UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant To Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the year ended December 31, 1999 Commission file number 1-19773
OTR EXPRESS, INC.
(Exact name of registrant as specified in its charter)
Kansas 48-0993128
(State or other jurisdiction of (IRS Employer
incorporation of organization) Identification No.)
804 N. Meadowbrook Drive, Olathe, Kansas 66062
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (913) 829-1616
Securities Registered Pursuant to Section 12(g) of the Act:
Title of each class
Common Stock, $.01 par value
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 the 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.
(1) Yes X No (2) Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to
the best of Registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( )
The aggregate market value of voting stock held by non-affiliates of the
Registrant was $3,564,044 as of February 29, 2000.
1,782,022
(Number of shares of common stock outstanding as of February 29, 2000)
Part II incorporates certain information by reference from the
Registrant's Annual Report to Stockholders for fiscal year ended December 31,
1999. Part III incorporates certain information by reference from the
Registrant's definitive Proxy Statement dated March 30, 2000
OTR EXPRESS, INC.
1999 Annual Report on Form 10-K
Table of Contents
Page
Part I
Item 1. Business 3
Item 2. Properties 9
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 10
Item 6. Selected Financial Data 10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 8. Financial Statements and Supplementary Data 10
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 10
Part III
Item 10. Directors and Executive Officers of the Registrant 10
Item 11. Executive Compensation 11
Item 12. Security Ownership of Certain Beneficial Owners and
Management 11
Item 13. Certain Relationships and Related Transactions 11
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K 11
PART I
Item 1. Business
Overview
The discussion set forth below as well as other documents
incorporated by reference herein and oral statements made by
officers of the Company relating thereto, may contain forward
looking statements. Such comments are based upon information
currently available to management and management's perception
thereof as of the date of this Form 10-K. Actual results of the
Company's operations could materially differ from those forward
looking statements. Such differences could be caused by a number of
factors including, but not limited to, potential adverse affects of
regulation; changes in competition and the effects of such changes;
increased competition; changes in fuel prices; changes in used
tractor and trailer values; changes in economic, political or
regulatory environments; litigation involving the Company; changes
in the availability of a stable labor force; ability of the Company
to hire drivers meeting Company standards; changes in driver
compensation rates; changes in management strategies; environmental
or tax matters; increases in interest rates and availability of
affordable financing; and risks described from time to time in
reports filed by the Company with the Securities and Exchange
Commission. Readers should take these factors into account in
evaluating any such forward looking statements.
The Company
OTR Express, Inc., a Kansas corporation organized in 1985 (the
"Company" or "OTR") operates primarily as a dry van, truckload
carrier and logistics company. The Company transports a diversified
mix of general commodities for a large base of customers (currently
over 1,000) throughout the continental United States. OTR is
headquartered in Olathe, Kansas, a suburb of Kansas City, Missouri.
The Company also provides non-asset based third party logistics
services to its customers, including rail, truckload, and less-than-
truckload services.
Operating Strategy
OTR's business philosophy is to provide high quality
transportation services at a low cost. The Company has historically
achieved this by (1) focusing on technology; (2) operating premium,
late model equipment; (3) hiring experienced drivers; and (4)
maintaining an efficient cost structure. From its founding in 1985
until 1995, the Company's operating strategy differed from that of
most truckload carriers in that OTR serviced a large base of
customers with no long-term contracts or commitments. This strategy
allowed the Company to obtain the most profitable loads available on
a spot basis. To identify the most profitable loads, the Company
utilized its internally developed, proprietary Freight Optimization
System - a next-move probability based freight system. The Freight
Optimization System enables the Company to analyze historical data
to prioritize customers most likely to have freight that will
produce the most profitable combination of rates and destinations.
The Freight Optimization System was designed to maximize freight
opportunities, maximize revenue per mile and minimize empty miles,
but had become dependent to some extent on freight brokers offering
opportunities in the spot market. In mid-1995, using the system,
the Company received as much as 55% of its freight opportunities
from freight brokers who typically pay 10% to 15% less per mile than
direct shippers.
In 1996, due to changing market conditions, the Company
determined that it was necessary to change its operating strategy to
market to larger national accounts and away from the lower priced
spot freight market and its reliance on freight brokers. The
objective of OTR's new operating strategy was to improve revenue per
mile, equipment utilization, stability of the customer base and
reduce reliance on freight brokers. These larger shippers are
capable of offering increased load counts at higher revenue rates.
The larger shippers require additional
services, including guaranteed equipment availability, drop trailers and
fifty-three foot trailers. Additionally, in 1996, the Company began offering
Qualcomm satellite communications on every truck and electronic data
interchange (EDI) for load status information to serve the Company's
larger national accounts. The Company is working to integrate these
larger shippers into the Company's existing operating strategy
effectively, providing a higher mix of more profitable shipper
freight. In this new operating strategy, the Company will be able
to utilize its Freight Optimization System which will work in
conjunction with the Company's national accounts program to identify
opportunities on non-national account freight and backhaul
opportunities on national account freight.
OTR has regional short-haul operations in Kansas City, Chicago,
and Dallas/Houston to meet customer demand. Based on management's
analysis of the market size, cost of entry and potential long-term
profitability, the Company expects to make further investments in
the short-haul division.
This flexible operating strategy has contributed to the Company's
growth during the five year period ending December 31, 1999, with
revenue increasing to $80.5 million in 1999 from $42.8 million in
1994 (a compound annual growth rate of 13.5%), and a corresponding
increase in its fleet to 588 tractors (505 company-owned tractors
and 83 owner operators) from 394 during such period.
Customers and Marketing
OTR has a large customer base that is diversified in terms of
geographic location and types of commodities shipped. The Company
markets its services based on dependable, time definite delivery and
service.
The Company obtains freight in three different manners: directly
from shippers ("OTR Shippers"), through Company agents ("Agent
Shippers") and from freight brokers. OTR Shippers are marketed
directly by OTR sales representatives. Agent Shippers are marketed
by the Company's outside sales agents. The Company's customer
database includes approximately 500 OTR Shippers, 300 Agent Shippers
and 400 freight brokers. In 1999, OTR Shippers accounted for 68% of
OTR's revenue miles, Agent Shippers accounted for 13% and freight
brokers accounted for 19%.
The freight obtained from OTR Shippers and Agent Shippers is
generally more profitable than freight obtained from brokers, having
freight rates which average 10% to 15% more than brokered freight.
To maximize this more profitable revenue base by generating new OTR
Shippers, OTR increased the number of its sales representatives and
customer service representatives to twenty-one at February 29, 2000
from three at December 31, 1994. From the Company's inception
through 1995, sales representatives operated primarily through
direct telemarketing efforts.
During 1998, the Company divided its operations and sales
departments into seven regional teams to better serve customers in
those regions. In order to capitalize on this structure, the
Company has regional sales managers in the Kansas City, Dallas,
Baltimore, Cleveland, Chicago and Atlanta metropolitan areas. The
focus of these regional sales managers is to enhance freight
opportunities with current customers and to add new national account
customers.
The Company's brokered freight is obtained through a network of
freight brokers who contract for freight directly from shippers and
re-contract with the Company to transport the freight. A freight
broker helps carriers obtain loads in areas where the carrier does
not typically have a large number of customers, thereby minimizing
the empty miles of the carrier. Freight brokers typically earn a
margin based on a percentage of the carrier's freight fee. The
Company has developed a network of approximately 400 freight
brokers. The Company expects to reduce the percentage of revenue
miles from freight brokers in the future.
For the year ended December 31, 1999, the Company's 20, 10 and
five largest customers accounted for 28.3%, 19.6% and 13.3%,
respectively, of the Company's operating revenue. The largest
customer accounted for 3.9% of the Company's operating revenue for
that period.
Logistics Division
To better serve its customers, OTR has developed a logistics
division which brokers loads to other carriers. The Company
contracts with other trucking companies to haul freight on their
equipment for OTR's customers. The Company is able to increase its
profitability while satisfying its customers' shipping needs without
utilizing Company owned equipment.
In 1998, OTR formed a rail logistics department within its OTR
Logistics division. The intermodal logistics department contracts
with rail carriers to move freight on rail equipment for customers
and is currently based in Salt Lake City, Utah. The department
currently employs eight professionals. OTR expects to utilize its
information technology to improve the operating efficiency and
capacity for the intermodal logistics department. OTR's internal
computer programmers have developed a proprietary load order system
specifically for intermodal logistics services which is integrated
with the Company's current system and will substantially reduce the
amount of time it takes to coordinate the movement of a load. The
intermodal logistics division operates as a non-asset based
transportation service provider and the Company expects that it will
not require the purchase of transportation equipment.
Logistics division revenue increased to $9.7 million in 1999 from
$4.5 million in 1998. OTR expects to expand the rail logistics
department in the future.
Drivers, Other Employees and Owner-Operator Drivers
Recruiting and retaining professional, experienced drivers is
critical to the Company's success, and all of the Company's drivers
must meet specific guidelines relating primarily to safety record,
driving experience and personal evaluation, including drug and
alcohol testing. OTR's drivers have an average age of 46.0 years
and average 12.5 years of driving experience. Within the Company,
drivers are considered "managers" and are given a high level of
responsibility to manage the profitability of their equipment.
The Company's Driver Incentive Management System allows
experienced drivers to earn higher compensation than prevailing
industry wages. The Company provides incentive programs for its
drivers based on number of miles driven, fuel efficiency, safety
record and profitability. OTR considers each tractor and its driver
to be a separate profit center, with profit center reports,
including the actual revenue and expense of the equipment and fixed
expense components for administration, taxes and depreciation,
generated monthly. Under the Company's "profit center" program, on
a quarterly basis, a distribution approved by management is
distributed to the drivers based on the profitability of their
respective profit centers. The program is designed to give OTR's
drivers the incentive to improve their individual productivity,
minimize costs and thereby increase overall Company profitability.
Driver recruitment and retention is essential to the maintenance
of high equipment utilization, particularly during periods of rapid
fleet growth. OTR's drivers are given recruiting bonuses for the
referral of new drivers to the Company. In order to attract and
retain highly qualified drivers and to promote safe operations, the
Company purchases premium quality tractors and equips the tractors
with optimal comfort and safety features, such as on-board satellite
communications, high quality interiors, power steering, automatic
braking systems, engine brakes and oversized sleepers. As a result
of management's attention to driver retention, the Company's driver
turnover rate was 75% in 1999, which management believes to be below
the industry average.
At December 31, 1999, the Company's ratio of tractors to non-
driving employees was 4.78 to one, which management believes is well
above industry standards. At February 29, 2000, the Company had 624
employees, of whom 503 were drivers and 121 were management and
administrative personnel. At February 29, 2000, the Company also
had contracts with independent contractors (owner-operators) for the
services of 97 tractors that provide both a tractor and a qualified
driver. The Company's employees are not represented by a collective
bargaining unit. Employees may participate in OTR's 401(k) program
and in Company-sponsored health, life and dental plans. The Company
does not have any employees who are receiving post retirement
benefits and does not anticipate offering any post retirement
benefits in the future. Management considers relations with its
employees to be very good.
In 1997, the Company began contracting with owner-operators to
haul freight for the Company's customers. The Company recognizes
that carefully selected owner-operators complement its company
drivers. Owner-operators supply their own tractor and driver, and
are responsible for their operating expenses. Because owner-
operators provide their own tractors, less capital is required from
the company for growth and they provide the Company with another
source of drivers to support its growth. The Company expects to
continue to recruit owner-operators, as well as company drivers.
Revenue Equipment
The Company believes that a key to the successful retention of
drivers is the use of standardized, fuel efficient, late-model
tractors and trailers. The Company purchases all new tractors,
primarily with driver comfort, fuel efficiency, safety and overall
economy in mind. To recruit and retain high-quality drivers, all
the tractors owned by the Company have deluxe interiors and
oversized sleepers. The average age of OTR's tractors and trailers
at December 31, 1999 was 1.4 years and 2.9 years, respectively. The
Company plans its trade cycle based on engine warranties and
routinely replaces its tractors after forty to forty-five months of
use (approximately 450,000 miles).
At December 31, 1999 the Company owned 271 Navistar tractors and
234 Peterbilt tractors. The tractors include engines which are
fully electronic and manufactured by Detroit Diesel and Caterpillar.
Trailers in the fleet at year-end were manufactured by Pines,
Utility, Stoughton and Trailmobile. All of the Company's trailers
have a 110 inch inside and are 102 inches wide, the maximum width
generally allowed by law. The trailer fleet at December 31, 1999
included 797 fifty-three foot trailers and 265 forty-eight foot
trailers. The Company owns only dry van trailers.
The following table shows the age of Company-owned equipment in
service at December 31, 1999.
Acquisition Year Tractors Trailers
1999 261 20
1998 84 280
1997 150 292
1996 10 205
1995 - 130
1994 - 120
1993 - 15
Total 505 1,062
The Company's preventive maintenance program focuses on early
diagnosis of problems and contracting maintenance out to third-party
providers. In addition to annual Department of Transportation
("DOT") inspections, tractors are inspected when they pass through
the Company's diagnostic facilities at its headquarters. Almost all
tractors are still under warranty and are generally traded in before
their engine warranties expire. The exclusive use of third-party
maintenance providers, coupled with the effective utilization of
manufacturers' warranties and the Company's trade-in policy, allows
the Company to minimize its maintenance costs. Owner-operator
tractors are inspected prior to acceptance by the Company for
compliance with operational and safety requirements of the Company
and the Department of Transportation. These tractors are then
periodically inspected, similar to company-owned tractors, to
monitor continued compliance.
Fuel Availability and Cost
The Company actively manages its fuel costs through a five
component fuel management system which incorporates: wholesale
purchasing for the Company's unmanned fuel facilities, mileage pay
rates based upon fuel economy, the "profit center" incentive driver
compensation program, fuel hedging, and equipment specifications.
See "-Drivers and Other Employees."
The Company owns five automated fuel facilities, one located at
the Company's headquarters in Kansas and one each located on major
traffic lanes in Arizona, Ohio, Texas and Wyoming. Each of the four
remote unmanned fuel facilities consists of an above-ground fuel
tank, pump and a computer modem linking it directly to the Company's
computers. In 1999, the Company purchased 16.0% of its fuel in bulk
for distribution through its automated fuel facilities. These
facilities allow the Company to purchase fuel at wholesale prices.
As a way to protect the Company against major fuel price
increases, since October 1994 the Company has engaged in a fuel
hedging strategy. Pursuant to this program, the Company buys four-
or-six month call options within ten cents of current market prices,
to buy futures contracts for #2 heating oil, in amounts equal to
approximately 20% of the Company's anticipated fuel purchases for
such period.
All of the Company's tractors have fully electronic engines, which
typically deliver enhanced fuel economy compared to tractors with
mechanically governed engines.
Environmental Matters
The Company's operations are subject to federal, state and local
laws and regulations concerning the environment. There is the
possibility of environmental liability as a result of the Company's
use of fuels, from the fuel storage tanks installed at its fuel
facilities and also from the cargo it may transport. The Company's
only underground storage tanks are two fiberglass tanks installed at
its headquarters facility. One tank was installed in 1988 and the
other in 1995. The tanks have overfill protection hardware, spill
containment manhole covers and leak detection equipment. The
Company believes that the use of above-ground storage tanks at its
remote fuel facilities minimizes both potential liability and the
cost of compliance with environmental regulations. The Company
occasionally transports environmentally hazardous substances in
accordance with hazardous material guidelines. To date, the Company
has experienced no material claims for hazardous substance
shipments. The Company believes that its environmental practices
comply with applicable federal, state and local environmental laws
and regulations. In the event the Company should fail to comply
with applicable regulations, the Company could be subject to
substantial fines or penalties and to civil or criminal liability.
Competition
The truckload industry is extremely competitive and highly
fragmented, with numerous regional,
inter-regional and national truckload carriers, none of which dominates the
market. The Company competes primarily with other long-haul truckload
carriers, rail-truck intermodal transportation, railroads and, to a lesser
degree, with less-than-truckload ("LTL") carriers. Most of OTR's larger
truckload competitors utilize "core carrier" or "lane density"
marketing concepts, which emphasize greater individualized service
to a smaller number of shippers. Many long haul truck load carriers
utilize driver teams which allow them to provide expedited service
while complying with DOT regulations concerning driver's duty hours.
OTR's drivers consist principally of single drivers. Intermodal
transportation and railroads typically have created downward
pressure on the truckload industry's pricing structure. The Company
competes for freight based primarily on freight rates, service and
reliability.
Seasonality
Seasonality causes variations in the operations of the Company as
well as industry-wide operations. Demand for the Company's service
is generally the highest during the summer and fall months.
Historically, expenses are greater during the winter months when
fuel costs are generally higher and fuel efficiency is lower.
Governmental Regulation
The Company is a contract and common motor carrier subject to the
authority of federal and state agencies. These regulatory
authorities have broad powers, but the rates and charges of the
Company are not directly regulated by these authorities. OTR, as
primarily a contract carrier, negotiates competitive rates directly
with its customers as opposed to adhering to scheduled tariffs.
The trucking industry is subject to regulatory and legislative
changes such as increasingly stringent environmental regulations and
limits on weight and size that can affect the economics of the
industry by requiring changes in operating practices or influencing
the demand for, and the costs of providing, services to shippers.
In August 1994, the Federal Aviation Administration Authorization
Act of 1994 (the "1994 FAA Act") became law. Effective January 1,
1995, the 1994 FAA Act preempted certain state and local laws
regulating the prices, routes or services of motor carriers (other
than household carriers). State agencies may continue to impose
tax, license, bonding and insurance requirements. The 1994 FAA Act
does not limit the authority of a state or other political
subdivision to impose safety regulations or highway route
limitations or controls based on the size or weight of the motor
vehicle, the hazardous nature of cargo being transported by motor
vehicles or minimum financial responsibility requirements relating
to insurance and self-insurance authorization.
The Negotiated Rates Act of 1993 ("NRA"), in tandem with the
Trucking Industry Regulatory Reform Act of 1994 ("TIRRA"), further
redefined the regulatory structure applicable to interstate
transportation of goods. The NRA provided further regulation
governing interstate transportation, including prohibitions on off-
bill discounting, certain re-regulation of contract shipping
arrangements, and, with respect to common carriers, regulation
regarding the collection of undercharge claims, and applicable
defenses and exceptions to such claims. The TIRRA further
deregulated the trucking industry by partially repealing the "filed-
rate" doctrine previously applicable to common carriers. Under the
TIRRA, while collectively-made bureau rates must still be published
in tariffs, individually negotiated rates are not.
The Company's drivers must be licensed as "commercial drivers"
pursuant to requirements established by the Federal Highway
Administration ("FHA") of the DOT. In addition to the knowledge and
driving skills tests required to obtain a commercial driver's
license (a "CDL"), there are various disqualifying offenses set
forth in the FHA rules, which, if committed, could result in
suspension or termination of the operator's CDL, as well as
potential civil or criminal liabilities. Also, DOT regulations
impose mandatory drug testing of drivers and the Company has
its own ongoing drug-testing program. DOT alcohol testing rules require
certain tests for alcohol levels in drivers and other safety
personnel.
Motor carrier operations are also subject to safety, equipment and
operators' hours of service requirements prescribed by the DOT. The
Company currently has a satisfactory rating from the DOT based upon
the DOT's most recent audit of the Company.
Safety
The Company maintains a program for training and supervising
personnel to keep safety awareness at its highest level. The
emphasis on safety begins in the hiring and training process. A
minimum of 2.0 years of over-the-road driving experience is required
for new company drivers. OTR also verifies the driving records of
all new drivers before they begin employment. Prospective employees
are given physical examinations and drug tests, and newly hired
drivers are trained in the Company's safety procedures. In
general, any driver who violates the Company's safety standards will receive
a warning letter, and any driver who has more than two such violations
within certain periods of time is subject to termination. The Company
continuously monitors driver performance and has final authority regarding
employment and retention of drivers. OTR currently has a
"satisfactory" safety and fitness rating from the DOT. See "-Governmental
Regulation."
Item 2. Properties.
The Company owns real estate in Olathe, Kansas, where the Company
is headquartered. The property includes a 22,000 square foot office
facility and a 9,400 square foot diagnostic and inspection facility.
The property also includes approximately 258,000 square feet of
parking space and the Kansas fuel facility. Additionally, the
Company owns tracts, each approximately one acre in size, in
Arizona, Ohio, Texas and Wyoming, on which its remote fuel
facilities are located. See "Item 1 Fuel-Availability and Cost."
Item 3. Legal Proceedings.
The Company is routinely a party to litigation incidental to its
business, primarily involving claims for personal injuries and
property damage incurred in the transportation of freight. The
Company believes that all litigation in which the Company is
currently involved is covered by the Company's liability insurance
(personal injury, physical damage and cargo) or workers'
compensation insurance. The Company believes the ultimate outcome
of current litigation will not have a material adverse effect on its
financial position or results of operations.
The Company maintains liability insurance (including umbrella
coverage) in the amount of $10 million per occurrence for personal
injury, property damage and cargo. Under the terms of the policy,
the Company retains the first $50,000 of losses paid and loss
adjusting expense. The Company is self-insured for workers'
compensation insurance. The Company is responsible for claims up to
$250,000 per occurrence and $900,000 aggregate per year. The
Company carries excess insurance to cover losses over $250,000,
subject to a maximum coverage of $5 million per occurrence.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
The information required by this Item is incorporated by reference
from the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1999, under the caption "Price Range of Stock."
Item 6. Selected Financial Data.
The information required by this Item is incorporated by reference
from the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1999, under the caption "Financial Highlights."
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The information required by this Item is incorporated by reference
from the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1999 under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
Item 8. Financial Statements and Supplementary Data.
Index to Financial Statements
The information required by this Item is incorporated by reference
from the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1999 under the caption "Financial Statements" and
"Quarterly Financial Data."
Annual Report Page
Report of Independent Public Accountants 11
Balance Sheets 12
Statements of Operations 13
Statements of Stockholders' Equity 14
Statements of Cash Flows 15
Notes to Financial Statements 16
Supplemental Financial Information 24
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information required by this Item is incorporated by reference
from the Company's definitive Proxy Statement dated March 30, 2000
under the headings "Proposal One: Election of Class B Directors-
Nominees," "The Board of Directors-Continuing Directors," "Executive
Officers-Information About Other Executive Officers" and
"Miscellaneous-Section 16 Reporting" to be filed with the Commission
not later than 120 days after the end of the fiscal year covered by
this Form 10-K.
Item 11. Executive Compensation.
The information required by this Item is incorporated by reference
from the Company's definitive Proxy Statement under the heading
"Executive Compensation and Other Information" to be filed with the
Commission not later than 120 days after the end of the fiscal year
covered by this Form 10-K.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information required by this Item is incorporated by reference
from the Company's definitive Proxy Statement dated March 30, 2000
under the heading "Stock Ownership of Certain Beneficial Owners and
Management" to be filed with the Commission not later than 120 days
after the end of the fiscal year covered by this Form 10-K.
Item 13. Certain Relationships and Related Transactions.
The information required by this Item is incorporated by reference
from the Company's definitive Proxy Statement dated March 30, 2000
under the heading "Certain Relationships and Other Transactions" to
be filed with the Commission not later than 120 days after the end
of the fiscal year covered by this Form 10-K.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) List of documents filed as part of this Report on Form 10-K.
(1) Financial Statements
All financial statements of the Registrant as set forth
under Item 8 of this Report on Form 10-K.
(2) Financial Statement Schedules
Page of
Schedule Number Description 1999 10-K
II Valuation and Qualifying Accounts 16
The report of the Registrant's independent public accountants with
respect to the above listed financial statements and financial
statement schedules appears on page 15 of this Annual Report on Form
10-K.
All other financial statement schedules not listed above have
been omitted since the required information is included in the
financial statements or the notes thereto, or is not applicable or
required.
(b) Reports on Form 8-K
No reports on Form 8-K were filed for the year ended December 31,
1999.
Exhibits
Exhibit Page Number or Incorporation
Number Description By Reference To
3(a)(1) Articles of Incorporation, as amended Exhibit 3(a) to Annual Report
prior to July 10, 1998 for the year ended Dec 31,
1994 on Form 10-K (SEC File
No. 1-19773)
3(a)(2) Amendment to Articles of Incorporation, Exhibit 3(a)(2) to Annual
filed July 13, 1998 Report for the year ended
Dec 31, 1998 on Form 10-K
(SEC File No. 1-19773)
3(b) Restated By-Laws Exhibit 3(b) to Annual Report
for the year ended Dec 31,
1995 on Form 10-K (SEC File
No. 1-19773)
4 The Registrant, by signing this Report,
agrees to furnish the Securities and
Exchange Commission, upon its request,
a copy of any instrument which defines
the rights of holders of long-term debt
of the Registrant.
4(a) Specimen Common Stock Certificate Exhibit 4(a) to Amendment No.
1 to Registration Statement
on Form S-18(SEC File No.
33-44422FW)
10(a) 1991 Incentive Stock Option Plan of Exhibit 10(a) to Registration
OTR Express, Inc. Statement on Form S-18 (SEC
File No. 33-44422FW)
10(b) Mortgage note dated January 10, 1995 Exhibit 10(xx) to Annual
between Registrant and Report for the year ended
Toni J. Waggoner and Robert E. Dec 31, 1994 on Form
Waggoner , as Trustees 10-K (SEC File No. 1-19773)
10(c) OTR Express, Inc. 1996 Stock Option Exhibit 10(bbb) to Annual
Plan Report for the year ended
Dec 31, 1995 on Form 10-K
(SEC File No. 1-19773)
10(d) OTR Express, Inc. 1996 Directors' Exhibit 10(ccc) to Annual
Stock Option Plan Report for the year ended
Dec 31, 1995 on Form 10-K
(SEC File No. 1-19773)
10(e) Loan and Security Agreement dated Exhibit 10(ddd) to Quarterly
June 11, 1997 between Report for the period ended
Registrant and HSBC June 30, 1997 on Form
10-Q (SEC File No. 1-19773)
10(f) Guaranty Agreement dated February 27, Exhibit 10(q) to Quarterly
1998 between Registrant and Report for the period ended
HSBC Business Loans, Inc.- Steven W. March 31, 1998 on Form
Ruben 10-Q (SEC File No. 1-19773)
10(g) Stock Purchase Assistance Agreement Exhibit 10(s)to Quarterly
dated February 27, 1998 between the Report for the period ended
Registrant and Steven W. Ruben March 31, 1998 on Form 10-Q
(SEC File No. 1-19773)
10(h) Guaranty Agreement dated June 8, 1998 Exhibit 10(t) to Quarterly
between Registrant and Report for the period ended
HSBC Business Loans, Inc.- Jeffrey T. June 30, 1998 on Form 10-Q
Brown (SEC File No. 1-19773)
10(i) Stock Purchase Assistance Agreement Exhibit 10(v) to Quarterly
dated June 8, 1998 between the Report for the period ended
Registrant and Jeffrey T. Brown June 30, 1998 on Form 10-Q
(SEC File No. 1-19773)
10(j) Contract to Purchase Tractors in 1999 Exhibit 10(v) to Quarterly
between Registrant and Kansas Report for the period ended
City Peterbilt March 31,1999 on Form 10-Q
(SEC File No. 1-19773)
10(k) Contract to Purchase Tractors in 1999 Exhibit 13(b) to Annual
between Registrant and KCR Report for the year ended
International Trucks, Inc. December 31, 1998 on Form
10-K/A (SEC File No.
1-19773)
10(l) Form of Carrier/Shipper Transportation Page 17 of sequentially
Contract* numbered pages
10(m) Amended Loan and Security Agreement dated Page 21 of sequentially
February 24, 2000 between Registrant and numbered pages
HSBC*
11 Statement re: Computation of Earnings Page 26 of sequentially
per Share* numbered pages
13(a) Annual Report to Stockholders for the Exhibit 13(b) to Annual
year ended December 31, 1998 Report for the year ended
December 31, 1998 on
Form 10-K (SEC File No.
1-19773)
13(b) Annual Report to Stockholders for the Page 27 of sequentially
year ended December 31, 1999* numbered pages
23 Consent of Arthur Andersen LLP* Page 55 of sequentially
numbered pages
* Filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registration has duly caused
this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
OTR EXPRESS, INC.
Date: March 27, 2000 /s/ WILLIAM P. WARD
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signature Title Date
/s/ WILLIAM P. WARD President, Principal Executive March 27, 2000
William P. Ward Officer and Chairman of the
Board
/s/ JANICE K. WARD Vice President and Director March 27,2000
Janice K. Ward
/s/ STEVEN W. RUBEN Vice President Finance March 27, 2000
Steven W. Ruben Principal Financial Officer and
Principal Accounting Officer
/s/ CHRISTINE D. SCHOWENGERDT Treasurer and Secretary March 27, 2000
Christine D. Schowengerdt
/s/ JAMES P. ANTHONY Director March 27, 2000
James P. Anthony
/s/ DEAN W. GRAVES Director March 27, 2000
Dean W. Graves
/s/ RALPH E. MACNAUGHTON Director March 27, 2000
Ralph E. MacNaughton
/s/ TERRY G. CHRISTENBERRY Director March 27, 2000
Terry G. Christenberry
/s/ CHARLES M. FOUDREE Director March 27, 2000
Charles M. Foudree
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SCHEDULES
To the Board of Directors and Stockholders of OTR Express, Inc.:
We have audited in accordance with generally accepted auditing
standards, the financial statements included in OTR Express, Inc.'s
annual report to stockholders incorporated by reference in this Form
10-K, and have issued our report thereon dated February 24, 2000.
Our audits were made for the purpose of forming an opinion on those
statements taken as a whole. Schedule II-Valuation and Qualifying
Accounts is the responsibility of the company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not a part of the basic financial
statements. This schedule has been subjected to the auditing
procedures applied in our audit of the basic financial statements,
and, in our opinion, fairly states in all material respects, the
financial data required to be set forth therein in relation to the
basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Kansas City, Missouri
February 24, 2000
Schedule II
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Balance at Additions Balance
Beginning Charged to at End
of Year Expense Deductions of Year
Allowance for doubtful
accounts
1997 57,016 115,522 71,415 101,123
1998 101,123 47,648 71,368 77,403
1999 77,403 141,485 32,668 186,220
CORPORATE INFORMATION
Corporate Offices Common Stock Listing
OTR Express, Inc. OTR Express, Inc's common
804 N. Meadowbrook Drive stock trades on The American
Olathe, Kansas 66062 Stock Exchange under the
(913) 829-1616 symbol OTR
Mailing address:
PO Box 2819
Olathe, Kansas 66063-0819