Management believes that maintaining a culture of driver support through flexible work schedules that enable drivers to accommodate personal obligations and lifestyles, leveraging technology (in cab e-mail, Internet services, etc.) that enables drivers to remain in touch with their families when on the road, managing driver home time, seeking drivers’ input in the decision making process to achieve mutually satisfactory solutions and providing career advancement opportunities for drivers are also key factors in recruiting and retaining experienced professional drivers.

Independent Contractors
The Company recognizes the benefits of augmenting its service capacity through the use of independent contractors. Independent contractors provide their own tractors and pay for all the expenses of operating their own equipment, including wages and benefits, fuel, physical damage insurance, maintenance, highway use taxes and debt service. Therefore, less capital is required for the Company’s growth. The Company has an aggressive independent contractor recruiting program, with 950 contractors under active contract at December 31, 2003.

COMPETITION

The transportation services business is extremely competitive. U.S. Xpress competes primarily with other truckload carriers and logistics providers and to a lesser degree railroads and air freight. Xpress Global Systems is a leading provider of logistics services to the floorcovering industry and competes with several smaller, regional carriers. Xpress Global Systems has one national and several regional competitors in its airport-to-airport business and one national and numerous local competitors in its pool distribution business.

Generally, competition for the freight transported by the Companies is based on service, efficiency, scope of operations and pricing. Historically, increased competition has created downward pressure on the transportation industry’s pricing structure. Prolonged weakness in freight markets or downward pressure on freight rates could adversely affect the Company’s results of operations or financial condition. Some competitors have greater financial resources, operate more equipment and transport more freight than the Company.

REGULATION

The Company is a motor carrier that is subject to safety regulations promulgated by the DOT and various laws and regulations enforced by state agencies. These regulatory authorities have broad powers, generally governing activities such as authority to engage in motor carrier operations, accounting systems, certain mergers, consolidations, acquisitions and periodic financial reporting. Subject to federal, state and provincial regulatory authorities, the Company may transport most types of freight to and from any point in the United States and certain Canadian provinces, over any route selected by the Company. The trucking industry is subject to possible regulatory and legislative change that could affect the economics of the industry.

The Company’s operations are also subject to various federal, state and local environmental laws dealing with transportation, storage, presence, use, disposal and handling of hazardous materials, discharge of storm water and underground fuel storage tanks. The Company believes that its operations are in substantial compliance with current laws and regulations and does not know of any existing condition that would cause non-compliance with applicable environmental regulations to have a material adverse effect on the Company’s business or operating results.

Effective January 2004, the new hours of service regulations became effective which resulted in the following: 1) an increase in daily drive time to 11 hours from 10 hours, 2) decrease in total on-duty hours from 15 to 14 with no extension of time for breaks, 3) increase in cumulative off-duty hours to 10 compared to 8 previously and 4) restart of weekly hour count following any consecutive 34-hours off-duty. These changes could reduce the amount of time drivers can spend driving if the Company is unable to limit driver’s on-duty non-driving activities. The Company has increased accessorial charges to customers including stop-pay, loading and unloading fees and equipment detention fees to mitigate the expected impact of these new hours of service regulations.

SAFETY AND RISK MANAGEMENT

The Company is committed to safe operations. The Company’s emphasis on safety is demonstrated through equipment specifications and active safety and loss prevention programs. These programs reinforce the importance of driving safely, abiding by all laws and regulations, such as speed limits and driving hours, performing regular equipment inspections and acting as good citizens on the road. The Company’s accident review committee meets regularly to review any new accidents, take appropriate

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action related to drivers, examine accident trends and implement changes in procedures or communications to address any safety issues.

Management’s emphasis on safety also is demonstrated through its equipment specifications, such as anti-lock brakes, electronic engines, special mirrors, conspicuity tape and the implementation of Eaton Vorad collision avoidance systems on all tractors. The Eaton Vorad system is designed to provide drivers with visible and audible warnings when other vehicles are beside them and when vehicles ahead are traveling at slower speeds than the truck. The system provides drivers with additional response time to prevent accidents.

The Company requires prospective drivers to meet higher qualification standards than those required by the DOT. The DOT requires the Company’s drivers to obtain national commercial driver’s licenses pursuant to the regulations promulgated by the DOT. The DOT also requires that the employer implement a drug-testing program in accordance with DOT regulations. The Company’s program includes pre-employment, random, reasonable cause and post-accident drug testing.

Interstate motor carrier operations are subject to safety requirements prescribed by the DOT. Such matters as equipment weight and dimensions are also subject to federal and state regulations. The DOT evaluates carriers and provides safety fitness ratings based on conformance with requirements and accident frequency. U.S. Xpress and Xpress Global Systems each have satisfactory safety fitness ratings.

The Company secures appropriate insurance coverage at cost-effective rates. The primary claims arising in the Company’s business consist of cargo loss and physical damage, auto liability (personal injury and property damage) and workers’ compensation. The Company currently purchases primary and excess coverage for these types of claims at amounts that management believes are sufficient to adequately protect the Company, subject to certain retention levels. The current retention level per occurrence is $250,000 for Cargo Loss and Workers’ Compensation. The retention level for Liability is $2.0 million per occurrence. The estimated cost for self-insurance claims, which include estimates for incurred but unreported claims, are accrued as liabilities in the consolidated balance sheets and are based on estimates of the Company’s evaluation of the type and severity of individual claims and historical information, primarily its own claims experience, along with assumptions about future events.

FUEL

Shortages of fuel or increases in fuel prices could have a materially adverse effect on the operations and profitability of the Company. Substantially all of the Company’s customer contracts contain fuel surcharge provisions to mitigate increases in the cost of fuel (the Company recognized $34.0 million of fuel surcharge revenue for the year ended December 31, 2003, compared to $15.6 million for the year ended December 31, 2002). However, fuel surcharges to customers do not fully recover all fuel increases due to engine idle time and out-of-route and empty miles not billable to the customer. At times, fuel purchase contracts are used to mitigate the effects of increases in the price of fuel. The Company maintains fuel storage tanks at certain of its terminals. Leakage or damage to these tanks could subject the Company to environmental clean-up costs. The Company believes it is in compliance with all laws and regulations relating to maintenance of such fuel storage tanks.

INTERNET WEBSITE

The Company maintains an Internet website through which additional information concerning its business can be found. The website address is www.usxpress.com. The Company makes available on its website, free of charge, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such reports are electronically filed with or furnished to the Securities and Exchange Commission.

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The following table provides information regarding the Company’s facilities at December 31, 2003:

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The Company’s corporate headquarters are located in Chattanooga, Tennessee. The facility encompasses nearly 100,000 square feet of office space and includes state-of-the-art information management and communications systems.

Xpress Global Systems’ corporate headquarters are based in Tunnel Hill, Georgia, approximately 25 miles from the Chattanooga location. The Tunnel Hill facility includes a 101-door loading dock facility in which floorcovering shipments from multiple manufacturers are consolidated into truckloads for delivery to Company-owned and agent-operated distribution service centers. Substantially all Xpress Global Systems’ facilities operate as distribution centers performing consolidation, warehousing and local distribution.

In the opinion of the Company, its facilities are suitable and adequate for the Company’s needs.

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ITEM 3. LEGAL PROCEEDINGS

The Company is party to various other legal proceedings arising in the normal course of its business. Management does not believe that the outcome of any of these proceedings will have a material adverse effect on the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the quarter ended December 31, 2003, no matters were submitted to a vote of security holders.

EXECUTIVE OFFICERS OF THE COMPANY

Information with respect to the executive officers of the Company is set forth below:

Max L. Fuller has served as Co-Chairman of the Board of the Company since 1994, Vice President and Secretary of the Company since its formation in 1989 and Interim Chief Operating Officer from November 2002 to March 2004. Mr. Fuller is a director of SunTrust Bank, Chattanooga, N. A. Mr. Fuller has served as an officer and director of U.S. Xpress, Inc. since 1985.

Ray M. Harlin has served as Executive Vice President of Finance and Chief Financial Officer of the Company since 1997. Previously, Mr. Harlin served for 25 years in auditing and managerial positions and as a partner with Arthur Andersen LLP. Mr. Harlin has been a director of the Company since 1997.

E. William Lusk, Jr. has served as President of Xpress Global Systems, Inc. since 2001. Previously, Mr. Lusk was Executive Vice President of the Company from 1996 to 2000, Vice President of Marketing of the Company from 1991 to 1996 and Executive Vice President of U.S. Xpress, Inc. from 1987 to 1994.

Patrick E. Quinn has served as Co-Chairman of the Board of the Company since 1994 and President and Treasurer of the Company since its formation in 1989. Mr. Quinn has served as an officer and director of U.S. Xpress, Inc. since 1985.

Jeffrey S. Wardeberg has served as Executive Vice President of Operations since 2002. Previously, Mr. Wardeberg was Executive Vice President of Sales and Marketing from 2000 to 2002, Vice President of Sales and Marketing from 1998 to 2000, Director of Marketing from 1996 to 1998 and a Regional Sales Vice President from 1994 to 1996. Mr. Wardeberg was elected to the Board of Directors of the Company in 2003 and was named Chief Operating Officer in March 2004.

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

COMMON STOCK AND STOCKHOLDER DATA

The Company’s Class A Common Stock is traded on the NASDAQ National Market System under the symbol XPRSA. No market exists for the Company’s Class B Common Stock. At March 9, 2004, there were 244 registered stockholders and an estimated 1,500 beneficial owners of the Company’s Class A Common Stock and 2 beneficial owners of the Company’s Class B Common Stock. At March 9, 2004, there were 11,026,618 shares of Class A Common Stock outstanding and 3,040,262 shares of Class B Common Stock outstanding. On March 9, 2004, the closing price for the Common Stock was $14.66. Listed below are the high and low sales prices with respect to shares of Class A Common Stock, as reported on the Nasdaq National Market System, for each quarter in the last two fiscal years:

DIVIDENDS

The Company does not pay cash dividends and intends to continue to retain earnings to finance the growth of the Company for the foreseeable future. Certain covenants contained in the Company’s senior secured revolving credit facility prohibit the Company from paying dividends on its capital stock. (See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, “Revolving Credit Agreement” and Note 5, “Long-Term Debt”, of the Company’s 2003 Consolidated Financial Statements.)

For information on the Company’s equity compensation plans, please refer to Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

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ITEM 6.

SELECTED FINANCIAL DATA
(In thousands, except per share and operating data)

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ITEM 7.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
                     CONDITION AND RESULTS OF OPERATIONS

U.S. Xpress Enterprises, Inc. (the “Company”) provides transportation services through two business segments, U.S. Xpress, Inc. (“U.S. Xpress”) and Xpress Global Systems, Inc. (“Xpress Global Systems, Inc.”). U.S. Xpress is a truckload carrier serving the continental United States and parts of Canada and Mexico. Xpress Global Systems provides transportation, warehousing and distribution services to the floorcovering industry and also provides airport-to-airport transportation services to the airfreight and airfreight forwarding industries.

The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes that are included in this annual report.

Forward-Looking Statements

This Annual Report contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may be identified by their use of terms or phrases such as “expects”, “estimates”, “projects”, “believes”, “anticipates”, “intends”, and similar terms and phrases, and may include, but not be limited to projections of revenues, income or loss, capital expenditures, acquisitions, plans for growth and future operations, financing needs or plans or intentions relating to acquisitions by the Company, as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by or underlying the forward-looking statements. The following factors among others, could cause actual results to differ materially from those in forward looking statements: excess tractor or trailer capacity in the trucking industry; decrease in demand for the Company’s services; inventory levels; recessionary economic cycles and downturns in customers’ business cycles; increases or rapid fluctuations in fuel prices, interest rates, fuel taxes, tolls and license and registration fees; increases in the prices paid for new revenue equipment; resale value of used revenue equipment; the ability to obtain long-term debt financing and the continued availability of financing in the amounts and on the terms necessary to support the Company’s future business; difficulty in attracting and retaining qualified drivers and owner-operators; increased experience in the severity and frequency of claims relating to liability, cargo loss, physical damage, workers’ compensation and health insurance related claims; increased premiums and deductibles; seasonal factors such as weather conditions; regulatory requirements including the new hours of service rules. The Company disclaims any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information.

Overview
The Company’s truckload segment comprises the majority of its operations, representing 85.2% of consolidated revenues in fiscal 2003. Revenues are primarily earned by transporting freight for customers. Additionally, revenues are derived from fuel surcharges to customers and accessorial charges such as loading and unloading fees and equipment detention fees. The main factors that impact revenue include the revenue per mile earned from customers, number of miles driven and the percentage of miles driven for which the Company is compensated. The aforementioned factors relate primarily to the general level of economic activity in the United States, inventory levels, customer demand and the level of truck capacity.

U.S. Xpress offers its customer base expertise within the specialized needs of medium to long-haul solo, team expedited and regional and dedicated contract carriage. In recent years U.S. Xpress has diversified its truckload services by focusing on growth in regional and dedicated contract services while reducing its dependency on long-haul solo freight. The approximate percentage of truckload revenue by service type in 2003 is medium to long-haul solo 61.0%, team expedited 18.0%, regional 11.0%, and dedicated contract 10.0%.

Xpress Global Systems’ offers its customer base expertise within the specialized needs of floorcovering logistic services and airport-to-airport transportation. The approximate percentage of Xpress Global Systems’ revenue by service type in 2003 was floorcovering logistic 64.0% and airport-to-airport 36.0%.

Prior to the second half of 2003, the economic environment was sluggish which resulted in lower freight demand and excess capacity within the truckload industry. Accordingly, the truckload industry generally experienced declines in asset utilization, limited ability to improve rates and lower operating margins. However, in the second half of 2003, the U.S. economy and freight tonnage

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experienced stronger growth. This along with the reduction in capacity enabled the industry to increase pricing during 2003. During 2003, U.S. Xpress achieved a 3.3% increase in the average rate per mile.

The trucking industry and the Company continued to experience an increase in operating costs during 2003 including insurance premiums and claims, fuel prices and the cost of truck ownership including lower residual values for used trucks combined with the new EPA compliant truck engines. The industry also continues to experience an increasingly difficult driver and owner-operator environment. As a result, the Company experienced an overall decline in its seated truck count compared to expectations during 2003. The Company anticipates the driver and owner-operator supply to remain tight within the industry during 2004. In order to address this issue, the Company has initiated various programs to enhance its recruiting and retention efforts and has implemented a driver and owner-operator pay increase of approximately $0.03 per mile, which was fully implemented by February 15, 2004.

Effective January 4, 2004, the new federally mandated hours of service rules adopted by the DOT became effective for all drivers. During the fourth quarter of 2003, the Company implemented training for all drivers and operational personnel to ensure a smooth transition and continue to work very closely with customers to mitigate the impact. Effective January 2004, accessorial charges to customers were increased with a corresponding increase in accessorial pay rates for drivers to compensate for the anticipated adverse impact on utilization. Although it is too early to determine the full impact of the new rules, the Company has experienced minimal disruption to date in its operations. The Company believes that the effect of the new hours of service may adversely impact overall utilization to a degree. However, it has anticipated that the above described increases in assessorial charges and actions taken by customers to improve efficiency will largely mitigate the effect on the Company’s financial results.

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Consolidated Results of Operations

The following table sets forth the percentage relationships of expense items to total revenue, excluding fuel surcharge, for each of the fiscal years indicated below. Fuel surcharge revenue is offset against fuel and fuel taxes. Management believes that eliminating the impact of this source of revenue provides a more consistent basis for comparing results of operations from period to period.

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Comparison of the Year Ended December 31, 2003 to the Year Ended December 31, 2002

Operating revenues net of fuel surcharges, increased 5.9% to $896.5 million in 2003 compared to $846.8 million in 2002. U.S. Xpress revenue, net of fuel surcharges, increased 4.1% to $793.9 million in 2003 compared to $762.3 million in 2002, due primarily to an increase of 3.3% in average revenue per mile to $1.298 from $1.257. The increase in average revenue per mile is due to increased rates in over-the-road and team expedited operations and improved freight selection. The effect of the increase in average revenue per mile was offset by a slight decrease in average revenue miles per tractor per period. Xpress Global Systems’ revenue increased 20.0% to $137.8 million in 2003 compared to $114.8 million in 2002. Within Xpress Global Systems, floorcovering revenue increased 19.0% to $87.6 million, due to new and additional business with large floorcovering retailers and manufacturers combined with increased rates and an increase in airport-to-airport revenue of 22.0% to $50.2 million, due to continued penetration in the marketplace. Xpress Global Systems initiated its airport-to-airport transportation services in February 2001.

Salaries, wages and benefits remained relatively consistent as a percentage of revenue, at 36.3% in 2003 compared to 36.7% in 2002. Salaries, wages and benefits increased 5.0% to $325.8 million in 2003 compared to $310.4 million in 2002. The increase is primarily due to an increase in workers’ compensation claims combined with a growth in headcount to support the expansion of facilities and additional volume of business at Xpress Global Systems.

Fuel and fuel taxes net of fuel surcharges, as a percentage of revenue, was 11.4% in 2003 compared to 12.2% in 2002. The decrease is due primarily to improvements in the level of fuel surcharges billed to customers in 2003. Fuel surcharge revenue was $34.0 million in 2003 compared to $15.6 million in 2002.  The average fuel price per gallon increased approximately 12.0% in 2003 compared to 2002. 

Vehicle rents as a percentage of revenue, was 8.4% in 2003 compared to 8.1% in 2002. The increase is primarily due to an increase of 12.7% in the average number of tractors financed under operating leases to 4,009 in 2003 compared to 3,558 in 2002. The Company also experienced a slight increase in the average number of trailers leased in 2003 to 7,221 compared to 7,181 in 2002.

Depreciation and amortization as a percentage of revenue, was 4.2% in 2003 compared to 4.4% in 2002. The decrease is primarily due to the increase in the ratio of leased to owned revenue equipment in 2003 compared to 2002. The decrease was offset by an increase in trailer depreciation, which can be attributed to an increase in the average number of owned trailers to 6,197 in 2003 compared to 5,661 in 2002.

Purchased transportation as a percentage of revenue, was 17.5% in 2003 compared to 17.0% in 2002. The increase is due to the increased use of rail transportation for certain long-haul truckload freight in 2003. The average number of owner-operators remained relatively consistent in 2003 and 2002 at 951 and 962, respectively.

Insurance premiums and claims as a percentage of revenue, was 5.4% in 2003 compared to 4.8% in 2002. The increase is due to an increase in insurance rates combined with an increase in liability claims. The Company is self-insured up to certain limits for cargo loss, physical damage and liability (personal injury and property damage). The current retention level per occurrence for cargo loss is $250,000 ($200,000 in 2002) and the retention level for liability is $2.0 million per occurrence ($500,000 in 2002 with the risk for the $1.0 million to $3.0 million level of cost per occurrence). The Company maintains insurance with licensed insurance companies above amounts for which it is self-insured for cargo and liability. The Company accrues for the uninsured portion of pending claims, plus any incurred but not reported claims. The accruals are estimated based on the Company’s evaluation of the type and severity of individual claims and future development based on historical trends. Insurance premiums and claims expense will fluctuate based on claims experience, premium rates and self-insurance retention levels.

Operating taxes and licenses remained relatively consistent as a percentage of revenue at 1.6% in 2003 compared to 1.5% in 2002. Operating taxes and licenses increased 10.1% to $14.2 million in 2003 compared to $12.9 million in 2002. The increase is principally the result of an increase in vehicle registration and license expense. Vehicle registration and license expense fluctuates based on the trade activity of revenue equipment and the size of the owner-operator and Company tractor fleet. The average number of tractors in the Company’s fleet (including owner-operators) was 5,433 and 5,331, respectively in 2003 and 2002.

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General and other operating expenses as a percentage of revenue, was 4.1% in 2003 compared to 4.7% in 2002. The decrease is due to the settlement of a litigation matter for $1.7 million in the fourth quarter of 2002 combined with a lower percentage growth in general and administrative expenses as compared to the percentage increase in revenues. See Footnote 9, “Commitments and Contingencies,” of the Company’s 2003 Consolidated Financial Statements for further details regarding the settlement of the litigation matter.

Interest expense decreased $3.5 million, or 26.1%, to $9.9 million, compared to $13.4 million in 2002. The decrease is primarily attributable to a decline in average borrowings, combined with a decrease in the weighted average interest rate to 5.4% in 2003 compared to 6.3% in 2002. See Footnote 5, “Long-Term Debt,” of the Company’s 2003 Consolidated Financial Statements for further details.

The effective tax rate was 47.4% for the 2003 fiscal year. The rate is higher than the statutory rate of 36.5%, primarily as a result of per diems paid to drivers which are not fully deductible for federal income tax purposes. The Company initiated the per diem driver pay plan in February 2002. See Footnote 4, “Income Taxes,” of the Company’s 2003 Consolidated Financial Statements for further details.

Comparison of the Year Ended December 31, 2002 to the Year Ended December 31, 2001

Operating revenues net of fuel surcharges, increased 9.7% to $846.8 million in 2002 compared to $772.1 million in 2001. U.S. Xpress revenue, net of fuel surcharges, increased 7.2% to $762.3 million in 2002 compared to $711.0 million in 2001, due primarily to an increase of 4.0% in revenue miles and a 2.4% increase in average revenue per mile to $1.257 from $1.227. Revenue miles increased due to an increase in the average number of tractors to 5,331 in 2002 from 5,144 in 2001. Xpress Global Systems’ revenue increased 38.1% to $114.8 million in 2002 compared to $83.1 million in 2001. Within Xpress Global Systems, floorcovering revenue increased 30.0% to $73.6 million, due to additional business by a large floorcovering retailer and an increase in airport-to-airport revenue of 55.5% to $41.2 million, due to continued penetration in the marketplace. Xpress Global Systems initiated its airport-to-airport transportation services in February 2001.

Salaries, wages and benefits, as a percentage of revenue was 36.7% in 2002 compared to 39.5% in 2002. The decrease was primarily due to the increased use of owner-operators. Owner-operators represented 18.0% of the total fleet in 2002 compared to 13.8% in 2001.

Fuel and fuel taxes net of fuel surcharges, as a percentage of revenue, was 12.2% in 2002 compared to 13.1% in 2001. The decrease can be attributed to a decline in the average fuel price per gallon of approximately 4.0% in 2002 and an increase in the average number of owner-operators who pay for their fuel purchases. Owner-operators represented 18.0% of the total fleet in 2002 compared to 13.8% in 2001.

Vehicle rents as a percentage of revenue, was 8.1% in 2002 compared to 8.8% in 2001. The decline is primarily due to lower per unit lease costs related to lower interest rates and lower lease payments due to the Company having extended the trade cycle of its tractor fleet.

Depreciation and amortization expense as a percentage of revenue, was 4.4% in 2002 compared to 4.6% in 2001. The decrease was primarily due to the elimination of goodwill amortization of approximately $1.8 million (See Footnote 2, “Goodwill”, of the Company’s 2003 Consolidated Financial Statements) and the decrease of approximately $1.5 million of deferred loan costs.

Purchased transportation as a percentage of revenue, was 17.0% in 2002 compared to 13.5% in 2001. The increase is primarily due to an increase in the average number of owner-operators in 2002 to 962, or 18.0% of the total fleet, compared to 710, or 13.8% of the total fleet in 2001.

Operating expenses and supplies as a percentage of revenue, was 7.1% in 2002 compared to 6.8% in 2001. The increase is due in part to an increase in maintenance expenses due to the Company having extended the trade cycle of its revenue equipment combined with an increase in tolls due to increased mileage on toll roads.

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Insurance premiums and claims as a percentage of revenue, was 4.8% in 2002 compared to 4.2% in 2001. The increase is due to higher premiums for excess and reinsurance coverage related to liability claims. Prior to September 1, 2001, the Company’s retention level was $3,000 per claim. After that date, the first retention level increased to $250,000 per claim and the Company also assumed the risk for the $1.0 million to $3.0 million layer of claims costs per occurrence. In addition, the Company’s cost for primary coverage plus the estimated cost of claims in 2002 exceeded the cost of premiums for primary coverage in 2001. Beginning September 1, 2002, the Company’s retention level for liability claims increased to $500,000.

Operating taxes and licenses as a percentage of revenue, was 1.5% in 2002 compared to 1.8% in 2001. The decrease was primarily due to a decline of approximately $1.1 million in trailer registration expense combined with a 38.1% increase in Xpress Global Systems’ revenue, which requires minimal Company tractors and trailers because Xpress Global Systems relies mainly on purchased transportation for movement of its freight.

General and other operating expenses as a percentage of revenue, was 4.7% in 2002 compared to 4.5% in 2001. The increase is due to a litigation charge of $1.7 million, as a result of the settlement of a litigation matter. See Footnote 9, “Commitments and Contingencies”, of the Company’s 2003 Consolidated Financial Statements for further details.

Early extinguishment of debt was incurred in connection with the repayment of the former revolving credit agreement. The Company incurred a charge of $1.8 million related to fees and additional costs incurred with the early extinguishment of debt.

Interest expense decreased $1.5 million, or 10.1%, to $13.4 million, compared to $14.9 million in 2001. The decrease is primarily attributable to a decline in average borrowings combined with a decrease in the weighted average interest rate to 6.3% in 2002 compared to 7.3% in 2001. See Footnote 5, “Long-Term Debt,” of the Company’s 2003 Consolidated Financial Statements for further details.

The effective tax rate was 70.1% for the 2002 fiscal year. The rate is significantly higher than the statutory rate of 38.0%, primarily as a result of per diems paid to drivers, offset to a degree by certain federal and state tax credits. See Footnote 4, “Income Taxes,” of the Company’s 2003 Consolidated Financial Statements for further details.

Liquidity and Capital Resources

Cash Flows
Cash generated from operations increased $15.5 million during 2003 as compared to 2002. The increase was driven primarily by an increase in earnings of $6.5 million, combined with improvements in collection of accounts receivables in the truckload segment.

Cash used in investing activities decreased $5.9 million during 2003 as compared to 2002. The Company invested $22.9 million, net of sales proceeds, in capital expenditures during 2003 compared to $27.9 million during 2002. The decrease is due to the Company selling significantly more revenue equipment generating cash proceeds, while a greater portion of the replacement of revenue equipment was funded through the use of operating leases. Cash used in investing activities increased $19.4 million in 2002 compared to 2001, primarily due to a decrease in the purchase of new equipment and a corresponding decrease in sales of used revenue equipment as the Company extended the trade cycle of its tractor fleet. The Company expects cash capital expenditures, primarily for revenue equipment (net of sales proceeds and trade-ins), to be approximately $35.0 to $40.0 million in 2004, primarily for the replacement of tractors and expected additions to the trailer fleet.

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Cash used in financing activities increased $13.3 million during 2003 compared to 2002. The increase is due primarily to an increase in net repayments of long-term debt of $31.4 million in 2003 compared to $27.4 million in 2002. The repayments of long-term debt during 2003 were funded from cash flows from operations. Current maturities of long-term debt at December 31, 2003, of $25.0 million include $4.5 million in balloon payments related to maturing revenue equipment installment notes. The balloon payments are generally expected to be funded with proceeds from the sale of the related revenue equipment, which is generally covered by repurchase and/or trade agreements in principle between the Company and the equipment manufacturer. Cash used in financing activities decreased $4.6 million during 2002 compared to 2001. In December 2001, the Company entered into approximately $107.0 million in equipment installment notes, the proceeds of which were used primarily to reduce borrowings under the revolving line of credit.

Revolving Credit Agreement
On March 29, 2002, the Company entered into a $100.0 million senior secured revolving credit facility. Proceeds from this new facility were used to repay the then existing revolving credit facility. The revolving credit facility provides for borrowings up to $100.0 million, with availability at any given time based on specified percentages of eligible receivables and revenue equipment, less reserves, under the facility’s Borrowing Base formula. Letters of credit under the facility are limited to $37.0 million. The facility matures in March 2007.

The facility allows the Company to select interest rates for all or any portion of the outstanding balance, based on a Base Rate (based on the domestic prime rate) plus an Applicable Margin or LIBOR plus an Applicable Margin. The Applicable Margin ranges from 0.75% to 1.50% for Base Rate Loans and from 2.25% to 3.00% for LIBOR Loans, based in each case on the aggregate availability as defined. At December 31, 2003, the Applicable Margin was 0.75% for Base Rate Loans and 2.25% for LIBOR Loans. The facility also prescribes additional fees for Letter of Credit transactions and a monthly commitment fee based on the difference between the total commitment and the total borrowing capacity utilized by the Company from time to time.

The facility requires, among other things, maintenance by the Company of prescribed minimum amounts of Consolidated Tangible Net Worth, Fixed Charge Coverage Ratios and Leverage Ratios. It also: 1) limits the Company’s future capital expenditures; 2) prohibits all acquisitions by the Company of its own capital stock or the payment of dividends on such stock; and 3) effectively prohibits future asset acquisitions or dispositions (except in the ordinary course of business) or other business combination transactions by the Company without the Lenders’ consent. The Company was in compliance with these covenants as of December 31, 2003 and 2002.

At December 31, 2003, the Company had $36.2 million in letters of credit and no borrowings outstanding under the facility, with $53.7 million available to borrow. The facility is secured by substantially all assets of the Company, other than real estate and assets securing other debt.

Off Balance Sheet Arrangements
The Company leases certain revenue and service equipment and office and terminal facilities under long-term non-cancelable operating leases. In making the decision to finance revenue equipment or facilities through long-term debt or by entering into non-cancelable lease agreements, the Company considers interest rates, capital requirements and the tax advantages of leasing versus owning the equipment or facilities. At December 31, 2003, the Company leased approximately 3,740 tractors, 7,880 trailers and 50 office and terminal facilities under non-cancelable operating leases with termination dates ranging from January 2004 to November 2010. Lease payments on revenue equipment and office and terminal facilities are included in vehicle rents and general and other operating expenses, respectively, in the consolidated statement of operations. Rental expense related to revenue equipment and facilities was $81.5 million in 2003 compared to $74.9 million in 2002. The remaining obligation as of December 31, 2003 was $196.1 million, with $69.7 million due in the next twelve months.

Certain equipment leases provide for guarantees by the Company of a portion of the residual amount under certain circumstances at the end of the lease term. The maximum potential amount of future payments (undiscounted) under these guarantees is approximately $103.5 million at December 31, 2003. The residual value of a substantial portion of the leased revenue equipment is covered by repurchase or trade agreements in principle between the Company and the equipment manufacturer.

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Cash Requirements
During fiscal year 2003, the Company continued to strengthen its financial position. The Company reduced outstanding debt by $21.3 million to $146.6 million in 2003 compared to $167.9 million in 2002. At December 31, 2003, total capitalization was $313.8, consisting of long-term debt of $146.6 million and equity of $167.2 million, resulting in a debt to total capitalization ratio of 46.7% compared to 51.5% in 2002. In addition, the Company has $53.7 million available to borrow under its revolving credit facility. Management believes that funds provided by operations, borrowings under its line of credit, equipment installment loans and long-term operating lease financing will be sufficient to fund its cash needs and anticipated capital expenditures through 2004. The Company's business will continue to require over the long-term, significant capital investments in revenue equipment, which may require the Company to seek additional borrowings or equity capital. The availability of additional capital will depend upon prevailing market conditions, the market price of the Company’s common stock of which we have limited control, as well as our financial condition and results of operations. Based on recent operating results, anticipated future cash flows and sources of financing expected to be available, the Company does not expect any significant liquidity constraints in the foreseeable future.

The following table represents the Company’s outstanding contractual obligations at December 31, 2003, excluding letters of credit of $36.2 million. The letters of credit are maintained primarily to support the Company’s insurance program and are renewed on an annual basis.

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Critical Accounting Policies and Estimates

In the ordinary course of business, the Company has made a number of estimates and assumptions relating to the reporting of results of operations and financial position in the preparation of its financial statements in conformity with generally accepted accounting principles. Actual results could differ significantly from those estimates under different assumptions and conditions. The Company believes that the following discussion addresses the Company’s most critical accounting policies, which are those that are most important to the portrayal of the Company’s financial condition and results of operations and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Recognition of Revenue
The Company generally recognizes revenue and direct costs when shipments are completed. Certain revenue of Xpress Global Systems, representing less than 10% of consolidated revenues, is recognized upon manifest. Manifest refers to the time when the trailer of the independent carrier is loaded, sealed and ready to leave the dock. Estimated expenses are recorded simultaneous to the recognition of revenue.

Income Taxes
Significant management judgment is required in determining the Company’s provision for income taxes and in determining whether deferred tax assets will be realized in full or in part. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income in years in which the temporary differences are expected to be recovered or settled. When it is more likely than not that all or some portion of specific deferred tax assets, such as state tax credit carry-forwards or state net operating loss carry-forwards will not be realized, a valuation allowance must be established for the amount of the deferred tax assets that are determined not realizable. A valuation allowance for deferred tax assets has not been deemed necessary due to the Company’s profitable operations on both a consolidated and separate legal entity basis. However, if the facts or financial results were to change, thereby impacting the likelihood of the realization of the deferred tax assets, judgment would be applied to determine the amount of the valuation allowance required at that time for that period.

Depreciation
Property and equipment are carried at cost. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the related assets (net of estimated salvage value or trade-in value). The residual value of a substantial portion of the Company’s equipment is covered by repurchase or trade agreements in principle between the Company and the manufacturer. Periodically, the Company evaluates the useful lives and salvage values of its property and equipment based upon, but not limited to, its experience with similar assets, including gains or losses upon dispositions of such assets. If the Company’s equipment manufacturer was unable to perform under the terms of the repurchase and/or trade agreements, it could have a materially negative impact on financial results.

Goodwill
The excess of the consideration paid by the Company over the estimated fair value of identifiable net assets acquired has been recorded as goodwill and prior to 2002, had been amortized on the straight-line basis over periods ranging from 20 to 40 years. The Company previously evaluated whether subsequent events and circumstances occurred that indicated the remaining estimated useful life of goodwill might warrant revision or that the remaining balance may not have been recoverable. When factors indicated that goodwill should be evaluated for possible impairment, the Company used an estimate of the future undiscounted net cash flows of the related businesses over the remaining life of the goodwill in measuring whether goodwill is recoverable.

In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 142 requires that goodwill not be amortized, and that amounts recorded as goodwill are to be tested for impairment. The Company adopted SFAS No. 142 effective January 1, 2002. The Company tested goodwill for impairment using the two-step process prescribed in SFAS No. 142. The first step is a screen for potential impairment, while the second step measures impairment, if any. The Company completed the required impairment tests of goodwill and noted no impairment of goodwill in 2003 or 2002.

Claims Reserves and Estimates
Claims reserves consist of estimates of cargo loss, physical damage, liability (personal injury and property damage), employee medical expenses and workers’ compensation claims within the Company’s established retention levels. Claims in excess of retention levels are generally covered by insurance in amounts the Company considers adequate. Claims accruals represent the

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uninsured portion of pending claims, including estimates of adverse development of known claims, plus an estimated liability for incurred but not reported claims. Accruals for cargo loss, physical damage, liability and workers’ compensation claims are estimated based on the Company’s evaluation of the type and severity of individual claims and historical information, primarily its own claims experience, along with assumptions about future events. Changes in assumptions as well as changes in actual experience could cause these esitmates to change in the future.

Factors that May Affect Future Results

The trucking industry is affected by economic risks and uncertainties, some of which are beyond its control. These include economic recessions and downturns in customers’ business cycles, increases in fuel prices, the availability of qualified drivers and fluctuations in interest rates.

The trucking industry is highly competitive and includes numerous regional, inter-regional and national truckload carriers. Some of these carriers have greater financial resources, equipment and freight capacity than the Company. Management believes its strategies of controlled growth and focused marketing will provide freight at sufficient volumes and prices to be profitable. Changes in economic conditions could reduce both the amount of freight available and freight rates, which could have a material adverse effect on the Company’s results.

Fuel is one of the Company’s largest operating expenditures. Shortages of fuel or significant increases in fuel prices could have a materially adverse effect on the operations and profitability of the Company. For example, the Company’s average fuel price per gallon increased approximately 12.0% in 2003 compared to 2002. Substantially all of the Company’s customer contracts contain fuel surcharge provisions to mitigate increases in the cost of fuel (the Company recognized $34.0 million of fuel surcharge revenue for the year ended December 31, 2003, compared to $15.6 million for the same period in 2002). However, fuel surcharges to customers do not fully recover all fuel increases due to engine idle time and out-of-route and empty miles not billable to the customer. At times, fuel purchase contracts are used to mitigate the effects of increases in the prices of fuel.

Competition for available qualified drivers in the truckload industry is intense and will likely remain so for the foreseeable future. The Company and many of its competitors experience high rates of turnover and occasionally have difficulty in attracting and retaining qualified drivers in sufficient numbers to operate all available equipment. Management believes the Company’s current pay structure, benefits, policies and procedures related to drivers are effective in attracting and retaining drivers. However, there can be no assurance that it will not be affected by a shortage of qualified drivers in the future particularly due to the more restrictive driver’s hours of service requirement imposed by the DOT on January 4, 2004. The inability to attract and retain qualified drivers would have a material adverse effect on the Company’s results.

The trucking industry is extremely capital intensive. The Company depends on operating leases, lines of credit, secured equipment financing, proceeds from the sale of used revenue equipment and cash flows from operations to finance the expansion and maintenance of its modern and cost efficient revenue equipment and facilities. At present, the Company is more highly leveraged than some of its competitors. If the Company were unable in the future to obtain financing at acceptable levels, it could be forced to limit the growth or replacement of its equipment and facilities. A significant increase in interest rates could have a material adverse effect on the Company’s results.

The Company is self-insured for cargo loss, physical damage, liability (personal injury and property damage) and workers’ compensation claims within the Company’s established retention levels. The current retention level per occurrence is $250,000 for Cargo Loss and Workers’ Compensation. The retention level for Liability is $2.0 million per occurrence. If the number of claims or severity of claims for which the Company is self-insured increases from historical levels, operating results could be adversely affected. Also, the Company maintains insurance with licensed insurance companies above the amounts for which it is self-insured. After several years of aggressive pricing, insurance carriers have raised premiums, which have increased the Company’s insurance and claims expense. If these expenses continue to increase and the Company is unable to offset the increase with higher freight rates, earnings could be materially and adversely affected.

The Company is regulated by the DOT. The DOT has broad powers and generally governs activities such as authorization to engage in motor carrier operations, safety and other matters. The EPA adopted the new truck engine emissions standards which became effective for truck engine manufacturers in October 1, 2002. The new regulations decrease the amount of emissions that can be released by truck engines and affect tractors produced after the effective date of the regulations.

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Compliance with the new regulations has resulted in increased new equipment prices of approximately $3,000 to $4,000 more per engine. Additionally, the Company has experienced degradations in fuel economy ranging between 8.0% to 12.0%. As of December 31, 2003, the Company had approximately 1,300 trucks in its fleet subject to the new regulations. During 2004, the Company expects to replace approximately 500 to 600 trucks that will also be subject to the aforementioned emissions standards. To the extent the Company is unable to offset such increases in operating costs associated with the environmentally compliant engines with rate increases or cost savings, results of operations could be materially affected.

Effective January 2004, the new hours of service regulations became effective which resulted in the following: 1) an increase in daily drive time to 11 hours from 10 hours, 2) decrease in total on-duty hours from 15 to 14 with no extension of time for breaks, 3) increase in cumulative off-duty hours to 10 compared to 8 previously and 4) restart of weekly hour count following any consecutive 34-hours off-duty. These changes could reduce the amount of time drivers can spend driving if the Company is unable to limit driver’s on-duty non-driving activities.

The Company has increased accessorial charges to customers including stop-pay, loading and unloading fees and equipment detention fees to mitigate the expected impact of these new hours of service regulations. Although it is too early to determine the full impact of the new rules, the Company has experienced minimal disruption to date in its operations. The Company believes that the effect of the new hours of service may adversely impact overall utilization to a degree. However, it has anticipated that the above described increases in accessorial charges and actions taken by customers to improve efficiency will largely mitigate the effect on the Company’s financial results.

Inflation

Inflation could have an adverse impact on the Company's costs of operations. A period of inflation may cause interest rates, revenue equipment prices, wages paid to attract and retain qualified drivers and fuel prices to increase, which would adversely affect results of operations unless corresponding increases in freight rates could be achieved. However, inflation has not had a material effect on the Company’s results of operations or financial condition during the past three years.

Seasonality

In the trucking industry, results of operations generally show a seasonal pattern as customers increase shipments prior to and reduce shipments during and after the winter holiday season. Additionally, shipments can be adversely impacted by winter weather conditions. The Company’s operating expenses have historically been higher in the winter months due primarily to decreased fuel efficiency, increased maintenance costs of revenue equipment in colder weather and increased insurance and claims costs due to adverse winter weather conditions. Revenue can also be affected by bad weather and holidays, since revenue is directly related to available working days of shippers.

Recent Accounting Pronouncements

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51.” The Interpretation requires the consolidation of entities in which an enterprise absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. Currently, entities are generally consolidated by an enterprise when it has a controlling interest through ownership of a majority voting interest in the entity. In December 2003, the FASB issued a revision of the Interpretation, which deferred the effective date to the first reporting period after March 15, 2004. The Interpretation permits consolidation at historical carrying amounts as if the Interpretation had always been applied, or at fair value, if determining historical amounts is impracticable. The Interpretation may be applied prospectively with a cumulative-effect adjustment as of the date on which it is first applied or by restating previously issued financial statements for one or more years with a cumulative effective adjustment as of the beginning of the first year restated. The adoption of Interpretation No. 46 is not expected to have a material effect on the Company’s financial statements.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. In particular, SFAS No. 149 clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative as discussed in SFAS No. 133 and it clarifies when a derivative contains a financing component that warrants special reporting in the statement of cash flows. SFAS No. 149 is effective for

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contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003 and is to be applied prospectively. The adoption of SFAS No. 149 had no impact on the Company’s financial statements.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity,” which specifies that instruments within its scope are obligations of the issuer and, therefore, the issuer must classify them as liabilities. Financial instruments within the scope of the pronouncement include mandatory redeemable financial instruments, obligations to repurchase the issuer’s equity shares by transferring assets and certain obligations to issue a variable number of shares. SFAS No. 150 is effective for all financial instruments entered into or modified after May 31, 2003. The adoption of SFAS No. 150 had no impact on the Company’s financial statements.

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ITEM 7A.

QUANTITIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Interest Rate Risk

The Company has interest rate exposure arising from the Company’s variable rate debt. At December 31, 2003, the Company had $30.2 million of variable rate debt. If interest rates on the Company’s existing variable rate debt were to increase by 10.0% from their December 31, 2003 rates for the next twelve months, there would be no material adverse impact on the Company’s results of operations related to existing debt obligations.

Commodity Price Risk

Fuel is one of the Company’s largest expenditures. The price and availability of diesel fuel fluctuates due to changes in production, seasonality and other market factors generally outside the Company’s control. Many of the Company’s customer contracts contain fuel surcharge provisions to mitigate increases in the cost of fuel. Fuel surcharges to customers do not fully recover all fuel increases due to engine idle time and out-of-route and empty miles not billable to the customer.

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ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Auditors

The Board of Directors and Stockholders U.S. Xpress Enterprises, Inc.

We have audited the accompanying consolidated balance sheets of U.S. Xpress Enterprises, Inc. and subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements of U.S. Xpress Enterprises, Inc. and subsidiaries for the year ended December 31, 2001 were audited by other auditors who have ceased operations and whose report dated January 29, 2002 expressed an unqualified opinion.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of U.S. Xpress Enterprises, Inc. and subsidiaries as of December 31, 2003 and 2002, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

As explained in Note 2 to the consolidated financial statements, the Company adopted Financial Accounting Standards Board Statement No. 142, Goodwill and Other Intangible Assets, in fiscal 2002.

As discussed above, the consolidated financial statements of U.S. Xpress Enterprises, Inc. and subsidiaries for the year ended December 31, 2001 were audited by other auditors who have ceased operations. As described in Note 2, these consolidated financial statements have been revised to include the transitional disclosures required by Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, which was adopted by the Company as of January 1, 2002. Our audit procedures, with respect to these disclosures in Note 2 for 2001, included (a) agreeing the previously reported net loss to the previously issued consolidated financial statements and the adjustments to reported net loss representing amortization expense (including any related tax effects) recognized in the period related to goodwill that is no longer being amortized as a result of initially applying Statement 142 to the Company’s underlying records obtained from management and (b) testing the mathematical accuracy of the reconciliation of pro forma net income to reported net loss. In our opinion, such adjustments are appropriate and have been properly applied. However, we were not engaged to audit, review, or apply any procedures to the 2001 financial statements of the Company other than with respect to such adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2001 consolidated financial statements taken as a whole.

Chattanooga, Tennessee
February 2, 2004

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This report is a copy of the previously issued report of Arthur Andersen LLP which has not been
reissued by Arthur Andersen LLP. We are including this copy of Andersen’s Audit Report pursuant to
Rule 2-02(e) of Regulation S-X under the Securities Exchange Act of 1933

Report of Independent Public Accountants

To U.S. Xpress Enterprises, Inc.:

We have audited the accompanying consolidated balance sheets of U.S. Xpress Enterprises, Inc. (a Nevada corporation) and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of U.S. Xpress Enterprises, Inc. and subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States.

/s/ ARTHUR ANDERSEN LLP

Chattanooga, Tennessee
January 29, 2002

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U.S.XPRESS ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

   The accompanying notes are an integral part of these consolidated statements.

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U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

   The accompanying notes are an integral part of these consolidated balance sheets.

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U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

   The accompanying notes are an integral part of these consolidated statements.

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U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except per share amounts)