-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FKVBrbRlPJlNB1cSxEg96cNdz4aCN8Yso3fV9RQdsqkbPP1Tq37tTfs4rjmNbeVJ haaW0upWM3StBi0itA4ygw== 0000950134-01-002111.txt : 20010315 0000950134-01-002111.hdr.sgml : 20010315 ACCESSION NUMBER: 0000950134-01-002111 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010314 FILER: COMPANY DATA: COMPANY CONFORMED NAME: USA TRUCK INC CENTRAL INDEX KEY: 0000883945 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 710556971 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-19858 FILM NUMBER: 1567782 BUSINESS ADDRESS: STREET 1: 3200 INDUSTRIAL PARK ROAD CITY: VAN BUREN STATE: AK ZIP: 72956 BUSINESS PHONE: 5014712500 MAIL ADDRESS: STREET 1: 3200 INDUSTRIAL PARK ROAD CITY: VAN BUREN STATE: AK ZIP: 72956 10-K 1 d84966e10-k.txt FORM 10-K FOR FISCAL YEAR END DECEMBER 31, 2000 1 UNITED STATES 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 fiscal year ended December 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------- ---------- Commission File Number 0-19858 USA TRUCK, INC. (Exact name of Registrant as specified in its charter) DELAWARE 71-0556971 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 3200 INDUSTRIAL PARK ROAD 72956 VAN BUREN, ARKANSAS (Zip Code) (Address of principal executive offices)
Registrant's telephone number, including area code: (501) 471-2500 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, PAR VALUE $.01 PER SHARE (Title of class) 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 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 this Form 10-K. The aggregate market value of the voting stock held by nonaffiliates of the Registrant on March 7, 2001 was $24,957,531 (The characterization of officers and directors of the Registrant as affiliates for purposes of this computation should not be construed as an admission for any other purpose that any such person is in fact an affiliate of the Registrant). The number of shares outstanding of the Registrant's Common Stock, par value $ .01, as of March 7, 2001 is 9,225,286. DOCUMENTS INCORPORATED BY REFERENCE
Part of Form 10-K into Which the Document Document is Incorporated -------- -------------------------------- Portions of the Proxy Statement to be sent to stockholders Part III in connection with 2001 Annual Meeting
2 USA TRUCK, INC. TABLE OF CONTENTS
ITEM NO. CAPTION PAGE - -------- ------- ---- PART I 1. Business................................................................................. 1 2. Properties............................................................................... 6 3. Legal Proceedings........................................................................ 7 4. Submission of Matters to a Vote of Security Holders...................................... 7 PART II 5. Market for Registrant's Common Equity and Related Stockholder Matters.................... 8 6. Selected Financial Data.................................................................. 9 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.... 10 7A. Quantitative and Qualitative Disclosure about Market Risk................................ 16 8. Financial Statements and Supplementary Data.............................................. 17 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..... 33 PART III 10. Directors and Executive Officers of the Registrant....................................... 33 11. Executive Compensation................................................................... 33 12. Security Ownership of Certain Beneficial Owners and Management........................... 33 13. Certain Relationships and Related Transactions........................................... 33 PART IV 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.......................... 34 Signatures............................................................................... 41
3 PART I ITEM 1. BUSINESS GENERAL USA Truck, Inc. (the "Company" or "USA Truck") is engaged in the transportation of general commodity freight in interstate and foreign commerce. Operations are conducted primarily east of the Rocky Mountains, but the Company holds authority to transport and does transport freight between all points in the continental United States, other than intrastate, and between all points in the U.S., on the one hand, and the Canadian provinces of Ontario and Quebec, on the other. The Company also provides the U.S. and Canadian portions of shipments between points in the U.S. and Canadian provinces of Ontario and Quebec, on the one hand, and points in Mexico, on the other. The Company transfers freight to, or receives freight from, Mexican carriers at the U.S.-Mexico border in Laredo, Texas. Revenue from foreign countries represents less than 6% of total revenues of the Company for each of the past three years. The principal types of freight transported include automotive parts and materials, tires, paper and paper products, glass, retail store merchandise, chemicals, aluminum and manufacturing materials and supplies. USA Truck does not transport Class A or Class B explosives, garbage, radioactive materials or hazardous wastes. USA Truck transports freight in truckload quantities from individual shippers to single or multiple destinations on an as-needed basis. Its business consists primarily of medium haul shipments, more than 700 but less than 1,000 miles. For 1998, 1999, and 2000, the average length of haul for Company tractors was 916 miles, 908 miles, and 871 miles, respectively. The Company's principal offices are located at 3200 Industrial Park Road, Van Buren, Arkansas 72956, and its telephone number is (501) 471-2500. BUSINESS STRATEGY USA Truck's principal competitive strength is its ability and commitment to consistently provide superior service to shippers. Although price is a primary concern to all shippers, many of the Company's customers are high-volume shippers that require a flexible and dependable source of motor carrier service tailored to specific needs, including pickup or delivery within narrow time windows. The Company's strategy is to provide a premium service to meet these needs and to charge compensating rates for such service. This approach has found increasing acceptance. See "Business -- Competition". The Company is committed to prompt freight pickup, consistent on-time delivery, and twenty-four hours a day, seven days a week dispatching. It has taken a number of steps to meet these commitments. In particular, the Company (i) adheres to strict maintenance and cleaning schedules to avoid breakdowns and delays; (ii) provides detailed routing instructions for, and maintains satellite communications with, drivers to expedite delivery; (iii) maintains trailer pools at strategic locations to minimize the time between customer order and pickup; and (iv) provides extra trailers to high volume shippers for loading and unloading at their convenience. USA Truck utilizes cost-efficient communications throughout its operations. The Company provides EDI (electronic data interchange) arrangements with several of its largest customers, providing them with access through their computer systems to current information on the status of their shipments. Beginning in the third quarter of 1997, the Company began installing two-way, satellite based mobile messaging and position-locating equipment in all of its tractors. This equipment is designed to fulfill customers' heightened need for real-time transit information as well as provide the Company with an enhanced and cost-effective method of communications between its drivers and its operations personnel. The system provides fleet managers the ability to contact drivers virtually anywhere in the Company's market area. These capabilities are intended to shorten response time to customers, as well as to allow drivers uninterrupted rest time while awaiting assignment. The installation of the equipment was completed in the fourth quarter of 1997. 1 4 The Company has designed its own management information software systems, which it operates on a mainframe computer. This system became operational during the second quarter of 1997, when the Company's software was migrated to its mainframe computer. Prior to that, the Company used a mainframe computer through a contractual agreement with a third party. The Company has also designed its own e-commerce software systems, which operate on several platforms and connect to the Company's mainframe computer and the internet. Through this expanded business-to-business ("B2B") system, USA Truck's customers can check equipment availability and track the progress of their loads through the Company's web site. Although the Company prefers direct relationships with its shippers, marketing activity through third party logistics ("3PL") providers is encouraged. Many of these 3PL providers offer daily load posting which is conducted through e-commerce. These communication and data processing capabilities enhance operating efficiency by providing immediate access to detailed information concerning equipment, cargo, customer locations, credit history, billing arrangements and specific customer requirements. They also permit the Company to respond quickly and accurately to customers' requests and assist in balancing equipment availability throughout its market area. Management believes these information software systems and computer hardware will be sufficient to support the Company's expansion plans at least through 2002 without substantial additional expenditures in the data processing area. ACQUISITION On November 1, 1999, pursuant to an Asset Purchase Agreement (the "Asset Purchase Agreement") dated October 31, 1999, the Company acquired substantially all the assets of CARCO Carrier Corporation, an Arkansas corporation, which operated under the name CCC Express, Inc. ("CCC"), for a purchase price of $35.3 million. The purchase price, which was subject to certain post-closing adjustments, consisted of (i) a cash payment of approximately $3.0 million; (ii) the assumption of approximately $6.5 million of liabilities including equipment notes held by Bank Boston, Mellon U.S. Leasing and Banc of America Leasing & Capital LLC and (iii) the refinancing with Banc One Leasing Corporation and Deposit Guaranty National Bank of approximately $25.8 million in other debt secured by equipment. The cash portion of the purchase price was paid with available cash and proceeds of borrowings under the Company's credit facilities with Deposit Guaranty National Bank. The purchase price was equal to the net book value of CCC on the closing date, as adjusted in accordance with the Asset Purchase Agreement, plus $2.0 million. The acquired operations include a fleet of 498 tractors and 1,103 dry van trailers, which the Company has used in its truckload motor carrier business. The acquisition equated to an increase of 43% in the tractor fleet of the Company, which operated 1,149 tractors and 2,266 dry van trailers before the transaction. As part of the transaction, the Company also assumed three leases for dedicated shop and fuel facilities. MARKETING AND SALES The Company focuses its marketing efforts on customers with demanding requirements and heavy shipping needs within the regions where the Company operates. This permits the Company to concentrate available equipment in its primary service area, enabling it to be more responsive to customer needs. USA Truck's Marketing and Operations Departments have primary responsibility for developing and implementing the Company's marketing strategy and retaining customer accounts. The Marketing Department solicits and responds to customer orders and maintains close customer contact regarding service requirements and rates. A high percentage of the Company's business is from repeat customers. For the year ended December 31, 2000, at least 92% of USA Truck's operating revenues were derived from customers that were customers of the Company prior to 2000. USA Truck establishes rates through individual negotiations with customers and through contracts tailored to the specific needs of shippers. For the year ended December 31, 2000, the Company's ten largest customers accounted for 31% of revenues and its three largest customers accounted for approximately 15% of revenues, with more than 2,300 other customers accounting for the balance. No customer accounted for more than 10% of revenues. 2 5 Customers are generally required to have credit approval before dispatch. The Company bills customers at or shortly after pickup, and, for the last three years, receivables collection has averaged approximately 33 days from the billing date. OPERATIONS The Operations Department consists of two primary divisions: the Load Coordinator Group and the Fleet Manager Group. Load coordinators are responsible for efficiently matching available equipment with customer needs, and they serve as the contact with customers' receiving and shipping personnel. Load coordinators also have primary responsibility for minimizing empty miles, and they work closely with the Marketing Department to increase equipment utilization. The average distance between loads as a percentage of total miles (empty mile factor) is a standard measurement in the truckload industry. The empty mile factor generally decreases as average length of haul and density of trucks in an area increase. The Company's commitment to on-time pickup often requires a tractor to travel farther to complete a pickup than it would have to travel if the Company delayed the pickup until a tractor became available in the area. USA Truck's empty mile factor was 9.16% for the year ended December 31, 2000. Fleet managers supervise fleets of approximately 58 drivers each and serve as the drivers' primary contact with the Company. Fleet managers monitor the location of equipment and direct its movement in the most efficient and safe manner practicable. DRIVERS AND OTHER PERSONNEL Driver recruitment and retention continue to be a challenge for the Company. Recruiting drivers is difficult because Company standards are high and because of declining enrollment in driving schools. Retention is difficult because of wage and job fulfillment considerations. Driver turnover, especially in the early months of employment, is a significant problem, and the competition for qualified drivers is intense. Although USA Truck has experienced difficulty with driver turnover, it has been able to attract and retain a sufficient number of qualified drivers to support its operations. To attract and retain drivers, the Company must continue to provide safe, attractive and comfortable equipment, direct access to management, and competitive wages and benefits designed to encourage longer-term employment. Drivers' pay is calculated on the basis of miles driven and increases with tenure. In 2000, drivers averaged 486 miles per workday. On October 1, 2000, the Company implemented a 16% driver pay increase. With this pay increase, the Company eliminated incentive pay from its pay package except for drivers in its dedicated services division. The incentives that were earned and eliminated as of October 1, 2000 totaled approximately $492,000 and were paid in October, 2000. The incentives that were earned by the Company's dedicated services drivers totaled approximately $130,000 for 2000. During 2000, the Company's drivers earned wages and incentives averaging $.32 per mile. As of December 31, 2000, USA Truck employed 2,155 persons, of which 1,667 were drivers, none of whom was represented by a collective bargaining unit. In the opinion of management, the Company's relationship with its employees is satisfactory. SAFETY USA Truck's safety program is designed to meet the Company's goal of an accident-free working environment and to enforce governmental safety regulations. The Company controls the maximum speed of its tractors with electronic governing equipment, and all its tractors are equipped with anti-lock braking systems. The evaluation of safety records is one of several criteria used by USA Truck to hire driver employees. Safe equipment handling techniques are an important part of new driver training. The Company also conducts pre-employment, random and post-accident drug testing in accordance with Department of Transportation ("DOT") regulations. 3 6 REVENUE EQUIPMENT AND MAINTENANCE The Company's current policy is to replace most tractors within 42 months from the date of purchase, which permits the Company to maintain substantial warranty coverage throughout the period of ownership. USA Truck replaces its tractors and trailers based on various factors, including the used equipment market, prevailing interest rates, technological improvements, fuel efficiency and durability. The following table shows the number and age of revenue equipment operated by the Company at December 31, 2000:
Tractors Trailers ---------------------------------- -------------------------------------- Average Average Model Months Months Year Number in Service Number in Service ----- ------ ---------- ------ ---------- 2001 289 4 100 3 2000 525 14 733 13 1999 329 26 346 24 1998 552 38 697 38 1997 43 47 299 50 1996 330 61 1995 615 72 1994 267 87 1993 and prior 13 133 ----- -- ----- ---- Total 1,738 23 3,400 43 ===== == ===== ====
At December 31, 2000, USA Truck operated 1,738 conventional sleeper tractors and 3,400 van trailers. To simplify driver and mechanic training, control the cost of spare parts and tire inventory and provide for a more efficient vehicle maintenance program, the Company buys tractors and trailers manufactured to its specifications. In deciding which equipment to buy, it considers a number of factors, including safety, economy, resale value and driver comfort. Most of the Company's tractors are equipped with Detroit Diesel Series 60 12.7-liter engines, air-ride suspension, and anti-lock brakes. The Company's equipment is maintained through a strict preventive maintenance program designed to minimize equipment downtime and to enhance trade-in value. Beginning with the November 1995 trailer purchases, the Company began converting its trailer fleet from 48-foot long and 102 inches wide trailers to 53-foot long and 102 inches wide trailers. Because of this conversion process and additional trailers required to serve Mexico, the Company's trailer to tractor ratio was 2.0-to-1 at December 31, 2000. Management believes that a 2.0-to-1 ratio is ideal for the Company's operations, in that it promotes efficiency and provides the flexibility needed to serve customer needs. As of December 31, 2000, 2,848 of the 3,400 trailers in the Company's trailer fleet were 53-foot models. All future purchases of trailers will be 53-foot models. The Company is undertaking this conversion in order to meet its customers' requirements and to continue to provide an efficient balance between trailer capacity and weight and length limitations in the various states and Canada. During 2000, the Company financed revenue equipment through, either its collateralized, $40 million revolving credit agreement (the "General Line of Credit") or its collateralized, $60 million revolving credit agreement (the "Senior Credit Facility") and through lease-purchase arrangements. The Senior Credit Facility was originated on April 28, 2000 and was used to pay off the outstanding balance on the General Line of Credit, which was then terminated. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources". All of its revenue equipment is pledged to secure its obligations under such financing arrangements. 4 7 REVENUE EQUIPMENT ACQUISITION PROGRAM During 2001 and 2002, the Company plans to acquire 517 and 647 new tractors and 224 and 360 new trailers, respectively. These acquisitions and the disposals during the year will result in a net decrease of 18 and a net increase of 252 tractors and net increases of 187 and 360 trailers, respectively. As of February 16, 2001, contracts had been executed for the acquisition of all 517 tractors and 224 trailers to be acquired in 2001. Although these contracts fix the price at which the Company may acquire this equipment, the Company has the right in its discretion to decrease or increase the number of tractors or trailers to be purchased during the year at agreed prices. If the terms of the contracts are carried out, the Company could recognize an after-tax, non-cash loss from such sales of up to $0.5 million during 2001. Most of these losses are expected to occur in the fourth quarter of that year on certain groups of tractors. They result from the sale of such tractors by the Company at prices that will likely be below the depreciated cost of such tractors as carried on the Company's books. The low sales prices for such vehicles result from an unusually poor used tractor market caused, for the most part, by oversupply of vehicles. During the fourth quarter of 2000, the Company increased the depreciation rate on its tractors, which resulted in a slightly increased charge to net income for 2000. Provided the Company can secure better pricing, it will attempt to limit these losses by obtaining direct sales which could yield prices closer to book values on these tractors and reduce these contractual capital losses. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources". During 2000, the Company acquired 470 new tractors (a net increase of 20) and 453 new trailers (a net decrease of 125). The Company purchased 267 fewer new tractors and 197 fewer trailers in 2000 than anticipated in response to the shortage of qualified drivers in the truckload industry. INSURANCE The primary risk areas in the motor carrier industry are cargo loss and damage, personal injury, property damage and workers' compensation claims. Management believes that its insurance coverages are sufficient in each of these areas. The Company is qualified as a workers' compensation self-insurer in the State of Arkansas, which is secured by a $200,000 letter of credit and in Louisiana, which is secured by a $100,000 certificate of deposit. In June 1993, the Company received authority to self-insure for cargo loss and damage claims and up to $1.0 million per occurrence for bodily injury and property damage ("BIPD") claims. These self-insurance arrangements are secured by $1.01 million in letters of credit with the Federal Highway Administration. During 2000, the self-insurance retention levels were $1.0 million for BIPD and $500,000 for workers' compensation claims per occurrence. The Company has insurance coverage for cargo loss and damage claims exceeding $100,000 per occurrence and coverage for physical damage to its tractors and trailers with a self-insurance level of $10,000 per occurrence. The Company has excess general liability coverage in amounts substantially exceeding minimum legal requirements and believed to be sufficient to protect the Company against material loss. FUEL AVAILABILITY AND COST The motor carrier industry is dependent upon the availability of diesel fuel, and fuel shortages or increases in fuel taxes or fuel costs have adversely affected and may in the future adversely affect the profitability of USA Truck. Fuel prices have fluctuated widely and fuel taxes have generally increased in recent years. The Company has not experienced difficulty in maintaining necessary fuel supplies, and in the past the Company generally has been able to recover most of the increases in fuel costs and fuel taxes from customers through increased freight rates. Diesel prices increased during 2000, and there can be no assurance that diesel prices will decrease to price levels experienced in recent periods. There also can be no assurance that the Company will be able to recover any future increases in fuel costs and fuel taxes through increased rates. 5 8 COMPETITION The trucking industry is highly competitive. It is characterized by ease of entry and by many small carriers having revenues of less than $1 million per year, with relatively few carriers being able to achieve revenues exceeding $100 million per year. The principal means of competition in the truckload segment of the industry are service and price, with rate discounting being particularly intense during economic downturns. Although the Company competes primarily on the basis of service rather than rates, rate discounting continues to be a factor in obtaining and retaining business. Although the number of firms competing in the truckload segment has increased dramatically since industry deregulation in 1980, the industry continues to undergo a consolidation phase. Furthermore, a depressed economy tends to increase both price and service competition from alternative modes such as less-than-truckload carriers and railroads. Management believes that further growth in the truckload segment of the industry is likely to be achieved by acquiring greater market share rather than through an increase in the size of the market. USA Truck competes primarily with other truckload carriers and shipper-owned fleets and, to a lesser extent, with railroads and less-than-truckload carriers. A number of truckload carriers have much greater financial resources, own more revenue equipment and carry a larger volume of freight than does the Company. The Company also competes with truckload and less-than-truckload carriers for qualified drivers. See "Business -- Drivers and Other Personnel". TRADEMARK USA Truck's name and logo are registered with the United States Patent and Trademark Office, the Canadian Trade Marks Office, and the Mexican Industrial Property Institute. During 2000, the Company registered its trademark for its logistics division with the United States Patent and Trademark Office. The Company believes its trademarks have significant value and are important to its marketing efforts. The trademark registration in each country is renewable indefinitely at the option of the Company. REGULATION USA Truck is a motor carrier regulated by the DOT and other federal and state agencies. The Company's business activities in the United States are subject to broad federal, state and local laws and regulations beyond those applicable to most business activities. These regulated business activities include, among other things, service area, routes traveled, equipment specifications, commodities transported, rates and charges, accounting systems, financial reporting and insurance coverages. The Company's Canadian business activities are subject to similar requirements imposed by the laws and regulations of the Dominion of Canada and provincial laws and regulations. Motor carrier operations are subject to safety requirements prescribed by the DOT, governing interstate operation, and by Canadian provincial authorities. Matters such as weight and equipment dimensions are also subject to federal, state, and provincial regulations. The Company is subject to federal, state, provincial, and local environmental laws and regulations. Management believes that the Company is in substantial compliance with such laws and regulations and that costs of such compliance will not have a material adverse effect on its competitive position, operations or financial condition or require a material increase in currently anticipated capital expenditures. ITEM 2. PROPERTIES The Company owns its headquarters in Van Buren, Arkansas, located on 63 acres. This site has approximately 84,000-square feet of office, training, and driver housing space within two structures, a 12,000-square foot maintenance facility and a 2,500-square foot dock. In the second quarter of 1997, the Company completed construction of a new 57,000-square foot corporate headquarters next to its existing headquarters facility in Van Buren, Arkansas. The previously existing 27,000-square foot facility has been partially refurbished and will continue to be refurbished over the next several years to house additional training, maintenance and support services. This facility also contains aboveground fuel tanks with a capacity of 40,000 gallons. 6 9 The Company operates a maintenance and driver facility in West Memphis, Arkansas, situated on roughly 32 acres with 29 acres of paved tractor and trailer parking behind fence, a 17,200-square foot shop, an eight-lane drive through fueling station containing aboveground fuel tanks with a capacity of 37,000 gallons and drivers' sleeping quarters that can house 36 drivers. During 1998, the Company expanded the shop by 7,200 square feet and added four additional lanes to its drive through fueling station. The drivers' quarters also include a recruiting office and driver training center for new drivers. The Company owns 29 of the 32 acres and leases the remainder under a long-term lease agreement with an initial term ending in November 2044. Located at the intersection of I-40 and I-55, this facility is an ideal location for these activities. In August 1995, the Company completed construction of and began operating its maintenance and driver facility in Shreveport, Louisiana, with 15 acres of paved tractor and trailer parking behind fence, a 12,000-square foot shop, a two-lane drive through fueling station containing aboveground fuel tanks with a capacity of 37,000 gallons and drivers' sleeping quarters that can house 32 drivers. The drivers' quarters also include a recruiting office and driver training center for new drivers. The facility is located on 20 acres of land owned by the Company near I-20 on US Hwy. 80 and is strategically located near several major customers in the area. In June 1996, USA Truck began operating its maintenance and driver facility in Vandalia, Ohio, with approximately eight acres of paved tractor and trailer parking behind fence, a 2,400-square foot shop, a one-lane drive through fueling station containing a below-ground fuel tank with a capacity of 10,000 gallons and drivers' sleeping quarters that can house 22 drivers. The drivers' quarters also include a sales and recruiting office. The Company owned facility is located near I-75 & I-70 and is strategically located for these activities. The Company plans to purchase property near this current facility, which will allow the Company to build a new maintenance facility and expand its ability to service its equipment and house drivers at this location. The Company leases, on a month-to-month basis, shop and office facilities in East Peoria and Blue Island, Illinois and New Paris, Indiana. With the exception of the Vandalia, Ohio facility mentioned above, management believes that its facilities will be sufficient for its operations at least through 2001. See "Item 1. Business -- Revenue Equipment and Maintenance" and "Item 1. Business -- Revenue Equipment Acquisition Program" for information regarding the Company's revenue equipment. ITEM 3. LEGAL PROCEEDINGS The Company is a party to routine litigation incidental to its business, primarily involving claims for personal injury and property damage incurred in the transportation of freight. It maintains insurance covering liabilities resulting from personal injury and property damage claims. Management believes that adverse results in one or more of these cases would not have a material adverse effect on the financial position or results of operations of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company did not submit any matter to a vote of security holders during the fourth quarter of the fiscal year covered by this Annual Report. 7 10 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's Common Stock trades on The NASDAQ Stock Market under the symbol: USAK. The following table sets forth the high and low closing sales prices for the Company's Common Stock as reported by The NASDAQ Stock Market for 2000 and 1999.
2000 HIGH LOW - ---- ---- --- First Quarter.............................................. $8.81 $7.25 Second Quarter............................................. $7.94 $5.38 Third Quarter.............................................. $7.19 $5.38 Fourth Quarter............................................. $6.50 $5.19
1999 HIGH LOW - ---- ---- --- First Quarter ............................................. $10.44 $10.19 Second Quarter............................................. $ 9.38 $ 9.16 Third Quarter.............................................. $ 9.25 $ 8.88 Fourth Quarter............................................. $ 8.13 $ 7.75
As of March 7, 2001, there were 240 holders of record (including brokerage firms and other nominees) of the Company's Common Stock. The Company estimates that there were approximately 1,940 beneficial owners of the Common Stock as of that date. The Company has never paid a cash dividend on its Common Stock. It is the current intention of the Company's Board of Directors to continue to retain earnings to finance the growth of the Company rather than to pay cash dividends. Any future payments of cash dividends will depend upon the financial condition, results of operations and capital commitments of the Company as well as other factors deemed relevant by the Board of Directors. Covenants contained in the Company's Senior Credit Facility may limit the Company's ability to pay dividends. 8 11 ITEM 6. SELECTED FINANCIAL DATA The following table sets forth, for the periods and at the dates indicated, selected financial data of the Company. The data should be read in conjunction with the financial statements and related notes contained in Item 8 of this Annual Report and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations".
YEAR ENDED DECEMBER 31, ------------------------------------------------------------ 2000 1999 1998 1997 1996 --------- --------- --------- --------- --------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) STATEMENT OF OPERATIONS DATA: Operating revenues ................................. $ 226,585 $ 166,363 $ 145,216 $ 129,507 $ 108,313 Operating expenses and costs: Salaries, wages and employee benefits ........... 91,454 70,198 61,297 53,122 45,122 Operations and maintenance ...................... 71,567 42,480 33,401 34,189 31,064 Operating taxes and licenses .................... 4,248 3,005 2,547 2,160 1,964 Insurance and claims ............................ 14,318 7,987 7,250 6,773 6,422 Communications and utilities .................... 2,802 2,000 1,469 1,828 1,612 Depreciation and amortization ................... 26,793 18,592 16,179 13,608 11,839 Other ........................................... 9,608 6,265 4,113 3,659 4,038 --------- --------- --------- --------- --------- 220,790 150,527 126,256 115,339 102,061 --------- --------- --------- --------- --------- Operating income ................................... 5,795 15,836 18,960 14,168 6,252 Other expenses (income): Interest expense ................................ 5,408 1,655 1,715 1,380 730 Loss (gain) on disposal of assets ............... 150 (9) (37) (2) (9) Other, net ...................................... 82 (23) 102 (191) (4) --------- --------- --------- --------- --------- 5,640 1,623 1,780 1,187 717 --------- --------- --------- --------- --------- Income before income taxes ......................... 155 14,213 17,180 12,817 5,535 Income taxes ....................................... 61 5,571 6,683 5,078 2,153 --------- --------- --------- --------- --------- Net Income ......................................... $ 94 $ 8,642 $ 10,497 $ 7,093 $ 3,382 ========= ========= ========= ========= ========= Basic: Net income per share ............................ $ .01 $ .93 $ 1.12 $ 0.84 $ 0.36 ========= ========= ========= ========= ========= Average shares outstanding ...................... 9,254 9,324 9,400 9,356 9,463 ========= ========= ========= ========= ========= Diluted: Net income per share ............................ $ .01 $ .92 $ 1.11 $ 0.83 $ 0.35 ========= ========= ========= ========= ========= Average shares outstanding ...................... 9,260 9,354 9,466 9,485 9,620 ========= ========= ========= ========= ========= Cash dividends per share ........................... -- -- -- -- -- BALANCE SHEET DATA (AT END OF YEAR): Current assets ..................................... $ 41,739 $ 39,449 $ 20,459 $ 20,292 $ 16,825 Current liabilities ................................ 30,357 28,277 21,151 20,762 15,193 Total assets ....................................... 189,919 182,040 119,611 113,518 86,330 Long-term debt, less current maturities ............ 65,660 64,453 19,058 27,057 15,867 Stockholders' equity ............................... 69,981 70,108 62,734 52,373 44,424
9 12 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table sets forth the percentage relationship of certain items to operating revenues for the years indicated:
YEAR ENDED DECEMBER 31, ----------------------------- 2000 1999 1998 ------ ------ ------ Operating revenues................................... 100.0% 100.0% 100.0% Operating expenses and costs: Salaries, wages and employee benefits............ 40.4 42.2 42.2 Operations and maintenance....................... 31.6 25.5 23.0 Operating taxes and licenses..................... 1.9 1.8 1.8 Insurance and claims............................. 6.3 4.8 5.0 Communications and utilities..................... 1.2 1.2 1.0 Depreciation and amortization.................... 11.8 11.2 11.1 Other............................................ 4.2 3.8 2.8 ----- ----- ----- 97.4 90.5 86.9 ----- ----- ----- Operating income..................................... 2.6 9.5 13.1 Other expenses (income): Interest expense................................. 2.4 1.0 1.2 Loss on disposal of assets....................... 0.1 -- -- Other, net....................................... -- -- 0.1 ----- ----- ----- 2.5 1.0 1.3 ----- ----- ----- Income before income taxes........................... 0.1 8.5 11.8 Income tax expense................................... -- 3.3 4.6 ----- ----- ----- Net income........................................... 0.1% 5.2% 7.2% ===== ===== =====
RESULTS OF OPERATIONS Year Ended December 31, 2000 Compared to Year Ended December 31, 1999 Operating revenues increased 36.2% to $226.6 million in 2000 from $166.4 million in 1999 , resulting from increased business with existing customers, additional business from new customers and the acquisition of CCC Express on November 1, 1999. Average revenue per mile increased to $1.18 in 2000 from $1.13 in 1999. The empty mile factor decreased to 9.16% of paid miles in 2000 from 9.26% of paid miles in 1999. There was a 35.3% increase in the number of shipments to 199,611 in 2000 from 147,484 in 1999. This volume improvement was made possible by an increase of 42.4% in the average number of tractors operated during 1999 from 1,223 to 1,740 during 2000. The net effect of the volume increase and the Company's continuing fleet expansion was a decrease of 8.9% in miles per tractor per week from 2,404 in 1999 to 2,190 in 2000. Operating expenses and costs as a percentage of revenues rose to 97.4% in 2000 from 90.5% in 1999. This change resulted primarily from an increase, on a percent of revenue basis, in operations and maintenance cost, insurance and claims cost, depreciation and amortization expense and other expenses. These increases were partially offset by a decrease, on a percent of revenue basis, in salaries, wages and employee benefits. The percentage increase, relative to revenues, in operations and maintenance cost was primarily the result of a an increase of 33.2 cents per gallon in the average cost of fuel in 2000 compared to 1999, combined with a decrease in fuel efficiency to 6.31 average miles per gallon in 2000 from 6.46 in 1999. The increase in insurance and claims cost, as a percentage of revenue and in actual dollars, resulted from an increase in the number of accidents during 2000 compared to 1999. The increase in depreciation and amortization expense, as a percent of revenue, resulted from a decline in tractor utilization from 1999 to 2000, as mentioned above. The increase in other expenses, as a percentage of revenue, resulted primarily from higher recruiting and training costs brought about by a higher driver turnover rate and increased competition for drivers. The percentage decrease, relative to salaries, wages and employee benefits expense for 2000 compared to 1999 was due to the reduction in management and executive incentives for 2000, which are based on the profitability of the Company, the effects of fuel surcharges and the elimination of a substantial portion of drivers' incentives earned during the fourth quarter of 2000 which resulted 10 13 from a change in the drivers' pay package, except for drivers in the Company's dedicated services division, that eliminated incentive pay and overall, increased mileage based pay by 16%. Because salaries, wages and employee benefits expense consumes a larger portion of revenue than do other expenses, it is affected to a larger extent by the fuel surcharges included in revenue rate increases. As a result of the foregoing factors, operating income decreased 63.4% to $5.8 million, or 2.6% of revenue, in 2000 from $15.8 million or, 9.5% of revenues, in 1999. Interest expense increased to $5.41 million from $1.65 million in 1999, resulting primarily from a substantial increase in borrowings following the acquisition of CCC Express on November 1, 1999. The Company had other expense, net of $83,000 during 2000 compared to other income, net of $23,000 in 1999. This increase in other expense, net was due to a variety of factors, no single one of which accounted for more than half of the increase. As a result of the above factors, income before taxes decreased to $155,000, or 0.1% of revenues, in 2000 from $14.2 million, or 8.5% of revenues, in 1999. The Company's effective tax rate was 39.2% in 2000 and 1999. The effective rates varied from the statutory Federal tax rate of 34% primarily due to state income taxes and certain non-deductible expenses. As a result of the aforementioned factors, net income decreased to $94,000, or 0.1% of revenues, in 2000 from $8.6 million, or 5.2% of revenues in 1999, representing a decrease in diluted net income per share to $.01 from $.92. The number of shares used in the calculation of diluted net income per share for 2000 and 1999 were 9,260,011 and 9,354,441. The principal means of competition in the truckload segment of the industry are service and rates, with rate discounting being particularly intense during economic downturns in order to maintain desired revenue levels. Although the Company competes primarily on the basis of its service provided to its customers rather than rates charged, rate discounting continues to be a factor in obtaining and retaining business. The number of firms competing in the truckload segment of the industry has increased dramatically since the deregulation of the industry in 1980. Also, a depressed economy tends to increase the competitive pressure placed on rate and service from alternative modes of transportation such as less-than-truckload and railroads. The Company's management believes that the truckload segment of the market has reached a certain level of maturity as the market exists currently and that the Company's further growth in the truckload segment of the industry is likely to be attained by increasing its market share rather than through an increase in the overall size of the market. The Company experienced higher driver turnover and a reduction in equipment utilization as well as increased insurance costs in the first three quarter of 2000 because of large number of students and inexperienced drivers hired during this period. In order to combat this trend, the Company issued a 16% driver pay increase on October 1, 2000. With this pay increase, the Company eliminated incentive pay from its pay package except for drivers in its dedicated services division. This pay increase was implemented in order to dramatically improve driver recruiting efforts by attracting more experienced drivers than in the past and improve driver retention by offering a more competitive pay package than most other companies in the truckload segment of the industry. This pay raise will increase driver wages by approximately 3% of revenue annually. Management has set goals for recruiting, retention, driver and equipment utilization and claims cost to be achieved in order to recover this additional wage cost. More experienced drivers will also help the Company provide superior customer service. Year Ended December 31, 1999 Compared to Year Ended December 31, 1998 Operating revenues increased 14.6% to $166.4 million in 1999 from $145.2 million in 1998, resulting from increased business with existing customers, additional business from new customers and the acquisition of CCC Express on November 1, 1999. Average revenue per mile increased to $1.13 in 1999 from $1.12 in 1998. The empty mile factor decreased to 9.26% of paid miles in 1999 from 9.78% of paid miles in 1998. There was a 15.1% increase in the number of shipments to 147,484 in 1999 from 128,179 in 1998. This volume improvement was made possible by an increase of 15.6% in the average number of tractors operated from 1,058 in 1998 to 1,223 in 11 14 1999. The net effect of the volume improvement and the Company's continuing fleet expansion was a decrease of 1.5% in miles per tractor per week from 2,441 in 1998 to 2,404 in 1999. Operating expenses and costs as a percentage of revenues rose to 90.5% in 1999 from 86.9% in 1998. This change resulted primarily from an increase, on a percent of revenue basis, in operations and maintenance cost, communications and utilities, and other expenses. These increases were partially offset by a decrease, on a percent of revenue basis, in insurance and claims. The percentage increase, relative to revenues, in operations and maintenance cost was primarily the result of an increase of 10 cents per gallon in the average cost of fuel in 1999 compared to 1998, offset by an increase in fuel efficiency to 6.46 average miles per gallon in 1999 from 6.41 in 1998. The increase in communications and utilities expense, as a percentage of revenue and in actual dollars, reflects the usage credits issued with the purchase of Qualcomm units in 1997 being used to reduce rates in 1998. The increase in other expenses, as a percentage of revenue, resulted primarily from higher recruiting costs brought about by a higher driver turnover rate and increased competition for drivers. The percentage decrease, relative to revenues, in insurance and claims expense was due to a decrease in the number and severity of accidents in 1999 compared to 1998. As a result of the foregoing factors, operating income decreased 16.5% to $15.8 million, or 9.5% of revenue, in 1999 from $19.0 million or, 13.1% of revenues, in 1998. Interest expense decreased 3.5% to $1.65 million from $1.72 million in 1998, resulting primarily from reduction in borrowings for most of the year offset by a substantial increase in borrowings following the acquisition of CCC Express on November 1, 1999. The Company had other income, net of $23,000 during 1999 compared to other expense, net of $102,000 in 1998. This increase in other income, net was due to a variety of factors, no single one of which accounted for more than half of the increase. As a result of the above factors, income before taxes decreased 17.3% to $14.2 million, or 8.5% of revenues, in 1999 from $17.2 million, or 11.8% of revenues, in 1998. The Company's effective tax rate increased to 39.2% in 1999 from 38.9% in 1998. The effective rates varied from the statutory Federal tax rate of 34% primarily due to state income taxes and certain non-deductible expenses. As a result of the aforementioned factors, net income decreased 17.7% to $8.6 million, or 5.2% of revenues, in 1999 from $10.5 million, or 7.2% of revenues in 1998, representing a decrease of 17.1% in diluted net income per share to $.92 from $1.11. The number of shares used in the calculation of diluted net income per share for 1999 and 1998 were 9,354,441 and 9,465,971. INFLATION The effect of inflation on operating costs has been minimal in recent years. Most of the Company's operating expenses are inflation sensitive, with increases in inflation generally resulting in increased operating costs and expenses. The effect of inflation-driven cost increases on the Company's overall operating costs would not be expected to be greater for the Company than for its competitors. SEASONALITY In the trucking industry generally, revenues decrease as customers reduce shipments during the winter holiday season and as inclement weather impedes operations. At the same time, operating expenses increase, due primarily to decreased fuel efficiency and increased maintenance costs. Future revenues could be impacted if customers reduce shipments due to temporary plant closings, which historically have occurred during July and December. 12 15 FUEL AVAILABILITY AND COST The motor carrier industry is dependent upon the availability of diesel fuel, and fuel shortages or increases in fuel taxes or fuel costs have adversely affected, and may in the future adversely affect the profitability of USA Truck. Fuel prices have fluctuated widely and fuel taxes have generally increased in recent years. The Company has not experienced difficulty in maintaining necessary fuel supplies, and in the past the Company generally has been able to recover most of the increases in fuel costs and fuel taxes from customers through increased freight rates. Diesel prices increased during 2000 and there can be no assurance when diesel prices will decrease to price levels experienced in recent periods. There also can be no assurance that the Company will be able to recover any future increases in fuel costs and fuel taxes through increased rates. OPERATIONAL DATA The following table sets forth certain operational information for the last three fiscal years:
YEAR ENDED DECEMBER 31, -------------------------------------- 2000 1999 1998 ---- ---- ---- Total loads moved during the year......................... 199,611 147,484 128,179 Average number of tractors operated during the year....... 1,740 1,223 1,058 Number of tractors operated at year end................... 1,738 1,713 1,132 Number of trailers operated at year end................... 3,400 3,524 2,004 Total tractor miles during the year....................... 220,210,709 169,587,327 148,590,937
LIQUIDITY AND CAPITAL RESOURCES On April 28, 2000, the Company signed a new senior credit facility (the "Senior Credit Facility") that provides a working capital line of credit of $60.0 million, including letters of credit not exceeding $5.0 million. The Company repaid all amounts due under the General Line of Credit in the amount of $36.1 million and subsequently terminated the General Line of Credit. Bank of America, N.A. is the agent bank and SunTrust Bank and Firstar Bank, N.A. are participants in the Senior Credit Facility. As of December 31, 2000, approximately $23.9 million was available under the Senior Credit Facility. This credit facility matures on April 28, 2005, prior to which time, subject to certain conditions, the amount outstanding can be converted at any time, at the Company's option, to a four-year term loan requiring 48 equal monthly principal payments plus interest. The Senior Credit Facility bears variable interest based on the lenders prime rate, or federal funds rate plus 1/2% or LIBOR plus a certain percentage, which is determined based on the Company's attainment of certain financial ratios. The effective interest rate on the Company's borrowings under the credit facility for the year ending December 31, 2000 was 7.92%. A quarterly commitment fee is payable on the unused credit line and bears a rate which is determined based on the Company's attainment of certain financial ratios. As of December 31, 2000 the rate was 1/5%. This credit facility is collateralized by accounts receivable and all otherwise unencumbered equipment. See Note 5 to the Financial Statements. The continued growth of the Company's business has required significant investments in new equipment. USA Truck has financed revenue equipment purchases with cash flows from operations and through borrowings under the Company's General Line of Credit or Senior Credit Facility, conventional financing and lease-purchase arrangements. The Company has generally met its working capital needs with cash flows from operations and occasionally with borrowings under the General Line of Credit or Senior Credit Facility. The Company has relied significantly on the General Line of Credit or Senior Credit Facility to meet working capital requirements since the acquisition of the assets of CCC Express. The Company uses the Senior Credit Facility to minimize fluctuations in cash flow needs and to provide flexibility in financing revenue equipment purchases. Cash flows from operations were $29.2 million for 2000 and $13.6 million for 1999. The Company is a party to a lease commitment agreement (the "Equipment TRAC Lease Commitment"), dated November 19, 1997, to facilitate the leasing of tractors. The Equipment TRAC Lease Commitment was amended on October 12, 1999 to provide for available borrowings of up to $6,000,000 available during the remainder of 1999 and until October 12, 2000. Each capital lease under this lease commitment has a repayment period of either 36 or 42 months. As of December 31, 2000, capital leases in the aggregate principal amount of $20.5 million were outstanding under the Equipment TRAC Lease Commitment with an average interest rate of 13 16 5.75% per annum. During 2000, the Company entered into capital leases under this facility in the amount of $3.1 million. As of December 31, 2000, capital leases in the aggregate principal amount of $4.6 million were outstanding under a prior lease commitment with an average interest rate of 5.26% per annum. On January 11, 2000, the Company entered into a lease commitment agreement (the "2000 TRAC Lease Commitment A"), to facilitate the leasing of tractors. The 2000 Equipment TRAC Lease Commitment A was amended on November 7, 2000 to provide for a maximum borrowing amount of approximately $16.5 million. Each capital lease will have a repayment period of 42 months. Borrowings are limited based on the amounts outstanding under capital leases entered into under this agreement. As of December 31, 2000, $8.3 million remained available under the 2000 Equipment TRAC Lease Commitment A. The interest rate on the capital leases under this lease commitment fluctuates in relation to the interest rate for the three year Treasury Note as published in The Wall Street Journal and is fixed upon execution of each lease. As of December 31, 2000, capital leases in the aggregate principal amount of $8.2 million were outstanding under this lease commitment with an average interest rate of 6.63% per annum. During, 2000, the Company entered into capital leases under this lease commitment in the amount of $9.1 million. On January 31, 2000, the Company entered into a lease commitment agreement (the "2000 TRAC Lease Commitment B"), dated January 31, 2000, to facilitate the leasing of tractors. The 2000 Equipment TRAC Lease Commitment B was amended on October 18, 2000 to provide for a maximum borrowing amount of approximately $19.6 million. Each capital lease will have a repayment period of either 36 or 42 months. Borrowings are limited based on the amounts outstanding under capital leases entered into under this agreement. As of December 31, 2000, $12.0 million remained available under the 2000 Equipment TRAC Lease Commitment B. The interest rate on the capital leases under this lease commitment fluctuates in relation to the one year LIBOR as published in The Wall Street Journal and is fixed upon execution of a lease. As of December 31, 2000, capital leases in the aggregate principal amount of $7.6 million were outstanding under this lease commitment with an average interest rate of 6.58% per annum. During 2000, the Company entered into capital leases under this lease commitment in the amount of $8.3 million. As of December 31, 2000, the Company had debt obligations of approximately $78.5 million, including amounts borrowed under the facilities described above, of which approximately $12.9 million were current obligations. During 2000, the Company made borrowings under the facilities described above of $89.6 million, while retiring $106.9 million in debt. The retired debt had an average interest rate of approximately 6.98%. During the years 2001 and 2002, the Company plans to make approximately $99.9 million in capital expenditures. At December 31, 2000, USA Truck was committed to spend $41.0 million of this amount for revenue equipment in 2001, and $52.7 million of this amount is currently budgeted for revenue equipment in 2002. The commitments to purchase revenue equipment are cancelable by the Company if certain conditions are met. The balance of the expected capital expenditures will be used for maintenance and office equipment and facility improvements. The Senior Credit Facility, the Equipment TRAC Lease Commitment A, the Equipment TRAC Lease Commitment B equipment leases and cash flows from operations should be adequate to fund the Company's operations and expansion plans through the end of 2001. There can be no assurance, however, that such sources will be sufficient to fund Company operations and all expansion plans through such date, or that any necessary additional financing will be available, if at all, in amounts required or on terms satisfactory to the Company. The Company expects to continue to fund its operations with cash flows from operations, equipment leases, the Senior Credit Facility, the Equipment TRAC Lease Commitment A, the Equipment TRAC Lease Commitment Board for the foreseeable future. On July 9, 1998, the Company's Board of Directors authorized the Company to purchase up to 500,000 shares of its outstanding common stock over a three-year period dependent upon market conditions. Common stock purchases under the authorization may be made from time to time on the open market or in privately negotiated transactions at prices determined by the Chairman of the Board and President of the Company. This new authorization became effective in September 1998 upon the expiration of the Company's existing stock repurchase program. On May 5, 1999, the Board of Directors authorized the retirement of 100,000 shares of treasury stock that 14 17 had been purchased at an aggregate cost of $.9 million. On May 3, 2000, the Board of Directors authorized the retirement of 106,733 shares of treasury stock that had been purchased at an aggregate cost of $.9 million. As of December 31, 2000, the Company had purchased 289,800 shares pursuant to this new authorization at an aggregate purchase price of $2,475,000. In addition, as of December 31, 2000, 23,232 of the remaining 131,600 repurchased shares had been resold under the Company's Employee Stock Purchase Plan. The Company may continue to purchase shares in the future if, in the view of management, the common stock is undervalued relative to the Company's performance and prospects for continued growth. Any such purchases would be funded with cash flows from operations or the Senior Credit Facility. NEW ACCOUNTING PRONOUNCEMENTS In 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. This statement provides guidance on the capitalization of certain costs incurred in developing or acquiring internal-use computer software. This statement was adopted in 1998 and did not have a significant impact on the Company's financial statements. In June, 1998, the Financial Accounting Standards Board issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. The Statement has been amended by SFAS No. 137 and is effective for all quarters of fiscal years beginning after June 15, 2000. It establishes accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability at its fair value. The Company is currently evaluating the requirements of SFAS No. 133 and does not anticipate that the adoption will have a material effect on earnings or the financial position of the Company. FORWARD-LOOKING STATEMENTS This report contains forward-looking statements and information that are based on management's belief as well as assumptions made by, and information currently available to management. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will be realized. Should one or more of the risks or uncertainties underlying such expectations materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. Among the key factors that are not within the Company's control and that may have a direct bearing on operating results are increases in diesel prices, adverse weather conditions or driver turnover and the impact of increased rate competition or competition for qualified drivers. The Company's results may also be significantly affected by fluctuations in general economic conditions, as the Company's utilization rates are directly related to business levels of shippers in a variety of industries. Results for any specific period could also be affected by various unforeseen events, such as unusual levels of equipment failure or accident claims. 15 18 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The Company's Senior Credit Facility provides for borrowings which bear interest at variable rates based on either a prime rate, federal funds rate plus 1/2% or LIBOR plus a certain percentage which is determined based on the Company's attainment of certain financial ratios. At December 31, 2000, the Company had $34.9 million outstanding pursuant to the Senior Credit Facility. The Company believes that the effect, if any, of reasonably possible near-term changes in interest rates on the Company's financial position, results of operations, and cash flows should not be material. All customers are required to pay for Company services in U.S. dollars. Although the Canadian Government makes certain payments, such as tax refunds, to the Company in Canadian dollars, any foreign currency exchange risk associated with such payments is insignificant. The Company does not engage in hedging transactions relating to diesel fuel or any other commodity. 16 19 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA USA TRUCK, INC. ANNUAL REPORT ON FORM 10-K YEAR ENDED DECEMBER 31, 2000 INDEX TO FINANCIAL STATEMENTS
Page Report of Ernst & Young LLP, Independent Auditors ...................................................... 18 Balance Sheets as of December 31, 2000 and 1999......................................................... 19 Statements of Income for the years ended December 31, 2000, 1999 and 1998............................... 20 Statements of Stockholders' Equity for the years ended December 31, 2000, 1999 and 1998................. 21 Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998........................... 22 Notes to Financial Statements........................................................................... 23
17 20 REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS The Board of Directors and Stockholders USA Truck, Inc. We have audited the accompanying balance sheets of USA Truck, Inc. as of December 31, 2000 and 1999, and the related statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2000. Our audits also included the financial statement schedule listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule 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 USA Truck, Inc. at December 31, 2000 and 1999, and the results of its operations and its 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. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. ERNST & YOUNG LLP Little Rock, Arkansas January 19, 2001 18 21 USA TRUCK, INC. BALANCE SHEETS
December 31, ------------------------------ 2000 1999 ------------- ------------- ASSETS Current assets: Cash and cash equivalents ..................................... $ 1,674,730 $ 2,145,707 Receivables (Note 5): Trade, less allowance for doubtful accounts of $303,203 in 2000 and $269,150 in 1999 ..................... 30,019,565 26,649,235 Other ....................................................... 3,853,642 5,509,866 Inventories ................................................... 382,639 301,907 Deferred income taxes (Note 7) ................................ 1,607,633 1,208,413 Prepaid expenses and other current assets (Note 3) ............ 4,200,618 3,634,056 ------------- ------------- Total current assets .............................................. 41,738,827 39,449,184 Property and equipment (Notes 5 and 6): Land and structures ........................................... 18,519,687 16,798,699 Revenue equipment ............................................. 170,109,906 155,546,718 Service, office and other equipment ........................... 14,517,040 13,665,713 ------------- ------------- 203,146,633 186,011,130 Accumulated depreciation and amortization ..................... (55,417,751) (43,873,074) ------------- ------------- 147,728,882 142,138,056 Other assets ...................................................... 451,115 452,448 ------------- ------------- Total assets ...................................................... $ 189,918,824 $ 182,039,688 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Bank drafts payable ........................................... $ 1,487,086 $ 1,116,485 Trade accounts payable ........................................ 5,870,192 5,139,164 Accrued expenses (Note 4) ..................................... 10,131,717 11,065,604 Current maturities of long-term debt (Note 5) ................. 12,867,611 10,956,533 ------------- ------------- Total current liabilities ......................................... 30,356,606 28,277,285 Long-term debt, less current maturities (Notes 5 and 6) ........... 65,660,268 64,452,648 Deferred income taxes (Note 7) .................................... 21,111,025 17,008,364 Insurance and claims accruals ..................................... 2,810,214 2,192,714 Commitments and contingencies (Notes 6 and 12) Stockholders' equity (Notes 5 and 9): Preferred Stock, $.01 par value; 1,000,000 shares authorized; none issued ..................................... -- -- Common Stock, $.01 par value; 16,000,000 shares authorized; issued 9,282,889 shares in 2000 and 9,387,041 shares in 1999 ................................ 92,829 93,870 Additional paid-in capital .................................... 11,318,279 12,271,685 Retained earnings ............................................. 58,934,889 58,840,827 Less treasury stock, at cost (59,835 shares in 2000 and 122,011 shares in 1999) ..................................... (365,286) (1,098,206) ------------- ------------- Total stockholders' equity ........................................ 69,980,711 70,108,176 ------------- ------------- Total liabilities and stockholders' equity ........................ $ 189,918,824 $ 182,039,688 ============= =============
See accompanying notes. 19 22 USA TRUCK, INC. STATEMENTS OF INCOME
Year Ended December 31, ----------------------------------------------- 2000 1999 1998 ------------- ------------- ------------- Operating revenues .................................... $ 226,585,437 $ 166,363,356 $ 145,216,121 Operating expenses and costs: Salaries, wages and employee benefits (Note 8) .... 91,453,590 70,197,581 61,296,860 Operations and maintenance ........................ 71,567,226 42,480,525 33,400,982 Operating taxes and licenses ...................... 4,248,497 3,005,166 2,547,449 Insurance and claims .............................. 14,318,596 7,987,208 7,249,853 Communications and utilities ...................... 2,802,007 1,999,548 1,468,485 Depreciation and amortization ..................... 26,792,923 18,591,780 16,179,143 Other ............................................. 9,607,679 6,264,876 4,113,158 ------------- ------------- ------------- 220,790,518 150,526,684 126,255,930 ------------- ------------- ------------- Operating income ...................................... 5,794,919 15,836,672 18,960,191 Other expenses (income): Interest expense .................................. 5,407,723 1,655,558 1,714,662 Loss (gain) on disposal of assets ................. 149,788 (9,297) (37,088) Other, net ........................................ 82,702 (22,588) 102,340 ------------- ------------- ------------- 5,640,213 1,623,673 1,779,914 ------------- ------------- ------------- Income before income taxes ............................ 154,706 14,212,999 17,180,277 Income tax (benefit) expense (Note 7): Current ........................................... (3,642,795) 2,774,219 3,366,164 Deferred .......................................... 3,703,440 2,797,278 3,316,964 ------------- ------------- ------------- 60,645 5,571,497 6,683,128 ------------- ------------- ------------- Net income ............................................ $ 94,061 $ 8,641,502 $ 10,497,149 ============= ============= ============= Net income per share (Notes 9 and 10): Basic earnings per share .......................... $ 0.01 $ 0.93 $ 1.12 ============= ============= ============= Diluted earnings per share ........................ $ 0.01 $ 0.92 $ 1.11 ============= ============= =============
See accompanying notes. 20 23 USA TRUCK, INC. STATEMENTS OF STOCKHOLDERS' EQUITY
ADDITIONAL COMMON PAID-IN RETAINED TREASURY STOCK CAPITAL EARNINGS STOCK TOTAL ------------ ------------ ------------ ------------ ------------ Balance at January 1, 1998 .............. $ 93,749 $ 12,577,336 $ 39,702,176 $ -- $ 52,373,261 Exercise of stock options, net (Note 10) ......................... 622 290,941 -- -- 291,563 Tax benefit of stock options (Note 7) .......................... -- 53,065 -- -- 53,065 Purchases of 54,750 shares of common stock into treasury ....... -- -- -- (585,962) (585,962) Sale of 7,961 shares of treasury stock to employee stock purchase plan .................... -- -- -- 104,987 104,987 Net income for 1998 ................. -- -- 10,497,149 -- 10,497,149 ------------ ------------ ------------ ------------ ------------ Balance at December 31, 1998 ............ 94,371 12,921,342 50,199,325 (480,975) 62,734,063 Exercise of stock options, net (Note 10) ......................... 499 278,219 -- -- 278,718 Purchase of 186,600 shares of common stock into treasury ........ -- -- -- (1,662,883) (1,662,883) Sale of 11,379 shares of treasury stock to employee stock purchase plan ............................. -- -- -- 116,776 116,776 Retirement of 100,000 shares out of treasury stock ............ (1,000) (927,876) -- 928,876 -- Net income for 1999 ................. -- -- 8,641,502 -- 8,641,502 ------------ ------------ ------------ ------------ ------------ Balance at December 31, 1999 ............ 93,870 12,271,685 58,840,827 (1,098,206) 70,108,176 Exercise of stock options, net (Note 10) ......................... 26 (21) -- -- 5 Purchase of 58,200 shares of common stock into treasury ....... -- -- -- (350,344) (350,344) Transfer of 13,643 shares of treasury Stock to Employee Stock Purchase -- -- -- 128,813 128,813 Plan ............................. Retirement of 106,733 shares out of treasury stock ........... (1,067) (953,384) -- 954,451 -- Net income for 2000 ................. -- -- 94,061 -- 94,061 ------------ ------------ ------------ ------------ ------------ Balance at December 31, 2000 ............ $ 92,829 $ 11,318,280 $ 58,934,888 $ (365,286) $ 69,980,711 ============ ============ ============ ============ ============
See accompanying notes. 21 24 USA TRUCK, INC. STATEMENTS OF CASH FLOWS
Year Ended December 31, -------------------------------------------- 2000 1999 1998 ------------ ------------ ------------ OPERATING ACTIVITIES Net income ....................................................... $ 94,061 $ 8,641,502 $ 10,497,149 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization .............................. 26,792,923 18,591,780 16,179,143 Provision for doubtful accounts ............................ 82,200 121,900 30,000 Deferred income taxes ...................................... 3,703,441 2,797,278 3,316,964 Gain on disposal of assets ................................. 149,788 (9,297) (37,088) Changes in operating assets and liabilities: Receivables ............................................. (1,796,306) (17,186,596) (1,363,041) Inventories, prepaid expenses and other current assets ........................................ (647,294) (609,527) (1,103,891) Bank drafts payable, trade accounts payable and accrued expenses ...................................... 167,742 1,103,205 539,981 Insurance and claims accruals - long-term ............... 617,500 100,100 408,000 ------------ ------------ ------------ Net cash provided by operating activities ........................ 29,164,055 13,550,345 28,467,217 INVESTING ACTIVITIES Purchases of property and equipment .............................. (27,011,263) (29,492,589) (21,731,600) Purchase of CCC Express, Inc. .................................... -- (22,891,055) -- Proceeds from sale of equipment .................................. 14,898,989 9,651,337 6,395,382 Proceeds from sale of investments ................................ -- 968,196 -- Decrease (increase) in other assets .............................. 1,333 (153,165) 31,150 ------------ ------------ ------------ Net cash used by investing activities ............................ (12,110,941) (41,917,276) (15,305,068) FINANCING ACTIVITIES Borrowings under long-term debt .................................. 89,606,979 55,685,310 14,325,000 Proceeds from the exercise of stock options ...................... 5 278,718 291,563 Proceeds from sale of treasury stock ............................. 128,813 116,776 104,987 Refund of security deposits ...................................... -- 1,745,478 -- Payments to repurchase common stock .............................. (350,344) (1,662,883) (585,962) Principal payments on long-term debt ............................. (93,689,979) (19,595,310) (22,800,000) Principal payments on capitalized lease obligations .............. (13,219,565) (7,835,094) (6,385,405) ------------ ------------ ------------ Net cash (used by) provided by financing activities .............. (17,524,091) 28,732,995 (15,049,817) ------------ ------------ ------------ (Decrease) increase in cash and cash equivalents ................. (470,977) 366,064 (1,887,668) Cash and cash equivalents: Beginning of year ............................................ 2,145,707 1,779,643 3,667,311 ------------ ------------ ------------ End of year .................................................. $ 1,674,730 $ 2,145,707 $ 1,779,643 ============ ============ ============
See accompanying notes. 22 25 USA TRUCK, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES DESCRIPTION OF BUSINESS USA Truck, Inc. (the "Company"), operates as a truckload motor carrier with operating authority to provide service throughout the continental United States and parts of Canada and Mexico. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. CASH EQUIVALENTS The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The carrying amount reported in the balance sheet for cash and cash equivalents approximates its fair value. CONCENTRATION OF CREDIT RISK The Company performs ongoing credit evaluations and generally does not require collateral. The Company maintains reserves for potential credit losses. Such losses have been within management's expectations. One customer represented approximately 8% and 7% of net trade receivables as of December 31, 2000 and 1999, respectively. The same customer represented approximately 6% and 6% of revenues for the years ended December 31, 2000 and 1999, respectively. INVENTORIES Inventories consist primarily of tires, fuel and supplies and are stated at the lower of cost (first-in, first-out basis) or market. PROPERTY AND EQUIPMENT Property and equipment is recorded at cost. For financial reporting purposes, the cost of such property is depreciated principally by the straight-line method using the following estimated useful lives: structures - 5 to 39.5 years; revenue equipment - 3 to 10 years; and service, office and other equipment - 3 to 20 years. Gains and losses on asset sales are reflected in the year of disposal. Trade-in allowances in excess of book value of revenue equipment are accounted for by adjusting the cost of assets acquired. Tires purchased with revenue equipment are capitalized as a part of the cost of such equipment, with replacement tires being inventoried and expensed when placed in service. 23 26 USA TRUCK, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) PROPERTY AND EQUIPMENT (CONTINUED) During 2000, the Company made certain changes in the estimated lives and salvage values of certain revenue equipment to better reflect the Company's experience as to service lives and resale values of that revenue equipment. Effective June 1, 2000, the Company changed the estimated lives and salvage values of its trailers. This change decreased depreciation expense and increased net income by approximately $563,500 during 2000. Effective October 1, 2000, the Company changed the salvage values of certain types of its tractors. This change increased depreciation expense and decrease net income by approximately $200,000 during 2000. CLAIMS LIABILITIES The Company is self-insured up to certain limits for bodily injury, property damage, workers' compensation, and cargo loss and damage claims. Provisions are made for both the estimated liabilities for known claims as incurred and estimates for those incurred but not reported. In 2000 the Company was self-insured up to $1,000,000 per occurrence for bodily injury and property damage, up to $500,000 for workers' compensation claims, and up to $100,000 per occurrence for cargo loss and damage claims. These self-insurance arrangements are secured by $1,210,000 in letters of credit. The workers' compensation self-insurance is secured by $100,000 in certificates of deposit maturing during 2001. The certificates of deposit are included in other assets on the balance sheet as of December 31, 2000 and 1999. REVENUE RECOGNITION Revenues are recognized based on a method whereby revenue is allocated between reporting periods based on relative transit time in each period and direct expenses are allocated on the same basis. INCOME TAXES Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets include temporary differences relating to depreciation, capitalized leases and certain revenues and expenses. EARNINGS PER SHARE Earnings per share amounts are computed based on Financial Accounting Standards Board Statement No. 128, Earnings per Share. Basic earnings per share is computed based on the weighted average number of shares of common stock outstanding during the year excluding any dilutive effects of options. Diluted earnings per share is computed by adjusting the weighted average shares outstanding by common stock equivalents attributable to dilutive options. 24 27 USA TRUCK, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) COMPENSATION TO EMPLOYEES Stock based compensation to employees is accounted for based on the intrinsic value method under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25). Under APB 25 because the exercise price of employee stock options equaled the market price of the underlying stock on the grant date, no compensation expense is recorded. The Company has adopted the disclosure - only provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS 123). ADVERTISING COSTS The Company expenses advertising costs as they are incurred. Total advertising costs for the period ended December 31, 2000, 1999 and 1998 were $1,770,000, $1,628,000, and $1,416,000 respectively. NEW ACCOUNTING PRONOUNCEMENTS In 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. This statement provides guidance on the capitalization of certain costs incurred in developing or acquiring internal-use computer software. This statement was adopted in 1998 and did not have a significant impact on the Company's financial statements. In June, 1998, the Financial Accounting Standards Board issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. The Statement has been amended by SFAS No. 137 and is effective for all quarters of fiscal years beginning after June 15, 2000. It establishes accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability at its fair value. The Company is currently evaluating the requirements of SFAS No. 133 and does not anticipate that the adoption will have a material effect on earnings or the financial position of the Company. 2. ACQUISITION On November 1, 1999, pursuant to an Asset Purchase Agreement (the "Asset Purchase Agreement") dated October 31, 1999, the Company acquired substantially all the assets of CARCO Carrier Corporation, an Arkansas corporation, which operated under the name CCC Express, Inc. ("CCC"), for a purchase price of $35.3 million. The purchase price consisted of (i) a cash payment of approximately $3.0 million; (ii) the assumption of approximately $6.5 million of liabilities including equipment notes and (iii) the refinancing of approximately $25.8 million in other debt secured by equipment. Additionally, $5.9 million of the $25.8 million consisted of a non-cash transaction. The cash portion of the purchase price was paid from available cash and proceeds of borrowings under the Company's credit facilities. The purchase price was equal to the net book value of CCC on the closing date, as adjusted in accordance with the Asset Purchase Agreement, plus $2 million. In connection with the acquisition, the Company's borrowing under its General Line of Credit was increased from $20 million to $35 million effective October 28, 1999. 25 28 USA TRUCK, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. ACQUISITION (CONTINUED) The acquisition has been accounted for under the purchase method. Accordingly, the acquired assets and liabilities have been recorded at their estimated fair values at the date of acquisition. Operating results of the acquired business are included in the statements of income from the acquisition date. The following pro forma summary of results of operations has been prepared as though CCC had been acquired on January 1, 1998. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what would have occurred had the acquisition been made on January 1, 1998, or of results which may occur in the future.
December 31, -------------------------- 1999 1998 ------------ ------------ Operating revenues .................................... $222,089,793 $211,937,321 Net Income ............................................ 6,127,054 9,074,624 Basic earnings per share .............................. $ .66 $ .97 Diluted earnings per share ............................ $ .65 $ .96
3. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist of the following:
December 31, ----------------------- 2000 1999 ---------- ---------- Prepaid licenses and taxes ............................ $1,484,736 $1,381,345 Prepaid insurance ..................................... 1,938,554 2,039,749 Other ................................................. 777,328 212,962 ---------- ---------- $4,200,618 $3,634,056 ========== ==========
4. ACCRUED EXPENSES Accrued expenses consist of the following:
December 31, ------------------------- 2000 1999 ---------- ----------- Salaries, wages, bonuses and employee benefits ......... $ 2,471,160 $ 4,352,233 Insurance and claims accruals .......................... 5,032,871 3,585,366 Other .................................................. 2,627,686 3,128,005 ----------- ----------- $10,131,717 $11,065,604 =========== ===========
26 29 USA TRUCK, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 5. LONG-TERM DEBT Long-term debt consists of the following:
December 31, --------------------------- 2000 1999 ---------- ---------- Revolving credit agreement(1) .......................... $ 34,907,000 $ 38,990,000 Capitalized lease obligations(2) ....................... 43,620,879 36,419,181 ------------ ------------ 78,527,879 75,409,181 Less current maturities ................................ (12,867,611) (10,956,533) ------------ ------------ $ 65,660,268 $ 64,452,648 ============ ============
(1) The Company's revolving credit agreement (the "Senior Credit Facility"), effective April 28, 2000, provides for available borrowings of $60,000,000, including letters of credit not exceeding $5,000,000. The Senior Credit Facility matures on April 28, 2005, prior to which time, subject to certain conditions, the remaining balance may be converted at any time at the Company's option to a term loan requiring forty-eight equal monthly principal payments plus interest. The credit facility bears variable interest based on the lenders prime rate, or federal funds rate plus 1/2% or LIBOR plus a certain percentage, which is determined based on the Company's attainment of certain financial ratios. The effective interest rate on the Company's borrowings under the credit facility for the year ending December 31, 2000 was 7.58%. A quarterly commitment fee of 1/5% per annum is payable on the unused credit line. The Senior Credit Facility is collateralized by accounts receivable and all otherwise unencumbered equipment. The Company has outstanding letters of credit of approximately $1,210,000 at December 31, 2000. The Senior Credit Facility requires the Company to meet certain financial covenants and to maintain a minimum tangible net worth of approximately $65,846,000 at December 31, 2000. The Company was in compliance with these covenants at December 31, 2000. The covenants would prohibit the payment of dividends by the Company if such payment would cause the Company to be in violation of any of the covenants. The carrying amount reported in the balance sheet for borrowings under the Line of Credit approximates its fair value since the interest rate is variable. (2) The leases extend through February 2004 and contain renewal or fixed price purchase options. The effective interest rates on the leases range from 4.50% to 11.56% at December 31, 2000. The lease agreements require the Company to pay property taxes, maintenance and operating expenses. The Company made interest payments of approximately $5,378,000, $1,490,000 and $1,699,000 during 2000, 1999 and 1998, respectively. The Company capitalized approximately $12,500 and $6,800 in interest as a result of construction during 2000 and 1998, respectively. 27 30 USA TRUCK, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 6. LEASES AND COMMITMENTS Capital lease obligations of $20,421,263, $21,908,219 and $6,763,522 were incurred during the years ended December 31, 2000, 1999 and 1998, respectively. At December 31, 2000, the future minimum payments under capitalized leases with initial terms of one year or more were $15,146,492 for 2001, $13,481,486 for 2002, $17,760,502 for 2003 and $1,349,203 for 2004. The present value of net minimum lease payments was $43,620,879, which includes the current portion of the capital leases of $12,867,611 and excludes amounts representing interest of $4,116,805. At December 31, 2000, property and equipment included capitalized leases, which had capitalized costs of $58,048,308, accumulated amortization of $14,081,766 and a net book value of $43,966,542. At December 31, 1999 property and equipment included capitalized leases, which had capitalized costs of $45,526,083, accumulated amortization of $7,944,872 and a net book value of $37,581,211. Amortization of leased assets is included in depreciation and amortization expense. Commitments to purchase revenue equipment, which are cancelable by the Company if certain conditions are met, aggregated approximately $37,974,000 at December 31, 2000. 7. FEDERAL AND STATE INCOME TAXES Significant components of the Company's deferred tax liabilities and assets as of December 31, 2000 and 1999 are as follows:
December 31, ---------------------------- 2000 1999 ------------ ------------ Noncurrent deferred tax liabilities: Tax over book depreciation ......................... $ 21,433,405 $ 16,904,280 Capitalized leases ................................. 338,222 104,084 ------------ ------------ Total noncurrent deferred tax liabilities .............. 21,771,627 17,008,364 Noncurrent deferred tax assets: Alternative minimum tax credits .................... (263,838) -- Net operating losses ............................... (396,764) -- ------------ ------------ Total noncurrent deferred tax assets ................... (660,602) -- ------------ ------------ Net current deferred tax liabilities ................... $ 21,111,025 $ 17,008,364 ============ ============ Current deferred tax assets: Revenue recognition ................................ $ (42,661) $ (89,392) Accrued expenses not deductible until paid ......... (3,033,282) (2,389,894) Allowance for doubtful accounts .................... (115,323) (99,166) ------------ ------------ Total current deferred tax assets ...................... (3,191,266) (2,578,452) Current deferred tax liabilities: Prepaid expenses deductible when paid .............. 1,583,633 1,370,039 ------------ ------------ Net current deferred tax assets ........................ $ (1,607,633) $ (1,208,413) ============ ============
28 31 USA TRUCK, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 7. FEDERAL AND STATE INCOME TAXES (CONTINUED) Significant components of the provision for income taxes are as follows:
Year Ended December 31, ------------------------------------------- 2000 1999 1998 ----------- ----------- ----------- Current Federal ......................................... $(3,642,796) $ 2,406,997 $ 2,812,318 State ........................................... -- 367,222 553,846 ----------- ----------- ----------- Total current ................................... (3,642,796) 2,774,219 3,366,164 Deferred Federal ......................................... 3,152,732 2,350,248 2,883,617 State ........................................... 550,709 447,030 433,347 ----------- ----------- ----------- Total deferred .................................. 3,703,441 2,797,278 3,316,964 ----------- ----------- ----------- Total income tax expense ........................ $ 60,645 $ 5,571,497 $ 6,683,128 =========== =========== ===========
During 2000, 1999 and 1998, the Company made income tax payments of approximately $66,250, $3,105,300, and $3,484,000, respectively. During 1998, the Company recognized a tax benefit of $53,065 related to stock options. This amount was added to additional paid-in capital. In 2000, the Company generated $396,742 in a state net operating loss carry forward, which will expire in 2020. The Company also generated alternative minimum tax credits of $263,838. These credits have no expiration date. A reconciliation between the effective income tax rate and the statutory federal income tax rate is as follows:
Year Ended December 31, ------------------------------------------- 2000 1999 1998 ----------- ----------- ----------- Income tax at 34% statutory federal rate ......... $ 52,600 $ 4,832,420 $ 5,841,294 Federal income tax effects of: State income taxes ........................... (7,224) (276,846) (336,172) Nondeductible expenses ....................... 75,038 58,846 98,131 Other ........................................ (81,017) 142,825 92,682 ----------- ----------- ----------- Federal income taxes ......................... 39,397 4,757,245 5,695,935 State income taxes ............................... 21,248 814,252 987,193 ----------- ----------- ----------- Total income tax expense ......................... $ 60,645 $ 5,571,497 $ 6,683,128 =========== =========== =========== Effective tax rate ............................... 39.2% 39.2% 38.9% =========== =========== ===========
29 32 USA TRUCK, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 8. EMPLOYEE BENEFIT PLANS The Company sponsors the USA Truck, Inc. Employees' Investment Plan, a tax deferred savings plan under section 401(k) of the Internal Revenue Code, that covers substantially all employees. Employees can contribute up to 15% of their compensation, with the Company matching 50% of the first 4% of compensation contributed by each employee. Company matching contributions were approximately $788,400, $634,000 and $652,000 for 2000, 1999 and 1998, respectively. 9. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share:
Year Ended December 31, --------------------------------------- 2000 1999 1998 ----------- ----------- ----------- Numerator: Net Income ................................... $ 94,061 $ 8,641,502 $10,497,149 Denominator: Denominator for basic earnings per share - weighted average shares ............ 9,253,843 9,324,037 9,399,727 Effect of dilutive securities: Employee stock options ..................... 6,201 30,404 66,244 ----------- ----------- ----------- Denominator for diluted earnings per share - adjusted weighted average shares and assumed conversions ............. 9,260,011 9,354,441 9,465,971 =========== =========== =========== Basic earnings per share ........................ $ .01 $ .93 $ 1.12 =========== =========== =========== Diluted earnings per share ...................... $ .01 $ .92 $ 1.11 =========== =========== =========== Anti-dilutive employee stock options ............ 79,600 94,600 -- =========== =========== ===========
10. COMMON STOCK TRANSACTIONS The Company has a stock option plan which provides for the granting of incentive or nonqualified options to purchase up to 800,000 shares of common stock to officers and other key employees. No options may be granted under this plan for less than the fair market value of the common stock at the date of the grant. Although the exercise period is determined when options are actually granted, no option will be exercised later than 10 years after it is granted. The Company also has a nonqualified stock option plan for directors who are not officers or employees of the Company, which provides for the granting of options to purchase up to 25,000 shares of common stock. No options may be granted under this plan with exercise prices of less than the fair market value of the common stock at the date of grant. Although the exercise period is determined when options are actually granted, options will vest no less than six months or more than three years after the grant date and may not be exercised later than five years after the grant date. 30 33 USA TRUCK, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 10. COMMON STOCK TRANSACTIONS (CONTINUED) A summary of the Company's stock option activity, and related information for the years ended December 31, follows:
2000 1999 1998 ------------------------- -------------------------- ------------------------- WEIGHTED-AVERAGE Weighted-Average Weighted-Average OPTIONS EXERCISE PRICE Options Exercise Price Options Exercise Price ------- ---------------- ------- ---------------- ------- ---------------- Outstanding-beginning of year .................... 258,200 $ 8.09 323,200 $ 7.72 356,400 $ 6.90 Granted ...................... 185,000 5.49 -- -- 46,000 11.59 Exercised .................... (32,000) 6.25 (65,000) $ 6.25 (79,200) 6.30 Canceled ..................... (10,000) 6.96 -- -- -- -- Expired ...................... (20,600) 11.53 -- -- -- -- -------- -------- -------- -------- -------- -------- Outstanding-end of year ...... 380,600 $ 6.85 258,200 $ 8.09 323,200 $ 7.72 ======== ======== ======== ======== ======== ======== Exercisable at end of year ... 104,800 $ 8.10 95,600 $ 7.85 103,000 $ 6.46
Exercise prices for options outstanding as of December 31, 2000 ranged from $5.44 to $13.00. The weighted-average fair value of options granted during 2000 and 1998 were $2.33 and $4.30. No options were granted during 1999. The weighted-average remaining contractual life of these options is 3.59 years. No options were exercised for cash in 2000. In 1999 and 1998, 44,595 and 45,240 options, respectively, were exercised for cash. In 2000, 1999 and 1998 additional options of 30,200, 20,405 and 33,960 respectively, were exercised by the exchange of 29,419, 15,056 and 16,971 shares of stock respectively, (with a market value equal to the exercise price of the options). The exchanged shares were then canceled. Since the Company has adopted the disclosure-only provisions of SFAS 123, no compensation cost has been recognized for the stock option plans. Had compensation cost for the Company's two stock option plans been determined based on the fair value at the grant date for awards in 2000, 1999 and 1998 consistent with the provisions of SFAS 123, the Company's pro forma net income would have been $20,808, $8,603,394 and $10,431,143, pro forma basic earnings per share would have been $.00, $.92 and $.1.11, and pro forma diluted earnings per share would have been $.00, $.92 and $1.10, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The following weighted-average assumptions were used for grants in 2000: dividend yield of 0%; expected volatility of 0.336%; risk-free interest rates range from 5.77% to 5.92% and expected lives range from 3 to 7 years. The following weighted-average assumptions were used for grants in 1999: dividend yield of 0%; expected volatility of 0.292%; risk-free interest rates range from 4.29% to 5.44% and expected lives range from 3 to 5 years. The following weighted-average assumptions were used for grants in 1998: dividend yield of 0%; expected volatility of 0.457%; risk-free interest rates range from 4.29% to 5.44% and expected lives range from 3 to 5 years. 31 34 USA TRUCK, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 11. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The tables below present quarterly financial information for 2000 and 1999:
2000 THREE MONTHS ENDED ------------------------------------------------------ MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, ----------- ----------- ------------- ------------ Operating revenues ........................... $55,144,425 $58,348,467 $ 55,532,933 $ 57,559,612 Operating expenses and costs ................. 54,344,363 54,871,633 53,434,653 58,139,869 ----------- ----------- ------------- ------------ Operating income ............................. 800,062 3,476,834 2,098,280 (580,257) Other expenses, net .......................... 1,451,235 1,533,420 1,255,588 1,399,970 ----------- ----------- ------------- ------------ (Loss) income before income taxes ............ (651,173) 1,943,414 842,692 (1,980,227) Income tax (benefit) expense ................. (256,788) 763,347 330,335 (776,249) ----------- ----------- ------------- ------------ Net (Loss) income ............................ $ (394,385) $ 1,180,067 $ 512,357 $ (1,203,978) =========== =========== ============= ============ Average shares outstanding (basic) ........... 9,266,229 9,297,761 9,257,973 9,222,264 =========== =========== ============= ============ Basic (loss) earnings per share .............. $ (.04) $ .13 $ .06 $ (.13) =========== =========== ============= ============ Average shares outstanding (diluted) ......... 9,288,976 9,302,194 9,264,116 9,228,370 =========== =========== ============= ============ Diluted (loss) earnings per share ............ $ (.04) $ .13 $ .06 $ (.13) =========== =========== ============= ============
1999 Three Months Ended ------------------------------------------------------ March 31, June 30, September 30, December 31, ----------- ----------- ------------- ------------ Operating revenues ........................... $36,199,447 $38,117,504 $ 40,416,850 $ 51,629,555 Operating expenses and costs ................. 32,063,006 33,830,877 37,330,310 47,302,491 ----------- ----------- ------------- ------------ Operating income ............................. 4,136,441 4,286,627 3,086,540 4,327,064 Other expenses, net .......................... 313,880 282,016 308,597 719,180 ----------- ----------- ------------- ------------ Income before income taxes ................... 3,822,561 4,004,611 2,777,943 3,607,884 Income taxes ................................. 1,498,444 1,569,808 1,088,954 1,414,291 ----------- ----------- ------------- ------------ Net income ................................... $ 2,324,117 $ 2,434,803 $ 1,688,989 $ 2,193,593 =========== =========== ============= ============ Average shares outstanding (basic) ........... 9,392,817 9,373,109 9,298,377 9,257,361 =========== =========== ============= ============ Basic earnings per share ..................... $ .25 $ .26 $ .18 $ .24 =========== =========== ============= ============ Average shares outstanding (diluted) ......... 9,452,481 9,410,750 9,335,972 9,287,601 =========== =========== ============= ============ Diluted earnings per share ................... $ .25 $ .26 $ .18 $ .24 =========== =========== ============= ============
12. LITIGATION The Company is not a party to any pending legal proceedings which management believes to be material to the financial condition of the Company. The Company maintains liability insurance against risks arising out of the normal course of its business. 32 35 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no changes in or disagreements with accountants on accounting and financial disclosure matters during any period covered by the financial statements filed herein or any period subsequent thereto. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The sections entitled "Election of Directors", "Executive Officers" and "Section 16(a) Compliance" in the Company's proxy statement for the annual meeting of stockholders to be held on May 2, 2001, set forth certain information with respect to the directors, nominees for election as directors and executive officers of the Company and are incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The section entitled "Executive Compensation" in the Company's proxy statement for the annual meeting of stockholders to be held on May 2, 2001, sets forth certain information with respect to the compensation of management of the Company and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The sections entitled "Outstanding Stock and Voting Rights" and "Election of Directors" in the Company's proxy statement for the annual meeting of stockholders to be held on May 2, 2001, set forth certain information with respect to the ownership of the Company's voting securities and are incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The section entitled "Certain Transactions" in the Company's proxy statement for the annual meeting of stockholders to be held on May 2, 2001, sets forth certain information with respect to relations of and transactions by management of the Company and is incorporated herein by reference. 33 36 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) THE FOLLOWING DOCUMENTS ARE FILED AS A PART OF THIS REPORT: 1. Financial statements. The following financial statements of the Company are included in Part II, Item 8 of this report:
PAGE ---- Balance Sheets as of December 31, 2000 and 1999................................................. 19 Statements of Income for the years ended December 31, 2000, 1999 and 1998....................... 20 Statements of Stockholders' Equity for the years ended December 31, 2000, 1999 and 1998......... 21 Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998................... 22 Notes to Financial Statements................................................................... 23 2. The following financial statement schedule of the Company is included in Item 14(d): Schedule II - Valuation and Qualifying Accounts................................................ 40
Schedules other than the schedule listed above have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements or the notes thereto. 3. Listing of exhibits.
EXHIBIT SEQUENTIALLY NUMBER EXHIBIT NUMBERED PAGE ------ ------- ------------- 2.1 Asset Purchase Agreement dated as of October 31, 1999 between the Company, as buyer, and CARCO Carrier Corporation doing business as CCC Express, Inc., as seller, and CARCO Capital Corporation (incorporated by reference to Exhibit 2.1 to the Company's Report on Form 8-K filed on November 15, 1999). 3.1 Restated and Amended Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1, Registration No. 33-45682, filed with the Securities and Exchange Commission on February 13, 1992 [the "Form S-1"]). 3.2 Bylaws of the Company as currently in effect (incorporated by reference to Exhibit 3.2 to Amendment No. 1 to the Form S-1 filed with the Securities and Exchange Commission on March 19, 1992 ["Amendment No. 1"]). 3.3 Certificate of Amendment to Certificate of Incorporation of the Company filed March 17, 1992 (incorporated by reference to Exhibit 3.3 to Amendment No. 1). 4.1 Specimen certificate evidencing shares of the Common Stock, $.01 par value, of the Company (incorporated by reference to Exhibit 4.1 to the Form S-1).
34 37
EXHIBIT SEQUENTIALLY NUMBER EXHIBIT NUMBERED PAGE ------ ------- ------------- 4.2 Fourth Amended and Restated Revolving Credit Agreement dated December 30, 1992, between the Company and Deposit Guaranty National Bank, as Lender (incorporated by reference to Exhibit 4.2 to the Company's annual report on Form 10-K for the year ended December 31, 1992). 4.3 Fourth Amended and Restated Revolving Note of the Company dated December 30, 1992, in the maximum principal amount of $12,000,000 payable to Deposit Guaranty National Bank, executed in connection with the credit facility filed as Exhibit 4.2 (incorporated by reference to Exhibit 4.3 to the Company's annual report on Form 10-K for the year ended December 31, 1992). 4.4 Fifth Amendment to Fourth Amended and Restated Revolving Credit Agreement dated December 30, 1996, between the Company and Deposit Guaranty National Bank, as Lender (incorporated by reference to Exhibit 4.5 to the Company's annual report on Form 10-K for the year ended December 31, 1996). 4.5 Sixth Amendment to Fourth Amended and Restated Revolving Credit Agreement dated December 30, 1997, between the Company and Deposit Guaranty National Bank, as Lender (incorporated by reference to Exhibit 4.5 to the Company's annual report on Form 10-K for the year ended December 31, 1997). 4.6 Sixth Amendment to Fourth Amended and Restated Revolving Note of the Company dated December 30, 1997, in the maximum principal amount of $28,500,000 payable to Deposit Guaranty National Bank, executed in connection with the credit facility filed as Exhibit 4.5 (incorporated by reference to Exhibit 4.6 to the Company's annual report on Form 10-K for the year ended December 31, 1997). 4.7 Seventh Amendment to Fourth Amended and Restated Revolving Credit Agreement dated October 30, 1998, between the Company and Deposit Guaranty National Bank, as Lender (incorporated by reference to Exhibit 4.7 to the Company's annual report on Form 10-K for the year ended December 31, 1998). 4.8 Seventh Amendment to Fourth Amended and Restated Revolving Note of the Company dated October 30, 1998, in the maximum principal amount of $20,000,000 payable to Deposit Guaranty National Bank, executed in connection with the credit facility filed as Exhibit 4.7 (incorporated by reference to Exhibit 4.8 to the Company's annual report on Form 10-K for the year ended December 31, 1998). 4.9 Eighth Amendment to Fourth Amended and Restated Revolving Credit Agreement dated October 28, 1999, between the Company and Deposit Guaranty National Bank, as Lender (incorporated by reference to Exhibit 4.9 to the Company's annual report on Form 10-K for the year ended December 31, 1999).
35 38
EXHIBIT SEQUENTIALLY NUMBER EXHIBIT NUMBERED PAGE ------ ------- ------------- 4.10 Eighth Amended and Restated Revolving Note of the Company dated October 28, 1999, in the maximum principal amount of $35,000,000 payable to Deposit Guaranty National Bank, executed in connection with the credit facility filed as Exhibit 4.9 (incorporated by reference to Exhibit 4.10 to the Company's annual report on Form 10-K for the year ended December 31, 1999). 4.11 Ninth Amendment to Fourth Amended and Restated Revolving Credit Agreement dated December 15, 1999, between the Company and Deposit Guaranty National Bank, as Lender (incorporated by reference to Exhibit 4.11 to the Company's annual report on Form 10-K for the year ended December 31, 1999). 4.12 Ninth Amended and Restated Revolving Note of the Company dated December 15, 1999, in the maximum principal amount of $40,000,000 payable to Deposit Guaranty National Bank, executed in connection with the credit facility filed as Exhibit 4.11 (incorporated by reference to Exhibit 4.12 to the Company's annual report on Form 10-K for the year ended December 31, 1999). 4.13 TRAC Lease Commitment Agreement dated January 24, 1996, between the Company and Fleet Credit Corporation, as Lender. (incorporated by reference to Exhibit 4.9 to the Company's annual report on Form 10-K for the year ended December 31, 1995). 4.14 First Amendment to TRAC Lease Commitment Agreement dated November 13, 1996, between the Company and Fleet Credit Corporation, as Lender (incorporated by reference to Exhibit 4.8 to the Company's annual report on Form 10-K for the year ended December 31, 1997). 4.15 Equipment TRAC Lease Commitment Agreement dated November 12, 1997 and accepted November 19, 1997, between the Company and Banc One Leasing Corporation, as Lender (incorporated by reference to Exhibit 4.9 to the Company's annual report on Form 10-K for the year ended December 31, 1997). 4.16 First Amendment dated December 30, 1998, to the Equipment TRAC Lease Commitment Agreement dated November 12, 1997 and accepted November 19, 1997, between the Company and Banc One Leasing Corporation, as Lender, as amended by letter dated March 12, 1999 (incorporated by reference to Exhibit 4.12 to the Company's annual report on Form 10-K for the year ended December 31, 1998). 4.17 Second Amendment dated December 30, 1998, to the Equipment TRAC Lease Commitment Agreement dated October 25, 1999 between the Company and Banc One Leasing Corporation, as Lender (incorporated by reference to Exhibit 4.17 to the Company's annual report on Form 10-K for the year ended December 31, 1999).
36 39
EXHIBIT SEQUENTIALLY NUMBER EXHIBIT NUMBERED PAGE ------ ------- ------------- 4.18 TRAC Lease Commitment Agreement dated January 6, 2000 between the Company and SunTrust Leasing Corporation, as Lessor (incorporated by reference to Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2000). 4.19 TRAC Lease Commitment Agreement dated January 11, 2000 and accepted January 12, 2000, between the Company and First Union Commercial Corporation, as Lessor (incorporated by reference to Exhibit 10.2 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2000). 4.20 Senior Credit Facility Commitment Letter dated April 11, 2000, between the Company and Bank of America, N.A., SunTrust Bank, and Mercantile Bank, N.A. collectively as the Lenders (incorporated by reference to Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2000). 4.21 Senior Credit Facility Summary of Terms and Conditions dated April 11, 2000, between the Company and Bank of America, N.A., SunTrust Bank, and Mercantile Bank, N.A. collectively as the Lenders (incorporated by reference to Exhibit 10.2 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2000). 4.22* First Union Commercial Corporation Commitment Letter 46 dated October 17, 2000, for the First Amendment to the Equipment TRAC Lease Agreement between the Company and First Union Commercial Corporation, as Lessor. 4.23* Proposal Exhibit (No. 1) dated October 17, 2000, to the 48 Equipment TRAC Lease Agreement between the Company and First Union Commercial Corporation, as Lessor. 4.24* SunTrust Leasing Corporation Commitment Letter dated 50 November 3, 2000, and accepted November 7, 2000, for the First Amendment to the Equipment TRAC Lease Agreement between the Company and SunTrust Leasing Corporation, as Lessor. 4.25* Lease Proposal dated November 3, 2000, and accepted 51 November 7, 2000, to the Equipment TRAC Lease Agreement between the Company and SunTrust Leasing Corporation, as Lessor. 4.26 Instruments with respect to long-term debt not exceeding 10% of the total assets of the Company have not been filed. The Company agrees to furnish a copy of such instruments to the Securities and Exchange Commission upon request. 10.1 Employee Stock Option Plan of the Company (incorporated by reference to Exhibit 10.6 to the Form S-1). 10.2 Nonqualified Stock Option Plan for Nonemployee Directors of the Company (incorporated by reference to Exhibit 10.7 to the Form S-1) terminated in January 1997, except with respect to outstanding options.
37 40
EXHIBIT SEQUENTIALLY NUMBER EXHIBIT NUMBERED PAGE ------ ------- ------------- 10.3 Description of Incentive Compensation Plan for executive officers of the Company (incorporated by reference to Exhibit 10.8 to the Form S-1). 10.4 1997 Nonqualified Stock Option Plan for Nonemployee Directors of the Company (incorporated by reference to Exhibit 99.1 to the Company's Registration Statement on Form S-8, Registration No. 333-20721, filed with the Securities and Exchange Commission on January 30, 1997). 21 The Company has no significant subsidiaries. 23 * Consent of Ernst & Young LLP, Independent Auditors. 54
- ---------- * Filed herewith. Management Compensatory Plans: -Employee Stock Option Plan (Exhibit 10.1) -Nonqualified Stock Option Plan for Nonemployee Directors (Exhibit 10.2) -Incentive Compensation Plan (Exhibit 10.3) -1997 Nonqualified Stock Option Plan for Nonemployee Directors (Exhibit 10.4) (b) REPORTS ON FORM 8-K: Current report on Form 8-K as filed on November 15, 1999. 38 41 USA TRUCK, INC. ANNUAL REPORT ON FORM 10-K YEAR ENDED DECEMBER 31, 2000 ITEM 14(d) FINANCIAL STATEMENT SCHEDULE 39 42 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS USA TRUCK, INC.
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E -------- ---------- ----------- ---------- --------- BALANCE AT CHARGED BALANCE BEGINNING TO COST AND DEDUCTIONS END DESCRIPTION OF PERIOD EXPENSES -OTHER(a) OF PERIOD ----------- ---------- ----------- ---------- --------- Year ended December 31, 2000 Deducted from asset accounts: Allowance for doubtful-accounts .................. $269,150 $ 82,200 $(48,147) $303,203 -------- -------- -------- -------- Year ended December 31, 1999 Deducted from asset accounts: Allowance for doubtful accounts .................. $140,670 $121,900 $ 6,580 $269,150 -------- -------- -------- -------- Year ended December 31, 1998 Deducted from asset accounts: Allowance for doubtful accounts .................. $170,250 $ 30,000 $(59,580) $140,670 -------- -------- -------- --------
(a) Uncollectible accounts written off, net recoveries. 40 43 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. USA TRUCK, INC. (Registrant) By: /s/ ROBERT M. POWELL By: /s/ JERRY D. ORLER ------------------------------- ------------------------------- Robert M. Powell Jerry D. Orler Chairman, President and Vice President - Finance, Chief Chief Executive Officer Financial Officer and Secretary Date: March 14, 2001 Date: March 14, 2001 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 and in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ ROBERT M. POWELL Chairman, President, March 14, 2001 - --------------------------- Chief Executive Officer Robert M. Powell and Director /s/ JERRY D. ORLER Vice President - Finance, March 14, 2001 - --------------------------- Chief Financial Officer, Secretary Jerry D. Orler and Director /s/ J.B. SPEED Director March 14, 2001 - --------------------------- James B. Speed /s/ GEORGE R. JACOBS Director March 14, 2001 - --------------------------- George R. Jacobs /s/ JIM L. HANNA Director March 14, 2001 - --------------------------- Jim L. Hanna /s/ ROLAND S. BOREHAM Director March 14, 2001 - --------------------------- Roland S. Boreham, Jr. /s/ JOE D. POWERS Director March 14, 2001 - --------------------------- Joe D. Powers
41 44 INDEX TO EXHIBITS
EXHIBIT SEQUENTIALLY NUMBER EXHIBIT NUMBERED PAGE ------ ------- ------------- 2.1 Asset Purchase Agreement dated as of October 31, 1999 between the Company, as buyer, and CARCO Carrier Corporation doing business as CCC Express, Inc., as seller, and CARCO Capital Corporation (incorporated by reference to Exhibit 2.1 to the Company's Report on Form 8-K filed on November 15, 1999). 3.1 Restated and Amended Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1, Registration No. 33-45682, filed with the Securities and Exchange Commission on February 13, 1992 [the "Form S-1"]). 3.2 Bylaws of the Company as currently in effect (incorporated by reference to Exhibit 3.2 to Amendment No. 1 to the Form S-1 filed with the Securities and Exchange Commission on March 19, 1992 ["Amendment No. 1"]). 3.3 Certificate of Amendment to Certificate of Incorporation of the Company filed March 17, 1992 (incorporated by reference to Exhibit 3.3 to Amendment No. 1). 4.1 Specimen certificate evidencing shares of the Common Stock, $.01 par value, of the Company (incorporated by reference to Exhibit 4.1 to the Form S-1). 4.2 Fourth Amended and Restated Revolving Credit Agreement dated December 30, 1992, between the Company and Deposit Guaranty National Bank, as Lender (incorporated by reference to Exhibit 4.2 to the Company's annual report on Form 10-K for the year ended December 31, 1992). 4.3 Fourth Amended and Restated Revolving Note of the Company dated December 30, 1992, in the maximum principal amount of $12,000,000 payable to Deposit Guaranty National Bank, executed in connection with the credit facility filed as Exhibit 4.2 (incorporated by reference to Exhibit 4.3 to the Company's annual report on Form 10-K for the year ended December 31, 1992). 4.4 Fifth Amendment to Fourth Amended and Restated Revolving Credit Agreement dated December 30, 1996, between the Company and Deposit Guaranty National Bank, as Lender (incorporated by reference to Exhibit 4.5 to the Company's annual report on Form 10-K for the year ended December 31, 1996). 4.5 Sixth Amendment to Fourth Amended and Restated Revolving Credit Agreement dated December 30, 1997, between the Company and Deposit Guaranty National Bank, as Lender (incorporated by reference to Exhibit 4.5 to the Company's annual report on Form 10-K for the year ended December 31, 1997).
42 45
EXHIBIT SEQUENTIALLY NUMBER EXHIBIT NUMBERED PAGE ------ ------- ------------- 4.6 Sixth Amendment to Fourth Amended and Restated Revolving Note of the Company dated December 30, 1997, in the maximum principal amount of $28,500,000 payable to Deposit Guaranty National Bank, executed in connection with the credit facility filed as Exhibit 4.5 (incorporated by reference to Exhibit 4.6 to the Company's annual report on Form 10-K for the year ended December 31, 1997). 4.7 Seventh Amendment to Fourth Amended and Restated Revolving Credit Agreement dated October 30, 1998, between the Company and Deposit Guaranty National Bank, as Lender (incorporated by reference to Exhibit 4.7 to the Company's annual report on Form 10-K for the year ended December 31, 1998). 4.8 Seventh Amendment to Fourth Amended and Restated Revolving Note of the Company dated October 30, 1998, in the maximum principal amount of $20,000,000 payable to Deposit Guaranty National Bank, executed in connection with the credit facility filed as Exhibit 4.7 (incorporated by reference to Exhibit 4.8 to the Company's annual report on Form 10-K for the year ended December 31, 1998). 4.9 Eighth Amendment to Fourth Amended and Restated Revolving Credit Agreement dated October 28, 1999, between the Company and Deposit Guaranty National Bank, as Lender (incorporated by reference to Exhibit 4.9 to the Company's annual report on Form 10-K for the year ended December 31, 1999). 4.10 Eighth Amended and Restated Revolving Note of the Company dated October 28, 1999, in the maximum principal amount of $35,000,000 payable to Deposit Guaranty National Bank, executed in connection with the credit facility filed as Exhibit 4.9 (incorporated by reference to Exhibit 4.10 to the Company's annual report on Form 10-K for the year ended December 31, 1999). 4.11 Ninth Amendment to Fourth Amended and Restated Revolving Credit Agreement dated December 15, 1999, between the Company and Deposit Guaranty National Bank, as Lender (incorporated by reference to Exhibit 4.11 to the Company's annual report on Form 10-K for the year ended December 31, 1999). 4.12 Ninth Amended and Restated Revolving Note of the Company dated December 15, 1999, in the maximum principal amount of $40,000,000 payable to Deposit Guaranty National Bank, executed in connection with the credit facility filed as Exhibit 4.11 (incorporated by reference to Exhibit 4.12 to the Company's annual report on Form 10-K for the year ended December 31, 1999). 4.13 TRAC Lease Commitment Agreement dated January 24, 1996, between the Company and Fleet Credit Corporation, as Lender. (incorporated by reference to Exhibit 4.9 to the Company's annual report on Form 10-K for the year ended December 31, 1995).
43 46
EXHIBIT SEQUENTIALLY NUMBER EXHIBIT NUMBERED PAGE ------ ------- ------------- 4.14 First Amendment to TRAC Lease Commitment Agreement dated November 13, 1996, between the Company and Fleet Credit Corporation, as Lender (incorporated by reference to Exhibit 4.8 to the Company's annual report on Form 10-K for the year ended December 31, 1997). 4.15 Equipment TRAC Lease Commitment Agreement dated November 12, 1997 and accepted November 19, 1997, between the Company and Banc One Leasing Corporation, as Lender (incorporated by reference to Exhibit 4.9 to the Company's annual report on Form 10-K for the year ended December 31, 1997). 4.16 First Amendment dated December 30, 1998, to the Equipment TRAC Lease Commitment Agreement dated November 12, 1997 and accepted November 19, 1997, between the Company and Banc One Leasing Corporation, as Lender, as amended by letter dated March 12, 1999 (incorporated by reference to Exhibit 4.12 to the Company's annual report on Form 10-K for the year ended December 31, 1998). 4.17 Second Amendment dated December 30, 1998, to the Equipment TRAC Lease Commitment Agreement dated October 25, 1999 between the Company and Banc One Leasing Corporation, as Lender (incorporated by reference to Exhibit 4.17 to the Company's annual report on Form 10-K for the year ended December 31, 1999). 4.18 TRAC Lease Commitment Agreement dated January 6, 2000 between the Company and SunTrust Leasing Corporation, as Lessor (incorporated by reference to Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2000). 4.19 TRAC Lease Commitment Agreement dated January 11, 2000 and accepted January 12, 2000, between the Company and First Union Commercial Corporation, as Lessor (incorporated by reference to Exhibit 10.2 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2000). 4.20 Senior Credit Facility Commitment Letter dated April 11, 2000, between the Company and Bank of America, N.A., SunTrust Bank, and Mercantile Bank, N.A. collectively as the Lenders (incorporated by reference to Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2000). 4.21 Senior Credit Facility Summary of Terms and Conditions dated April 11, 2000, between the Company and Bank of America, N.A., SunTrust Bank, and Mercantile Bank, N.A. collectively as the Lenders (incorporated by reference to Exhibit 10.2 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2000).
44 47
EXHIBIT SEQUENTIALLY NUMBER EXHIBIT NUMBERED PAGE ------ ------- ------------- 4.22* First Union Commercial Corporation Commitment Letter 46 dated October 17, 2000, for the First Amendment to the Equipment TRAC Lease Agreement between the Company and First Union Commercial Corporation, as Lessor. 4.23* Proposal Exhibit (No. 1) dated October 17, 2000, to the 48 Equipment TRAC Lease Agreement between the Company and First Union Commercial Corporation, as Lessor. 4.24* SunTrust Leasing Corporation Commitment Letter dated 50 November 3, 2000, and accepted November 7, 2000, for the First Amendment to the Equipment TRAC Lease Agreement between the Company and SunTrust Leasing Corporation, as Lessor. 4.25* Lease Proposal dated November 3, 2000, and accepted 51 November 7, 2000, to the Equipment TRAC Lease Agreement between the Company and SunTrust Leasing Corporation, as Lessor. 4.26 Instruments with respect to long-term debt not exceeding 10% of the total assets of the Company have not been filed. The Company agrees to furnish a copy of such instruments to the Securities and Exchange Commission upon request. 10.1 Employee Stock Option Plan of the Company (incorporated by reference to Exhibit 10.6 to the Form S-1). 10.2 Nonqualified Stock Option Plan for Nonemployee Directors of the Company (incorporated by reference to Exhibit 10.7 to the Form S-1) terminated in January 1997, except with respect to outstanding options. 10.3 Description of Incentive Compensation Plan for executive officers of the Company (incorporated by reference to Exhibit 10.8 to the Form S-1). 10.4 1997 Nonqualified Stock Option Plan for Nonemployee Directors of the Company (incorporated by reference to Exhibit 99.1 to the Company's Registration Statement on Form S-8, Registration No. 333-20721, filed with the Securities and Exchange Commission on January 30, 1997). 21 The Company has no significant subsidiaries. 23* Consent of Ernst & Young LLP, Independent Auditors. 54
- ---------- * Filed herewith. 45 EX-4.22 2 d84966ex4-22.txt FIRST UNION COMMERCIAL CORP COMMITMENT LETTER 1 EXHIBIT 4.22 FIRST UNION COMMERCIAL CORPORATION USA TRUCK, INC. October 17, 2000 Mr. Jerry D. Orler Chief Financial Officer USA Truck, Inc. 3200 Industrial Park Road Van Buren, Arkansas 72956 Dear Jerry: We are pleased to present our proposal for lease of equipment from First Union Commercial Corporation. The enclosed proposal exhibit contains additional information regarding this proposal and is incorporated herein by reference. If the terms are mutually satisfactory, they will be incorporated in an Equipment Lease agreement which will be executed by the parties. The lease proposal is as follows: 1. LESSEE: USA Truck, Inc. 2. LESSOR: First Union Commercial Corporation or its nominee. 3. EQUIPMENT, LEASE TERM AND LEASE PAYMENT: See attached exhibit(s). 4. TYPE OF LEASE: The lease will be a net lease whereby Lessee will be responsible for all expenses related directly or indirectly to the use of the equipment including maintenance, taxes, insurance coverage, etc. Should this proposal be acceptable in principle, please sign and date the enclosed original of this letter and return it to us as an indication of your acceptance, by the expiration date noted below. As is our standard practice, this proposal is subject to final approval by our Pricing and Credit Committees and, as such, should not be deemed to be a commitment on the part of First Union. 2 We appreciate the opportunity to present this proposal and look forward to your favorable acknowledgement of this letter. In the meantime, we would be pleased to receive any questions or comments that you may have. Sincerely, FIRST UNION COMMERCIAL CORPORATION /s/ J. Roberts Jody Roberts Vice President ACCEPTED PROPOSAL EXHIBIT NO. USA TRUCK, INC. --------------- (Seal) By: /s/ Jerry D. Orler ------------------ C.F.O. ------------------ Title Date: October 18, 2000 THIS PROPOSAL SHALL EXPIRE ON NOVEMBER 17, 2000 UNLESS ACCEPTED BY LESSEE PRIOR TO THAT DATE. EX-4.23 3 d84966ex4-23.txt PROPOSAL EXHIBIT (NO. 1) DATED OCTOBER 17, 2000 1 EXHIBIT 4.23 FIRST UNION COMMERCIAL CORPORATION PROPOSAL EXHIBIT (NO. 1) USA TRUCK, INC. PROPOSAL EXHIBIT (NO. 1) The terms of this Proposal Exhibit are incorporated by reference within the Proposal letter dated October 17, 2000. 1. TYPE OF EQUIPMENT: Approximately One Hundred and Seventy (170) Freightliner Columbia Tractors. 2. ANTICIPATED EQUIPMENT COST: Approximately $12,000,000.00. 3. EQUIPMENT LOCATION: Continental United States. 4. ANTICIPATED DELIVERY DATE: January 15th through December 15th, 2001. 5. LEASE TERM: Forty-two (42) months. 6. LEASE PAYMENTS: Lessee shall make forty-two (42) monthly payments, each payable in arrears, with the following monthly payment factors according to the month of equipment takedown:
- ----------------------------------------------------------------------------------------------------------------------------------- Month JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC - -------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Lease Rate 6.33% 6.28% 6.24% 6.19% 6.17% 6.12% 5.64% 5.58% 5.51% 5.50% 5.43% 5.37% - -------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Payment Factor 1.70079 1.69791 1.69500 1.69206 1.69071 1.68786 1.65767 1.65373 1.64976 1.64854 1.64468 1.64079 - -------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
The lease rate in this transaction will float from the date of this letter until the equipment funding date, based on the change in either the 5 1/2% Treasury Note's yield to maturity of 5.87% with a three (3) year remaining life and maturing Jan, 2003 or the one year LIBOR rate of 6.62%, as published in the October 17, 2000 edition of The Wall Street Journal and as published on the equipment funding date. The lease rate in this transaction will float up from the date of this proposal until the equipment funding date based on the change in either the above referenced Treasury Note's yield to maturity or the one year LIBOR rate, whichever is greater. The lease rate in this transaction will float down from the date of this proposal until the equipment funding date based on the change in either the above referenced Treasury Note's yield to maturity or the one year LIBOR rate, whichever is less. The lease rate shall be adjusted by .01% for each corresponding increase or decrease of .01% in the selected index. 7. PURCHASE OPTION: At the end of the lease term, Lessee shall have the option to purchase the equipment for its then Fair Market Value. 8. TERMINAL RENTAL ADJUSTMENT CLAUSE: If the fair market value paid to Lessor by the Lessee or a third party exceeds or falls below forty-five percent (45%) of original equipment cost, the excess will be refunded to Lessee or the shortfall will be reimbursed to Lessor by Lessee through a rental adjustment. 9. DEPRECIATION: For the account of the LESSOR and assumed to be three (3) year MACRS property. 2 10. EXPENSES: Lessee shall bear expenses related to (i) preparation, negotiation and the finalization of documents related to the transaction, (ii) out-of-pocket expenses for lien searches, title searches and obtaining certified copies of charter documents and good standing certificates, (iii) title application, lien application and registration fees and financing statement filing fees, and (iv) similar out-of-pocket expenses. 11 INDEMNIFICATION: Lessee shall indemnify Lessor against all hazards, liabilities, claims, actions, contingencies and risk of loss caused by the acts and omissions of Lessee. Additionally, Lessee shall indemnify Lessor against the loss of tax benefits retained by Lessor caused by the acts and omissions of Lessee. EX-4.24 4 d84966ex4-24.txt SUNTRUST LEASING CORP COMMITMENT LETTER 1 EXHIBIT 4.24 SUNTRUST LEASING CORPORATION COMMITMENT LETTER USA TRUCK, INC. November 3, 2000 Mr. Jerry Orler Chief Financial Officer USA Truck, Inc. 3108 Industrial Park Road Van Buren, Arkansas 72956 Dear Jerry: We are pleased to provide the following lease proposal covering financing for your truck acquisitions for the 2001 calendar year for your review and consideration. The attached Proposal Exhibit outlines the details of our financing. Per your request, the terms and conditions of this proposal are identical to our original lease proposal dated January 4, 2000. You will note below that the monthly lease factors have been adjusted to reflect the prevailing market conditions as of October 27, 2000. Thank you for the opportunity to be of service on this transaction. Should you have any questions or require additional information, please do not hesitate to contact me at your convenience. Sincerely, /s/ Mark D. King SunTrust Leasing Corporation Mark D. King Vice President Agreed to and accepted on this 7th day of November, 2000 USA Truck, Inc. - --------------- Lessee By: /s/ Jerry D. Orler C.F.O -------------------------------------- Name/Title Jerry D. Orler -------------------------------------- Print Name Above EX-4.25 5 d84966ex4-25.txt LEASE PROPOSAL DATED NOVEMBER 3, 2000 1 EXHIBIT 4.25 SUNTRUST LEASING CORPORATION LEASE PROPOSAL USA TRUCK, INC. LEASE PROPOSAL DATED NOVEMBER 3, 2000 LESSOR: SunTrust Leasing Corporation/or its assignee or nominee LESSEE: USA Truck, Inc. EQUIPMENT: Freightliner FLD-120 Tractors EQUIPMENT COST: Up to $16,500,000 in total lease outstandings (estimated to be $8,330,000 in new funding for the 2001 calendar year) BASIC TERM: Forty Two (42) Months BASIC TERM COMMENCEMENT DATE: The Basic Term will commence on the 30th day of the month in which the funding occurs. BASIC TERM RENTALS: Lease rentals are payable monthly in ARREARS from the Basic Commencement Date.
Base Lease Monthly Rental Factor Commencement Date (As a % of Equipment Cost) ----------------- -------------------------- January, 2001 1.69876 February, 2001 1.69520 March, 2001 1.69156 April, 2001 1.68827 May, 2001 1.68660 June, 2001 1.68334 July, 2001 1.66295 August, 2001 1.65793 September, 2001 1.65277 October, 2001 1.65027 November, 2001 1.64542 December, 2001 1.64046
The above Monthly Rental Factors are based on current market conditions as of October 27, 2000. On this date the interpolated yield for the three (3) year Treasury Note is 5.84%. On the Funding Date the Monthly Rental Factor will be adjusted upward or downward by .011704% for every 25 basis points change in the yield of the three (3) year Treasury Note. INTERIM LEASE TERM AND RENT: The Interim Lease Term will run from the date the Equipment is accepted by the Lessee to (but not including) the Basic Term Commencement Date. Interim Rent will be paid by the Lessee on the Basic Term Commencement Date in an amount equal to the daily equivalent of Basic Term Rentals. 2 EARLY TERMINATION: In the event that any item of Equipment is (i) damaged or destroyed to such extent that it cannot be reasonably restored to normal operating condition or (ii) seized or condemned by governmental authorities (i.e. eminent domain) or (iii) lost due to theft or disappearance for a period in excess of 45 days, the Lease with respect to such Equipment will terminate and the Lessee thereof will pay the Stipulated Loss Value with respect thereto. NET LEASE: The Lease will be a net lease in that the Lessee will be responsible for any and all costs and expenses in connection with the Equipment, including sales and use taxes, and any other taxes with the exception of federal and state net income taxes on the net income of the Lessor. The Lessee is also responsible for maintaining and insuring the Equipment and for all fees; insurance premiums; cost of installation, operations, maintenance, repair, and rebuilding; and other charges related to the use or possession of the Equipment. FEDERAL TAX INDEMNIFICATIONS: The Lessee will indemnify the Lessor for any loss or deduction in federal tax benefits based on the tax assumptions outlined above if such loss or reduction is caused by (i) any breach, inaccuracy or incorrectness of any representation, warranty or covenant made by the Lessee, (ii) the acts or omissions (not including the execution of documents contemplated hereby or any act or omission expressly required or expressly permitted by such documents) of the Lessee, or (iii) any change in federal law with an effective date that precedes the date of acceptance of the Equipment for lease by the Lessee. If an Investment Tax Credit provision is passed, benefit will flow to Lessee at the same lease rate as indicated in this proposal. MAINTENANCE: Lessee will maintain the Equipment leased by it so that it remains in good operating condition (ordinary wear and tear excepted) and in compliance with any and all applicable laws, regulations, and state inspections. END OF TERM OPTIONS: At the end of the Basic Term, the Lessee shall have the option of purchasing the Equipment or returning the Equipment to the Lessor in accordance with the terms described below. 3 TERMINATION: At the satisfactory conclusion of the Basic Term, the Lessee shall have the option to purchase all, but not less than all, of the equipment on a Lease Schedule. In this event, the Lessee will have a purchase price as follows: Forty-Five Percent (45%) of the Equipment Cost In the event the Lessee chooses to return the Equipment, the Lessor will sell the Equipment. If the Net Proceeds of the sale (after expenses) are greater than the Purchase Price, the excess proceeds will be returned to the Lessee. If the Net Proceeds are less than the Purchase Price, the difference between the proceeds and the Purchase Price will be paid by the Lessee to the Lessor as a final Rental Payment then due. DOCUMENTATION: This Proposal is not intended to address all the final legal and documentation matters pertaining to this lease. The lease documentation will represent the final legal agreement. The lease documentation will be furnished by the Lessor. DISCLAIMER: This proposal letter is not a commitment by SunTrust Leasing Corporation to enter into this lease. A commitment can be issued only upon final approval by our Credit/Investment Committee. EX-23 6 d84966ex23.txt CONSENT OF ERNST & YOUNG LLP 1 EXHIBIT 23 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 33-48027, 333-20721 and 333-40317) pertaining to the Employee Stock Option Plan, the Nonqualified Stock Option Plan for Nonemployee Directors and the Employee Stock Purchase Plan, respectively of our report dated January 19, 2001 with respect to the financial statements and schedule of USA Truck, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 2000. ERNST & YOUNG LLP Little Rock, Arkansas March 13, 2001 -----END PRIVACY-ENHANCED MESSAGE-----