in the US economy, increases in our costs of labor and insurance, intense pricing pressure, and geographic expansion of our competitors. Despite these conditions, we earned $44,101 in income from continuing operations and generated a net increase in cash of $67,501. However, we recognized that within a changing, more competitive marketplace, our business model needed to be changed to remain competitive and grow the business. Under the direction of our leadership team, we will be focused in 2004 on becoming a ‘company of one’, projecting a common face to our customers so that in their dealings with any combination of companies within the USF system, the operations appear to be seamless. The opportunity is to capitalize on the strength of the operating companies by availing ourselves of the synergies normally found in a company the size of USF Corporation. Initiatives to be implemented in 2004 include:

	•	The deployment of a ‘best practices’ group aimed at increasing productivity across operating companies as well as providing for significant cost reductions.
	•	Placing a stronger focus on both corporate accounts and the cross-selling of regional and inter-regional products across all operating units.
	•	A more rigorous budget process with heightened awareness of capital spending levels along with stronger profit and loss accountability across all operating units.
	•	A new product, USF MexicoSM, will increase cross-border opportunities for the LTL, TL and Logistics businesses and also provide USF with a significant competitive advantage over other transportation companies.
	•	More focused IT plans and structure that will be better aligned with strategic initiatives.

      While we remain confident that USF will be a more focused and competitive company by the end of 2004, there are risks and uncertainties that are inherent in the transportation and logistics markets that may impact our results. Examples include fuel costs, industry consolidation, regulatory issues, general economic weakness, weather, customer failures and others.

CONSOLIDATED RESULTS

      Our revenue and net income (loss) for 2001 through 2003 was as follows:

      The following comments provide an understanding of significant items that were included in net income (loss) during each of the three years presented.

	•	Our net loss for 2002 included a goodwill impairment charge of $70,022 at USF Worldwide, our discontinued freight forwarding segment. The charge resulted from the adoption of SFAS No. 142.
	•	Our net income (loss) for 2003 and 2002 was negatively impacted by our losses from discontinued freight forwarding operations of $338 and $16,978, respectively.
	•	Our net loss for 2002 included a loss of $13,239 related to the disposal of our freight forwarding segment. The disposal of this segment was the result of taking the action necessary to better focus on our core competencies of providing high value comprehensive supply chain management services.

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	•	Our net loss for 2002 included a charge of $12,760 related to the relinquishment of our interest in USF Asia to better focus on our core competencies. There were also loans of $6,000 that were forgiven in 2002 related to the relinquishment.
	•	Our net income for 2003 was negatively impacted by $1,467 due to a change in the accounting for revenue and expense recognition. This change was made to recognize the increase in our average length of haul of freight, which resulted from our implementation of new marketing strategies.
	•	Our net income for 2003 included a gain of approximately $6,100 from the sale of our Red Star Newark terminal.

      Our consolidated financial statements have been restated to reflect the non-core freight forwarding segment as discontinued operations. Unless otherwise indicated, the following discussion relates to our continuing operations.

RESULTS OF OPERATIONS

LTL Group

      Our revenue, income from operations and operating ratios for 2001 through 2003 for our LTL group was as follows:

      Our LTL segment includes our LTL operating companies, each of which generates revenue from LTL and TL shipments. Revenue from LTL shipments represents approximately 94% of the revenue in the LTL segment. LTL statistics presented in the table below only include revenue from LTL shipments.

2003 Compared to 2002

      In 2003 our LTL segment’s total revenue and income from operations increased from 2002 by 1.7% and 5.1%, respectively. The following provides an understanding of the factors that impacted our operating results:

	•	LTL tonnage increased at Reddaway 6.3% resulting in a 9.0% increase in LTL revenue.
	•	Revenue increased by 2.4% at Holland. A difficult industrial economy for most of 2003, particularly in the Midwest, and increased competition impacted our ability to grow.
	•	Revenue at Red Star decreased by 13.5% following our strategic decision to exit business with a large customer ($26,000) and the closure of terminals in the Carolinas and Atlanta ($14,000). These decreases were partially offset by the acquisition of a small Northeastern carrier and its contribution of $14,630 to revenue in 2003.

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	•	The general rate increase of 5.9% that was implemented during the 2nd quarter of 2003. Its implementation occurred three weeks earlier in the year than 2002’s 5.9% increase.
	•	Revenue from fuel surcharges increased $28,941 due to rising fuel costs.
	•	PremierPlus revenue increased 12.5% as a result of our marketing and service efforts. This revenue represented 12.6% and 11.4% of LTL revenue in 2003 and 2002, respectively.
	•	Income from operations for 2003 included a gain of $10,000 from the sale of our Red Star Newark terminal.
	•	Income from operations was also impacted by the effect of increased insurance costs of 14.3% or $11,238, which reflects the continued escalation of insurance premiums and the medical cost-driven inflation of workers’ compensation, and continued pricing pressures in the Midwest and Southwest, which affected Holland and Bestway.
	•	We were able to increase our revenue per shipment and revenue per hundredweight through increased focus on yield in our pricing decisions.

      Holland, our largest subsidiary, accounted for 52% of our LTL segment’s total revenue and 61% of its income from operations. Holland’s total revenue and income from operations in 2003 were $983,830 and $67,466, an increase of $23,438 and a decrease of $4,302, respectively. Although Holland’s income from operations and margins decreased from 2002, margins improved during the latter part of 2003 as result of increased focus on managing yield and costs. Also during 2003, Holland was negatively impacted by increased contractual benefit and workers’ compensation costs.

2002 Compared to 2001

      The following provides an understanding of the factors that impacted our operating results:

	•	Revenue and income from operations were lower during the first eight months of 2002 compared to the first eight months of 2001.
	•	In early September 2002, Consolidated Freightways (“CF”) filed for bankruptcy and our LTL segment captured a portion of CF’s former revenue which contributed to our fourth quarter 2002 revenue increase of 11.1% compared to the fourth quarter of 2001.
	•	In late June 2002, our LTL segment enacted a 5.9% general rate increase, the same as in June 2001.
	•	Pricing pressures continued throughout the year, but rates held in the fourth quarter, as evidenced by the increase in our LTL revenue per hundredweight compared to 2001.
	•	The increase in our LTL segment’s operating ratio was primarily attributed to an increase in labor, union health care, and equipment maintenance expense.
	•	Workers’ compensation and other insurance were generally flat in both years. This cost control was achieved as the LTL segment managed increases in insurance premiums by increasing our level of self-insured risks. Reductions in cargo claims in 2002 offset the increases in workers’ compensation and third-party liability expenses.
	•	At Holland, our largest subsidiary, revenue increased to $960,392 in 2002 compared to $937,150 in 2001, and income from operations declined to $71,800 in 2002 from $75,000 in 2001. Even though Holland showed increased business volumes (tonnage and shipments grew by 2.9% and 4.1%, respectively), its average revenue per shipment decreased 1.5%, resulting in a decrease in margins.

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Truckload

      The following provides an understanding of the factors that impacted our operating results:

	•	The increase in revenue in 2003 from 2002 was primarily due to the acquisition of System 81 Express, Inc., a truckload carrier based in Tennessee that contributed $8,000.
	•	Increases in revenue per mile, increased business volumes with new customers and our regional LTL carriers (performing the intercompany substitute line-haul for our PremierPlus service product) also contributed to the 2003 revenue increase.
	•	The decline in the TL segment’s 2003 income from operations was primarily due to substantially higher fuel costs compared to 2002, which were partially offset by our improved loaded revenue per mile.
	•	The improvement in the operating ratio in 2002 from 2001 was mainly attributable to reduced labor and purchased transportation expense as a percent of revenue as a result of improved driver productivity, as well as lower fuel prices.

Logistics

      The following provides an understanding of the factors that impacted our operating results:

	•	Revenue from our cross-dock operations increased $4,200 in 2003, primarily through growth at existing distribution centers.
	•	Revenue from our dedicated carriage and warehouse operations decreased $30,300 in 2003 due in large part to our customer, The Fleming Companies, bankruptcy in April 2003.
	•	Revenue from our reverse logistics services decreased $4,900 resulting from the loss of a major customer in early 2003.
	•	These revenue decreases were partially offset by $26,800 in revenue from the domestic ocean freight forwarding operations that we acquired in late 2002 from Seko Worldwide.
	•	A bad debt write off of $2,000 was recorded in 2003 as a result of The Fleming Companies bankruptcy.
	•	Revenue in our cross-dock business increased by $9,800 in 2002, primarily through growth at existing distribution centers along with full year revenue from distribution centers that opened late in 2001.
	•	Reverse logistics services revenue decreased $15,100 in 2002. Most of this revenue decline came from the loss of significant volumes from a major customer that, while declining in 2001, were non-existent in 2002.
	•	In 2001, there was a $1,600 charge related to employee costs from combining certain administrative functions within the segment.

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Corporate and Other

      The following provides an understanding of the factors that impacted our operating results:

	•	In 2003, several major software projects that were begun in 2002 and were in the non-capitalizable phase moved into the phase where the development costs were capitalized.
	•	2003 included a $621 restructuring charge as a result of staff reductions of 29 employees to streamline the IT organization.
	•	Corporate office expense (non-IT) increased in 2003 primarily due to retirement costs of approximately $2,100 for a former CEO.
	•	Amortization of intangible assets increased by $1,134 in 2003, which resulted from the acquisitions of System 81 Express, Inc. and Plymouth Rock Transportation Corporation.
	•	In 2002 IT expense increased due to our significant investment in IT initiatives, which resulted in the need for additions to our employee staff as well as the utilization of outsourced labor and consultants.
	•	Amortization of intangible assets decreased by $4,211 in 2002 as a result of adopting SFAS No. 142, which required us to cease amortization of goodwill in 2002.

Non-operating Income and Expense

      Interest expense principally includes interest on our guaranteed unsecured notes of $250,000. We had cash invested in interest bearing instruments during all of 2003 and 2002. For 2003 and 2002, interest income also included $886 and $1,261 from the settlement of tax related matters. At the end of 2003 and 2002, we had cash and cash equivalents of $121,659 and $54,158, respectively.

Income Taxes

      Our effective tax rate on income from continuing operations for 2003 was 41.4% compared with 46.3% in 2002 and 39.3% in 2001. The current year effective tax rate is lower than that of the prior year because a net tax benefit was not recognized for the Asia exit costs in the prior year, resulting in an increase in the rate for that year.

Outlook — Unknown Trends or Uncertainties

      We expect improvement in our operating results in 2004 as a result of an improved economy and our strategic initiatives. We believe our 2004 initiatives will provide increased revenue opportunities and generate cost savings through operational efficiencies. We believe achieving improved operating results are dependent on us executing our strategic initiatives, the level of competition, and the extent of the improvement in the US economy.

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LIQUIDITY AND CAPITAL RESOURCES

      The following is a table of our contractual obligations and other commercial commitments as of December 31, 2003 (See also Notes 3, 4 & 9 to the Consolidated Financial Statements of this Form 10-K):

(1)	As of December 31, 2003, we invested $5,365 in the form of a loan, which can be increased to $10,000.
(2)	At December 31, 2003 our capital purchase commitments included $7,380 for land and improvements and $2,569 for other information technology related projects.

      We believe that projected cash flows from operating activities and funding from our committed credit facilities will be adequate to finance our anticipated cash needs for 2004.

Sources and Uses of Cash

      Our primary sources and uses of cash result from the realization of trade accounts receivable and settlement of payroll, trade accounts payable, and operating accruals, including insurance and claims. During the three years ended December 31, 2003, the aging of our receivables remained substantially constant and our cash operating expenses (i.e., operating expenses less depreciation and amortization) as a percentage of revenue were 91.3%, 91.9%, and 90.6%, respectively.

      We maintain an appropriate level of tractors and trailers to ensure the effectiveness of our operations. Purchases of tractors and trailers have been, and are expected to be, our most significant type of capital expenditure. These purchases can be deferred or accelerated in order for us to respond to changes in economic conditions and the market for these assets. Purchases of tractors and trailers and total capital expenditures were $34,549, $86,958, $11,262 and $116,081, $141,322 and $89,495 during 2003, 2002, and 2001, respectively.

      We received cash of $12,970 from the sale of our Newark terminal, and made a $5,365 loan related to our Mexican joint venture.

      There have not been, and we do not expect, any material changes to the underlying drivers of our operating cash flows. We believe that cash generated from our core operations and, if needed, our credit facilities to be sufficient to fund our operations.

      We have a $200,000 committed credit facility that expires in October 2005. The facility allows up to $125,000 for standby letters of credit to cover our self-insurance programs and other miscellaneous letter of credit requirements. In addition to our committed credit facility, we maintain an uncommitted line of credit,

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which provides $10,000 of short-term funds. At December 31, 2003, we had no borrowings under these facilities and had $87,974 of outstanding standby letters of credit under the revolving credit facility.

      Our external debt financing arrangements are discussed in Note 4 to the Consolidated Financial Statements found later in this Form 10-K.

      Our financing arrangements include covenants that require us to comply with certain financial ratios including net worth and funded debt to adjusted cash flows. We are in compliance with these covenants and do not believe these covenants would restrict us from securing additional financing, if necessary.

      At December 31, 2003, cash increased by $67,501 from December 31, 2002. Excess cash after working capital and investing requirements were primarily invested in short term interest bearing instruments.

DIVIDENDS AND STOCK REPURCHASE

      Our quarterly dividend rate is .0933 per share. During 2003, we paid cash dividends totaling $10,135.

      During 2003, we repurchased 14,000 shares for $336 under a Board authorized repurchase program. There were no shares repurchased in 2002 and 2001. At December 31, 2003, we had authorization to purchase an additional 500,000 shares.

      Table of Share Price by Quarter:

CRITICAL ACCOUNTING ESTIMATES

Revenue Recognition

      At the beginning of 2003, we changed our method of accounting for revenue and expense recognition for our LTL and TL segments. Under the new accounting method, we recognize revenue for our LTL and TL operations by the allocation of revenue between reporting periods based on the relative transit time in each reporting period with expenses recognized as incurred. In 2002 and 2001, revenue for our LTL and TL operations was recognized when freight was picked up from the customer. This change was made to more precisely reflect revenue earned, and expenses incurred, as of our reporting dates in response to the increase in our length of haul of freight, which resulted from the implementation of our new marketing strategies.

      The estimation of a shipment’s relative transit time at the end of a period is accomplished utilizing the estimated percentage-of-completion of each shipment based on its location status as provided by our freight management systems. This estimation technique reasonably approximates the in-transit times of shipments. Although there are inherent limitations in the methodology and estimation utilized under this accounting method, the amount of revenue recognized that relates to shipments in-transit at the end of a given quarterly period has been less than 2% of total revenue for that quarter. Accordingly, we believe that our revenue recognition method provides an accurate measurement of our quarterly and annual revenue.

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Insurance and Claims

      Casualty claim reserves represent management’s estimates of liability for property damage, public liability and workers’ compensation. We have processes in place to capture claims on a timely basis and we manage these claims with the assistance of a third-party administrator along with our insurers. Our reserves for claims are significant and can involve a high degree of judgment. We therefore utilize various historical data and trends to compute estimated reserve ranges. These ranges, along with other known facts on individually significant outstanding claims, are utilized to best estimate our liability. We continuously monitor our reserves and their underlying estimation methodologies. We believe that our processes and methodologies sufficiently minimize the possibility of the final resolution of claims being materially different than our recorded reserves and our estimates have historically been reasonably accurate. However, our estimated reserves are inherently sensitive to differences between our actual future settlement of liability and our estimation methodologies utilized in the preparation of the current financial statements.

Allowance for Doubtful Accounts

      We follow credit and collection procedures to ensure the customer credit risk is assessed and follow up is performed on delinquent accounts. With the diversity of needs for our service offerings, particularly in the LTL segment, we serve a wide range of customers. Our procedures therefore must be flexible and consider the cost and benefit of providing services to customers to whom there is a higher risk of uncollectible accounts. There can be significant write-offs that occur which are not predictable, such as customer bankruptcies. Our allowance for doubtful accounts is computed by applying factors based on historical write-off activity to our outstanding balances. We believe that our credit and collection procedures, fairly predictable write-off results, and the estimation methodology utilized to compute our allowance for doubtful accounts, minimize the possibility of our actual bad debts being materially different than the amount recorded in our allowance for doubtful accounts. However, our allowance is inherently sensitive to differences between the actual future realization of outstanding customer accounts receivable balances and amounts as computed under our estimation methodology, which is utilized in the preparation of the current financial statements.

Goodwill

      At the beginning of 2002, under SFAS No. 142, goodwill and other intangible assets with indefinite lives are no longer amortized, but are subject to an annual impairment test. The test involves the application of estimation techniques to determine fair values. The test that we utilize compares the present value of our expected future cash flows to the carrying value of our reporting units. The expected future cash flows are determined from our budgetary process. We believe that our budgetary process, which includes various assumptions concerning future operating activities but at the same time a sufficient level of objectivity and scrutiny, provides us with a reasonable estimate of projected future cash flows. However, our actual results will ultimately determine the valuation of goodwill.

      Additional information concerning our accounting policies for the critical accounting estimates discussed above is discussed in Notes 1 and 8 to the Consolidated Financial Statements found later in this Form 10-K.

RECENT ACCOUNTING PRONOUNCEMENTS

      On November 25, 2002, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others,” which elaborates on the disclosures to be made by a guarantor about its obligations under certain guarantees issued. The Interpretation also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The Interpretation expands on the accounting guidance of Interpretation No. 5, Accounting for Contingencies, SFAS No. 57 Related Party Disclosures, and SFAS No. 107, Disclosures about Fair Value of Financial Instruments. The Interpretation also incorporates, without change, the provisions of Interpretation

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No. 34, Disclosure of Indirect Guarantees of Indebtedness of Others, which it supersedes. The Interpretation does identify several situations where the recognition of a liability at inception for a guarantor’s obligation is not required. The initial recognition and measurement provisions of this Interpretation apply on a prospective basis to guarantees issued or modified after December 31, 2002, regardless of the guarantor’s fiscal year-end. The disclosures are effective for financial statements of interim or annual periods ending after December 15, 2002. Adoption of this Interpretation did not have an impact on our financial statements and related disclosures.

      In December 2002, the FASB issued SFAS No. 148 “Accounting for Stock-Based Compensation — Transition and Disclosure — an amendment of SFAS No. 123”. This Statement amends SFAS No. 123, “Accounting for Stock-Based Compensation” to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. Finally, this Statement amends APB Opinion No. 28, “Interim Financial Reporting”, to require disclosure about those effects in interim financial information. The amendments to SFAS No. 123 in paragraphs 2(a) - 2(e) of this Statement are effective for financial statements for fiscal years ending after December 15, 2002. The amendment to SFAS No. 123 in paragraph 2(f) of this Statement and the amendment to Opinion No. 28 in paragraph 3 of this statement were effective for financial reports containing condensed financial statements for interim periods beginning after December 15, 2002. As is allowed, we have adopted the disclosure requirements under SFAS No. 148.

      In March 2003, the FASB issued Interpretation No. 46. This Interpretation of Accounting Research Bulletin No. 5, Consolidated Financial Statements, addresses consolidation by business enterprises of variable interest entities. This Interpretation applies to variable interest entities created after January 1, 2002, and to variable interest entities in which an enterprise obtains an interest after that date. We have no investments in variable interest entities and therefore, this Interpretation has no impact on our financial statements and related disclosures.

      In May 2003, the FASB issued SFAS No. 150 — “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. This Statement provides guidance as to the appropriate classification of certain financial statement instruments that have characteristics of both liabilities and equity. This statement is effective at the beginning of the first interim period after June 15, 2003. Adoption of this Statement did not have an impact on our financial statements and related disclosures.

Item 7A — Quantitative and Qualitative Disclosures About Market Risk

      We are exposed to the impact of interest rate changes. Our exposure to changes in interest rates is limited to borrowings, if any, under our line of credit that has variable interest rates tied to the LIBOR rate and our investments in short-term interest bearing instruments. We had no borrowings under the credit agreement in 2002 or 2003. In addition, we had $150,000 of unsecured notes with an 8.5% fixed annual interest rate and $100,000 of unsecured notes with a 6.5% fixed annual interest rate at December 31, 2003. Because these notes have a relatively long maturity feature, any sudden change in market interest rates would not affect our operating results or cash flows to any significant degree. We estimate that the fair value of the notes exceeded by approximately 13% their carrying value at December 31, 2003. We have no outstanding derivative contracts.

      Our guaranteed notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured senior basis, by all our direct and indirect domestic subsidiaries (the “Subsidiary Guarantors”). We are a holding company and during the periods presented substantially all of the assets of the Subsidiary Guarantors, and substantially all of our operations were conducted by the Subsidiary Guarantors. Accordingly, the aggregate assets, liabilities, earnings and equity of the Subsidiary Guarantors were substantially equivalent to the assets, liabilities, earnings and equity shown in our consolidated financial statements. We believe that separate financial statements of our Subsidiary Guarantors, and other disclosures relating to them, are not

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meaningful or material to our investors. Our subsidiaries, other than the Subsidiary Guarantors, are minor. There are no restrictions on our ability to obtain funds from our subsidiaries by dividend or loan. We, therefore, are not required to present separate financial statements of our Subsidiary Guarantors, and other disclosures relating to them.

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(Thousands of dollars, except share and per share amounts)

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders of

      We have audited the accompanying consolidated balance sheets of USF Corporation and subsidiaries (the “Company”) as of December 31, 2003 and 2002 and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2003. Our audits also included the financial statement schedule listed in the Index under Part IV, Item 15(a)(2). These financial statements and the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

      We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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, such consolidated financial statements present fairly, in all material respects, the financial position of USF Corporation and subsidiaries at December 31, 2003 and 2002 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

      As discussed in Note 1, effective January 1, 2003, the Company changed its method of accounting for revenue and expense recognition for its less-than-truckload and truckload segments.

      As discussed in Note 8, effective January 1, 2002, the Company changed its method of accounting for goodwill and intangible assets upon adoption of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.”

/s/ DELOITTE & TOUCHE LLP
Deloitte & Touche LLP

Chicago, Illinois

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USF CORPORATION

CONSOLIDATED BALANCE SHEETS

See accompanying notes to consolidated financial statements.

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USF CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS