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Table of Contents

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 September 30, 2020

or

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: 1-35740

Graphic

USA TRUCK INC.

(Exact name of registrant as specified in its charter)

Delaware

71-0556971

(State or other jurisdiction of incorporation

(I.R.S. Employer Identification No.)

or organization)

3200 Industrial Park Road

Van Buren, Arkansas

72956

(Address of principal executive offices)

(Zip Code)

479-471-2500

(Registrant’s telephone number, including area code) 

N/A

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class

Trading Symbol(s):

Name of each exchange on which registered:

Common Stock, $0.01 Par Value

USAK

The NASDAQ Stock Market LLC
(NASDAQ Global Select Market)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  [X]  No [   ]

Indicate 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  [X]  No [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 [X]

The number of shares outstanding of the registrant’s common stock, as of October 25, 2020, was 8,760,316.

Table of Contents

USA TRUCK INC.

TABLE OF CONTENTS

Item No.

    

Caption

    

Page

PART I – FINANCIAL INFORMATION

1.

Financial Statements

Condensed Consolidated Balance Sheets (unaudited) as of September 30, 2020 and December 31, 2019

2

Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (unaudited) - Three and nine months ended September 30, 2020 and September 30, 2019

3

Condensed Consolidated Statements of Stockholders’ Equity (unaudited) - Three and nine months ended September 30, 2020 and September 30, 2019

4

Condensed Consolidated Statements of Cash Flows (unaudited) - Nine months ended September 30, 2020 and September 30, 2019

5

Notes to Condensed Consolidated Financial Statements (unaudited)

6

2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

13

3.

Quantitative and Qualitative Disclosures About Market Risk

28

4.

Controls and Procedures

29

PART II – OTHER INFORMATION

1.

Legal Proceedings

29

1A.

Risk Factors

29

2.

Unregistered Sales of Equity Securities and Use of Proceeds

30

3.

Defaults Upon Senior Securities

30

4.

Mine Safety Disclosures

30

5.

Other Information

30

6.

Exhibits

31

Signatures

32

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

USA TRUCK INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

Assets

September 30, 2020

December 31, 2019

Current assets:

(in thousands, except share data)

Cash

$

1,161

$

97

Accounts receivable, net of allowance for doubtful accounts of $697 and $369, respectively

 

65,859

 

49,853

Other receivables

 

4,518

 

5,408

Inventories

 

873

 

769

Assets held for sale

 

1,246

 

2,542

Prepaid expenses and other current assets

 

4,458

 

7,855

Total current assets

 

78,115

 

66,524

Property and equipment:

 

  

 

  

Land and structures

 

33,601

 

33,077

Revenue equipment

 

311,869

 

309,573

Service, office and other equipment

 

31,040

 

30,235

Property and equipment, at cost

 

376,510

 

372,885

Accumulated depreciation and amortization

 

(144,240)

 

(124,216)

Property and equipment, net

 

232,270

 

248,669

Operating leases - right of use assets

9,714

11,775

Goodwill

5,231

 

5,231

Other intangibles, net

 

15,433

 

16,453

Other assets

 

1,362

 

2,058

Total assets

$

342,125

$

350,710

Liabilities and Stockholders’ Equity

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

26,901

$

29,421

Current portion of insurance and claims accruals

 

9,488

 

12,466

Accrued expenses

 

10,616

 

6,518

Current finance lease obligations

23,717

30,779

Current operating lease obligations

2,732

6,050

Long-term debt, current maturities

1,660

6,165

Total current liabilities

 

75,114

 

91,399

Other long-term liabilities

 

3,140

 

80

Long-term debt, less current maturities

89,238

83,349

Long-term finance lease obligations

57,451

58,397

Long-term operating lease obligations

7,209

5,812

Deferred income taxes

 

22,700

 

24,017

Insurance and claims accruals, less current portion

 

9,071

 

9,445

Total liabilities

 

263,923

 

272,499

Stockholders’ equity:

 

  

 

  

Preferred Stock, $0.01 par value; 1,000,000 shares authorized; none issued

 

 

Common Stock, $0.01 par value; 30,000,000 shares authorized; issued 12,038,197 shares, and 11,987,572 shares, respectively

 

120

 

120

Additional paid-in capital

 

60,006

 

63,238

Retained earnings

 

72,582

 

73,769

Less treasury stock, at cost (3,277,294 shares, and 3,434,231 shares, respectively)

 

(54,506)

 

(58,916)

Total stockholders’ equity

 

78,202

 

78,211

Total liabilities and stockholders’ equity

$

342,125

$

350,710

See accompanying notes to condensed consolidated financial statements.

2

Table of Contents

USA TRUCK INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2020

    

2019

    

2020

    

2019

    

(in thousands, except per share data)

Operating revenue

$

141,786

$

130,924

$

392,296

$

398,520

Operating expenses:

Salaries, wages and employee benefits

 

34,916

 

32,846

 

104,397

 

102,742

Fuel and fuel taxes

 

9,734

 

13,842

 

29,679

 

41,575

Depreciation and amortization

 

9,896

 

9,652

 

29,941

 

27,595

Insurance and claims

 

5,388

 

6,499

 

15,254

 

20,939

Equipment rent

 

2,479

 

2,427

 

7,107

 

7,715

Operations and maintenance

 

9,310

 

8,829

 

26,812

 

24,583

Purchased transportation

 

59,617

 

51,281

 

156,707

 

148,634

Operating taxes and licenses

 

1,167

 

1,218

 

3,675

 

3,646

Communications and utilities

 

867

 

967

 

2,586

 

2,453

Loss (gain) on disposal of assets, net

 

398

 

(696)

 

420

 

(700)

Asset impairments

1

588

368

Other

 

3,580

 

4,092

 

12,008

 

13,100

Total operating expenses

 

137,352

 

130,958

 

389,174

 

392,650

Operating income (loss)

 

4,434

 

(34)

 

3,122

 

5,870

Other expenses:

 

  

 

  

 

  

 

  

Interest expense, net

 

1,416

1,615

4,335

4,951

Other, net

 

57

145

167

453

Total other expenses, net

 

1,473

 

1,760

 

4,502

 

5,404

Income (loss) before income taxes

 

2,961

 

(1,794)

 

(1,380)

 

466

Income tax expense (benefit)

 

666

(421)

(193)

337

Consolidated net income (loss) and comprehensive income (loss)

$

2,295

$

(1,373)

$

(1,187)

$

129

Net earnings (loss) per share:

 

  

 

  

 

  

 

  

Average shares outstanding (basic)

 

8,807

8,564

8,762

8,509

Basic earnings (loss) per share

$

0.26

$

(0.16)

$

(0.14)

$

0.02

Average shares outstanding (diluted)

 

8,955

 

8,564

 

8,762

 

8,522

Diluted earnings (loss) per share

$

0.26

$

(0.16)

$

(0.14)

$

0.02

See accompanying notes to condensed consolidated financial statements.

3

Table of Contents

USA TRUCK INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

    

Common Stock

    

Additional

    

    

    

Par

Paid-in

Retained

Treasury

Shares

Value

Capital

Earnings

Stock

Total

(in thousands)

Balance at December 31, 2019

 

11,988

$

120

$

63,238

$

73,769

$

(58,916)

$

78,211

Issuance of treasury stock

 

 

 

(4,327)

 

 

4,327

 

Stock-based compensation

 

 

 

471

 

 

 

471

Forfeited restricted stock

(15)

 

 

 

 

Net share settlement related to restricted stock vesting

 

(11)

 

 

(57)

 

 

 

(57)

Net loss

 

 

 

 

(2,551)

 

 

(2,551)

Balance at March 31, 2020

 

11,962

120

59,325

71,218

(54,589)

76,074

Issuance of treasury stock

 

 

 

(123)

 

 

123

 

Stock-based compensation

 

 

 

363

 

 

 

363

Restricted stock award grant

 

74

 

 

 

 

 

Net loss

 

 

 

 

(931)

 

 

(931)

Balance at June 30, 2020

 

12,036

$

120

$

59,565

$

70,287

$

(54,466)

$

75,506

Return of treasury stock

 

 

 

40

 

 

(40)

 

Stock-based compensation

 

 

 

406

 

 

 

406

Restricted stock award grant

3

 

 

 

 

 

Forfeited restricted stock

 

(1)

 

 

 

 

 

Net share settlement related to restricted stock vesting

 

 

 

(5)

 

 

 

(5)

Net income

 

 

 

2,295

 

 

2,295

Balance at September 30, 2020

 

12,038

120

 

60,006

 

72,582

 

(54,506)

 

78,202

    

Common Stock

    

Additional

    

    

    

Par

Paid-in

Retained

Treasury

Shares

Value

Capital

Earnings

Stock

Total

(in thousands)

Balance at December 31, 2018

 

12,012

$

120

$

66,433

$

78,467

$

(63,747)

$

81,273

Issuance of treasury stock

 

 

 

(4,558)

 

 

4,558

 

Stock-based compensation

 

 

 

589

 

 

 

589

Net share settlement related to restricted stock vesting

 

(5)

 

 

(72)

 

 

 

(72)

Net income

 

 

 

 

1,501

 

 

1,501

Balance at March 31, 2019

 

12,007

120

62,392

79,968

(59,189)

83,291

Issuance of treasury stock

 

 

 

(378)

 

 

378

 

Stock-based compensation

 

 

 

705

 

 

 

705

Forfeited restricted stock

 

(18)

 

 

 

 

 

Net share settlement related to restricted stock vesting

 

 

 

(1)

 

 

 

(1)

Net income

 

 

 

 

1

 

 

1

Balance at June 30, 2019

 

11,989

$

120

$

62,718

$

79,969

$

(58,811)

$

83,996

Issuance of treasury stock

 

 

(21)

 

 

21

Stock-based compensation

 

 

(107)

 

 

(107)

Net share settlement related to restricted stock vesting

(1)

 

 

(5)

 

 

(5)

Net loss

 

 

 

(1,373)

 

(1,373)

Balance at September 30, 2019

11,988

 

120

 

62,585

 

78,596

 

(58,790)

 

82,511

See accompanying notes to condensed consolidated financial statements.

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USA TRUCK INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Nine Months Ended September 30, 

    

2020

    

2019

Operating activities:

(in thousands)

Net (loss) income

$

(1,187)

$

129

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

Depreciation and amortization

 

29,941

 

27,595

Deferred income tax, net

 

(1,317)

 

46

Share-based compensation

 

1,240

 

1,187

Loss (gain) on disposal of assets, net

 

420

 

(700)

Asset impairments

 

588

 

368

Other

 

138

 

84

Changes in operating assets and liabilities:

 

 

Accounts and other receivables

 

(15,116)

 

925

Inventories and prepaid expenses

 

3,293

 

3,401

Accounts payable and accrued expenses

 

8,635

 

(4,385)

Insurance and claims accruals

 

(2,923)

 

(1,558)

Other long-term assets and liabilities

 

697

 

(658)

Net cash provided by operating activities

$

24,409

$

26,434

Investing activities:

 

  

 

Acquisition of Davis Transfer Company (net of cash)

 

 

(305)

Capital expenditures

(10,577)

(25,156)

Proceeds from sale of property and equipment

3,274

8,771

Net cash used in investing activities

$

(7,303)

$

(16,690)

Financing activities:

 

  

 

  

Borrowings under long-term debt

 

48,950

 

72,125

Payments on long-term debt

 

(46,106)

 

(85,310)

Principal payments on financing lease obligations

 

(16,490)

 

(10,021)

Proceeds from obligation under finance lease

12,795

Payments on obligation under finance lease

(1,459)

(605)

Payment of debt issuance costs

(538)

Net change in bank drafts payable

 

(875)

 

1,183

Net payments for tax withholdings for vested stock-based awards

 

(62)

 

(78)

Net cash used in financing activities

$

(16,042)

$

(10,449)

Increase (decrease) in cash

1,064

(705)

Cash:

 

  

 

  

Beginning of period

 

97

 

989

End of period

$

1,161

$

284

Supplemental disclosure of cash flow information:

 

  

 

  

Cash paid during the period for:

 

  

 

  

Interest

$

4,336

$

4,253

Income taxes

 

52

 

1,189

Supplemental disclosure of non-cash investing:

 

 

  

Sales of revenue equipment included in other receivables

$

$

1,240

Purchase of revenue equipment included in accounts payable

1,420

See accompanying notes to condensed consolidated financial statements.

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USA TRUCK INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

September 30, 2020

NOTE 1 – BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements include the accounts and operations of USA Truck Inc., and present our financial position as of September 30, 2020 and December 31, 2019 and our results of operations, comprehensive income (loss) for the three and nine months ended September 30, 2020 and 2019, and cash flows for the nine months ended September 30 2020 and 2019.

These condensed consolidated financial statements and notes are prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting and do not include all of the information normally included with financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) of the United States.  Additionally, the Company has elected to utilize certain abbreviated reporting requirements available to smaller reporting companies. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes.  Actual results could differ from those estimates.

These condensed consolidated financial statements and notes are unaudited.  However, in the opinion of management, these condensed consolidated financial statements reflect all normal recurring adjustments necessary for a fair presentation of the results for the periods presented.  Results for interim periods are not necessarily indicative of results to be expected for the full year ending December 31, 2020.

The accompanying condensed consolidated financial statements include USA Truck Inc., and its wholly owned subsidiaries: International Freight Services, Inc. (“IFS”), a Delaware corporation; Skyraider Risk Retention Group Inc. (“SRRG”), a South Carolina corporation; Davis Transfer Company Inc. (“DTC”), a Georgia corporation, Davis Transfer Logistics Inc. (“DTL”), a Georgia corporation, and B & G Leasing, L.L.C. (“B & G”), a Georgia limited liability company.  Collectively, DTC, DTL, and B & G comprise “Davis Transfer Company”.  References in this report to “it,” “we,” “us,” “our,” or the “Company,” and similar expressions refer to USA Truck Inc. and its subsidiaries.  All significant intercompany balances and transactions have been eliminated in preparing the condensed consolidated financial statements.  Certain amounts reported in prior periods have been reclassified to conform to the current year presentation.

Change in estimate

The Company reviews the estimated useful lives and salvage values of its fixed assets on an ongoing basis, based upon, among other things, our experience with similar assets, conditions in the used revenue equipment market, and prevailing industry practice.  During the first quarter of 2020, the Company lowered the salvage value of its tractor fleet from 30% to 25% to better reflect current estimates of the value of such equipment upon its retirement.  This change is being accounted for as a change in estimate.  During the three and nine months ended September 30, 2020, this change in estimate resulted in an increase in depreciation and amortization expense of approximately $0.4 million and $1.2 million, respectively.

Risks and Uncertainties

In March 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency.  The rapid spread of the pandemic and the continuously evolving responses to combat it have had an increasingly negative impact on the global economy.  In view of the rapidly changing business environment, unprecedented market volatility and heightened degree of uncertainty resulting from COVID-19, we are currently unable to fully determine its future impact on our business.  However, we continue to monitor the progression of the pandemic, further government response and development of treatments and vaccines and the resulting potential effect on our financial position, results of operations, cash flows and liquidity.  These events could have an impact in future periods on certain estimates used in the preparation of our financial results, including, but not limited to impairment of goodwill, other intangible assets and other long-lived assets, income tax provision and recoverability of certain receivables.  Should the pandemic continue for an extended

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period of time, the impact on our operations could have a material adverse effect on our financial condition, results of operations, cash flows and liquidity.

Accounting standards issued but not yet adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).  This update requires measurement and recognition of expected versus incurred credit losses for financial assets held.  For smaller reporting companies, ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.  We are currently evaluating the effect of adopting ASU 2016-13.

NOTE 2 – REVENUE RECOGNITION

The following tables set forth revenue disaggregated by revenue type and segment:

Three Months Ended September 30, 

2020

2019

Trucking

    

USAT Logistics

    

Eliminations

    

Total

    

Trucking

    

USAT Logistics

    

Eliminations

    

Total

Revenue type

(in thousands)

Freight

$

87,505

$

48,148

$

(7,493)

$

128,160

$

80,002

$

34,753

$

(1,778)

$

112,977

Fuel surcharge

 

7,847

 

2,565

 

(163)

 

10,249

 

12,274

3,991

(250)

 

16,015

Accessorial

 

2,031

 

1,346

 

 

3,377

 

1,311

621

 

1,932

Total

$

97,383

$

52,059

$

(7,656)

$

141,786

$

93,587

$

39,365

$

(2,028)

$

130,924

Nine Months Ended September 30, 

2020

2019

Trucking

    

USAT Logistics

    

Eliminations

    

Total

    

Trucking

    

USAT Logistics

    

Eliminations

    

Total

Revenue type

(in thousands)

Freight

$

246,922

$

114,856

$

(13,648)

$

348,130

$

244,089

$

106,081

$

(6,199)

$

343,971

Fuel surcharge

 

27,218

 

8,260

 

(684)

 

34,794

 

37,073

 

11,920

 

(636)

 

48,357

Accessorial

 

5,865

 

3,507

 

 

9,372

 

3,803

 

2,389

 

 

6,192

Total

$

280,005

$

126,623

$

(14,332)

$

392,296

$

284,965

$

120,390

$

(6,835)

$

398,520

At September 30, 2020 and December 31, 2019, the Company had contract assets, representing our right to consideration for transportation services not yet billed, of $1.9 million and $0.9 million, respectively.

NOTE 3 – SEGMENT REPORTING

The Company’s two reportable segments are Trucking and USAT Logistics.  In determining its reportable segments, the Company’s chief operating decision maker focuses on financial information, such as operating revenue, operating expense categories, operating ratios and operating income, as well as on key operating statistics, to make operating decisions.

Trucking. Trucking is comprised of one-way truckload and dedicated freight motor carrier services.  Truckload provides motor carrier services as a medium-haul common and contract carrier.  USA Truck has provided truckload motor carrier services since its inception, and continues to derive the largest portion of its gross revenue from these services.  Dedicated freight provides truckload motor carrier services to specific customers for movement of freight over particular routes at specified times.

USAT Logistics. USAT Logistics’ service offerings consist of freight brokerage, logistics, and rail intermodal services.  Each of these service offerings match customer shipments with available equipment of authorized third-party motor carriers and other service providers.  The Company provides these services to many existing Trucking customers, many of whom prefer to rely on a single service provider, or a small group of service providers, to provide all their transportation solutions.

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Revenue equipment assets are not allocated to the USAT Logistics segment as freight services for customers are brokered through arrangements with third-party motor carriers who utilize their own equipment.  To the extent rail intermodal or other USAT Logistics operations require the use of Company-owned assets, they are obtained from the Company’s Trucking segment on an as-needed basis.  Depreciation and amortization expense is allocated to the USAT Logistics segment based on the Company-owned assets specifically utilized to generate USAT Logistics revenue.  All intercompany transactions between segments reflect rates similar to those that would be negotiated with independent third parties.  All other expenses for the USAT Logistics segment are specifically identifiable direct costs or are allocated to the USAT Logistics segment based on relevant cost drivers, as determined by management.

A summary of operating revenue by segment is as follows:

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2020

    

2019

    

2020

    

2019

    

Operating revenue

(in thousands)

Trucking revenue (1)

$

97,383

$

93,587

$

280,005

$

284,965

Trucking intersegment eliminations

 

(651)

 

(233)

 

(2,353)

 

(1,002)

Trucking operating revenue

 

96,732

 

93,354

 

277,652

 

283,963

USAT Logistics revenue

 

52,059

 

39,365

 

126,623

 

120,390

USAT Logistics intersegment eliminations

 

(7,005)

 

(1,795)

 

(11,979)

 

(5,833)

USAT Logistics operating revenue

 

45,054

 

37,570

 

114,644

 

114,557

Total operating revenue

$

141,786

$

130,924

$

392,296

$

398,520

1)Includes foreign revenue of $8.8 million and $9.5 million for the three months ended September 30, 2020 and 2019, respectively, and $24.9 million and $28.5 million for the nine months ended September 30, 2020 and 2019, respectively.

A summary of operating income (loss) by segment is as follows:

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2020

    

2019

    

2020

    

2019

Operating income (loss)

(in thousands)

Trucking

$

3,453

$

(278)

$

2,941

$

2,168

USAT Logistics

 

981

 

244

 

181

 

3,702

Total operating income (loss)

$

4,434

$

(34)

$

3,122

$

5,870

A summary of depreciation and amortization by segment is as follows:

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2020

    

2019

    

2020

    

2019

Depreciation and amortization

(in thousands)

Trucking

$

9,615

$

9,435

$

29,088

$

26,867

USAT Logistics

 

281

 

217

 

853

 

728

Total depreciation and amortization

$

9,896

$

9,652

$

29,941

$

27,595

NOTE 4 – EQUITY COMPENSATION AND EMPLOYEE BENEFIT PLANS

The Company adopted the 2014 Omnibus Incentive Plan (the “Incentive Plan”) in May 2014.  The Incentive Plan replaced the 2004 Equity Incentive Plan and provided for the granting of up to 500,000 shares of common stock through equity-based awards to directors, officers and other key employees and consultants.  The First Amendment to the Incentive Plan was adopted in May 2017, which, among other things, increased the number of shares of common stock available for issuance under the Incentive Plan by an additional 500,000 shares.  The Second Amendment to the Incentive Plan was adopted in May 2019, which, among other things, increased the number of shares of common stock available for issuance under the Incentive Plan by an additional 500,000 shares.  As of September 30, 2020, 489,639 shares remain available under the Incentive Plan for the issuance of future equity-based compensation awards.

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NOTE 5 – ACCRUED EXPENSES

Accrued expenses consist of the following:

September 30, 2020

December 31, 2019

(in thousands)

Salaries, wages and employee benefits

$