April 21, 2006
Via Mail and Fax
Mr. Robert M. Powell
Chief Executive Officer
USA Truck, Inc.
3200 Industrial Park Road
Van Buren, Arkansas 72956
RE: USA Truck, Inc.
Form 10-K: For the Year Ended December 31, 2005
File Number: 000-19858
Dear Mr. Powell:
We have reviewed the above referenced filing and have the
following comments. We have limited our review to only the
financial statements and related disclosures and do not intend to expand our
review to other portions of your filing. Where indicated, we
believe you should revise your future filings in response to these
comments. If you disagree, we will consider your explanation as to why a
comment is inapplicable or a revision is unnecessary. Please be as
detailed as necessary in your explanation. In some of our comments, we may
ask you to provide us with information so we may better understand
your disclosure. After reviewing this information, we may raise
additional comments.
The purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to
enhance the overall disclosure in your filings. We look forward to
working with you in these respects and welcome any questions you may have
about our comments or any other aspect of our review. Feel free
to call us at the telephone numbers listed at the end of this letter.
Form 10-K: For the Year Ended December 31, 2005
Item 7. Management`s Discussion and Analysis ...
Critical Accounting Estimates
Selections of estimated useful lives and salvage values for
purposes of depreciating tractors and trailers
1. You cite a number of factors that are considered in determining
useful lives and salvage values for your revenue equipment. In
this regard, please expand your disclosure to provide greater insight
into the quality, sensitivity and variability of these factors that
materially have affected or may affect your determination of
useful lives and/or salvage values, and the consequent amount of
depreciation expense recorded in any period. In particular, clearly and
in greater detail explain how depreciation expense has varied in response
to changes in your equipment replacement policy, and how the policy
was changed. For example, you disclose that depreciation expense
increased for 2002, 2003 and the first quarter of 2004 relative to
your decision to delay replacing tractors. However, it is not
clear whether this was due to an extension of useful lives, salvage
values or combination of both and the degree of the related impact, or
merely the result of the equipment being held longer than expected within
previously established depreciable lives and salvage values.
Ensure that any consequent changes in depreciation expense in respect of
your policy changes are reported in accordance with the requirements of
FAS 154. Additionally, discuss the anticipated impacts on future
depreciation expense in response to expected changes in your
replacement policy. For example, you have disclosed that you have
recently returned to a more aggressive replacement program. Also,
address the reasonableness of assigned depreciable lives relative
to average ages. Further, explain how the determination of useful
lives and salvage values impact the amount of gains/losses recognized on
asset dispositions. Provide us with a copy of your intended
disclosure.
Notes to Consolidated Financial Statements
Note 1. Summary of Significant Accounting Policies
Revenue Recognition
2. We note that direct expenses related to delivery service
revenue are recognized proportionally over reporting periods. This does
not comply with the acceptable methods (Methods 3 and 5) specified in
EITF 91-9. Please explain to us why you believe your policy is
appropriate, and cite relevant guidance upon which you rely in
support of your position. Provide us with a schedule that shows over
the last three fiscal years the amount of such expenses that would have
been recognized in each quarter within each year if expenses were
recognized under each of the specified methods within the EITF
along with the amount of expenses that were recognized. In addition,
disclose in all future quarterly and annual filings the impact
from using your method of accounting versus an acceptable method under
EITF 91-9. In any period where you conclude that the impact would be
material, you must change your method of accounting to comply with
EITF 91-9.
3. Additionally, please expand your disclosure to include the
policies for revenue and related direct expenses associated with logistic
and brokerage services.
Segment Reporting
4. We note that you now have three operating divisions as opposed
to two in the past, and that you continue to disclose only one
reportable segment. Please explain to us the reason why you believe it
was necessary to expand your operations into a third division, and
whether or not this has created any changes in the way management assesses
operations and allocates resources thereto. Explain how the
economic characteristics of these divisions are similar to warrant
aggregation into one reportable segment, in particular how operating margins
and the "empty mile factor" compare among divisions over the last
three fiscal years, and how the empty mile factor is or is not
compensated for in arrangements with customers respective to each division.
Moreover, explain how the economic characteristics are similar in
light of your disclosure that services of the logistics division
are more stable than those of the other divisions during economic
downturns and that logistics and freight brokerage typically
remain consistent during periods of scarce freight demand.
We urge all persons who are responsible for the accuracy
and adequacy of the disclosure in the filings to be certain that the
filings include all information required under the Securities
Exchange Act of 1934 and that they have provided all information investors
require for an informed decision. Since the company and its
management are in possession of all facts relating to a company`s
disclosure, they are responsible for the accuracy and adequacy of
the disclosures they have made.
In connection with responding to our comments, please
provide, in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosures in the filings;
* staff comments or changes to disclosure in
response to staff comments do not foreclose the Commission from taking any
action with respect to the filings; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filings or in
response to our comments on your filings.
Please file your response to our comments via EDGAR within 10
business days from the date of this letter. You may contact Doug
Jones at 202-551-3309 or me at 202-551-3812 with any questions.
Sincerely,
Michael Fay
Accounting Branch Chief
cc: Clifton R. Beckham, Senior Vice President, Chief Financial Officer