-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ky8eCEix/lxB1EFEFFxQXQ+k9dcr6wTCY6IFQZZqy30Mrd7Dwm8oT+HKnS2JG4Fu iOomTFnEy8I+bb5JAyMIQQ== 0001089355-00-000584.txt : 20001225 0001089355-00-000584.hdr.sgml : 20001225 ACCESSION NUMBER: 0001089355-00-000584 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: U S TRUCKING INC CENTRAL INDEX KEY: 0000820408 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 680133692 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 033-16417-LA FILM NUMBER: 794106 BUSINESS ADDRESS: STREET 1: 550 LONG POINT ROAD STREET 2: SUITE C CITY: MT. PLEASANT STATE: SC ZIP: 29464 BUSINESS PHONE: 8439722055 MAIL ADDRESS: STREET 1: 550 LONG POINT ROAD STREET 2: SUITE C CITY: MT. PLEASANT STATE: SC ZIP: 29464 FORMER COMPANY: FORMER CONFORMED NAME: NORTHERN DANCER CORP DATE OF NAME CHANGE: 19930723 10QSB 1 0001.txt QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Nine Months Ended September 30, 2000 Commission File Number: 33-9640-LA U S TRUCKING, INC. (Exact Name of Issuer as Specified in its Charter) COLORADO 68-0133692 (State or Other Jurisdiction (I.R.S. Employer Identification Number) Incorporation or Organization) 550 Long Point Road MT. Pleasant, S.C. 29462 ------------------------------------------------------------------------------ (Address of Principal Executive (Offices) (843) 972-2055 (Registrant's Telephone Number, Including Area Code) Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [ ] No [X] There were 19,727,783 shares of the Registrant's common stock outstanding as of August 25, 2000 U.S. TRUCKING, INC. FORM 10-QSB INDEX PART I: FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS (UNAUDITED) SEPTEMBER 30, 2000 AND DECEMBER 31, 1999 CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEAR ENDED DECEMBER 31, 1999 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION PART II: OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS ITEM 2. CHANGES IN SECURITIES ITEM 3. DEFAULTS UPON SENIOR SECURITIES ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K U.S. TRUCKING, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, 2000 and December 31, 1999
A S S E T S 2000 1999 - ----------- ------------- -------------- CURRENT ASSETS Cash and cash equivalents -- 1,057,719 Accounts receivable-net of allowance for doubtful accounts of $5,603,970 in 2000 and $303,451 in 1999 9,998,841 8,140,132 Current portion of notes receivable-related parties -- 4,541,634 Parts and supply inventory 143,405 258,405 Current portion of deferred tax asset -- 400,000 Investment in marketable securities at fair market value 28,881 188,136 Prepaid expenses and other assets 682,869 575,565 ------------ ----------- Total Current Assets 10,853,996 15,161,591 ------------ ----------- TRANSPORTATION AND OTHER EQUIPMENT - at cost, less accumulated depreciation and amortization of $982,249 in 2000 and $420,541 in 1999 4,114,264 887,690 ------------ ----------- OTHER ASSETS Restricted cash 4,085,864 981,704 Notes receivable-related parties-net of allowance for doubtful accounts of $1,897,278 in 2000 and $ -0- in 1999 315,814 5,407,346 Deferred tax asset - net of current portion 1,141,963 741,963 Due from related party -- 186,023 Due from captive insurer 601,963 705,321 Other assets -- 375,700 Intangible assets - net of accumulated amortization of $7,672,771 in 2000 and $879,565 in 1999 259,694 5,501,756 ------------ ------------ Total Other Assets 6,405,298 13,899,813 ------------ ------------ TOTAL ASSETS $21,373,558 $29,949,094 ============ ============
3 U.S. TRUCKING, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, 2000 and December 31, 1999
LIABILITIES AND STOCKHOLDERS' EQUITY 2000 1999 - ------------------------------------ --------------- ------------- CURRENT LIABILITIES Accounts payable-trade $ 3,187,952 $ 2,027,819 Revolving loan payable 15,224,072 6,736,536 Accrued expenses and other 3,598,230 1,818,902 Current portion - long term debt 400,000 3,210,916 ------------ ----------- Total Current Liabilities 22,410,254 13,794,173 ------------ ----------- OTHER LIABILITIES Owner operator escrow accounts -- 122,865 Long term debt - net of current portion 1,994,932 1,486,954 Convertible debentures 8,885,000 1,450,000 ------------ ----------- Total Other Liabilities 10,879,932 3,059,819 ------------ ----------- TOTAL LIABILITIES 33,290,186 16,853,992 ------------ ----------- STOCKHOLDERS' EQUITY Preferred Stock (no par value - 10,000,000 shares authorized) Series A (99,000 shares outstanding) 76 762 Series B (2,000 shares outstanding 2,000,000 2,000,000 Series C (50,000 shares outstanding) 15,000 15,000 Series D (950 shares outstanding) 950,000 950,000 Series E (2,300 shares outstanding) 2,300,000 2,300,000 Common Stock (no par value-75,000,000 shares authorized, 18,229,461 shares issued and outstanding in 2000; 50,000,000 shares authorized, 8,844,461 shares issued and outstanding in 1999) 7,649,010 6,445,199 Additional paid-in capital 3,605,580 3,605,580 Accumulated (deficit) (28,265,063) (1,302,675) Accumulated other comprehensive (loss) (171,231) (11,976) Subscriptions receivable -- (906,788) ------------ ----------- Total Stockholders' Equity (11,916,628) 13,095,102 ------------ ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $21,373,558 $29,949,094 ============ ===========
4 U.S. TRUCKING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the Nine Months Ended September 30, 2000 and 1999
2000 1999 ---------------- -------------- Net Revenues $56,816,019 $29,828,018 Operating expenses Transportation and rentals 48,853,827 12,589,165 Operating supplies and maintenance 112,549 1,102,553 Bad debts 7,609,557 577,969 Other operating costs 415,527 -- Fuel 25,000 2,405,503 Insurance and claims 3,750,916 1,696,760 Depreciation and amortization 2,394,912 1,731,921 Taxes and licenses 225,487 416,033 Salaries, wages and benefits 2,960,708 6,400,761 Occupancy costs 251,104 262,117 Administrative expenses 2,736,069 1,810,006 ------------ ----------- Total operating expenses 69,335,656 28,992,788 ------------ ----------- Operating income (loss) (12,519,637) 835,230 ------------ ----------- Other income and expenses Interest income 155,435 13,691 Interest expense (1,482,382) (596,048) Other income 13,592 25,899 Gain (loss) on disposition of equipment (449,998) 404,954 -------------- ------------ Total other income and (expenses) (1,763,353) (151,504) ------------- ------------ Net income (loss) before income taxes (14,282,990) 683,726 Provision for income taxes -- 266,653 Tax benefit of net operating loss carryforward -- (266,653) ------------ ----------- Net income from continuing operations (14,282,990) 683,726 ------------ ----------- Loss from discontinued operations (12,679,398) -- ------------ ----------- Net Income (loss) $(26,962,388) $ 683,726 ============ ============ Basic earnings (loss) per common share $ (2.10) $ .09 ============= ============ Weighted average number of common shares 12,810,850 7,876,381 ============= ============
5 U.S. TRUCKING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the Three Months Ended September 30, 2000 and 1999
2000 1999 ---------------- ------------ Net Revenues $ 16,449,629 $ 12,000,849 Operating expenses Transportation and rentals 15,055,253 5,501,283 Operating supplies and maintenance 80,182 477,045 Bad debts 7,194,033 -- Other operating costs 415,527 277,138 Fuel 25,376 948,179 Insurance and claims 1,479,006 644,820 Depreciation and amortization 1,848,457 585,204 Taxes and licenses 130,981 181,020 Salaries, wages and benefits 1,021,097 2,262,888 Occupancy costs 75,220 90,085 Administrative expenses 1,061,716 740,835 ------------ ----------- Total operating expenses 28,386,848 11,708,497 ------------ ----------- Operating income (loss) (11,937,219) 295,352 ------------ ----------- Other income and expenses Interest income 133,188 11,266 Interest expense (653,082) (217,576) Gain (Loss) on the sale of equipment (814,398) 280,840 Other income (13,826) -- ------------ ----------- Total other income and (expenses) (1,348,118) 74,530 ------------ ----------- Net income (loss) before income taxes (13,285,337) 369,882 Provision for income taxes -- 144,254 Tax benefit of net operation loss carryforward -- (144,254) ------------ ----------- Net income from continuing operations (13,285,337) 369,882 ------------ ----------- Loss from discontinued operations (7,828,201) -- ------------ ----------- Net Income (loss) $(21,113,162) $ 369,882 ============ =========== Basic earnings (loss) per common share $ (1.16) $ .05 ============ =========== Weighted average number of common shares 18,229,461 7,149,404 ============ ===========
6 U.S. TRUCKING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
Common Stock Preferred Stock No Par Value Shares Amount Shares Amount ---------- ---------- --------- ----------- Opening balance - January 1, 2000 8,844,461 $6,445,199 1,054,250 $5,265,762 Issuance of Common Stock- Checkmate Acquisition 385,000 1,203,125 -- -- Series A Preferred stock exchanged for common stock 9,000,000 686 (900,000) (686) Write off of Subscriptions Receivable -- -- -- -- Other Comprehensive Loss: Net Loss for the nine months ended September 30, 2000 -- -- -- -- Change in unrealized loss on available-for-sale investments -- -- -- -- Closing balance - June 30, 2000 18,229,461 $7,649,010 154,250 $5,265,076 Accumulated Additional Other Paid in Accumulated Comprehensive Subscriptions Capital Deficit (Loss) Receivable Total ---------- ----------- -------- ---------- ------------ Opening balance - January 1, 2000 $3,605,580 $ (1,302,675) $ (11,976) $(906,788) $ 13,095,102 Issuance of Common Stock- Checkmate Acquisition -- -- -- -- 1,203,125 Series A Preferred stock exchanged for common stock -- -- -- -- -- Write off of Subscriptions Receivable -- -- -- 906,788 906,788 Other Comprehensive Loss: Net Loss for the nine months ended September 30, 2000 -- (26,962,388) -- -- (26,962,388) Change in unrealized loss on available-for-sale investments -- -- (159,255) -- (159,255) ---------- ------------ ---------- ----------- ------------ Closing balance - June 30, 2000 $3,605,580 $(28,265,063) $ (171,231) $ $(11,916,628) ========== ============ ========== =========== ============
7 U.S. TRUCKING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE YEAR ENDED DECEMBER 31, 1999
Common Stock Preferred Stock No Par Value Shares Amount Shares Amount ---------- ---------- --------- ----------- Opening balance - January 1, 1999 16,074,591 $2,796,000 -- $ -- Issuance of Common Stock upon Exercise of options 1,759,870 449,961 -- -- Capital contributed -- -- -- -- Issuance of Common Stock- Excalibur Acquisition - Note 3 200,000 650,000 -- -- Issuance of Common Stock-Prostar Acquisition - Note 3 200,000 500,000 -- -- Common Stock exchanged for Series A Preferred Stock - Note 8 (9,990,000) (762) 999,000 762 Issuance of Series B Preferred Stock Note 8 -- -- 2,000 2,000,000 Issuance of Series C Preferred Stock Note 8 -- -- 50,000 15,000 Issuance of Series D Preferred Stock Note 8 -- -- 950 950,000 Issuance of Series E Preferred Stock Note 8 -- -- 2,300 2,300,000 Proceeds from sale of Common Stock 600,000 2,050,000 -- -- Other Comprehensive Income: Net Income for the year ended December 31, 1999 -- -- -- -- Change in unrealized loss on available-for-sale investments -- -- -- -- December 31, 1999 -- -- -- -- ---------- ---------- --------- ----------- Closing balance - December 31, 1999 8,844,461 $6,445,199 1,054,250 $ 5,265,762 ========== ========== ========= =========== Accumulated Additional Other Paid in Accumulated Comprehensive Subscriptions Capital Deficit (Loss) Receivable Total ---------- ----------- -------- ---------- ------------ Opening balance - January 1, 1999 $3,821,812 $(1,409,433) -- $(120,000) $ 5,088,379 Issuance of Common Stock upon Exercise of options -- -- -- (436,788) 13,173 Capital contributed 401,668 -- -- -- 401,668 Issuance of Common Stock- Excalibur Acquisition - Note 3 -- -- -- -- 650,000 Issuance of Common Stock-Prostar Acquisition - Note 3 -- -- -- -- 500,000 Common Stock exchanged for Series A Preferred Stock - Note 8 -- -- -- -- -- Issuance of Series B Preferred Stock Note 8 (185,000) -- -- -- 1,815,000 Issuance of Series C Preferred Stock Note 8 -- -- -- -- 15,000 Issuance of Series D Preferred Stock Note 8 (150,000) -- -- -- 800,000 Issuance of Series E Preferred Stock Note 8 (282,900) -- -- -- 2,017,100 Proceeds from sale of Common Stock -- -- -- (350,000) 1,700,000 Other Comprehensive Income: Net Income for the year ended December 31, 1999 -- 106,758 -- -- 106,758 Change in unrealized loss on available-for-sale investments -- (11,976) -- -- (11,976) December 31, 1999 -- -- -- -- 106,758 ---------- ----------- -------- --------- ------------ Closing balance - December 31, 1999 $3,605,580 $(1,302,675) $(11,976) $(906,788) $ 13,095,102 ========== =========== ======== ========= ============
8 U.S. TRUCKING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 2000 and 1999
2000 1999 --------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net Income (loss) from continuing operations $(14,282,990) $ 683,726 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED (USED) IN OPERATING ACTIVITIES Depreciation & amortization 3,355,912 1,731,921 Provision for doubtful accounts 3,978,410 -- (Loss) on disposition of equipment 449,998 -- Deferred taxes -- -- Gain on disposal of equipment -- (404,954) (Increase) Decrease-Assets Restricted cash (3,104,160) (485,108) Accounts receivable (5,339,088) (4,375,651) Parts and Supplies inventory 115,000 (39,870) Investment in marketable securities 159,255 -- Prepaid expenses and other assets 268,396 (588,512) Intangible assets 4,874,457 -- Due from captive insurer 103,358 -- Increase (Decrease)-Liabilities Accounts payable - trade 1,160,133 ( 110,457) Revolving loan 8,487,536 3,034,165 Owner operator escrow (122,865) -- Accrued expenses and other current liabilities 1,779,328 727,107 ------------ ----------- Total Adjustments 16,165,670 (511,359) ------------ ----------- Net cash provided (used) by operating activities 1,882,680 172.367 ------------ ----------- Discontinued operations (12,679,398) -- Subtotal (10,796,718) -- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of equipment and software development (136,618) (1,251,766) Cash paid for businesses acquired (534,698) (898,484) Proceeds from disposition of assets -- 1,255,160 ------------ ----------- Net cash (used) by investing activities (671,316) (895,090) ------------ ----------- Subtotal $(11,468,034) $ (722,723) ------------ -----------
9 U.S. TRUCKING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) For the Nine Months ended September 30, 2000 and 1999
2000 1999 ----------------- ----------------- Balance Forward $(11,468,034) $ 722,723 CASH FLOWS FROM FINANCING ACTIVITIES Due from related parties 186,023 -- Notes receivable 5,091,532 (1,124,805) Repayments of notes receivable -- -- Proceeds from long-term debt financing 508,676 1,071,229 Issuance of preferred stock -- 2,665,462 Proceeds from sale of common stock and additional paid in capital -- 701,688 Issuance of convertible debentures 7,435,000 1,040,000 Conversion of stock options- 71,238 Principal payments on long-term debt ( 2,810,916) (2,168,727) ------------ ------------ Net cash (used) provided by financing activities 10,410,315 2,256,085 ------------ ------------ NET INCREASE (DECREASE) IN CASH (1,057,719) 1,533,362 CASH AT BEGINNING OF PERIOD 1,057,719 22,976 ------------ ------------ CASH AT END OF PERIOD $ -- $ 1,556,338 ============ ============ Supplemental Disclosure of Cash flow information: Cash Paid during the year Interest expense $ 1,382,382 $ 217,576 ============ ============ Income taxes $ -- $ -- =============== =============
10 U.S. TRUCKING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) For the Nine Months ended September 30, 2000 and 1999 Non Cash Investing and Financing Activities During the first quarter of year 2000, U.S. Trucking acquired the business operations of Checkmate Truck Brokerage, Inc. and Maverick Truck Brokerage, Inc. Fair Value of assets acquired $ 3,531,347 Fair Value of liabilities assumed 4,399,649 Goodwill recognized 2,606,125 Cash paid 534,698 Value of Common Stock issued 1,203,125 Effective June 1999, U.S. Trucking acquired the intermodal business of Excalibur Express, Inc. Fair Value of assets acquired $ -- Fair Value of liabilities assumed 76,410 Goodwill recognized 1,026,410 Cash paid 300,000 Value of Common Stock issued 650,000 In April 1999 U.S. Trucking acquired the freight brokerage business of Prostar, Inc. Fair Value of assets acquired $ -- Fair Value of liabilities assumed 229,312 Goodwill recognized 1,444,312 Cash paid 715,000 Value of Common Stock issued 500,000 11 U.S. TRUCKING, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Nine Months Ended September 30, 2000 and 1999 NOTE 1 - General and Summary of Significant Accounting Policies (A) - Nature of Business The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. They have been prepared in accordance with paragraph 228.310 of Regulation S-B and accordingly, do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. All adjustments considered necessary for a fair presentation have been included. U.S. Trucking is in the mid to long-haul trucking, brokerage-logistics services, agent and auto liability insurance businesses. Corporate headquarters are located in Mt. Pleasant, South Carolina with regional terminals located in various states. Services are provided to customers throughout the 48 contiguous states. (B) - Basis of Presentation The accompanying consolidated balance sheets and related statements of operations, stockholders' equity and cash flows includes the accounts of U.S. Trucking, Inc. and its wholly owned subsidiaries, Gulf Northern Transport, Inc., Mencor, Inc. and Prostar, Inc. as of September 30, 2000 and Gulf Northern Transport, Inc. and Mencor, Inc. as of June 30, 1999. Significant intercompany transactions or balances as of and for the periods ended September 30, 2000 and 1999 have been eliminated. (C) - Net Income per Common Share Basic net income per share is computed on the basis of the weighted average number of common shares outstanding during each period. Diluted net income per share is calculated by combining weighted average number of common shares outstanding and potentially dilutive common share equivalents (D) - Cash and Cash Equivalents The Company considers all highly liquid debt instruments purchased with maturities of six months or less to be cash equivalents for financial statement purposes. 12 U.S. TRUCKING, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Nine Months Ended September 30, 2000 and 1999 (E) - Parts and Supply Inventory Inventory consists principally of parts and supplies used in maintaining its motor carrier fleet, skids used in transporting goods, and small tools and are stated at the lower-of-cost or market, determined on a first-in, first-out basis. (F) - Transportation and Other Equipment Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives. Accelerated methods of depreciation are followed for tax purposes and the straight-line method is used for financial reporting purposes. Transportation equipment, furniture and fixtures, and other equipment are generally depreciated over periods ranging from two to seven years. (G) - Intangible Assets Intangible assets include goodwill which is amortized on a straight-line basis over periods ranging from six to twenty years and deferred financing, debt issuance costs and trade-in costs which are amortized on a straight-line basis over periods ranging from three to five years. (H)- Management In January 2000, U.S. Trucking subsidiary Gulf Northern Transport, Inc. signed a master agent agreement with Carolina Global, Inc. to manage Gulf Northern's container operations. Carolina Global is owned 90% by Logistics Management, LLC and 10% by an officer of U.S. Trucking. Under the terms of the agreement, Gulf Northern will pay 90% of revenues generated by its container operations to Carolina Global in exchange for the operational services provided. Also in January 2000, Gulf Northern signed a master agent agreement with One-Way Logistics, Inc. to manage Gulf Northern's over the road operations. Effective November 30, 2000 Gulf Northern's trustee filed a voluntary petition of bankruptcy under Chapter 11 of the U.S. Code. Under the terms of the agreement, Gulf Northern will pay 90% of revenues generated by its over the road operations to One-Way in exchange for the operational services provided. 13 U.S. TRUCKING, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Nine Months Ended September 30, 2000 and 1999 (I) - Income Taxes U.S. Trucking accounts for income taxes in accordance with Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting or Income Taxes" which requires the use of the "liability method" of accounting for income taxes. Accordingly, deferred tax liabilities and assts are determined based on the difference between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Current income taxes are based on the respective periods' taxable income for federal, state and local income tax reporting purposes. (J) - Use of Estimates In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (K) - Revenue Recognition During 1999, U.S. Trucking changed its revenue recognition policy to record revenue at he time freight is picked up at the customer's site. Prior to 1999, the Company recognized revenues at the time freight was delivered to recipients. This change in accounting policy resulted in an insignificant difference in net income for the periods reported. Accordingly, these financial statements were not restated to reflect this change. Liability insurance revenue is recognized on a written premium basis. All other revenue is recognized at the time services are provided. (L) - 1999 Reclassifications Certain reclassifications have been made to the 1999 figures to conform them to the current year's presentation. 14 U.S. TRUCKING, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Nine Months Ended September 30, 2000 and 1999 NOTE 2 - Earnings (Loss) Per Common Share Basic earnings (loss) per common share was calculated using the weighted average number of shares outstanding for the periods presented, after giving effect to the conversion of 9,990,000 shares of common stock into series A preferred stock in February 1999 and the conversion of 900,000 shares Series A preferred stock back to 9,000,000 shares of common stock as of June 30, 2000. The resulting weighted average number of common shares outstanding was 10,010,544 in 2000 and 8,925,676 in 1999. With respect to 1999, diluted earnings per common share were calculated assuming the issuance of potentially dilutive securities such as the convertible preferred stock and convertible debentures and options and warrants. NOTE 3 - Acquisition of Subsidiaries and Other Assets and Liabilities On February 7, 2000, U.S. Trucking entered into a merger agreement to acquire Checkmate Truck Brokerage, Inc. and Maverick Truck Brokerage, Inc., for a purchase price of $2,606,125. Under the terms of the agreement, the purchase price consists of 385,000 shares of common stock that were valued at $1,203,125 and $500,000 payable to the principals. In addition, $500,000 has been placed in escrow pending the outcome of an acquisition review of the assets and liabilities. Further, the contract includes a stock adjustment agreement whereby the issuance of the common stock included in the agreement will be adjusted pending the outcome of certain performance parameters. An allocation of the purchase price follows: Checkmate/ Maverick Assets Accounts receivable $ 3,311,143 Transportation and other equipment 220,204 Goodwill 2,606,125 ----------- Total $ 6,137,472 =========== Liabilities Assumed and Equity Liabilities assumed $ 3,962,688 Liability to sellers 971,659 Common stock 1,203,125 ---------- Total $ 6,137,472 =========== 15 U.S. TRUCKING, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Nine Months Ended September 30, 2000 and 1999 NOTE 3 - Acquisition of Subsidiaries and Other Assets and Liabilities (Conrtinued) In April 1999, U.S. Trucking acquired the common stock of Pro Star, Inc. a truck brokerage company based in Charleston, SC for $1,444,312 consisting of 200,000 shares of common stock, cash of $715,000 and the assumption of liabilities of $229,312. In June 1999, the Company acquired the intermodal business of Excalibur Express, Inc., also a Charleston, SC based company for $1,026,410 consisting of 200,000 shares of common stock and $300,000 in cash. An allocation of the purchase prices follow:
Excalibur Prostar, Inc. Express Total ------------- ----------- ------------ Assets Goodwill $ 1,444,312 $ 1,026,410 $ 2,470,722 ----------- ----------- ----------- Total $ 1,444,312 $ 1,026,410 $ 2,470,722 =========== =========== =========== Liabilities Assumed and Equity Liabilities assumed and debt to sellers $ 944,312 $ 376,410 $ 1,320,722 Common stock 500,000 650,000 1,150,000 ----------- ----------- ----------- Total $ 1,444,312 $ 1,026,410 $ 2,470,722 =========== =========== ===========
16 U.S. TRUCKING, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Nine Months Ended September 30, 2000 and 1999 NOTE 4 - Income Taxes The deferred tax asset of $1,141,963 represents the tax benefit from net operating losses generated in prior years reduced by a valuation allowance amounting to $9,338,000 as of September 30, 2000. The valuation allowance provided is based on management's valuation of the likelihood of realization of the benefit of the net operating loss carryovers. Management believes it is more likely than not that U.S. Trucking will realize the benefit of the recorded deferred tax assets. As required by SFAS 109, deferred taxes are provided based upon the tax rate at which the items of income and expense are expected to be settled in the Company's tax return. The expected tax rate used is 37.3% for each of the years. U.S. Trucking has net operating losses through September 30, 2000 of $29,000,000. These losses will be available to offset future taxable income and begin to expire in 2010. There is no tax effect related to the component of the other comprehensive loss since no future capital gain can be anticipated. 17 U.S. TRUCKING, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Nine Months Ended September 30, 2000 and 1999 Note 5 - Convertible Debentures During the six months ended June 30, 2000, U.S. Trucking issued convertible debentures in the amount of $7,100,000. Debt issuance costs amounted to $84,000 which are being amortized over the life of the debentures. The debentures include a stated interest rate of 10% per annum and mature during 2003. The Company also retired $539,704 of debentures during the six months ended June 30, 2000. Related debt issuance costs of $44,000 was expensed and is included in amortization expenses in the accompanying financial statements. During the six months ended June 30, 1999 the Company issued $2,250,000 of 10% convertible debentures due May 31, 2002 with related debt issuance costs amounting to $208,000. The Company subsequently retired $800,000 of those debentures. Related debt issuance costs of $78,180 was expensed and is included in amortization expenses in the accompanying financial statements. The holders of the debentures are entitled, at their option, to convert at any time, all or any part of the principal amount of the debentures into U.S. Trucking's common stock plus accrued interest. The price per share of common stock into which the debentures are convertible is the higher of $1.50 or the lower of 80% of the average closing bid price of the Common Stock quoted on the OTC Bulletin board for three trading days preceding the conversion date or $2.37 per share. In no event will the conversion price be less than $1.50 per share. No debentures were converted as of June 30, 2000. Note 6 - Captive Insurance Program The company recorded in the accompanying financial statements $1,040,943 of amounts due from the captive insurer of which $ 2,252,990 and $ 937,214 is reflected in revenues in the six months ended June 30, 2000 and 1999, respectively. These amounts represent the estimated "program-to date profit" at June 30, 2000 and 1999. 18 U.S. TRUCKING, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Nine Months Ended September 30, 2000 and 1999 NOTE 7 - Industry Segment Information During 1998, the company adopted Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" (SFAS 131). The adoption of SFAS 131 requires the presentation of descriptive information about reportable segments which is consistent with that made available to the management of U.S. Trucking to assess performance. U.S. Trucking currently has three major business segments: long-haul trucking, interstate truck brokerage and liability insurance for the long haul trucking industry. In 1999, a fourth segment, Agents' Program was included and separately reported. However, that segment was deemed to be not reportable at December 31, 1999. In determining the net income of each segment of the company, 100% of the interest expense is allocated to long-haul trucking and effective tax rates are determined for each business segment. Nine Months ended September 30, 2000
Long-haul Truck Liability Trucking Brokerage Insurance Inter-segment Total ---------------------------------------------------------------------- ------------- Sales $ 31,896,910 $ 23,321,554 $ 2,424,850 $ (827,295) $ 56,816,019 Operating income (loss) (14,971,885) (723,934) (306,592) -- (16,002,411) Net interest (1,093,812) (233,135) -- -- (1,326,947) Pretax income (loss) (16,502,103) (957,069) (306,592) -- (17,765,764) Loss from discontinued operations (5,242,489) (3,954,135) -- -- (9,196,624) Net income (loss) (21,744,592) (4,911,204) (306,592) -- (26,962,388) Assets 16,671,656 3,399,634 1,302,268 -- 21,373,558 Depreciation & Amortization 5,405,885 4,094,812 -- -- 9,500,697 Additions to long- lived assets 138,618 383,232 -- -- 521,850
19 U.S. TRUCKING, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Nine Months Ended September 30, 2000 and 1999 NOTE 7 - Industry Segment Information (continued)
Three Months ended September 30, 2000 Long-haul Truck Liability Trucking Brokerage Insurance Inter-segment Total ---------------------------------------------------------------------- ------------- Sales $ 10,585,971 $ 6,050,936 $ 139,821 $ (236,399) $ 16,539,629 Operating (loss) (13,887,787) (916,329) (615,501) -- (15,419,617) Net interest (329,533) (190,361) -- -- (519,894) Pretax income (loss) (15,045,524) (1,106,710) (615,501) -- (16,767,735) Loss from discontinued operations (3,912,292) (3,954,135) -- -- (4,345,427) Net income (loss) (15,436,816) (5,060,845) (615,501) -- 21,113,162) Assets 16,671,656 3,399,634 1,302,268 -- 21,373,558 Depreciation & Amortization 5,054,645 3,923,779 -- -- 8,978,424 Additions to long- lived assets 88,181 -- -- -- 88,181 Nine Months ended September 30, 1999 Long-haul Agents' Truck Liability Trucking Program Brokerage Insurance Intersegment Total ----------------------------------------------------------------------- ------------- Sales $23,195,461 $ 1,459,227 $ 4,521,499 $ 1,485,780 $ (338,978) $ 29,828,018 Operating income 420,589 65,450 266,151 184,978 (101,938) 835,230 Net interest (562,252) (5,250) (4,382) -- (10,473) (582,357) Pretax income (loss) 231,415 60,200 261,768 184,978 (54,635) 683,726 Net income 231,415 60,200 261,768 184,978 (54,635) 683,726 Assets 22,368,773 1,328,057 1,778,527 2,170,161 -- 27,645,518 Depreciation & Amortization 1,687,537 9,593 34,791 -- -- 1,731,921 Additions to long- lived assets 768,766 483,000 -- -- -- 1,251,766
20 U.S. TRUCKING, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Nine Months Ended September 30, 2000 and 1999 NOTE 7 - Industry Segment Information (continued)
Three Months ended September 30, 1999 Long-haul Agents' Truck Liability Trucking Program Brokerage Insurance Intersegment Total ----------------------------------------------------------------------- ------------- Sales $ 8,482,941 $1,459,227 $ 2,008,086 $ 548,566 $( 494,971) $ 12,003,849 Operating Income (loss) 72,622 64,450 175,661 83,557 (101,938) 295,352 Net interest expense (185,006) (5,250) (3,156) -- (12,898) (206,310) Pretax income (loss) 109,482 60,200 171,278 83,557 (54,635) (369,882) Net income (loss) 109,482 60,200 171,278 83,557 (54,635) (369,882) Assets 22,368,773 1,328,057 1,778,527 2,170,161 -- 27,645,518 Depreciation & Amortization 553,729 9,593 21,882 -- -- 585,204 Additions to long- lived assets 524,093 483,000 -- -- -- 1,007,093
NOTE 8 - Commitments and Contingencies During 1999, U.S. Trucking issued a total of 6,497,297 shares of common stock to several companies and individuals as collateral in connection with contingent transactions. Of these shares, 5,100,000 were issued with the understanding that they could be recalled at any time, at the discretion of the Company, prior to any transaction taking place. The remaining 1,397,297 shares are used as collateral for the other contingent transactions. Accordingly, these shares were not included in the total shares issued and outstanding as of December 31, 1999, and therefore, were not considered in the calculation of earnings per share. 21 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30,2000 U.S. TRUCKING, INC. AND SUBSIDIARIES NOTE 9 - Bankruptcy On November 29, 2000, four of the Registrant's operating subsidiaries, Gulf Northern Transport, Inc., ProStar, Inc., UST Logistics, Inc. and Mencor, Inc. (the "petitioning subsidiaries") filed a Voluntary Petition under Chapter 11 of the Bankruptcy Code (the "Petition") with the United States Bankruptcy Court, Middle District of Florida, Jacksonville Division. As of this date, no plan of reorganization has been filed by the Registrant's subsidiaries, however, a trustee has been appointed. On December 1, 2000 U.S. Trucking, Inc., issued a press release in which it announced: (i) the filing of the Petition, and (ii) the signing of an agreement with its primary lender for repayment of any deficiencies, which may be left after liquidation of the collateral. The agreement provides for payment of liquidation of the collateral. The agreement provides for payment of the deficiency over three years, including payments based upon a fixed percentage of the Company's ongoing revenue. The accompanying financial statements contain adjustments resulting from the bankruptcies based upon management's best estimates as to the recoverability of assets and obligations for liabilities incurred. NOTE 10 - Discontinuance of Operations During the quarter ended June 30,2000, U.S. Trucking effected a plan to discontinue the agency portion of its truckload segment excluding intermodal. As a result of the decision, the Company recorded adjustments to the assets and liabilities of the business as well as a provision to cover estimated operating losses expected during the period it will take to wind down operations. During the third quarter ended September 30,2000, the Company effected a plan to discontinue the truck brokerage and long-haul trucking businesses. Consequently, the Company adjusted the carrying value of the assets and liabilities of those business operations and recorded a change to earning of $4,345,427. 22 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion in conjunction with the Consolidated Financial Statements, including the footnotes, and understand that this discussion is qualified in its entirety by the foregoing and other more detailed financial information appearing elsewhere herein. Historical results of operations and the percentage relationships among any amounts included in the Consolidated Statement of Operations, and any trends which may appear to be inferable therefrom, should not be taken as being necessarily indicative of trends of operations or results of operations for any future periods. These and other statements, which are not historical facts, are based largely on current expectations and assumptions of management and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by such forward-looking statements. Assumptions and risks related to forward-looking statements, include that we are pursuing a growth strategy that relies in part on the completion of acquisitions of companies in the transportation, logistics and inter-modal and transportation service industry. Assumptions relating to forward-looking statements involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many which are beyond our control. When used in this Quarterly Report, the words "estimates", "projects", and "expect" and similar expressions are intended to identify forward-looking statements. Although we believe that assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in the forward-looking information will be realized. Management decisions are subjective in many respects and susceptible to interpretations and periodic revisions based on actual experience and business developments, the impacts of which may cause us to alter our business strategy, which may in turn, affect our results of operations. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as our representation that statements contained in this Quarterly Report speak only as of the date of this Quarterly Report, and we do not have any obligation to publicly update or revise any of these forward-looking statements. Such statements may include, but are not limited to, projections of revenues, income, or loss, capital expenditures, plans for future operations, financing needs or plans, the impact of inflation and plans relating to the foregoing. Statements in the Company's Form 10-QSB, including Notes to the Consolidated Financial Results of Operations, describe factors, among others, that could contribute to or cause such differences. 23 Tax Benefit. During 1999, because of acquisitions made by the company, it became more likely than not that the net operating loss carryovers generated from 1995 to 1999 would be fully used by the time the loss utilization periods expired. Accordingly, the income tax benefit was included in income during 1999. Prior to 1999, US Trucking incurred net operating losses for tax purposes. Because it did not appear likely that the benefit of such losses would be used before their expiration dates, we had limited the income tax benefit recognized in the financial statements for those net operating losses by establishing a valuation allowance for deferred tax assets. The Emerging Issues Task Force addressed the accounting for decreases in deferred tax asset valuation allowances established in a purchase business combination as a result of a change in tax regulations and reached a consensus that the change in the valuation amount should be recognized through the statement of operations. GENERAL U.S. Trucking, Inc. was established in January of 1997 by combining under U S Trucking-Nevada the operations of Gulf Northern Transport, a mid-to-long-haul truckload carrier and Mencor, Inc. a third party logistics (brokerage) company. During 1999, we acquired Prostar, Inc. ( a brokerage company ) and merged Mencor, Inc. into Prostar, Inc. U.S. Trucking, Inc.'s operating results are driven by the truckload business of its operating subsidiary, Gulf Northern Transport, Inc., our Captive auto liability insurance program, it's brokerage operations (ProStar Inc.), implementation of an agent program, and the purchase of a inter-modal line of business. The Company reported a loss for the period ending September 30, 2000 and a profit for period ending September 30, 1999. On December 31, 1999, the Company effected a plan to transfer the over the road truckload operations to One Way Logistics, Inc. This plan was not consummated. However, in January 2000, U.S. Trucking, Inc's., subsidiary Gulf Northern Transport, Inc. signed a master agent agreement with One Way Logistics, Inc. to manage Gulf Northern's over the road operations. Under the terms of the agreement, Gulf Northern will pay 90% of revenues generated by its over the road operations to One Way in exchange for operation service provided. 24 Also in January 2000, U.S. Trucking subsidiary Gulf Northern Transport, Inc. signed a master agent agreement with Carolina Global, Inc. to manage Gulf Northern's container operations. Under the terms of the agreement, Gulf Northern will pay 90% of revenues generated by its over the road operations to Carolina Global, Inc. in exchange for operation service provided. During the second quarter of 2000, we effected a plan to discontinue the agency portion of our truckload segment excluding inter-modal. The decision resulted in us having to record certain adjustments to the related assets and liabilities of that business segment as well as provision to cover the estimated operating losses expected during the period we estimate it will take to totally discontinue the operation. In addition, we accrued our expected losses on the disposal of assets. Such adjustments total $4,851,197 for the nine months ended September 30, 2000. The loss from discontinued operations has been reflected in accordance with Accounting Principles Board No. 30 "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual, and Infrequently Occurring Events and Transactions" as a disposal of a segment. The September 30, 2000 consolidated balance sheet and the consolidated statements of operations and cash flows for the nine months then ended have been restated to separately reflect the financial position, results of operations, and cash flows of the discontinued operations. RESULTS OF OPERATIONS The following tables sets forth items in the Consolidated Statement of Operations for the nine and three months ending September 30, 2000 and 1999 as a percentage of operating revenues. 9 mos. Ending 9 mos. Ending 30-Sept-00 30-Sept-99 OPERATING REVENUES 100.0% 100.0% PURCHASED TRANSPORTATION & RENTALS 85.9% 42.2% OPERATING SUPPLIES AND MAINTENANCE 0.2% 3.6% BAD DEBTS 13.3% 1.9% FUEL 0.1% 8.1% OTHER OPERATING EXPENSES 0.7% 0.0% INSURANCE AND CLAIMS 6.6% 5.6% DEPRECIATION AND AMORTIZATION 4.2% 5.8% TAXES AND LICENSES 0.4% 1.4% OCCUPANCY COSTS 0.4% 0.8% SALARIES, WAGES AND BENEFITS 5.2% 21.5% ADMINISTRATIVE EXPENSES 4.8% 6.0% ---- ---- TOTAL EXPENSES 121.8% 96.9% OPERATING INCOME -21.8% 3.1% INTEREST EXPENSE -2.6% -1.9% GAIN ON SALE OF EQUIPMENT -0.8% 1.3% INTEREST INCOME 0.3% 0.0% OTHER INCOME 0.0% 0.1% INCOME ( LOSS ) BEFORE INCOME TAXES -25.1% 2.3% PROVISION FOR INCOME TAXES 0.0% 0.0% NET INCOME FROM CONTINUING OPERATIONS -25.1% 2.3% LOSS FROM DISCONTINUED OPERATIONS -22.3% 0.0% NET INCOME ( LOSS ) -47.4% 2.3% 25 3 mos. Ending 3 mos. Ending 30-Sept-00 30-Sept-99 OPERATING REVENUES 100.0% 100.0% PURCHASED TRANSPORTATION & RENTALS 91.5% 45.8% OPERATING SUPPLIES AND MAINTENANCE 0.4% 3.9% BAD DEBTS 46.2% 0.0% FUEL 0.1% 7.9% OTHER OPERATING EXPENSES 2.5% 2.3% INSURANCE AND CLAIMS 8.9% 5.3% DEPRECIATION AND AMORTIZATION 11.2% 4.8% TAXES AND LICENSES 0.8% 1.5% OCCUPANCY COSTS 0.4% 0.7% SALARIES, WAGES AND BENEFITS 6.2% 18.9% ADMINISTRATIVE EXPENSES 6.4% 6.1% ---- ---- TOTAL EXPENSES 172.5% 97.6% OPERATING INCOME -72.5% 2.4% INTEREST EXPENSE -3.9% -1.8% GAIN ON SALE OF EQUIPMENT -4.9% 2.3% INTEREST INCOME 0.1% 0.0% OTHER INCOME 0.0% 0.0% INCOME ( LOSS ) BEFORE INCOME TAXES -83.2% 3.0% PROVISION FOR INCOME TAXES 0.0% 1.2% NET INCOME FROM CONTINUING OPERATIONS -80.7% 3.0% LOSS FROM DISCONTINUED OPERATIONS -4.7% -0.0% NET INCOME ( LOSS ) -130.8% 3.0% Three months ended September 30, 2000 compared to September 30, 1999 Operating revenues. Total operating revenue increased from $12.0 million for the three months ended September 30, 1999 to $16.4 million, or 36.6 % for the three months ended September 30, 2000. The reason for this increase is the overall increase of business within all of the operating segments of the company, including truckload, brokerage and inter-modal. Purchased transportation and rentals. Purchased transportation and rentals increased from $5.50 million for the three months ended September 30, 1999 to $15.05 million or 173.6% for the three months ended September 30, 2000. As a percentage of operating revenue, purchased transportation and rentals increased from 45.8% for the three months ended September 30, 1999 to 91.5% for the three months ended September 30, 2000. Changes from converting the truckload and inter-modal operations to a 90% agency program and the acquisition of Prostar, Inc.(a brokerage company) and Checkmate/Maverick Truck Brokerage resulted in the increase in purchase transportation as a percentage of sales. 26 Salaries, wages and benefits. Salaries, wages and benefits decreased from $2.26 million for the three months ended September 30, 1999 to $1.02 million or 54.8% for the three months ended September 30, 2000. Salaries, wages and benefits as a percentage of total operating revenue decreased from 18.8% for the three months ended September 30, 1999 to 6.2% for the three months ended September 30, 2000. The decrease as a percentage of operating revenue is attributed to the change in revenue mix discussed in the preceding paragraph. Fuel. Fuel expense decreased from $948 thousand for the three months ended September 30, 1999 to $25 thousand for the three months ended September 30, 2000.The decrease is attributed to the conversion of truckload operations to a 90% agency program in which most operating costs other than agents settlements are eliminated. Operating supplies and maintenance. Operating supplies and maintenance decreased from $477 thousand for the three months ended September 30, 1999 to $80 thousand for the three months ended September 30, 2000. The decrease is attributed to the change in mix of revenues mentioned in previous paragraphs. By converting the truckload operations to a 90% agency program maintenance on all company equipment was shifted to the master agent Insurance and claims. Insurance and claims increased from $644 thousand for the three months ended September 30, 1999 to $1.47 million or 99.6 % for the three months ended September 30, 2000. Insurance and claims as a percentage of total operating revenue increased from 5.37% for the three months ended September 30, 1999 to 12.32% for the three months ended September 30, 2000. The increase as a percentage of operating revenue can be attributed to the increase in cost of the captive insurance program as well as increase in cargo claims in the inter-modal operations. Taxes and licenses. Taxes and licenses decreased from $181 thousand for the three months ended September 30, 1999 to $131 thousand for the three months ended September 30, 2000. The decrease is attributed to the conversion of truckload and inter-modal operations to a agency program. Depreciation and amortization. Depreciation and amortization increased from $585 thousand for the three months ended September 30, 1999 to $1.84 million or 42.5% for the three months ended September 30, 2000. Depreciation and amortization as a percentage of total operating revenue increased from 4.87% for the three months ended September 30, 1999 to 11.23% for the three months ended September 30, 2000. General and administrative. General and administrative expenses increased from $740 thousand for the three months ended September 30, 1999 to $1.06 million or 43.2 % for the three months ended September 30, 2000. General and administrative as a percentage of total operating revenue increased from 6.17% for the three months ended September 30, 1999 to 6.45% for the three months ended September 30, 2000. 27 Operating income(loss). Operating income decreased from $295 thousand or 2.46 % of total operating revenues for the three months ended September 30, 1999 to a operating loss of $12.35 million or (75.09) % of total operating revenue for the three months ended September 30, 2000. This decrease as a percentage of total operating revenue can be attributed to the provisions of bad debt and the write down of goodwill and assets of discontinued operations. Interest. Interest expense increased from $217 thousand for the three months ended September 30, 1999 to $653 thousand or 200.9% for the three months ended September 30, 2000. Interest expense as a percentage of total operating revenue increased from 1.81% for the three months ended September 30, 1999 to 3.97% for the three months ended September 30, 2000. The primary reason for the increase in total is interest and fees paid in relation to our revolving credit line facility with GE Capital Business Credit. Discontinued Operations. Net income decreased from zero for the three months ended September 30, 1999 to a net loss of $7.82 million for the three months September 30, 2000. The primary factors that caused the loss is the discontinued operations and reduction in operating income discussed previously. Nine months ended September 30, 2000 compared to September 30, 1999 Operating revenues. Total operating revenue increased from $29.82 million for the nine months ended September 30, 1999 to $56.81 million, or 90.50% for the nine months ended September 30, 2000. The reasons for this increase are the overall increases in revenues within all of the operating subsidiaries. Purchased transportation and rentals. Purchased transportation and rentals increased from $12.58 million for the nine months ended September 30, 1999 to $48.85 million or 288.3% for the nine months ended September 30, 2000. As a percentage of operating revenue, purchased transportation and rentals increased from 42.2% for the nine months ended September 30, 1999 to 85.9% for the nine months ended September 30, 2000. Changes from converting the truckload and inter-modal operations to agency programs and the acquisition of Prostar, Inc.(a brokerage company) and Checkmate/Maverick Truck Brokerage resulted in the increase in purchase transportation as a percentage of sales. Salaries, wages and benefits. Salaries, wages and benefits decreased from $6.40 million for the nine months ended September 30, 1999 to $2.96 million or 53.7% for the nine months ended September 30, 2000. Salaries, wages and benefits as a percentage of total operating revenue decreased from 21.4% for the nine months ended September 30, 1999 to 5.21% for the nine months ended September 30, 2000. The decrease as a percentage of operating revenue is attributed to the change in revenue mix within the inter-modal brokerage and truckload segments. 28 Fuel. Fuel expense decreased from $2.40 million for the nine months ended September 30, 1999 to 25 thousand for the nine months ended September 30, 2000.The decrease is attributed to the conversion of truckload operations to a 90% agency program in which most operating costs other than agents settlements are eliminated or shifted to the master agent. Operating supplies and maintenance. Operating supplies and maintenance decreased from $1.10 million for the nine months ended September 30, 1999 to $112 thousand for the nine months ended September 30, 2000. The decrease is attributed to the change in mix of revenues mentioned in previous paragraphs. By converting the truckload operations to a 90% agency program maintenance on all company equipment became a cost to the master agent and eliminated. Insurance and claims. Insurance and claims increased from $1.69 million for the nine months ended September 30, 1999 to $3.75 million or 121.8% for the nine months ended September 30, 2000. Insurance and claims as a percentage of total operating revenue increased from 5.6% for the nine months ended September 30, 1999 to 6.6% for the nine months ended September 30, 2000. The increase as a percentage of operating revenue can be attributed to an increase in the captive insurance program cost, and an increase in claims and lower brokerage revenues than anticipated. Miscellaneous operating expenses. Miscellaneous operating expenses increased from zero for the nine months ended September 30, 1999 to $415 thousand or 0.8% for the nine months ended September 30, 2000. Miscellaneous operating expenses as a percentage of revenue decreased from zero for nine months ended September 30, 1999 to 0.8% for the nine months ended September 30, 2000. Taxes and licenses. Taxes and licenses decreased from $416 thousand for the nine months ended September 30, 1999 to $215 thousand or 48.3% for the nine months ended September 30, 2000 . Taxes and licenses as a percentage of total operating revenue decreased from 1.39% for the nine months ended September 30, 1999 to 0.3% for the nine months ended September 30, 2000. The decrease as a percentage of total operating revenue is attributed to the conversion of truckload and inter-modal operations to a 90% agency program. Depreciation and amortization. Depreciation and amortization increased from $1.73 million for the nine months ended September 30, 1999 to $2.39 million or 38.1% for the nine months ended September 30, 2000. Depreciation and amortization as a percentage of total operating revenue increased from 5.6% for the nine months ended September 30, 1999 to 6.6% for the nine months ended September 30, 2000. General and administrative. General and administrative expenses increased from $1.81 million for the nine months ended September 30, 1999 to $2.73 million or 50.8% for the nine months ended September 30, 2000. General and administrative as a percentage of total operating revenue decreased from 6.0% for the nine months ended September 30, 1999 to 4.8% for the nine months ended September 30, 2000. The decrease as a percentage of operating revenue can be attributed to the economies of scale as revenues have increased through acquisitions some fixed costs have remained constant therefore have decreased as a percentage of operating revenue. 29 Operating income(loss). Operating income(loss) increased from $835 thousand or 2.8% of total operating revenues for the nine months ended September 30, 1999 to $(12.51) million or (22.0)% of total operating revenue for the nine months ended September 30, 2000. This increase as a percentage of total operating revenue can be attributed to the chare for bad debts, the write down of good will off discontinued operations, the chare for loss on sale of equipment and increases in interest and fees. Interest. Interest expense increased from $596 thousand for the nine months ended September 30, 1999 to $1.48 million or 99.6% for the nine months ended September 30, 2000. Interest expense as a percentage of total operating revenue increased from 1.9% for the nine months ended September 30, 1999 to 2.6% for the nine months ended September 30, 2000. The primary reason for the increase in total is the interest paid in relation to our revolving credit line facility. Discontinued Operations. Net income decreased from $683 thousand for the nine months ended September 30, 1999 to a net loss of $26.96 million for the nine months September 30, 2000. The primary factors that caused our loss for the nine months ended September 30, 2000, was the loss from discontinued operations, the write down of bad debts, the loss on sale of equipment, increases in our interest and fee cost and the overall reduction in operating income. Acquisition of Prostar, Inc. and Fulmer Transportation Submission of Audited Financial Statements In May 1999, U.S. Trucking acquired 100% of the common stock of Prostar, Inc. and in September 1999, U.S. Trucking acquired certain assets and liabilities of Fulmer Transportation, Inc. In both instances, the acquisitions were contingent upon the accuracy and validity of certain representations. In the case of Prostar, Inc., the assertions were completed and validated and the acquisition was successful. In the case of Fulmer Transportation, however, these contingent factors were ultimately determined to be not valid and the acquisition was reversed. For financial reporting purposes, however, Fulmer was determined to be part of U.S. Trucking's consolidated group for part of the fiscal 1999 and 2000 years and accordingly, audited financial statements of both Prostar and Fulmer for periods prior to U.S. Trucking's acquisition are required to be presented. Management determined that it was not practical to commence these audits immediately upon the contractual signing of the acquisition agreements and it was management's intention to commence the audit procedures during the 2000 year. We engaged our auditors to perform the required audits during the summer of 2000. Unfortunately, because of the deteriorated relationship with the principals of Fulmer, the auditors were prohibited from completing their assignment and the principals have refused any discussion in this regard. Accordingly, it is not possible to complete the required audit for Fulmer at this time and present the proper financial statements. U.S. Trucking's management believes it has the information necessary to complete the audit of Prostar, but its current financial condition has prevented it from currently completing this requirement. 30 LIQUIDITY & CAPITAL RESOURCES On November 30, 2000, U.S. Trucking's four operating subsidiaries filed voluntary petitions for protection under Chapter 11 of the US Bankruptcy code. These subsidiaries comprised all of the Company's operations so the Company has had no working capital requirements. While the Company is planning to recommence a transportation business, which business will require operating capital, it has not developed a plan for raising such capital, and will not do so until it determines the nature and scope of its future business activities. 31 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. None. ITEM 2. CHANGES IN SECURITIES. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibit 27 - Financial Data Schedule (b) None. 32 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. U.S. TRUCKING --------------------------------------------- Registrant December 22, 2000 By \s\ Danny L. Pixler ------------------------------------------ Danny L. Pixler Chief Executive Officer By \s\ John Ragland ------------------------------------------ John Ragland Chief Financial Officer 33 EX-27 2 0002.txt FDS --
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM U.S. TRUCKING, INC. REVIEWED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 0 28,881 9,998,841 0 143,405 10,853,996 682,869 982,249 21,373,558 22,410,254 0 0 5,265,076 7,649,010 0 21,373,558 56,816,019 56,816,019 48,853,827 69,335,656 (1,763,353) 0 (1,482,382) (14,282,990) 0 0 0 0 0 (26,962,388) (2.10) (2.10)
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