UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

U.S. XPRESS ENTERPRISES, INC.

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes x No o

        As of September 30, 2003, 10,942,352 shares of the registrant’s Class A common stock, par value $.01 per share, and 3,040,262 shares of the registrant’s Class B common stock, par value $.01 per share, were outstanding.

U.S. XPRESS ENTERPRISES, INC.

TABLE OF CONTENTS

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(See Accompanying Notes to Consolidated Financial Statements)

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(See Accompanying Notes to Consolidated Financial Statements)

4

(See Accompanying Notes to Consolidated Financial Statements)

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(See Accompanying Notes to Consolidated Financial Statements)

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U.S. XPRESS ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In Thousands, Except Per Share Data)

1. Consolidated Financial Statements

        The interim consolidated financial statements contained herein reflect all adjustments that, in the opinion of management, are necessary for a fair statement of the financial condition and results of operations for the periods presented. They have been prepared by the Company, without audit, in accordance with the instructions to Form 10-Q and the rules and regulations of the Securities and Exchange Commission and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.

        Operating results for the three and nine months ended September 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. In the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments consisted only of items that are of a normal recurring nature.

        These interim consolidated financial statements should be read in conjunction with the Company’s latest annual consolidated financial statements (which are included in the 2002 Annual Report to Stockholders in the Company’s Form 10-K filed with the Securities and Exchange Commission on March 31, 2003).

2. Organization and 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”). 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.

3. Earnings Per Share

        The difference in basic and diluted weighted average shares is due to the assumed conversion of outstanding options. The computation of basic and diluted earnings per share is as follows:

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4. Stock-Based Compensation

        Stock Options
        The Company accounts for its stock-based compensation plans using the intrinsic value method under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”) and has elected the disclosure option of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation.”

        As of December 31, 2002, the Company adopted SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure.” SFAS No. 148 amends SFAS No. 123 to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of that statement to require prominent disclosure about the effects of an entity’s accounting policy decisions with respect to stock-based employee compensation. Finally, SFAS No. 148 amends APB Opinion No. 28, “Interim Financial Reporting,” to require disclosure about these effects in interim financial information.

        The following pro forma summary presents the Company’s net income and earnings per share which would have been reported had the Company determined stock-based compensation cost using the alternative fair value method of accounting set forth under SFAS No. 123.

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        Employee Stock Purchase Plan
        In May 2003, the Company adopted the 2003 U.S. Xpress Enterprises, Inc. Employee Stock Purchase Plan (the “Plan”), effective July 1, 2003, through which employees meeting certain eligibility criteria may purchase shares of the Company’s common stock at a 15% discount of the fair market value, as defined. Common stock is purchased for employees in January and July of each year. Employees may not purchase more than 1,250 shares in any six-month period or purchase stock having a fair market value of more than $25,000 per calendar year. The Company has reserved 500,000 shares of Class A Common Stock under the terms of the Plan.

        Non-Employee Directors Stock Plan
        In May 2003, the Company adopted the 2003 Non-Employee Directors Stock Award and Option Plan (the “Directors Stock Plan”) providing for the issuance of stock options to non-employee directors. The Directors Stock Plan also provides for non-employee directors the option to receive certain board related compensation in the form of the Company’s Class A Common Stock in lieu of cash. If the board member elects to receive board related compensation in the form of stock, the number of shares issued to each director in lieu of cash is determined based on the amount of earned compensation divided by the fair market value of the Company’s stock on the date the compensation is earned. The number of shares of Class A Common Stock available for option or issue under the Directors Stock Plan may not exceed 50,000 shares.

        The Directors Stock Plan provides for the grant of 1,200 options to purchase the Company’s Class A Common Stock to each non-employee director upon the election or re-election of each such director to the board. The exercise price of the options issued under the Directors Stock Plan is set at the fair market value of the Company’s stock on the date of grant. Options vest ratably on each of the first, second and third anniversaries of the date of grant.

        Incentive Stock Plans
        In May 2003, the Company registered 1,000,000 additional shares of Class A Common Stock under the U.S. Xpress Enterprises, Inc. 2002 Stock Incentive Plan.

5. Commitments and Contingencies

        The Company is party to certain legal proceedings incidental to its business. The ultimate disposition of these matters, in the opinion of management, based in part upon advice of legal counsel, is not expected to have a material adverse effect on the Company’s financial position or results of operations.

        The Company has letters of credit of $36.2 million outstanding at September 30, 2003. The letters of credit are maintained primarily to support the Company’s insurance program.

6. Derivative Financial Instruments

        The Company uses derivative financial instruments to manage exposure to interest rate risks inherent in variable-rate debt and does not use them for trading or speculative purposes. On March 29, 2002, the Company entered into a new revolving credit agreement. Prior to that date, the Company designated its interest rate swap agreements as cash flow hedges, in which changes in fair value were recognized in other comprehensive income.

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        In connection with entering into the new revolving credit agreement, the outstanding interest rate swap agreements ceased to qualify as cash flow hedge instruments because they were not matched to the terms of the new debt. Accordingly, they were not designated as hedging instruments, resulting in the amounts included in other comprehensive income being amortized over the remaining term of the respective agreements with any future changes in the market value reflected as interest expense in the consolidated statements of operations. For the year ended September 30, 2003 and 2002, the Company recognized $(201,000) and $198,000, respectively, to interest expense.

        As of September 30, 2003, the Company no longer has outstanding interest rate swap agreements. The agreements expired in February and September 2003.

7. Operating Segments

        The Company has two reportable segments based on the types of services it provides to its customers: U.S. Xpress which provides truckload operations throughout the continental United States and parts of Canada and Mexico, and Xpress Global Systems which 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. Substantially all intersegment sales prices are market based. The Company evaluates performance based on operating income of the respective business units.

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        The difference in consolidated operating income as shown above and consolidated income before income tax provision on the consolidated statements of operations is net interest expense of $2,247 and $3,122 for the three months ended September 30, 2003 and 2002, respectively, $7,685 and $10,132 for the nine months ended September 30, 2003 and 2002, respectively, and early extinguishment of debt of $1,776 for the nine months ended September 30, 2002, which is considered a corporate expense.

8. Comprehensive Income

        Comprehensive income consisted of the following components for the three and nine months ended September 30, 2003 and 2002, respectively:

9. Long-Term Debt

        The Company’s long-term debt primarily consists of equipment installment notes, mortgage notes, a revolving credit facility and capital lease obligations. As of September 30, 2003 and 2002, $123.1 million and $129.9 million, respectively, were outstanding under the equipment installment notes, with weighted average interest rates of 5.79% and 6.94%, respectively. The equipment installment notes are secured by the related revenue equipment and mature at various dates ranging from October 2003 to July 2011.

        The outstanding mortgage notes primarily relate to the Company’s corporate headquarters and certain terminal locations, which are secured by the related real estate and mature from August 2007 to October 2010. As of September 30, 2003 and 2002, $23.1 million and $24.8 million, respectively, were outstanding under the mortgage notes, with average interest rates of 5.83% and 6.08%, respectively. The Company also has capital lease obligations related to a terminal location and certain revenue equipment. As of September 30, 2003 and 2002, $3.8 million and $1.5 million were outstanding, respectively. The capital lease obligations mature from July to November 2007.

        On March 29, 2002, the Company entered into a $100.0 million senior secured revolving credit facility. Proceeds from this 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.

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        The facility allows the Company to select interest rates for all or any portion of the outstanding balance, based on either 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 September 30, 2003, the Applicable Margin was 1.25% for Base Rate Loans and 2.75% 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.

        At September 30, 2003, $3.0 million in borrowings and $36.2 million in letters of credit were outstanding under the facility with $52.0 million available to borrow. The facility is secured by substantially all assets of the Company, other than real estate and assets securing other debt of the Company.

        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: (i) limits the Company’s future capital expenditures; (ii) prohibits all acquisitions by the Company of its own capital stock or the payment of dividends on such stock; and (iii) 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.

10. Early Extinguishment of Debt

        In April 2002, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” SFAS No. 145 rescinds SFAS No. 4, which required all material gains and losses from extinguishment of debt to be classified as an extraordinary item, net of related income tax effect. As a result, upon adoption, extinguishment gains and losses will be classified as ordinary gains or losses in the income statement. Additionally, any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods should be reclassified to ordinary gain or loss in comparative income statements. SFAS No. 145 is effective for fiscal years beginning after May 15, 2002. Effective January 1, 2003, the Company adopted SFAS No. 145 which resulted in a reclassification of an extraordinary loss, which occurred during fiscal 2002, from the early extinguishment of debt of $1.1 million, net of tax, to income from operations in the accompanying consolidated statements of operations.

11. Leases

        In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others,” an interpretation of FASB Statement Nos. 5, 57 and 107 and a rescission of FASB Interpretation No. 34. This Interpretation elaborates on the disclosure to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. The Interpretation also clarifies that a guarantor is required to recognize, at inception of a guarantee, a /

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liability for the fair value of the obligation undertaken. The initial recognition and measurement provisions of the Interpretation are applicable to guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for financial statements of interim and annual periods ending after December 15, 2002. The Company adopted Interpretation No. 45 effective January 1, 2003 and it had no material impact on its financial condition or results of operations.

        The Company leases certain revenue and service equipment and office and terminal facilities under long-term non-cancelable operating lease agreements expiring at various dates through September 2010. Revenue equipment lease terms are generally 3 — 4 years for tractors and 5-7 years for trailers. 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 $115.6 million at September 30, 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.

12. 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. The Company will adopt the provisions of Interpretation No. 46 during the fourth quarter of 2003 as a result of the FASB deferring the effective date of the Interpretation for interests held by variable interest entities or potential variable interest entities created before February 1, 2003. The adoption of Interpretation No. 46 is not expected to have a material effect on our financial statements.

13. Reclassifications

        Certain reclassifications have been made to the 2002 financial statements to conform to the 2003 presentation.

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      Item 2. Management’s Discussion and Analysis of Financial
                   Condition and Results of Operations

General

    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”). 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.

Results of Operations

        The following table sets forth, for the periods indicated, the components of the consolidated statements of operations expressed as a percentage of operating revenue:

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Comparison of the Three Months Ended September 30, 2003 to the
Three Months Ended September 30, 2002

        Operating revenue during the three months ended September 30, 2003, increased $18.2 million, or 8.3%, to $238.3 million, compared to $220.1 million during the same period in 2002. U.S. Xpress revenue increased $11.8 million, or 6.0%, due primarily to a 2.8% increase in revenue per mile to $1.303 from $1.267, combined with a $3.2 million increase in fuel surcharge revenue. Xpress Global Systems revenue increased $7.1 million, or 23.6%, due to a $2.1 million increase in revenues in the airport-to-airport transportation business primarily the result of a 7.3% increase in shipment volume combined with a 4.7% increase in shipment yield, and a $5.0 million increase in the floorcovering logistics business resulting from an improvement in shipment yield and an increase in the average shipment size.

        Operating expenses represented 96.8% of operating revenue for the three months ended September 30, 2003, compared to 97.4% during the same period in 2002.

        Salaries, wages and benefits increased $5.5 million, or 7.1%, to $83.5 million during the three months ended September 30, 2003, compared to $78.0 million during the same period in 2002. The increase is due, in part, to increased group health insurance costs and workers’ compensation premiums, which are included in salaries, wages and benefits. The increase can also be attributed to the expansion of facilities and additional volume of business at Xpress Global Systems.

        Fuel and fuel taxes as a percentage of operating revenue remained relatively consistent at 13.7% and 13.8% for the three months ended September 30, 2003 and 2002, respectively. The Company’s exposure to increases in fuel prices is partially mitigated by fuel surcharges to its customers. The Company recognized $7.5 million of fuel surcharge revenue for the three months ended September 30, 2003, compared to $4.3 million during the same period in 2002.

        Vehicle rents increased $1.9 million, or 11.2%, to $18.9 million during the three months ended September 30, 2003, compared to $17.0 million during the same period in 2002. The increase is due to a 12.1% increase in the average number of tractors leased under operating leases, offset by a 1.6% decrease in the average number of trailers leased during the three months ended September 30, 2003, compared to the same period in 2002. Depreciation and amortization was $8.8 million during the three months ended September 30, 2003, compared to $9.0 million during the same period in 2002. The Company includes gains and losses from the sale of revenue equipment in depreciation expense. Net losses from the sale of revenue and other equipment for the three months ended September 30, 2003, were $404,000 compared to $294,000 during the same period in 2002. Overall, as a percentage of operating revenue, vehicle rents and depreciation expense (including net losses) were 11.8% and 11.9% during the three months ended September 30, 2003 and 2002, respectively. The increase in the ratio of leased to owned revenue equipment resulted in a shift of financing expenses from interest to “above the line” operating expenses.

        Purchased transportation increased $2.7 million, or 7.1%, to $40.6 million during the three months ended September 30, 2003, compared to $37.9 million during the same period in 2002. The increase is due, in part, to an increase in fuel surcharges paid to owner-operators due to the

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higher cost of fuel during the three months ended September 30, 2003, compared to the same period in 2002. The change can also be attributed to an increase of 14.6% in Xpress Global Systems’ purchased transportation due to an increase in shipment volume for the three months ended September 30, 2003, compared to the same period in 2002.

        Operating expenses and supplies as a percentage of operating revenue were 7.1% during the three months ended September 30, 2003, compared to 7.4% during the same period in 2002. The decrease is primarily due to a decline in tire expenses during the three months ended September 30, 2003 as compared to the same period in 2002, offset by an increase in tractor maintenance expenses.

        Insurance premiums and claims increased $2.9 million, or 29.6%, to $12.7 million, during the three months ended September 30, 2003, compared to $9.8 million during the same period in 2002. The increase is primarily due to an increase in liability claims associated with a significant accident.

        General and other operating expenses were $9.5 million in the three months ended September 30, 2003, compared to $9.4 million during the same period in 2002. The increase is primarily due to an increase in building rent and related costs.

        Interest expense decreased $0.9 million, or 28.0%, to $2.2 million, during the three months ended September 30, 2003, compared to $3.1 million during the same period in 2002. This decrease was primarily attributable to a decrease in average borrowings of approximately $31.2 million and a decrease in the average interest rate of approximately 1.0%.

        The Company’s effective tax rate was 50.0% during the three months ended September 30, 2003. The rate is higher than the statutory rate of 38.0%, 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.

        Income from operations for the three months ended September 30, 2003, increased $1.8 million, or 31.0%, to $7.6 million from $5.8 million during the same period in 2002. As a percentage of operating revenue, income from operations was 3.2% for the three months ended September 30, 2003 and 2.6% for the same period in 2002.

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Comparison of the Nine Months Ended September 30, 2003 to the
Nine Months Ended September 30, 2002

        Operating revenue during the nine month period ended September 30, 2003, increased $58.0 million, or 9.2%, to $690.9 million, compared to $632.9 million during the same period in 2002. U.S. Xpress revenue increased $44.8 million, or 7.9%, due primarily to a 2.9% increase in revenue per mile to $1.288 from $1.252, combined with a $17.2 million increase in fuel surcharge revenue. Xpress Global Systems revenue increased $18.7 million, or 22.5%, due to a $7.6 million increase in revenues in the airport-to-airport transportation business primarily resulting from a 22.0% increase in shipment volume, and an $11.1 million increase in the floorcovering logistics business resulting from an improvement in shipment yield and an increase in the average shipment size.

        Operating expenses represented 97.4% of operating revenue for the nine months ended September 30, 2003, compared to 98.0% during the same period in 2002.

        Salaries, wages and benefits increased $11.4 million, or 5.0%, to $240.0 million during the nine months ended September 30, 2003, compared to $228.6 million during the same period in 2002. The increase is due, in part, to increased group health insurance costs and workers’ compensation premiums, which are included in salaries, wages and benefits. The increase can also be attributed to the expansion of facilities and additional volume of business at Xpress Global Systems.

        Fuel and fuel taxes as a percentage of operating revenue were 14.8% during the nine months ended September 30, 2003, compared to 13.5% during the same period in 2002. The increase was primarily due to the approximately 17.1% increase in the average fuel price per gallon during the nine months ended September 30, 2003 compared to the same period in 2002. The Company’s exposure to increases in fuel prices is partially mitigated by fuel surcharges to its customers. The Company recognized $26.2 million of fuel surcharge revenue for the nine months ended September 30, 2003, compared to $8.9 million during the same period in 2002.

        Vehicle rents increased $4.1 million, or 7.8%, to $56.6 million, during the nine months ended September 30, 2003, compared to $52.5 million during the same period in 2002. The increase is due to a 15.3% increase in the average number of tractors leased under operating leases offset by a 3.0% decrease in the average number of trailers leased during the nine months ended September 30, 2003, compared to the same period in 2002. Depreciation and amortization was $26.9 million during the nine months ended September 30, 2003, compared to $26.6 million during the same period in 2002. The Company includes gains and losses from the sale of revenue equipment in depreciation expense. Net losses from the sale of revenue and other equipment for the nine months ended September 30, 2003 were $570,000, compared to $840,000 during the same period in 2002. Overall, as a percentage of operating revenue, vehicle rents and depreciation expense (including net losses) were 12.2% during the nine months ended September 30, 2003, compared to 12.6% during the same period in 2002. The increase in the ratio of leased to owned revenue equipment resulted in a shift of financing expenses from interest to “above the line” operating expenses.

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        Purchased transportation increased $11.3 million, or 10.9%, to $115.2 million during the nine months ended September 30, 2003, compared to $103.9 million during the same period in 2002. The increase is due, in part, to an increase in fuel surcharges paid to owner-operators due to the higher cost of fuel during the nine months ended September 30, 2003, compared to the same period in 2002. The change can also be attributed to an increase of 17.1% in Xpress Global Systems’ purchased transportation due to an increase in shipment volume for the nine months ended September 30, 2003, compared to the same period in 2002.

        Operating expenses and supplies as a percentage of operating revenue were 7.1% during the nine months ended September 30, 2003, compared to 7.2% during the same period in 2002. The decrease is primarily due to a decrease in tire expenses during the nine months ended September 30, 2003, as compared to the same period in 2002, offset by an increase in tractor maintenance expenses.

        Insurance premiums and claims, increased $5.5 million, or 18.4%, to $35.4 million, during the nine months ended September 30, 2003, compared to $29.9 million during the same period in 2002. The increase is due to an increase in claims expense related to cargo and physical damage, combined with an increase in liability claims associated with a significant accident.

        General and other operating expenses were $27.5 million for the nine months ended September 30, 2003, compared to $27.2 million during the same period in 2002. The increase is primarily due to an increase in building rent and related costs.

        Early extinguishment of debt for the nine months ended September 30, 2002, was 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 $2.4 million, or 23.8%, to $7.7 million, during the nine months ended September 30, 2003, compared to $10.1 million during the same period in 2002. The decrease was primarily attributable to a decrease in average borrowings of approximately $108.2 million and a decrease in the average interest rate of approximately 1.0%.

        The Company’s effective tax rate was 50.0% during the nine months ended September 30, 2003. The rate is higher than the statutory rate of 38.0%, primarily as a result of per diems paid to drivers which are not fully deductible for federal income tax purposes. The Company initiated a per diem driver pay plan in February 2002.

        Income from operations for the nine months ended September 30, 2003, increased $5.2 million, or 41.6%, to $17.7 million from $12.5 million during the same period in 2002. As a percentage of operating revenue, income from operations was 2.6% for the nine months ended September 30, 2003, and 2.0% for the same period in 2002.

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Liquidity and Capital Resources

        The Company’s primary sources of liquidity and capital resources during the nine month period ended September 30, 2003, were cash from operations, borrowings under lines of credit and equipment installment notes, proceeds from sales of used revenue equipment and the use of long-term operating leases to fund the replacement and addition of revenue equipment.

        On March 29, 2002, the Company entered into a $100.0 million senior secured revolving credit facility. Proceeds from this 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 allows the Company to select interest rates for all or any portion of the outstanding balance, based on either 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 September 30, 2003, the Applicable Margin was 1.25% for Base Rate Loans and 2.75% 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.

        At September 30, 2003, $3.0 million in borrowings and $36.2 million in letters of credit were outstanding under the facility with $52.0 million available to borrow. The facility is secured by substantially all assets of the Company, other than real estate and assets securing other debt of the Company.

        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: (i) limits the Company’s future capital expenditures; (ii) prohibits all acquisitions by the Company of its own capital stock or the payment of dividends on such stock; and (iii) 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.

        Cash provided by operations increased to $40.0 million during the nine months ended September 30, 2003, compared to $28.3 million during the same period in 2002, due in part to a $7.6 million increase in pretax income, combined with a decrease in the growth of working capital.

        Net cash provided by investing activities was $1.7 million during the nine months ended September 30, 2003, compared to cash used in investing activities of $29.1 million during the same period in 2002. The change during the nine months ended September 30, 2003, can be attributed to the Company selling significantly more revenue equipment generating cash proceeds, while the replacement and additions of revenue equipment were primarily funded through operating leases.

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        Net cash used in financing activities was $35.8 million during the nine months ended September 30, 2003, compared to $3.9 million during the same period in 2002. During 2003, the Company used proceeds from the sale of revenue equipment to pay down long-term debt. Current maturities of long-term debt at September 30, 2003, of $30.6 million include $9.3 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.

        Management believes that the aggregate funds provided by operations, borrowings under its lines of credit, equipment installment loans, sales of used revenue equipment and long-term operating lease financing will be sufficient to fund its cash needs and anticipated capital expenditures through the next twelve months.

        The following table represents the Company’s outstanding contractual obligations at September 30, 2003, excluding letters of credit. Letters of credit of $36.2 million were outstanding at September 30, 2003. The letters of credit are maintained primarily to support the Company’s insurance program and are renewed on an annual basis.

        The Company leases certain revenue and service equipment and office and terminal facilities under long-term non-cancelable operating leases. 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 $115.6 million at September 30, 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.

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

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entity. The Company will adopt the provisions of Interpretation No. 46 during the fourth quarter of 2003 as a result of the FASB deferring the effective date of the Interpretation for interests held by variable interest entities or potential variable interest entities created before February 1, 2003. The adoption of Interpretation No. 46 is not expected to have a material effect on our financial statements.

Inflation

        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, revenue generally shows a seasonal pattern as customers reduce shipments during and after the winter holiday season and as a result of inherent weather variations. The Company’s operating expenses also have historically been higher during the winter months.

        This Quarterly 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,” “estimated,” “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. Such risks and uncertainties include, but are not limited to, those factors discussed under the heading “Factors that May Affect Future Results” in the Company’s Annual Report on Form 10-K, as well as other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission.

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Interest Rate Risk

        The Company has interest rate exposure arising from the Company’s line of credit and other installment notes, which have variable interest rates. At September 30, 2003, the Company had $31.6 million of variable rate debt. If interest rates on the Company’s existing variable rate debt were to increase by 10% from their September 30, 2003 rates for the next twelve months, there would be no material adverse impact on the Company’s results of operations.

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. However, fuel surcharges to customers do not fully recover all of fuel increases due to engine idle time and out-of-route and empty miles not billable to the customer.

Item 4. Controls and Procedures

        As of the end of the period covered by this Form 10-Q, an evaluation under Rule 13a-15 of the Securities Exchange Act of 1934 was performed under the supervision and with the participation of our management, including our principal executive and financial officers, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our principal executive and financial officers concluded that our disclosure controls and procedures were effective. There have been no significant changes in our internal controls over financial reporting or in other factors that could significantly affect internal controls during the period covered by the form.

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    U.S. XPRESS ENTERPRISES, INC.

PART II — OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a)        Exhibits

                    31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

                    31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

                    31.3 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

                    32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

                    32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)        Reports on Form 8-K

            During the quarter ended September 30, 2003, the Company filed the following report on Form 8-K:

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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EXHIBIT 31.1

CERTIFICATIONS

I, Ray M. Harlin, certify that:

1.     I have reviewed this Quarterly Report on Form 10-Q of U.S. Xpress Enterprises, Inc.;

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EXHIBIT 31.2

CERTIFICATIONS

I, Patrick E. Quinn, certify that:

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EXHIBIT 31.3

CERTIFICATIONS

I, Max L. Fuller, certify that:

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EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Quarterly Report of U.S. Xpress Enterprises, Inc. (the “Company”) on Form 10-Q for the three months ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. § 1350 (as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002) that he is the President (the Chief Executive Officer) of the Company and that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/Patrick E. Quinn
——————————————
Patrick E. Quinn
Co-Chairman of the Board of Directors,
President and Treasurer

Date: November 14, 2003

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Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Quarterly Report of U.S. Xpress Enterprises, Inc. (the “Company”) on Form 10-Q for the three months ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. § 1350 (as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002) that he is the Chief Financial Officer of the Company and that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/Ray M. Harlin
——————————————
Ray M. Harlin
Executive Vice President of Finance,
and Chief Financial Officer

Date: November 14, 2003

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