UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38528

U.S. Xpress Enterprises, Inc.

(Exact name of registrant as specified in its charter)


Nevada	62-1378182
(State or other jurisdiction of incorporation	(I.R.S. Employer Identification No.)
or organization)

4080 Jenkins Road
Chattanooga, Tennessee	37421
(Address of principal executive offices)	(Zip Code)

(423) 510-3000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value	USX	The New York Stock Exchange

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 ☒	No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


Yes ☒	No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes ☐	No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date July 31, 2020.

Class A Common Stock, $0.01 par value: 33,936,199

Class B Common Stock, $0.01 par value: 15,667,095

Table of Contents

TABLE OF CONTENTS


	PART I FINANCIAL INFORMATION
		Page Number

Item 1.	Unaudited Condensed Consolidated Financial Statements Three and Six Months Ended June 30, 2020 and 2019

	Unaudited Condensed Consolidated Balance Sheets	3

	Unaudited Condensed Consolidated Statements of Comprehensive Income	4

	Unaudited Condensed Consolidated Statements of Cash Flows	5

	Unaudited Condensed Consolidated Statement of Stockholders’ Equity	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	36

Item 4.	Controls and Procedures	36


	PART II OTHER INFORMATION
		Page Number

Item 1.	Legal Proceedings	37

Item 1A.	Risk Factors	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38

Item 3.	Defaults Upon Senior Securities	38

Item 4.	Mine Safety Disclosures	38

Item 5.	Other Information	38

Item 6.	Exhibits	38

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U.S. Xpress Enterprises, Inc.

Unaudited Condensed Consolidated Balance Sheets

June 30, 2020 and December 31, 2019


	June 30,		December 31,
(in thousands, except share amounts)	2020		2019
Assets
Current assets
Cash and cash equivalents	$	1,326	$	5,687
Customer receivables, net of allowance of $207 and $63 at June 30, 2020 and December 31, 2019, respectively		185,035		183,706
Other receivables		16,573		15,253
Prepaid insurance and licenses		9,392		11,326
Operating supplies		7,950		7,193
Assets held for sale		12,715		17,732
Other current assets		14,553		15,831
Total current assets		247,544		256,728
Property and equipment, at cost		912,264		880,101
Less accumulated depreciation and amortization		(400,641)		(388,318)
Net property and equipment		511,623		491,783
Other assets
Operating lease right of use assets		277,362		276,618
Goodwill		59,221		57,708
Intangible assets, net		26,364		27,214
Other		31,327		30,058
Total other assets		394,274		391,598
Total assets	$	1,153,441	$	1,140,109
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	72,459	$	68,918
Book overdraft		4,945		1,313
Accrued wages and benefits		26,970		24,110
Claims and insurance accruals, current		48,881		51,910
Other accrued liabilities		6,642		9,127
Current portion of operating lease liabilities		70,438		69,866
Current maturities of long-term debt and finance leases		87,106		80,247
Total current liabilities		317,441		305,491
Long-term debt, net of current maturities		295,858		315,797
Less unamortized discount and debt issuance costs		(335)		(1,223)
Net long-term debt		295,523		314,574
Deferred income taxes		20,993		20,692
Other long-term liabilities		12,325		5,249
Claims and insurance accruals, long-term		60,306		56,910
Noncurrent operating lease liabilities		206,616		206,357
Commitments and contingencies (Note 6)		—		—
Stockholders' Equity
Common stock Class A, $.01 par value, 140,000,000 shares authorized at June 30, 2020 and December 31, 2019, respectively, 33,697,907 and 33,314,141 issued and outstanding at June 30, 2020 and December 31, 2019, respectively		336		333
Common stock Class B, $.01 par value, 35,000,000 authorized at June 30, 2020 and December 31, 2019, respectively, 15,807,095 and 15,687,101 issued and outstanding at June 30, 2020 and December 31, 2019, respectively		158		157
Additional paid-in capital		258,557		250,700
Accumulated deficit		(20,700)		(20,982)
Stockholders' equity		238,351		230,208
Noncontrolling interest		1,886		628
Total stockholders' equity		240,237		230,836
Total liabilities and stockholders' equity	$	1,153,441	$	1,140,109

See Notes to Unaudited Condensed Consolidated Financial Statements

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U.S. Xpress Enterprises, Inc.

Unaudited Condensed Consolidated Statements of Comprehensive Income

Three and Six Months Ended June 30, 2020 and 2019


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands, except per share amounts)	2020		2019		2020		2019
Operating revenue
Revenue, before fuel surcharge	$	393,964	$	371,184	$	786,784	$	746,496
Fuel surcharge		28,513		42,678		68,261		82,729
Total operating revenue		422,477		413,862		855,045		829,225
Operating expenses
Salaries, wages, and benefits		139,987		130,521		275,381		255,084
Fuel and fuel taxes		29,874		47,374		70,197		94,278
Vehicle rents		21,335		18,579		43,212		37,555
Depreciation and amortization, net of (gain) loss on sale of property		26,283		24,752		52,086		47,814
Purchased transportation		117,366		112,579		247,120		226,584
Operating expenses and supplies		28,126		29,968		57,800		57,913
Insurance premiums and claims		21,283		19,266		47,306		43,619
Operating taxes and licenses		3,720		3,406		7,397		6,579
Communications and utilities		2,256		2,185		4,708		4,450
General and other operating expenses		15,970		17,115		37,229		34,594
Gain on sale of subsidiary		—		(670)		—		(670)
Total operating expenses		406,200		405,075		842,436		807,800
Operating income		16,277		8,787		12,609		21,425
Other expense (income)
Interest expense, net		4,862		5,296		10,283		10,899
Loss on sale of equity method investment		—		—		2,000		—
Equity in loss of affiliated companies		—		90		—		179
Other, net		—		—		—		26
		4,862		5,386		12,283		11,104
Income before income tax provision		11,415		3,401		326		10,321
Income tax provision		2,387		415		530		2,316
Net total and comprehensive income (loss)		9,028		2,986		(204)		8,005
Net total and comprehensive income (loss) attributable to noncontrolling interest		(470)		314		(486)		612
Net total and comprehensive income attributable to controlling interest	$	9,498	$	2,672	$	282	$	7,393
Earnings per share
Basic earnings per share	$	0.19	$	0.05	$	0.01	$	0.15
Basic weighted average shares outstanding		49,499		48,742		49,358		48,569
Diluted earnings (loss) per share	$	0.18	$	0.05	$	(0.00)	$	0.15
Diluted weighted average shares outstanding		50,215		49,312		49,518		49,184

See Notes to Unaudited Condensed Consolidated Financial Statements

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U.S. Xpress Enterprises, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30, 2020 and 2019


	Six Months Ended
	June 30,
(in thousands)	2020		2019
Operating activities
Net income (loss)	$	(204)	$	8,005
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Deferred income tax provision		301		1,824
Depreciation and amortization		45,683		44,401
Losses on sale of equipment		6,403		3,413
Share based compensation		2,000		1,880
Other		2,967		572
Gain on sale of subsidiary		—		(670)
Changes in operating assets and liabilities, net of acquisitions:
Receivables		(3,027)		5,320
Prepaid insurance and licenses		1,933		612
Operating supplies		95		72
Other assets		1,085		(3,288)
Accounts payable and other accrued liabilities		11,822		(2,167)
Accrued wages and benefits		2,738		(2,401)
Net cash provided by operating activities		71,796		57,573
Investing activities
Payments for purchases of property and equipment		(87,270)		(105,137)
Proceeds from sales of property and equipment		24,101		23,041
Other		(1,880)		—
Sale of subsidiary, net of cash		—		(8,259)
Net cash used in investing activities		(65,049)		(90,355)
Financing activities
Borrowings under lines of credit		180,254		10,700
Payments under lines of credit		(180,254)		(9,900)
Borrowings under long-term debt		183,662		65,704
Payments of long-term debt and finance leases		(196,742)		(51,936)
Payments of financing costs and original issue discount		(1,276)		—
Payments of long-term consideration for business acquisition		(1,000)		(990)
Tax withholding related to net share settlement of restricted stock awards		(93)		(44)
Proceeds from issuance of common stock under ESPP		420		—
Purchase of noncontrolling interest		—		(8,659)
Proceeds from long-term consideration for sale of subsidiary		290		—
Book overdraft		3,631		9,791
Net cash (used in) provided by financing activities		(11,108)		14,666
Cash included in assets held for sale		—		11,784
Net change in cash and cash equivalents		(4,361)		(6,332)
Cash and cash equivalents
Beginning of year		5,687		9,892
End of period	$	1,326	$	3,560
Supplemental disclosure of cash flow information
Cash paid during the year for interest	$	9,222	$	10,622
Cash paid during the year for income taxes		160		252
Supplemental disclosure of significant noncash investing and financing activities
Subsidiary stock issued in business combination	$	7,278	$	—
Debt obligations relieved in conjunction with the divesture of Xpress Internacional		—		7,109
Property and equipment amounts accrued in accounts payable		1,245		—

See Notes to Unaudited Condensed Consolidated Financial Statements

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U.S. Xpress Enterprises, Inc.

Unaudited Condensed Consolidated Statement of Stockholders' Equity

Three and Six Months Ended June 30, 2020 and 2019


					Additional				Non		Total
	Class A		Class B		Paid		Accumulated		Controlling		Stockholders'
(in thousands, except share amounts)	Stock		Stock		In Capital		Deficit		Interest		Equity
Balances at December 31, 2019	$	333	$	157	$	250,700	$	(20,982)	$	628	$	230,836
Share based compensation		—		—		836		—		—		836
Vesting of restricted units		1		1		(93)		—		—		(91)
Issuance of common stock under ESPP		1		—		419		—		—		420
Net loss		—		—		—		(9,216)		(16)		(9,232)
Balances at March 31, 2020		335		158		251,862		(30,198)		612		222,769
Share based compensation		—		—		1,164		—		—		1,164
Vesting of restricted units		1		—		(3)		—		—		(2)
Issuance of subsidiary shares in business combination		—		—		5,534		—		1,744		7,278
Net income (loss)		—		—		—		9,498		(470)		9,028
Balances at June 30, 2020	$	336	$	158	$	258,557	$	(20,700)	$	1,886	$	240,237


					Additional				Non		Total
	Class A		Class B		Paid		Accumulated		Controlling		Stockholders'
(in thousands, except share amounts)	Stock		Stock		In Capital		Deficit		Interest		Equity
Balances at December 31, 2018	$	329	$	155	$	251,742	$	(17,335)	$	3,496	$	238,387
Share based compensation		—		—		856		—		—		856
Vesting of restricted units		—		1		(39)		—		—		(38)
Net income		—		—		—		4,721		298		5,019
Balances at March 31, 2019		329		156		252,559		(12,614)		3,794		244,224
Share based compensation		—		—		1,024		—		—		1,024
Vesting of restricted stock		3		1		(10)		—		—		(6)
Purchase of noncontrolling interest		—		—		(5,187)		—		(3,472)		(8,659)
Net income		—		—		—		2,672		314		2,986
Balances at June 30, 2019	$	332	$	157	$	248,386	$	(9,942)	$	636	$	239,569

See Notes to Unaudited Condensed Consolidated Financial Statements

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U.S. Xpress Enterprises, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2020

1. Organization and Operations

U.S. Xpress Enterprises, Inc. and its consolidated subsidiaries (collectively, the “Company”, “we”, “us”, “our”, and similar expressions) provide transportation services throughout the United States, with a focus in the densely populated and economically diverse eastern half of the United States. The Company offers its customers a broad portfolio of services using its own asset-based truckload fleet and third-party carriers through our non-asset-based truck brokerage network. The Company has two reportable segments, Truckload and Brokerage. Our Truckload segment offers asset-based truckload services, including over-the-road (“OTR”) trucking and dedicated contract services. Our Brokerage segment is principally engaged in non-asset-based freight brokerage services, where loads are contracted to third-party carriers.

Under our Articles of Incorporation, our authorized capital stock consists of 140,000,000 shares of Class A common stock, par value $0.01 per share, 35,000,000 shares of Class B common stock, par value $0.01 per share, and 9,333,333 shares of preferred stock, the rights and preferences of which may be designated by the Board of Directors.

2. Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned and majority owned subsidiaries. All significant intercompany transactions and accounts have been eliminated.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with Article 10 of Regulation S-X promulgated under the Securities Act of 1933, as amended. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and such differences could be material. In the opinion of management, the accompanying financial statements include all adjustments that are necessary for a fair statement of the results of the interim periods presented, such adjustments being of a normal recurring nature.

Certain information and footnote disclosures have been condensed or omitted pursuant to such rules and regulations. The December 31, 2019 balance sheet was derived from our audited balance sheet as of that date. The Company’s operating results are subject to seasonal trends when measured on a quarterly basis; therefore operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2019.

Recently Issued Accounting Standards

On December 18, 2019, the FASB issued Accounting Standards Update (“ASU”) 2019-12, which modifies Accounting Standards Codification (“ASC”) 740 to simplify the accounting for income taxes. The amendments in ASU 2019-12 are effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. The Company has not early adopted this guidance and will continue to evaluate the impact on its financial statements.

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Recently Adopted Accounting Standards

In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments-Credit Losses (Topic 326) amending how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance requires the application of a current expected credit loss model, which is a new impairment model based on expected losses. We adopted ASU 2016-13 effective January 1, 2020 and the application of this guidance did not have a material impact on our financial statements.

In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which eliminates Step 2 from the goodwill impairment testing process. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount. Under the new standard, a goodwill impairment loss is measured as the excess of the carrying value of a reporting unit over its fair value. We adopted ASU 2017-04 effective January 1, 2020 and the application of this guidance did not have a material impact on our financial statements.

3. Income Taxes

The Company’s provision for income taxes for the three and six months ended June 30, 2020 and 2019 is based on the estimated annual effective tax rate, plus discrete items. The following table presents the provision for income taxes and the effective tax rates for the three and six months ended June 30, 2020 and 2019 (in thousands):


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Income before income tax provision	$	11,415		$	3,401		$	326		$	10,321
Income tax provision		2,387			415			530			2,316
Effective tax rate		20.9	%		12.2	%		162.6	%		22.4	%

The difference between the Company’s effective tax rate for the three and six months ended June 30, 2020 and 2019 and the US statutory rate of 21% primarily relates to nondeductible expenses, federal income tax credits, state income taxes (net of federal benefit), a net increase in valuation allowances and certain discrete items.

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4. Long-Term Debt

Long-term debt at June 30, 2020 and December 31, 2019 consists of the following (in thousands):


	June 30, 2020		December 31, 2019
Line of credit, maturing January 2025	$	—	$	—
Term loan agreement, interest rate of 4.3% at December 31, 2019, terminated January 2020		—		150,000
Revenue equipment installment notes with finance companies, weighted average interest rate of 4.4% and 4.7% at June 30, 2020 and December 31, 2019, due in monthly installments with final maturities at various dates through March 2027, secured by related revenue equipment with a net book value of $346.3 million and $220.4 million at June 30, 2020 and December 31, 2019		346,600		208,252
Mortgage note payables, interest rates ranging from 4.17% to 6.99% at June 30, 2020 and December 31, 2019 due in monthly installments with final maturities at various dates through September 2031, secured by real estate with a net book value of $32.6 million and $20.2 million at June 30, 2020 and December 31, 2019		26,641		17,776
Other		1,893		8,795
		375,134		384,823
Less: Debt issuance costs		(335)		(1,223)
Less: Current maturities of long-term debt		(82,774)		(75,596)
	$	292,025	$	308,004

Credit Facility

On January 28, 2020, we entered into a new credit facility (the “Credit Facility”) and contemporaneously with the funding of the Credit Facility paid off obligations under our then existing credit facility and terminated such facility. The Credit Facility is a $250.0 million revolving credit facility, with an uncommitted accordion feature that, so long as no event of default exists, allows the Company to request an increase in the revolving credit facility of up to $75.0 million.

The Credit Facility is a five-year facility scheduled to terminate on January 28, 2025. Borrowings under the Credit Facility are classified as either “base rate loans” or “eurodollar rate loans”. Base rate loans accrue interest at a base rate equal to the highest of (A) the Federal Funds Rate plus 0.50%, (B) the Agent’s prime rate, and (C) LIBOR plus 1.00% plus an applicable margin that is set at 0.50% through June 30, 2020 and adjusted quarterly thereafter between 0.25% and 0.75% based on the ratio of the daily average availability under the Credit Facility to the daily average of the lesser of the borrowing base or the revolving credit facility. Eurodollar rate loans accrue interest at LIBOR plus an applicable margin that is set at 1.50% through June 30, 2020 and adjusted quarterly thereafter between 1.25% and 1.75% based on the ratio of the daily average availability under the Credit Facility to the daily average of the lesser of the borrowing base or the revolving credit facility. The Credit Facility includes, within its $250.0 million revolving credit facility, a letter of credit sub-facility in an aggregate amount of $75.0 million and a swingline sub-facility in an aggregate amount of $25.0 million. An unused line fee of 0.25% is applied to the average daily amount by which the lenders’ aggregate revolving commitments exceed the outstanding principal amount of revolver loans and aggregate undrawn amount of all outstanding letters of credit issued under the Credit Facility. The Credit Facility is secured by a pledge of substantially all of the Company’s assets, excluding, among other things, any real estate or revenue equipment financed outside the Credit Facility.

Borrowings under the new Credit Facility are subject to a borrowing base limited to the lesser of (A) $250.0 million; or (B) the sum of (i) 87.5% of eligible billed accounts receivable, plus (ii) 85.0% of eligible unbilled accounts receivable (less than 30 days), plus (iii) 85.0% of the net orderly liquidation value percentage applied to the net book value of eligible revenue equipment, plus (iv) the lesser of (a) 80.0% the fair market value of eligible real estate or (b) $25.0 million. The Credit Facility contains a single springing financial covenant, which requires a

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consolidated fixed charge coverage ratio of at least 1.0 to 1.0. The financial covenant is tested only in the event excess availability under the Credit Facility is less than the greater of (A) 10.0% of the lesser of the borrowing base or revolving credit facility or (B) $20.0 million

The Credit Facility includes usual and customary events of default for a facility of this nature and provides that, upon the occurrence and continuation of an event of default, payment of all amounts payable under the Credit Facility may be accelerated, and the lenders’ commitments may be terminated. The Credit Facility contains certain restrictions and covenants relating to, among other things, dividends, liens, acquisitions and dispositions, affiliate transactions, and other indebtedness.

At June 30, 2020, the Credit Facility had issued collateralized letters of credit in the face amount of $32.7 million, with $0 borrowings outstanding and $139.1 million available to borrow.

At June 30, 2020, the Company was in compliance with the financial covenant prescribed by the Credit Facility.

5. Leases

We have operating and finance leases with terms of 1 year to 10 years for certain revenue and service equipment and office and terminal facilities.

The table below presents the lease-related assets and liabilities recorded on the balance sheet (in thousands):


Leases	Classification	June 30, 2020
Assets
Operating	Operating lease right-of-use assets	$	277,362
Finance	Property and equipment, net		9,123
Total leased assets		$	286,485

Liabilities
Current
Operating	Current portion of operating lease liabilities	$	70,438
Finance	Current maturities of long-term debt and finance leases		4,332
Noncurrent
Operating	Noncurrent operating lease liabilities		206,616
Finance	Long-term debt and finance leases, net of current maturities		3,498
Total lease liabilities		$	284,884

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The table below presents certain information related to the lease costs for finance and operating leases (in thousands):


		Three Months Ended				Six Months Ended
		June 30,				June 30,
Lease Cost	Classification	2020		2019		2020		2019
Operating lease cost	Vehicle rents and General and other operating	$	21,628	$	19,072	$	43,543	$	39,239
Finance lease cost:
Amortization of finance lease assets	Depreciation and amortization		442		797		880		1,605
Interest on lease liabilities	Interest expense		141		278		314		596
Short-term lease cost	Vehicle rents and General and other operating		1,780		792		3,798		1,103
Total lease cost		$	23,991	$	20,939	$	48,535	$	42,543


	Six Months Ended
	June 30,
Cash Flow Information	2020		2019
Cash paid for operating leases included in operating activities	$	43,543	$	39,239
Cash paid for finance leases included in operating activities	$	314	$	596
Cash paid for finance leases included in financing activities	$	3,236	$	4,544

Operating lease right-of-use assets obtained in exchange for lease obligations	$	45,474	$	54,053
Operating lease right-of-use assets and liabilities relieved in conjunction with divesture of Xpress Internacional	$	—	$	2,018


	June 30, 2020
	Weighted‑Average	Weighted-
	Remaining Lease	Average
Lease Term and Discount Rate	Term (years)	Discount Rate
Operating leases	4.9	4.2	%
Finance leases	3.0	5.4	%


	June 30, 2019
	Weighted‑Average	Weighted-
	Remaining Lease	Average
Lease Term and Discount Rate	Term (years)	Discount Rate
Operating leases	4.2	5.0	%
Finance leases	3.3	5.3	%

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As of June 30, 2020, future maturities of lease liabilities were as follows (in thousands):


	June 30, 2020
	Finance		Operating
2020	$	1,491	$	40,452
2021		4,081		77,274
2022		1,423		68,937
2023		1,423		53,362
2024		296		25,572
Thereafter		—		43,808
		8,714		309,405
Less: Amount representing interest		(884)		(32,351)
Total	$	7,830	$	277,054

6. 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 on the advice of legal counsel, is not expected to have a materially adverse effect on the Company’s financial position or results of operations.

For the cases described below, management is unable to provide a meaningful estimate of the possible loss or range of loss because, among other reasons, (1) the proceedings are in various stages; (2) damages have not been sought; (3) damages are unsupported and/or exaggerated; (4) there is uncertainty as to the outcome of the proceedings, including pending appeals; and/or (5) there are significant factual issues to be resolved. For these cases, however, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material adverse effect on our financial condition, though the outcomes could be material to our operating results for any particular period, depending, in part, upon the operating results for such period.

California Wage and Hour Class Action Litigation

On December 23, 2015, a class action lawsuit was filed against the Company and its subsidiary U.S. Xpress, Inc. in the Superior Court of California, County of San Bernardino. The Company removed the case from state court to the U.S. District Court for the Central District of California. The plaintiff’s initial proposed class certification (any employee driver who has driven in California at any time since December 23, 2011) was denied by the district court under Rule 26 due to lack of commonality amongst the putative class members. The Court granted the plaintiff’s revised Motion for Class Certification, and the certified class now consists of all employee drivers who resided in California and who have driven in the State of California on behalf of U.S. Xpress at any time since December 23, 2011. The case alleges that class members were not paid for off-the-clock work, were not provided duty free meal or rest breaks, and were not paid premium pay in their absence, were not paid the California minimum wage for all hours worked in that state, were not provided accurate and complete itemized wage statements and were not paid all accrued wages at the end of their employment, all in violation of California law. The class seeks a judgment for compensatory damages and penalties, injunctive relief, attorney fees, costs and pre- and post-judgment interest. On May 2, 2019, the district court dismissed on grounds of preemption the claims alleging failure to provide duty free meal and rest breaks or to pay premium pay for failure to provide such breaks under California law. The parties also filed cross-motions for summary judgment on the remaining claims, and the Company filed a motion to decertify the class. The court recently issued it ruling on the pending cross-motions: (1) the court denied the Company’s motion to decertify the class; (2) the court granted the Company’s motion for summary judgment on the plaintiff’s minimum wage claim for non-driving duties such as pre-trip and post-trip inspection, fueling, receiving dispatches, waiting to load or unload, and handling paperwork for the loads for January 1, 2013 forward (leaving the minimum wage claim only for the approximate one-year time period from December 23, 2011 to December 31, 2012); (3) the court granted the plaintiff’s motion for summary judgment for the time spent taking Department of Transportation-required 10-hour breaks while hauling high value loads in California for solo drivers and for the designated team driver responsible for the load; and (4) the court denied the balance of cross-motions.

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The plaintiff has filed a petition for permission to file an interlocutory appeal of the court’s decision on the minimum wage claim, which the court has granted and is presently before the Ninth Circuit Court of Appeals for final determination as to whether the plaintiff will be given permission to file the appeal. The parties will complete expert discovery over the next several months, and a jury trial is set to begin on February 16, 2021. We are currently not able to predict the probable outcome or to reasonably estimate a range of potential losses, if any. We intend to vigorously defend the merits of these claims.

Stockholder Claims

As set forth below, between November 2018 and April 2019, eight substantially similar putative securities class action complaints were filed against the Company and certain other defendants: five in the Circuit Court of Hamilton County, Tennessee (“Tennessee State Court Cases”), two in the U.S. District Court for the Eastern District of Tennessee (“Federal Court Cases”), and one in the Supreme Court of the State of New York (“New York State Court Case”). Two of the Tennessee State Court Cases and one of the Federal Court Cases have been voluntarily dismissed. All of these matters are in preliminary stages of litigation, and discovery has not yet begun. We are currently not able to predict the probable outcome or to reasonably estimate a range of potential losses, if any.

On November 21, 2018, a putative class action complaint was filed in the Circuit Court of Hamilton County, Tennessee against the Company, five of our officers or directors, and the seven underwriters who participated in our June 2018 initial public offering (“IPO”), alleging violations of Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”). The class action lawsuit is based on allegations that the Company made false and/or misleading statements in the registration statement and prospectus filed with the Securities and Exchange Commission (“SEC”) in connection with the IPO. The lawsuit is purportedly brought on behalf of a putative class of all persons or entities who purchased or otherwise acquired the Company’s Class A common stock pursuant and/or traceable to the IPO, and seeks, among other things, compensatory damages, costs and expenses (including attorneys’ fees) on behalf of the putative class.

On January 23, 2019, a substantially similar putative class action complaint was filed in the Circuit Court of Hamilton County, Tennessee, by a different plaintiff alleging claims under Sections 11 and 15 of the Securities Act against the same defendants as in the action commenced on November 21, 2018. On March 7, 2019, this case was voluntarily dismissed by the plaintiff.

On January 30, 2019, a substantially similar putative class action complaint was filed in the Circuit Court of Hamilton County, Tennessee, by a different plaintiff alleging claims under Sections 11 and 15 of the Securities Act against the same defendants as in the action commenced on November 21, 2018, and also alleging a claim under Section 12 of the Securities Act.

On February 5, 2019, a substantially similar putative class action complaint was filed in the Circuit Court of Hamilton County, Tennessee, by a different plaintiff alleging claims under Sections 11 and 15 of the Securities Act against the same defendants as in the action commenced on November 21, 2018, and also alleging a claim under Section 12 of the Securities Act.

On February 6, 2019, a substantially similar putative class action complaint was filed in the Circuit Court of Hamilton County, Tennessee, by different plaintiffs alleging claims under Sections 11 and 15 of the Securities Act against the same defendants as in the action commenced on November 21, 2018. On March 19, 2019, this case was voluntarily dismissed by the plaintiff.

On March 8, 2019, a substantially similar putative class action complaint was filed in the U.S. District Court for the Eastern District of Tennessee by a different plaintiff alleging claims under Sections 11 and 15 of the Securities Act against the same defendants as in the action commenced on November 21, 2018. On May 9, 2019, this case was voluntarily dismissed by the plaintiff.

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On March 14, 2019, a substantially similar putative class action complaint was filed in the Supreme Court of the State of New York, County of New York, by a different plaintiff alleging claims under Sections 11 and 15 of the Securities Act against the same defendants as in the action commenced on November 21, 2018. The parties have stipulated to extend the time for defendants to respond to the complaint in this matter pending resolution of the motions to dismiss filed (or to be filed) in the remaining of the Tennessee State Court Cases and the Federal Court Cases.

On April 2, 2019, a substantially similar putative class action complaint was filed in the U.S. District Court for the Eastern District of Tennessee, by a different plaintiff alleging claims under Sections 11 and 15 of the Securities Act against the Company and the same five officers and directors as in the action commenced on November 21, 2018. Unlike the previously filed complaints, this complaint did not name as defendants any of the seven underwriters who participated in our IPO; however, an amended complaint was filed on October 8, 2019 (“Amended Federal Complaint”) which added all underwriters who participated in the IPO as defendants.

The three remaining Tennessee State Court Cases have been consolidated, and discovery is currently stayed pending a decision on a motion to dismiss filed by the Company and the other defendants. On June 28, 2019, the defendants filed a Motion to Dismiss the Tennessee State Court Cases for failure to allege facts sufficient to support a violation of either Section 11, 12 or 15 of the Securities Act. On July 18, 2019, the court presiding over the remaining of the Federal Court Cases issued an order appointing lead plaintiff and lead counsel. Pursuant to a stipulation entered in that matter, the appointed lead plaintiff filed the Amended Federal Complaint on October 8, 2019.

The Amended Federal Complaint is made on behalf of a putative class that consists of all persons who purchased or otherwise acquired the Class A common stock of the Company between June 14, 2018 and November 1, 2018 and who were allegedly damaged thereby. In addition, the Amended Federal Complaint alleges additional violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) against the Company, its Chief Executive Office and its Chief Financial Officer. On December 23, 2019, the defendants filed a motion to dismiss the Amended Federal Complaint in its entirety for failure to allege facts sufficient to state a claim under either the Securities Act or the Exchange Act. Plaintiffs filed their Opposition to that Motion on March 9, 2020, and the Company filed its Reply brief on April 23, 2020.

On June 30, 2020, the court presiding over the remaining Federal Court Cases issued its ruling granting in part and denying in part the defendants’ motions to dismiss the Amended Federal Complaint. The court dismissed entirely plaintiffs’ claims for alleged violations of the Exchange Act and further held that plaintiffs failed to state a claim for violation of the Securities Act with respect to the majority of statements challenged as false or misleading in the Federal Amended Complaint. The court, however, held that the Federal Amended Complaint sufficiently alleged violations of the Securities Act to survive a motion to dismiss with respect to two statements from the June 2018 IPO registration statement and prospectus that plaintiffs alleged to be false or misleading, both on theories of alleged misrepresentations and material omissions. Accordingly, the court allowed this action to proceed beyond the pleading stage, but only with respect to the statements deemed sufficient to support a Securities Act claim when assuming the truth of plaintiffs’ allegations. Defendants’ answers to the Federal Amended Complaint are to be filed by August 14, 2020, and the case will proceed to the discovery phase.

The complaints in all the actions listed above allege that the Company made false and/or misleading statements in the registration statement and prospectus filed with the SEC in connection with the IPO, and that, as a result of such alleged statements, the plaintiffs and the members of the putative classes suffered damages. The Amended Federal Complaint additionally alleged that the Company, its Chief Executive Officer and its Chief Financial Officer made false and/or misleading statements and/or material omissions in press releases, earnings calls, investor conferences, television interviews, and filings made with the SEC subsequent to the IPO; however, claims with respect to those challenged statements were dismissed in the court’s June 30, 2020 ruling on defendants’ motions to dismiss. We believe the allegations made in the complaints are without merit and intend to defend ourselves vigorously in these matters.

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Stockholder Derivative Action

On June 7, 2019, a stockholder derivative lawsuit was filed in the District Court for Clark County, Nevada against five of our executives and all five of our independent board members (collectively, the “Individual Defendants”), and naming the Company as a nominal defendant. The complaint alleges that the Company made false and/or misleading statements in the registration statement and prospectus filed with the SEC in connection with the IPO and that the Individual Defendants breached their fiduciary duties by causing or allowing the Company to make such statements. The complaint alleges that the Company has been damaged by the alleged wrongful conduct as a result of, among other things, being subjected to the time and expense of the securities class action lawsuits that have been filed relating to the IPO. In addition to a claim for alleged breach of fiduciary duties, the lawsuit alleges claims against the Individual Defendants for unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets. The parties have stipulated to a stay of this proceeding pending the filing of an answer or a dismissal in the remaining of the Tennessee State Court Cases or the Federal Court Cases. This matter is in the preliminary stages of litigation and discovery has not yet begun. We are currently not able to predict the probable outcome or to reasonably estimate a range of potential losses, if any. We believe the allegations made in the complaint are without merit and intend to defend ourselves vigorously in these matters.

Independent Contractor Class Action

On March 26, 2019, a putative class action complaint was filed in the U.S. District Court for the Eastern District of Tennessee against the Company and its subsidiaries U.S. Xpress, Inc. and U.S. Xpress Leasing, Inc. The putative class includes all individuals who performed work for U.S. Xpress, Inc. or U.S. Xpress Leasing, Inc. as lease drivers from March 26, 2016 to present. The complaint alleges that independent contractors are improperly designated as such and should be designated as employees and thus subject to the Fair Labor Standards Act (“FLSA”). The complaint further alleges that U.S. Xpress, Inc.’s pay practices for the putative class members violated the minimum wage provisions of the FLSA for the period from March 26, 2016 to present. The complaint further alleges that the Company violated the requirements of the Truth in Leasing Act with regard to the independent contractor agreements and lease purchase agreements it entered into with the putative class members. The complaint further alleges that the Company failed to comply with the terms of the independent contractor agreements and lease purchase agreements entered into with the putative class members, that it violated the provisions of the Tennessee Consumer Protection Act in advertising, describing and marketing the lease purchase program to the putative class members, and that it was unjustly enriched as a result of the foregoing allegations. We filed a Motion to Compel Arbitration on October 18, 2019. On January 17, 2020, the court granted that motion, in part, compelling arbitration on all of the plaintiff’s claims and denying the plaintiff’s motion for conditional certification of a collective action. The court further stayed the matter pending arbitration, rather than dismissing it entirely. On March 6, 2020, the plaintiff petitioned the court to certify the decision for an interlocutory appeal. The Company filed an opposition to plaintiff’s motion on March 20, 2020, and plaintiff filed her reply on April 3, 2020, purportedly relying, in part, on a recent case from Massachusetts. In response to that newly cited case, the Company was granted leave to file a surreply, which it filed on April 13, 2020. The district court has not yet ruled on the plaintiff’s petition for interlocutory appeal. There has been no discovery in this matter, and we are currently not able to predict the probable outcome or to reasonably estimate a range of potential losses, if any. We believe the allegations made in the complaint are without merit and intend to defend ourselves vigorously against the complaints relating to such actions.

On June 25, 2020, a second putative collective and class action complaint was filed against the Company and its subsidiaries U.S. Xpress, Inc. and U.S. Xpress Leasing, Inc. in the U.S. District Court for the Eastern District of Tennessee. The putative class and collective action includes all current and former over-the-road truck drivers classified as independent contractors and employed by us during the applicable statute of limitations. The complaint alleges that independent contractors are improperly designated as such and should be designated as employees subject to the FLSA. The complaint alleges that U.S. Xpress, Inc.’s pay practices for the putative collective and class members violated the minimum wage provisions of the FLSA for the period from June 25, 2017 to the present. The complaint further alleges that we failed to pay the plaintiff and members of the class for all miles they drove and breached the contract between the parties and that we were unjustly enriched as a result of the foregoing allegations. The parties have met and conferred to discuss the plaintiff’s claims, and the plaintiff has agreed to file

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a joint stipulation that his claim would be submitted to individual arbitration and asking the court to stay the case pending arbitration. There has been no discovery in this matter, and we are currently not able to predict the probable outcome or to reasonably estimate a range of potential losses, if any. We believe the allegations made in the complaint are without merit and intend to defend ourselves vigorously against the complaints relating to such actions

Phishing Attack Class Action

On June 5, 2020, a putative class action lawsuit was filed against the Company in the U.S. District Court for the Eastern District of Tennessee arising out of a September 2019 phishing attack on the Company. Plaintiffs allege their personally identifiable information (“PII”) was compromised. Plaintiffs further allege that the Company failed to implement adequate security measures to prevent the phishing attack and failed to provide individuals whose PII was potentially impacted with timely and accurate notice. Plaintiffs bring the lawsuit on behalf of themselves and a putative class of “[a]ll persons residing in the United States whose PII was exposed” as a result of the phishing attack. Plaintiffs also assert a Florida-specific subclass. Plaintiffs assert claims for negligence, negligence per se, breach of confidence, and breach of implied contract. The Company’s deadline for responding to the complaint is August 3, 2020. We believe all of the counts in the complaint are without merit and intend to defend ourselves vigorously in this matter.

Other

The Company had letters of credit of $32.7 million outstanding as of June 30, 2020. The letters of credit are maintained primarily to support the Company’s insurance program.

The Company had cancelable commitments outstanding at June 30, 2020 to acquire revenue equipment for approximately $87.4 million during the remainder of 2020. These purchase commitments are expected to be financed by operating leases, long-term debt and proceeds from sales of existing equipment.

7. Share-based Compensation

2018 Omnibus Incentive Plan

In June 2018, the Board approved the 2018 Omnibus Incentive Plan (the “Incentive Plan”) to become effective in connection with the offering. The Company had reserved an aggregate of 3.2 million shares of its Class A common stock for issuance of awards under the Incentive Plan. In May 2020, the stockholders approved the Amended and Restated Omnibus Plan which, among other things, increased the number of shares remaining to issue to 5.8 million shares. Participants in the Incentive Plan will be selected by the Compensation Committee from the executive officers, directors, employees and consultants of the Company. Awards under the Incentive Plan may be made in the form of stock options, stock appreciation rights, stock awards, restricted stock units, performance awards, performance units, and any other form established by the Compensation Committee pursuant to the Incentive Plan.

The following is a summary of the Incentive Plan restricted stock and restricted stock unit activity for the six months ended June 30, 2020:


		Weighted
	Number of	Average Grant
	Units	Date Fair Value
Unvested at December 31, 2019	908,088	$	8.73
Granted	1,010,461		5.01
Vested	(209,627)		9.06
Forfeited	(55,952)		6.84
Unvested at June 30, 2020	1,652,970	$	6.48

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Service based restricted stock grants vest over periods of one to five years and account for 1,392,970 of the unvested shares. Performance based awards account for 260,000 of the unvested shares and vest based upon achievement of certain performance goals, as defined by the Company. During the six months ended June 30, 2020, the Company recognized $0.1 million in compensation expense related to performance based awards. The Company recognized compensation expense related to service based awards of $0.8 million and $1.4 million during the three and six months ended June 30, 2020 and $0.6 million and $1.2 million during the three and six months ended June 30, 2019, respectively. At June 30, 2020, the Company had $7.6 million in unrecognized compensation expense related to the service based restricted stock awards which is expected to be recognized over a weighted average period of approximately 3.0 years.

The following is a summary of the Incentive Plan stock option activity from December 31, 2019 to June 30, 2020:


		Weighted
	Number of	Average Grant
	Units	Date Fair Value
Unvested at December 31, 2019	359,259	$	4.95
Vested	(87,476)		5.05
Forfeited/Canceled	(42,515)		5.00
Unvested at June 30, 2020	229,268	$	4.90

The stock options vest over a period of four years and expire ten years from the date of grant. The Company recognized compensation expense of $0.1 million and $0.1 million during the three and six months ended June 30, 2020 and $0.2 million and $0.3 million during the three and six months ended June 30, 2019, respectively. The fair value of the stock options granted was estimated using the Black-Scholes method as of the grant date.

At June 30, 2020, the Company had $0.9 million in unrecognized compensation expense related to the stock option awards which is expected to be recognized over a weighted average period of approximately 2.4 years. As of June 30, 2020,