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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: 001-38528

Graphic

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 October  27, 2020.

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

Class B Common Stock, $0.01 par value: 15,647,095

Table of Contents

TABLE OF CONTENTS

PART I
FINANCIAL INFORMATION

Page
Number

Item 1.

Unaudited Condensed Consolidated Financial Statements Three and Nine Months Ended September 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

37

Item 4.

Controls and Procedures

37

PART II
OTHER INFORMATION

Page
Number

Item 1.

Legal Proceedings

38

Item 1A.

Risk Factors

38

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

39

Page 2

Table of Contents

U.S. Xpress Enterprises, Inc.

Unaudited Condensed Consolidated Balance Sheets

September 30, 2020 and December 31, 2019

September 30, 

December 31, 

(in thousands, except share amounts)

    

2020

    

2019

Assets

 

  

 

  

Current assets

 

  

 

  

Cash and cash equivalents

$

7,422

$

5,687

Customer receivables, net of allowance of $185 and $63 at September 30, 2020 and December 31, 2019, respectively

 

190,644

 

183,706

Other receivables

 

16,345

 

15,253

Prepaid insurance and licenses

 

23,073

 

11,326

Operating supplies

 

8,249

 

7,193

Assets held for sale

 

25,623

 

17,732

Other current assets

 

16,405

 

15,831

Total current assets

 

287,761

 

256,728

Property and equipment, at cost

 

900,719

 

880,101

Less accumulated depreciation and amortization

 

(397,263)

 

(388,318)

Net property and equipment

 

503,456

 

491,783

Other assets

 

  

 

  

Operating lease right of use assets

 

280,687

 

276,618

Goodwill

 

59,221

 

57,708

Intangible assets, net

 

25,938

 

27,214

Other

 

33,979

 

30,058

Total other assets

 

399,825

 

391,598

Total assets

$

1,191,042

$

1,140,109

Liabilities and Stockholders' Equity

 

  

 

  

Current liabilities

 

  

 

  

Accounts payable

$

77,646

$

68,918

Book overdraft

 

 

1,313

Accrued wages and benefits

 

32,095

 

24,110

Claims and insurance accruals, current

 

51,571

 

51,910

Other accrued liabilities

 

7,483

 

9,127

Current portion of operating lease liabilities

 

74,357

 

69,866

Current maturities of long-term debt and finance leases

 

111,232

 

80,247

Total current liabilities

 

354,384

 

305,491

Long-term debt and finance leases, net of current maturities

 

282,453

 

315,797

Less unamortized discount and debt issuance costs

 

(325)

 

(1,223)

Net long-term debt and finance leases

 

282,128

 

314,574

Deferred income taxes

 

22,236

 

20,692

Other long-term liabilities

 

18,710

 

5,249

Claims and insurance accruals, long-term

 

55,174

 

56,910

Noncurrent operating lease liabilities

 

206,190

 

206,357

Commitments and contingencies (Note 6)

 

 

Stockholders' equity

Common stock Class A, $.01 par value, 140,000,000 shares authorized at September 30, 2020 and December 31, 2019, respectively, 33,967,774 and 33,314,141 issued and outstanding at September 30, 2020 and December 31, 2019, respectively

 

339

 

333

Common stock Class B, $.01 par value, 35,000,000 authorized at September 30, 2020 and December 31, 2019, respectively, 15,647,095 and 15,687,101 issued and outstanding at September 30, 2020 and December 31, 2019, respectively

 

157

 

157

Additional paid-in capital

 

260,365

 

250,700

Accumulated deficit

 

(10,004)

 

(20,982)

Stockholders' equity

 

250,857

 

230,208

Noncontrolling interest

 

1,363

 

628

Total stockholders' equity

 

252,220

 

230,836

Total liabilities and stockholders' equity

$

1,191,042

$

1,140,109

See Notes to Unaudited Condensed Consolidated Financial Statements

Page 3

Table of Contents

U.S. Xpress Enterprises, Inc.

Unaudited Condensed Consolidated Statements of Comprehensive Income

Three and Nine Months Ended September 30, 2020 and 2019

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

(in thousands, except per share amounts)

    

2020

    

2019

    

2020

    

2019

Operating revenue

 

  

 

  

 

  

 

  

Revenue, before fuel surcharge

$

403,679

$

386,666

$

1,190,463

$

1,133,162

Fuel surcharge

 

27,790

 

41,837

 

96,051

 

124,566

Total operating revenue

 

431,469

 

428,503

 

1,286,514

 

1,257,728

Operating expenses

 

  

 

  

 

  

 

  

Salaries, wages, and benefits

 

137,541

 

134,862

 

412,889

 

389,907

Fuel and fuel taxes

 

33,208

 

47,315

 

103,265

 

141,252

Vehicle rents

 

20,956

 

19,470

 

64,168

 

57,025

Depreciation and amortization, net of (gain) loss on sale of property

 

25,785

 

26,684

 

77,871

 

74,498

Purchased transportation

 

125,997

 

122,433

 

373,117

 

349,017

Operating expenses and supplies

 

33,927

 

36,147

 

101,249

 

104,744

Insurance premiums and claims

 

17,835

 

19,570

 

65,141

 

63,189

Operating taxes and licenses

 

3,359

 

3,533

 

10,756

 

10,112

Communications and utilities

 

2,187

 

2,209

 

6,895

 

6,659

General and other operating expenses

 

14,783

 

12,998

 

42,663

 

37,288

Gain on sale of subsidiary

(670)

Total operating expenses

 

415,578

 

425,221

 

1,258,014

 

1,233,021

Operating income

 

15,891

 

3,282

 

28,500

 

24,707

Other expense (income)

 

  

 

  

 

  

 

  

Interest expense, net

 

4,381

 

5,467

 

14,664

 

16,366

Loss on sale of equity method investment

2,000

Equity in loss of affiliated companies

 

 

91

 

 

270

Other, net

 

 

 

 

26

 

4,381

 

5,558

 

16,664

 

16,662

Income (loss) before income tax provision

 

11,510

 

(2,276)

 

11,836

 

8,045

Income tax provision (benefit)

 

1,337

 

(813)

 

1,867

 

1,503

Net total and comprehensive income (loss)

 

10,173

 

(1,463)

 

9,969

 

6,542

Net total and comprehensive income (loss) attributable to noncontrolling interest

 

(523)

 

(17)

 

(1,009)

 

595

Net total and comprehensive income (loss) attributable to controlling interest

$

10,696

$

(1,446)

$

10,978

$

5,947

Earnings (loss) per share

 

  

 

  

 

  

 

  

Basic earnings (loss) per share

$

0.22

$

(0.03)

$

0.22

$

0.12

Basic weighted average shares outstanding

 

49,667

 

48,984

 

49,462

 

48,709

Diluted earnings (loss) per share

$

0.20

$

(0.03)

$

0.20

$

0.12

Diluted weighted average shares outstanding

 

51,194

 

48,984

 

50,493

 

49,289

See Notes to Unaudited Condensed Consolidated Financial Statements

Page 4

Table of Contents

U.S. Xpress Enterprises, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30, 2020 and 2019

Nine Months Ended

September 30, 

(in thousands)

    

2020

    

2019

Operating activities

 

  

 

  

Net income

$

9,969

$

6,542

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

  

Deferred income tax provision

 

1,543

 

1,018

Depreciation and amortization

 

68,104

 

68,813

Losses on sale of equipment

 

9,767

 

5,685

Share based compensation

 

3,421

 

2,810

Other

 

3,186

 

783

Gain on sale of subsidiary

(670)

Changes in operating assets and liabilities, net of acquisitions:

 

 

  

Receivables

 

(8,354)

 

(5,650)

Prepaid insurance and licenses

 

(11,747)

 

(12,189)

Operating supplies

 

(204)

 

(443)

Other assets

 

(3,047)

 

(4,800)

Accounts payable and other accrued liabilities

 

21,413

 

22,076

Accrued wages and benefits

 

7,863

 

(729)

Net cash provided by operating activities

 

101,914

 

83,246

Investing activities

 

  

 

  

Payments for purchases of property and equipment

 

(129,582)

 

(127,899)

Proceeds from sales of property and equipment

 

36,192

 

33,301

Other

(1,880)

(2,000)

Sale of subsidiary, net of cash

 

 

(6,432)

Net cash used in investing activities

 

(95,270)

 

(103,030)

Financing activities

 

  

 

  

Borrowings under lines of credit

 

231,254

 

56,200

Payments under lines of credit

 

(231,254)

 

(53,300)

Borrowings under long-term debt

 

228,981

 

78,803

Payments of long-term debt and finance leases

 

(231,340)

 

(73,472)

Payments of financing costs

 

(1,391)

 

(170)

Payments of long-term consideration for business acquisition

 

(1,000)

 

(990)

Tax withholding related to net share settlement of restricted stock awards

 

(135)

 

(44)

Proceeds from issuance of common stock under ESPP

851

349

Purchase of noncontrolling interest

(8,659)

Proceeds from long-term consideration for sale of subsidiary

 

438

 

Book overdraft

 

(1,313)

 

3,833

Net cash (used in) provided by financing activities

 

(4,909)

 

2,550

Cash included in assets held for sale

 

 

11,784

Net change in cash and cash equivalents

 

1,735

(5,450)

Cash and cash equivalents

 

 

  

Beginning of year

 

5,687

 

9,892

End of period

$

7,422

$

4,442

Supplemental disclosure of cash flow information

 

  

 

  

Cash paid during the year for interest

$

13,479

$

16,102

Cash paid during the year for income taxes

 

497

 

311

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

Uncollected proceeds from asset sales

1,607

Property and equipment amounts accrued in accounts payable

1,252

1,622

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 Nine Months Ended September 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

Share based compensation

 

1,421

 

1,421

Vesting of restricted units

 

1

(43)

 

(42)

Conversion of Class B stock to Class A stock

 

1

(1)

 

Issuance of common stock under ESPP

1

430

431

Net income (loss)

10,696

(523)

10,173

Balances at September 30, 2020

$

339

$

157

$

260,365

$

(10,004)

$

1,363

$

252,220

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

Share based compensation

 

 

 

930

 

 

 

930

Issuance of common stock under ESPP

1

349

350

Net loss

(1,446)

(17)

(1,463)

Balances at September 30, 2019

$

333

$

157

$

249,665

$

(11,388)

$

619

$

239,386

See Notes to Unaudited Condensed Consolidated Financial Statements

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U.S. Xpress Enterprises, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

September 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 nine months ended September 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.

Reclassifications

Certain reclassifications have been made to the prior year financial statements to conform to the current presentation.

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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 believes the adoption of this guidance will not have a material impact on its financial statements.

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 nine months ended September 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 nine months ended September 30, 2020 and 2019 (in thousands):

Three Months Ended

Nine Months Ended

 

September 30, 

September 30, 

 

    

2020

    

2019

    

2020

    

2019

 

Income before income tax provision

$

11,510

$

(2,276)

$

11,836

$

8,045

Income tax provision

 

1,337

 

(813)

 

1,867

 

1,503

Effective tax rate

11.6

%  

35.7

%  

15.8

%  

 

18.7

%  

The difference between the Company’s effective tax rate for the three and nine months ended September 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 September 30, 2020 and December 31, 2019 consists of the following (in thousands):

    

September 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 4.2% and 4.7% at September 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 $344.5 million and $220.4 million at September 30, 2020 and December 31, 2019

344,281

208,252

Mortgage note payables, interest rates ranging from 4.17% to 6.99% at September 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 $32.2 million and $20.2 million at September 30, 2020 and December 31, 2019

 

26,312

 

17,776

Other

 

15,851

 

8,795

 

386,444

 

384,823

Less: Debt issuance costs

 

(325)

 

(1,223)

Less: Current maturities of long-term debt

 

(107,165)

 

(75,596)

$

278,954

$

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 September 30, 2020, the Credit Facility had issued collateralized letters of credit in the face amount of $32.7 million, with $0 borrowings outstanding and $147.5 million available to borrow.

At September 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 15 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

    

September 30, 2020

Assets

 

  

 

  

Operating

 

Operating lease right-of-use assets

$

280,687

Finance

 

Property and equipment, net

 

8,095

Total leased assets

 

  

$

288,782

Liabilities

 

  

 

  

Current

 

  

 

  

Operating

 

Current portion of operating lease liabilities

$

74,357

Finance

 

Current maturities of long-term debt and finance leases

 

4,067

Noncurrent

 

  

 

Operating

 

Noncurrent operating lease liabilities

 

206,190

Finance

 

Long-term debt and finance leases, net of current maturities

 

3,174

Total lease liabilities

 

  

$

287,788

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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

Nine Months Ended

September 30, 

September 30, 

Lease Cost

    

Classification

    

2020

    

2019

 

2020

    

2019

Operating lease cost

 

Vehicle rents and General and other operating

$

20,902

$

19,917

$

64,445

$

59,156

Finance lease cost:

 

  

 

  

 

  

 

  

 

  

Amortization of finance lease assets

 

Depreciation and amortization

 

439

 

760

 

1,319

 

2,365

Interest on lease liabilities

 

Interest expense

 

138

 

252

 

452

 

848

Short-term lease cost

 

Vehicle rents and General and other operating

 

2,358

 

1,250

 

6,156

 

2,353

Total lease cost

 

  

$

23,837

$

22,179

$

72,372

$

64,722

Nine Months Ended

September 30, 

Cash Flow Information

    

2020

 

2019

Cash paid for operating leases included in operating activities

$

64,445

$

59,156

Cash paid for finance leases included in operating activities

$

452

$

848

Cash paid for finance leases included in financing activities

$

3,746

$

5,624

Operating lease right-of-use assets obtained in exchange for lease obligations

$

66,526

$

116,222

Operating lease right-of-use assets and liabilities relieved in conjunction with divesture of Xpress Internacional

$

$

2,018

September 30, 2020

WeightedAverage

Weighted-

 

Remaining Lease

Average

 

Lease Term and Discount Rate

    

Term (years)

    

Discount Rate

 

Operating leases

 

4.7

4.1

%

Finance leases

 

2.9

5.4

%

September 30, 2019

WeightedAverage

Weighted-

 

Remaining Lease

Average

 

Lease Term and Discount Rate

    

Term (years)

    

Discount Rate

 

Operating leases

 

4.0

 

5.3

%

Finance leases

 

3.3

 

4.6

%

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

September 30, 2020

    

Finance

    

Operating 

2020

$

771

$

21,163

2021

 

4,081

 

82,414

2022

 

1,423

 

74,085

2023

 

1,423

 

58,524

2024

 

296

 

29,288

Thereafter

 

 

46,493

 

7,994

 

311,967

Less: Amount representing interest

 

(753)

 

(31,420)

Total

$

7,241

$

280,547

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 filed a petition for permission to file an interlocutory appeal of the court’s decision on the minimum wage claim, which the district court and the Ninth Circuit both granted. We anticipate the appeal will be fully-briefed by approximately the end of February 2021.The parties have agreed to request the district court to stay the trial presently scheduled for February 16, 2021 until after the appeal is decided. The district court will still need to decide the scope of the stay as to whether the case will be completely stayed or whether the parties will complete expert discovery over the next several months. 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,