UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
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 72956
VAN BUREN, ARKANSAS (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (479) 471-2500
Securities registered pursuant to Section 12(b)of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of class)
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 such 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. 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 the 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 the voting stock held by nonaffiliates of
the Registrant on March 6, 2002 was $55,250,434 (The characterization of
officers and directors of the Registrant as affiliates for purposes of this
computation should not be construed as an admission for any other purpose that
any such person is in fact an affiliate of the Registrant).
The number of shares outstanding of the Registrant's Common Stock, par
value $ .01, as of March 6, 2002 is 9,311,716.
DOCUMENTS INCORPORATED BY REFERENCE
<Table>
<Caption>
Part of Form 10-K into Which the
Document Document is Incorporated
-------- --------------------------------
Portions of the Proxy Statement to be Part III
sent to stockholders in connection
with 2002 Annual Meeting
</Table>
USA TRUCK, INC.
TABLE OF CONTENTS
<Table>
<Caption>
ITEM NO. CAPTION PAGE
- -------- ------- ----
PART I
1. Business................................................................................. 1
2. Properties............................................................................... 6
3. Legal Proceedings........................................................................ 7
4. Submission of Matters to a Vote of Security Holders...................................... 8
PART II
5. Market for Registrant's Common Equity and Related Stockholder Matters.................... 8
6. Selected Financial Data.................................................................. 9
7. Management's Discussion and Analysis of Financial Condition and Results of Operations.... 10
7A. Quantitative and Qualitative Disclosure about Market Risk................................ 16
8. Financial Statements and Supplementary Data.............................................. 17
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..... 33
PART III
10. Directors and Executive Officers of the Registrant....................................... 33
11. Executive Compensation................................................................... 33
12. Security Ownership of Certain Beneficial Owners and Management........................... 33
13. Certain Relationships and Related Transactions........................................... 33
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.......................... 34
Signatures............................................................................... 37
</Table>
PART I
ITEM 1. BUSINESS
GENERAL
USA Truck, Inc. (the "Company" or "USA Truck") is engaged in the
transportation of general commodity freight in interstate and foreign commerce.
Operations are conducted primarily east of the Rocky Mountains, but the Company
holds authority to transport and does transport freight between all points in
the continental United States, other than intrastate, and between all points in
the U.S., on the one hand, and the Canadian provinces of Ontario and Quebec, on
the other. The Company also provides the U.S. and Canadian portions of shipments
between points in the U.S. and Canadian provinces of Ontario and Quebec, on the
one hand, and points in Mexico, on the other. The Company transfers freight to,
or receives freight from, Mexican carriers at the U.S.-Mexico border in Laredo,
Texas. Revenue from foreign countries represents less than 6% of total revenues
of the Company for each of the past three years. The principal types of freight
transported include automotive parts and materials, tires, paper and paper
products, glass, retail store merchandise, chemicals, aluminum and manufacturing
materials and supplies. USA Truck does not transport Class A or Class B
explosives, garbage, radioactive materials or hazardous wastes.
USA Truck transports freight in truckload quantities from individual
shippers to single or multiple destinations on an as-needed basis. Its business
consists primarily of medium haul shipments, more than 700 but less than 1,200
miles. For 1999, 2000, and 2001, the average length of haul for Company tractors
was 908 miles, 871 miles and 826 miles, respectively.
The Company's principal offices are located at 3200 Industrial Park
Road, Van Buren, Arkansas 72956, and its telephone number is (479) 471-2500.
BUSINESS STRATEGY
USA Truck's principal competitive strength is its ability and
commitment to consistently provide superior service to shippers. Although price
is a primary concern to all shippers, many of the Company's customers are
high-volume shippers that require a flexible and dependable source of motor
carrier service tailored to specific needs, including pickup or delivery within
narrow time windows. The Company's strategy is to provide a premium service to
meet these needs and to charge compensating rates for such service. This
approach has found increasing acceptance. See "Business--Competition".
The Company is committed to prompt freight pickup, consistent on-time
delivery and twenty-four hours a day, seven days a week dispatching. It has
taken a number of steps to meet these commitments. In particular, the Company
(i) adheres to strict maintenance and cleaning schedules to avoid breakdowns and
delays; (ii) provides detailed routing instructions for, and maintains satellite
communications with, drivers to expedite delivery; (iii) maintains trailer pools
at strategic locations to minimize the time between customer order and pickup;
and (iv) provides extra trailers to high volume shippers for loading and
unloading at their convenience.
USA Truck utilizes cost-efficient communications throughout its
operations. The Company provides EDI (electronic data interchange) arrangements
with several of its largest customers, providing them with access through their
computer systems to current information on the status of their shipments. The
Company utilizes two-way, satellite based mobile messaging and position-locating
equipment in all of its tractors. This equipment is designed to fulfill
customers' heightened need for real-time transit information as well as provide
the Company with an enhanced and cost-effective method of communications between
its drivers and its operations personnel. The system provides fleet managers the
ability to contact drivers virtually anywhere in the Company's market area.
These capabilities are intended to shorten response time to customers, as well
as to allow drivers uninterrupted rest time while awaiting assignment.
1
The Company has designed its own management information software
systems, which it operates on a mainframe computer. The Company has also
designed its own e-commerce software systems, which operate on several platforms
and connect to the Company's mainframe computer and the internet. Through this
expanded business-to-business ("B2B") system, USA Truck's customers can check
equipment availability and track the progress of their loads through the
Company's web site.
These communication and data processing capabilities enhance operating
efficiency by providing immediate access to detailed information concerning
equipment, cargo, customer locations, credit history, billing arrangements and
specific customer requirements. They also permit the Company to respond quickly
and accurately to customers' requests and assist in balancing equipment
availability throughout its market area. Management believes these information
software systems and computer hardware will be sufficient to support the
Company's expansion plans at least through 2003 without substantial additional
expenditures in the data processing area.
The Company offers additional services through its USA Logistics
Division. USA Logistics provides many services that are not generally available
through the general fleet including, but not limited to, dedicated fleet
services, private fleet conversions, brokerage services and third party
logistics ("3PL") services. USA Logistics represented 6.9%, 9.7% and 12.3% of
Company revenues in 1999, 2000 and 2001, respectively.
MARKETING AND SALES
The Company focuses its marketing efforts on customers with demanding
requirements and heavy shipping needs within the primary regions where the
Company operates. This permits the Company to concentrate available equipment in
its primary service area, enabling it to be more responsive to customer needs.
USA Truck's Marketing and Operations Departments have primary responsibility for
developing and implementing the Company's marketing strategy and retaining
customer accounts.
The Marketing Department solicits and responds to customer orders and
maintains close customer contact regarding service requirements and rates. A
high percentage of the Company's business is from repeat customers. For the year
ended December 31, 2001, at least 95% of USA Truck's operating revenues were
derived from customers that were customers of the Company prior to 2001.
USA Truck establishes rates through individual negotiations with
customers and through contracts tailored to the specific needs of shippers.
For the year ended December 31, 2001, the Company's ten largest
customers accounted for 32% of revenues and its three largest customers
accounted for approximately 13% of revenues, with more than 1,800 other
customers accounting for the balance. No single customer accounted for more than
10% of revenues.
Although the Company prefers direct relationships with its shippers,
significant marketing activity takes place through 3PL providers. Securing
freight through a third party benefits the Company by providing access to a
variety of volume shippers, many of which require their carriers to conduct
business with their designated third party. Conversely, such third party
arrangements reduce the Company's direct relationship with its shippers.
Customers are generally required to have credit approval before
dispatch. The Company bills customers at or shortly after delivery, and, for the
last three years, receivables collection has averaged approximately 35 days from
the billing date.
OPERATIONS
The Operations Department consists of two primary divisions: the Load
Coordinator Group and the Fleet Manager Group.
Load coordinators are responsible for efficiently matching available
equipment with customer needs, and they serve as the contact with customers'
receiving and shipping personnel. Load coordinators also have primary
responsibility for minimizing empty miles, and they work closely with the
Marketing Department to increase equipment utilization.
The average distance between loads as a percentage of total miles
(empty mile factor) is a standard measurement in the truckload industry. The
empty mile factor generally decreases as average length of haul and density of
trucks in an area increase. The Company's commitment to on-time pickup often
requires a tractor to travel
2
farther to complete a pickup than it would have to travel if the Company delayed
the pickup until a tractor became available in the area. USA Truck's empty mile
factor was 9.82% for the year ended December 31, 2001.
Fleet managers supervise fleets of approximately 63 drivers each and
serve as the drivers' primary contact with the Company. Fleet managers monitor
the location of equipment and direct its movement in the most efficient and safe
manner practicable.
DRIVERS AND OTHER PERSONNEL
Driver recruitment and retention are vital to the success of the
Company. Recruiting drivers is difficult because Company standards are high and
because of declining enrollment in driving schools. Retention is difficult
because of wage and job fulfillment considerations. Driver turnover, especially
in the early months of employment, is a significant problem, and the competition
for qualified drivers is intense. Although USA Truck has experienced difficulty
with driver turnover, it has been able to attract and retain a sufficient number
of qualified drivers to support its operations. To attract and retain drivers,
the Company must continue to provide safe, attractive and comfortable equipment,
direct access to management and competitive wages and benefits designed to
encourage longer-term employment.
Drivers' pay is calculated on the basis of miles driven and increases
with tenure. In 2001, drivers averaged 460 paid miles per workday. In October
2000, the Company implemented a 16% driver pay increase. With this pay increase,
the Company eliminated incentive pay from its pay package except for drivers in
its dedicated services division. The pay increase substantially raised the
experience level of the fleet and quickly enabled the Company to man 100% of the
fleet with drivers by early 2001. In response, the Company developed a
three-phase plan to bring driver wages more into line with historical levels
while maintaining the improvements made in the areas of driver retention and
safety. All three phases affect new hires only and have no effect on existing
drivers. Phase-I, effective in the second quarter of 2001, capped the amount of
experience paid to newly hired drivers. Phase-II, effective in the third quarter
of 2001, lowered the pay scale for drivers with less than one year of industry
experience in strategic points along that scale. Both of these changes served to
level off the growth of driver wages. Phase-III, effective October 1, 2001,
lowered the pay scale for drivers with more than a year of industry experience
in strategic points along that scale. Phase-III is designed to reduce driver pay
as a percent of revenue without substantially affecting the strides we have made
in the areas of safety, recruiting and retention. The reduced pay scale remains
very competitive among industry peers.
As of December 31, 2001, USA Truck employed 2,373 persons, of which
1,874 were drivers, none of whom was represented by a collective bargaining
unit. In the opinion of management, the Company's relationship with its
employees is satisfactory.
SAFETY
USA Truck's safety program is designed to meet the Company's goal of an
accident-free working environment and to enforce governmental safety
regulations. The Company controls the maximum speed of its tractors with
electronic governing equipment, and all its tractors are equipped with anti-lock
braking systems.
The evaluation of safety records is one of several criteria used by USA
Truck to hire driver employees. Safe equipment handling techniques are an
important part of new driver training. The Company also conducts pre-employment,
random and post-accident drug testing in accordance with Department of
Transportation ("DOT") regulations.
The Company incorporates many programs designed to manage fleet safety
including, but not limited to, periodic meetings at remote facilities, a point
system to evaluate individual driver safety, a company-wide communication
network to facilitate rapid response to safety failures and a driver counseling
and retraining system.
3
REVENUE EQUIPMENT AND MAINTENANCE
The Company's current policy is to replace most tractors within 42
months from the date of purchase (see "Business--Revenue Equipment Acquisition
Program" for details concerning the 2002 tractor trading schedule, which will
extend beyond the standard 42 months), which permits the Company to maintain
substantial warranty coverage throughout the period of ownership. USA Truck
replaces its tractors and trailers based on various factors, including the used
equipment market, prevailing interest rates, technological improvements, fuel
efficiency and durability.
The following table shows the number and age of revenue equipment owned
and operated by the Company at December 31, 2001:
<Table>
<Caption>
Tractors Trailers
----------------------------- -------------------------------
Average Average
Model Months Months
Year Number in Service Number in Service
----- ------ ---------- ------ ----------
2002 353 3 259 4
2001 441 13 124 14
2000 523 26 726 25
1999 325 38 343 36
1998 74 46 715 50
1997 5 57 296 62
1996 1 76 329 73
1995 604 84
1994 240 92
------- ------- ------- ------
Total 1,722 22 3,636 51
======= ======= ======= ======
</Table>
At December 31, 2001, USA Truck operated 1,722 conventional sleeper
tractors and 3,636 van trailers. To simplify driver and mechanic training,
control the cost of spare parts and tire inventory and provide for a more
efficient vehicle maintenance program, the Company buys tractors and trailers
manufactured to its specifications. In deciding which equipment to buy, it
considers a number of factors, including safety, economy, resale value and
driver comfort. Most of the Company's tractors are equipped with Detroit Diesel
Series 60 12.7-liter engines, air-ride suspension and anti-lock brakes. The
Company's equipment is maintained through a strict preventive maintenance
program designed to minimize equipment downtime and to enhance trade-in value.
Beginning with the November 1995 trailer purchases, the Company began
converting its trailer fleet from 48-foot long and 102 inches wide trailers to
53-foot long and 102 inches wide trailers. Because of this conversion process
and additional trailers required to serve Mexico, the Company's trailer to
tractor ratio was 2.1 to 1 at December 31, 2001. Management believes that a 2.1
to 1 ratio is sufficient for the Company's operations, in that it promotes
efficiency and provides the flexibility needed to serve customer needs. As of
December 31, 2001, 3,097 of the 3,636 trailers in the Company's trailer fleet
were 53-foot models. All future purchases of fleet trailers will be 53-foot
models, with the possible exception of specialized trailers for dedicated
services. The Company is undertaking this conversion in order to meet its
customers' requirements and to continue to provide an efficient balance between
trailer capacity and weight and length limitations in the various states and
Canada.
During 2001, the Company financed revenue equipment purchases through
either its collateralized, $60 million revolving credit agreement (the "Senior
Credit Facility") or through lease-purchase arrangements. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources". All of the Company's revenue
equipment is pledged to secure its obligations under such financing
arrangements.
4
In addition to company-owned tractors, the Company contracts with
owner-operators for the use of their tractors and drivers in the Company's
operations. At December 31, 2001, 44 owner-operator tractors were under contract
with the Company. The Company does not plan to increase the size of its
owner-operator fleet significantly in proportion to its company-owned fleet in
2002.
REVENUE EQUIPMENT ACQUISITION PROGRAM
During 2002 and 2003, the Company plans to acquire 221 and 1,104 new
tractors and 517 and 720 new trailers, respectively. These acquisitions and the
disposals during the year will result in net increases of 203 and 289 tractors
and net increases of 506 and 720 trailers, respectively. As of March 13, 2002,
contracts had been executed for the acquisition of all 221 tractors and 517
trailers to be acquired in 2002.
The Company does not intend to trade revenue equipment during the
calendar year 2002 because of the continued softness in the used tractor market.
The Company has decided to extend the useful lives on those groups of tractors
that would have traded in 2002 under normal used tractor market conditions.
These extended lives (54 months) will yield an increased depreciation charge to
pre-tax earnings in 2002 of approximately $0.4 million.
The Company will aggressively pursue selling to unrelated third parties
the tractors on which useful lives have been extended if it can secure
satisfactory pricing through its internal tractor sales efforts. Anytime the
market price equals the book value on such equipment, it will be sold
immediately even if it has not yet served its full extended life. The Company
will continue to take all necessary measures to minimize the effects of the poor
used tractor market on net income.
Extending the lives on tractors will also result in an increased charge
to net income in 2002 for maintenance costs. Although the dollar impact cannot
be accurately estimated, the Company is taking steps to minimize it through an
expansion of its maintenance facilities in Laredo, TX and the Pennsylvania area
as well as an expanded facility in Butler Township, OH. See "Item 2.
Properties."
During 2001, the Company acquired 516 new tractors (a net decrease of
16) and 309 new trailers (a net increase of 236). The Company purchased 85 more
trailers in 2001 than anticipated in response to a shortage of available
trailers caused by increased utilization of owner-operators by the Company.
INSURANCE
The primary risk areas in the motor carrier industry are cargo loss and
damage, personal injury, property damage and workers' compensation claims.
Management believes that its insurance coverages are sufficient in each of these
areas. The Company is qualified as a workers' compensation self-insurer in the
State of Arkansas, which is secured by a $200,000 letter of credit and in
Louisiana, which is secured by a $100,000 letter of credit. In June 1993, the
Company received authority to self-insure for cargo loss and damage claims and
for bodily injury and property damage ("BIPD") claims. These self-insurance
arrangements are secured by $1.01 million in letters of credit with the Federal
Highway Administration. During 2001, the self-insurance retention levels were
$1.0 million for BIPD claims and $0.5 million for workers' compensation claims
per occurrence. The Company has insurance coverage for cargo loss and damage
claims exceeding $0.1 million per occurrence and coverage for physical damage to
its tractors and trailers with a self-insurance level of $10,000 per occurrence.
The Company has excess general liability coverage in amounts substantially
exceeding minimum legal requirements and believed to be sufficient to protect
the Company against material loss.
In response to a tight insurance market for 2002, the Company has
assumed self-insurance retention levels greater than those in 2001. For 2002,
the self-insurance retention levels are $2.0 million for BIPD claims and $0.75
million for workers' compensation claims per occurrence. The Company opted to
completely self-insure for physical damage to its tractors and trailers in 2002.
Other lines of coverage remain substantially the same in 2002 as they were in
2001.
5
COMPETITION
The trucking industry is highly competitive. It is characterized by
ease of entry and by many small carriers having revenues of less than $1 million
per year, with relatively few carriers being able to achieve revenues exceeding
$100 million per year. The principal means of competition in the truckload
segment of the industry are service and price, with rate discounting being
particularly intense during economic downturns. Although the Company competes
primarily on the basis of service rather than rates, rate discounting continues
to be a factor in obtaining and retaining business. Although the number of firms
competing in the truckload segment has increased dramatically since industry
deregulation in 1980, the industry continues to undergo a consolidation phase.
Furthermore, a depressed economy tends to increase both price and service
competition from alternative modes such as less-than-truckload carriers and
railroads. Management believes that further growth in the truckload segment of
the industry is likely to be achieved by acquiring greater market share rather
than through an increase in the size of the market.
USA Truck competes primarily with other truckload carriers and
shipper-owned fleets and, to a lesser extent, with railroads and
less-than-truckload carriers. A number of truckload carriers have much greater
financial resources, own more revenue equipment and carry a larger volume of
freight than does the Company.
The Company also competes with truckload and less-than-truckload
carriers for qualified drivers. See "Business--Drivers and Other Personnel".
TRADEMARK
USA Truck's name and logo are registered with the United States Patent
and Trademark Office, the Canadian Trade Marks Office, and the Mexican
Industrial Property Institute. The USA Logistics Division's name and logo are
also registered with the United States Patent and Trademark Office. The Company
believes its trademarks have significant value and are important to its
marketing efforts. The trademark registration in each country is renewable
indefinitely at the option of the Company.
REGULATION
USA Truck is a motor carrier regulated by the DOT and other federal and
state agencies. The Company's business activities in the United States are
subject to broad federal, state and local laws and regulations beyond those
applicable to most business activities. These regulated business activities
include, among other things, service area, routes traveled, equipment
specifications, commodities transported, rates and charges, accounting systems,
financial reporting and insurance coverages. The Company's Canadian business
activities are subject to similar requirements imposed by the laws and
regulations of the Dominion of Canada and provincial laws and regulations.
Motor carrier operations are subject to safety requirements prescribed
by the DOT, governing interstate operation and by Canadian provincial
authorities. Matters such as weight and equipment dimensions are also subject to
federal, state and provincial regulations.
The Company is subject to federal, state, provincial and local
environmental laws and regulations. Management believes that the Company is in
substantial compliance with such laws and regulations and that costs of such
compliance will not have a material adverse effect on its competitive position,
operations or financial condition or require a material increase in currently
anticipated capital expenditures.
ITEM 2. PROPERTIES
The Company owns its headquarters in Van Buren, Arkansas, located on 63
acres. This site has approximately 84,000-square feet of office, training and
driver housing space within two structures, a 12,000-square foot maintenance
facility and a 2,500-square foot dock. In 1997, the Company completed
construction of a new 57,000-square foot corporate headquarters next to its
existing headquarters facility in Van Buren, Arkansas. The previously existing
27,000-square foot facility has been partially refurbished and will continue to
be refurbished over the next several years to house additional training,
maintenance and support services. This facility also contains aboveground fuel
tanks with a capacity of 40,000 gallons.
6
The Company owns and operates a maintenance and driver facility in West
Memphis, Arkansas, situated on roughly 32 acres with 29 acres of paved tractor
and trailer parking behind fence, a 17,200-square foot shop, an eight-lane drive
through fueling station containing aboveground fuel tanks with a capacity of
37,000 gallons and drivers' sleeping quarters that can house 36 drivers. The
drivers' quarters also include a recruiting office and driver training center
for new drivers. The Company owns 29 of the 32 acres and leases the remainder
under a long-term lease agreement with an initial term ending in November 2044.
Located at the intersection of I-40 and I-55, this facility is an ideal location
for these activities.
The Company owns and operates a maintenance and driver facility in
Shreveport, Louisiana, with 15 acres of paved tractor and trailer parking behind
fence, a 12,000-square foot shop, a two-lane drive through fueling station
containing aboveground fuel tanks with a capacity of 37,000 gallons and drivers'
sleeping quarters that can house 32 drivers. The drivers' quarters also include
a recruiting office and driver training center for new drivers. The facility is
located on 20 acres of land owned by the Company near I-20 on US Hwy. 80.
The Company owns and operates a maintenance and driver facility in
Vandalia, Ohio, with approximately eight acres of paved tractor and trailer
parking behind fence, a 2,400-square foot shop, a one-lane drive through fueling
station containing a belowground fuel tank with a capacity of 10,000 gallons and
drivers' sleeping quarters that can house 22 drivers. The drivers' quarters also
include sales and recruiting offices. The facility is strategically located near
I-75 & I-70.
The Company is scheduled to complete construction of a new maintenance
and driver facility in Butler Township, Ohio in April 2002. This facility is
situated on roughly 44 acres of land with 15 acres of paved tractor and trailer
parking behind fence, a 21,000-square foot shop, a six-lane drive through
fueling station containing aboveground fuel tanks with a capacity of 36,000
gallons and drivers' sleeping quarters that can house 21 drivers. The drivers'
quarters also include a driver training center for new drivers. The facility is
located only four miles from the Company's current Vandalia, Ohio facility near
I-75 & I-70. This facility will replace the one operated in Vandalia, Ohio which
is currently for sale. The Company also has the option to purchase nearly ten
additional acres adjacent to the Butler Township property. This option expires
in March 2003.
In November 2001, the Company signed a 3-year lease agreement for
maintenance facilities in Bethel, Pennsylvania. This facility has approximately
ten acres of tractor and trailer parking and a 28,000-square foot shop and
transfer building. The Company has two 1-year options to renew the lease.
The Company leases, on a month-to-month basis, office facilities in
East Peoria, Illinois, office and parking facilities in Blue Island, Illinois
and Laredo, Texas and office and shop facilities in New Paris, Indiana.
Management believes that its facilities will be sufficient for its
operations at least through 2002.
See "Item 1. Business--Revenue Equipment and Maintenance" and "Item 1.
Business--Revenue Equipment Acquisition Program" for information regarding the
Company's revenue equipment.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to routine litigation incidental to its
business, primarily involving claims for personal injury and property damage
incurred in the transportation of freight. It maintains insurance covering
liabilities resulting from personal injury and property damage claims.
Management believes that adverse results in one or more of these cases would not
have a material adverse effect on the financial position or results of
operations of the Company.
7
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matter to a vote of security holders
during the fourth quarter of the fiscal year covered by this Annual Report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock trades on The NASDAQ Stock Market under the
symbol: USAK. The following table sets forth the high and low closing sales
prices for the Company's Common Stock as reported by The NASDAQ Stock Market for
2001 and 2000.
<Table>
<Caption>
2001 HIGH LOW
- ---- ---- ---
First Quarter.............................................. $ 7.75 $ 5.06
Second Quarter............................................. $ 7.75 $ 6.30
Third Quarter.............................................. $ 8.55 $ 7.00
Fourth Quarter............................................. $ 11.40 $ 6.70
2000 HIGH LOW
- ---- ---- ---
First Quarter ............................................. $ 8.81 $ 7.25
Second Quarter............................................. $ 7.94 $ 5.38
Third Quarter.............................................. $ 7.19 $ 5.38
Fourth Quarter............................................. $ 6.50 $ 5.19
</Table>
As of March 6, 2002, there were 228 holders of record (including
brokerage firms and other nominees) of the Company's Common Stock. The Company
estimates that there were approximately 2,003 beneficial owners of the Common
Stock as of that date.
The Company has never paid a cash dividend on its Common Stock. It is
the current intention of the Company's Board of Directors to continue to retain
earnings to finance the growth of the Company rather than to pay cash dividends.
Any future payments of cash dividends will depend upon the financial condition,
results of operations and capital commitments of the Company as well as other
factors deemed relevant by the Board of Directors. Covenants contained in the
Company's Senior Credit Facility may limit the Company's ability to pay
dividends.
8
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth, for the periods and at the dates
indicated, selected financial data of the Company. The data should be read in
conjunction with the financial statements and related notes contained in Item 8
of this Annual Report and "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations."
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
2001 2000 1999 1998 1997
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS DATA:
Operating revenues ......................... $ 252,441 $ 226,585 $ 166,363 $ 145,216 $ 129,507
Operating expenses and costs:
Salaries, wages and employee benefits ... 107,609 91,454 70,198 61,297 53,122
Operations and maintenance .............. 82,896 71,567 42,480 33,401 34,189
Operating taxes and licenses ............ 4,013 4,248 3,005 2,547 2,160
Insurance and claims .................... 13,489 14,318 7,987 7,250 6,773
Communications and utilities ............ 2,624 2,802 2,000 1,469 1,828
Depreciation and amortization ........... 26,418 26,793 18,592 16,179 13,608
Other ................................... 8,906 9,608 6,265 4,113 3,659
---------- ---------- --------- --------- ----------
245,955 220,790 150,527 126,256 115,339
---------- ---------- --------- --------- ----------
Operating income ........................... 6,486 5,795 15,836 18,960 14,168
Other expenses (income):
Interest expense ........................ 4,344 5,408 1,655 1,715 1,380
Loss (gain) on disposal of assets ....... 511 150 (9) (37) (2)
Other, net .............................. (148) 82 (23) 102 (191)
---------- ---------- --------- --------- ----------
4,707 5,640 1,623 1,780 1,187
---------- ---------- --------- --------- ----------
Income before income taxes ................. 1,779 155 14,213 17,180 12,981
Income taxes ............................... 692 61 5,571 6,683 5,078
---------- ---------- --------- --------- ----------
Net Income ................................. $ 1,087 $ 94 $ 8,642 $ 10,497 $ 7,903
========== ========== ========== ========== ==========
Basic:
Net income per share .................... $ .12 $ .01 $ .93 $ 1.12 $ 0.84
========== ========== ========== ========== ==========
Average shares outstanding .............. 9,236 9,254 9,324 9,400 9,356
========== ========== ========== ========== ==========
Diluted:
Net income per share .................... $ .12 $ .01 $ .92 $ 1.11 $ 0.83
========== ========== ========== ========== ==========
Average shares outstanding .............. 9,279 9,260 9,354 9,466 9,485
========== ========== ========== ========== ==========
Cash dividends per share ................... -- -- -- -- --
BALANCE SHEET DATA (AT END OF YEAR):
Current assets ............................. $ 34,414 $ 41,739 $ 39,449 $ 20,459 $ 20,292
Current liabilities ........................ 31,770 30,357 28,277 21,151 20,762
Total assets ............................... 182,411 189,919 182,040 119,611 113,518
Long-term debt, less current maturities .... 56,451 65,660 64,453 19,058 27,057
Stockholders' equity ....................... 71,173 69,981 70,108 62,734 52,373
</Table>
9
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth the percentage relationship of certain
items to operating revenues for the years indicated:
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
-------------------------------
2001 2000 1999
------ ------ ------
Operating revenues ............................. 100.0% 100.0% 100.0%
Operating expenses and costs:
Salaries, wages and employee benefits ...... 42.6 40.4 42.2
Operations and maintenance ................. 32.9 31.6 25.5
Operating taxes and licenses ............... 1.6 1.9 1.8
Insurance and claims ....................... 5.3 6.3 4.8
Communications and utilities ............... 1.0 1.2 1.2
Depreciation and amortization .............. 10.5 11.8 11.2
Other ...................................... 3.5 4.2 3.8
------ ------ ------
97.4 97.4 90.5
------ ------ ------
Operating income ............................... 2.6 2.6 9.5
Other expenses (income):
Interest expense ........................... 1.8 2.4 1.0
Loss on disposal of assets ................. 0.2 0.1 --
Other, net ................................. (0.1) -- --
------ ------ ------
1.9 2.5 1.0
------ ------ ------
Income before income taxes ..................... 0.7 0.1 8.5
Income tax expense ............................. 0.3 -- 3.3
------ ------ ------
Net income ..................................... 0.4% 0.1% 7.2%
====== ====== ======
</Table>
RESULTS OF OPERATIONS
Year Ended December 31, 2001 Compared to Year Ended December 31, 2000
Operating revenues increased 11.4% to $252.4 million in 2001 from
$226.6 million in 2000. The Company believes this increase is due primarily to
the reduction in unmanned tractors, additional business from existing customers
and, to a lesser extent, the marketing efforts by the Company's logistics
division. Average revenue per mile increased to $1.193 in 2001 from $1.184 in
2000 primarily due to an increase in brokerage and 3PL revenue. The empty mile
factor increased to 9.82% of paid miles in 2001 from 9.16% of paid miles in 2000
primarily due to soft freight demand in 2001 and, to a lesser extent, to the
decrease in the average length of haul to 826 miles per shipment in 2001 from
871 miles per shipment in 2000. There was a 15.7% increase in the number of
shipments to 231,002 in 2001 from 199,611 in 2000. This volume improvement was
made possible primarily by the fact that the number of unmanned tractors
dramatically declined to 1.2% of the fleet in 2001 from 9.2% of the fleet in
2000 and, to a lesser extent, by a 2.1% increase in the average number of
tractors owned during the year from 1,740 in 2000 to 1,776 during 2001. The net
effect of the volume increase and the Company's continuing fleet expansion was a
7.9% increase in miles per tractor per week from 2,190 in 2000 to 2,364 in 2001.
Operating expenses and costs as a percentage of revenues remained
unchanged at 97.4% in 2001 from 97.4% in 2000. The percentage increase, relative
to revenues, in salaries, wages and employee benefits cost was primarily the
result of an 11.6% increase in driver wages from $.318 per mile in 2000 to $.356
in 2001. This increase was partially offset by a 2.7% decrease, relative to
revenues, in salaries, wages and employee benefits other than driver wages. The
percentage increase, relative to revenues, in operations and maintenance cost
was primarily the result of a 620% increase in purchased transportation expense
from $1.2 million in 2000 to $7.94 million in 2001 resulting from revenues
derived from the logistics division and operations in Mexico. This increase was
partially offset by a 10.4% decrease in fuel cost resulting from a $.098
decrease in the average price per gallon in 2001 from 2000 and an improvement in
fuel efficiency to 6.43 miles per gallon in 2001 from 6.31 miles per gallon in
2000. Fuel efficiency is affected by several factors including tractor idle time
management, driver quality, engine technology and weather conditions in North
America. The decrease in insurance and claims cost, as a percentage of revenue
and in actual dollars, resulted from a 25.9% decrease in the number of accidents
from 3,142 in 2000 to
10
2,328 in 2001 despite a 10.6% increase in fleet miles. The decrease in
depreciation and amortization expense, as a percent of revenue, resulted from a
7.9% increase in tractor utilization from 2000 to 2001, as mentioned above, and
a 0.7% increase in net revenue per mile partially offset by slightly higher
depreciation rates on certain groups of equipment (see "Item 1.
Business--Revenue Equipment Acquisition Program" above). The decrease in other
expenses, as a percentage of revenue, resulted primarily from reduced recruiting
and training costs brought about by a lower driver turnover rate and a more
competitive driver compensation program.
As a result of the foregoing factors, operating income increased 11.9%
to $6.5 million, or 2.6% of revenue, in 2001 from $5.8 million or, 2.6% of
revenues, in 2000.
Interest expense decreased to $4.3 million in 2001 from $5.4 million in
2000, resulting primarily from significantly lower outstanding debt balances and
lower interest rates.
The Company had other income, net of $148,000 during 2001 compared to
other expenses, net of $83,000 in 2000. This increase in other income, net was
due to a variety of factors, no single one of which accounted for more than half
of the increase.
As a result of the above factors, income before taxes increased to $1.8
million, or 0.7% of revenues, in 2001 from $0.2 million, or 0.1% of revenues, in
2000.
The Company's effective tax rate was 38.9% in 2001 and 39.2% in 2000.
The effective rates varied from the statutory Federal tax rate of 34% primarily
due to state income taxes and certain non-deductible expenses.
As a result of the aforementioned factors, net income increased to $1.1
million, or 0.4% of revenues, in 2001 from $0.1 million, or 0.1% of revenues in
2000, representing an increase in diluted net income per share to $.12 from
$.01. The number of shares used in the calculation of diluted net income per
share for 2001 and 2000 were 9,279,268 and 9,260,044.
The principal means of competition in the truckload segment of the
industry are service and rates, with rate discounting being particularly intense
during economic downturns in order to maintain desired revenue levels. Although
the Company competes primarily on the basis of its service provided to its
customers rather than rates charged, rate discounting continues to be a factor
in obtaining and retaining business. The number of firms competing in the
truckload segment of the industry has increased dramatically since the
deregulation of the industry in 1980. Also, a depressed economy tends to
increase the competitive pressure placed on rate and service from alternative
modes of transportation such as less-than-truckload and railroads. The Company's
management believes that the truckload segment of the market has reached a
certain level of maturity as the market exists currently and that the Company's
further growth in the truckload segment of the industry is likely to be attained
by increasing its market share rather than through an increase in the overall
size of the market.
The Company experienced lower driver turnover and increased equipment
utilization as well as lower insurance costs during 2001 because of the large
numbers of experienced drivers hired and retained during this period. The
October 2000 driver pay increase made these improvements possible, but came at a
pre-tax cost of approximately $7.9 million in 2001 compared to 2000. See "Item
1. Business--Drivers and Other Personnel" for information regarding driver pay.
Year Ended December 31, 2000 Compared to Year Ended December 31, 1999
Operating revenues increased 36.2% to $226.6 million in 2000 from
$166.4 million in 1999, resulting from increased business with existing
customers, additional business from new customers and the acquisition of CCC
Express on November 1, 1999. Average revenue per mile increased to $1.18 in 2000
from $1.13 in 1999. The empty mile factor decreased to 9.16% of paid miles in
2000 from 9.26% of paid miles in 1999. There was a 35.3% increase in the number
of shipments to 199,611 in 2000 from 147,484 in 1999. This volume improvement
was made possible by an increase of 42.4% in the average number of tractors
operated during 1999 from 1,223 to 1,740 during 2000. The net effect of the
volume increase and the Company's continuing fleet expansion was a decrease of
8.9% in miles per tractor per week from 2,404 in 1999 to 2,190 in 2000.
11
Operating expenses and costs as a percentage of revenues rose to 97.4%
in 2000 from 90.5% in 1999. This change resulted primarily from an increase, on
a percent of revenue basis, in operations and maintenance cost, insurance and
claims cost, depreciation and amortization expense and other expenses. These
increases were partially offset by a decrease, on a percent of revenue basis, in
salaries, wages and employee benefits. The percentage increase, relative to
revenues, in operations and maintenance cost was primarily the result of an
increase of 33.2 cents per gallon in the average cost of fuel in 2000 compared
to 1999, combined with a decrease in fuel efficiency to 6.31 average miles per
gallon in 2000 from 6.46 in 1999. The increase in insurance and claims cost, as
a percentage of revenue and in actual dollars, resulted from an increase in the
number of accidents during 2000 compared to 1999. The increase in depreciation
and amortization expense, as a percent of revenue, resulted from a decline in
tractor utilization from 1999 to 2000, as mentioned above. The increase in other
expenses, as a percentage of revenue, resulted primarily from higher recruiting
and training costs brought about by a higher driver turnover rate and increased
competition for drivers. The percentage decrease, relative to salaries, wages
and employee benefits expense for 2000 compared to 1999 was due to the reduction
in management and executive incentives for 2000, which are based on the
profitability of the Company, the effects of fuel surcharges and the elimination
of a substantial portion of drivers' incentives earned during the fourth quarter
of 2000 which resulted from a change in the drivers' pay package, except for
drivers in the Company's dedicated services division, that eliminated incentive
pay and overall, increased mileage based pay by 16%. Because salaries, wages and
employee benefits expense consumes a larger portion of revenue than do other
expenses, it is affected to a larger extent by the fuel surcharges included in
revenue rate increases.
As a result of the foregoing factors, operating income decreased 63.4%
to $5.8 million, or 2.6% of revenue, in 2000 from $15.8 million or, 9.5% of
revenues, in 1999.
Interest expense increased to $5.41 million from $1.65 million in 1999,
resulting primarily from a substantial increase in borrowings following the
acquisition of CCC Express on November 1, 1999.
The Company had other expense, net of $83,000 during 2000 compared to
other income, net of $23,000 in 1999. This increase in other expense, net was
due to a variety of factors, no single one of which accounted for more than half
of the increase.
As a result of the above factors, income before taxes decreased to
$155,000, or 0.1% of revenues, in 2000 from $14.2 million, or 8.5% of revenues,
in 1999.
The Company's effective tax rate was 39.2% in 2000 and 1999. The
effective rates varied from the statutory Federal tax rate of 34% primarily due
to state income taxes and certain non-deductible expenses.
As a result of the aforementioned factors, net income decreased to
$94,000, or 0.1% of revenues, in 2000 from $8.6 million, or 5.2% of revenues in
1999, representing a decrease in diluted net income per share to $.01 from $.92.
The number of shares used in the calculation of diluted net income per share for
2000 and 1999 were 9,260,011 and 9,354,441.
INFLATION
The effect of inflation on operating costs has been minimal in recent
years. Most of the Company's operating expenses are inflation sensitive, with
increases in inflation generally resulting in increased operating costs and
expenses. The effect of inflation-driven cost increases on the Company's overall
operating costs would not be expected to be greater for the Company than for its
competitors.
SEASONALITY
In the trucking industry generally, revenues decrease as customers
reduce shipments during the winter holiday season and as inclement weather
impedes operations. At the same time, operating expenses increase, due primarily
to decreased fuel efficiency and increased maintenance costs. Future revenues
could be impacted if customers reduce shipments due to temporary plant closings,
which historically have occurred during July and December.
12
FUEL AVAILABILITY AND COST
The motor carrier industry is dependent upon the availability of diesel
fuel, and fuel shortages or increases in fuel taxes or fuel costs have adversely
affected, and may in the future adversely affect the profitability of USA Truck,
Inc.. Fuel prices have fluctuated widely and fuel taxes have generally increased
in recent years. The Company has not experienced difficulty in maintaining
necessary fuel supplies, and in the past the Company generally has been able to
recover most of the increases in fuel costs and fuel taxes from customers
through increased freight rates. Diesel prices decreased during 2001, but there
can be no assurance that diesel prices will remain at price levels experienced
in recent periods. There also can be no assurance that the Company will be able
to recover any future increases in fuel costs and fuel taxes through increased
rates.
OPERATIONAL DATA
The following table sets forth certain operational information for the
last three fiscal years:
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
-----------------------------------------
2001 2000 1999
----------- ----------- -----------
Total loads moved during the year ...................... 231,002 199,611 147,484
Average number of tractors operated during the year .... 1,751 1,740 1,223
Number of tractors operated at year end ................ 1,776 1,738 1,713
Number of trailers operated at year end ................ 3,636 3,400 3,524
Total tractor miles during the year .................... 243,391,194 220,210,709 169,587,327
</Table>
LIQUIDITY AND CAPITAL RESOURCES
On April 28, 2000, the Company signed a new senior credit facility (the
"Senior Credit Facility") that provides a working capital line of credit of
$60.0 million, including letters of credit not exceeding $5.0 million. Bank of
America, N.A. is the agent bank and SunTrust Bank and U.S. Bank (formerly
Firstar Bank, N.A.) are participants in the Senior Credit Facility. As of
December 31, 2001, approximately $32.7 million was available under the Senior
Credit Facility. The Senior Credit Facility matures on April 28, 2005, prior to
which time and, subject to certain conditions, the balance outstanding may be
converted at any time, at the Company's option, to a four-year term loan
requiring 48 equal monthly principal payments plus interest. The Senior Credit
Facility bears variable interest based on the lenders prime rate, or federal
funds rate plus a certain percentage or LIBOR plus a certain percentage, which
is determined based on the Company's attainment of certain financial ratios. The
effective interest rate on the Company's borrowings under the credit facility
for the year ending December 31, 2001 was 6.23%. A quarterly commitment fee is
payable on the unused credit line and bears a rate which is determined based on
the Company's attainment of certain financial ratios. As of December 31, 2001
the rate was 0.3%. This credit facility is collateralized by accounts receivable
and all otherwise unencumbered equipment (See Note 5 to the Financial
Statements). On March 30, 2001, the Company amended its Senior Credit Facility
to modify the covenants and more accurately align them with the Company's recent
operating performance resulting from the general economic conditions in the
truckload market. The Company modified its grid pricing which is based on
certain financial ratios. The amended applicable rate increments were increased
slightly for certain financial ratios. The Company does not expect the increase
in rates to have a significant impact on the Company's financial statements.
The continued growth of the Company's business has required significant
investments in new equipment. The Company has financed revenue equipment
purchases with cash flows from operations and through borrowings under the
Company's Senior Credit Facility, conventional financing and lease-purchase
arrangements. The Company has historically met its working capital needs with
cash flows from operations and occasionally with borrowings under the Senior
Credit Facility. The Company has relied significantly on the Senior Credit
Facility to meet working capital requirements since the acquisition of the
assets of CCC Express, Inc. in November 1999. The Company uses the Senior Credit
Facility to minimize fluctuations in cash flow needs and to provide flexibility
in financing revenue equipment purchases. Cash flows from operations were $36.0
million for 2001 and $29.2 million for 2000.
As of December 31, 2001, capital leases in the aggregate principal
amount of $17.3 million were outstanding under prior lease commitments with an
average interest rate of 5.87% per annum.
13
On January 11, 2000, the Company entered into a lease commitment
agreement (the "2000 Equipment TRAC Lease Commitment A") to facilitate the
leasing of tractors. The 2000 Equipment TRAC Lease Commitment A was amended on
November 7, 2000 to provide for a maximum borrowing amount of approximately
$16.5 million. The 2000 Equipment TRAC Lease Commitment A was amended again on
November 5, 2001 to provide for a maximum borrowing amount of $5.5 million
during the calendar year 2002. Each capital lease will have a repayment period
of 42 months. Borrowings are limited based on the amounts outstanding under
capital leases entered into under this agreement. The interest rate on the
capital leases under this lease commitment fluctuates in relation to the
interest rate for the three-year Treasury Note as published in The Wall Street
Journal and is fixed upon execution of each lease. As of December 31, 2001,
capital leases in the aggregate principal amount of $12.3 million were
outstanding under this lease commitment with an average interest rate of 5.43%
per annum. During 2001, the Company entered into capital leases under this lease
commitment in the amount of $5.6 million.
On January 31, 2000, the Company entered into a lease commitment
agreement (the "2000 Equipment TRAC Lease Commitment B") to facilitate the
leasing of tractors. The 2000 Equipment TRAC Lease Commitment B was available
until December 31, 2000. Each capital lease under this commitment has a
repayment period of either 36 or 42 months. As of December 31, 2001, capital
leases in the aggregate principal amount of $6.3 million were outstanding under
this lease commitment with an average interest rate of 6.58% per annum.
On October 18, 2000, the Company entered into a lease commitment
agreement (the "2001 Equipment TRAC Lease Commitment A"), to facilitate the
leasing of tractors. The 2001 Equipment TRAC Lease Commitment A was amended on
August 2, 2001 to provide for a maximum borrowing amount of approximately $8.0
million during the remainder of the calendar year 2001. The 2001 Equipment TRAC
Lease Commitment A was available until December 31, 2001. Each capital lease has
a repayment period of 42 months. As of December 31, 2001, capital leases in the
aggregate principal amount of $7.6 million were outstanding under this lease
commitment with an average interest rate of 3.53% per annum.
On November 5, 2001, the Company entered into a lease commitment
agreement (the "2002 Equipment TRAC Lease Commitment A"), to facilitate the
leasing of tractors. The 2002 Equipment TRAC Lease Commitment A provides for a
maximum borrowing amount of approximately $5.5 million during the calendar year
2002. Each capital lease will have a repayment period of 42 months. Borrowings
are limited based on the amounts outstanding under capital leases entered into
under this agreement. The interest rate on the capital leases under this lease
commitment fluctuates in relation to either the interest rate for the three-year
Treasury Note or the one year LIBOR as published in The Wall Street Journal,
whichever provides for the higher interest rate, and is fixed upon execution of
a lease.
On November 8, 2001, the Company entered into a lease commitment
agreement (the "2002 Equipment TRAC Lease Commitment B"), to facilitate the
leasing of tractors. The 2002 Equipment TRAC Lease Commitment B provides for a
maximum borrowing amount of approximately $7.0 million during the calendar year
2002. Each capital lease will have a repayment period of 42 months. Borrowings
are limited based on the amounts outstanding under capital leases entered into
under this agreement. The interest rate on the capital leases under this lease
commitment fluctuates in relation to Lessor's cost of funds and is fixed upon
execution of a lease.
As of December 31, 2001, the Company had debt obligations of
approximately $69.5 million, including amounts borrowed under the facilities
described above, of which approximately $13.0 million were current obligations.
During 2001, the Company made borrowings under the Senior Credit Facility of
$106.5 million, while retiring $128.9 million in debt under the Senior Credit
Facility and the other debt facilities described above. The retired debt had an
average interest rate of approximately 7.50%.
During the years 2002 and 2003, the Company plans to make approximately
$118.5 million in capital expenditures. At December 31, 2001, the Company was
committed to spend $23.9 million of this amount for revenue equipment in 2002,
and $93.8 million of this amount is currently budgeted for revenue equipment in
2003. The commitments to purchase revenue equipment are cancelable by the
Company if certain conditions are met. The balance of the expected capital
expenditures will be used for maintenance and office equipment and facility
improvements.
The Senior Credit Facility, the 2000 TRAC Lease Commitment A, the 2002
TRAC Lease Commitment A and the 2002 TRAC Lease Commitment B equipment leases
and cash flows from operations should be adequate to fund the Company's
operations and expansion plans through the end of 2002. There can be no
assurance, however,
14
that such sources will be sufficient to fund Company operations and all
expansion plans through such date, or that any necessary additional financing
will be available, if at all, in amounts required or on terms satisfactory to
the Company. The Company expects to continue to fund its operations with cash
flows from operations, the Senior Credit Facility, and the 2000 TRAC Lease
Commitment A, the 2002 TRAC Lease Commitment A and the 2002 TRAC Lease
Commitment B equipment leases for the foreseeable future.
On July 9, 1998, the Company's Board of Directors authorized the
Company to purchase up to 500,000 shares of its outstanding common stock over a
three-year period ending September 30, 2001 dependent upon market conditions.
Common stock purchases under the authorization may be made from time to time on
the open market or in privately negotiated transactions at prices determined by
the Chairman of the Board or President of the Company. As of December 31, 2001,
the Company had purchased 289,800 shares pursuant to this authorization at an
aggregate purchase price of $2.5 million. The Board of Directors has authorized
the retirement of 241,733 shares of treasury stock that had been purchased at an
aggregate cost of $2.1 million. In addition, as of December 31, 2001, 31,575 of
the remaining 48,067 repurchased shares had been resold under the Company's
Employee Stock Purchase Plan.
On October 17, 2001, the Company announced that its Board of Directors
had authorized the Company to purchase up to 500,000 shares of its outstanding
common stock over a three-year period dependent upon market conditions. Common
stock purchases under the authorization may be made from time to time on the
open market or in privately negotiated transactions at prices determined by the
Chairman of the Board or President of the Company. This new authorization is
effective immediately. The Company may purchase shares in the future if, in the
view of management, the common stock is undervalued relative to the Company's
performance and prospects for continued growth. Any such purchases would be
funded with cash flows from operations or the Senior Credit Facility.
See "Item 1. Business--Revenue Equipment Acquisition Program."
NEW ACCOUNTING PRONOUNCEMENTS
See "Item 8. Financial Statements and Supplementary Data--Note 1. to
the Financial Statements: New Accounting Pronouncements."
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements and information that
are based on management's current beliefs and expectations and assumptions made
by it based upon information currently available. Forward-looking statements
include statements relating to the Company's plans, strategies, objectives,
expectations, intentions, and adequacy of resources, may be identified by words
such as "will", "could", "should", "believe", "expect", "intend", "plan",
"schedule", "estimate", "project" and similar expressions. These statements are
based on current expectations and are subject to uncertainty and change.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will be realized. Should one or more of the risks or uncertainties
underlying such expectations materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those expected. Among the key
factors that are not within the Company's control and that may have a direct
bearing on operating results are increases in diesel prices, adverse weather
conditions and the impact of increased rate competition. The Company's results
may also be significantly affected by fluctuations in general economic
conditions, as the Company's utilization rates are directly related to business
levels of shippers in a variety of industries. In addition, shortages of
qualified drivers and intense or increased competition for drivers may adversely
impact the Company's operating results and its ability to grow. Results for any
specific period could also be affected by various unforeseen events, such as
unusual levels of equipment failure or vehicle accident claims.
15
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
As reported in the notes to the financial statements and in the
Liquidity and Capital Resources section of this Form 10-K, as of April 28, 2000,
the Company entered into the Senior Credit Facility with a multi-bank group. The
Senior Credit Facility agreement provides for borrowings that bear interest at
variable rates based on either a prime rate or the LIBOR. At December 31, 2001,
the Company had $26.0 million outstanding pursuant to the Senior Credit
Facility. The Company believes that the effect, if any, of reasonably possible
near-term changes in interest rates on the Company's financial position, results
of operations, and cash flows should not be material.
All customers are required to pay for the Company's services in U.S.
dollars. Although the Canadian Government makes certain payments, such as tax
refunds, to the Company in Canadian dollars, any foreign currency exchange risk
associated with such payments is insignificant.
The Company does not engage in hedging transactions relating to diesel
fuel or any other commodity.
16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
USA TRUCK, INC.
ANNUAL REPORT ON FORM 10-K
YEAR ENDED DECEMBER 31, 2001
INDEX TO FINANCIAL STATEMENTS
<Table>
<Caption>
Page
Report of Ernst & Young LLP, Independent Auditors ...................................................... 18
Balance Sheets as of December 31, 2001 and 2000......................................................... 19
Statements of Income for the years ended December 31, 2001, 2000 and 1999............................... 20
Statements of Stockholders' Equity for the years ended December 31, 2001, 2000 and 1999................. 21
Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999........................... 22
Notes to Financial Statements........................................................................... 23
</Table>
17
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
USA Truck, Inc.
We have audited the accompanying balance sheets of USA Truck, Inc. as of
December 31, 2001 and 2000, and the related statements of income, stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 2001. Our audits also included the financial statement schedule listed in
the Index at Item 14(a). These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. 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 USA Truck, Inc. at December 31,
2001 and 2000, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
ERNST & YOUNG LLP
Little Rock, Arkansas
January 18, 2002
18
USA TRUCK, INC.
BALANCE SHEETS
<Table>
<Caption>
December 31,
--------------------------------
2001 2000
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents ........................................ $ 1,976,228 $ 1,674,730
Receivables:
Trade, less allowance for doubtful accounts of
$260,771 in 2001 and $303,203 in 2000 ........................ 25,823,304 30,019,565
Other .......................................................... 3,068,554 3,853,642
Inventories ...................................................... 474,279 382,639
Deferred income taxes (Note 7) ................................... 673,000 1,607,633
Prepaid expenses and other current assets (Note 3) ............... 2,398,410 4,200,618
-------------- --------------
Total current assets ................................................. 34,413,775 41,738,827
Property and equipment (Notes 5 and 6):
Land and structures .............................................. 21,801,450 18,519,687
Revenue equipment ................................................ 171,247,579 170,109,906
Service, office and other equipment .............................. 14,896,781 14,517,040
-------------- --------------
207,945,810 203,146,633
Accumulated depreciation and amortization ........................ (60,102,406) (55,417,751)
-------------- --------------
147,843,404 147,728,882
Other assets ......................................................... 154,295 451,115
-------------- --------------
Total assets ......................................................... $ 182,411,474 $ 189,918,824
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank drafts payable .............................................. $ 1,537,585 $ 1,487,086
Trade accounts payable ........................................... 4,029,960 5,870,192
Accrued expenses (Note 4) ........................................ 13,173,442 10,131,717
Current maturities of long-term debt (Note 5) .................... 13,029,318 12,867,611
-------------- --------------
Total current liabilities ............................................ 31,770,305 30,356,606
Long-term debt, less current maturities (Notes 5 and 6) .............. 56,450,817 65,660,268
Deferred income taxes (Note 7) ....................................... 20,488,511 21,111,025
Insurance and claims accruals ........................................ 2,528,365 2,810,214
Commitments and contingencies (Notes 6 and 12)
Stockholders' equity (Notes 5 and 9):
Preferred Stock, $.01 par value; 1,000,000 shares
authorized; none issued ........................................ -- --
Common Stock, $.01 par value; 16,000,000 shares
authorized; issued 9,267,693 shares in 2001
and 9,282,889 shares in 2000 ................................... 92,677 92,829
Additional paid-in capital ....................................... 11,138,506 11,318,280
Retained earnings ................................................ 60,022,099 58,934,888
Less treasury stock, at cost (14,135 shares in 2001 and 59,835
shares in 2000) ................................................ (79,806) (365,286)
-------------- --------------
Total stockholders' equity ........................................... 71,173,476 69,980,711
-------------- --------------
Total liabilities and stockholders' equity ........................... $ 182,411,474 $ 189,918,824
============== ==============
</Table>
See accompanying notes.
19
USA TRUCK, INC.
STATEMENTS OF INCOME
<Table>
<Caption>
Year Ended December 31,
--------------------------------------------------
2001 2000 1999
-------------- -------------- --------------
Operating revenues ..................................... $ 252,441,345 $ 226,585,437 $ 166,363,356
Operating expenses and costs:
Salaries, wages and employee benefits (Note 8) ..... 107,609,237 91,453,590 70,197,581
Operations and maintenance ......................... 82,895,989 71,567,226 42,480,525
Operating taxes and licenses ....................... 4,013,314 4,248,497 3,005,166
Insurance and claims ............................... 13,489,023 14,318,596 7,987,208
Communications and utilities ....................... 2,623,892 2,802,007 1,999,548
Depreciation and amortization ...................... 26,418,261 26,792,923 18,591,780
Other .............................................. 8,905,508 9,607,679 6,264,876
-------------- -------------- --------------
245,955,224 220,790,518 150,526,684
-------------- -------------- --------------
Operating income ....................................... 6,486,121 5,794,919 15,836,672
Other expenses (income):
Interest expense ................................... 4,343,932 5,407,723 1,655,558
Loss (gain) on disposal of assets .................. 510,942 149,788 (9,297)
Other, net ......................................... (148,199) 82,702 (22,588)
-------------- -------------- --------------
4,706,675 5,640,213 1,623,673
-------------- -------------- --------------
Income before income taxes ............................. 1,779,446 154,706 14,212,999
Income tax expense (benefit) (Note 7):
Current ............................................ 380,116 (3,642,796) 2,774,219
Deferred ........................................... 312,119 3,703,441 2,797,278
-------------- -------------- --------------
692,235 60,645 5,571,497
-------------- -------------- --------------
Net income ............................................. $ 1,087,211 $ 94,061 $ 8,641,502
============== ============== ==============
Net income per share (Notes 9 and 10):
Basic earnings per share ........................... $ 0.12 $ 0.01 $ 0.93
============== ============== ==============
Diluted earnings per share ......................... $ 0.12 $ 0.01 $ 0.92
============== ============== ==============
</Table>
See accompanying notes.
20
USA TRUCK, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
<Table>
<Caption>
ADDITIONAL
COMMON PAID-IN RETAINED TREASURY
STOCK CAPITAL EARNINGS STOCK TOTAL
-------------- -------------- -------------- -------------- --------------
Balance at January 1, 1999 ................ $ 94,371 $ 12,921,342 $ 50,199,325 $ (480,975) $ 62,734,063
Exercise of stock options, net
(Note 10) .......................... 499 278,219 -- -- 278,718
Purchases of 186,600 shares of
Common stock into treasury ......... -- -- -- (1,662,883) (1,662,883)
Sale of 11,379 shares of treasury
stock to employee stock
purchase plan ...................... -- -- -- 116,776 116,776
Retirement of 100,000 shares
out of treasury stock ............. (1,000) (927,876) -- 928,876 --
Net income for 1999 ................... -- -- 8,641,502 -- 8,641,502
-------------- -------------- -------------- -------------- --------------
Balance at December 31, 1999 .............. 93,870 12,271,685 58,840,827 (1,098,206) 70,108,176
Exercise of stock options, net
(Note 10) ......................... 26 (21) -- -- 5
Purchase of 58,200 shares of
common stock into treasury ........ -- -- -- (350,344) (350,344)
Sale of 11,379 shares of treasury
stock to employee
stock purchase plan ............... -- -- -- 128,813 128,813
Retirement of 106,733 shares
out of treasury stock ............. (1,067) (953,384) -- 954,451 --
Net income for 2000 ................... -- -- 94,061 -- 94,061
-------------- -------------- -------------- -------------- --------------
Balance at December 31, 2000 .............. 92,829 11,318,280 58,934,888 (365,286) 69,980,711
Exercise of stock options, net
(Note 10) ......................... 198 39,333 -- -- 39,531
Sale of 10,700 shares of treasury
stock to employee stock purchase
plan .............................. -- -- -- 66,023 66,023
Retirement of 35,000 shares
out of treasury stock ............ (350) (219,107) -- 219,457 --
Net income for 2001 ................... -- -- 1,087,211 -- 1,087,211
-------------- -------------- -------------- -------------- --------------
Balance at December 31, 2001 .............. $ 92,677 $ 11,138,506 $ 60,022,099 $ (79,806) $ 71,173,476
============== ============== ============== ============== ==============
</Table>
See accompanying notes.
21
USA TRUCK, INC.
STATEMENTS OF CASH FLOWS
<Table>
<Caption>
Year Ended December 31,
--------------------------------------------------
2001 2000 1999
-------------- -------------- --------------
OPERATING ACTIVITIES
Net income ....................................................... $ 1,087,211 $ 94,061 $ 8,641,502
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .............................. 26,418,261 26,792,923 18,591,780
Provision for doubtful accounts ............................ 36,000 82,200 121,900
Deferred income taxes ...................................... 312,119 3,703,441 2,797,278
Loss or (gain) on disposal of assets ....................... 510,942 149,788 (9,297)
Changes in operating assets and liabilities:
Receivables ............................................. 4,945,349 (1,796,306) (17,186,596)
Inventories, prepaid expenses and other
current assets ........................................ 1,710,568 (647,294) (609,527)
Bank drafts payable, trade accounts payable and
accrued expenses ...................................... 1,251,992 167,742 1,103,205
Insurance and claims accruals - long-term ............... (281,849) 617,500 100,100
-------------- -------------- --------------
Net cash provided by operating activities ........................ 35,990,593 29,164,055 13,550,345
INVESTING ACTIVITIES
Purchases of property and equipment .............................. (27,430,902) (27,011,263) (29,492,589)
Purchase of CCC Express, Inc. .................................... -- -- (22,891,055)
Proceeds from sale of equipment .................................. 13,710,855 14,898,989 9,651,337
Proceeds from sale of investments ................................ -- -- 968,196
Increase (decrease) in other assets .............................. 296,820 1,333 (153,165)
-------------- -------------- --------------
Net cash used by investing activities ............................ (13,423,227) (12,110,941) (41,917,276)
FINANCING ACTIVITIES
Borrowings under long-term debt .................................. 106,513,000 89,606,979 55,685,310
Principal payments on long-term debt ............................. (115,420,000) (93,689,979) (19,595,310)
Proceeds from the exercise of stock options ...................... 39,531 5 278,718
Proceeds from sale of treasury stock ............................. 66,023 128,813 116,776
Refund of security deposits ...................................... -- -- 1,745,478
Payments to repurchase common stock .............................. -- (350,344) (1,662,883)
Principal payments on capitalized lease obligations .............. (13,464,422) (13,219,565) (7,835,094)
-------------- -------------- --------------
Net cash (used by) provided by financing activities .............. (22,265,868) (17,524,091) 28,732,995
-------------- -------------- --------------
Increase (decrease) in cash and cash equivalents ................. 301,498 (470,977) 366,064
Cash and cash equivalents:
Beginning of year ............................................ 1,674,730 2,145,707 1,779,643
-------------- -------------- --------------
End of year .................................................. $ 1,976,228 $ 1,674,730 $ 2,145,707
============== ============== ==============
</Table>
See accompanying notes.
22
USA TRUCK, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
USA Truck, Inc. (the Company), operates as a truckload motor carrier with
operating authority to provide service throughout the continental United States
and parts of Canada and Mexico.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents. The carrying amount
reported in the balance sheet for cash and cash equivalents approximates its
fair value.
CONCENTRATION OF CREDIT RISK
The Company performs ongoing credit evaluations and generally does not require
collateral. The Company maintains reserves for potential credit losses. Such
losses have been within management's expectations. Accounts receivable are
comprised of a diversified customer base that results in a lack of concentration
of credit risk.
INVENTORIES
Inventories consist primarily of tires, fuel and supplies and are stated at the
lower of cost (first-in, first-out basis) or market.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. For financial reporting purposes,
the cost of such property is depreciated principally by the straight-line method
using the following estimated useful lives: structures - 5 to 39.5 years;
revenue equipment - 3 to 10 years; and service, office and other equipment - 3
to 20 years. Gains and losses on asset sales are reflected in the year of
disposal. Trade-in allowances in excess of book value of revenue equipment are
accounted for by adjusting the cost of assets acquired. Tires purchased with
revenue equipment are capitalized as a part of the cost of such equipment, with
replacement tires being inventoried and expensed when placed in service.
23
USA TRUCK, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT (CONTINUED)
During 2000, the Company made certain changes in the estimated lives and salvage
values of certain revenue equipment to better reflect the Company's experience
as to service lives and resale values of that revenue equipment. Effective June
1, 2000, the Company changed the estimated lives and salvage values of its
trailers. This change decreased depreciation expense and increased net income by
approximately $563,500 during 2000. Effective October 1, 2000, the Company
changed the salvage values of certain types of its tractors. This change
increased depreciation expense and decrease net income by approximately $200,000
during 2000.
CLAIMS LIABILITIES
The Company is self-insured up to certain limits for bodily injury, property
damage, workers' compensation, and cargo loss and damage claims. Provisions are
made for both the estimated liabilities for known claims as incurred and
estimates for those incurred but not reported. In 2001 the Company was
self-insured up to $1,000,000 per occurrence for bodily injury and property
damage, up to $500,000 for workers' compensation claims, and up to $100,000 per
occurrence for cargo loss and damage claims. These self-insurance arrangements
are secured by $1,310,000 in letters of credit.
REVENUE RECOGNITION
Revenues are recognized based on a method whereby revenue is allocated between
reporting periods based on relative transit time in each period and direct
expenses are allocated on the same basis.
INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets include temporary differences
relating to depreciation, capitalized leases and certain revenues and expenses.
EARNINGS PER SHARE
Earnings per share amounts are computed based on Financial Accounting Standards
Board Statement No. 128, Earnings per Share. Basic earnings per share is
computed based on the weighted average number of shares of common stock
outstanding during the year excluding any dilutive effects of options. Diluted
earnings per share is computed by adjusting the weighted average shares
outstanding by common stock equivalents attributable to dilutive options.
24
USA TRUCK, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
COMPENSATION TO EMPLOYEES
Stock based compensation to employees is accounted for based on the intrinsic
value method under Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees (APB 25). Under APB 25 because the exercise price of
employee stock options equaled the market price of the underlying stock on the
grant date, no compensation expense is recorded. The Company has adopted the
disclosure - only provisions of Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation (SFAS 123).
ADVERTISING COSTS
The Company expenses advertising costs as they are incurred. Total advertising
costs for the period ended December 31, 2001, 2000 and 1999 were $1,337,000,
$1,770,000, and $1,628,000 respectively.
NEW ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board (FASB) issued Statements
of Financial Accounting Standards Board No. 141, "Business Combinations" (SFAS
141), and No. 142, "Goodwill and Other Intangible Assets" (SFAS 142). SFAS 141
eliminates the pooling-of-interests method of accounting for business
combinations and requires any business combination completed after June 30,
2001, to be accounted for by the purchase method. Additionally, SFAS 141 changes
the criteria to recognize intangible assets apart from goodwill. Under SFAS 142,
goodwill and indefinite lived intangible assets are no longer amortized but are
reviewed annually, or more frequently if impairment indicators arise, for
impairment. Separable intangible assets that have finite lives will continue to
be amortized over their useful lives. Because of the different transition dates
for goodwill and intangible assets acquired on or before June 30, 2001, and
those acquired after that date, pre-existing goodwill and intangibles will be
amortized during this transition period until adoption, whereas new goodwill and
other intangible assets acquired after June 30, 2001, will not be amortized.
Companies are required to adopt SFAS 142 in their fiscal year beginning after
December 15, 2001. The Company will adopt SFAS 142 on January 1, 2002. This
statement is not expected to have a material impact on the Company.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (SFAS 144). SFAS 144 supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of;" however, it retains the fundamental provisions of that
Statement related to the recognition and measurement of the impairment of
long-lived assets to be "held and used." In addition, the Statement provides
some guidance on estimating cash flows when performing a recoverability test,
requires that a long-lived asset to be disposed of other than by sale (e.g.,
abandoned) be classified as "held and used" until it is disposed of and
establishes more restrictive criteria to classify an asset as "held for sale".
Companies are required to adopt SFAS 144 in their fiscal year beginning after
December 15, 2001.
25
USA TRUCK, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. ACQUISITION
On November 1, 1999, pursuant to an Asset Purchase Agreement (the Asset Purchase
Agreement) dated October 31, 1999, the Company 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 $35.3 million.
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 and (iii) the refinancing of approximately $25.8
million in other debt secured by equipment. Additionally, $5.9 million of the
$25.8 million consisted of a non-cash transaction. The cash portion of the
purchase price was paid from available cash and proceeds of borrowings under the
Company's credit facilities. 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 million. In connection with the acquisition, the Company's
borrowing under its General Line of Credit was increased from $20 million to $35
million effective October 28, 1999.
The acquisition has been accounted for under the purchase method. Accordingly,
the acquired assets and liabilities have been recorded at their estimated fair
values at the date of acquisition. Operating results of the acquired business
are included in the statements of income from the acquisition date.
The following pro forma summary of results of operations has been prepared as
though CCC had been acquired on January 1, 1999. These pro forma results have
been prepared for comparative purposes only and do not purport to be indicative
of what would have occurred had the acquisition been made on January 1, 1999, or
of results which may occur in the future.
<Table>
<Caption>
YEAR ENDED
DECEMBER 31, 1999
-----------------
Operating revenues ................ $ 222,089,793
Net Income ........................ 6,127,054
Basic earnings per share .......... $ .66
Diluted earnings per share ........ $ .65
</Table>
3. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist of the following:
<Table>
<Caption>
December 31,
---------------------------
2001 2000
------------ ------------
Prepaid licenses and taxes ......... $ 1,540,779 $ 1,484,736
Prepaid insurance .................. 11,346 1,938,554
Other .............................. 846,285 777,328
------------ ------------
$ 2,398,410 $ 4,200,618
============ ============
</Table>
26
USA TRUCK, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. ACCRUED EXPENSES
Accrued expenses consist of the following:
<Table>
<Caption>
December 31,
---------------------------
2001 2000
------------ ------------
Salaries, wages, bonuses and employee benefits .. $ 2,917,302 $ 2,471,160
Insurance and claims accruals ................... 5,132,808 5,032,871
Other ........................................... 5,123,332 2,627,686
------------ ------------
$ 13,173,442 $ 10,131,717
============ ============
</Table>
5. LONG-TERM DEBT
Long-term debt consists of the following:
<Table>
<Caption>
December 31,
---------------------------
2001 2000
------------ ------------
Revolving credit agreement (1) .......... $ 26,000,000 $ 34,907,000
Capitalized lease obligations (2) ....... 43,480,135 43,620,879
------------ ------------
69,480,135 78,527,879
Less current maturities ................. 13,029,318 12,867,611
------------ ------------
$ 56,450,817 $ 65,660,268
============ ============
</Table>
(1) The Company's revolving credit agreement (the "Senior Credit
Facility"), effective April 28, 2000, provides for available
borrowings of $60,000,000, including letters of credit not
exceeding $5,000,000. The Senior Credit Facility matures on
April 28, 2005, prior to which time, subject to certain
conditions, the remaining balance may be converted at any time
at the Company's option to a term loan requiring forty-eight
equal monthly principal payments plus interest. The credit
facility bears variable interest based on the lenders prime
rate, or federal funds rate plus a certain percentage or LIBOR
plus a certain percentage, which is determined based on the
Company's attainment of certain financial ratios. The
effective interest rate on the Company's borrowings under the
credit facility for the year ending December 31, 2001 was
6.23%. A quarterly commitment fee of .30% per annum is payable
on the unused credit line. The Senior Credit Facility is
collateralized by accounts receivable and all otherwise
unencumbered equipment. The Company has outstanding letters of
credit of approximately $1,310,000 at December 31, 2001.
The Senior Credit Facility requires the Company to meet
certain financial covenants and to maintain a minimum tangible
net worth of approximately $66,581,000 at December 31, 2001.
The Company was in compliance with these covenants at December
31, 2001. The covenants would prohibit the payment of
dividends by the Company if such payment would cause the
Company to be in violation of any of the covenants. The
carrying amount reported in the balance sheet for borrowings
under the Line of Credit approximates its fair value since the
interest rate is variable.
(2) The leases extend through June 2005 and contain renewal or
fixed price purchase options. The effective interest rates on
the leases range from 3.51% to 11.57% at December 31, 2001.
The lease agreements require the Company to pay property
taxes, maintenance and operating expenses.
The Company made interest payments of approximately $4,483,000, $5,378,000 and
$1,490,000 during 2001, 2000 and 1999, respectively.
27
USA TRUCK, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. LEASES AND COMMITMENTS
Capital lease obligations of $13,323,678, $20,421,263 and $21,908,219 were
incurred during the years ended December 31, 2001, 2000 and 1999, respectively.
At December 31, 2001, the future minimum payments under capitalized leases with
initial terms of one year or more were $13,029,318 for 2002, $20,466,289 for
2003, $3,695,434 for 2004 and $6,289,095 for 2005. The present value of net
minimum lease payments was $43,480,136, which includes the current portion of
the capital leases of $13,029,318 and excludes amounts representing interest of
$3,158,730.
At December 31, 2001, property and equipment included capitalized leases which
had capitalized costs of $60,080,041, accumulated amortization of $16,986,378
and a net book value of $43,093,663. At December 31, 2000 property and equipment
included capitalized leases which had capitalized costs of $58,048,308,
accumulated amortization of $14,081,766 and a net book value of $43,966,542.
Amortization of leased assets is included in depreciation and amortization
expense.
Commitments to purchase revenue equipment and other fixed assets, which are
cancelable by the Company if certain conditions are met, aggregated
approximately $25,820,000 at December 31, 2001.
7. FEDERAL AND STATE INCOME TAXES
Significant components of the Company's deferred tax liabilities and assets are
as follows:
<Table>
<Caption>
December 31,
--------------------------------
2001 2000
-------------- --------------
Current deferred tax assets:
Revenue recognition .......................... $ -- $ (42,661)
Accrued expenses not deductible until paid ... (3,005,188) (3,033,282)
Allowance for doubtful accounts .............. (98,311) (115,323)
-------------- --------------
Total current deferred tax assets ................ (3,103,499) (3,191,266)
Current deferred tax liabilities:
Revenue recognition .......................... 109,683 --
Prepaid expenses deductible when paid ........ 2,320,816 1,583,633
-------------- --------------
Total current deferred tax liability ............. 2,430,499 (3,191,266)
-------------- --------------
Net current deferred tax assets .................. $ (673,000) $ (1,607,633)
============== ==============
Noncurrent deferred tax assets:
Alternative minimum tax credits .............. (20,716) (263,838)
Capitalized leases ........................... (162,507) --
Net operating losses ......................... (1,565,136) (396,764)
-------------- --------------
Total noncurrent deferred tax assets ............. (1,748,359) (660,602)
-------------- --------------
Noncurrent deferred tax liabilities:
Tax over book depreciation ................... $ 22,234,773 $ 21,433,405
Capitalized leases ........................... 2,097 338,222
-------------- --------------
Total noncurrent deferred tax liabilities ........ 22,236,870 21,771,627
-------------- --------------
Net current deferred tax liabilities ............. $ 20,488,511 $ 21,111,025
============== ==============
</Table>
28
USA TRUCK, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. FEDERAL AND STATE INCOME TAXES (CONTINUED)
Significant components of the provision for income taxes are as follows:
<Table>
<Caption>
Year Ended December 31,
-------------------------------------------
2001 2000 1999
------------ ------------ ------------
Current
Federal ............................ $ 321,496 $ (3,642,796) $ 2,406,997
State .............................. 58,620 -- 367,222
------------ ------------ ------------
Total current ...................... 380,116 (3,642,796) 2,774,219
Deferred
Federal ............................ 258,305 3,152,732 2,350,248
State .............................. 53,814 550,709 447,030
------------ ------------ ------------
Total deferred ..................... 312,119 3,703,441 2,797,278
------------ ------------ ------------
Total income tax expense ........... $ 692,235 $ 60,645 $ 5,571,497
============ ============ ============
</Table>
During 2001, 2000 and 1999, the Company made income tax payments of
approximately $34,625, $66,250, and $3,105,300, respectively.
As of December 31, 2001, the Company has a net operating loss carry forward of
approximately $1.6 million, which will expire in 2021. The Company also has
alternative minimum tax credits of $20,716. These credits have no expiration
date.
A reconciliation between the effective income tax rate and the statutory federal
income tax rate is as follows:
<Table>
<Caption>
Year Ended December 31,
----------------------------------------------
2001 2000 1999
------------ ------------ ------------
Income tax at 34% statutory federal rate ... $ 604,995 $ 52,600 $ 4,832,420
Federal income tax effects of:
State income taxes ..................... (38,228) (7,224) (276,846)
Nondeductible expenses ................. 70,404 75,038 58,846
Other .................................. (57,370) (81,017) 142,825
------------ ------------ ------------
Federal income taxes ................... 579,801 39,397 4,757,245
State income taxes ......................... 112,434 21,248 814,252
------------ ------------ ------------
Total income tax expense ................... $ 692,235 $ 60,645 $ 5,571,497
============ ============ ============
Effective tax rate ......................... 38.9% 39.2% 39.2%
============ ============ ============
</Table>
29
USA TRUCK, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. EMPLOYEE BENEFIT PLANS
The Company sponsors the USA Truck, Inc. Employees' Investment Plan, a tax
deferred savings plan under section 401(k) of the Internal Revenue Code that
covers substantially all employees. Employees can contribute up to 15% of their
compensation, with the Company matching 50% of the first 4% of compensation
contributed by each employee. Company matching contributions to the plan were
approximately $938,400, $788,400 and $634,000 for 2001, 2000 and 1999,
respectively.
9. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share:
<Table>
<Caption>
Year Ended December 31,
------------------------------------------
2001 2000 1999
------------ ------------ ------------
Numerator:
Net Income ................................ $ 1,087,211 $ 94,061 $ 8,641,502
Denominator:
Denominator for basic earnings per
share - weighted average shares ......... 9,235,586 9,253,843 9,324,037
Effect of dilutive securities:
Employee stock options .................. 43,682 6,201 30,404
------------ ------------ ------------
Denominator for diluted earnings per
share - adjusted weighted average
shares and assumed conversions .......... 9,279,268 9,260,044 9,354,441
============ ============ ============
Basic earnings per share ..................... $ .12 $ .01 $ .93
============ ============ ============
Diluted earnings per share ................... $ .12 $ .01 $ .92
============ ============ ============
Anti-dilutive employee stock options ......... 39,400 79,600 94,600
============ ============ ============
</Table>
10. COMMON STOCK TRANSACTIONS
The Company has a stock option plan which provides for the granting of incentive
or nonqualified options to purchase up to 800,000 shares of common stock to
officers and other key employees. No options may be granted under this plan for
less than the fair market value of the common stock at the date of the grant.
Although the exercise period is determined when options are actually granted, no
option will be exercised later than 10 years after it is granted.
The Company also has a nonqualified stock option plan for directors who are not
officers or employees of the Company, which provides for the granting of options
to purchase up to 25,000 shares of common stock. No options may be granted under
this plan with exercise prices of less than the fair market value of the common
stock at the date of grant. Although the exercise period is determined when
options are actually granted, options will vest no less than six months or more
than three years after the grant date and may not be exercised later than five
years after the grant date.
30
USA TRUCK, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. COMMON STOCK TRANSACTIONS (CONTINUED)
A summary of the Company's stock option activity, and related information for
the years ended December 31, follows:
<Table>
<Caption>
2001 2000 1999
---------------------------- ---------------------------- ---------------------------
WEIGHTED-AVERAGE Weighted-Average Weighted-Average
OPTIONS EXERCISE PRICE Options Exercise Price Options Exercise Price
---------- ---------------- --------- ---------------- --------- ----------------
Outstanding-beginning
of year .......................... 380,600 $ 8.10 258,200 $ 8.09 323,200 $ 7.72
Granted ............................ 6,000 6.65 185,000 5.49 -- --
Exercised .......................... (68,000) 6.46 (32,000) 6.25 (65,000) 6.25
Canceled ........................... (17,400) 7.70 (10,000) 6.96 -- --
Expired ............................ (24,800) 11.53 (20,600) 11.53 -- --
---------- ---------- --------- ---------- --------- ----------
Outstanding-end of year ............ 276,400 $ 6.48 380,600 $ 6.85 258,200 $ 8.09
========== ========== ========= ========== ========= ==========
Exercisable at end of year ......... 64,500 $ 8.70 104,800 $ 8.10 95,600 $ 7.85
</Table>
Exercise prices for options outstanding as of December 31, 2001 ranged from
$5.44 to $13.00. The weighted-average fair value of options granted during 2001
and 2000 were $3.18 and $2.33. No options were granted during 1999. The
weighted-average remaining contractual life of these options is 3.57 years.
In 2001 and 1999, 4,000 and 44,595 options, respectively, were exercised for
cash. No options were exercised for cash in 2000. In 2001, 2000 and 1999,
additional options of 64,000, 30,200 and 20,405 respectively, were exercised by
the exchange of 48,196, 29,419 and 15,056 shares of stock respectively, (with a
market value equal to the exercise price of the options). The exchanged shares
were then canceled.
Since the Company has adopted the disclosure-only provisions of SFAS 123, no
compensation cost has been recognized for the stock option plans. Had
compensation cost for the Company's two stock option plans been determined based
on the fair value at the grant date for awards in 2001, 2000 and 1999 consistent
with the provisions of SFAS 123, the Company's pro forma net income would have
been $969,439, $20,808 and $8,603,394, pro forma basic earnings per share would
have been $.10, $.00 and $.92, and pro forma diluted earnings per share would
have been $.10, $.00 and $.92, respectively.
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model. The following weighted-average assumptions
were used for grants in 2001: dividend yield of 0%; expected volatility of
0.477%; risk-free interest rate of 4.97% and expected lives range from 3 to 7
years. The following weighted-average assumptions were used for grants in 2000:
dividend yield of 0%; expected volatility of 0.336%; risk-free interest rates
range from 5.77% to 5.92% and expected lives range from 3 to 7 years. The
following weighted-average assumptions were used for grants in 1999: dividend
yield of 0%; expected volatility of 0.292%; risk-free interest rates range from
4.29% to 5.44% and expected lives range from 3 to 5 years.
31
USA TRUCK, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
11. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The tables below present quarterly financial information for 2001 and 2000:
<Table>
<Caption>
2001
THREE MONTHS ENDED
------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
-------------- -------------- -------------- --------------
Operating revenues .............................. $ 60,908,374 $ 64,220,633 $ 64,867,371 $ 62,444,967
Operating expenses and costs .................... 60,314,923 62,657,330 62,587,590 60,395,381
-------------- -------------- -------------- --------------
Operating income ................................ 593,451 1,563,303 2,279,781 2,049,586
Other expenses, net ............................. 1,256,001 1,109,326 1,313,491 1,027,857
-------------- -------------- -------------- --------------
(Loss) income before income taxes ............... (662,550) 453,977 966,290 1,021,729
Income tax (benefit) expense .................... (257,640) 175,420 377,003 397,452
-------------- -------------- -------------- --------------
Net (loss) income ............................... $ (404,910) $ 278,557 $ 589,287 $ 624,277
============== ============== ============== ==============
Average shares outstanding (basic) .............. 9,224,550 9,240,270 9,235,520 9,248,192
============== ============== ============== ==============
Basic (loss) earnings per share ................. $ (.04) $ .03 $ .06 $ .07
============== ============== ============== ==============
Average shares outstanding (diluted) ............ 9,232,087 9,266,526 9,277,221 9,291,936
============== ============== ============== ==============
Diluted (loss) earnings per share ............... $ (.04) $ .03 $ .06 $ .07
============== ============== ============== ==============
</Table>
<Table>
<Caption>
2000
Three Months Ended
------------------------------------------------------------------
March 31, June 30, September 30, December 31,
-------------- -------------- -------------- --------------
Operating revenues .............................. $ 55,144,425 $ 58,348,467 $ 55,532,933 $ 57,559,612
Operating expenses and costs .................... 54,344,363 54,871,633 53,434,653 58,139,869
-------------- -------------- -------------- --------------
Operating income ................................ 800,062 3,476,834 2,098,280 (580,257)
Other expenses, net ............................. 1,451,235 1,533,420 1,255,588 1,399,970
-------------- -------------- -------------- --------------
(Loss) income before income taxes ............... (651,173) 1,943,414 842,692 (1,980,227)
Income (benefit) tax expense .................... (256,788) 763,347 330,335 (776,249)
-------------- -------------- -------------- --------------
Net (loss) income ............................... $ (394,385) $ 1,180,067 $ 512,357 $ (1,203,978)
============== ============== ============== ==============
Average shares outstanding (basic) .............. 9,266,229 9,297,761 9,257,973 9,222,264
============== ============== ============== ==============
Basic (loss) earnings per share ................. $ (.04) $ .13 $ .06 $ (.13)
============== ============== ============== ==============
Average shares outstanding (diluted) ............ 9,288,976 9,302,194 9,264,116 9,228,370
============== ============== ============== ==============
Diluted (loss) earnings per share ............... $ (.04) $ .13 $ .06 $ (.13)
============== ============== ============== ==============
</Table>
12. LITIGATION
The Company is not a party to any pending legal proceedings which management
believes to be material to the financial condition or results of operations of
the Company. The Company maintains liability insurance against risks arising out
of the normal course of its business.
32
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no changes in or disagreements with accountants on
accounting and financial disclosure matters during any period covered by the
financial statements filed herein or any period subsequent thereto.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The sections entitled "Additional Information Regarding the Board of
Directors--Biographical Information", "Executive Officers", "Section 16(a)
Compliance" and "Security Ownership of Certain Beneficial Owners, Directors and
Executive Officers" in the Company's proxy statement for the annual meeting of
stockholders to be held on May 8, 2002, set forth certain information with
respect to the directors, nominees for election as directors and executive
officers of the Company and are incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The section entitled "Executive Compensation" in the Company's proxy
statement for the annual meeting of stockholders to be held on May 8, 2002, sets
forth certain information with respect to the compensation of management of the
Company and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The section entitled "Security Ownership of Certain Beneficial Owners,
Directors and Executive Officers" in the Company's proxy statement for the
annual meeting of stockholders to be held on May 8, 2002, set forth certain
information with respect to the ownership of the Company's voting securities and
are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The section entitled "Certain Transactions" in the Company's proxy
statement for the annual meeting of stockholders to be held on May 8, 2002, sets
forth certain information with respect to relations of and transactions by
management of the Company and is incorporated herein by reference.
33
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) THE FOLLOWING DOCUMENTS ARE FILED AS A PART OF THIS REPORT:
1. Financial statements.
The following financial statements of the Company are included in Part II,
Item 8 of this report:
<Table>
<Caption>
PAGE
----
Balance Sheets as of December 31, 2001 and 2000................................................. 19
Statements of Income for the years ended December 31, 2001, 2000 and 1999....................... 20
Statements of Stockholders' Equity for the years ended December 31, 2001, 2000 and 1999......... 21
Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999................... 22
Notes to Financial Statements................................................................... 23
2. The following financial statement schedule of the Company is included in Item 14(d):
Schedule II - Valuation and Qualifying Accounts................................................ 36
</Table>
Schedules other than the schedule listed above have been omitted since the
required information is not present or not present in amounts sufficient to
require submission of the schedule, or because the information required is
included in the financial statements or the notes thereto.
3. Listing of exhibits.
The exhibits filed with this report are listed in the Exhibit Index, which is
a separate section of this report.
Management Compensatory Plans:
- Employee Stock Option Plan (Exhibit 10.1)
- Nonqualified Stock Option Plan for Nonemployee Directors (Exhibit 10.2)
- Incentive Compensation Plan (Exhibit 10.3)
- 1997 Nonqualified Stock Option Plan for Nonemployee Directors (Exhibit
10.4)
(b) REPORTS ON FORM 8-K:
Current report on Form 8-K as filed on November 15, 1999.
34
USA TRUCK, INC.
ANNUAL REPORT ON FORM 10-K
YEAR ENDED DECEMBER 31, 2001
ITEM 14(d)
FINANCIAL STATEMENT SCHEDULE
35
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
USA TRUCK, INC.
<Table>
<Caption>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
----------- ---------- ----------- ---------- ----------
BALANCE AT CHARGED BALANCE
BEGINNING TO COST AND DEDUCTIONS END
DESCRIPTION OF PERIOD EXPENSES -OTHER (a) OF PERIOD
----------- ---------- ----------- ---------- ----------
Year ended December 31, 2001
Deducted from asset accounts:
Allowance for doubtful-accounts .... $ 303,203 $ 36,000 $ (78,432) $ 260,771
---------- ---------- ---------- ----------
Year ended December 31, 2000
Deducted from asset accounts:
Allowance for doubtful accounts .... $ 269,150 $ 82,200 $ (48,147) $ 303,203
---------- ---------- ---------- ----------
Year ended December 31, 1999
Deducted from asset accounts:
Allowance for doubtful accounts .... $ 140,670 $ 121,900 $ 6,580 $ 269,150
---------- ---------- ---------- ----------
</Table>
(a) Uncollectible accounts written off, net recoveries.
36
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
USA TRUCK, INC.
(Registrant)
<Table>
By: /s/ ROBERT M. POWELL By: /s/ CLIFTON R. BECKHAM By: /s/ JERRY D. ORLER
------------------------------- ------------------------------- -------------------------------
Robert M. Powell Clifton R. Beckham Jerry D. Orler
Chairman and Chief Vice President - Finance, Chief President
Executive Officer Financial Officer, Secretary,
and Treasurer
Date: March 22, 2002 Date: March 22, 2002 Date: March 22, 2002
</Table>
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.
<Table>
<Caption>
Signature Title Date
--------- ----- ----
/s/ ROBERT M. POWELL Chairman, Chief Executive March 22, 2002
------------------------------ Officer and Director
Robert M. Powell
/s/ JERRY D. ORLER President March 22, 2002
------------------------------ and Director
Jerry D. Orler
/s/ J.B. SPEED Director March 22, 2002
------------------------------
James B. Speed
/s/ GEORGE R. JACOBS Director March 22, 2002
------------------------------
George R. Jacobs
/s/ JIM L. HANNA Director March 22, 2002
------------------------------
Jim L. Hanna
/s/ ROLAND S. BOREHAM Director March 22, 2002
------------------------------
Roland S. Boreham, Jr.
/s/ JOE D. POWERS Director March 22, 2002
------------------------------
Joe D. Powers
</Table>
37
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT NUMBERED PAGE
------- ------- -------------
2.1 Asset Purchase Agreement dated as of October 31, 1999
between the Company, as buyer, and CARCO Carrier
Corporation doing business as CCC Express, Inc., as
seller, and CARCO Capital Corporation (incorporated by
reference to Exhibit 2.1 to the Company's Report on
Form 8-K filed on November 15, 1999).
3.1 Restated and Amended Certificate of Incorporation of
the Company (incorporated by reference to Exhibit 3.1
to the Company's Registration Statement on Form S-1,
Registration No. 33-45682, filed with the Securities
and Exchange Commission on February 13, 1992 [the "Form
S-1"]).
3.2* Amended Bylaws of the Company as currently in effect. 41
3.3 Certificate of Amendment to Certificate of
Incorporation of the Company filed March 17, 1992
(incorporated by reference to Exhibit 3.3 to Amendment
No. 1).
4.1 Specimen certificate evidencing shares of the Common
Stock, $.01 par value, of the Company (incorporated by
reference to Exhibit 4.1 to the Form S-1).
4.2 Equipment TRAC Lease Commitment Agreement dated
November 12, 1997 and accepted November 19, 1997,
between the Company and Banc One Leasing Corporation,
as Lender (incorporated by reference to Exhibit 4.9 to
the Company's annual report on Form 10-K for the year
ended December 31, 1997).
4.3 First Amendment dated December 30, 1998, to the
Equipment TRAC Lease Commitment Agreement dated
November 12, 1997 and accepted November 19, 1997,
between the Company and Banc One Leasing Corporation,
as Lender, as amended by letter dated March 12, 1999
(incorporated by reference to Exhibit 4.12 to the
Company's annual report on Form 10-K for the year ended
December 31, 1998).
4.4 Second Amendment dated December 30, 1998, to the
Equipment TRAC Lease Commitment Agreement dated October
25, 1999 between the Company and Banc One Leasing
Corporation, as Lender (incorporated by reference to
Exhibit 4.17 to the Company's annual report on Form
10-K for the year ended December 31, 1999).
4.5 TRAC Lease Commitment Agreement dated January 6, 2000
between the Company and SunTrust Leasing Corporation,
as Lessor (incorporated by reference to Exhibit 10.1 to
the Company's quarterly report on Form 10-Q for the
quarter ended March 31, 2000).
4.6 TRAC Lease Commitment Agreement dated January 11, 2000
and accepted January 12, 2000, between the Company and
First Union Commercial Corporation, as Lessor
(incorporated by reference to Exhibit 10.2 to the
Company's quarterly report on Form 10-Q for the quarter
ended March 31, 2000).
</Table>
38
<Table>
<Caption>
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT NUMBERED PAGE
------- ------- -------------
4.7 Senior Credit Facility Commitment Letter dated April
11, 2000, between the Company and Bank of America,
N.A., SunTrust Bank, and Mercantile Bank, N.A.
collectively as the Lenders (incorporated by reference
to Exhibit 10.1 to the Company's quarterly report on
Form 10-Q for the quarter ended March 31, 2000).
4.8 Senior Credit Facility Summary of Terms and Conditions
dated April 11, 2000, between the Company and Bank of
America, N.A., SunTrust Bank, and Mercantile Bank, N.A.
collectively as the Lenders (incorporated by reference
to Exhibit 10.2 to the Company's quarterly report on
Form 10-Q for the quarter ended June 30, 2000).
4.9 First Union Commercial Corporation Commitment Letter
dated October 17, 2000, for the First Amendment to the
Equipment TRAC Lease Agreement between the Company and
First Union Commercial Corporation, as Lessor
(incorporated by reference to Exhibit 4.22 to the
Company's annual report on Form 10-K for the year ended
December 31, 2000).
4.10 Proposal Exhibit (No. 1) dated October 17, 2000, to the
Equipment TRAC Lease Agreement between the Company and
First Union Commercial Corporation, as Lessor
(incorporated by reference to Exhibit 4.23 to the
Company's annual report on Form 10-K for the year ended
December 31, 2000).
4.11 SunTrust Leasing Corporation Commitment Letter dated
November 3, 2000, and accepted November 7, 2000, for
the First Amendment to the Equipment TRAC Lease
Agreement between the Company and SunTrust Leasing
Corporation, as Lessor (incorporated by reference to
Exhibit 4.24 to the Company's annual report on Form
10-K for the year ended December 31, 2000).
4.12 Lease Proposal dated November 3, 2000, and accepted
November 7, 2000, to the Equipment TRAC Lease Agreement
between the Company and SunTrust Leasing Corporation,
as Lessor (incorporated by reference to Exhibit 4.25 to
the Company's annual report on Form 10-K for the year
ended December 31, 2000).
4.13 First Amended to Senior Credit Facility dated April 11,
2000, between the Company and Bank of America, N.A.,
SunTrust Bank, and Firstar Bank, N.A. collectively as
the Lenders (incorporated by reference to Exhibit 10.1
to the Company's quarterly report on Form 10-Q for the
quarter ended March 31, 2001).
4.14* First Union Commercial Corporation Commitment Letter 55
dated October 31, 2001, and accepted November 5, 2001,
for the Equipment TRAC Lease Agreement between the
Company and First Union Commercial Corporation, as
Lessor.
</Table>
39
<Table>
<Caption>
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT NUMBERED PAGE
------- ------- -------------
4.15* Proposal Exhibit (No. 1) dated October 31, 2001, to the 57
Equipment TRAC Lease Agreement between the Company and
First Union Commercial Corporation, as Lessor.
4.16* SunTrust Leasing Corporation Commitment Letter dated 59
October 24, 2001, and accepted November 5, 2001, for
the Second Amendment to the Equipment TRAC Lease
Agreement between the Company and SunTrust Leasing
Corporation, as Lessor.
4.17* Lease Proposal dated October 24, 2001, and accepted 60
November 5, 2001, to the Equipment TRAC Lease Agreement
between the Company and SunTrust Leasing Corporation,
as Lessor.
4.18* Equipment TRAC Lease Commitment Agreement dated 63
November 2, 2001, and accepted November 8, 2001,
between the Company and Fleet Capital Corporation, as
Lessor.
4.19 Instruments with respect to long-term debt not
exceeding 10% of the total assets of the Company have
not been filed. The Company agrees to furnish a copy of
such instruments to the Securities and Exchange
Commission upon request.
10.1 Employee Stock Option Plan of the Company (incorporated
by reference to Exhibit 10.6 to the Form S-1).
10.2 Nonqualified Stock Option Plan for Nonemployee
Directors of the Company (incorporated by reference to
Exhibit 10.7 to the Form S-1) terminated in January
1997, except with respect to outstanding options.
10.3 Description of Incentive Compensation Plan for
executive officers of the Company (incorporated by
reference to Exhibit 10.8 to the Form S-1).
10.4 1997 Nonqualified Stock Option Plan for Nonemployee
Directors of the Company (incorporated by reference to
Exhibit 99.1 to the Company's Registration Statement on
Form S-8, Registration No. 333-20721, filed with the
Securities and Exchange Commission on January 30,
1997).
21 The Company has no significant subsidiaries.
23 * Consent of Ernst & Young LLP, Independent Auditors. 66
</Table>
- ----------
* Filed herewith.
40