Acquisition of Davis Transfer Company

12 Months Ended

Dec. 31, 2018

Asset Acquisition [Abstract]

Acquisition of Davis Transfer Company

NOTE 4. ACQUISITION OF DAVIS TRANSFER COMPANY

On October 18, 2018, USA Truck, Inc. acquired 100% of the outstanding equity of Davis Transfer Company Inc., a Georgia corporation ("DTC"), Davis Transfer Logistics Inc. and B & G Leasing, L.L.C. ("B & G," and collectively with DTC and DTL, "Davis Transfer Company"), for $52.25 million in cash and $0.75 million in Company stock. We believe the acquisition of Davis Transfer Company allowed us to grow our base of drivers, expand and diversify our customer base, and improve our operating network of terminal facilities.  The purchase price is subject to a customary working capital adjustment post-closing. The equity purchase agreement includes an agreement to execute an Internal Revenue Code Section 338(h)(10) election. As a result, the acquisition of Davis will be treated as an asset acquisition for income tax purposes and the $4.9 million in goodwill acquired is deductible for tax purposes. Acquisition related expenses of $0.6 million are included in "Other non-operating" expenses line item in the accompanying consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2018.

The following unaudited pro forma financial information for the years ended December 31, 2018 and December 31, 2017, assume that the Davis Transfer Company acquisition occurred as of January 1, 2017.  Pro forma adjustments reflected in the financial information below relate to accounting policy changes such as changes in depreciation expense of revenue equipment, amortization of intangible assets, and accounting for certain operations and maintenance costs, along with other adjustments for terminal rent expense to align Davis Transfer Company results with those of the Company and income tax effects for the periods presented.

(in thousands)	Year Ended December 31,
	2018		2017
Operating revenue	$	575,226	$	492,145
Net income	15,709		7,893

These unaudited pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the acquisition had occurred at the beginning of the periods presented or that may be obtained in the future.

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the closing date of the Davis Transfer Company acquisition (in thousands):

Cash	$	810
Accounts receivable	4,582
Other current assets	1,036
Property and equipment	25,604
Intangible assets	18,040
Goodwill	4,926
Total Assets	54,998
Accounts payable and Accrued expenses	(1,581)
Insurance accruals	(417)
Total consideration transferred	$	53,000
Total Purchase Price Consideration
Cash paid	52,250
Stock granted	750
Total consideration	$	53,000
Net cash paid	$	51,440