<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
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Commission file number 0-19858
USA TRUCK, INC.
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(Exact name of Registrant as specified in its charter)
DELAWARE 71-0556971
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3200 INDUSTRIAL PARK ROAD
VAN BUREN, ARKANSAS 72956
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(Address of principal executive offices) (Zip Code)
(501) 471-2500
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Registrant's telephone number, including area code
Not applicable
- --------------------------------------------------------------------------------
Former name, address and former fiscal year, if changed since last report.
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
9,269,332 shares of common stock, $.01 par value, were outstanding on May
1, 2000.
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INDEX
USA TRUCK, INC.
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited) Page
----
<S> <C>
Condensed Balance Sheets - March 31, 2000 and December 31, 1999 3
Condensed Statements of Income and Comprehensive Income -- Three
months ended March 31, 2000 and 1999 4
Condensed Statements of Cash Flows -- Three months ended March 31,
2000 and 1999 5
Notes to Condensed Financial Statements - March 31, 2000 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk 14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 15
</TABLE>
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
USA TRUCK, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
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(unaudited) (note)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,186,040 $ 2,145,707
Accounts receivable:
Trade, less allowance for doubtful accounts
(2000 - $278,150; 1999 - $269,150) 29,191,691 26,649,235
Other 3,960,244 5,509,866
Inventories 425,871 301,907
Deferred income taxes 639,852 1,208,413
Prepaid expenses and other current assets 5,104,217 3,634,056
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Total current assets 40,507,915 39,449,184
PROPERTY AND EQUIPMENT 191,690,719 186,011,130
ACCUMULATED DEPRECIATION AND AMORTIZATION (45,901,363) (43,873,074)
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145,789,356 142,138,056
OTHER ASSETS 462,533 452,448
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Total assets $ 186,759,804 $ 182,039,688
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank drafts payable $ 1,399,043 $ 1,116,485
Trade accounts payable 5,548,022 5,139,164
Accrued expenses 8,596,531 11,065,604
Current maturities of long-term debt 12,979,829 10,956,533
------------- -------------
Total current liabilities 28,523,425 28,277,786
LONG-TERM DEBT, LESS CURRENT MATURITIES 68,994,214 64,452,648
DEFERRED INCOME TAXES 17,186,533 17,008,364
LONG-TERM INSURANCE AND CLAIMS ACCRUALS 2,312,714 2,192,714
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.01 per share; 1,000,000 shares
authorized; none issued -- --
Common stock, par value $.01 per share; 16,000,000 shares authorized;
issued shares (2000 and 1999 - 9,387,041) 93,870 93,870
Additional paid-in capital 12,271,684 12,271,685
Retained earnings 58,446,442 58,840,827
Less treasury stock at cost (2000 - 118,936; 1999 - 122,011) (1,069,078) (1,098,206)
------------- -------------
Total stockholders' equity 69,742,918 70,108,176
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Total liabilities and stockholders' equity $ 186,759,804 $ 182,039,688
============= =============
</TABLE>
NOTE: The balance sheet at December 31, 1999 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See notes to condensed financial statements.
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USA TRUCK, INC.
CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
2000 1999
------------ ------------
<S> <C> <C>
OPERATING REVENUES $ 55,144,425 $ 36,199,447
OPERATING EXPENSES AND COSTS:
Salaries, wages and employee benefits 22,511,334 15,656,478
Operations and maintenance 17,708,908 8,343,429
Operating taxes and licenses 1,175,876 703,307
Insurance and claims 2,809,509 1,638,086
Communications and utilities 711,992 409,891
Depreciation and amortization 6,821,145 4,229,216
Other 2,605,599 1,082,599
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54,344,363 32,063,006
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OPERATING INCOME 800,062 4,136,441
OTHER (INCOME) EXPENSE:
Interest expense 1,376,565 330,176
(Gain) or loss on disposal of assets 34,773 (7,760)
Other, net 39,897 (8,536)
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1,451,235 313,880
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INCOME BEFORE INCOME TAXES (651,173) 3,822,561
INCOME TAXES (256,788) 1,498,444
------------ ------------
NET INCOME AND
COMPREHENSIVE INCOME $ (394,385) $ 2,324,117
============ ============
PER SHARE INFORMATION:
Average shares outstanding (Basic) 9,266,229 9,392,817
============ ============
Basic net income per share $ (0.04) $ 0.25
============ ============
Average shares outstanding (Diluted) 9,288,976 9,452,481
============ ============
Diluted net income per share $ (0.04) $ 0.25
============ ============
</TABLE>
See notes to condensed financial statements.
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USA TRUCK, INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
2000 1999
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ (394,385) $ 2,324,117
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 6,828,665 4,229,216
Provision for doubtful accounts 9,000 9,001
Deferred income taxes 746,730 904,699
Gain on sale of assets 34,773 (7,760)
Changes in operating assets and liabilities:
Receivables (1,001,834) (815,972)
Inventories and prepaid expenses (1,594,124) (741,665)
Bank drafts payable, accounts payable and accrued expenses (1,777,656) (3,166,345)
Insurance and claims accruals - long-term 120,000 102,000
------------ ------------
Net cash provided by operating activities 2,971,169 2,837,291
INVESTING ACTIVITIES:
Purchases of property and equipment (5,357,535) (7,117,318)
Proceeds from sale of assets 5,178,796 2,723,747
Increase in other assets (11,000) --
------------ ------------
Net cash used by investing activities (189,739) (4,393,571)
FINANCING ACTIVITIES:
Borrowings under long-term debt 11,197,632 5,753,000
Proceeds from the exercise of stock options -- 178,716
Proceeds from sale of treasury stock 29,127 25,808
Principal payments on long-term debt (12,550,324) (3,653,000)
Principal payments on capitalized lease obligations (2,417,532) (1,208,790)
------------ ------------
Net cash used by financing activities (3,741,097) 1,095,734
------------ ------------
DECREASE IN CASH AND CASH EQUIVALENTS (959,667) (460,546)
Cash and cash equivalents at beginning of period 2,145,707 1,779,643
------------ ------------
Cash and cash equivalents at end of period $ 1,186,040 $ 1,319,097
============ ============
</TABLE>
See notes to condensed financial statements.
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USA TRUCK, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2000
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments considered necessary for a fair presentation)
have been included. Operating results for the three-month period ended March 31,
2000, are not necessarily indicative of the results that may be expected for the
year ended December 31, 2000. For further information, refer to the financial
statements and footnotes thereto included in the annual report on Form 10-K of
USA Truck, Inc. (the "Company") for the year ended December 31, 1999.
NOTE B--COMMITMENTS
As of May 12, 2000, the Company had remaining commitments for the purchases
of revenue equipment in the aggregate amount of approximately $35.0 million in
2000 and $56.5 million in 2001. The Company also had remaining commitments to
purchase certain other assets for approximately $6.2 million in 2000.
NOTE C--CAPITAL STOCK TRANSACTIONS
During the three-month period ended March 31, 2000, the Company made no
purchases of its outstanding common stock on the open market pursuant to the
repurchase program authorized by the Board of Directors in July 1998. The
Company distributed 3,075 treasury shares pursuant to the Company's Employee
Stock Purchase Plan, to participants in such Plan.
NOTE D--NEW ACCOUNTING PRONOUNCEMENTS
In March 2000, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation No. 44 ("FIN 44"), Accounting of Certain Transactions
involving Stock Compensation an interpretation of APB Opinion No. 25. FIN 44
clarifies the application of Opinion 25 for (a) the definition of employee for
purposes of applying Opinion 25, (b) the criteria for determining whether a plan
qualifies as a noncompensatory plan, (c) the accounting consequence of various
modifications to the terms of a previously fixed stock option or award, and (d)
the accounting for an exchange of stock compensation awards in a business
combination.
FIN 44 is effective July 1, 2000, but certain conclusions cover specific
events that occur after either December 15, 1998, or January 12, 2000.
Management believes that the impact of FIN 44 will not have a material effect on
the financial position or results of operations of the Company.
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NOTE E -- SUBSEQUENT EVENTS
On April 28, 2000, the Company signed a new senior credit facility (the
"Senior Credit Facility") that will provide a working capital line of credit of
$60,000,000, including letters of credit not exceeding $5,000,000. Bank of
America, N.A. is the agent bank and SunTrust Bank and Firstar Bank, N.A. are
participants. The Senior Credit Facility matures on April 28, 2005. The rates
are based on grid pricing which uses the Company's ratio of total funded debt to
earnings before interest, taxes, depreciation, amortization and rent ("EBITDAR")
to determine the points to be added to the base LIBOR rate. A quarterly
commitment fee is payable on the unused amount and the rate is also based on
grid pricing as described above. The Company repaid all amounts due under its
General Line of Credit (see "Liquidity and Capital Resources" section of this
Form 10-Q) in the amount of $36,174,000 and had $35,000,000 outstanding on the
Senior Credit Facility as of May 9, 2000. The effective interest rate on the
Company's borrowings under the Senior Credit Facility for the period from April
28, 2000 to May 9, 2000 was 7.493%.
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FORM 10-Q
USA TRUCK, INC.
Item 2. 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 periods indicated:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
2000 1999
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<S> <C> <C>
OPERATING REVENUES 100.0% 100.0%
OPERATING EXPENSES AND COSTS:
Salaries, wages and employee benefits 40.8 43.3
Operations and maintenance 32.1 23.0
Operating taxes and licenses 2.1 2.0
Insurance and claims 5.1 4.5
Communications and utilities 1.3 1.1
Depreciation and amortization 12.4 11.7
Other 4.7 3.0
-------- --------
98.5 88.6
-------- --------
OPERATING INCOME 1.5 11.4
OTHER (INCOME) EXPENSE:
Interest expense 2.5 0.9
(Gain) or loss on disposal of assets 0.1 --
Other, net 0.1 --
-------- --------
2.6 0.9
-------- --------
INCOME BEFORE INCOME TAXES (1.2) 10.5
INCOME TAXES (0.5) 4.1
-------- --------
NET INCOME AND
COMPREHENSIVE INCOME (0.7)% 6.4%
======== ========
</TABLE>
RESULTS OF OPERATIONS
Quarter Ended March 31, 2000 Compared to Quarter Ended March 31, 1999
Operating revenues increased 52.3% to $55.1 million in the first quarter of
2000 from $36.2 million for the same quarter of 1999. The Company believes this
increase is due primarily to the acquisition of the assets of CCC Express on
November 1, 1999 and related business, the expansion of the Company's marketing
team and the new marketing efforts implemented for the Company's logistics
services, dedicated fleet operations, and private fleet conversions and to
additional business from existing customers. Average revenue per mile increased
to $1.162 in
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the first quarter of 2000 from $1.106 in 1999. There was a 51.2% increase in the
number of shipments to 48,508 in 2000 from 32,084 in 1999. This volume
improvement was made possible by an increase of 56.7% in the average number of
tractors operated from 1,104 in 1999 to 1,729 in 2000. Although the Company has
continued to expand its fleet, miles per tractor per week decreased 8.9% from
2,353 in 1999 to 2,144 in 2000. The empty mile factor decreased to 9.0% in 2000
from 9.7% of paid miles in the first quarter of 1999.
Operating expenses and costs as a percentage of revenues increased to 98.5%
in 2000 from 88.6% in 1999. This change resulted primarily from increases, on a
percentage of revenue basis, in operations and maintenance costs, insurance and
claims, depreciation and amortization and in other expenses. These increases
were partially offset by a decrease, on a percentage of revenue basis, in
salaries, wages and employee benefits. The increase in operations and
maintenance costs was primarily the result of an increase of 46.9 cents per
gallon in the average cost of fuel in the first quarter of this year compared to
the same period last year, combined with a decrease in average fuel efficiency
to 6.14 miles per gallon in 2000 from 6.24 in 1999. The increase in insurance
and claims was due to an increase in the quantity and severity of accidents. The
increase in depreciation and amortization was due to an increase in the cost of
tractors and trailers when compared to those being retired and to a reduction in
the average miles per tractor per week as mentioned above. The increase in other
expenses, relative to revenues, was due primarily to our increased efforts to
recruit and train qualified drivers in order to replace lost drivers and grow
our fleet. The percentage decrease, relative to revenue, in salaries, wages and
employee benefits was partially due to the decrease in empty miles as mentioned
above, which increase the efficiency of drivers' wages paid, and partially due
to the reduction in operating-based incentives accrued.
As a result of the foregoing factors, operating income decreased 80.7% to
$0.8 million, or 1.5% of revenues, in 2000 from $4.1 million, or 11.4% of
revenues, in 1999.
Interest expense increased 316.9% to $1.3 million in 2000 from $0.3 million
in 1999, resulting primarily from a substantial increase in total borrowings to
fund the acquisition of the assets of CCC Express on November 1, 1999.
Other, net expense increased to $39,900 in 2000 from a negative $8,500 in
1999, resulting primarily from an increase in fines, reduction in interest
income and miscellaneous income partially offset by a reduction in the amount of
officer life insurance expense.
As a result of the above, income before income taxes decreased 117.0% to
negative $0.7 million, or negative 1.2% of revenues, in 2000 from $3.8 million,
or 10.5% of revenues, in 1999.
The Company's effective tax rate of 39.2% for 2000 did not change from
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 117% to
negative $0.4 million, or 0.7% of revenues, in 2000 from $2.3 million, or 6.4%
of revenues, in 1999, a decrease of 116% in diluted net income per share to
negative $.04 from $.25. The number of shares used in the calculation of diluted
net income per share for the first quarters of 2000 and 1999 were 9,288,976 and
9,452,481, respectively. Total shares outstanding at March 31, 2000, were
9,268,105.
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SEASONALITY
In the motor carrier industry generally, revenues are lower in the first
and fourth quarters as customers decrease shipments during the winter holiday
season and as inclement weather impedes operations. These factors historically
have tended to decrease net income in the first and fourth quarters. Future
revenues could be impacted if customers reduce shipments due to temporary plant
closings, which historically have occurred during July and December.
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. 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 all but the most significant increases in fuel costs and
fuel taxes from customers through increased freight rates. Diesel prices
increased significantly during 1999 and the three-month period ended March 31,
2000. There can be no assurance that diesel prices will not increase further or
that they will remain below the higher prices experienced in prior 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.
LIQUIDITY & CAPITAL RESOURCES
The continued growth of the Company's business has required significant
investments in new equipment. USA Truck has financed revenue equipment purchases
with cash flows from operations and through borrowings under the Company's
collateralized revolving credit agreement (the "General Line of Credit") and
conventional financing and lease-purchase arrangements. Working capital needs
have generally been met with cash flows from operations and occasionally with
borrowings under the General Line of Credit. The Company has relied
significantly on the General Line of Credit to meet working capital requirements
since the acquisition of the assets of CCC Express. The Company uses the General
Line of Credit to minimize fluctuations in cash flow needs and to provide
flexibility in financing revenue equipment purchases. Cash flows from operations
were $3.0 million for the three-month period ended March 31, 2000 as compared to
$2.8 million in the comparable period of 1999.
As of March 31, 2000, the Company's General Line of Credit provided for
available borrowings of up to $40.0 million, including letters of credit not
exceeding $5.0 million. Approximately $1.35 million was available under the
General Line of Credit. The General Line of Credit matures on April 30, 2001,
prior to which time, subject to certain conditions, the amount outstanding can
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 interest rate
on the General Line of Credit fluctuates between the lender's prime rate, or
prime plus 1/2% 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 General Line of Credit for the
three-month period ending March 31, 2000 was 7.68%. Under the General Line of
Credit, the Company has the right to borrow at a rate related to the Eurodollar
rate when this rate is less than the lender's prime rate. A quarterly commitment
fee of 1/4% per annum is payable on the unused amount. The principal maturity
can be accelerated if the borrowing base (based on percentages of receivables
and otherwise unsecured equipment) does not support the
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principal balance outstanding. The General Line of Credit is collateralized by
accounts receivable and all otherwise unencumbered equipment.
The Company is a party to a lease commitment agreement (the "Equipment TRAC
Lease Commitment"), dated November 19, 1997, to facilitate the leasing of
tractors. The Equipment TRAC Lease Commitment was amended on October 12, 1999 to
provide for available borrowings of up to $6,000,000 available during the
remainder of 1999 and until October 12, 2000. Each capital lease under this
lease commitment has a repayment period of either 36 or 42 months. As of March
31, 2000, capital leases in the aggregate principal amount of $23.7 million were
outstanding under the Equipment TRAC Lease Commitment with an average interest
rate of 5.74% per annum.
As of March 31, 2000, capital leases in the aggregate principal amount of
$8.6 million were outstanding under a prior lease commitment with an average
interest rate of 5.25% per annum.
On January 11, 2000, the Company entered into a lease commitment agreement
(the "2000 TRAC Lease Commitment A"), to facilitate the leasing of tractors. The
2000 Equipment TRAC Lease Commitment A expires on December 31, 2000 and provides
for a maximum borrowing amount of $15.6 million during 2000. Each capital lease
will have a repayment period of either 36 or 42 months. Borrowings are limited
based on the amounts outstanding under capital leases entered into under this
agreement. As of March 31, 2000, $9.4 million remained available under the 2000
Equipment TRAC Lease Commitment A. 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 March 31, 2000, capital leases in the aggregate
principal amount of $6.2 million were outstanding under this lease commitment
with an average interest rate of 6.77% per annum.
On January 31, 2000, the Company entered into a lease commitment agreement
(the "2000 TRAC Lease Commitment B"), dated January 31, 2000, to facilitate the
leasing of tractors. The 2000 Equipment TRAC Lease Commitment B expires on
December 31, 2000 and provides for a maximum borrowing amount of $16.5 million
during 2000. Each capital lease will have a repayment period of either 36 or 42
months. Borrowings are limited based on the amounts outstanding under capital
leases entered into under this agreement. As of March 31, 2000, $15.4 million
remained available under the 2000 Equipment TRAC Lease Commitment B. The
interest rate on the capital leases under this lease commitment fluctuates in
relation to the one year LIBOR as published in The Wall Street Journal and is
fixed upon execution of a lease. As of March 31, 2000, capital leases in the
aggregate principal amount of $1.1 million were outstanding under this lease
commitment with an average interest rate of 6.73% per annum.
As of March 31, 2000, the Company had debt obligations of approximately $82
million, including amounts borrowed under the facilities described above, of
which approximately $13 million were current obligations. During the first three
months of 2000, the Company made borrowings under the General Line of Credit of
$11.2 million, while retiring $15.0 million in debt. The retired debt had an
average interest rate of approximately 6.7%.
During the years 2000 and 2001, the Company plans to make approximately
$107.6 million in capital expenditures, including $5.4 million expended as of
March 31, 2000. As of March 31, 2000, USA Truck had committed to spend an
additional $29 million of this amount for revenue equipment in 2000, and $56.5
million of this amount is currently committed for revenue equipment in 2001. The
commitments to purchase revenue equipment are cancelable by the
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Company if certain conditions are met. The balance of the expected capital
expenditures will be used for certain other assets.
The Senior Credit Facility, equipment leases and cash flows from operations
should be adequate to fund the Company's operations and expansion plans at least
through the end of 2001. For further information refer to Note E - "Subsequent
Events" in the notes to the financial statements in Item 1 of this Form 10-Q.
There can be no assurance, however, 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
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 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 became effective in
September 1998 upon the expiration of the Company's existing stock repurchase
program. As of March 31, 2000, the Company had purchased 231,600 shares pursuant
to this new authorization at an aggregate purchase price of $2,125,000. On May
5, 1999, the Board of Directors authorized the retirement of 100,000 shares of
treasury stock that had been purchased at an aggregate cost of $.9 million. In
addition, as of March 31, 2000, 12,664 of the remaining 131,600 repurchased
shares had been resold under the Company's Employee Stock Purchase Plan. On May
3, 2000, the Board of Directors authorized the retirement of 106,733 shares of
treasury stock that had been purchased at an aggregate cost of $.9 million. The
Company may continue to 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.
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YEAR 2000 ISSUES
The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Potentially,
the Year 2000 issue could have resulted, at the Company and at its vendors and
customers, in system failures or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions or to engage in other normal business activities. Beginning in
1997, the Company undertook various initiatives intended to ensure that its
computer equipment and software would function properly in the Year 2000 and
thereafter.
As of May 1, 2000, the Company has not experienced any material adverse
effects related to the Year 2000 issue, and none of its key vendors have
reported to the Company any material adverse effects related to the issue. At
this time, the Company does not expect to encounter any Year 2000 issues that
would have a material effect on its results of operations, liquidity and
financial condition. Furthermore, the Company does not anticipate any
significant expenditure in the future related to year 2000 compliance. However,
latent Year 2000 problems may surface at key dates or events in the future.
NEW ACCOUNTING PRONOUNCEMENTS
In March 2000, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation No. 44 ("FIN 44"), Accounting of Certain Transactions
involving Stock Compensation an interpretation of APB Opinion No. 25. FIN 44
clarifies the application of Opinion 25 for (a) the definition of employee for
purposes of applying Opinion 25, (b) the criteria for determining whether a plan
qualifies as a noncompensatory plan, (c) the accounting consequence of various
modifications to the terms of a previously fixed stock option or award, and (d)
the accounting for an exchange of stock compensation awards in a business
combination.
FIN 44 is effective July 1, 2000, but certain conclusions cover specific
events that occur after either December 15, 1998, or January 12, 2000.
Management believes that the impact of FIN 44 will not have a material effect on
the financial position or results of operations of the Company.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements and information that are
based on management's belief as well as assumptions made by, and information
currently available to management. 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.
Page 13
<PAGE> 14
FORM 10-Q
USA TRUCK, INC.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company's General Line of Credit agreement provides for borrowings that
bear interest at variable rates based on either a prime rate or the LIBOR. At
March 31, 2000, the Company had $37.6 million outstanding pursuant to the
General Line of Credit. 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.
As reported in the notes to the financial statements in Item 1 of this Form
10-Q, as of April 28, 2000 the Company entered into the Senior Credit Facility
with a multibank group. All amounts due under the General Line of Credit were
repaid at that time and the facility was closed. The Senior Credit Facility
agreement provides for borrowings that bear interest at variable rates based on
either a prime rate or the LIBOR. At May 1, 2000 the Company had $37.8 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.
Page 14
<PAGE> 15
FORM 10-Q
USA TRUCK, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(A) Exhibits
11.1 Statement Re: Computation of Earnings Per Share
27 Financial Data Schedule
(B) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the three
months ended March 31, 2000.
Page 15
<PAGE> 16
SIGNATURES
Pursuant to the requirements 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)
Date: 05/15/00 /s/ ROBERT M. POWELL
---------------------- -------------------------------------
ROBERT M. POWELL
President and Chief Executive Officer
Date: 05/15/00 /s/ JERRY D. ORLER
---------------------- -------------------------------------
JERRY D. ORLER
Vice President-Finance and
Chief Financial Officer
Page 16
<PAGE> 17
FORM 10-Q
INDEX TO EXHIBITS
USA TRUCK, INC.
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------------ ----------------------------------------------------- ------------
<S> <C> <C>
10.1 SunTrust Leasing Corporation Commitment Letter
10.2 First Union Commercial Corporation Commitment Letter
11.1 Statement Re: Computation of Earnings Per Share
27 Financial Data Schedule
</TABLE>
<PAGE> 18
FORM 10-Q
INDEX TO EXHIBITS
USA TRUCK, INC.
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------------ ----------------------------------------------------- ------------
<S> <C> <C>
10.1 SunTrust Leasing Corporation Commitment Letter 18
10.2 First Union Commercial Corporation Commitment Letter 21
11.1 Statement Re: Computation of Earnings Per Share 24
27 Financial Data Schedule 25
</TABLE>
<PAGE> 1
EXHIBIT 10.1
SUNTRUST LEASING CORPORATION COMMITMENT LETTER
USA TRUCK, INC.
USA TRUCK, INC. LEASE PROPOSAL
LESSOR: SunTrust Leasing Corporation and/or its
assignee or nominee
LESSEE: USA Truck, Inc.
EQUIPMENT: Up to 230 New 2000 and 2001 Model Freightliner
Tractors
ESTIMATED EQUIPMENT COST: $16,500,000.00
BASIC TERM: 42 Months
BASIC TERM COMMENCEMENT DATE: Fundings under this lease line shall be
completed between January 15, 2000 and
December 31, 2000. The Basic Term will
commence on the 30th day of the month
following the date of the Lease Schedule.
BASIC TERM RENTALS: Lease Rentals will be payable monthly in
arrears from the Basic Term Commencement Date.
Base Lease Monthly Rental Factor
Commencement Date (As a % of Equip. Cost)
----------------- -----------------------
January 15, 2000 1.71097
February 15, 2000 1.70676
March 15, 2000 1.70246
April 15, 2000 1.69879
May 15, 2000 1.69669
June 15, 2000 1.68903
July 15, 2000 1.67892
August 15, 2000 1.67294
September 15, 2000 1.66673
October 15, 2000 1.66314
November 15, 2000 1.65738
December 15, 2000 1.64540
The above Monthly Rental Factor is based on
current market conditions as of December 30,
1999. As of this date the yield for the Three
(3) Year Treasury Note is 6.20%. The Monthly
Rental Factor will be adjusted upward or
downward by .011704% for every 25 basis points
change in the yield of the 3-Year Treasury, or
pro rata share thereof. On the Acceptance
Date, the then prevailing Lease Rate Factor
shall be determined by the Lessor and shall
remain fixed for the Base Lease Term.
<PAGE> 2
INTERIM LEASE TERM AND RENT: The Interim Lease Term will run from the date
the Equipment is accepted by the Lessee to
(but not including) the Basic Term
Commencement Date. Interim Rent will be paid
by the Lessee on the Basic Term Commencement
Date in an amount equal to the daily
equivalent of the Basic Term Rentals.
END OF TERM OPTIONS: At the end of the Basic Term, the Lessee shall have the
option of purchasing the Equipment or returning the Equipment to the Lessor in
accordance with the terms described below.
TERMINATION: At the satisfactory conclusion of the Basic
Term, the Lessee shall have the option to
purchase all, but not less than all, of the
equipment on a Lease Schedule. In this event,
the Lessee will have a purchase price as
follows:
Forty-Five Percent (45%) of the Equipment Cost
In the event the Lessee chooses to return the Equipment, the Lessor
will sell the Equipment. If the Net Proceeds of the sale (after expenses) are
greater than the Purchase Price, the excess proceeds will be returned to the
Lessee. If the Net Proceeds are less than the Purchase Price, the difference
between the proceeds and the Purchase Price will be paid by the Lessee to the
Lessor as a final Rental Payment then due.
LEASE RENTAL AND ASSUMPTIONS: The rentals quoted in this TRAC Lease Proposal
are based on the following assumptions and are
subject to adjustment should any or all of
such assumptions not be valid:
1. The Lessor will be entitled to depreciate
the Equipment and all of the Equipment will
qualify for accelerated depreciation,
utilizing a depreciable life of Three (3)
years for the Equipment.
2. To support the Lessor's tax treatment of
the Lease as a true lease, the Lessee may be
required to furnish an independent expert
appraisal to the effect that at the end of the
Basic Lease Term (a) the Equipment will have a
fair market value of at lease twenty percent
(20%) of its original cost, and (b) the
Equipment will have a remaining useful life of
the longer of one year or twenty percent (20%)
of the originally estimated useful life of the
Equipment.
3. At the time the Lessor becomes the owner of
the equipment, the Equipment will be new,
tangible personal property and the Lessee will
be deemed to be the original user thereof.
EARLY TERMINATION: In the event that any item of Equipment is (I)
damaged or destroyed to such extent that it
cannot be reasonably restored to normal
operating condition or (II) seized or
condemned by governmental authorities (i.e.,
eminent domain) or (III) lost due to theft or
disappearance for a period in excess of 45
days, the Lease with respect to such Equipment
will terminate and the Lessee thereof will pay
the Stipulated Loss Value with respect
thereto.
<PAGE> 3
NET LEASE: The Lease will be a net lease in that the
Lessee will be responsible for any and all
costs and expenses in connection with the
Equipment, including sales and use taxes, and
any other taxes with the exception of federal
and state net income taxes on the net income
of the Lessor. The Lessee is also responsible
for maintaining and insuring the Equipment and
for all fees, insurance premiums, operations,
maintenance, repair, rebuilding and other
charges related to the use or possession of
the Equipment.
FEDERAL TAX INDEMNIFICATION: The Lessee will indemnify the Lessor for any
loss or deduction in federal tax benefits
based on the tax assumptions outlined above if
such loss or reduction is caused by (i) any
breach, inaccuracy or incorrectness of any
representation, warranty or covenant made by
the Lessee, (ii) the acts of omissions (not
including the execution of documents
contemplated hereby or any act or omission
expressly required or expressly permitted by
such documents) of the lessee, or (iii) any
change in federal law with an effective date
that precedes the date of acceptance of the
Equipment for lease by the Lessee. If an
Investment Tax Credit provision is passed,
benefit will flow to Lessee at the same lease
rate as indicated in this proposal.
MAINTENANCE: Lessee will maintain the Equipment leased by
it so that it remains in good operating
condition (ordinary wear and tear excepted)
and in compliance with any and all applicable
laws, regulations and state inspections.
DOCUMENTATION: This Proposal is not intended to address all
the final legal and documentation matters
pertaining to this Lease. The lease
documentation will represent the final legal
agreement. The lease documentation will be
furnished by the Lessor.
CREDIT APPROVAL: This Proposal Letter is subject to the credit
approval of SunTrust Leasing Corporation.
SUNTRUST BANK
By: /s/ TIM W. WAGNER
------------------------
Title: First Vice President
---------------------
The undersigned accepts and agrees to the lease terms of this commitment this
the 6th day of January, 2000.
USA TRUCK, INC.
By: /s/ JERRY D. ORLER
------------------------
Title: CFO and Secretary
---------------------
<PAGE> 1
EXHIBIT 10.2
FIRST UNION COMMERCIAL CORPORATION COMMITMENT LETTER
USA TRUCK, INC.
January 11, 2000
Mr. Jerry D. Orler
Chief Financial Officer
USA Truck, Inc.
3200 Industrial Park Road
Van Buren, Arkansas 72956
Dear Jerry:
It is a pleasure to inform you that we hereby offer to enter into a leasing
transaction with you under the terms and conditions set forth in this Commitment
Letter.
1. LESSEE: USA Truck, Inc.
2. LESSOR: First Union Commercial Corporation.
3. DESCRIPTION OF EQUIPMENT:
Type A Equipment: Approximately two hundred fourteen (214) new
International highway tractors.
Type B Equipment: Five (5) new International trainer tractors.
4. COST OF EQUIPMENT: Up to $15,600,000.00 in the aggregate.
5. EQUIPMENT LOCATION: Continental United States.
6. LEASE TERM:
Type A Equipment: Forty-two (42) months.
Type B Equipment: Thirty-six (36) months.
7. LEASE PAYMENTS:
Type A Equipment: Lessee shall be required to make forty-two (42)
consecutive monthly payments, payable in arrears, each equal to the
following percentages.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Month of Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Funding
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Monthly
Rental 1.705 1.702 1.699 1.696 1.6948 1.6920 1.6620 1.658 1.654 1.652 1.64888 1.64497
Rate 07 17 24 28 7 0 3 07 08 77
- --------------------------------------------------------------------------------------------------------------------------------
Lease 6.40% 6.35% 6.31% 6.26% 6.24% 6.19% 5.71% 5.65% 5.58% 5.56% 5.50% 5.44%
Rate
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
Type B Equipment: Lessee shall be required to make thirty-six (36)
consecutive monthly payments, payable in arrears, based on a lease rate of
6.34% and payment factor of 1.79291%.
The lease payments for the Equipment covered by this Commitment Letter
shall be an amount equal to the product of the cost of the Equipment
multiplied by the monthly rental rate. The monthly rental rate will be
determined by adjusting the lease rate in this transaction, which will
float from the date of this Commitment Letter until the equipment funding
date, based on the change in either the like term Treasury Note's yield to
maturity (*see below), or the one year LIBOR rate of 6.46%, as published in
the December 22nd, 1999 edition of the The Wall Street Journal and as
published on the equipment funding date. The lease rate in this transaction
will float up from the date of this Commitment Letter until the equipment
funding date based on the change in either the above-referenced Treasury
Note's yield to maturity or the one year LIBOR rate, whichever is greater.
The lease rate shall be increased by .01% for each corresponding increase
of .01% in the selected index. The lease rate in this transaction will
float down from the date of this Commitment Letter until the equipment
funding date based on the change in either the above-referenced Treasury
Note's yield to maturity or the one year LIBOR rate, whichever is less. The
lease rate shall be decreased by .01% for each corresponding decrease of
.02% in the selected index.
Treasury Note's Yield at
Funding month Treasury Note time of pricing
- --------------------------------------------------------------------------------
January-April 6 5/8% March, 2002 6.20%
May-August 5 7/8% September, 2002 6.21%
September-December 5 3/4% April, 2003 6.27%
8. PURCHASE OPTION: At the expiration of the basic lease term, the Lessee
shall have the option to purchase the equipment for its then fair market
value.
9. TERMINAL RENTAL ADJUSTMENT CLAUSE: If the fair market value paid by the
Lessee or a third party exceeds or falls below forty-five percent (45%) of
the original equipment cost for Type A Equipment or fifty percent (50%) for
Type B Equipment, the excess will be refunded or the shortfall will be
reimbursed to Lessor by Lessee through a rental adjustment.
10. DEPRECIATION: For the account of the Lessor the assumption has been made
that the property qualifies for a three (3) year depreciable life based
upon its ADR guideline class of 00.26.
11. COMMITMENT EXPIRATION DATE: December 31, 2000. If the equipment has not
been (a) delivered at the above referenced location, accepted by Lessee and
the necessary Acceptance Certificates have not been executed prior to this
expiration date, or (b) an adverse change has occurred in Lessee's
financial condition since the date shown on the latest financial statement
which Lessee has furnished prior to the date of this letter, then, at
Lessor's option, Lessor may terminate its obligation under this commitment
or may re-commit under different conditions.
12. TYPE OF LEASE: The lease will be a net lease whereby Lessee will be
responsible for all expenses related to the use of the equipment including,
but not limited to, maintenance costs, taxes, and insurance coverage.
13. INDEMNIFICATION: Lessee shall indemnify Lessor against all hazards,
liabilities, claims, actions, contingencies, risks of loss, and loss of tax
benefits retained by Lessor caused by the acts or omissions of Lessee.
14. EXPENSES: Lessee shall bear expenses related to (i) preparation,
negotiation and the finalization of documents related to the transaction,
(ii) out-of-pocket expenses for lien searches, title searches and obtaining
certified copies of charter documents and good standing certificates, (iii)
title application, lien application and registration fees and financing
statement filing fees, and (iv) similar out-of-pocket expenses.
<PAGE> 3
15. FINANCIAL STATEMENTS: During the term of the lease, Lessee shall provide
Lessor with company prepared quarterly and annual audited financial
statements.
16. ASSIGNMENT: This commitment and the benefits and obligations hereunder
shall not be assignable by Lessee.
17. INSURANCE REQUIREMENT: As set forth in the attached Exhibit A with
policyholder as First Union Commercial Corporation.
18. DOCUMENTATION: This Commitment Letter is subject to obtaining a lease
document and other customary documentation, including without limitation,
title registration applications and UCC financing statements, containing
such terms and conditions, including additional terms and conditions to
those set forth herein, as is satisfactory to Lessor.
It is understood that we are not bound by the oral or written statement of any
employee or agent of ours, and that our obligations are contained only in this
letter or any amendment to it in writing, or in the Equipment Lease signed by
our authorized officer.
If you agree to enter into a leasing transaction on the terms set forth in this
letter, in the Equipment Lease and in the Schedule, please indicate your
acceptance by delivering the following to us within fifteen (15) days from the
date of this letter.
1. The Lessor counterpart of this letter executed by you;
2. The Lessor counterparts of the enclosed Equipment Lease and Schedule Nos. I
and No. II executed by you;
3. The enclosed Corporate Resolution with incumbency; and
4. Certificate of Lessee (more than 50% usage).
BY YOUR ACCEPTANCE HEREOF, YOU AGREE THAT THIS LETTER BECOMES A PART
OF THE EQUIPMENT LEASE REFERENCED ABOVE.
Please be assured that we shall be certain that you receive the best and most
efficient leasing service.
Sincerely,
FIRST UNION COMMERCIAL CORPORATION
/s/ JODY ROBERTS
Jody Roberts
Vice President
/s/ WILLIAM H. GRIER
William H. Grier
Vice President
We hereby agree to enter the equipment leasing transaction described above on
the terms and conditions set forth above and agree that the foregoing letter
shall be a part of the Equipment Lease referred to in such letter.
USA TRUCK, INC.
- -----------------------
By: /s/ JERRY D. ORLER
--------------------
Title: CFO & SEC.
-----------------
Date: January 12, 2000
------------------
<PAGE> 1
EXHIBIT 11.1
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
USA TRUCK, INC.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
2000 1999
------------- -------------
<S> <C> <C>
Numerator:
Net income and comprehensive income .... $ (394,385) $ 2,324,117
============= =============
Denominator:
Denominator for basic earnings per
share - weighted average shares ...... 9,266,229 9,392,817
Effect of dilutive securities:-
Employee stock options ................. 22,747 59,664
------------- -------------
Denominator for diluted earnings per
share - adjusted weighted average
shares and assumed conversions ......... 9,288,976 9,452,481
============= =============
Basic earnings per share ................. $ (0.04) $ 0.25
============= =============
Diluted earnings per share ............... $ (0.04) $ 0.25
============= =============
$(9,288,976.0) $(9,452,481.0)
============= =============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S REPORT ON FORM 10-Q FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2000
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,186,040
<SECURITIES> 0
<RECEIVABLES> 29,469,841
<ALLOWANCES> 278,150
<INVENTORY> 425,871
<CURRENT-ASSETS> 40,507,915
<PP&E> 191,690,719
<DEPRECIATION> 45,901,363
<TOTAL-ASSETS> 186,759,804
<CURRENT-LIABILITIES> 28,523,425
<BONDS> 0
93,870
0
<COMMON> 0
<OTHER-SE> 69,649,048
<TOTAL-LIABILITY-AND-EQUITY> 186,759,804
<SALES> 55,144,425
<TOTAL-REVENUES> 55,144,425
<CGS> 0
<TOTAL-COSTS> 54,344,363
<OTHER-EXPENSES> 1,451,235
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,376,565
<INCOME-PRETAX> (651,173)
<INCOME-TAX> (256,788)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (394,385)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
