United States securities and exchange commission logo
December 20, 2022
Eric Fuller
President and Chief Executive Officer
U.S. Xpress Enterprises, Inc.
4080 Jenkins Road
Chatanooga, TN 37421
Re: U.S. Xpress
Enterprises, Inc.
Form 10-K for the
Fiscal Year ended December 31, 2021
Filed March 1, 2022
File No. 001-38528
Dear Eric Fuller:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for the Fiscal Year ended December 31, 2021
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations, page 38
1. We note that you
present a gross margin percentage for your Brokerage segment although
in describing the
computation you indicate that brokerage revenue less purchased
transportation expense
is being expressed as a percentage of "total operating revenue."
Please provide us with
your computations of the Brokerage segment margin measures for
each period and if the
denominator in your computations is total operating revenue, rather
than brokerage revenue,
explain your rationale. Also provide us with your computations
of the gross margin
percentages for the Truckload segment and the consolidated entity and
if there are material
variations compared to your Brokerage segment gross margin
percentages, tell us
how you have considered these details for disclosure.
Eric Fuller
FirstName
U.S. XpressLastNameEric Fuller
Enterprises, Inc.
Comapany20,
December NameU.S.
2022 Xpress Enterprises, Inc.
December
Page 2 20, 2022 Page 2
FirstName LastName
Please identify and quantify the components considered as cost of
sales in computing your
gross margin percentages for each segment, reconciled to the line
items in your financial
statements, and clarify how purchased transportation costs are
appropriately identified as
the only costs of sales for the brokerage segment in your view. For
example, explain how
you considered the costs of "brokerage employees" mentioned on page
38.
2. Given the distinguishing characteristics of your Truckload and
Brokerage services, please
expand your discussion and analysis to address the attribution of
costs and expenses to
these operating segments (e.g. quantify salaries, wages, and related
expenses, and
purchased transportation), consistent with Item 303(b) of Regulation
S-K, and describe
any material variations in the amounts or relationships with the
associated revenues.
With regard to the increasing significance of the Variant operations
and related concerns,
please also disclose how the Variant operations are impacting revenues
and expenses to
comply with Item 303(a) of Regulation S-K (i.e. provide descriptions
and amounts of
matters that have had a material impact on reported operations, as
well as matters that are
reasonably likely to have a material impact on future operations).
Financial Statements
Note 12 - Commitments and Contingencies
Legal Proceedings, page 72
3. We note that you identify and discuss several matters involving
litigation which you
appear to collectively summarize with two partially conflicting
disclosures, stating that
management believes ultimate disposition "is not expected to have a
materially adverse
effect" on your financial position or results of operations, while
also stating that
"outcomes could be material to our operating results for any
particular period...."
Please revise your disclosures to resolve these conflicting
perspectives and to specify the
extent of damages claimed by the counterparties for each matter, where
you are unable to
estimate the amount of reasonably possible loss or reasonably possible
range of loss.
Please also clarify which amounts are associated with your disclosure
stating that damages
claimed "are unsupported and/or exaggerated," and identify those
matters for which
damages have not yet been quantified or fully quantified.
Please also explain whether your assessments associated with the term
"ultimate
disposition" are based on an estimate of the cumulative settlement
amounts, or are focused
on a potential final periodic charge, excluding any existing reserves,
as suggested on page
33, or possible subsequent adjustments to reserves prior to an
ultimate disposition; and
modify the associated risk factor disclosures on pages 27 and 30, and
the legal
proceedings disclosure on page 33, as necessary to clarify your
assessments of the
reasonably possible outcomes of present litigation and to
differentiate these from the risks
of loss associated with unrelated future litigation.
Eric Fuller
FirstName
U.S. XpressLastNameEric Fuller
Enterprises, Inc.
Comapany20,
December NameU.S.
2022 Xpress Enterprises, Inc.
December
Page 3 20, 2022 Page 3
FirstName LastName
Tell us how your various disclosures expressing a view on the
materiality of ultimate
disposition, as referenced above, reconcile with disclosures on pages
72-75, indicating
that you have been unable to estimate your exposure to loss.
Note 17 - Segment Information, page 79
4. We understand from your disclosure that you aggregate OTR trucking and
dedicated
contract services in the Trucking segment because you have concluded
that these
operations have similar economic characteristics. You explain that OTR
includes "solo
and expedited" team services, while dedicated contract involves
equipment and services
being provided under long-term contracts.
Given your disclosure on page 39, describing the primary factors
underlying changes in
Truckload revenue, stating that a 13.2% increase in average revenue
per loaded mile is
"primarily due to an approximate 9.0% increase in contractual rates
combined with a
greater than 40% increase in spot rates...," please clarify how you
are able to maintain that
OTR and dedicated contract service offerings have similar economic
characteristics, i.e.
address the apparent differing levels of exposure to market shipping
rates.
Also explain to us how the Variant operations described on pages 4, 7,
19, and 35, would
meet the economic criteria for aggregation, considering the economic
dissimilarities that
you mention and the change in leadership announced in your 2021
earnings release,
with technology and operations teams now reporting directly to your
CEO.
If you believe that the OTR, brokerage and Variant operations are
appropriately
aggregated based on similar economic characteristics please submit for
our review the
analyses that you have performed in arriving at this view, covering
their actual historic
performance and any assumptions regarding their long-term performance.
5. Given that you report operating income/loss as the segment performance
measures, please
expand your tabulations to include depreciation, depletion, and
amortization expense
attributable to each segment to comply with FASB ASC 280-10-50-22(e).
Controls and Procedures
Management's Report on Internal Control over Financial Reporting, page 81
6. We note your disclosure indicating that management conducted an
assessment of the
effectiveness of your internal control over financial reporting, and
that their conclusions
were subject to audit, although you do not include a statement of
their conclusions.
Please disclose management's assessment as to whether or not internal
control over
financial reporting was effective to comply with Item 308(a)(3) of
Regulation S-K.
Eric Fuller
U.S. Xpress Enterprises, Inc.
December 20, 2022
Page 4
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact, Joseph Klinko, Staff Accountant, at (202) 551-3824 or
Karl Hiller,
Branch Chief at (202) 551-3686 with any questions.
FirstName LastNameEric Fuller Sincerely,
Comapany NameU.S. Xpress Enterprises, Inc.
Division of
Corporation Finance
December 20, 2022 Page 4 Office of Energy &
Transportation
FirstName LastName