UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 11-K
______________
(Mark One)
[X] | ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] |
For the year ended December 31, 2006
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from _____________ to ________________
Commission file number 33-91238
A. Full title of the Plan and the address of the Plan, if different from that of the issuer named below:
XPRE$$AVINGS 401(k) PLAN
B. Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office:
U.S. XPRESS ENTERPRISES, INC.
4080 Jenkins Road
Chattanooga, TN 37421
Audited Financial Statements and Supplemental Schedule
Xpre$$avings 401(k) Plan
As of December 31, 2006 and 2005 and for the Year Ended December 31, 2006 with Report of Independent Registered Public Accounting Firm
Xpre$$avings 401(k) Plan
Audited Financial Statements and Supplemental Schedule
As of December 31, 2006 and 2005 and for the Year Ended December 31, 2006
Contents
| 1 | |||
| Audited Financial Statements | |||
| 2 | |||
| 3 | |||
| 4 | |||
| Supplemental Schedule | |||
| 11 | |||
| 12 | |||
| 14 |
The Plan Administrator of the
Xpre$$avings 401(k) Plan
We have audited the accompanying statements of net assets available for benefits of Xpre$$avings 401(k) Plan as of December 31, 2006 and 2005, and the related statement of changes in net assets available for benefits for the year ended December 31, 2006. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and 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 net assets available for benefits of the Plan at December 31, 2006 and 2005, and the changes in its net assets available for benefits for the year ended December 31, 2006, in conformity with U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2006 is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.
/s/ ERNST & YOUNG LLP
Chattanooga, Tennessee
June 20, 2007
1
Statements of Net Assets Available for Benefits
December 31 | ||||||||
2006 | 2005 | |||||||
Assets | ||||||||
| Investments, at fair value: | ||||||||
| Interest-bearing cash | $ | 316,067 | $ | 215,351 | ||||
| Participant loans | 2,837,834 | 2,396,932 | ||||||
| Mutual funds | 27,918,290 | 24,377,695 | ||||||
| Common stock | 2,906,560 | 2,877,098 | ||||||
| Collective trust fund | 7,032,839 | 5,992,027 | ||||||
| Total investments | 41,011,590 | 35,859,103 | ||||||
| Contributions receivable: | ||||||||
| Participants | 238,940 | 211,128 | ||||||
| Employer | 1,949,086 | 1,815,854 | ||||||
| Total contributions receivable | 2,188,026 | 2,026,982 | ||||||
| Total assets | 43,199,616 | 37,886,085 | ||||||
Liabilities | ||||||||
| Excess contributions payable | 74,492 | 182,985 | ||||||
| Total liabilities | 74,492 | 182,985 | ||||||
| Net assets available for benefits, at fair value | 43,125,124 | 37,703,100 | ||||||
| Adjustment from fair value to contract value for investment in the collective trust fund | 101,118 | 82,781 | ||||||
| Net assets available for benefits | $ | 43,226,242 | $ | 37,785,881 | ||||
See accompanying notes.
2
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2006
| Additions to net assets attributed to: | ||||
| Investment income | $ | 1,622,847 | ||
| Net appreciation in fair value of investments | 796,404 | |||
| Contributions: | ||||
| Participants | 6,610,011 | |||
| Employer | 1,949,086 | |||
| Total additions | 10,978,348 | |||
| Deductions from net assets attributed to: | ||||
| Benefits paid to participants | 5,501,196 | |||
| Administrative expenses | 36,791 | |||
| Total deductions | 5,537,987 | |||
| Net increase | 5,440,361 | |||
| Net assets available for benefits: | ||||
| Beginning of year | 37,785,881 | |||
| End of year | $ | 43,226,242 | ||
See accompanying notes.
3
Xpre$$avings 401(k) Plan
Notes to Financial Statements
December 31, 2006
The following description of the Xpre$$avings 401(k) Plan (the “Plan”) is provided for general information purposes only. More complete information regarding the Plan’s provisions may be found in the Plan document.
General
The Plan is a defined contribution plan established January 1, 1993, by U.S. Xpress Enterprises, Inc. (the “Company” and “Plan Administrator”) under the provisions of Section 401(a) of the Internal Revenue Code (the “IRC”), which includes a qualified cash or deferred arrangement as described in Section 401(k) of the IRC, for the benefit of eligible employees of the Company. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).
Employees are eligible to participate in the Plan when they have completed six months of service, as defined in the Plan document, and have attained age 18, effective January 1, 2006. Prior to January 1, 2006, the minimum age requirement was 21.
Plan Administration
The Plan is administered by the Investment Committee, which includes management personnel appointed by the executive officers of the Company, and Morgan Keegan & Company, Inc. who provides investment advisory services to the Plan. Investors Bank and Trust Company (“IBT”, the trustee) has a servicing agent agreement for trustee services with Diversified Investment Advisors, Inc. (“Diversified”) to provide the recordkeeping services for the trust.
Contributions
As defined in the Plan document, eligible employees may make before-tax contributions up to 75% of compensation and under certain circumstances, participants may make an additional catch-up contribution subject to certain limitations of the IRC. Catch-up contributions are not matched by the Company. The Company provides a contribution equal to 50% of each participant’s before-tax contribution up to a maximum of 6%, not to exceed 3% of a participant’s compensation. Participants must be employed on the last day of the Plan year to be eligible for the Company contribution.
4
Xpre$$avings 401(k) Plan
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
Vesting
Participants are fully vested in their contributions and the earnings thereon. Vesting in the Company matching contributions and earnings thereon is based on years of service. Participants who were eligible to enter the Plan before July 1, 2000, vest according to the following schedule:
Years of Service | Percent Vested | |||
| Less than 2 years | 0 | % | ||
| 2 but not more than 3 years | 30 | % | ||
| 3 but not more than 4 years | 65 | % | ||
| 4 or more years | 100 | % | ||
Participants who were eligible to enter the Plan on or after July 1, 2000, vest according to the following schedule:
Years of Service | Percent Vested | |||
| Less than 2 years | 0 | % | ||
| 2 but not more than 3 years | 20 | % | ||
| 3 but not more than 4 years | 40 | % | ||
| 4 but not more than 5 years | 60 | % | ||
| 5 but not more than 6 years | 80 | % | ||
| 6 or more years | 100 | % | ||
Participants automatically become 100% vested in the Company contributions upon attainment of normal retirement age, as defined in the Plan document, or termination due to death or total disability.
At December 31, 2006 and 2005 forfeited non-vested accounts totaled $204,494 and $136,147, respectively. These accounts may be used to reduce future employer contributions or pay Plan expenses. For the 2006 Plan year, non-vested forfeitures utilized to reduce employer contributions were $204,494.
Benefits
Upon retirement, death, disability, or termination of service, a participant (or participant’s beneficiary in the event of death) may elect to receive a lump-sum distribution equal to the value of the participant’s vested account balance. In addition, participants may receive an in-service withdrawal of after-tax contributions or rollover contributions from previous plans. Hardship distributions are also permitted if certain criteria are met.
5
Xpre$$avings 401(k) Plan
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
Participant Accounts
Individual accounts are maintained for each of the Plan’s participants to reflect the participant’s contributions and related Company matching contributions, as well as the participant’s share of the Plan’s investment results and any related administrative expenses. Allocations of income and expenses are based on individual participant account balances in proportion to total participant account balances.
Participant Loans
Subject to approval, a participant can secure a loan from the Plan against his/her account balance for a minimum of $1,000 up to the lesser of 50% of the vested account balance or $50,000. Participants can have up to two loans outstanding at a time. Loans may generally be repaid over one to five years, unless the loan is used to purchase a principal residence in which case the repayment period can be extended up to fifteen years. Loans must be repaid through automatic payroll deductions unless otherwise provided for by the Plan Administrator. The interest rate is the prime rate plus 1% as determined by the Plan Administrator and is fixed over the life of the loan.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts.
2. Summary of Significant Accounting Policies
Basis of Accounting
The accompanying financial statements have been prepared using the accrual method of accounting.
New Accounting Pronouncement
In December 2005, the Financial Accounting Standards Board (FASB) issued FASB Staff Position AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans (the FSP). The FSP defines the circumstances in which an investment contract is considered fully benefit responsive and provides certain reporting and disclosure requirements for fully benefit responsive investment contracts in defined contribution health and welfare and pension plans. The financial statement presentation and disclosure provisions of the FSP are effective for financial statements issued for annual periods ending after December 15, 2006 and are required to be applied retroactively to all prior periods presented for comparative purposes. The Plan has adopted the provisions of the FSP at December 31, 2006.
6
Xpre$$avings 401(k) Plan
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
As required by the FSP, investments in the accompanying Statements of Net Assets Available for Benefits include fully benefit responsive investment contracts recognized at fair value. AICPA Statement of Position 94-4, Reporting of Investment Contracts Held by Health and Welfare Benefit Plans and Defined Contribution Pension Plans, as amended, requires fully benefit responsive investment contracts to be reported at fair value in the Plan’s Statement of Net Assets Available for Benefits with a corresponding adjustment to reflect these investments at contract value. The requirements of the FSP have been applied retroactively to the Statement of Net Assets Available for Benefits as of December 31, 2005 presented for comparative purposes. Adoption of the FSP had no effect on the Statement of Changes in Net Assets Available for Benefits for any period presented.
Income Recognition
Investment income is recorded as earned on the accrual basis. Dividend income is recorded on the ex-dividend date. Net realized gains (losses) and unrealized appreciation (depreciation) are presented in the accompanying statement of changes in net assets available for benefits as net appreciation in fair value of investments.
Investment Valuation
Investments of the Plan in mutual funds and common stock are stated at fair value, as determined by quoted active market prices on the last business day of the Plan year. Participant loans are valued at their outstanding balance, which approximates fair value. Purchases and sales of securities are reflected on a trade-date basis.
The Diversified Investment Advisors Stable Pooled Fund (Stable Pooled Fund) is a common/collective fund which invests all of its assets in the Wells Fargo Stable Return Fund G (the G Fund), a common/collective fund sponsored by Wells Fargo Bank. The value of the Stable Pooled Fund is based on the underlying unit value reported by the G Fund. The G Fund invests in investment contracts, such as traditional guaranteed investment contracts (GICs) and security-backed contracts issued by insurance companies and other financial institutions and carries its investments at contract value. The contract value of GICs represents contributions made under the contract less any participant-directed withdrawals plus accrued interest which has not been received from the issuer. Security-backed contracts are carried at contract value in the aggregate, which consists of the fair value of the underlying portfolio, accrued interest on the underlying portfolio assets, the fair value of the contract, and the adjustment to contract value. The fair value of a GIC is based on the present value of future cash flows using the current discount rate. The fair value of a security-backed contract includes the value of the underlying securities and the value of the wrapper contract. The fair value of a wrapper contract provided by a security-backed contract issuer is the replacement cost, and is based on the wrapper contract fees. All GICs and security-backed contracts held by the G Fund are fully benefit responsive, which means withdrawals from these investment contracts may be made at contract value for qualifying benefit payments, including participant-directed transfers. The G Fund does not distribute investment income to unit holders, therefore, the appreciation or depreciation of units held and gain or loss on sale of units represent the sources of income to holders of the G Fund.
7
Xpre$$avings 401(k) Plan
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Administrative Expenses
A Plan service fee equal to 0.0275% of each participant’s account balance is charged each quarter for administration and maintenance. In addition, a loan set-up fee of $75 per loan is charged to a participant’s account upon issuance of a loan. All other expenses, if any, are paid by the Company.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Risk and Uncertainties
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefits.
3. Investments
The individual assets that represent 5% or more of the Plan’s net assets as of December 31 are as follows:
2006 | 2005 | |||||||
| U.S. Xpress Enterprises, Inc. Common Stock | $ | 2,906,560 | $ | 2,877,098 | ||||
| Diversified Investment Advisors, Inc.: | ||||||||
| Equity Growth Fund | 8,315,122 | 8,090,732 | ||||||
| Intermediate Horizon Strategic Allocation Fund | 4,484,267 | 3,832,434 | ||||||
| Stable Pooled Fund (fair value is $7,032,839 and $5,992,027 at December 31, 2006 and 2005, respectively) | 7,133,957 | 6,074,807 | ||||||
| Value and Income Fund | 2,264,535 | 1,622,223 | ||||||
| American EuroPacific R3 Fund | 2,392,194 | - | ||||||
8
Xpre$$avings 401(k) Plan
Notes to Financial Statements (continued)
3. Investments (continued)
During the year ended December 31, 2006, the Plan’s investments (including investments purchased and sold, as well as held during the year) appreciated/(depreciated) in fair value as follows:
Fair value as determined by quoted market prices: | ||||
| Mutual Funds | $ | 887,146 | ||
| Common Stock | (344,390 | ) | ||
Contract value as determined by quoted redemption value: | ||||
| Collective Trust Fund | 253,648 | |||
| $ | 796,404 | |||
4. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service dated May 24, 2004, stating that the Plan is qualified under Section 401(a) of the IRC and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the Internal Revenue Service, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Administrator has indicated that it will take the necessary steps, if any, to bring the Plan’s operations into compliance with the IRC.
5. Related Party Transactions
Parties-in-interest are defined under Department of Labor regulations as any fiduciary of the Plan, any party rendering service to the Plan, the Company, and certain others. Party-in-interest transactions include purchases and sales of mutual funds and a common trust fund offered by Diversified through IBT.
Other party-in-interest investments held by the Plan include Company common stock and participant loans.
6. Reconciliation Between Financial Statements and Form 5500
The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
December 31, 2006 | ||||
| Net assets available for benefits per the financial statements | $ | 43,226,242 | ||
| Adjustment to report collective trust fund at fair value | (101,118 | ) | ||
| Net assets available for benefits per the Form 5500 | $ | 43,125,124 | ||
9
Xpre$$avings 401(k) Plan
Notes to Financial Statements (continued)
6. Reconciliation Between Financial Statements and Form 5500 (continued)
The following is a reconciliation of additions per the financial statements to total income on the Form 5500:
Year Ended December 31, 2006 | ||||
| Total additions per the financial statements | $ | 10,978,348 | ||
| Adjustment to report collective trust fund at fair value | (101,118 | ) | ||
| Total income per the Form 5500 | $ | 10,877,230 | ||
The following is a reconciliation of additions per the financial statements to net income on the Form 5500:
Year Ended December 31, 2006 | ||||
| Net additions per the financial statements | $ | 5,440,361 | ||
| Adjustment to report collective trust fund at fair value | (101,118 | ) | ||
| Net income per the Form 5500 | $ | 5,339,243 | ||
10
EIN 62-1378182 Plan Number 001
Schedule H, Line 4i
Schedule of Assets (Held at End of Year)
December 31, 2006
(a) | (b) Identity of Issue, Borrower, Lessor, of Similar Party | (c) Description of Investment Including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value | (e) Current Value | |||||
| * | Investors Bank & Trust Company | Interest—bearing Cash | $ | 316,067 | ||||
| * | Diversified Investment Advisors, Inc. | Stable Pooled Fund | 7,032,839 | |||||
| * | Diversified Investment Advisors, Inc. | Short Horizon Strategic Allocation Fund | 291,439 | |||||
| * | Diversified Investment Advisors, Inc. | Short/Intermediate Horizon Strategic Allocation Fund | 374,492 | |||||
| * | Diversified Investment Advisors, Inc. | Intermediate Horizon Strategic Allocation Fund | 4,484,267 | |||||
| * | U.S. Xpress Enterprises, Inc. | U.S. Xpress Enterprises, Inc. Common Stock | 2,906,560 | |||||
| * | Diversified Investment Advisors, Inc. | Intermediate/Long Horizon Strategic Allocation Fund | 806,545 | |||||
| * | Diversified Investment Advisors, Inc. | Long Horizon Strategic Allocation Fund | 1,257,869 | |||||
| * | Diversified Investment Advisors, Inc. | Core Bond Fund | 1,231,047 | |||||
| * | Diversified Investment Advisors, Inc. | Value & Income Fund | 2,264,535 | |||||
| * | Diversified Investment Advisors, Inc. | Stock Index Fund | 1,170,122 | |||||
| * | Diversified Investment Advisors, Inc. | Equity Growth Fund | 8,315,122 | |||||
| * | Diversified Investment Advisors, Inc. | Mid—Cap Value Fund | 1,872,616 | |||||
| * | Diversified Investment Advisors, Inc. | Mid—Cap Growth Fund | 1,613,065 | |||||
| * | Diversified Investment Advisors, Inc. | Special Equity Fund | 1,562,124 | |||||
| Vanguard Funds | REIT Index Investment Fund | 282,853 | ||||||
| American Funds | American EuroPacific R3 Fund | 2,392,194 | ||||||
| * | Participant Loans | Loans to participants, with interest rates from 5.00% to 9.25% | 2,837,834 | |||||
| $ | 41,011,590 | |||||||
*Indicates a party-in-interest to the Plan.
Note: Cost information has not been included in column (d) because all investments are participant directed.
11
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: June 22, 2007
U.S. XPRESS ENTERPRISES, INC.’S
Xpre$$avings 401(K) Plan
BY: INVESTMENT COMMITTEE
BY: /s/ LISA M. PATE
Lisa M. Pate
Member of the Investment Committee
12
Exhibit Number | Description of Exhibit |
23 | Consent of Independent Registered Public Accounting Firm |
13
Exhibit 23
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-91238) pertaining to the Xpre$$avings 401(k) Plan of our report dated June 20, 2007, with respect to the financial statements and schedule of the Xpre$$avings 401(k) Plan included in this Annual Report (Form 11-K) for the year ended December 31, 2006.
/s/ ERNST & YOUNG LLP
Chattanooga, Tennessee
June 20, 2007