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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8- K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: November 1, 1999
(Date of earliest event reported)
Commission file number 0-19858
USA TRUCK, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 71-0556971
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3200 INDUSTRIAL PARK ROAD
VAN BUREN, ARKANSAS 72956
(Address of principal executive offices) (Zip Code)
(501) 471-2500
Registrant's telephone number, including area code
Not applicable
Former name, address and former fiscal year, if changed since last report.
The undersigned registrant hereby amends the following item, financial
statements, exhibits or other portions of its Form 8-K dated November 15, 1999
as set forth in the pages attached hereto:
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Item 7. Financial Statements and Exhibits
Page
----
(a) Financial statements of businesses being acquired:
Carco Carrier Corporation
Independent Auditors Report 3
Balance Sheets as of December 31, 1998 and 1997 4
Statements of Operations for the Years ended December 31, 1998 and 1997 5
Statements of Retained Earnings for the Years Ended December 31, 1998 and 1997 6
Statements of Cash Flows for the year ended December 31, 1998 and 1997 7
Notes to Financial Statements 8
(b) Pro forma consolidated financial information: 18
USA Truck, Inc.
Pro Forma Condensed Balance Sheet as of September 30, 1999 (Unaudited) 19
Pro Forma Condensed Statement of Operations for the Nine Months
ended September 30, 1999 (Unaudited) 20
Notes to Pro Forma Condensed Financial Statements (Unaudited) 21
(c) Exhibits:
23.1 Consent of Beall Barclay and Company, PLC 22
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
USA Truck, Inc.
Dated: January 14, 2000 By: /s/ Jerry D. Orler
---------------------------------
Jerry D. Orler
Vice President, Finance and
Chief Financial Officer
USA Truck, Inc.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
INDEPENDENT AUDITORS' REPORT
Board of Directors
Carco Carrier Corporation
Fort Smith, Arkansas
We have audited the accompanying balance sheets of CARCO CARRIER CORPORATION
(the "Corporation") as of December 31, 1998 and 1997, and the related statements
of operations, retained earnings, and cash flows for the years then ended. These
financial statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as 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 financial position of CARCO CARRIER CORPORATION at
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
As discussed in Note 7 to the financial statements, the Corporation is part of
an affiliated group of companies and has entered into transactions with the
group members.
As discussed in Note 11 to the financial statements, on November 1, 1999, the
Corporation's assets and operations were sold to another trucking company.
/s/ Beall Barclay & Company, PLC
--------------------------------------
BEALL BARCLAY & COMPANY, PLC
Certified Public Accountants
Fort Smith, Arkansas
November 17, 1999
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CARCO CARRIER CORPORATION
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
1998 1997
------------ ------------
ASSETS
CURRENT ASSETS
Accounts receivable (Note 10) $ 5,729,725 $ 5,510,364
Deferred income taxes (Note 5) 43,255 245,586
Prepaid expenses (Note 2) 364,511 515,863
------------ ------------
Total Current Assets 6,137,491 6,271,813
------------ ------------
PROPERTY AND EQUIPMENT (Notes 4, 7 and 8)
Automobiles 262,718 378,752
Revenue equipment 60,084,193 58,819,022
Service, office and other equipment 117,542 108,603
------------ ------------
60,464,453 59,306,377
Less accumulated depreciation and amortization 26,562,933 26,083,114
------------ ------------
33,901,520 33,223,263
------------ ------------
OTHER ASSETS
Notes receivable - affiliate (Notes 7, 8 and 10) 311,650 311,650
Other 19,016 19,016
------------ ------------
330,666 330,666
------------ ------------
DUE FROM AFFILIATE (Note 7) 1,873,911 2,269,159
------------ ------------
$ 42,243,588 $ 42,094,901
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Bank overdraft $ -- $ 3,563
Due to affiliate (Note 7) 613,582 488,204
Trade accounts payable (Note 7) 1,386,194 998,954
Accrued expenses (Note 3) 2,849,219 2,875,807
Current maturities of long-term debt (Notes 4 and 8) 9,088,388 9,056,079
Other 27,014 72,279
------------ ------------
Total Current Liabilities 13,964,397 13,494,886
------------ ------------
LONG-TERM DEBT, LESS CURRENT MATURITIES
(Notes 4 and 8) 19,029,353 18,223,516
------------ ------------
DEFERRED INCOME TAXES (Note 5) 7,061,350 7,126,970
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDER'S EQUITY
Common stock, $.10 par value; 200,000 shares authorized,
issued and outstanding 20,000 20,000
Additional paid-in capital 2,137,309 2,137,309
Retained earnings 31,179 1,092,220
------------ ------------
2,188,488 3,249,529
------------ ------------
$ 42,243,588 $ 42,094,901
============ ============
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CARCO CARRIER CORPORATION
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
------------- -------------
OPERATING REVENUES $ 66,721,200 $ 66,450,292
------------- -------------
OPERATING EXPENSES
Salaries, wages and employee benefits (Note 6) 19,690,601 19,689,933
Operations and maintenance (Note 7) 29,926,675 29,269,013
Operating taxes and licenses 1,595,908 1,399,414
Insurance and claims 4,223,896 3,945,667
Communications and utilities 478,782 548,001
Depreciation and amortization 8,295,646 8,278,704
Other 1,494,445 1,257,171
------------- -------------
65,705,953 64,387,903
------------- -------------
OPERATING INCOME 1,015,247 2,062,389
------------- -------------
OTHER INCOME (EXPENSES)
Interest income 23,318 5,242
Interest expense (2,277,270) (2,227,039)
Gain on disposal of assets 430,845 81,599
Other, net (20,391) (74,261)
------------- -------------
(1,843,498) (2,214,459)
------------- -------------
(LOSS) BEFORE PROVISION FOR INCOME TAXES (828,251) (152,070)
PROVISION FOR INCOME TAXES (Note 5)
Current 96,079 53,348
Deferred 136,711 445,984
------------- -------------
232,790 499,332
------------- -------------
NET (LOSS) $ (1,061,041) $ (651,402)
============= =============
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CARCO CARRIER CORPORATION
STATEMENTS OF RETAINED EARNINGS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
BALANCE, BEGINNING OF YEAR $ 1,092,220 $ 1,743,622
NET (LOSS) (1,061,041) (651,402)
------------- -------------
BALANCE, END OF YEAR $ 31,179 $ 1,092,220
============= =============
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CARCO CARRIER CORPORATION
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (1,061,041) $ (651,402)
Adjustments to reconcile net (loss) to net cash from
operating activities
Depreciation and amortization 8,295,646 8,278,704
Deferred income taxes 136,711 445,984
Gain on disposal of assets (430,845) (81,599)
Changes in:
Accounts receivable (219,361) 1,553,413
Inventories, prepaid expenses and other current assets 151,352 (175,888)
Bank overdrafts, due to affiliate, trade accounts payable,
accrued expenses and other liabilities 437,202 (347,566)
------------- -------------
Net Cash From Operating Activities 7,309,664 9,021,646
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Repayments of notes receivable 573,230 443,000
Purchases of property and equipment (8,903,938) (2,696,783)
Proceeds from sale of equipment 3,432,481 453,269
Net change in due from (to) affiliate 395,248 (23,996)
------------- -------------
Net Cash (Used For) Investing Activities (4,502,979) (1,824,510)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under long-term debt 8,807,545 2,610,453
Principal payments on long-term debt (11,614,230) (9,851,596)
------------- -------------
Net Cash (Used For) Financing Activities (2,806,685) (7,241,143)
------------- -------------
NET CHANGE IN CASH -- (44,007)
CASH, BEGINNING OF YEAR -- 44,007
------------- -------------
CASH, END OF YEAR $ -- $ --
============= =============
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CARCO CARRIER CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Carco Carrier Corporation (the "Corporation"), formerly CCC Express, Inc., is an
irregular route, common, and contract motor carrier operating under the
jurisdiction of various regulatory commissions within the continental United
States.
The Corporation is a subsidiary of Carco Capital Corporation (Capital), which is
a holding company with no operations other than the management of its
subsidiaries. Other subsidiaries of Capital are Carco Rentals, Inc. (Rentals)
and Carco Carriage Corporation (Carriage). Rentals provides trucks and trailers
to lease and rental customers whose operations are located throughout the
continental United States. Carriage provides cars to rental customers from its
operating locations throughout Arkansas.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation on property and equipment
is computed using the straight-line and declining balance methods over the
estimated useful lives of the assets which range from three to twenty years.
UNCOLLECTIBLE ACCOUNTS
Uncollectible accounts receivable are charged directly against earnings when
they are determined to be uncollectible. Use of this method does not result in a
material difference from the valuation method required by generally accepted
accounting principles.
INCOME TAXES
Deferred income taxes are calculated for certain transactions and events because
of differing treatments under generally accepted accounting principles and the
currently enacted tax laws of the Federal government. The results of these
differences on a cumulative basis, known as temporary differences, result in the
recognition and measurement of deferred tax assets and liabilities in the
accompanying balance sheets. See Note 5 below for further details.
Capital and its subsidiaries file consolidated Federal and state income tax
returns. The Corporation provides for income taxes on a separate-return basis.
See Note 5 below for further details.
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CARCO CARRIER CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
FREIGHT REVENUE
Freight revenue is recognized at the date a shipment is delivered to the
customer. Expenses relating to a shipment are accrued when the related revenue
is recognized.
EMPLOYEE BENEFIT PLANS
Capital provides a 401(k) plan which covers substantially all employees of the
Corporation who are eligible as to age and length of service. For further
details relating to the 401(k) plan, see Note 6.
Capital had a noncontributory defined benefit plan covering substantially all of
the Corporation's employees which was terminated on June 30, 1997. The policy of
Capital was to accrue pension costs in accordance with Statement of Financial
Accounting Standards No. 87, Employers' Accounting for Pensions (SFAS 87) and to
fund such pension costs in accordance with contributory guidelines established
by the Employee Retirement Income Security Act of 1974, as amended. For further
details relating to the pension plan, see Note 6.
CASH EQUIVALENTS
For purposes of the Statements of Cash Flows, the Corporation considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents. At December 31, 1998 and 1997, the Corporation had no
cash equivalents.
ADVERTISING AND PROMOTIONS
The Corporation follows the policy of charging advertising and promotions to
expense as incurred.
NOTE 2: PREPAID EXPENSES
Prepaid expenses consist of the following at December 31:
1998 1997
Prepaid licenses and taxes $ 58,121 $ 89,485
Prepaid insurance 299,740 413,289
Other, net 6,650 13,089
-------- --------
$364,511 $515,863
======== ========
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CARCO CARRIER CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 3: ACCRUED EXPENSES
Accrued expenses consist of the following at December 31:
1998 1997
Salaries, wages and employee benefits $ 499,015 $ 317,716
Insurance and claims accruals 2,148,470 2,298,077
Other 201,734 260,014
------------ ------------
$ 2,849,219 $ 2,875,807
============ ============
NOTE 4: LONG-TERM DEBT
Long-term debt consists of the following at December 31:
1998 1997
Notes payable to First National Bank of Fort Smith, Arkansas, collateralized by
revenue equipment, due in varying monthly installments, plus interest at prime
rate (6.80% at December 31, 1998), maturing through 2002 $ 323,729 $ 581,833
Notes payable to First Commercial Bank of Little Rock, Arkansas, collateralized
by automobiles and revenue equipment, due in varying monthly installments, plus
interest at variable rates (8.50% at December 31, 1997) -- 16,707
Notes payable to Bank One, collateralized by revenue equipment, due in varying
monthly installments, plus interest at variable rates (7.45% - 7.75% at
December 31, 1998), maturing through 2002 753,285 1,623,330
Notes payable to NationsBanc Leasing, collateralized by revenue equipment, due
in varying monthly installments, plus interest at variable rates (7.36% at
December 31, 1998), maturing through 2001 1,129,344 2,222,668
Notes payable to Navistar Financial Corporation, collateralized by revenue
equipment, due in varying monthly installments, plus interest at fixed rates
varying from 6.75% - 7.95%, maturing through 2004 8,336,192 8,211,383
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CARCO CARRIER CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 4: LONG-TERM DEBT - CONTINUED
1998 1997
Notes payable to Associates Commercial Corporation,
collateralized by revenue equipment, due in varying
monthly installments, plus interest at 7.25% -- 581,036
Notes payable to BancBoston Leasing, collateralized by revenue equipment, due
in varying monthly installments, plus interest at fixed rates varying from
6.50% - 7.67%, maturing through 2001 3,027,893 5,044,366
Notes payable to GE Capital Corporation, collateralized by revenue equipment,
due in monthly installments, plus interest at variable rates (6.64% - 7.14% at
December 31, 1998), maturing through 2005 8,303,624 7,000,453
Note payable to Compass Bank, collateralized by revenue equipment, due in
monthly installments, plus interest rate up to 180 day LIBOR plus 1.5% (6.62%
to 7.12% at December 31, 1998), maturing through 2001 1,465,640 1,997,819
Note payable to Mellon US Leasing, collateralized
by revenue equipment, due in varying monthly
installments, plus interest at 6.72%, maturing through 2003 4,778,034
--------------- --------------
28,117,741 27,279,595
Less current maturities 9,088,388 9,056,079
--------------- --------------
$ 19,029,353 $ 18,223,516
=============== ==============
Long-term debt maturities for each of the next five years and thereafter are as
follows:
1999 $ 9,088,388
2000 8,417,145
2001 5,317,882
2002 3,209,267
2003 1,305,631
Thereafter 779,428
-----------------
$ 28,117,741
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CARCO CARRIER CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 4: LONG-TERM DEBT - CONTINUED
Interest paid during 1998 and 1997 amounted to $2,270,542 and $2,273,189,
respectively.
The Corporation has lines of credit in the following amounts with the following
entities, some of which have related notes payable outstanding at December 31,
1998:
First National Bank $ 4,500,000
Bank One 753,285
Mellon US Leasing 5,500,000
Navistar Financial Corporation 20,000,000
-------------
30,753,285
Less outstanding notes payable 14,191,240
-------------
Available lines of credit $ 16,562,045
=============
The line of credit with Bank One permits borrowings limited to the depreciated
cost of the revenue equipment held as collateral by Bank One. The line of credit
with Navistar Financial Corporation permits borrowings of $20,000,000. Both
lines of credit have financial covenants related to net worth, debt to equity
and cash flow determined for the consolidated group. The consolidated group was
in compliance with these covenants at December 31, 1998.
NOTE 5: INCOME TAXES
PROVISION FOR INCOME TAXES
All income taxes for Capital and its subsidiaries are paid by one of the other
subsidiaries. The Corporation is allocated its share of income taxes through the
"due from (to) affiliate".
Included in the current portion of the provision for income taxes are state
income taxes of $95,117 and $20,515, respectively, for the years ended December
31, 1998 and 1997.
The reasons for the difference between the Federal statutory rate and the
effective income tax rate for the years ended December 31, 1998 and 1997 are as
follows:
1998 1997
Income tax at 34% statutory federal rate $ (281,606) $ (51,704)
Federal income tax effects of:
State income taxes 62,778 13,540
Nondeductible expenses 451,234 531,590
Other 384 5,906
------------ ------------
Total income tax expense $ 232,790 $ 499,332
============ ============
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CARCO CARRIER CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 5: INCOME TAXES - CONTINUED
DEFERRED INCOME TAXES
The net current deferred tax asset included in the accompanying balance sheets
includes the following amounts of deferred tax assets and liabilities:
1998 1997
Deferred Tax Asset - Current $ 43,255 $ 245,586
Deferred Tax Liability - Current -- --
---------- ----------
$ 43,255 $ 245,586
========== ==========
The net non-current deferred tax liability included in the accompanying balance
sheets includes the following amounts of deferred tax assets and liabilities:
1998 1997
Deferred Tax Asset - Non-current $ 1,716,310 $ 2,060,638
Deferred Tax Liability - Non-current (8,777,660) (9,187,608)
------------- -------------
$ (7,061,350) $ (7,126,970)
============= =============
The deferred tax assets results from alternative minimum tax credit (AMT)
carryforwards and investment tax credit (ITC) carryforwards. The ITC
carryforwards were $-0- and $416,382, respectively, at December 31, 1998 and
1997. The AMT credit carryforwards were $1,759,565 and $1,889,842, respectively,
at December 31, 1998 and 1997.
The deferred tax liability results from the use of accelerated methods of
depreciation of property and equipment for tax purposes.
NOTE 6: EMPLOYEE BENEFIT PLANS
As of June 30, 1997, Capital elected to terminate its pension plan (see detail
below) and replace it with a 401(k) plan. In early 1998, all participant
accounts were rolled over into the new 401(k) plan. The 401(k) plan allows for
contributions by employees as well as the Corporation and covers substantially
all of the Corporation's employees. The Corporation matches one-half of the
first 4.0% of employees' contributions. The Corporation may also make
discretionary contributions to the plan. These contributions will be distributed
to all employees with at least one hour of service in the plan year, regardless
of the current year elective contribution. Contributions totaled $99,196 for the
year ended December 31, 1998.
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CARCO CARRIER CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 6: EMPLOYEE BENEFIT PLANS - CONTINUED
The components of pension cost for the entire plan, which includes the
Corporation, for the year ended December 31, 1997, as determined by the plan's
actuary, were as follows:
Service cost - benefits earned during the period $ --
Interest cost on projected benefit obligation 111,000
Actual return on plan assets (187,000)
Net amortization and deferral (37,000)
----------
Net pension cost $ (113,000)
==========
The funded status of the entire plan, which includes the Corporation, at
December 31, 1997, was as follows:
Actuarial present value of accumulated pension plan benefits:
Vested $ 1,654,000
Nonvested --
-------------
Accumulated benefit obligation 1,654,000
Effects of projected future compensation levels --
-------------
Projected benefit obligation 1,654,000
Plan assets at fair value 3,209,000
-------------
Plan assets greater than projected benefit obligation 1,555,000
Unrecognized prior service credit (405,000)
Unrecognized transition assets (92,000)
Unrecognized net gain (583,000)
-------------
Prepaid pension cost $ 475,000
=============
The assets of the plan consisted primarily of equity mutual funds and
nongovernment fixed income securities.
The weighted average discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the projected benefit
obligation was 7.0% and 4.5%, respectively. The expected long-term rate of
return on assets was 7.0%.
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CARCO CARRIER CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 7: RELATED PARTY TRANSACTIONS
At December 31, 1998 and 1997, the Corporation had trade accounts payable of
$89,574 and $174,886, respectively, due to another member of the consolidated
group.
During the years ended December 31, 1998 and 1997, the Corporation had notes
receivable from an affiliated company, of which Capital's president and majority
stockholder owns 50 percent of the common stock, amounting to $311,650 in each
year.
During the years ended December 31, 1998 and 1997, the Corporation and Rentals
purchased revenue equipment and various repair parts and supplies totaling
approximately $10,922,000 and $1,840,500, respectively, from the same affiliated
company. During the years ended December 31, 1998 and 1997, the Corporation sold
used revenue equipment for $573,230 and $50,500, respectively, and traded
revenue equipment with a book value of approximately $33,000 during the year
ended December 31, 1998, to the same affiliated company.
The Corporation leases facilities from an affiliated company which is owned by
Capital's president and majority stockholder.
Due from (to) affiliate represents non-interest bearing amounts receivable from
and/or payable to companies included in the consolidated group. These result
primarily from the allocation of expenses, such as salaries, rent, computer
operations, licenses and taxes, and income taxes, between the companies of the
consolidated group. There are no structured payment terms.
The majority of the Corporation's cash is swept daily into a common bank account
of the consolidated group. As of December 31, 1998 and 1997, the Corporation was
in an overdraft position as reflected in "Due to affiliate" recorded as a
current liability in the accompanying balance sheets.
NOTE 8: NONCASH INVESTING AND FINANCING ACTIVITIES
Long-term debt of $3,644,831 and $211,525 was incurred when the Corporation
purchased property and equipment during the years ended December 31, 1998 and
1997, respectively.
The Corporation sold used revenue equipment in exchange for notes receivable of
$573,230 and $50,500 during the years ended December 31, 1998 and 1997,
respectively.
The Corporation traded used revenue equipment with a book value of approximately
$33,000 during the year ended December 31, 1998.
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CARCO CARRIER CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 9: COMMITMENTS AND CONTINGENCIES
At December 31, 1998, the Corporation had committed to purchase revenue
equipment at a total cost of approximately $12,921,500 scheduled for delivery in
1999.
At December 31, 1998, the Corporation had unsecured letters of credit of
approximately $2,795,000 outstanding with commercial banks. The letters of
credit were issued to guarantee certain future payments to be made to an
insurance company for claims it may pay on the Corporation's behalf. The
Corporation had no outstanding borrowings associated with these letters of
credit at December 31, 1998.
The Corporation is not a party to any pending legal proceedings which management
believes to be material to the financial condition of the Corporation. The
Corporation maintains liability insurance against risks arising out of the
normal course of its business.
YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. The Corporation
recognizes that the arrival of the year 2000 poses a unique worldwide challenge
to the ability of systems to recognize the date change from December 31, 1999 to
January 1, 2000. The Year 2000 issue could result, at the Corporation and
elsewhere, in system failures or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions or to engage in other normal business activities.
The Corporation has begun, but not yet completed, an analysis of the operational
problems (including loss of revenues) that would be reasonably likely to result
form the failure by the Corporation and certain third parties to complete
efforts necessary to achieve Year 2000 compliance on a timely basis. A
contingency plan has not been developed for dealing with the most reasonably
likely worst case scenario, and such scenario has not yet been clearly
identified. The Corporation does not plan to engage an independent expert to
evaluate its Year 2000 identification, assessment, remediation, and testing
efforts.
It is not possible for any entity to guarantee the results of its own
remediation efforts or to accurately predict the impact of the Year 2000 Issue
on third parties with which the Corporation does business. If remediation
efforts of the Corporation or third parties with which the Corporation does
business are not successful, the Year 2000 problem could have negative effects
on the Corporation's financial condition and results of operations in the near
term.
NOTE 10: CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Corporation to credit risk
consist primarily of accounts receivable and notes receivable. The Corporation
provides its services to customers throughout the United States.
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CARCO CARRIER CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 11: SUBSEQUENT EVENT
Subsequent to December 31, 1998, the Corporation entered into negotiations to
sell its assets and operations. Effective November 1, 1999, substantially all of
the Corporation's assets and operations were sold to another trucking company.
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(b) Pro Forma Financial Information
PRO FORMA CONDENSED FINANCIAL INFORMATION
On November 1, 1999, pursuant to an Asset Purchase Agreement (the "Asset
Purchase Agreement") dated October 31, 1999, USA Truck, Inc. (the "Registrant"),
a Delaware corporation, acquired substantially all the assets of CARCO Carrier
Corporation, an Arkansas corporation, which operated under the name CCC Express,
Inc. ("CCC"), for a purchase price of $35,300,000. The purchase price, which is
subject to certain post-closing adjustments, consisted of (i) a cash payment of
approximately $3.0 million; (ii) the assumption of approximately $6.5 million of
liabilities including equipment notes held by Bank Boston, Mellon U.S. Leasing
and Banc of America Leasing & Capital LLC and (iii) the refinancing with Banc
One Leasing Corporation and Deposit Guaranty National Bank of approximately
$25.8 million in other debt secured by equipment. The cash portion of the
purchase price was paid with available cash and proceeds of borrowings under the
Registrant's credit facilities with Deposit Guaranty National Bank. The Purchase
price was equal to the net book value of CCC on the closing date, as adjusted in
accordance with the Asset Purchase Agreement, plus $2.0 million. In connection
with the acquisition, the Registrant's borrowing limit under its General Line of
Credit with Deposit Guaranty National Bank was increased from $20.0 million to
$35.0 million effective October 28, 1999.
The acquired operations include a fleet of 498 tractors and 1,103 dry van
trailers, which the Registrant will use in its truckload motor carrier business.
The Registrant is, and before the acquisition CCC was, a motor carrier engaged
in common and contract carriage of truckload quantities of general commodities.
The acquisition represents an increase of 43% in the tractor fleet of the
Registrant, which operated 1,149 tractors and 2,266 dry van trailers before the
transaction. As part of the transaction, the Registrant also assumed three
leases for dedicated shop and fuel facilities.
The foregoing is qualified by reference to the Asset Purchase Agreement, the
form of which is filed as an exhibit to this Report and incorporated herein by
reference.
The following unaudited pro forma condensed statement of operations for the nine
months ended September 30, 1999 give effect to the acquisition as if it had
occurred at the beginning of the period presented. The unaudited pro forma
condensed balance sheet as of September 30, 1999 gives effect to the acquisition
as if it had occurred on that date. The unaudited pro forma condensed financial
information shows the combined results of USA Truck, Inc. and CCC Express, Inc.
for the period presented. The pro forma information is presented for
informational purposes only and the results do not purport to be indicative of
what would have occurred had the acquisition been made at the beginning of the
period presented, or of the results which may occur in the future.
18
19
USA TRUCK, INC.
PRO FORMA CONDENSED BALANCE SHEET
SEPTEMBER 30, 1999
(UNAUDITED)
CARCO CARRIER PRO FORMA
USA TRUCK, INC. CORPORATION ADJUSTMENTS PRO FORMA
--------------- --------------- --------------- ---------------
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 1,013,278 $ -- $ -- $ 1,013,278
Trade receivables-net 18,466,321 7,369,098 -- 25,835,419
Other receivables 886,654 -- -- 886,654
Inventories 286,887 -- -- 286,887
Deferred income taxes 1,275,299 463,066 -- 1,738,365
Other current assets 2,333,846 340,805 -- 2,674,651
--------------- --------------- --------------- ---------------
Total Current Assets 24,262,285 8,172,969 -- 32,435,254
Property and equipment-net 100,326,696 32,480,072 2,237,381 135,044,149
Security deposits 739 -- -- 739
Notes receivable - affiliate -- 1,278,208 -- 1,278,208
Other assets 305,194 19,016 -- 324,210
--------------- --------------- --------------- ---------------
100,632,629 33,777,296 2,237,381 136,647,306
Due from affiliate -- 1,113,604 -- 1,113,604
--------------- --------------- --------------- ---------------
$ 124,894,914 $ 43,063,869 $ 2,237,381 $ 170,196,164
=============== =============== =============== ===============
LIABILITIES AND STOCKHOLDER'S EQUITY:
CURRENT LIABILITIES:
Bank drafts payable $ 502,574 $ 324 $ -- $ 502,898
Due to affiliate -- 2,651,717 -- 2,651,717
Trade accounts payable 5,309,982 2,300,093 -- 7,610,075
Accrued expenses 10,508,479 3,730,468 371,772 14,610,719
Current maturities of long-term debt 6,664,511 8,797,650 837,060 16,299,221
Other -- 193,883 193,883
--------------- --------------- --------------- ---------------
Total Current Liabilities 22,985,546 17,674,135 1,208,832 41,868,513
Long-term debt, less current maturities 15,063,242 18,422,802 2,028,116 35,514,160
Deferred income taxes 16,220,958 6,661,761 22,882,719
Other long-term liabilities 2,398,614 -- 2,398,614
Stockholders' equity 68,226,554 305,171 (999,517) 67,532,208
--------------- --------------- --------------- ---------------
$ 124,894,914 $ 43,063,869 $ 2,237,431 $ 170,196,214
=============== =============== =============== ===============
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20
USA TRUCK, INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
CARCO CARRIER PRO FORMA
USA TRUCK, INC. CORPORATION ADJUSTMENTS PRO FORMA
--------------- -------------- -------------- --------------
OPERATING REVENUE $ 114,733,801 $ 50,153,793 $ -- $ 164,887,594
OPERATING EXPENSES:
Salaries, wages and employee benefits 49,136,967 15,736,932 -- 64,873,899
Operations and maintenance 27,826,856 22,462,143 -- 50,288,999
Operating taxes and licenses 2,049,575 1,222,880 -- 3,272,455
Insurance and claims 5,702,704 4,622,973 -- 10,325,677
Communications and utilities 1,412,364 393,723 -- 1,806,087
Depreciation and amortization 12,874,750 6,068,776 627,795 19,571,321
Other 4,220,977 1,267,604 -- 5,488,581
--------------- -------------- -------------- --------------
103,224,193 51,775,031 627,795 155,627,019
--------------- -------------- -------------- --------------
OPERATING INCOME (LOSS) 11,509,608 (1,621,238) (627,795) 9,260,575
OTHER EXPENSES (INCOME):
Interest income -- (45,573) (45,573)
Interest expense 949,658 1,401,835 1,016,148 3,367,641
Gain on disposal of assets (9,758) (308,283) (318,041)
Other, net (35,407) 33,500 (1,907)
--------------- -------------- -------------- --------------
904,493 1,081,479 1,016,148 3,002,120
--------------- -------------- -------------- --------------
INCOME (LOSS) BEFORE INCOME TAXES 10,605,115 (2,702,717) (1,643,943) 6,258,455
PROVISION (BENEFIT) FOR INCOME TAXES 4,157,206 (819,400) (644,426) 2,693,380
--------------- -------------- -------------- --------------
NET INCOME (LOSS) $ 6,447,909 $ (1,883,317) $ (999,517) $ 3,565,075
=============== ============== ============== ==============
BASIC NET INCOME PER SHARE $ 0.69 $ 0.38
AVERAGE SHARES OUTSTANDING (BASIC) 9,369,589 9,369,589
DILUTED NET INCOME PER SHARE $ 0.69 $ 0.38
AVERAGE SHARES OUTSTANDING (DILUTED) 9,408,583 9,408,583
20
21
USA TRUCK, INC.
NOTES TO PRO FORMA CONDENSED STATEMENTS
(unaudited)
Note 1: Transaction Description
On November 1, 1999, the Company completed a purchase of substantially all the
assets of CCC Express, Inc. The purchase price consisted of (i) a cash payment
of approximately $3.0 million; (ii) the assumption of approximately $6.5 million
of liabilities including equipment notes held by Bank Boston, Mellon U.S.
Leasing and Banc of America Leasing & Capital LLC and (iii) the refinancing with
Banc One Leasing Corporation and Deposit Guaranty National Bank of approximately
$25.8 million in other debt secured by equipment. The cash portion of the
purchase price was paid with available cash and proceeds of borrowings under the
Registrant's credit facilities with Deposit Guaranty National Bank. The Purchase
price was equal to the net book value of CCC on the closing date, as adjusted in
accordance with the Asset Purchase Agreement, plus $2.0 million.
Note 2: Purchase Price Allocation and Pro Forma Adjustments
Property and equipment was recorded at fair value resulting in a $2.8 million
increase over historical book value. The pro forma depreciation expense
adjustment reduced property and equipment by $627,798 which is the additional
depreciation resulting from the write-up of book value. Fair value adjustments
to property and equipment were based on results from asset sales contracts for
comparable property and equipment and on third party market value data. The
acquisition is being financed through the assumption of equipment notes and
other secured debt and with available cash and borrowings under the Company's
credit facilities.
The pro forma interest expense adjustment is based on the Company's average
quarterly effective interest rate for the nine month period ending September 30,
1999, which approximates the interest rate available under the Company's
existing credit facilities.
The pro forma income tax expense adjustment is based on an effective federal and
state rate of 39.2%.
(c) Exhibits
21
22
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
23.1 Consent of Beall Barclay & Company, PLC (1)
- ------------------------
(1) Filed herewith.
22