10-Q

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

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended	Commission file number
September 30, 2003	0-24806

U.S. XPRESS ENTERPRISES, INC.

NEVADA	62-1378182
(State or other jurisdiction of	(I.R.S. employer identification no.)
Incorporation or organization)
4080 Jenkins Road	(423)   510-3000
CHATTANOOGA, TENNESSEE 37421	(Registrant's telephone no.)
(Address of principal executive offices)

        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 o

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

Yes x No o

        As of September 30, 2003, 10,942,352 shares of the registrant’s Class A common stock, par value $.01 per share, and 3,040,262 shares of the registrant’s Class B common stock, par value $.01 per share, were outstanding.

U.S. XPRESS ENTERPRISES, INC.

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION	PAGE NO.
Item 1.	Consolidated Financial Statements
	Consolidated Statements of Operations for the Three and
	Nine Months Ended September 30, 2003 and 2002		3
	Consolidated Balance Sheets as of September 30,
	2003 and December 31, 2002		4
	Consolidated Statements of Cash Flows for the
	Nine Months Ended September 30, 2003 and 2002		6
	Notes to Consolidated Financial Statements		7
Item 2.	Management's Discussion and Analysis of
	Financial Condition and Results of Operations		14
Item 3.	Quantitative and Qualitative Disclosure About Market Risk		22
Item 4.	Controls and Procedures		22
PART II.	OTHER INFORMATION
Item 4.	Exhibits and Reports on Form 8-K		23
	SIGNATURES		24
	EXHIBITS		25

2

U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2003		2002		2003		2002
Operating Revenue	$	238,323	$	220,066	$	690,923	$	632,921
Operating Expenses:
Salaries, wages and benefits		83,527		77,982		240,002		228,575
Fuel and fuel taxes		32,703		30,437		102,343		85,728
Vehicle rents		18,890		17,034		56,568		52,517
Depreciation and amortization		9,214		9,253		27,495		27,436
Purchased transportation		40,647		37,939		115,237		103,901
Operating expense and supplies		16,821		16,349		49,385		45,277
Insurance premiums and claims		12,740		9,830		35,424		29,910
Operating taxes and licenses		3,828		3,274		10,444		9,663
Communications and utilities		2,853		2,768		8,854		8,442
General and other operating		9,531		9,391		27,495		27,181
Early extinguishment of debt		--		--		--		1,776
Total operating expenses		230,754		214,257		673,247		620,406
Income from Operations		7,569		5,809		17,676		12,515
Interest Expense, net		2,247		3,122		7,685		10,132
Income Before Income Taxes		5,322		2,687		9,991		2,383
Income Tax Provision		2,661		1,605		4,995		1,806
Net Income	$	2,661	$	1,082	$	4,996	$	577
Earnings Per Share - basic	$	0.19	$	0.08	$	0.36	$	0.04
Weighted average shares - basic		13,967		13,930		13,950		13,878
Earnings Per Share - diluted	$	0.19	$	0.08	$	0.35	$	0.04
Weighted average shares - diluted		14,147		14,109		14,080		14,068

(See Accompanying Notes to Consolidated Financial Statements)

3

U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)

Assets	September 30, 2003			December 31, 2002
	(Unaudited)
Current Assets:
Cash and cash equivalents	$	6,101		$	131
Customer receivables, net of allowance		99,881			92,893
Other receivables		8,973			10,557
Prepaid insurance and licenses		4,213			5,864
Operating and installation supplies		5,072			5,598
Deferred income taxes		5,174			5,306
Other current assets		8,730			7,355
Total current assets		138,144			127,704
Property and Equipment, at cost:
Land and buildings		43,936			44,080
Revenue and service equipment		220,325			235,978
Furniture and equipment		23,931			22,793
Leasehold improvements		19,321			17,607
Computer software		17,845			15,926
		325,358			336,384
Less accumulated depreciation and amortization		(115,092	)		(109,865	)
Net property and equipment		210,266			226,519
Other Assets:
Goodwill, net		72,143			71,976
Other		14,364			12,340
Total other assets		86,507			84,316
Total Assets	$	434,917		$	438,539

(See Accompanying Notes to Consolidated Financial Statements)

4

U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Data)
(Unaudited)

Liabilities and Stockholders' Equity	September 30, 2003			December 31, 2002
	(Unaudited)
Current Liabilities:
Accounts payable	$	20,980		$	16,659
Book overdraft		--			6,437
Accrued wages and benefits		13,010			10,818
Claims and insurance accruals		29,107			25,224
Other accrued liabilities		4,987			3,558
Current maturities of long-term debt		30,617			38,956
Total current liabilities		98,701			101,652
Long-Term Debt, net of current maturities		120,054			128,907
Deferred Income Taxes		50,848			48,350
Other Long-Term Liabilities		1,209			1,198
Stockholders' Equity:
Preferred stock, $.01 par value, 2,000,000
shares authorized, no shares issued		--			--
Common stock Class A, $.01 par value, 30,000,000 shares
authorized, 13,486,741 and 13,408,327 shares issued at
September 30, 2003 and December 31, 2002, respectively		135			134
Common stock Class B, $.01 par value, 7,500,000 shares
authorized, 3,040,262 shares issued and outstanding at
September 30, 2003 and December 31, 2002		30			30
Additional paid-in capital		106,898			106,334
Retained earnings		81,764			76,768
Other comprehensive loss		--			(100	)
Treasury Stock Class A, at cost (2,544,389 shares at
September 30, 2003 and December 31, 2002, respectively)		(24,483	)		(24,483	)
Notes receivable from stockholders		(211	)		(211	)
Unamortized compensation on restricted stock		(28	)		(40	)
Total stockholders' equity		164,105			158,432
Total Liabilities and Stockholders' Equity	$	434,917		$	438,539

(See Accompanying Notes to Consolidated Financial Statements)

5

U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)

	Nine Months Ended September 30,
	2003			2002
Cash Flows from Operating Activities:
Net Income	$	4,996		$	577
Adjustments to reconcile net income to
net cash provided by operating activities:
Early extinguishment of debt		--			1,776
Deferred income tax provision		2,498			1,237
Depreciation and amortization		26,925			26,596
Amortization of restricted stock		12			72
Loss on sale of equipment		570			840
(Gain) Loss on interest rate swap, net		(201	)		198
Change in operating assets and liabilities:
Receivables		(6,478	)		(11,839	)
Prepaid insurance and licenses		1,655			819
Operating and installation supplies		557			(1,907	)
Other assets		(3,711	)		(1,783	)
Accounts payable and other accrued liabilities		10,969			10,645
Accrued wages and benefits		2,192			1,114
Net cash provided by operating activities		39,984			28,345
Cash Flows from Investing Activities:
Payments for purchases of property and equipment		(70,931	)		(30,588	)
Proceeds from sales of property and equipment		72,679			1,454
Net cash provided by (used in) investing activities		1,748			(29,134	)
Cash Flows from Financing Activities:
Payments under lines of credit, net of borrowings		(19,418	)		(14,500	)
Borrowings under long-term debt		24,405			32,995
Payments of long-term debt		(34,856	)		(23,299	)
Book overdraft		(6,437	)		--
Proceeds from exercise of stock options		544			56
Proceeds from issuance of common stock		--			889
Net cash used in financing activities		(35,762	)		(3,859	)
Net Change in Cash and Cash Equivalents		5,970			(4,648	)
Cash and Cash Equivalents, beginning of period		131			8,185
Cash and Cash Equivalents, end of period		6,101			3,537
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest	$	7,878		$	9,978
Cash paid during the period for income taxes	$	1,026		$	264
Conversion of operating leases to equipment installment notes	$	12,677		$	16,622

(See Accompanying Notes to Consolidated Financial Statements)

6

U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In Thousands, Except Per Share Data)

1. Consolidated Financial Statements

        The interim consolidated financial statements contained herein reflect all adjustments that, in the opinion of management, are necessary for a fair statement of the financial condition and results of operations for the periods presented. They have been prepared by the Company, without audit, in accordance with the instructions to Form 10-Q and the rules and regulations of the Securities and Exchange Commission and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.

        Operating results for the three and nine months ended September 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. In the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments consisted only of items that are of a normal recurring nature.

        These interim consolidated financial statements should be read in conjunction with the Company’s latest annual consolidated financial statements (which are included in the 2002 Annual Report to Stockholders in the Company’s Form 10-K filed with the Securities and Exchange Commission on March 31, 2003).

2. Organization and Operations

    U.S. Xpress Enterprises, Inc. (the “Company”) provides transportation services through two business segments, U.S. Xpress, Inc. (“U.S. Xpress”) and Xpress Global Systems, Inc. (“Xpress Global Systems”). U.S. Xpress is a truckload carrier serving the continental United States and parts of Canada and Mexico. Xpress Global Systems provides transportation, warehousing and distribution services to the floorcovering industry and also provides airport-to-airport transportation services to the airfreight and airfreight forwarding industries.

3. Earnings Per Share

        The difference in basic and diluted weighted average shares is due to the assumed conversion of outstanding options. The computation of basic and diluted earnings per share is as follows:

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2003		2002		2003		2002
Net Income	$	2,661	$	1,082	$	4,996	$	577
Denominator
Weighted average common shares outstanding		13,967		13,930		13,950		13,878
Equivalent shares issuable upon exercise of stock options		180		179		130		190
Diluted shares		14,147		14,109		14,080		14,068
Earnings per share
Basic	$	0.19	$	0.08	$	0.36	$	0.04
Diluted shares	$	0.19	$	0.08	$	0.35	$	0.04

4. Stock-Based Compensation

        Stock Options
        The Company accounts for its stock-based compensation plans using the intrinsic value method under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”) and has elected the disclosure option of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation.”

        As of December 31, 2002, the Company adopted SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure.” SFAS No. 148 amends SFAS No. 123 to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of that statement to require prominent disclosure about the effects of an entity’s accounting policy decisions with respect to stock-based employee compensation. Finally, SFAS No. 148 amends APB Opinion No. 28, “Interim Financial Reporting,” to require disclosure about these effects in interim financial information.

        The following pro forma summary presents the Company’s net income and earnings per share which would have been reported had the Company determined stock-based compensation cost using the alternative fair value method of accounting set forth under SFAS No. 123.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2002			2003			2002
Net Income, as reported	$	2,661		$	1,082		$	4,996		$	577
Stock-based employee compensation, net of tax		(79	)		(144	)		(225	)	$	(486	)
Pro forma net income	$	2,582		$	938		$	4,771		$	91
Net income per share, basic, as reported	$	0.19		$	0.08		$	0.36		$	0.04
Net income per share, basic, pro forma	$	0.18		$	0.07		$	0.34		$	0.01
Net income per share, diluted, as reported	$	0.19		$	0.08		$	0.35		$	0.04
Net income per share, diluted, pro forma	$	0.18		$	0.07		$	0.34		$	0.01

8

        Employee Stock Purchase Plan
        In May 2003, the Company adopted the 2003 U.S. Xpress Enterprises, Inc. Employee Stock Purchase Plan (the “Plan”), effective July 1, 2003, through which employees meeting certain eligibility criteria may purchase shares of the Company’s common stock at a 15% discount of the fair market value, as defined. Common stock is purchased for employees in January and July of each year. Employees may not purchase more than 1,250 shares in any six-month period or purchase stock having a fair market value of more than $25,000 per calendar year. The Company has reserved 500,000 shares of Class A Common Stock under the terms of the Plan.

        Non-Employee Directors Stock Plan
        In May 2003, the Company adopted the 2003 Non-Employee Directors Stock Award and Option Plan (the “Directors Stock Plan”) providing for the issuance of stock options to non-employee directors. The Directors Stock Plan also provides for non-employee directors the option to receive certain board related compensation in the form of the Company’s Class A Common Stock in lieu of cash. If the board member elects to receive board related compensation in the form of stock, the number of shares issued to each director in lieu of cash is determined based on the amount of earned compensation divided by the fair market value of the Company’s stock on the date the compensation is earned. The number of shares of Class A Common Stock available for option or issue under the Directors Stock Plan may not exceed 50,000 shares.

        The Directors Stock Plan provides for the grant of 1,200 options to purchase the Company’s Class A Common Stock to each non-employee director upon the election or re-election of each such director to the board. The exercise price of the options issued under the Directors Stock Plan is set at the fair market value of the Company’s stock on the date of grant. Options vest ratably on each of the first, second and third anniversaries of the date of grant.

        Incentive Stock Plans
        In May 2003, the Company registered 1,000,000 additional shares of Class A Common Stock under the U.S. Xpress Enterprises, Inc. 2002 Stock Incentive Plan.

5. Commitments and Contingencies

        The Company is party to certain legal proceedings incidental to its business. The ultimate disposition of these matters, in the opinion of management, based in part upon advice of legal counsel, is not expected to have a material adverse effect on the Company’s financial position or results of operations.

        The Company has letters of credit of $36.2 million outstanding at September 30, 2003. The letters of credit are maintained primarily to support the Company’s insurance program.

6. Derivative Financial Instruments

        The Company uses derivative financial instruments to manage exposure to interest rate risks inherent in variable-rate debt and does not use them for trading or speculative purposes. On March 29, 2002, the Company entered into a new revolving credit agreement. Prior to that date, the Company designated its interest rate swap agreements as cash flow hedges, in which changes in fair value were recognized in other comprehensive income.

9

        In connection with entering into the new revolving credit agreement, the outstanding interest rate swap agreements ceased to qualify as cash flow hedge instruments because they were not matched to the terms of the new debt. Accordingly, they were not designated as hedging instruments, resulting in the amounts included in other comprehensive income being amortized over the remaining term of the respective agreements with any future changes in the market value reflected as interest expense in the consolidated statements of operations. For the year ended September 30, 2003 and 2002, the Company recognized $(201,000) and $198,000, respectively, to interest expense.

        As of September 30, 2003, the Company no longer has outstanding interest rate swap agreements. The agreements expired in February and September 2003.

7. Operating Segments

        The Company has two reportable segments based on the types of services it provides to its customers: U.S. Xpress which provides truckload operations throughout the continental United States and parts of Canada and Mexico, and Xpress Global Systems which provides transportation, warehousing and distribution services to the floorcovering industry and also provides airport-to-airport transportation services to the airfreight and airfreight forwarding industries. Substantially all intersegment sales prices are market based. The Company evaluates performance based on operating income of the respective business units.

	U.S. Xpress		(Dollars in Thousands) Xpress Global Systems		Consolidated
Three Months Ended September 30, 2003
Revenues - external customers	$	201,116	$	37,207	$	238,323
Intersegment revenues		8,810		--		8,810
Operating income		6,881		688		7,569
Total assets		393,294		41,623		434,917
Three Months Ended September 30, 2002
Revenues - external customers	$	189,968	$	30,098	$	220,066
Intersegment revenues		8,141		--		8,141
Operating income		5,769		40		5,809
Total assets		412,624		30,000		442,624
Nine Months Ended September 30, 2003
Revenues - external customers	$	589,222	$	101,701	$	690,923
Intersegment revenues		26,247		--		26,247
Operating income		15,666		2,010		17,676
Total assets		393,294		41,623		434,917
Nine Months Ended September 30, 2002
Revenues - external customers	$	549,877	$	83,044	$	632,921
Intersegment revenues		20,757		--		20,757
Operating income		13,757		534		14,291
Total assets		412,624		30,000		442,624

10

        The difference in consolidated operating income as shown above and consolidated income before income tax provision on the consolidated statements of operations is net interest expense of $2,247 and $3,122 for the three months ended September 30, 2003 and 2002, respectively, $7,685 and $10,132 for the nine months ended September 30, 2003 and 2002, respectively, and early extinguishment of debt of $1,776 for the nine months ended September 30, 2002, which is considered a corporate expense.

8. Comprehensive Income

        Comprehensive income consisted of the following components for the three and nine months ended September 30, 2003 and 2002, respectively:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2003		2002		2003		2002
Net Income	$	2,661	$	1,082	$	4,996	$	577
Net gain on current period cash flow hedges		--		--		--		312
Amortization of hedge de-designation		12		94		100		232
Total	$	2,673	$	1,176	$	5,096	$	1,121

9. Long-Term Debt

        The Company’s long-term debt primarily consists of equipment installment notes, mortgage notes, a revolving credit facility and capital lease obligations. As of September 30, 2003 and 2002, $123.1 million and $129.9 million, respectively, were outstanding under the equipment installment notes, with weighted average interest rates of 5.79% and 6.94%, respectively. The equipment installment notes are secured by the related revenue equipment and mature at various dates ranging from October 2003 to July 2011.

        The outstanding mortgage notes primarily relate to the Company’s corporate headquarters and certain terminal locations, which are secured by the related real estate and mature from August 2007 to October 2010. As of September 30, 2003 and 2002, $23.1 million and $24.8 million, respectively, were outstanding under the mortgage notes, with average interest rates of 5.83% and 6.08%, respectively. The Company also has capital lease obligations related to a terminal location and certain revenue equipment. As of September 30, 2003 and 2002, $3.8 million and $1.5 million were outstanding, respectively. The capital lease obligations mature from July to November 2007.

        On March 29, 2002, the Company entered into a $100.0 million senior secured revolving credit facility. Proceeds from this facility were used to repay the then existing revolving credit facility. The revolving credit facility provides for borrowings up to $100.0 million, with availability at any given time based on specified percentages of eligible receivables and revenue equipment, less reserves, under the facility’s Borrowing Base formula. Letters of credit under the facility are limited to $37.0 million. The facility matures in March 2007.

11

        The facility allows the Company to select interest rates for all or any portion of the outstanding balance, based on either a Base Rate (based on the domestic prime rate) plus an Applicable Margin or LIBOR plus an Applicable Margin. The Applicable Margin ranges from 0.75% to 1.50% for Base Rate Loans and from 2.25% to 3.00% for LIBOR Loans, based in each case on the aggregate availability, as defined. At September 30, 2003, the Applicable Margin was 1.25% for Base Rate Loans and 2.75% for LIBOR Loans. The facility also prescribes additional fees for Letter of Credit transactions and a monthly commitment fee based on the difference between the total commitment and the total borrowing capacity utilized by the Company from time to time.

        At September 30, 2003, $3.0 million in borrowings and $36.2 million in letters of credit were outstanding under the facility with $52.0 million available to borrow. The facility is secured by substantially all assets of the Company, other than real estate and assets securing other debt of the Company.

        The facility requires, among other things, maintenance by the Company of prescribed minimum amounts of Consolidated Tangible Net Worth, Fixed Charge Coverage Ratios and Leverage Ratios. It also: (i) limits the Company’s future capital expenditures; (ii) prohibits all acquisitions by the Company of its own capital stock or the payment of dividends on such stock; and (iii) effectively prohibits future asset acquisitions or dispositions (except in the ordinary course of business) or other business combination transactions by the Company without the Lenders’ consent.

10. Early Extinguishment of Debt

        In April 2002, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” SFAS No. 145 rescinds SFAS No. 4, which required all material gains and losses from extinguishment of debt to be classified as an extraordinary item, net of related income tax effect. As a result, upon adoption, extinguishment gains and losses will be classified as ordinary gains or losses in the income statement. Additionally, any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods should be reclassified to ordinary gain or loss in comparative income statements. SFAS No. 145 is effective for fiscal years beginning after May 15, 2002. Effective January 1, 2003, the Company adopted SFAS No. 145 which resulted in a reclassification of an extraordinary loss, which occurred during fiscal 2002, from the early extinguishment of debt of $1.1 million, net of tax, to income from operations in the accompanying consolidated statements of operations.

11. Leases

        In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others,” an interpretation of FASB Statement Nos. 5, 57 and 107 and a rescission of FASB Interpretation No. 34. This Interpretation elaborates on the disclosure to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. The Interpretation also clarifies that a guarantor is required to recognize, at inception of a guarantee, a /

12

liability for the fair value of the obligation undertaken. The initial recognition and measurement provisions of the Interpretation are applicable to guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for financial statements of interim and annual periods ending after December 15, 2002. The Company adopted Interpretation No. 45 effective January 1, 2003 and it had no material impact on its financial condition or results of operations.

        The Company leases certain revenue and service equipment and office and terminal facilities under long-term non-cancelable operating lease agreements expiring at various dates through September 2010. Revenue equipment lease terms are generally 3 — 4 years for tractors and 5-7 years for trailers. Certain equipment leases provide for guarantees by the Company of a portion of the residual amount under certain circumstances at the end of the lease term. The maximum potential amount of future payments (undiscounted) under these guarantees is approximately $115.6 million at September 30, 2003. The residual value of a substantial portion of the leased revenue equipment is covered by repurchase or trade agreements in principle between the Company and the equipment manufacturer.

12. Recent Accounting Pronouncements

        In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51.” The Interpretation requires the consolidation of entities in which an enterprise absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. Currently, entities are generally consolidated by an enterprise when it has a controlling interest through ownership of a majority voting interest in the entity. The Company will adopt the provisions of Interpretation No. 46 during the fourth quarter of 2003 as a result of the FASB deferring the effective date of the Interpretation for interests held by variable interest entities or potential variable interest entities created before February 1, 2003. The adoption of Interpretation No. 46 is not expected to have a material effect on our financial statements.

13. Reclassifications

        Certain reclassifications have been made to the 2002 financial statements to conform to the 2003 presentation.

13

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

General

    U.S. Xpress Enterprises, Inc. (the “Company”) provides transportation services through two business segments, U.S. Xpress, Inc. (“U.S. Xpress”) and Xpress Global Systems, Inc. (“Xpress Global Systems”). U.S. Xpress is a truckload carrier serving the continental United States and parts of Canada and Mexico. Xpress Global Systems provides transportation, warehousing and distribution services to the floorcovering industry and also provides airport-to-airport transportation services to the airfreight and airfreight forwarding industries.

Results of Operations

        The following table sets forth, for the periods indicated, the components of the consolidated statements of operations expressed as a percentage of operating revenue:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2002			2003			2002
Operating Revenue		100.0	%		100.0	%		100.0	%		100.0	%
Operating Expenses:
Salaries, wages and benefits		35.0			35.4			34.7			36.1
Fuel and fuel taxes		13.7			13.8			14.8			13.5
Vehicle rents		7.9			7.7			8.2			8.3
Depreciation and amortization		3.9			4.2			4.0			4.3
Purchased transportation		17.1			17.2			16.7			16.4
Operating expense and supplies		7.1			7.4			7.1			7.2
Insurance premiums and claims		5.3			4.5			5.1			4.7
Operating taxes and licenses		1.6			1.5			1.5			1.5
Communications and utilities		1.2			1.3			1.3			1.3
General and other operating		4.0			4.4			4.0			4.4
Early extinguishment of debt		0.0			0.0			0.0			0.3
Total operating expenses		96.8			97.4			97.4			98.0
Income from Operations		3.2			2.6			2.6			2.0
Interest Expense, net		1.0			1.4			1.1			1.6
Income Before Income Taxes		2.2			1.2			1.5			0.4
Income Tax Provision		1.1			0.7			0.7			0.3
Net Income		1.1	%		0.5	%		0.8	%		0.1	%

14

Comparison of the Three Months Ended September 30, 2003 to the
Three Months Ended September 30, 2002

        Operating revenue during the three months ended September 30, 2003, increased $18.2 million, or 8.3%, to $238.3 million, compared to $220.1 million during the same period in 2002. U.S. Xpress revenue increased $11.8 million, or 6.0%, due primarily to a 2.8% increase in revenue per mile to $1.303 from $1.267, combined with a $3.2 million increase in fuel surcharge revenue. Xpress Global Systems revenue increased $7.1 million, or 23.6%, due to a $2.1 million increase in revenues in the airport-to-airport transportation business primarily the result of a 7.3% increase in shipment volume combined with a 4.7% increase in shipment yield, and a $5.0 million increase in the floorcovering logistics business resulting from an improvement in shipment yield and an increase in the average shipment size.

        Operating expenses represented 96.8% of operating revenue for the three months ended September 30, 2003, compared to 97.4% during the same period in 2002.

        Salaries, wages and benefits increased $5.5 million, or 7.1%, to $83.5 million during the three months ended September 30, 2003, compared to $78.0 million during the same period in 2002. The increase is due, in part, to increased group health insurance costs and workers’ compensation premiums, which are included in salaries, wages and benefits. The increase can also be attributed to the expansion of facilities and additional volume of business at Xpress Global Systems.

        Fuel and fuel taxes as a percentage of operating revenue remained relatively consistent at 13.7% and 13.8% for the three months ended September 30, 2003 and 2002, respectively. The Company’s exposure to increases in fuel prices is partially mitigated by fuel surcharges to its customers. The Company recognized $7.5 million of fuel surcharge revenue for the three months ended September 30, 2003, compared to $4.3 million during the same period in 2002.

        Vehicle rents increased $1.9 million, or 11.2%, to $18.9 million during the three months ended September 30, 2003, compared to $17.0 million during the same period in 2002. The increase is due to a 12.1% increase in the average number of tractors leased under operating leases, offset by a 1.6% decrease in the average number of trailers leased during the three months ended September 30, 2003, compared to the same period in 2002. Depreciation and amortization was $8.8 million during the three months ended September 30, 2003, compared to $9.0 million during the same period in 2002. The Company includes gains and losses from the sale of revenue equipment in depreciation expense. Net losses from the sale of revenue and other equipment for the three months ended September 30, 2003, were $404,000 compared to $294,000 during the same period in 2002. Overall, as a percentage of operating revenue, vehicle rents and depreciation expense (including net losses) were 11.8% and 11.9% during the three months ended September 30, 2003 and 2002, respectively. The increase in the ratio of leased to owned revenue equipment resulted in a shift of financing expenses from interest to “above the line” operating expenses.

        Purchased transportation increased $2.7 million, or 7.1%, to $40.6 million during the three months ended September 30, 2003, compared to $37.9 million during the same period in 2002. The increase is due, in part, to an increase in fuel surcharges paid to owner-operators due to the

15

higher cost of fuel during the three months ended September 30, 2003, compared to the same period in 2002. The change can also be attributed to an increase of 14.6% in Xpress Global Systems’ purchased transportation due to an increase in shipment volume for the three months ended September 30, 2003, compared to the same period in 2002.

        Operating expenses and supplies as a percentage of operating revenue were 7.1% during the three months ended September 30, 2003, compared to 7.4% during the same period in 2002. The decrease is primarily due to a decline in tire expenses during the three months ended September 30, 2003 as compared to the same period in 2002, offset by an increase in tractor maintenance expenses.

        Insurance premiums and claims increased $2.9 million, or 29.6%, to $12.7 million, during the three months ended September 30, 2003, compared to $9.8 million during the same period in 2002. The increase is primarily due to an increase in liability claims associated with a significant accident.

        General and other operating expenses were $9.5 million in the three months ended September 30, 2003, compared to $9.4 million during the same period in 2002. The increase is primarily due to an increase in building rent and related costs.

        Interest expense decreased $0.9 million, or 28.0%, to $2.2 million, during the three months ended September 30, 2003, compared to $3.1 million during the same period in 2002. This decrease was primarily attributable to a decrease in average borrowings of approximately $31.2 million and a decrease in the average interest rate of approximately 1.0%.

        The Company’s effective tax rate was 50.0% during the three months ended September 30, 2003. The rate is higher than the statutory rate of 38.0%, primarily as a result of per diems paid to drivers which are not fully deductible for federal income tax purposes. The Company initiated the per diem driver pay plan in February 2002.

        Income from operations for the three months ended September 30, 2003, increased $1.8 million, or 31.0%, to $7.6 million from $5.8 million during the same period in 2002. As a percentage of operating revenue, income from operations was 3.2% for the three months ended September 30, 2003 and 2.6% for the same period in 2002.

16

Comparison of the Nine Months Ended September 30, 2003 to the
Nine Months Ended September 30, 2002

        Operating revenue during the nine month period ended September 30, 2003, increased $58.0 million, or 9.2%, to $690.9 million, compared to $632.9 million during the same period in 2002. U.S. Xpress revenue increased $44.8 million, or 7.9%, due primarily to a 2.9% increase in revenue per mile to $1.288 from $1.252, combined with a $17.2 million increase in fuel surcharge revenue. Xpress Global Systems revenue increased $18.7 million, or 22.5%, due to a $7.6 million increase in revenues in the airport-to-airport transportation business primarily resulting from a 22.0% increase in shipment volume, and an $11.1 million increase in the floorcovering logistics business resulting from an improvement in shipment yield and an increase in the average shipment size.

        Operating expenses represented 97.4% of operating revenue for the nine months ended September 30, 2003, compared to 98.0% during the same period in 2002.

        Salaries, wages and benefits increased $11.4 million, or 5.0%, to $240.0 million during the nine months ended September 30, 2003, compared to $228.6 million during the same period in 2002. The increase is due, in part, to increased group health insurance costs and workers’ compensation premiums, which are included in salaries, wages and benefits. The increase can also be attributed to the expansion of facilities and additional volume of business at Xpress Global Systems.

        Fuel and fuel taxes as a percentage of operating revenue were 14.8% during the nine months ended September 30, 2003, compared to 13.5% during the same period in 2002. The increase was primarily due to the approximately 17.1% increase in the average fuel price per gallon during the nine months ended September 30, 2003 compared to the same period in 2002. The Company’s exposure to increases in fuel prices is partially mitigated by fuel surcharges to its customers. The Company recognized $26.2 million of fuel surcharge revenue for the nine months ended September 30, 2003, compared to $8.9 million during the same period in 2002.

        Vehicle rents increased $4.1 million, or 7.8%, to $56.6 million, during the nine months ended September 30, 2003, compared to $52.5 million during the same period in 2002. The increase is due to a 15.3% increase in the average number of tractors leased under operating leases offset by a 3.0% decrease in the average number of trailers leased during the nine months ended September 30, 2003, compared to the same period in 2002. Depreciation and amortization was $26.9 million during the nine months ended September 30, 2003, compared to $26.6 million during the same period in 2002. The Company includes gains and losses from the sale of revenue equipment in depreciation expense. Net losses from the sale of revenue and other equipment for the nine months ended September 30, 2003 were $570,000, compared to $840,000 during the same period in 2002. Overall, as a percentage of operating revenue, vehicle rents and depreciation expense (including net losses) were 12.2% during the nine months ended September 30, 2003, compared to 12.6% during the same period in 2002. The increase in the ratio of leased to owned revenue equipment resulted in a shift of financing expenses from interest to “above the line” operating expenses.

17

        Purchased transportation increased $11.3 million, or 10.9%, to $115.2 million during the nine months ended September 30, 2003, compared to $103.9 million during the same period in 2002. The increase is due, in part, to an increase in fuel surcharges paid to owner-operators due to the higher cost of fuel during the nine months ended September 30, 2003, compared to the same period in 2002. The change can also be attributed to an increase of 17.1% in Xpress Global Systems’ purchased transportation due to an increase in shipment volume for the nine months ended September 30, 2003, compared to the same period in 2002.

        Operating expenses and supplies as a percentage of operating revenue were 7.1% during the nine months ended September 30, 2003, compared to 7.2% during the same period in 2002. The decrease is primarily due to a decrease in tire expenses during the nine months ended September 30, 2003, as compared to the same period in 2002, offset by an increase in tractor maintenance expenses.

        Insurance premiums and claims, increased $5.5 million, or 18.4%, to $35.4 million, during the nine months ended September 30, 2003, compared to $29.9 million during the same period in 2002. The increase is due to an increase in claims expense related to cargo and physical damage, combined with an increase in liability claims associated with a significant accident.

        General and other operating expenses were $27.5 million for the nine months ended September 30, 2003, compared to $27.2 million during the same period in 2002. The increase is primarily due to an increase in building rent and related costs.

        Early extinguishment of debt for the nine months ended September 30, 2002, was in connection with the repayment of the former revolving credit agreement. The Company incurred a charge of $1.8 million related to fees and additional costs incurred with the early extinguishment of debt.

        Interest expense decreased $2.4 million, or 23.8%, to $7.7 million, during the nine months ended September 30, 2003, compared to $10.1 million during the same period in 2002. The decrease was primarily attributable to a decrease in average borrowings of approximately $108.2 million and a decrease in the average interest rate of approximately 1.0%.

        The Company’s effective tax rate was 50.0% during the nine months ended September 30, 2003. The rate is higher than the statutory rate of 38.0%, primarily as a result of per diems paid to drivers which are not fully deductible for federal income tax purposes. The Company initiated a per diem driver pay plan in February 2002.

        Income from operations for the nine months ended September 30, 2003, increased $5.2 million, or 41.6%, to $17.7 million from $12.5 million during the same period in 2002. As a percentage of operating revenue, income from operations was 2.6% for the nine months ended September 30, 2003, and 2.0% for the same period in 2002.

18

Liquidity and Capital Resources

        The Company’s primary sources of liquidity and capital resources during the nine month period ended September 30, 2003, were cash from operations, borrowings under lines of credit and equipment installment notes, proceeds from sales of used revenue equipment and the use of long-term operating leases to fund the replacement and addition of revenue equipment.

        On March 29, 2002, the Company entered into a $100.0 million senior secured revolving credit facility. Proceeds from this facility were used to repay the then existing revolving credit facility. The revolving credit facility provides for borrowings up to $100.0 million, with availability at any given time based on specified percentages of eligible receivables and revenue equipment, less reserves, under the facility’s Borrowing Base formula. Letters of credit under the facility are limited to $37.0 million.

        The facility allows the Company to select interest rates for all or any portion of the outstanding balance, based on either a Base Rate (based on the domestic prime rate) plus an Applicable Margin or LIBOR plus an Applicable Margin. The Applicable Margin ranges from 0.75% to 1.50% for Base Rate Loans and from 2.25% to 3.00% for LIBOR Loans, based in each case on the aggregate availability as defined. At September 30, 2003, the Applicable Margin was 1.25% for Base Rate Loans and 2.75% for LIBOR Loans. The facility also prescribes additional fees for Letter of Credit transactions and a monthly commitment fee based on the difference between the total commitment and the total borrowing capacity utilized by the Company from time to time.

        At September 30, 2003, $3.0 million in borrowings and $36.2 million in letters of credit were outstanding under the facility with $52.0 million available to borrow. The facility is secured by substantially all assets of the Company, other than real estate and assets securing other debt of the Company.

        The facility requires, among other things, maintenance by the Company of prescribed minimum amounts of Consolidated Tangible Net Worth, Fixed Charge Coverage Ratios and Leverage Ratios. It also: (i) limits the Company’s future capital expenditures; (ii) prohibits all acquisitions by the Company of its own capital stock or the payment of dividends on such stock; and (iii) effectively prohibits future asset acquisitions or dispositions (except in the ordinary course of business) or other business combination transactions by the Company without the Lenders’ consent.

        Cash provided by operations increased to $40.0 million during the nine months ended September 30, 2003, compared to $28.3 million during the same period in 2002, due in part to a $7.6 million increase in pretax income, combined with a decrease in the growth of working capital.

        Net cash provided by investing activities was $1.7 million during the nine months ended September 30, 2003, compared to cash used in investing activities of $29.1 million during the same period in 2002. The change during the nine months ended September 30, 2003, can be attributed to the Company selling significantly more revenue equipment generating cash proceeds, while the replacement and additions of revenue equipment were primarily funded through operating leases.

19

        Net cash used in financing activities was $35.8 million during the nine months ended September 30, 2003, compared to $3.9 million during the same period in 2002. During 2003, the Company used proceeds from the sale of revenue equipment to pay down long-term debt. Current maturities of long-term debt at September 30, 2003, of $30.6 million include $9.3 million in balloon payments related to maturing revenue equipment installment notes. The balloon payments are generally expected to be funded with proceeds from the sale of the related revenue equipment, which is generally covered by repurchase and/or trade agreements in principle between the Company and the equipment manufacturer.

        Management believes that the aggregate funds provided by operations, borrowings under its lines of credit, equipment installment loans, sales of used revenue equipment and long-term operating lease financing will be sufficient to fund its cash needs and anticipated capital expenditures through the next twelve months.

        The following table represents the Company’s outstanding contractual obligations at September 30, 2003, excluding letters of credit. Letters of credit of $36.2 million were outstanding at September 30, 2003. The letters of credit are maintained primarily to support the Company’s insurance program and are renewed on an annual basis.

	Payments Due By Period (in thousands)
Contractual Obligations	Total		2003		2004-2005		2006-2007		Thereafter
Long-Term Debt	$	146,878	$	6,604	$	57,037	$	57,840	$	25,397
Capital Lease Obligations		3,793		363		1,868		1,562		--
Operating Leases - Revenue Equipment		165,170		18,058		92,480		47,078		7,554
Operating Leases - Other		24,926		2,813		15,642		5,366		1,105
Total Contractual Cash Obligations	$	340,767	$	27,838	$	167,027	$	111,846	$	34,056

        The Company leases certain revenue and service equipment and office and terminal facilities under long-term non-cancelable operating leases. Certain equipment leases provide for guarantees by the Company of a portion of the residual amount under certain circumstances at the end of the lease term. The maximum potential amount of future payments (undiscounted) under these guarantees is approximately $115.6 million at September 30, 2003. The residual value of a substantial portion of the leased revenue equipment is covered by repurchase or trade agreements in principle between the Company and the equipment manufacturer.

Recent Accounting Pronouncements

        In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51.” The Interpretation requires the consolidation of entities in which an enterprise absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. Currently, entities are generally consolidated by an enterprise when it has a controlling interest through ownership of a majority voting interest in the

20

entity. The Company will adopt the provisions of Interpretation No. 46 during the fourth quarter of 2003 as a result of the FASB deferring the effective date of the Interpretation for interests held by variable interest entities or potential variable interest entities created before February 1, 2003. The adoption of Interpretation No. 46 is not expected to have a material effect on our financial statements.

Inflation

        Inflation has not had a material effect on the Company’s results of operations or financial condition during the past three years.

Seasonality

        In the trucking industry, revenue generally shows a seasonal pattern as customers reduce shipments during and after the winter holiday season and as a result of inherent weather variations. The Company’s operating expenses also have historically been higher during the winter months.

        This Quarterly Report contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may be identified by their use of terms or phrases such as “expects,” “estimated,” “projects,” “believes,” “anticipates,” intends,” and similar terms and phrases, and may include, but not be limited to, projections of revenues, income or loss, capital expenditures, acquisitions, plans for growth and future operations, financing needs or plans or intentions relating to acquisitions by the Company, as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by or underlying the forward-looking statements. Such risks and uncertainties include, but are not limited to, those factors discussed under the heading “Factors that May Affect Future Results” in the Company’s Annual Report on Form 10-K, as well as other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission.

21

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Interest Rate Risk

        The Company has interest rate exposure arising from the Company’s line of credit and other installment notes, which have variable interest rates. At September 30, 2003, the Company had $31.6 million of variable rate debt. If interest rates on the Company’s existing variable rate debt were to increase by 10% from their September 30, 2003 rates for the next twelve months, there would be no material adverse impact on the Company’s results of operations.

Commodity Price Risk

        Fuel is one of the Company’s largest expenditures. The price and availability of diesel fuel fluctuates due to changes in production, seasonality and other market factors generally outside the Company’s control. Many of the Company’s customer contracts contain fuel surcharge provisions to mitigate increases in the cost of fuel. However, fuel surcharges to customers do not fully recover all of fuel increases due to engine idle time and out-of-route and empty miles not billable to the customer.

Item 4. Controls and Procedures

        As of the end of the period covered by this Form 10-Q, an evaluation under Rule 13a-15 of the Securities Exchange Act of 1934 was performed under the supervision and with the participation of our management, including our principal executive and financial officers, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our principal executive and financial officers concluded that our disclosure controls and procedures were effective. There have been no significant changes in our internal controls over financial reporting or in other factors that could significantly affect internal controls during the period covered by the form.

22

    U.S. XPRESS ENTERPRISES, INC.

PART II — OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a)        Exhibits

                    31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

                    31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

                    31.3 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

                    32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

                    32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)        Reports on Form 8-K

            During the quarter ended September 30, 2003, the Company filed the following report on Form 8-K:

A Current Report dated October 17, 2003, to furnish copies of the Company’s Earnings Release dated October 15, 2003.

23

SIGNATURES

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

	U.S. XPRESS ENTERPRISES, INC.
	(Registrant)
Date: November 14, 2003	By: /s/ Patrick E. Quinn
	Patrick E. Quinn
	President
Date: November 14, 2003	By: /s/ Ray M. Harlin
	Ray M. Harlin
	Chief Financial Officer

24

EXHIBIT 31.1

CERTIFICATIONS

I, Ray M. Harlin, certify that:

1.     I have reviewed this Quarterly Report on Form 10-Q of U.S. Xpress Enterprises, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)         Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)         Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)         Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)         Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2003


BY: /s/ Ray M. Harlin
——————————————
Chief Financial Officer

25

EXHIBIT 31.2

CERTIFICATIONS

I, Patrick E. Quinn, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of U.S. Xpress Enterprises, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)         Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)         Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)         Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)         Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2003


BY: /s/ Patrick E. Quinn
——————————————
President

26

EXHIBIT 31.3

CERTIFICATIONS

I, Max L. Fuller, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of U.S. Xpress Enterprises, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)         Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)         Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)         Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)         Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2003


BY: /s/Max L. Fuller
——————————————
Vice-President

27

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Quarterly Report of U.S. Xpress Enterprises, Inc. (the “Company”) on Form 10-Q for the three months ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. § 1350 (as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002) that he is the President (the Chief Executive Officer) of the Company and that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/Patrick E. Quinn
——————————————
Patrick E. Quinn
Co-Chairman of the Board of Directors,
President and Treasurer

Date: November 14, 2003

28

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Quarterly Report of U.S. Xpress Enterprises, Inc. (the “Company”) on Form 10-Q for the three months ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. § 1350 (as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002) that he is the Chief Financial Officer of the Company and that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/Ray M. Harlin
——————————————
Ray M. Harlin
Executive Vice President of Finance,
and Chief Financial Officer

Date: November 14, 2003

29

EX-99.H

AMENDMENT NO. 4 TO REVOLVING CREDIT
AGREEMENT, LIMITED WAIVER AND CONSENT

        This AMENDMENT NO. 4 TO REVOLVING CREDIT AGREEMENT, LIMITED WAIVER AND CONSENT (this “Amendment”) dated as of November 13, 2003, is by and among U.S. XPRESS ENTERPRISES, INC., a Nevada corporation, U.S. XPRESS, INC., a Nevada corporation, XPRESS GLOBAL SYSTEMS, INC. (f/k/a CSI/Crown, Inc.), a Georgia corporation, and U.S. XPRESS LEASING, INC., a Tennessee corporation (each a “Borrower” and collectively, the “Borrowers”), and FLEET CAPITAL CORPORATION, a Rhode Island corporation and the other lending institutions listed on Schedule 1 to the Credit Agreement (collectively, the “Lenders”), and FLEET CAPITAL CORPORATION, as administrative agent for itself and such other lending institutions (in such capacity, the “Administrative Agent”), with FLEET SECURITIES, INC., as arranger, and LASALLE BANK NATIONAL ASSOCIATION, as syndication agent.

        WHEREAS, the Borrowers, the Lenders and the Administrative Agent are parties to a Revolving Credit Agreement, dated as of March 29, 2002 (as amended and in effect from time to time, the “Credit Agreement”), pursuant to which the Lenders have agreed, upon certain terms and conditions, to make loans and otherwise extend credit to the Borrowers;

        WHEREAS, the Borrowers and their Subsidiaries desire to effectuate a series of transactions whereby the organizational and ownership structure of the Borrowers and their Subsidiaries will be restructured (the “Restructuring”);

        WHEREAS, the Borrowers have requested that the Administrative Agent and Lenders consent, on the terms and conditions outlined on Exhibit A hereto, to the proposed acquisition of Cargo Movement Corporation (the “CMC Acquisition”);

        WHEREAS, the Borrowers, the Lenders and the Administrative Agent have agreed, on the terms and conditions set forth herein, (i) to amend and/or waive certain provisions of the Credit Agreement and certain other Loan Documents in order to, among other things, permit the Restructuring and (ii) to grant their consent to the CMC Acquisition; and

        WHEREAS, capitalized terms which are used herein without definition and which are defined in the Credit Agreement shall have the same meanings herein as in the Credit Agreement.

        NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrowers, the Lenders and the Administrative Agent hereby agree as follows:

    §1.        Amendments to the Credit Agreement. The parties hereto hereby agree that the Credit Agreement is hereby amended as follows:

    (a)        Amendment to Section 9 of the Credit Agreement. Section 9 of the Credit Agreement is hereby amended by (i) deleting the word “and” at the end of Section 9.1(h) therein, (ii) deleting the period at the end of Section 9.1(i) therein and inserting the text “; and” in lieu thereof, and (iii) inserting the following new Section 9.1(j) in proper numerical and alphabetical order therein:

    “(j)        Indebtedness in respect of guarantees provided by any of the Borrowers or any of their Subsidiaries relating to any such Borrower’s or any such Subsidiary’s owner-operator tractor financing program, provided that the aggregate principal amount of Indebtedness permitted under this clause (j) shall not exceed $7,000,000 at any one time.” ; and

    (b)        Amendment to Section 10 of the Credit Agreement. Section 10 of the Credit Agreement is hereby amended by deleting Section 10.4 in its entirety and substituting the following new Section 10.4 in lieu thereof:

        “10.4 Leverage Ratio. The Borrowers will not permit the Leverage Ratio, determined as of the end of any fiscal quarter during any period described in the table set forth below to exceed the ratio set forth opposite such period in such table:

Period	Ratio
Closing Date through September 30, 2004	5.00:1.00
October 1, 2004 and thereafter	4.50:1.00"

    §2.        Specific Waivers. In connection with the Restructuring, the Lenders hereby agree to waive the following provisions of the Credit Agreement:

    (a)        the application of Section 9.1 of the Credit Agreement solely in connection with (i) the declaration and issuance of Distributions in the form of unsecured promissory notes (collectively, the “Distribution Notes”) to U.S. Xpress Enterprises, Inc. (the “Parent”) by each of U.S. Xpress, Inc. (“USX”), U.S. Xpress Leasing, Inc. (“USXL”), and Xpress Global Systems, Inc. (“XGS”), provided that the Distribution Notes shall (A) mature no later than seven (7) years from their respective dates of issuance, (B) bear interest at a rate of no greater than ten percent (10%) per annum, and (C), in the aggregate, total a principal amount not to exceed $133,450,000, (ii) the capital contribution of the Distribution Notes by the Parent to Xpress Colorado, Inc. (f/k/a CSI Acquisition Corporation) (“XCI”), and (iii) the subsequent capital contribution of the Distribution Notes by XCI to Xpress Nebraska, Inc., a newly formed subsidiary of XCI (“XNI”);

    (b)        the application of Section 9.3 of the Credit Agreement solely in connection with (i) the capital contribution of the Distribution Notes by the Parent

    to XCI and (ii) the subsequent capital contribution of the Distribution Notes by XCI to XNI;

    (c)        the application of Section 9.4 of the Credit Agreement solely in connection with the making of the Distributions in the form of the Distribution Notes by each of USX, USXL and XGS to the Parent;

    (d)        the application of Sections 9.5.2 and 9.11 of the Credit Agreement solely in connection with (i) the lease of the shop facility located in Colton, California (the “Shop Facility”) by the Parent to Colton Xpress, LLC, a newly formed subsidiary of the Parent (“CX”), and (ii) the lease of employees to operate the Shop Facility by USXL to CX; and

    (e)        the application of Section 9.9 of the Credit Agreement with respect to the business to be conducted by each of XNI and CX; provided, however, that the provisions of Section 9.9 of the Credit Agreement shall be applicable to each of XNI and CX from and after the date hereof.

        In addition, the Lenders hereby agree to waive any Default or Event of Default caused by the Borrowers’ failure to comply with the provisions of Section 10.4 of the Credit Agreement for the period ended September 30, 2003.

    §3.        Amendment to Schedules to the Credit Agreement. The Schedules to the Credit Agreement are hereby amended by deleting Schedule 7.19 and Schedule 9.3 in their entirety and substituting the new Schedule 7.19 and Schedule 9.3 attached hereto in lieu thereof.

    §4.        Consent to CMC Acquisition. The Administrative Agent and the Lenders hereby consent to the CMC Acquisition on the terms and conditions described on Exhibit A attached hereto.

    §5.        Consent to Name Change and Waiver. Each of the Lenders and the Administrative Agent hereby consent to CSI Acquisition Corporation’s change of name to Xpress Colorado, Inc. All references in the Loan Documents to CSI Acquisition Corporation shall hereafter refer to Xpress Colorado, Inc. In addition, each of the Lenders and the Administrative Agent hereby waive the requirement that the Borrowers provide thirty (30) days prior written notice of such change of name.

    §6.        Amendment to Annex to the Stock Pledge Agreement. Annex A to the Stock Pledge Agreement is hereby amended by deleting Annex A in its entirety and substituting the new Annex A attached hereto in lieu thereof.

    §7.        Representations and Warranties.  Each Borrower hereby represents and warrants to the Administrative Agent as follows:

        7.1 Representation and Warranties in the Credit Agreement.  The representations and warranties of each Borrower contained in the Credit Agreement were true and correct in all material respects as of the date when made and continue to be true and correct in all material respects on the date hereof.

        7.2 Ratification, Etc.  Except as expressly amended hereby, each of the Credit Agreement and the Stock Pledge Agreement is hereby ratified and confirmed in all respects and shall continue in full force and effect. Each of the Credit Agreement and the Stock Pledge Agreement shall, together with this Amendment, be read and construed as single agreements. All references in the Credit Agreement and the Stock Pledge Agreement or any related agreement or instrument shall hereafter refer to the Credit Agreement and the Stock Pledge Agreement, in each case as amended hereby.

        7.3 Authority, Etc.  The execution and delivery by each Borrower of this Amendment and the performance by each Borrower of all of its respective agreements and obligations under the Credit Agreement and the Stock Pledge Agreement, in each case as amended hereby, are within such Borrower’s corporate authority and have been duly authorized by all necessary corporate action on the part of such Borrower.

        7.4 Enforceability.   This Amendment and each of the Credit Agreement and the Stock Pledge Agreement, in each case as amended hereby, constitute the legal, valid and binding obligations of each Borrower and are enforceable against each Borrower in accordance with their terms, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of, creditors’ rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought.

    §8.        Effectiveness of Amendment.  This Amendment shall become effective (the “Effective Date”) upon the satisfaction of each of the following conditions, in each case in a manner and in form and substance satisfactory to the Administrative Agent:

    (a)        This Amendment shall have been duly executed and delivered by each of the Borrowers, the Administrative Agent and the Required Lenders and shall be in full force and effect;

    (b)        The Administrative Agent shall have received evidence that each of XNI and CX has entered into a security agreement (the “New Subsidiary Security Agreement”) with the Administrative Agent for the benefit of the Administrative Agent and the Lenders, in form and substance satisfactory to the Administrative Agent;

    (c)        The Administrative Agent shall have received from each of XNI and CX a duly completed Perfection Certificate in the form prescribed by the New Subsidiary Security Agreement;

    (d)        The Administrative Agent shall have received evidence that each of XNI and CX has executed a guaranty (the “New Subsidiary Security Guaranty”) in favor of the Administrative Agent for the benefit of the Administrative Agent and the Lenders, in form and substance satisfactory to the Administrative Agent;

    (e)        The Administrative Agent shall have received evidence that XCI has entered into a stock pledge agreement (the “New Pledge Agreement” and, together with the New Subsidiary Security Agreement and the New Subsidiary Guaranty, the “New Security Documents”) with the Administrative Agent for the benefit of the Administrative Agent and the Lenders, together with (i) original stock certificates representing 100% of the capital stock owned by XCI and (ii) instruments of assignment duly executed in blank, in each case in form and substance satisfactory to the Administrative Agent;

    (f)        The Administrative Agent shall have received each of the Distribution Notes, together with duly executed instruments of endorsement;

    (g)        The Administrative Agent shall have received from the Secretary of each of the XNI, CX and XCI a copy, certified by such Secretary to be true and complete as of such date, of the resolutions of such entities Board of Directors or other management authorizing, to the extent it is a party thereto, the execution, delivery and performance of this Amendment and such other documents contemplated hereby;

    (h)        The Administrative Agent shall have received favorable legal opinions addressed to the Administrative Agent and the Lenders, dated as of the date hereof, in form and substance satisfactory to the Administrative Agent, from counsel to XNI, CX and XCI, concerning corporate or other applicable entity authority matters and the enforceability of each of this Amendment and each of the New Security Documents, and concerning such other matters as the Administrative Agent may request;

    (i)        The Borrowers shall have paid to the Administrative Agent, for the pro rata accounts of the Lenders, an amendment fee in the principal amount of $100,000; and

    (j)        The Administrative Agent shall have received such other items, documents, agreements or actions as the Administrative Agent may reasonably request in order to effectuate the transactions contemplated hereby.

    §9.        No Other Amendments.  Except as expressly provided in this Amendment, all of the terms and conditions of each of the Credit Agreement and the Stock Pledge Agreement shall remain in full force and effect.

    §10.        Execution in Counterparts.  This Amendment may be executed in any number of counterparts, but all such counterparts shall together constitute but one instrument. In making proof of this Amendment it shall not be necessary to produce or account for more than one counterpart signed by each party hereto by and against which enforcement hereof is sought.

    §11.        Miscellaneous.  THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT UNDER SEAL UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). The captions in this Amendment are for convenience of reference only and shall not define or limit the provisions hereof.

        IN WITNESS WHEREOF, the undersigned have duly executed this Amendment as of the date first set forth above.

BORROWERS:

U.S. XPRESS ENTERPRISES, INC.


BY: /S/Ray M. Harlin
——————————————
Name:  Ray M. Harlin
Title:  Executive Vice President of Finance,
          Chief Financial Officer and
          Assistant Secretary

U.S. XPRESS, INC.


BY: /S/Ray M. Harlin
——————————————
Name:  Ray M. Harlin
Title:   Assistant Secretary

XPRESS GLOBAL SYSTEMS, INC.


BY: /S/Ray M. Harlin
——————————————
Name:  Ray M. Harlin
Title:   Assistant Secretary

U.S. XPRESS LEASING, INC.


BY: /S/Ray M. Harlin
——————————————
Name:  Ray M. Harlin
Title:   Assistant Secretary

LENDERS:

FLEET CAPITAL CORPORATION,
individually and as Administrative Agent


BY: /s/Christopher Godfrey
——————————————
Name:  Christopher Godfrey
Title:  Senior Vice President
          

FLEET NATIONAL BANK,
as Issuing Bank


BY:  /s/Christopher Godfrey
——————————————
Name:  Christopher Godfrey
Title:   Senior Vice President

THE CIT GROUP/BUSINESS CREDIT, INC.


BY:  /s/Arthur R. Cordwell, Jr.
——————————————
Name:  Arthur R. Cordwell, Jr.
Title:   Vice President

LASALLE BANK NATIONAL ASSOCIATION


BY:  /s/Stefan R. Loeb
——————————————
Name:  Stefan R. Loeb
Title:   Corporate Banking Officer

RATIFICATION OF GUARANTY

Each of the undersigned Guarantors hereby acknowledges and consents to the foregoing Amendment, and agrees that the Guaranty from such Guarantor in favor of the Administrative Agent for the benefit of the Administrative Agent and the Lenders and all other Loan Documents to which such Guarantor is a party remain in full force and effect, and each of the Guarantors confirms and ratifies all of its obligations thereunder.

XPRESS AIR, INC.


BY: /s/Ray M. Harlin
——————————————
Name:  Ray M. Harlin
Title:   Assistant Secretary

XPRESS COMPANY STORE, INC..


BY: /s/Ray M. Harlin
——————————————
Name:  Ray M. Harlin
Title:   Assistant Secretary

XPRESS HOLDINGS INC.


BY: /s/Christopher Monigle
——————————————
Name:  Christopher Monigle
Title:   Secretary and Treasurer

XPRESS COLORADO, INC.
(f/k/a CSI Acquisition Corporation)


BY: /s/Ray M. Harlin
——————————————
Name:  Ray M. Harlin
Title:   Assistant Secretary

DEDICATED XPRESS SERVICES, INC.


BY: /s/Ray M. Harlin
——————————————
Name:  Ray M. Harlin
Title:   Assistant Secretary

XPRESS NEBRASKA, INC.


BY: /s/Al Hingst
——————————————
Name:  Al Hingst
Title:   Secretary

COLTON XPRESS, LLC
BY:   U.S. Xpress Enterprises, Inc.,
     its sole Managing Member


BY: /s/Ray M. Harlin
——————————————
Name:  Ray M. Harlin
Title:   Executive Vice President of
Finance, Chief Financial Officer
and Assistant Secretary