USA TRUCK INC (Form: 10-Q, Received: 11/09/2016 16:15:19)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2016

[ ]	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: 0-19858

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)

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Yes [X]

No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer [ ]		Accelerated filer [X]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)		Smaller reporting company [ ]

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 27, 2016, was 8,289,699.

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	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, 2016 and December 31, 2015	2
	Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (unaudited) – Three Months and Nine Months Ended September 30, 2016 and September 30, 2015	3
	Condensed Consolidated Statement of Stockholders’ Equity (unaudited) – Nine Months Ended September 30, 2016	4
	Condensed Consolidated Statements of Cash Flows (unaudited) – Nine Months Ended September 30, 2016 and September 30, 2015	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	26
4.	Controls and Procedures	27
	PART II – OTHER INFORMATION
1.	Legal Proceedings	27
1A.	Risk Factors	27
2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
3.	Defaults Upon Senior Securities	28
4.	Mine Safety Disclosures	28
5.	Other Information	28
6.	Exhibits	29
	Signatures	30

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PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

USA TRUCK, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share data)

	September 30,			December 31,
	2016			2015
Assets
Current assets:
Cash	$	142		$	87
Accounts receivable, net of allowance for doubtful accounts of $607 and $608, respectively		54,361			53,324
Other receivables		3,642			5,094
Inventories		382			748
Assets held for sale		9,067			7,979
Income taxes receivable		9,373			6,159
Prepaid expenses and other current assets		3,667			4,876
Total current assets		80,634			78,267
Property and equipment:
Land and structures		32,463			32,910
Revenue equipment		277,670			289,045
Service, office and other equipment		24,519			22,156
Property and equipment, at cost		334,652			344,111
Accumulated depreciation and amortization		(105,539	)		(137,327	)
Property and equipment, net		229,113			206,784
Other assets		1,243			1,405
Total assets	$	310,990		$	286,456
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	28,075		$	24,473
Current portion of insurance and claims accruals		11,470			10,706
Accrued expenses		8,969			8,836
Current maturities of capital leases		17,071			12,190
Total current liabilities		65,585			56,205
Deferred gain		651			701
Long-term debt, less current maturities		99,700			70,400
Capital leases, less current maturities		34,357			18,845
Deferred income taxes		40,082			37,943
Insurance and claims accruals, less current portion		8,558			8,585
Total liabilities		248,933			192,679
Commitments and contingencies
Stockholders’ equity:
Preferred Stock, $.01 par value; 1,000,000 shares authorized		--			--
Common Stock, $.01 par value; 30,000,000 shares authorized; issued 12,157,843 shares, and 11,946,253 shares, respectively		121			119
Additional paid-in capital		67,907			67,370
Retained earnings		61,984			65,871
Less treasury stock, at cost (3,865,481 shares, and 2,286,608 shares, respectively)		(67,955	)		(39,583	)
Total stockholders’ equity		62,057			93,777
Total liabilities and stockholders’ equity	$	310,990		$	286,456

See accompanying notes to condensed consolidated financial statements.

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USA TRUCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(UNAUDITED)

(in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Revenue:
Operating revenue	$	105,458		$	123,490		$	325,964		$	389,950

Operating expenses:
Salaries, wages and employee benefits		29,131			32,028			92,332			105,536
Fuel and fuel taxes		10,932			12,960			32,512			47,195
Depreciation and amortization		7,411			8,702			22,282			29,951
Insurance and claims		5,620			5,405			15,826			17,502
Equipment rent		1,861			1,094			5,582			2,743
Operations and maintenance		8,170			10,439			27,682			31,340
Purchased transportation		37,218			40,613			111,650			122,029
Operating taxes and licenses		1,003			1,439			3,384			4,221
Communications and utilities		673			989			2,404			2,732
Gain on disposal of assets, net		(181	)		(3,008	)		(759	)		(5,766	)
Restructuring, impairment and other costs		--			2,893			5,264			2,893
Other		3,578			4,477			10,683			13,775
Total operating expenses		105,416			118,031			328,842			374,151
Operating income (loss)		42			5,459			(2,878	)		15,799

Other expenses:
Interest expense, net		913			493			2,209			1,672
Loss on extinguishment of debt		--			--			--			750
Other, net		87			78			423			650
Total other expenses, net		1,000			571			2,632			3,072
(Loss) income before income taxes		(958	)		4,888			(5,510	)		12,727
Income tax (benefit) expense		(224	)		2,161			(1,623	)		5,595

Net (loss) income and comprehensive (loss) income	$	(734	)	$	2,727		$	(3,887	)	$	7,132

Net (loss) income per share information:
Average shares outstanding (basic)		8,069			10,442			8,736			10,439
Basic (loss) earnings per share	$	(0.09	)	$	0.26		$	(0.44	)	$	0.68

Average shares outstanding (diluted)		8,069			10,470			8,736			10,515
Diluted (loss) earnings per share	$	(0.09	)	$	0.26		$	(0.44	)	$	0.68

See accompanying notes to condensed consolidated financial statements.

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USA TRUCK, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands)

	Common Stock						Additional
				Par			Paid-in			Retained			Treasury
	Shares			Value			Capital			Earnings			Stock			Total
Balance at December 31, 2015		11,946		$	119		$	67,370		$	65,871		$	(39,583	)	$	93,777
Exercise of stock options		2			--			3			--			--			3
Excess tax benefit from exercise of stock options		--			--			(75	)		--			--			(75	)
Purchase of treasury stock		--			--			(40	)		--			(28,372	)		(28,412	)
Share-based compensation		--			--			695			--			--			695
Restricted stock award grant		301			3			(3	)		--			--			--
Forfeited restricted stock		(88	)		(1	)		1			--			--			--
Net share settlement related to restricted stock vesting		(3	)		--			(44	)		--			--			(44	)
Net loss		--			--			--			(3,887	)		--			(3,887	)
Balance at September 30, 2016		12,158			121			67,907			61,984			(67,955	)		62,057

See accompanying notes to condensed consolidated financial statements.

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USA TRUCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Nine Months Ended
	September 30,
	2016			2015
Operating activities:
Net (loss) income	$	(3,887	)	$	7,132
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		22,282			29,951
Provision for doubtful accounts		458			360
Deferred income tax (benefit), net		2,139			(7,931	)
Share-based compensation		695			802
Gain on disposal of assets, net		(759	)		(5,766	)
Loss on extinguishment of debt		--			750
Impairment of property and equipment		1,070			--
Change in vacation policy		--			(1,383	)
Asset valuation reserve		--			281
Other		(49	)		(6	)
Changes in operating assets and liabilities:
Accounts receivable		(3,257	)		14,077
Inventories and prepaid expenses		1,575			1,132
Accounts payable and accrued liabilities		3,418			18,513
Insurance and claims accruals		1,315			1,248
Other long-term assets and liabilities		162			(374	)
Net cash provided by operating activities		25,162			58,786

Investing activities:
Capital expenditures		(62,435	)		(45,000	)
Proceeds from sale of property and equipment		22,564			31,212
Proceeds from operating sale leaseback		--			7,975
Net cash used in investing activities		(39,871	)		(5,813	)

Financing activities:
Borrowings under long-term debt		62,341			112,237
Payments on long-term debt		(33,041	)		(132,356	)
Payments on capitalized lease obligations		(7,530	)		(25,658	)
Net change in bank drafts payable		1,595			(3,422	)
Excess tax (benefit) payments from exercise of stock options		(75	)		837
Principal payments on note payable		--			(896	)
Purchase of common stock		(28,372	)		(4,702	)
Proceeds from capital sale leaseback		19,927			3,156
Net payments on stock-based awards		(81	)		(242	)
Net cash provided by (used in) financing activities		14,764			(51,046	)

Increase in cash		55			1,927
Cash:
Beginning of period		87			205
End of period	$	142		$	2,132

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	2,199		$	1,623
Income taxes		158			2,996
Supplemental disclosure of non-cash investing activities:
Purchases of revenue equipment included in accounts payable		--			8,422

See accompanying notes to condensed consolidated financial statements.

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USA TRUCK, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2016

NOTE 1 – BASIS OF PRESENTATION

In the opinion of the management of USA Truck, Inc., the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Certain information and footnote disclosures normally included in financial statements required by GAAP have been condensed or omitted. All normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. These financial statements should be read in conjunction with the financial statements, and footnotes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

NOTE 2 – NOTE RECEIVABLE

During 2010, the Company sold its terminal facility in Shreveport, Louisiana. In connection with this sale, the Company received cash in the amount of $0.2 million and a note receivable in the amount of $2.1 million due November 2015, which was recorded in the line item “Other receivables” in the accompanying condensed consolidated balance sheets. The purchaser/debtor defaulted on the note receivable by not making the principal payment in November 2015, and the Company is undertaking actions to collect. The note receivable is collateralized by a first priority mortgage on the property. The Company believes, based on a recent appraisal, the value of the property exceeds the amount of the note receivable plus collection costs. Accordingly, no valuation allowance has been recorded. The Company had previously deferred $0.7 million of gain on the sale of the property, with gain recognized into earnings only as payments on the note receivable were received.

In February 2016, the Company and the purchaser-debtor modified the original asset sale agreement (hereinafter referred to as the “Original Agreement”) for the property as a result of the default by the purchaser debtor in November 2015. The modifications to the Original Agreement are as follows:

(1)	As of January 1, 2016, the purchaser/debtor will no longer make monthly payments to the Company, as required under the Original Agreement.
(2)	The purchaser/debtor agrees that in addition to the balloon payment of $1.9 million, the Company shall also be entitled to receive 25% of the net sale proceeds from any future sale (including any foreclosure sale) of the property in excess of the balloon payment, closing costs, and realtor commissions.
(3)	At any time, the Company retains the right to enforce its rights as creditor, mortgagee, and holder of vendor’s privilege and declare the unpaid portion of the purchase price, interest, costs, and attorneys’ fees immediately due and payable. The Company’s rights include instituting foreclosure proceedings and/or other legal action.

NOTE 3 – 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 (the “Prior Plan”) and provides for the granting of equity-based awards covering up to 500,000 shares of common stock to directors, officers and other key employees and consultants, in addition to the shares available under the Prior Plan on the effective date of the “Incentive Plan”. As of September 30, 2016, 140,071 shares remain available for the issuance of future equity-based compensation awards.

NOTE 4 – REPURCHASE OF EQUITY SECURITIES

On February 2, 2016 the Company announced the board of directors had authorized the repurchase of up to two million shares of the Company’s common stock, which will expire in February 2019 unless earlier terminated or extended by the board of directors. During the nine months ended September 30, 2016, the Company, through a Rule 10b5-1 plan, repurchased 1,583,249 shares at an average price of $18.05 per share for an aggregate cost of approximately $28.4 million. At September 30, 2016, 463,013 shares remain available for repurchase.

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NOTE 5 – SEGMENT REPORTING

The Company’s two reportable segments are Trucking and USAT Logistics. During the first quarter of 2016, the Company rebranded its asset-light business, formerly known as Strategic Capacity Solutions (“SCS”) as USAT Logistics (“USAT Logistics”).

Trucking. Trucking is comprised of truckload and dedicated freight services. Truckload provides services as a medium to long-haul common carrier. USA Truck has provided truckload services since its inception, and derives the largest portion of its revenue from these services. Dedicated freight provides truckload services to specific customers for shipments over particular routes at particular times utilizing Company revenue equipment.

USAT Logistics. USAT Logistics consists of freight brokerage and rail intermodal services. Both of these service offerings match customer shipments with available equipment of authorized carriers and provide services that complement the Company’s Trucking operations.

In determining its reportable segments, the Company focuses on financial information, such as operating revenues, operating expense categories, operating ratios, operating income and key operating statistics, which the Company’s management uses to make operating decisions.

Assets are not allocated to USAT Logistics, as those operations provide truckload freight services to customers through arrangements with third party carriers who utilize their own equipment. To the extent rail intermodal 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 USAT Logistics based on the assets specifically utilized to generate revenue. All intercompany transactions between segments reflect rates similar to those that would be negotiated with independent third parties. All other expenses for USAT Logistics are specifically identifiable direct costs or are allocated to USAT Logistics based on relevant drivers.

A summary of operating revenue by segment is as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Operating revenue
Trucking revenue	$	73,644		$	85,369		$	225,430		$	275,617
Trucking intersegment eliminations		(277	)		(387	)		(857	)		(1,421	)
Trucking operating revenue		73,367			84,982			224,573			274,196
USAT Logistics revenue		33,476			39,505			106,473			119,781
USAT Logistics intersegment eliminations		(1,385	)		(997	)		(5,082	)		(4,027	)
USAT Logistics operating revenue		32,091			38,508			101,391			115,754
Total operating revenue	$	105,458		$	123,490		$	325,964		$	389,950

Operating revenue includes foreign revenue generated in Mexico and Canada of $9.4 million and $28.7 million for the three and nine months ended September 30, 2016, respectively, and $10.7 million and $32.5 million for the three and nine months ended September 30, 2015, respectively. All foreign revenue is collected in US dollars.

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

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2016			2015		2016			2015
Operating income (loss)
Trucking	$	(1,505	)	$	2,460	$	(8,607	)	$	6,565
USAT Logistics		1,547			2,999		5,729			9,234
Total operating income (loss)	$	42		$	5,459	$	(2,878	)	$	15,799

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A summary of depreciation and amortization by segment is as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Depreciation and amortization
Trucking	$	7,298	$	8,608	$	21,918	$	29,733
USAT Logistics		113		94		364		218
Total depreciation and amortization	$	7,411	$	8,702	$	22,282	$	29,951

NOTE 6 – ACCRUED EXPENSES

Accrued expenses consisted of the following (in thousands):

	September 30,		December 31,
	2016		2015
Salaries, wages and employee benefits	$	2,157	$	4,359
Federal and state tax accruals		3,710		1,712
Restructuring, impairment and other costs (1)		1,632		773
Accrued third party maintenance		14		525
Other		1,456		1,467
Total accrued expenses	$	8,969	$	8,836


	(1)	Refer to Note 13 of the footnotes to the Company’s condensed consolidated financial statements for additional information regarding the restructuring, impairment and other costs.

NOTE 7 – LONG-TERM DEBT

Long-term debt consisted of the following (in thousands):

	September 30,		December 31,
	2016		2015
Revolving credit agreement	$	99,700	$	70,400
Total debt	$	99,700	$	70,400

In February 2015, the Company entered into a new senior secured revolving credit facility (the “Credit Facility”) with a group of lenders and Bank of America, N.A., as agent (“Agent”). Contemporaneously with the funding of the Credit Facility, the Company paid off the obligations under and terminated its prior credit facility.

The Credit Facility is structured as a $170.0 million revolving credit facility, with an 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 $80.0 million, exercisable in increments of $20.0 million. The Credit Facility is a five-year facility scheduled to terminate on February 5, 2020. Borrowings under the Credit Facility are classified as either “base rate loans” or “LIBOR loans”. Base rate loans accrue interest at a base rate equal to the Agent’s prime rate plus an applicable margin that was set at 0.50% through May 31, 2016 and adjusted quarterly thereafter between 0.25% and 1.00% based on the Company’s consolidated fixed charge coverage ratio. LIBOR loans accrue interest at LIBOR plus an applicable margin that was set at 1.50% through May 31, 2016 and adjusted quarterly thereafter between 1.25% and 2.00% based on the Company’s consolidated fixed charge coverage ratio. The Credit Facility includes, within its $170.0 million revolving credit facility, a letter of credit sub-facility in an aggregate amount of $15.0 million and a swing line sub-facility (the “Swing line”) in an aggregate amount of $20.0 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 the 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, except for any real estate or revenue equipment financed outside the Credit Facility.

Borrowings under the Credit Facility are subject to a borrowing base limited to the lesser of (A) $170.0 million; or (B) the sum of (i) 90% of eligible investment grade accounts receivable (reduced to 85% in certain situations), plus (ii) 85% of eligible non-investment grade accounts receivable, plus (iii) the lesser of (a) 85% of eligible unbilled accounts receivable and (b) $10.0 million, plus (iv) the product of 85% multiplied by the net orderly liquidation value percentage applied to the net book value of eligible revenue equipment, plus (v) 85% multiplied by the net book value of otherwise eligible newly acquired revenue equipment that has not yet been subject to an appraisal. The Credit Facility contains a single springing financial covenant, which requires the Company to maintain a consolidated fixed charge coverage ratio of at least 1.0 to 1.0. The financial covenant applies only in the event excess availability under the Credit Facility drops below 10% of the lenders’ total commitments under the Credit Facility.

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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, share repurchase, dividends, liens, acquisitions and dispositions, affiliate transactions, and the incurrence of other indebtedness.

The average interest rate, including all borrowings made under the Credit Facility, as of September 30, 2016 was 2.5%. As debt is repriced on a monthly basis, the borrowings under the Credit Facility approximate fair value. As of September 30, 2016, the Company had outstanding $4.3 million in letters of credit and had approximately $51.0 million available under the Credit Facility.

Note 8 – LEASES AND Commitments

CAPITAL LEASES

The Company leases certain equipment under capital leases with terms ranging from 15 to 60 months. Balances related to these capitalized leases are included in property and equipment in the accompanying condensed consolidated balance sheets and are set forth in the table below for the periods indicated (in thousands).

Capitalized Costs

Accumulated Amortization

Net Book Value

September 30, 2016

66,976

15,294

51,682

December 31, 2015

45,170

12,896

32,274

The Company has capitalized lease obligations at September 30, 2016 of $51.4 million, of which $17.1 million represents the current portion. Such leases have various termination dates extending through September 2020 and contain renewal or fixed price purchase options. The effective interest rates on the leases range from nil to 3.11% as of September 30, 2016. The lease agreements require payment of property taxes, maintenance and operating expenses. Amortization of capital leases was $1.8 million and $4.3 million for the three and nine months ended September 30, 2016, respectively, and $1.8 million and $7.0 million for the three and nine months ended September 30, 2015, respectively.

During the three months ended September 30, 2016, the Company completed two sale-leaseback transactions under which it sold certain owned tractors to an unrelated party for net proceeds of $19.9 million and entered into two capital leases each with a term of 48 months with the buyer. At September 30, 2016, the Company recorded a liability of approximately $0.1 million representing the total gain on the sales and will amortize such amount to earnings ratably over the lease term. The deferred gain is included in the deferred gain line item on the accompanying condensed consolidated balance sheets.

OPERATING LEASES

The Company has entered into leases with lessors who do not participate in the Credit Facility. Rent expense associated with operating leases was $2.3 million and $7.2 million for the three and nine months ended September 30, 2016, respectively, and $1.7 million and $4.5 million for the three and nine months ended September 30, 2015, respectively. Rent expense relating to revenue equipment is included in the “Equipment rent,” line item while rent expense relating to office equipment and other operating equipment is included in the “Operations and maintenance” line item in the accompanying condensed consolidated statements of operations.

As of September 30, 2016, the future minimum payments, including interest, under capitalized leases with initial terms of one year or more and future rentals under operating leases for certain facilities, office equipment, and revenue equipment with initial terms of one year or more were as follows for the years indicated (in thousands).

	2016		2017		2018		2019		2020		Thereafter
Capital leases	$	18,134		8,948		6,219		20,921		--		--
Operating leases		8,134		7,937		5,526		3,988		159		241

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OTHER COMMITMENTS

As of September 30, 2016, the Company had $5.5 million in commitments for purchases of revenue equipment.

NOTE 9 – INCOME tAXES

During the three months ended September 30, 2016 and 2015, the Company’s effective tax rate was 23.4% and 44.2%, respectively. During the nine months ended September 30, 2016 and 2015, the Company’s effective tax rates were 29.5% and 44.0%, respectively. Income tax expense varies from the amount computed by applying the statutory federal tax rate to income before income taxes primarily due to state income taxes, net of federal income tax effect, adjusted for permanent differences, the most significant of which is the effect of the per diem pay structure for the Company’s drivers. Drivers may elect to receive non-taxable per diem pay in lieu of a portion of their taxable wages. This per diem program increases the Company’s drivers’ net pay per mile, after taxes, while decreasing gross pay, before taxes. Per diem pay is partially nondeductible under current IRS regulations. As a result, salaries, wages and employee benefits costs are slightly lower and effective income tax rates are higher than the statutory rate. Generally, as pre-tax income increases, the impact of the driver per diem program on the effective tax rate decreases, because aggregate per diem pay becomes smaller in relation to pre-tax income, while in periods where earnings are at or near breakeven, the impact of the per diem program on the Company’s effective tax rate can be significant. Due to the effect of per diem pay, the Company’s tax rate will fluctuate in future periods based on fluctuations in earnings and in the number of drivers who elect to receive this pay structure.

When the result of the expected annual effective tax rate is not deemed reliable, as was recently the case for the second and third quarters of 2016, and distorts the income tax provision for an interim period, the Company calculates the income tax provision or benefit using the cut-off method, which results in an income tax provision or benefit based solely on the year-to-date pretax income or loss as adjusted for permanent differences on a pro rata basis.

NOTE 10 – (LOSS) EARNINGS PER SHARE

Basic (loss) earnings per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted (loss) earnings per share is computed by adjusting the weighted average number of shares of common stock outstanding by common stock equivalents attributable to dilutive stock options and restricted stock. The computation of diluted (loss) earnings per share does not assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on (loss) income per share.

The following table sets forth the computation of basic and diluted (loss) earnings per share (in thousands, except per share amounts):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2016			2015		2016			2015
Numerator:
Net (loss) income	$	(734	)	$	2,727	$	(3,887	)	$	7,132
Denominator:
Denominator for basic earnings per share – weighted average shares		8,069			10,442		8,736			10,439
Effect of dilutive securities:
Employee stock options and restricted stock		--			28		--			76
Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversion		8,069			10,470		8,736			10,515
Basic (loss) earnings per share	$	(0.09	)	$	0.26	$	(0.44	)	$	0.68
Diluted (loss) earnings per share	$	(0.09	)	$	0.26	$	(0.44	)	$	0.68
Weighted average anti-dilutive employee stock options and restricted stock		17			59		12			69

NOTE 11 – LEGAL PROCEEDINGS

The Company is party to routine litigation incidental to its business, primarily involving claims for personal injury and property damage incurred in the transportation of freight. The Company maintains insurance to cover liabilities in excess of certain self-insured retention levels. It is the opinion of management that these claims are immaterial to the Company’s long-term financial position; however, adverse results related to one or more of these claims could have a material adverse effect on the Company’s condensed consolidated financial statements in any given reporting period.

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NOTE 12 – NEW ACCOUNTING PRONOUNCEMENTS

In May, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to implement this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The standard provides for using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). In August 2015, the FASB issued ASU 2015-14, “Revenue From Contracts with Customers – Deferral of the Effective Date”, which delayed the effectiveness of ASU 2014-09 to annual periods beginning after December 15, 2017, and interim periods therein. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires lessees to recognize a right-to-use asset and a lease obligation for all leases. Lessees are permitted to make an accounting policy election to not recognize an asset and liability for leases with a term of twelve months or less. Lessor accounting under the new standard is substantially unchanged. Additional qualitative and quantitative disclosures, including significant judgments made by management, will be required. The new standard will become effective for the Company beginning with the first quarter 2019, will require a modified retrospective transition approach and will include a number of practical expedients. Early adoption of the standard is permitted. The Company is currently evaluating the impacts the adoption of this accounting guidance will have on the consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification of related amounts within the statement of cash flows. The new standard will become effective for the Company beginning with the first quarter of 2017. The Company is currently evaluating the impacts the adoption of this accounting guidance will have on the consolidated financial statements.

NOTE 13 – RESTRUCTURING, IMPAIRMENT AND OTHER COSTS

During the first quarter of 2016, the Company took steps to streamline and simplify its operations to better align its cost structure. In the Company’s Trucking segment, the Company closed its maintenance facilities in Forest Park, Georgia and South Holland, Illinois. Additionally, in the Company’s USAT Logistics segment, the Company closed branch offices located at Olathe, Kansas and Salt Lake City, Utah.

The headcount reduction reflected a total of 47 team members across multiple departments, including two contractors. Employees separated from the Company as a result of these streamlining initiatives were offered severance benefits and the termination was communicated to them on or prior to March 31, 2016. The agreements with the contractors were cancelled and cancellation penalties will be paid, where required. The expenses recorded during the quarter ended March 31, 2016, included costs related to involuntary terminations and other direct costs associated with implementing these initiatives. Other direct costs included facility lease termination costs; costs associated with the development, communication and administration of these initiatives; and asset write-offs. At March 31, 2016, the Company incurred total pretax expenses of approximately $3.5 million related to these streamlining initiatives.

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The following table summarizes the Company’s liabilities, charges, and cash payments related to the restructuring plan made during the nine months ended September 30, 2016 (in thousands):

	Accrued Balance December 31, 2015		Costs Incurred March 31, 2016		Payments			Expenses/ Charges			Accrued Balance September 30, 2016
Compensation and benefits	$	753	$	768	$	(1,349	)	$	(3	)	$	169
Facility closing expenses		20		2,779		(1,050	)		(286	)		1,463
Spartanburg impairment		--		546		--			(546	)		--
Fuel tank write-off		--		524		--			(524	)		--
Out of period adjustment		--		647		--			(647	)		--
Total	$	773	$	5,264	$	(2,399	)	$	(2,006	)	$	1,632

	Costs Incurred
	Nine Months Ended September 30,
	2016		2015
Trucking	$	4,848	$	2,893
USAT Logistics		416		--
Total	$	5,264	$	2,893

On May 19, 2016, (the “Separation Date”), the Company’s board of directors unanimously approved a separation agreement between Michael K. Borrows and the Company (the “Separation Agreement”) and accepted Mr. Borrows’ resignation as Executive Vice President and Chief Financial Officer. The benefits provided to Mr. Borrows under the Separation Agreement are substantially consistent with benefits Mr. Borrows would have been entitled to receive under his previously disclosed Executive Severance and Change in Control Agreement, dated July 29, 2015, if the Company had terminated his employment without Cause (as defined therein). Under the terms of the Separation Agreement Mr. Borrows will receive: (i) severance pay equal to his current base salary ($300,000 per year) for a period of eighteen months following the Separation Date and (ii) a lump sum payment of $180,000, representing the target amount of short term cash incentive compensation that would have been awarded to and earned by him under the 2016 Management Bonus Plan, assuming all performance and other vesting criteria were satisfied at the target level for 2016. In addition, the Separation Agreement contains a customary release of claims, non-solicitation, non-disparagement, and confidentiality covenants in favor of the Company. During second quarter 2016, the Company recognized severance costs associated with Mr. Borrows’ departure of approximately $0.7 million, which are recorded in the “Salaries, wages and employee benefits” line item in the accompanying condensed consolidated statements of operations and comprehensive (loss) income. At September 30, 2016, the Company has approximately $0.4 million accrued for severance benefits still to be paid to Mr. Borrows.

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Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This report contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and such statements are subject to the safe harbor created by those sections, and the Private Securities Litigation Reform Act of 1995, as amended. All statements, other than statements of historical or current fact, are statements that could be deemed forward-looking statements, including without limitation:

	●	any projections of earnings, operating ratio (or operating margin), and return on equity or invested capital
	●	revenues, expenses and other financial items;
	●	any statement of plans;
	●	strategies and objectives of management for future operations;
	●	any statements concerning proposed new services or developments;
	●	any statements regarding future economic conditions and performance; and
	●	any statements of belief and any statement of assumptions underlying any of the foregoing.

In this Quarterly Report on Form 10-Q, statements relating to:

	●	future driver market,
	●	future driver and customer-facing employees compensation,
	●	future ability to recruit and retain drivers and customer-facing employees,
	●	future driver recruiting costs,
	●	the amount and timing of future acquisitions and dispositions of revenue equipment and anticipated gains/losses resulting from dispositions,
	●	our belief that improved safety features on tractors we purchase will result in fewer claims,
	●	future profitability,
	●	future industry capacity,
	●	future benefits of restructuring actions,
	●	future pricing rates,
	●	future fuel efficiency,
	●	future fuel prices and surcharges,
	●	future insurance and claims expense,
	●	future ability to recover costs through the fuel surcharge program,
	●	future employee benefits costs,
	●	future purchased transportation use and expense,
	●	future operations and maintenance costs,
	●	future depreciation and amortization expense,
	●	future effects of inflation,
	●	future indebtedness, expected amount and timing of capital expenditures,
	●	the future impact of pending litigation and claims against us,
	●	the sufficiency of our liquidity and sources of capital resources,
	●	the future use of derivative financial instruments,
	●	our intention to grow our independent contractor fleet,
	●	the impact of our per diem pay program, and
	●	future income tax rates,

among others, are forward-looking statements. Such statements may be identified by their use of terms or phrases such as “expects,” “estimates,” “projects,” “believes,” “anticipates,” “intends,” “plans,” “goals,” “may,” “will,” ”would,” “should,” “could,” “potential,” “continue,” “future” and similar terms and phrases. Forward-looking statements are based on currently available operating, financial and competitive information. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled “Item 1.A., Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 and other filings with the Securities and Exchange Commission.

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All such forward-looking statements speak only as of the date of this report. You are cautioned not to place undue reliance on such forward-looking statements. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in management’s expectations with regard thereto or any change in the events, conditions, or circumstances on which any such information is based, except as required by law.

All forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by this cautionary statement.

References to the “Company,” “we,” “us,” “our” or similar terms refer to USA Truck, Inc. and its subsidiary.

Overview

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader more fully understand the operations and present business environment of USA Truck, Inc. MD&A is provided as a supplement to, and should be read in conjunction with, the condensed consolidated financial statements and notes thereto and other financial information that appears elsewhere in this report. This overview summarizes the MD&A, which includes the following sections:

Our Business – a general description of USA Truck’s business, the organization of its operations and the service offerings that comprise its operations.

Results of Operations – an analysis of the consolidated results of operations for the periods presented in the condensed consolidated financial statements included in this filing and a discussion of seasonality, the potential impact of inflation and fuel availability and cost.

Liquidity and Capital Resources – an analysis of cash flows, sources and uses of cash, debt, equity and contractual obligations.

Our Business

USA Truck offers a broad range of truckload and logistics services to a diversified customer base that spans a variety of industries. The Company has two reportable segments: (i) Trucking, consisting of truckload and dedicated freight and (ii) USAT Logistics, consisting of freight brokerage and rail intermodal service offerings. The USAT Logistics segment formerly was referred to as “SCS”.

The Trucking segment provides truckload transportation, including dedicated services, of various products, goods and materials. The Trucking segment primarily uses its own purchased or leased tractors and trailers to provide the services and is commonly referred to as “asset-based” trucking. The Company’s USAT Logistics service matches customer shipments with available equipment of authorized third-party carriers and provides services that complement the Company’s Trucking operations. The USAT Logistics segment is commonly referred to as “non-asset based” or “asset-light” transportation.

Revenue for the Company’s Trucking segment is substantially generated by transporting freight for customers, and is predominantly affected by the base revenue per loaded mile received from customers, total number of tractors being operated, and average miles per tractor being operated. The Company enhances its operating revenue by charging for fuel surcharges and other ancillary services such as stop-off pay, loading and unloading activities, and tractor and trailer detention.

Operating expenses that have a major impact on the profitability of the Trucking segment fall into two categories: variable and fixed. The largest portion is the variable costs of transporting freight for customers. Variable or largely variable costs include driver wages and benefits, fuel and fuel taxes, payments to independent contractors for purchased transportation, operating and maintenance expense and insurance and claims expense. The costs vary mostly according to miles operated, but also have controllable components based on percentage of compensated miles, shop and dispatch efficiency, safety, and claims experience.

The most significant fixed or mostly fixed expenses include the capital costs of our assets (depreciation, rent, and interest), compensation of non-driving employees, and portions of insurance and maintenance expenses. These expenses are partially controllable through managing our fleet size and facilities infrastructure, gaining headcount efficiency, and operating safely.

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Fuel expense varies significantly with diesel fuel prices and is one of our most volatile variable expenses. To mitigate the Company’s exposure to fuel price increases, it recovers from its customers fuel surcharges that generally recoup a majority of the increased fuel costs; however, the Company cannot assure the recovery levels experienced in the past will continue in future periods. Although its fuel surcharge program mitigates some exposure to rising fuel costs, the Company continues to have exposure to increasing fuel costs related to empty miles, fuel inefficiency due to engine idle time and other factors, including the extent to which the surcharge paid by the customer is insufficient to compensate for higher fuel costs, particularly in times of rapidly increasing fuel prices. The main factors that affect fuel surcharge revenue are the price of diesel fuel and the number of loaded miles. The fuel surcharge is billed on a lagging basis, meaning the Company typically bills customers in the current week based on the previous week’s applicable United States Department of Energy, or DOE, index. Therefore, in times of increasing fuel prices, the Company does not recover as much as it is currently paying for fuel. In periods of declining prices, the opposite is true. Because of the volatility of fuel prices, the Company evaluates its profitability primarily based on net fuel cost per company tractor mile, because this measure reflects the net impact of fuel prices and surcharge collection, uncompensated miles, and changes in mix between company tractors and independent contractor tractor miles.

The key statistics used to evaluate Trucking segment performance, net of fuel surcharge, include (i) base Trucking revenue per seated tractor per week (ii) average base revenue per loaded mile, (iii) average miles per seated tractor per week, (iv) deadhead percentage, (v) average loaded miles per trip, (vi) average number of seated tractors, and (vii) adjusted operating ratio. In general, the Company’s average miles per seated tractor per week, rate per mile and deadhead percentage are affected by industry-wide freight volumes, industry-wide trucking capacity and the competitive environment, which factors are mostly beyond the Company’s control, as well as by its sales and marketing efforts, service levels and efficiency of its operations, over which the Company has significant control.

The USAT Logistics segment provides services that complement Trucking services. Unlike the Trucking segment, the USAT Logistics segment is non-asset based and is instead dependent upon qualified employees, information systems and qualified third-party capacity providers. The largest expense related to the USAT Logistics segment is purchased transportation expense. Other operating expenses consist primarily of salaries, wages and employee benefits. The Company evaluates the USAT Logistics segment’s financial performance by reviewing the gross margin percentage (revenue less purchased transportation expenses expressed as a percentage of revenue) and net revenue. The gross margin can be impacted by the rates charged to customers and the costs of securing third-party capacity.

Results of Operations

The following table sets forth the condensed consolidated statements of operations and comprehensive (loss) income in dollars (in thousands) and percentage of consolidated operating revenue and the percentage increase or decrease in the dollar amounts (in thousands) of those items compared to the prior year.

	Three Months Ended September 30,
	2016									2015
	$			% Operating Revenue			Adjusted Operating Ratio (2)			$		% Operating Revenue			Adjusted Operating Ratio (2)			% Change in Dollar Amounts
Base revenue	$	94,661			89.8	%				$	109,752		88.9	%					(13.8	)%
Fuel surcharge revenue		10,797			10.2						13,738		11.1						(21.4	)
Operating revenue		105,458			100.0	%					123,490		100.0	%					(14.6	)

Operating expenses		105,416			100.0			100.0	%		118,031		95.6			92.4	%		(10.7	)
Operating income		42			0.0			0.0			5,459		4.4			7.6			(99.2	)

Other expenses:
Interest expense		913			0.9						493		0.4						85.2
Other, net		87			0.1						78		0.1						11.5
Total other expenses, net		1,000			1.0						571		0.5						75.1
(Loss) Income before income taxes		(958	)		(0.9	)					4,888		3.9						(119.6	)
Income tax (benefit) expense		(224	)		(0.2	)					2,161		1.7						(110.4	)

Net (loss) income	$	(734	)		(0.7	)%				$	2,727		2.2	%					(126.9	)%

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	Nine Months Ended September 30,
	2016									2015
	$			% Operating Revenue			Adjusted Operating Ratio (2)			$		% Operating Revenue			Adjusted Operating Ratio (2)			% Change in Dollar Amounts
Base revenue	$	296,191			90.9	%				$	342,444		87.8	%					(13.5	)%
Fuel surcharge revenue		29,773			9.1						47,506		12.2						(37.3	)
Operating revenue		325,964			100.0	%					389,950		100.0	%					(16.4	)

Operating expenses		328,842			100.9			99.0	%		374,151		95.9			94.5	%		(12.1	)
Operating (loss) income		(2,878	)		(0.9	)		1.0			15,799		4.1			5.5			(118.2	)

Other expenses:
Interest expense		2,209			0.7						1,672		0.4						32.1
Loss on extinguishment of debt (1)		--			--						750		0.2						(100.0	)
Other, net		423			0.1						650		0.2						(34.9	)
Total other expenses, net		2,632			0.8						3,072		0.8						(14.3	)
(Loss) Income before income taxes		(5,510	)		(1.7	)					12,727		3.3						(143.3	)
Income tax (benefit) expense		(1,623	)		(0.5	)					5,595		1.4						(129.0	)

Net (loss) income	$	(3,887	)		(1.2	)%				$	7,132		1.8	%					(154.5	)%

(1)

Loss on extinguishment of debt represents the write-off of the deferred financing fees associated with the previous revolving credit facility during the first quarter of 2015.

(2)

The adjusted operating ratio calculation for operating expenses is calculated as operating expenses, net of fuel surcharges and other items, as a percent of operating revenue excluding fuel surcharge revenue. Other items in this presentation are the restructuring, impairment and other costs and severance costs included in salaries, wages and employee benefits. See Note 13 to the Company’s condensed consolidated financial statements included in Part I, Item 1, in this Form 10-Q. Adjusted operating ratio is a non-GAAP financial measure. See “Use of Non-GAAP Financial Information” and “Consolidated Reconciliations” and “Segment Reconciliations” below for the uses and limitations associated with adjusted operating ratio and other non-GAAP financial measures.

Use of Non-GAAP Financial Information

The Company uses the terms “adjusted operating ratio” and “adjusted earnings per diluted share” throughout this Form 10-Q. Adjusted operating ratio and adjusted earnings per diluted share, as defined here, are non-GAAP financial measures, as defined by the SEC. Management uses adjusted operating ratio and adjusted earnings per diluted share as supplements to the Company’s GAAP results in evaluating certain aspects of its business, as described below.

Adjusted operating ratio is calculated as operating expenses less restructuring, impairment and other costs, and severance costs included in salaries, wages and employee benefits, net of fuel surcharge, as a percentage of operating revenue excluding fuel surcharge revenue. Adjusted earnings per diluted share is defined as earnings or loss before income taxes plus loss on extinguishment of debt, restructuring, impairment and other costs, and severance costs included in salaries, wages and employee benefits reduced by our normalized statutory income tax rate, divided by weighted average diluted shares outstanding.

The Company’s board of directors and the chief operating decision-maker focus on adjusted operating ratio and adjusted earnings per diluted share as indicators of the Company’s performance from period to period.

Management believes removing the impact of the above described items from the Company’s operating results affords a more consistent basis for comparing results of operations. Management believes its presentation of adjusted operating ratio and adjusted earnings per diluted share is useful because it provides investors and securities analysts the same information that the Company uses internally for purposes of assessing its core operating performance.

Adjusted operating ratio and adjusted earnings per diluted share are not substitutes for operating margin or any other measure derived solely from GAAP measures. There are limitations to using non-GAAP measures such as adjusted operating ratio and adjusted earnings per diluted share. Although management believes that adjusted operating ratio and adjusted earnings per diluted share can make an evaluation of the Company’s operating performance more consistent because these measures remove items that, in management’s opinion, do not reflect its core operating performance, other companies in the transportation industry may define adjusted operating ratio and adjusted earnings per diluted share differently. As a result, it may be difficult to use adjusted operating ratio, adjusted earnings per diluted share or similarly named non-GAAP measures that other companies may use, to compare the performance of those companies to USA Truck’s performance.

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Consolidated Reconciliations

Pursuant to the requirements of Regulation S-K, reconciliations of non-GAAP financial measures to GAAP financial measures have been provided in the tables below for operating ratio (dollar amounts in thousands):

Adjusted Operating Ratio:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Operating revenue	$	105,458		$	123,490		$	325,964		$	389,950
Less:
Fuel surcharge revenue		10,797			13,738			29,773			47,506
Base revenue		94,661			109,752			296,191			342,444
Operating expense		105,416			118,031			328,842			374,151
Adjusted for:
Restructuring, impairment and other costs		--			(2,893	)		(5,264	)		(2,893	)
Severance costs in salaries, wages and employee benefits		--			--			(697	)		--
Fuel surcharge revenue		(10,797	)		(13,738	)		(29,773	)		(47,506	)
Adjusted operating expense	$	94,619		$	101,400		$	293,108		$	323,752
Operating ratio		100.0	%		95.6	%		100.9	%		95.9	%
Adjusted operating ratio		100.0	%		92.4	%		99.0	%		94.5	%

Adjusted (Loss) Earnings per Share:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
(Loss) Earnings per diluted share	$	(0.09	)	$	0.26		$	(0.44	)	$	0.68
Adjusted for:
Loss on debt extinguishment		--			--			--			0.07
Severance costs in salaries, wages and employee benefits		--			--			0.08			--
Restructuring, impairment and other costs		--			0.28			0.60			0.28
Income tax expense effect of adjustments		--			(0.11	)		(0.26	)		(0.14	)
Adjusted diluted (loss) earnings per share	$	(0.09	)	$	0.43		$	(0.02	)	$	0.89

Segment Reconciliations:

The tables below set forth the Trucking and USAT Logistics segment adjusted operating ratio (which is a non-GAAP financial measure as defined by the SEC) as if fuel surcharge is excluded from operating revenue and is instead reported as a reduction of operating expenses. Pursuant to the requirements of Regulation S-K, a reconciliation of this non-GAAP financial measure to the associated GAAP financial measure has been provided in the tables below for operating ratio (dollar amounts in thousands).

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*Trucking Segment*	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Revenue	$	73,644		$	85,369		$	225,430		$	275,617
Less: intersegment eliminations		277			387			857			1,421
Operating revenue		73,367			84,982			224,573			274,196
Less: fuel surcharge revenue		8,451			10,635			23,499			37,953
Base revenue		64,916			74,347			201,074			236,243
Operating expense		74,872			82,522			233,180			267,631
Adjusted for:
Restructuring, impairment and other costs		--			(2,893	)		(4,848	)		(2,893	)
Severance costs in salaries, wages and employee benefits		--			--			(697	)		--
Fuel surcharge revenue		(8,451	)		(10,635	)		(23,499	)		(37,953	)
Adjusted operating expense	$	66,421		$	68,994		$	204,136		$	226,785
Operating ratio		102.1	%		97.1	%		103.8	%		97.6	%
Adjusted operating ratio		102.3	%		92.8	%		101.5	%		96.0	%

*USAT Logistics Segment*	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Revenue	$	33,476		$	39,505		$	106,473		$	119,781
Less: intersegment eliminations		1,385			997			5,082			4,027
Operating revenue		32,091			38,508			101,391			115,754
Less: fuel surcharge revenue		2,346			3,103			6,274			9,553
Base revenue		29,745			35,405			95,117			106,201
Operating expense		30,544			35,509			95,662			106,520
Adjusted for:
Restructuring, impairment and other costs		--			--			(416	)		--
Fuel surcharge revenue		(2,346	)		(3,103	)		(6,274	)		(9,553	)
Adjusted operating expense	$	28,198		$	32,406		$	88,972		$	96,967
Operating ratio		95.2	%		92.2	%		94.3	%		92.0	%
Adjusted operating ratio		94.8	%		91.5	%		93.5	%		91.3	%

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Key Operating Statistics by Segment

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Trucking:
Operating revenue (in thousands)	$	73,367		$	84,982		$	224,573		$	274,196
Operating (loss) income (in thousands) (1)	$	(1,505	)	$	2,460		$	(8,607	)	$	6,565
Adjusted operating ratio (2)		102.3	%		92.8	%		101.5	%		96.0	%
Total miles (in thousands) (3)		43,365			44,559			132,216			143,927
Deadhead percentage (4)		13.2	%		12.3	%		12.8	%		12.3	%
Base revenue per loaded mile	$	1.725		$	1.902		$	1.743		$	1.871
Average number of in-service tractors (5)		1,742			1,838			1,797			2,025
Average number of seated tractors (6)		1,648			1,718			1,717			1,858
Average miles per seated tractor per week		2,002			1,973			1,967			1,986
Base revenue per seated tractor per week	$	2,997		$	3,293		$	2,992		$	3,260
Average loaded miles per trip		590			577			582			596

USAT Logistics:
Operating revenue (in thousands)	$	32,091		$	38,508		$	101,391		$	115,754
Operating income (in thousands) (1)	$	1,547		$	2,999		$	5,729		$	9,234
Net revenue (in thousands) (7)	$	6,050			7,211		$	19,481		$	21,466
Gross margin percentage (8)		18.1	%		18.3	%		18.3	%		17.9	%

	(1)	Operating income (loss) is calculated by deducting operating expenses from operating revenues.
	(2)	Adjusted operating ratio is calculated as operating expenses less restructuring, impairment and other costs, and severance costs included in salaries, wages and employee benefits net of fuel surcharge revenue as a percentage of operating revenue excluding fuel surcharge revenue. See GAAP to non-GAAP reconciliation above.
	(3)	Total miles include both loaded and empty miles.
	(4)	Deadhead percentage is calculated by dividing empty miles into total miles.
	(5)	Tractors include company-operated tractors in service, plus tractors operated by independent contractors.
	(6)	Seated tractors are those occupied by drivers.
	(7)	Net revenue is calculated by taking revenue less purchased transportation.
	(8)	Gross margin percentage is calculated by taking revenue less purchased transportation expense and dividing that amount by revenue. This calculation includes intercompany revenues and expenses.

Results of Operations—Segment Review

Trucking operating revenue

For the three months ended September 30, 2016, Trucking operating revenue decreased 13.7% to $73.4 million, compared to $85.0 million for the same period in 2015. Trucking base revenue decreased 12.7% to $64.9 million, compared to $74.3 million for the third quarter of 2015. The decrease in operating revenue was primarily due to downsizing of the tractor fleet conducted during 2015, which reduced the Company’s average year over year seated tractor count by approximately 4.1% and challenging industry conditions. The reduced tractor count also gave rise a 3.7% decrease in loaded miles, which resulted in a 20.5% decrease in fuel surcharge revenue for the quarter ended September 30, 2016. Other factors contributing to the decreases in both operating revenue and base revenue were a 9.3% decrease in base revenue per loaded mile and 0.9 percentage points higher deadhead percentage.

During the nine months ended September 30, 2016, Trucking operating revenue decreased 18.1% to $224.6 million, compared to $274.2 million for the same period of 2015. Trucking base revenue decreased 14.9% to $201.1 million, from $236.2 million for the same period in 2015. The decrease in operating revenues included a 38.1% decrease in fuel surcharge revenues, attributable to a 6.5% decrease in Trucking shipments and an 8.1% decrease in total miles driven. The remaining decreases in operating revenue and base revenue were attributable to 7.6% fewer seated tractors and a 6.8% decrease in Trucking base revenue per loaded mile. The loss of business from several customers contributed to the majority of the decrease in base revenue per loaded mile and in loaded miles during the year

The freight market was challenging in the first nine months of 2016. Freight rates and volumes continued to be affected by weak demand and excess trucking capacity. While Trucking capacity is currently available in the market, the Company believes significantly lower industry truck orders in recent months combined with the upcoming changes in Trucking regulations should begin to tighten the capacity market in future quarters. During the past year, the Company has continued to refine its network and focus on head-haul lanes versus the backhaul strategy which provided higher rates per mile during the strong freight environment experienced in recent years. Trends seen in recent customer bid activity have been mixed, as some customers continue to aggressively work to take advantage of the favorable shorter-term trends to the detriment of carriers. Based on the current rate and freight market, we believe it may be difficult to achieve base revenue per loaded mile increases on a year-over-year basis in the near term.

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While freight levels in third quarter typically improve over first and second quarter levels, this did not come to fruition in 2016. Decreased seasonal freight, combined with the changes in customer contracts during the second quarter as mentioned above, was the primary reason for the decline in revenue performance indicators. While we are actively working with our customers to procure freight, we are also taking the necessary actions to maintain the appropriate fleet size and accelerating our tractor-trade cycle.

Trucking operating (loss) income

Trucking generated an operating loss of $1.5 million in the third quarter of 2016 compared with operating income of $2.5 million in the comparable 2015 period. Contributing factors to the difference were an approximately 5.8% decrease in Trucking shipments and a 9.0% reduction in base revenue per seated tractor per week associated with the loss of several significant customers during the second quarter and a softer freight environment, partially offset by cost savings efforts.

For the nine months ended September 30, 2016, Trucking generated an operating loss of $8.6 million, compared to operating income of $6.6 million in the 2015 period. This was reflected in an 8.1% decrease in total revenue miles, a 6.5% decrease in number of Trucking shipments, and a 7.3% decrease in base revenue per total mile.

USAT Logistics operating revenue

For the three months ended September 30, 2016, operating revenue for USAT Logistics decreased 16.7% to $32.1 million from $38.5 million, for the same period in 2015. Reduced operating revenue primarily related to a 24.4% decrease in fuel surcharge revenue. For the three months ended September 30, 2016, operating revenue per employee decreased 14.4%, compared to the same period in 2015. USAT Logistics’ base revenue decreased 16.0% for the three months ended September 30, 2016, over the same period in the prior year. The decrease in both base revenue and fuel surcharge revenue was largely due to the soft freight market and contributed to an 11.6% decrease in revenue per order. In the USAT Logistics segment, which requires much lower capital investment, the Company remains focused on gaining market share and improving net revenue.

For the nine months ended September 30, 2016, operating revenue decreased 12.4% to $101.4 million from $115.8 million, for the corresponding period in 2015. The reduced operating revenues primarily stemmed from a 34.3% reduction in fuel surcharge revenue, partially offset by a 7.5% increase in load volumes and a 2.2% increase in gross margin.

USAT Logistics operating (loss) income

USAT Logistics operating income decreased $1.5 million to $1.5 million in the third quarter of 2016, or 48.4%, compared to $3.0 million in the third quarter of 2015. Decreased operating income was largely due to the decreases in base revenue and fuel surcharge revenues attributable to the softer freight environment, which less effectively covered compensation expense, which increased slightly in the 2016 period compared with the 2015 period. As mentioned above, in the USAT Logistics segment, which requires much lower capital investment, the Company remains focused on gaining more market share and improving net revenue.

For the nine months ended September 30, 2016, operating income decreased 38.0% to $5.7 million from $9.2 million. Contributing to this were decreased revenues mentioned above, which less effectively covered our costs.

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Consolidated Operating Expenses

The following table summarizes the consolidated operating expenses (dollar amounts in thousands) and percentage of consolidated operating revenue, consolidated base revenue and the percentage increase or decrease in the dollar amounts of those items compared to the prior year.

	Three Months Ended September 30,
	2016									2015									% Change
Operating Expenses:	$			% Operating Revenue			% Base Revenue (1)			$			% Operating Revenue			% Base Revenue (1)				2016 to 2015
Salaries, wages and employee benefits	$	29,131			27.6	%		30.8	%		32,028			25.9	%		29.2	%		(9.0	)%
Fuel and fuel taxes		10,932			10.4			0.1	(3)		12,960			10.5			(0.7	) (3)		(15.6	)
Depreciation and amortization		7,411			7.0			7.8			8,702			7.0			7.9			(14.8	)
Insurance and claims		5,620			5.3			5.9			5,405			4.4			4.9			4.0
Equipment rent		1,861			1.8			2.0			1,094			0.9			1.0			70.1
Operations and maintenance		8,170			7.8			8.6			10,439			8.5			9.5			(21.7	)
Purchased transportation		37,218			35.3			39.3			40,613			32.9			37.0			(8.4	)
Operating taxes and licenses		1,003			1.0			1.1			1,439			1.2			1.3			(30.3	)
Communications and utilities		673			0.6			0.7			989			0.8			0.9			(32.0	)
Gain on disposal of assets, net		(181	)		(0.2	)		(0.1	)		(3,008	)		(2.4	)		(2.7	)		(94.0	)
Restructuring, impairment and other costs		--			--			--			2,893			2.3			N/A			N/A
Other		3,578			3.4			3.8			4,477			3.6			4.1			(20.1	)
Operating expenses	$	105,416			100.0	%		100.0	%		118,031			95.6	%		92.4	%		(10.7	)%

	Nine Months Ended September 30,
	2016									2015									% Change
Operating Expenses:	$			% Operating Revenue			% Base Revenue (1)			$			% Operating Revenue			% Base Revenue (1)				2016 to 2015
Salaries, wages and employee benefits	$	92,332			28.3	%		31.0	% (2)	$	105,536			27.1	%		30.8	%		(12.5	)%
Fuel and fuel taxes		32,512			10.0			1.0	(3)		47,195			12.1			(0.1	) (3)		(31.1	)
Depreciation and amortization		22,282			6.8			7.5			29,951			7.7			8.7			(25.6	)
Insurance and claims		15,826			4.9			5.3			17,502			4.5			5.1			(9.6	)
Equipment rent		5,582			1.7			1.9			2,743			0.7			0.8			103.5
Operations and maintenance		27,682			8.5			9.3			31,340			8.0			9.2			(11.7	)
Purchased transportation		111,650			34.3			37.7			122,029			31.3			35.6			(8.5	)
Operating taxes and licenses		3,384			1.0			1.2			4,221			1.1			1.2			(19.8	)
Communications and utilities		2,404			0.7			0.8			2,732			0.7			0.8			(12.0	)
Gain on disposal of assets, net		(759	)		(0.2	)		(0.3	)		(5,766	)		(1.5	)		(1.7	)		(86.8	)
Restructuring, impairment and other costs		5,264			1.6			N/A			2,893			0.7			N/A			N/A
Other		10,683			3.3			3.6			13,775			3.5			4.0			(22.4	)
Operating expenses	$	328,842			100.9	%		99.0	%	$	374,151			95.9	%		94.4	%		(12.1	)%

(1)

The percent of base revenue calculation for operating expenses is calculated as operating expenses, net of fuel surcharges and other items, as a percent of operating revenue excluding fuel surcharge revenue. Other items in this presentation are the restructuring, impairment and other costs and severance costs included in salaries, wages and employee benefits. See Note 13 to the Company’s condensed consolidated financial statements included in Part I, Item 1, in this Form 10-Q.

(2)	The percent of base revenue calculation excludes severance costs included in this line item.

(3)	The percent of base revenue calculation for fuel and fuel surcharge expense is calculated as fuel and fuel taxes, net of fuel surcharges.

Salaries, wages and employee benefits

The decrease in salaries, wages and employee benefits expense during the third quarter of 2016, when compared to the same quarter in 2015, was primarily due to a 10.0% decrease in the Company’s tractor fleet from our planned fleet reduction, partially offset by growth in our independent contractor fleet of 25.4%. Additionally, health insurance expense decreased by approximately $0.8 million due to improved claims experience.

For the nine months ended September 30, 2016, the decrease in salaries, wages and employee benefits expense was primarily due to a 15.5% reduction in the Company’s tractor fleet and a 19.8% increase in the independent contractor fleet, partially offset by certain restructuring, impairment, and other costs and severance costs in the first and second quarters of 2016. Non-driver wages should continue to decrease as the Company right sizes its workforce and continues to align the number of drivers to non-drivers in the Trucking segment. USAT Logistics salaries, wages and employee benefits are expected to increase as we continue to increase customer facing positions.

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The rate of compensation paid to Company drivers per mile has increased in recent periods and is expected to further increase in future periods due to expected driver pay increases, especially if the economy strengthens and other employment alternatives become more available. Furthermore, management believes that the market for drivers continues to tighten; therefore, it expects hiring expenses, including recruiting and advertising, to increase in order to attract sufficient numbers of qualified drivers to operate the Company’s fleet. Changes will also be affected by the percentage of Trucking miles operated by independent contractors instead of Company employed drivers.

Fuel and fuel taxes

For the first nine months of 2016 diesel fuel prices have increased approximately 12%, which compressed our discount margin and resulted in an increase in net fuel expense for both the three and nine month periods ended September 30, 2016 of approximately $0.9 million and $3.1 million, respectively.

The Company expects to continue managing its idle time and truck speeds, locking in fuel hedges when deemed appropriate and partnering with customers to adjust fuel surcharge programs to recover a fair portion of rising fuel costs. Going forward, the Company’s net fuel expense is expected to fluctuate as a percentage of revenue based on factors such as diesel fuel prices, percentage recovered from fuel surcharge programs, percentage of uncompensated miles, the percentage of revenue generated from independent contractors and the success of fuel efficiency initiatives.

Equipment rent and depreciation and amortization

The increases in equipment rent during the three and nine month periods ended September 30, 2016, were the result of increased use of operating leases for the acquisition of revenue equipment due to favorable terms. Decreases in depreciation and amortization for both the three and nine month periods ended September 30, 2016 were primarily reflective of the 10.0% and 15.5% reductions, respectively, in the size of the Company tractor fleet resulting from fleet downsizing and the Company's continued focus on increasing its independent contractor fleet, partially offset by higher depreciation expense attributable to increased acquisition cost on new equipment. Our reduction in depreciation from the smaller fleet size more than offset increased equipment rent, which positively impacted our operating results.

The Company will continue its fleet reductions to match customer demand and load profitability initiatives. Further, the acquisition costs of new revenue equipment are expected to increase, largely due to the continued implementation of emissions requirements. During 2016, the Company has invested in tractors with improved safety features, which have an approximate 11% higher purchase price than 2015 tractor purchases. The Company believes the return on investment will be in fewer incidents of claims. As a result, management expects to see an increase in depreciation and amortization expense from new tractors, which should be offset to some degree by prior and potential future fleet reductions. Additionally, trailer purchases to reduce the average age of the fleet may result in an increase in depreciation and amortization expense.

Insurance and claims

Insurance and claims expense increased during the three months ended September 30, 2016 as a result of the most recent actuarial adjustment causing unfavorable rate development factors in our current year claims.

The decrease in insurance and claims expense during the nine months ended September 30, 2016, was the result of lower frequency of collisions resulting in a $1.8 million favorable collision expense variance partially offset by higher than expected claims experience associated with adverse development of prior year occurrences in the most recent actuarial report. As a result of the foregoing, our insurance and claims expense increased slightly as a percentage of operating revenue. The primary factors affecting the Company’s insurance and claims expense are the number of miles driven by its Company drivers and independent contractors, the frequency and severity of accidents, trends in the development factors used in the Company’s actuarial accruals, and developments in prior-year claims. The Company expects insurance and claims expense to improve over the long-term.

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Operations and maintenance

Operations and maintenance expense for the three months ended September 30, 2016 decreased due to acceleration of the removal of older tractors and trailers from the Company’s fleet. Overall, the size of the Company’s tractor fleet decreased 10.0% when compared to the same period in 2015.

During the nine months ended September 30, 2016, operations and maintenance expense decreased in terms of dollars, but increased in terms of a percentage of revenue and base revenue as the Company incurred higher than expected outside maintenance costs for roadside assistance and non-routine repairs. The size of the Company tractor fleet decreased 15.5% when compared to the same period in 2015, as a result of efforts by management to accelerate the removal of older tractors that require higher maintenance.

During 2015 and the first quarter of 2016, the Company closed four maintenance facilities as it continues to migrate to a more variable cost strategy in maintenance. The Company is continuing to focus on increasing its preventative in-house maintenance and sales preparation through a smaller footprint of strategic shops, and reducing its outside maintenance costs for roadside assistance and non-routine repairs.

Purchased transportation

While purchased transportation costs for the third quarter of 2016 decreased 8.4%, purchased transportation increased as a percentage of revenue and base revenue primarily from a 25.4% increase in the size of the Company’s independent contractor fleet, offset by a 16.7% decrease in USAT Logistics operating revenue. Moving forward, the Company is continuing to pursue its objective of growing its independent contractor fleet as a percentage of its total fleet, which could further increase purchased transportation expense. Increasing independent contractor capacity has shifted (and assuming all other factors remain equal, is expected to continue to shift) expenses to the purchased transportation line item with offsetting reductions in employee driver wages and related expenses, net fuel expense (as independent contractors generate fuel surcharge revenue, while the related cost of their fuel is included with their compensation in purchased transportation), maintenance, and capital expenditures.

For the nine months ended September 30, 2016, the decrease in purchased transportation expense was primarily due to the lower freight volumes in USAT Logistics, partially offset by the 19.8% growth in the size of the independent contractor fleet. As a percentage of consolidated operating revenue, purchased transportation increased 3.0 percentage points year-over-year, due primarily to the growth in the Company’s independent contractor fleet mentioned above.

Gain on disposal of assets, net

The decreases in gain on disposal of assets, net, during the 2016 periods reflect higher fleet reductions in the 2015 periods compared to the 2016 periods. During the 2015 periods, the Company reduced its fleet and seated truck count through the accelerated disposal of older, less efficient tractors and trailers. Additionally, the deterioration in the used equipment market resulted in lower used equipment prices in the 2016 periods. Going forward, the Company expects gains on the sale of revenue equipment to be less significant than in 2015.

Restructuring, impairment and other costs

See Note 13 to the Company’s condensed consolidated financial statements included in Part I, Item 1, in this Form 10-Q of the restructuring, impairment and other costs incurred during the three and nine months ended September 30, 2016, which is incorporated herein by reference.

Other expenses

The decrease in other expenses primarily reflects a decrease in the Company’s professional and consulting fees, offset by increased bad debt expense and recruiting and relocation expenses.

Interest expense

For both the three and nine months ended September 30, 2016, interest expense increased primarily due to the increased usage on the Company’s revolving line of credit to fund the Company’s stock repurchase program and purchase of revenue equipment. During the nine months ended September 30, 2016, the Company increased its debt outstanding on its Credit Facility by $29.3 million.

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Income tax expense

The Company’s effective tax rate was 23.4% and 29.5% for the three and nine months ended September 30, 2016, respectively. The effective tax rate for the three and nine months ended September 30, 2015 was 44.2% and 44.0% respectively. The Company’s effective tax rate, when compared to the federal statutory rate of 35%, is primarily affected by state income taxes, net of federal income tax effect, and permanent differences, the most significant of which is the effect of the partially non-deductible per diem payments to Company drivers. The recurring impact of this permanent non-deductible difference incurred causes the Company’s tax rate to increase as its pre-tax earnings or loss approaches zero. Generally, as pre-tax income increases, the impact of the driver per diem program on effective tax rate decreases, because aggregate per diem pay becomes smaller in relation to pre-tax income, while in periods where earnings are at or near breakeven the impact of the per diem program on the Company’s effective tax rate is more significant. Because the Company continued to incur losses during the three month period ended September 30, 2016, the estimated provision calculation was updated to reflect the impact of the non-deductible expenses on the effective tax rate. This resulted in a reduction to the effective tax rate during the three months ended September 30, 2016. Due to the effect of the non-deductible per diem payments, the Company’s tax rate will fluctuate in future periods based on fluctuations in earnings and in the number of drivers who elect to participate in the per diem program.

When the result of the expected annual effective tax rate is not deemed reliable, as was the case for the second and third quarters of 2016, and distorts the income tax provision for an interim period, the Company calculates the income tax provision or benefit using the cut-off method which results in an income tax provision or benefit based solely on the year-to-date pretax income or loss as adjusted for permanent differences on a pro rata basis.

Liquidity and Capital Resources

The Company’s business has required, and will continue to require, significant investments. In the Company’s Trucking segment, where capital investments are substantial, the primary investments are in new tractors and trailers and to a lesser extent, in technology and working capital. In the Company’s USAT Logistics business, where the required level of capital investment is modest in relation to that which is required in the Company’s Trucking segment, the primary investments are in technology and working capital. The Company’s primary sources of liquidity have been funds provided by operations, borrowings under the Company’s Credit Facility, sales of used revenue equipment and, to a lesser extent, capital and operating leases. Based on expected financial conditions, net capital expenditures, results of operations and related net cash flows and other sources of financing, management believes the Company’s sources of liquidity to be adequate to meet current and projected needs.

Debt and capital leases increased during the third quarter by $18.6 million, sequentially to $151.1 million. Net of cash, debt represented 70.8% of total capitalization. The Company had approximately $51.0 million available under the Credit Facility as of September 30, 2016. Fluctuations in the outstanding balance and related availability under the Credit Facility are driven primarily by cash flows from operations and the timing and nature of property and equipment additions that are not funded through other sources of financing, as well as the nature and timing of receipt of proceeds from disposals of property and equipment.

The Company may alter its levels of capital expenditures based on operating performance. Should capital expenditures be decreased for tractors and trailers, the Company would expect the average age of the equipment in the fleet to increase.

Cash Flows

	Nine Months Ended September 30,
(in thousands)	2016			2015
Net cash provided by operating activities	$	25,162		$	58,786
Net cash used in investing activities		(39,871	)		(5,813	)
Net cash provided by (used in) financing activities		14,764			(51,046	)

Operating Activities – Cash generated from operations decreased $33.6 million in the first nine months of 2016, compared to the same period in 2015. This decrease was primarily due to a decrease of $18.7 million in operating income, as well as an increase in days sales outstanding resulting from a change in terms for a large customer during the year.

Investing Activities – For the nine months ended September 30, 2016, net cash used in investing activities was $39.9 million, compared to $5.8 million during the same period in 2015. The $34.1 million increase in cash used in investing activities primarily reflects a $17.4 million increase in capital expenditures and an $8.6 million decrease in proceeds from sale of property and equipment.

Financing Activities – Cash provided by financing activities was $14.8 million for the first nine months of 2016, compared to $51.0 million used in financing activities during the same period in 2015. At September 30, 2016, the Company had borrowings of long-term debt, financing notes and capital leases of $151.1 million, and during the nine months ended September 30, 2016 repurchased approximately 1.6 million shares for $28.4 million.

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Debt and Capitalized Lease Obligations

See notes 7 and 8 of the footnotes to the Company’s condensed consolidated financial statements included in Part I, Item 1, in this Form 10-Q for further discussion of the revolving Credit Facility and capital lease obligations.

Off-Balance Sheet Arrangements

Operating leases have been an important source of financing for equipment used by operations, office equipment and certain facilities. As of September 30, 2016, the Company leased certain revenue equipment and information technology software under operating leases. Assets held under operating leases are not carried on the condensed consolidated balance sheets, and lease payments with regard to such assets are reflected in the condensed consolidated statements of operations and comprehensive (loss) income in the “Equipment rent” and, for office equipment, in the “Operations and maintenance” line items. Equipment rent related to the Company’s revenue equipment operating leases was $1.9 million and $1.1 million for the three months ended September 30, 2016 and 2015, respectively, and was $5.6 million and $2.7 million for the nine months ended September 30, 2016 and 2015, respectively.

Rent expense related to the other equipment and facilities leases was $0.4 million and $0.6 million for the three months ended September 30, 2016 and 2015, respectively, and was $1.6 million and $1.8 million for the nine months ended September 30, 2016 and 2015, respectively. Other than such operating leases, the Company has no other off-balance sheet arrangements that have or are reasonably likely to have a material effect on the condensed consolidated financial statements.

The following table represents outstanding contractual obligations for rental expense under operating leases as of September 30, 2016 (in thousands):

	Payments Due By Period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Facilities	$	1,637	$	456	$	601	$	339	$	241
Computer hardware rented		411		235		176		--		--
Revenue equipment		23,937		7,443		12,686		3,808		--
Total rental obligations	$	25,985	$	8,134	$	13,463	$	4,147	$	241

Seasonality

In the trucking industry, revenue typically follows a seasonal pattern for various commodities and customer businesses. Peak freight demand has historically occurred in the months of September, October and November. After the December holiday season and during the remaining winter months, freight volumes are typically lower as many customers reduce shipment levels. Operating expenses have historically been higher in the winter months due primarily to decreased fuel efficiency, increased cold weather-related maintenance costs of revenue equipment and increased insurance and claims costs attributed to adverse winter weather conditions. The Company attempts to minimize the impact of seasonality through its diverse customer solutions offerings by seeking additional freight from certain customers during traditionally slower shipping periods and focusing on transporting consumer nondurable products. Revenue can also be impacted by weather, holidays and the number of business days that occur during a given period, as revenue is directly related to the available working days of shippers.

Inflation

Most of the Company’s operating expenses are inflation sensitive, and as such, are not always able to be offset through increases in revenue per mile and cost control efforts. The effect of inflation-driven cost increases on overall operating costs is not expected to be greater for the Company than for its competitors.

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Fuel Availability and Cost

The trucking industry is dependent upon the availability of fuel. In the past, fuel shortages or increases in fuel taxes or fuel costs have adversely affected profitability and may continue to do so. The Company has not experienced difficulty in maintaining necessary fuel supplies, and in the past has generally been able to partially offset increases in fuel costs and fuel taxes through increased freight rates and through a fuel surcharge that increases incrementally as the price of fuel increases above an agreed upon baseline price per gallon. Typically, the Company is not able to fully recover increases in fuel prices through rate increases and fuel surcharges, primarily because those items cannot be recovered with respect to empty and out-of-route miles, for which the Company generally does not receive compensation from customers. Additionally, most fuel surcharges are based on the average fuel price as published by the DOE for the week prior to the shipment, meaning the Company typically bills customers in the current week based on the previous week’s applicable index. Accordingly, in times of increasing fuel prices, the Company does not recover as much as it is currently paying for fuel. In periods of declining prices, the inverse is true. Overall, the market fuel prices per gallon were approximately 9.4% lower during third quarter of 2016 than they were in the same period in 2015, as reported by the DOE.

As of September 30, 2016, the Company did not have any long-term fuel purchase contracts, and has not entered into any hedging arrangements.

Equity

As of September 30, 2016, the Company had stockholders’ equity of $62.1 million and total debt and capital leases including current maturities, of $151.1 million, resulting in a total debt, less cash, to total capitalization ratio of 70.8% compared to 51.9% as of December 31, 2015.

Purchases and Commitments

The Company routinely monitors equipment acquisition needs and adjusts purchase schedules from time to time based on analysis of factors such as new equipment prices, the condition of the used equipment market, demand for freight services, prevailing interest rates, technological improvements, fuel efficiency, equipment durability, equipment specifications, operating performance and the availability of qualified drivers.

As of September 30, 2016, the Company had $5.5 million in commitments for the acquisition of revenue equipment.

During the nine months ended September 30, 2016, the Company received proceeds from the sale of property and equipment of approximately $22.6 million and purchased approximately $62.4 million of property and equipment.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. USA Truck bases its assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time its consolidated financial statements are prepared. Actual results could differ from those estimates, and such differences could be material. During the three months ended September 30, 2016, there were no material changes to the Company’s critical accounting policies and estimates, compared to those disclosed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

The Company experiences various market risks, including changes in interest rates and commodity prices. Because the Company’s operations are largely confined to the U.S., the Company is not subject to a material amount of foreign currency risk.

Interest Rate Risk. The Company is exposed to interest rate risk primarily from its Credit Facility. The Company’s Credit Facility bears variable interest based on the type of borrowing and on the Agent’s prime rate or the London Interbank Offered Rate (“LIBOR”) plus a certain percentage determined based on a pricing grid dependent upon certain financial ratios. As of September 30, 2016, the Company had $99.7 million outstanding pursuant to its Credit Facility, excluding letters of credit of $4.3 million. Assuming the outstanding balance as of September 30, 2016 remained constant; a hypothetical one-percentage point increase in interest rates applicable to its Credit Facility would increase the Company’s interest expense over a one-year period by approximately $1.0 million.

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Commodity Price Risk. The Company is subject to commodity price risk with respect to purchases of fuel. In recent years, fuel prices have fluctuated greatly and have generally increased, although recently the Company has seen a significant decrease. In some periods, the Company’s operating performance was adversely affected because it was not able to fully offset the impact of higher diesel fuel prices through increased freight rates and fuel surcharge revenue recoveries. Management cannot predict how fuel price levels will continue to fluctuate in the future or the extent to which fuel surcharge revenue recoveries could be collected to offset any increases. As of September 30, 2016, the Company did not have any derivative financial instruments to reduce its exposure to fuel price fluctuations, but may use such instruments in the future. Accordingly, volatile fuel prices may continue to impact the Company significantly. A significant increase in fuel costs, or a shortage of diesel fuel, could materially and adversely affect the Company’s results of operations. Further, higher fuel costs could contribute to driver shortages in the trucking industry generally by forcing independent contractors to cease operations. Based on the Company’s expected fuel consumption for the remainder of 2016, a 10% increase in the average price per gallon would result in a $1.1 million increase in fuel expense.

ITEM 4.

CONTROLS AND PROCEDURES

The Company has established controls and procedures that are designed to ensure that relevant material information, including information pertaining to any consolidated subsidiaries, is made known to the officers who certify the financial reports and to other members of senior management and the Board of Directors. Management, with the participation of the Principal Executive Officer (the “PEO”) and Principal Financial Officer (the “PFO”), conducted an evaluation of the effectiveness of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, as of September 30, 2016 the PEO and PFO have concluded that the Company’s disclosure controls and procedures are effective at a reasonable assurance level to ensure that the information required to be disclosed in the reports filed or submitted by the Company under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) accumulated and communicated to management, including the PEO and PFO, as appropriate to allow timely decisions regarding required disclosure.

There has been no change in the Company’s internal control over financial reporting that occurred during the quarter ended September 30, 2016 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management has confidence in the Company’s internal controls and procedures. Nevertheless, management, including the PEO and PFO, does not expect that the disclosure procedures and controls or the internal controls will prevent all errors or intentional fraud. An internal controls system, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of such internal controls are met. Further, the design of an internal controls system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all internal controls systems, no evaluation of controls can provide absolute assurance that all controls issues and instances of fraud, if any, have been, or will be, detected.

PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

The Company is party to routine litigation incidental to its business, primarily involving claims for personal injury and property damage incurred in the transportation of freight. The Company maintains insurance to cover liabilities in excess of certain self-insured retention levels. Though management believes these claims to be immaterial to the Company’s long-term financial position, adverse results of one or more of these claims could have a material adverse effect on the financial position or results of operations in any given reporting period.

ITEM 1A.

RISK FACTORS

While the Company attempts to identify, manage, and mitigate risks and uncertainties associated with its business, some level of risk and uncertainty will always be present. The Company’s Form 10-K for the year ended December 31, 2015, and its Forms 10-Q for the quarters ended March 31, 2016 and June 30, 2016, in the sections entitled Item 1A. Risk Factors, describe some of the risks and uncertainties associated with the business. These risks and uncertainties have the potential to materially affect the Company’s business, financial condition, results of operations, cash flows, projected results, and future prospects.

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Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The table below sets forth the information with respect to purchases of the Company’s common stock made by or on behalf of USA Truck during the three months ended September 30, 2016:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1-31 2016		278,844	$	18.73		278,844		603,843
August 1-31, 2016		140,830		16.59		140,830		463,013
September 1-30, 2016		--		--		--		--
Total		419,674	$	18.02		419,674		463,013

(1)

Share repurchase program authorized by the Company’s board of directors during January 2016. See Note 4 to the Company’s condensed consolidated financial statements included in Part I, Item I, in this Form 10-Q for further discussion of the share repurchase program.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

None.

ITEM 5.

OTHER INFORMATION

None.

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Item 6.

EXHIBITS

Exhibit Number			Exhibit
3.1			Restated and Amended Certificate of Incorporation of the Company as currently in effect, including all Certificates of Amendment thereto (incorporated by reference to Exhibit 3.1 to the Company’s quarterly report for the quarter ended September 30, 2013).
3.2			Amended Bylaws of the Company as currently in effect (incorporated by reference to Exhibit 3.2 to the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2011).
4.1			Specimen certificate evidencing shares of the common stock, $.01 par value, of the Company (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1, Registration No. 33-45682, filed with the Securities and Exchange Commission on February 13, 1992).
10.1	*#		Executive Severance and Change of Control Agreement between the Company and Joseph M. Kaiser.
10.2	*#		Form of Restricted Stock Award Notice
31.1	#		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	#		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	##		Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	##		Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS			XBRL Instance Document.
101.SCH			XBRL Taxonomy Extension Schema Document.
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB			XBRL Taxonomy Extension Label Linkbase Document.
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document.

References:
*		Management contract or compensatory plan, contract or arrangement.
#		Filed herewith.
##		Furnished herewith.

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SIGNATURES

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

			USA Truck, Inc.
			(Registrant)


Date:	November 9, 2016	By:	/s/ John R. Rogers
			(Signature) John R. Rogers
			Executive President and Chief Executive Officer


Date:	November 9, 2016	By:	/s/ Joseph M. Kaiser
			(Signature) Joseph M. Kaiser
			Principal Accounting Officer

Exhibit 10.1

EXECUTIVE SEVERANCE AND CHANGE IN CONTROL AGREEMENT

This Executive Severance and Change in Control Agreement (this “Agreement”), dated as of August 3, 2016, is made by and between USA Truck, Inc., a Delaware corporation (as hereinafter defined, the “Company”), and Joseph Kaiser, Vice President, Chief Accounting Officer, and Principal Financial Officer of the Company (as hereinafter defined, the “Executive”).

WHEREAS, the Company and the Executive have entered into that Employment Letter Agreement by and between the Company and the Executive dated June 12, 2014 (the "Employment Letter Agreement");

WHEREAS, the Company and the Executive have entered into that Noncompete and Confidentiality Agreement by and between the Company and the Executive dated July 14, 2014, attached hereto as Exhibit A (the "Noncompete and Confidentiality Agreement"), which the Executive agreed to in connection with of his employment with the Company and which the Executive is agreeing to now for the additional severance benefits provided herein;

WHEREAS, in recognition that the services of the Executive are integral to the success of the operations of the Company, the Executive should remain focused on execution of his responsibilities without fear of unwarranted termination of his employment or the possibility of a Change in Control (as hereinafter defined) of the Company, and that either of such circumstances, and the uncertainty it may cause, may result in the departure or distraction of key management employees of the Company to the detriment of the Company and its stockholders;

WHEREAS, the Executive is a key management employee of the Company, and the Board of Directors of the Company (the “Board”) through its Executive Compensation Committee (the “Committee”) has determined that the Company should encourage the continued employment of the Executive by the Company and the continued dedication of the Executive to his assigned duties without distraction as a result of the circumstances set forth above; and

WHEREAS, the Company and the Executive desire to set forth the circumstances under which the Executive may receive payments under this Agreement.

NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows:

1. Defined Terms.

For purposes of this Agreement, the following terms shall have the meanings indicated below:

(A) “Annual Base Salary” shall mean the annual base salary of the Executive, specifically excluding any additional compensation approved by the Committee on August 3, 2016, for Executive's role as Principal Financial Officer.

(A) “Board” shall mean the Board of Directors of the Company, as constituted from time to time.

(B) “Cause” for termination by the Company of the Executive’s employment shall mean (i) the willful violation of Company policy or willful failure by the Executive to substantially perform the Executive’s duties with the Company, other than any failure resulting from the Executive’s incapacity due to physical or mental illness, that continues for at least 30 days after the Board delivers to the Executive a written demand for performance that identifies in reasonable detail the manner in which the Board believes that the Executive willfully has failed substantially to perform the Executive’s duties; (ii) the willful violation of any law, rule or regulation applicable to the Company’s business operations; (iii) the willful engaging by the Executive in misconduct that is demonstrably and materially injurious to the Company, from a monetary or reputational standpoint; (iv) a material violation by the Executive of the corporate governance guidelines, code of ethics, insider trading policy, or other governance policy of the Company; (v) a material violation by the Executive of the requirements of the Sarbanes-Oxley Act of 2002 or other federal or state securities law, rule, or regulation; (vi) a material breach by the Executive of any of the covenants contained in Sections 14, 15, and 16 of this Agreement; or (vii) the repeated use of alcohol by the Executive that materially interferes with the Executive's duties, the use of illegal drugs by the Executive, or a violation by the Executive of the drug and/or alcohol policies of the Company. For purposes of this definition following a Change in Control, no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company.

(i) Any “Person” as defined in Section 3(a)(9) of the Exchange Act, and as used in Section 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) of the Exchange Act (but excluding the Company and any employee benefit plan sponsored or maintained by the Company (including any trustee of such plan acting as trustee)), directly or indirectly, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities (other than indirectly as a result of the Company’s redemption of its own securities); or

(ii) The consummation of any merger or other business combination of the Company, a sale of more than 50% of the Company’s assets, the liquidation or dissolution of the Company or any combination of one or more of the foregoing transactions (the “Transactions”) other than a Transaction immediately following which either (x) the stockholders of the Company and any trustee or fiduciary of any Company employee benefit plan immediately prior to the Transaction own more than 50% of the voting power, directly or indirectly, of (A) the surviving corporation in any such merger or other business combination; (B) the purchaser of or successor to the Company’s assets; (C) both the surviving corporation and the purchaser in the event of any combination of Transactions; or (D) the parent company owning 100% of such surviving corporation, purchaser or both the surviving corporation and the purchaser, as the case may be ((A), (B), (C) or (D), as applicable, the “Surviving Entity”) or (y) the Incumbent Directors, as defined below, shall continue to serve as a majority of the board of directors of the Surviving Entity without an agreement or understanding that such Incumbent Directors will later surrender such majority; or

(iii) Within any twenty-four (24)-month period, the individuals who were directors immediately before the beginning of such period (the “Incumbent Directors”) shall cease (for any reason other than death) to constitute at least a majority of the Board or the board of directors of any successor to the Company, including any Surviving Entity. For this purpose, any director who was not a director at the beginning of such period shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of, or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors (so long as such director was not nominated by a Person who commenced or threatened to commence an election contest or proxy solicitation by or on behalf of a Person (other than the Board) or who has entered into an agreement to effect a Change in Control or expressed an intention to cause such a Change in Control).

(D) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

(E) “Company” shall mean USA Truck, Inc. and any successor to its business or assets, by operation of law or otherwise.

(F) “Constructive Termination” shall mean the occurrence of any of the following, without the Executive’s express written consent, at any time within twelve (12) months following a Change in Control:

(i) material diminution in the overall scope of the Executive’s duties, authorities and responsibilities from those held by the Executive immediately prior to the time of a Change in Control; provided, that the expiration of the Executive's position as Principal Financial Officer, if any, shall not be considered a material diminution in the overall scope of the Executive's duties, authorities, and responsibilities;

(ii) geographic relocation of the Executive’s assigned principal business location to a location greater than forty (40) miles from the place of the Executive’s principal business location immediately prior to the time of a Change in Control; or

(iii) diminution by ten percent (10%) or more of the Executive’s Annual Base Salary or target bonus in effect immediately prior to the time of a Change in Control.

(G) “Date of Termination” shall have the meaning stated in Paragraph (B) of Section 5 hereof.

(H) “Disability” shall mean a medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Executive to be unable to perform the duties of his or her position of employment or any substantially similar position of employment.

(I) “Executive” shall mean the individual named in the first paragraph of this Agreement.

(J) “Incumbent Directors” shall mean directors who were directors of the Company as of the date hereof or who are appointed, elected or nominated to the Board in accordance with the following sentence. It is understood that any individual becoming a member of the Board subsequent to the date hereof whose appointment was approved by a vote of at least a two-thirds majority of the Continuing Directors remaining in office at the time of appointment or whose election or nomination for election by the Company’s stockholders was approved by a vote of at least a two-thirds majority of the Continuing Directors remaining in office at the time of election or nomination shall be considered, for purposes of this Agreement, as though such individual were a Continuing Director on the date hereof.

(K) “Notice of Termination” shall have the meaning stated in Paragraph (A) of Section 5 hereof.

(L) “Payment Trigger” shall mean any of the following that occurs during the term of this Agreement:

(i) termination of the Executive’s employment by the Company without Cause, at any time other than within twelve (12) months following a Change in Control, and other than as a result of the Executive’s Disability; or

(ii) Constructive Termination of the Executive while the Executive remains employed by the Company or its successor, or termination of the Executive’s employment by the Company without Cause within twelve (12) months following a Change in Control occurring during the term of this Agreement.

For the avoidance of doubt, a termination of the Executive by the Company for Disability shall not be deemed a termination of the Executive without Cause.

(M) “Person” shall have the meaning given in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended from time to time, as modified and used in Sections 13(d) and 14(d) thereof; except that, a Person shall not include (i) the Company, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or (iii) an underwriter temporarily holding securities pursuant to an offering of such securities.

2. Term of Agreement.

This Agreement shall be effective as of the date set forth in the first paragraph of this Agreement and shall continue in effect until the earliest of (i) a Date of Termination in accordance with Section 5 or the death of the Executive, or (ii) if a Payment Trigger occurs during the term of this Agreement under subparagraphs (i) or (ii) of Paragraph (L) of Section 1, the performance by the Company of all its obligations and the satisfaction by the Company of all its liabilities under this Agreement.

3. General Provisions.

(A) The Company hereby represents and warrants to the Executive that the execution and delivery of this Agreement and the performance by the Company of the actions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company. This Agreement is a legal, valid and legally binding obligation of the Company enforceable in accordance with its terms.

(B) No amount or benefit shall be payable under this Agreement unless there shall have occurred a Payment Trigger during the term of this Agreement.

(C) This Agreement, the Employment Letter Agreement, and the Noncompete and Confidentiality Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company. Notwithstanding the immediately preceding sentence or any other provision of this Agreement, any purported termination of the Executive’s employment that is not effected in accordance with a Notice of Termination satisfying Paragraph (A) of Section 5 shall not be effective for purposes of this Agreement. The Executive’s continued employment for any period of time after a Payment Trigger, up to the maximum time specified in Paragraph (B) of Section 5, shall not constitute a waiver of the Executive’s rights with respect to any payment obligations of the Company under this Agreement. The waiver by the Executive of any particular event meeting the definition of or constituting a Constructive Termination shall not operate as a waiver by the Executive of any benefits or rights under this Agreement should any subsequent event or circumstance occur that constitutes a Constructive Termination under this Agreement.

4. Payments Due Upon a Payment Trigger.

(A) The Company shall pay to the Executive the payments described in this Section 4 upon the occurrence of a Payment Trigger during the term of this Agreement.

(B) (i) Upon the occurrence of a Payment Trigger during the term of this Agreement arising by reason of the circumstances described in subparagraph (i) of Paragraph (L) of Section 1:

(a) the Company shall pay the Executive monthly payments, in cash, equal to one-twelfth (1/12) of the Executive’s Annual Base Salary in effect immediately prior to the Payment Trigger, on or as near as practicable to the same date in each month as monthly installments (each of which shall be considered a separate "payment" for purposes of Code Section 409A, as defined in Section 23) of the Annual Base Salary were made to the Executive prior to the occurrence of the Payment Trigger, for a period of twelve (12) months following the occurrence of the Payment Trigger;

(b) the Company shall pay to the Executive a lump sum amount, in cash, equal to the target amount of any short term cash incentive compensation that would have been awarded to and earned by the Executive under any incentive compensation plan for the fiscal year of the Payment Trigger, assuming all performance and other vesting criteria were satisfied for such year; and

(c) the Company shall pay the Executive any other amounts (other than any unearned, pro-rated, or other payment of short term cash incentive compensation) that may be due the Executive under any employee welfare, benefit, equity, or long term incentive plan then in effect to the extent the Executive is an eligible participant, subject to and upon the terms and conditions set forth in any such plan.

(ii) Upon the occurrence of a Payment Trigger during the term of this Agreement arising by reason of the circumstances described in subparagraph (ii) of Paragraph (L) of Section 1:

(a) the Company shall pay the Executive a lump sum payment, in cash, equal to the sum of one hundred fifty percent (150%) of the Executive’s Annual Base Salary in effect immediately prior to the Payment Trigger provided that if the Change in Control does not constitute a change in control event as defined in Code Section 409A then the portion of the lump sum payment, if any, that is considered deferred compensation subject to Code Section 409A shall be paid in installments as described in Section 4(B)(i)(a);

(b) the Company shall pay the Executive the amount, if any, set forth on the signature page of this Agreement and identified as relocation services benefit, to defray the Executive's costs of relocation services;

(c) the Company shall pay to the Executive a lump sum amount, in cash, equal to one hundred fifty percent (150%) of the target amount of any short term incentive cash compensation that would have been paid to the Executive for the fiscal year of the Payment Trigger, assuming all performance and other vesting criteria were satisfied for such year;

(d) the Company shall reimburse, on an after-tax basis, any premiums paid by the Executive pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), during a period of eighteen (18) months following the Date of Termination; and

(e) the Company shall pay the Executive any other amounts (other than any unearned, pro-rated, or other payment of short term cash incentive compensation) that may be due the Executive under any employee welfare, benefit, equity, or long term incentive plan then in effect to the extent the Executive is an eligible participant, subject to and upon the terms and conditions set forth in any such plan.

(C) Notwithstanding any provision of any incentive compensation plan, and in addition to any payments under Paragraph (B) hereof, the Company shall pay to the Executive a lump sum amount, in cash, equal to the amount of any incentive compensation that has been awarded to and earned by the Executive under any incentive compensation plan for a completed fiscal year preceding the occurrence of a Payment Trigger but that has not yet been paid to the Executive.

(D) The payments provided for in subparagraph (ii)(a) of Paragraph (B) and, if applicable, Paragraph (C) of this Section 4 shall be made within two (2) business days following the Date of Termination, or such later required date as may be prescribed, allowing for applicable waiting periods, under the terms of the General Release (hereafter defined), unless the amounts of such payments cannot be finally determined on or before that date, in which case, the Company shall pay to the Executive on that date an estimate, as reasonably determined in good faith by the Company, of the minimum amount of the payments to which the Executive is clearly entitled and shall pay the remainder of the payments within five (5) business days following the final determination of such amounts due to the Executive under this Agreement.

(E) As a condition to the receipt of the severance and other payment benefits described in this Agreement, the Executive shall execute and comply with the terms of a general release of all claims (the “General Release”) against the Company, its affiliates and representatives, in the form attached hereto as Exhibit B, as updated by the Company for any change in laws. The General Release must be signed, and the period provided therein for revocation must have expired, not later than sixty days from the Date of Termination. No severance benefits or other payment benefits shall be paid until the General Release is signed and the revocation period has expired, and any amounts that would otherwise have been paid prior to such date shall be paid as soon as practicable after such date, without interest. Notwithstanding the foregoing, if the sixty day period after the Date of Termination ends in the calendar year following the year that includes the Date of Termination, no such amount that is subject to Code Section 409A shall be paid sooner than the first day of the year following the year that includes the Date of Termination, regardless of when the General Release is signed.

5. Termination Procedures.

(A) During the term of this Agreement, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 11 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice that indicates the specific termination provision in this Agreement relied upon, and, if applicable, the notice shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated. Further, a Notice of Termination for Cause shall include a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board that was called and held for the purpose of considering the termination finding that, in the informed, reasonable, good faith judgment of the Board, the Executive was guilty of conduct set forth in the definition of Cause in Paragraph (B) of Section 1, and specifying the particulars thereof in reasonable detail. A Notice of Termination by the Employee in the case of a Constructive Termination shall specify in reasonable detail the event or circumstance constituting the Constructive Termination under Paragraph (F) of Section 1 of this Agreement. Such notice of Constructive Termination must be provided by the Executive to the Company within sixty (60) days of the initial existence of the condition giving rise to the Constructive Termination.

(B) “Date of Termination” with respect to any purported termination of the Executive’s employment during the term of this Agreement (other than by reason of death) shall mean:

(i) if the Executive’s employment is terminated by the Company for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive’s duties during that thirty (30) day period);

(ii) if the Executive’s employment is terminated by the Company for any other reason except in the case of a termination for Cause, up to thirty (30) days, at the Company's discretion, after Notice of Termination is given;

(iii) if the Executive’s employment is terminated by the Company for Cause, the date specified in the Notice of Termination; and

(iv) in the case of termination by the Executive (including a Constructive Termination following a Change in Control), thirty (30) days after the date such Notice of Termination is given; provided, in the case of a Constructive Termination, the Notice of Termination contemplated by Paragraph (A) of this Section 5 shall be deemed cancelled, void and of no further force and effect, and no payment obligation of the Company shall arise therefrom, if the Company rescinds or otherwise eliminates or reverses the action or event that would otherwise constitute grounds for Constructive Termination, and so notifies the Executive in writing within thirty (30) days of its receipt of the notice of Constructive Termination. The rescission, elimination or reversal of any such action or event constituting a Constructive Termination shall not operate to release or discharge the Company from any other liability or obligation under this Agreement, including any liability or obligation arising from any subsequent action or event that constitutes a Constructive Termination.

6. No Mitigation; No Setoff.

The Executive shall not be required to mitigate the amount of any benefits the Company becomes obligated to provide to the Executive in connection with this Agreement by seeking other employment or otherwise. The benefits to be provided to the Executive in connection with this Agreement may not be reduced, setoff or subject to recovery by the Company by any benefits the Executive may receive from other employment, from retirement benefits or otherwise. Further, the amount of any payment or benefit provided for in this Agreement shall not be setoff against any amount claimed to be owed by the Executive to the Company, or otherwise, except for a violation of Section 14, 15, or 16.

7. Disputes.

(A) If a dispute or controversy arises out of or in connection with this Agreement, the parties shall first attempt in good faith to settle the dispute or controversy by mediation under the Commercial Mediation Rules of the American Arbitration Association before resorting to arbitration or litigation. Thereafter, any remaining unresolved dispute or controversy arising out of or in connection with this Agreement may be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association in a city located within Crawford or Sebastian County, Arkansas. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The Executive shall, however, be entitled to seek specific performance of the Company’s obligations hereunder during the pendency of any dispute or controversy arising under or in connection with this Agreement.

(B) Any legal action concerning this Agreement, other than a mediation or an arbitration described in Paragraph (A) of this Section 7, whether instituted by the Company or the Executive, shall be brought and resolved only in a state or federal court of competent jurisdiction located in Crawford County, Arkansas or the Fort Smith Division of the Western District of Arkansas. The parties hereby irrevocably consent and submit to and shall take any action necessary to subject themselves to the personal jurisdiction of any such court and hereby irrevocably agree that all claims in respect of the action shall be instituted, heard, and determined in such court. The parties agree that such court is a convenient forum, and hereby irrevocably waive, to the fullest extent they may effectively do so, the defense of an inconvenient forum to the maintenance of the action. Any final judgment in the action may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

(C) The Company shall pay all costs and expenses, including attorneys’ fees and disbursements, of the Company and the Executive in connection with any legal proceeding (including arbitration), whether or not instituted by the Company or the Executive, relating to the interpretation or enforcement of any provision of this Agreement, that is resolved in favor of the Executive pursuant to a final, unappealable judgment. The Executive shall pay all costs and expenses, including attorneys’ fees and disbursements, of the Company and the Executive in connection with any legal proceeding (including arbitration), whether or not instituted by the Company or the Executive, relating to the interpretation or enforcement of any provision of this Agreement, that is resolved in favor of the Company pursuant to a final, unappealable judgment. The non-prevailing party, as set forth above, shall pay prejudgment interest on any money judgment obtained by the prevailing party as a result of such proceeding, calculated at the rate provided in Section 1274(b)(2)(B) of the Code.

8. Successors; Binding Agreement.

(A) In addition to any obligations imposed by law upon any successor to the Company, the Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise, and whether or not such a transaction constitutes a Change in Control) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain the assumption and agreement prior to the effectiveness of any succession shall be a breach of this Agreement for which the Executive shall have any and all of the remedies available to him under this Agreement. The provisions of this Section 8 shall continue to apply to each subsequent employer of the Executive bound by this Agreement in the event of any merger, consolidation, or transfer of all or substantially all of the business or assets of that subsequent employer, whether or not that transaction constitutes a Change in Control.

(B) This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If the Executive shall die while any amount would be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, the amount, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives, or administrators of the Executive’s estate.

9. Effect on Prior Agreements.

This Agreement contains the complete, final, and exclusive embodiment of the agreement and understanding among the parties hereto regarding severance, change in control, or similar payments to the Executive and supersedes in all respects any prior or other agreement or understanding, written or oral, among the parties with respect to the subject matter of this Agreement, including, but not limited to, Change in Control Severance Agreements, the Employment Letter Agreement, including, without limitation, the sections titled "Separation of Employment Apart from a Change in Control" and "Separation of Employment After a Change in Control" therein, the Noncompete and Confidentiality Agreement, employment agreements or company policies, or other agreements or arrangements with respect to severance, change in control, or similar payments.

10. Exclusive Remedy.

In the event of a Payment Trigger, the provisions of Section 4 are intended to be and are exclusive and in lieu of any other rights or remedies to which the Executive or the Company may otherwise be entitled (including any contrary provisions in any written or oral employment agreement or arrangement the Executive may have with the Company), whether at law, tort or contract, in equity, or under this Agreement. The Executive shall not be entitled to any severance or Change in Control benefits or rights upon a Payment Trigger other than those benefits expressly set forth in Section 4.

11. Notices.

For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

To the Company:	USA Truck, Inc.
	3201 Industrial Park Road
	Van Buren, Arkansas 72956
	Attention: Chairman of the Board

To the Executive:	Joseph Kaiser

12. Miscellaneous.

No provision of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing and signed by the Executive and an officer of the Company specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. All references to sections of the Code shall be deemed also to refer to any successor provisions to such sections.

13. Governing Law.

The validity, interpretation, construction, and performance of this Agreement shall be governed by the internal, substantive laws of the State of Delaware, without giving effect to the law or principles of conflict of laws of any jurisdiction.

14. Obligation Not to Solicit and Compete.

The Executive previously entered into the Noncompete and Confidentiality Agreement in which the Executive agreed to certain restrictive covenants in Sections 2 and 3 thereof (the "Restrictive Covenants"). The purpose of this Section 14 is to modify and supersede the duration of the Restrictive Covenants, as set forth in Section 2 of Noncompete and Confidentiality Agreement, and to utilize the scope and other terms of the Restrictive Covenants as if they were fully set forth herein. The Executive hereby agrees that during his employment with the Company and for a period of twelve (12) months thereafter or, in the event of a Change in Control, eighteen (18) months thereafter (the applicable period being referred to herein as the "Restricted Period"), the Executive will comply with the Restrictive Covenants, as if the Restrictive Covenants were fully set forth herein; provided when there is no Payment Trigger, the Company must make monthly payments, in cash, equal to one-twelfth (1/12) of the Executive’s Annual Base Salary in effect immediately prior to termination, on or as near as practicable to the same date in each month as monthly installments of the Annual Base Salary were made to the Executive prior to termination, for such portion of the Restricted Period as the Company determines (the "Non-Compete Payments"), which benefits will commence when the General Release is signed and the revocation period has expired. The Company will give the Executive notice within ten (10) days following the Executive's termination if it elects to not make the Non-Compete Payments and, once Non-Compete Payments commence, the Company will give the Executive thirty (30) days' written notice before discontinuing the Non-Compete Payments. The provisions of Section 3 of the Noncompete and Confidentiality Agreement will automatically apply to the Executive regardless of whether there is a Payment Trigger and the scope and other terms, except for the duration, of Section 2 of the Noncompete and Confidentiality Agreement will automatically apply to the Executive if there is a Payment Trigger; the Executive acknowledging that he has received sufficient consideration for such covenants and further he agreed to such covenants at commencement of employment with the Company.

15. Confidentiality.

The Executive acknowledges that the requirements for confidentiality as set forth in the Noncompete and Confidentiality Agreement, including, without limitations, Sections 4 and 5 thereof, and the requirements for confidentiality as set forth in the Company handbook continue to apply to the Executive for the term provided therein.

16. Non-disparagement.

The Executive agrees that he will not make to any person or entity any false, disparaging, or derogatory comments about the Company or its affiliates, or their business affairs, directors, officers, employees, drivers, independent contractors, customers, or vendors.

17. Remedies

Upon breach of any of the covenants contained in Section 14, 15, or 16 of this Agreement, (a) the Company can and may take any and all actions available at law and in equity, including obtaining a restraining order or injunctive relief, (b) all compensation and benefits described in this Agreement will immediately cease, (c) the Executive will remain obligated to comply with the covenants in this Agreement, and (d) the periods set forth above in Sections 14 and 15 will be tolled during any period in which the Executive is in violation of such Section(s) so that the Company is provided with the full benefit of the Restricted Period.

18. Withholding.

All payments provided for hereunder will be subject to required withholding of federal, state and local income, excise, and employment-related taxes. If any such excise taxes would otherwise be imposed, the Company shall determine in good faith whether the Executive will either receive all of the benefits to which he is entitled under this Agreement, subject to the excise tax, or have his benefits under this Agreement reduced to a level at which the excise tax will not apply, depending upon which approach will provide the Executive with the greater net after-tax benefit.

19. Severability.

If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. If there is a conflict between a portion or provision of this Agreement and the Noncompete and Confidentiality Agreement or the Employment Letter Agreement, such portion or provision of this Agreement shall control

20. Counterparts.

This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

21. Payment; Assignment.

Benefits payable under this Agreement will be paid only from the general assets of the Company. No person has any right to or interest in any specific assets of the Company by reason of this Agreement, the Employment Letter Agreement, or the Noncompete and Confidentiality Agreement. To the extent benefits under this Agreement are not paid when due to any individual, he or she is a general unsecured creditor of the Company with respect to any amounts due. Benefits payable pursuant to this Agreement and the right to receive future benefits may not be anticipated, alienated, sold, transferred, assigned, pledged, encumbered, or subject to any charge.

22. Further Assurances.

The parties to this Agreement agree to perform, or cause to be performed, such further acts and deeds and to execute and deliver or cause to be executed and delivered, such additional or supplemental documents or instruments as may be reasonably required by the other party to carry into effect the intent and purpose of this Agreement.

23. Code Section 409A.

It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Code Section 409A (including the Treasury regulations and other published guidance relating thereto) (“Code Section 409A”) so as not to subject the Executive to payment of any additional tax, penalty or interest imposed under Code Section 409A. The provisions of this Agreement shall be construed and interpreted, and if necessary modified or reformed (including any modification or reformation regarding the timing and amount of any payment) to avoid the imputation of any such additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to the Executive. A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits that the Company determines may be considered nonqualified deferred compensation under Code Section 409A upon or following a termination of employment unless such termination is also a "separation from service" within the meaning of Code Section 409A, and, for purposes of any such provision of this Agreement, references to a "termination," "termination of employment" or like term, and the timing thereof, shall mean such a separation from service. Notwithstanding any other provision of this Agreement, in the event the Executive is a “specified employee” as defined in Code Section 409A on the date the Executive incurs a separation from service, as so defined, to the extent required by Code Section 409A, payments and benefits hereunder to which Code Section 409A would apply may not commence to the Executive until the earlier of the first day of the seventh month following the month that includes the Executive’s separation from service (as defined in Code Section 409A) or the date of the Executive’s death and any delayed payments and benefits shall be paid and provided in the aggregate, without interest, no later than ten (10) days following such date. For purposes of Code Section 409A, the Executive's right to receive the payments and benefits hereunder shall be treated as a right to receive a series of separate and distinct payments and benefits. Whenever a payment or benefit hereunder specifies a payment or benefit period with reference to a number of days, the actual date of payment or benefit within the specified period shall be within the sole discretion of the Company. In no event may the Executive, directly or indirectly, designate the calendar year of any payment to be made under this Plan, to the extent such payment is subject to Code Section 409A. The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Code Section 409A, but do not satisfy an exemption from, or the conditions of, Code Section 409A. Any terms of this Agreement that are undefined or ambiguous shall be interpreted by the Company in its discretion in a manner that complies with Code Section 409A to the extent necessary to comply therewith. If for any reason any provision of this Agreement does not accurately reflect its intended establishment of an exemption from or compliance with Code Section 409A, as demonstrated by consistent interpretations or other evidence of intent, such provision shall be considered ambiguous as to its exemption from or compliance with Code Section 409A and shall be interpreted by the Company in a manner consistent with such intent, as determined in the discretion of the Company.

[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]

IN WITNESS WHEREOF, the parties have signed this Agreement as of the date set forth above.

USA TRUCK, INC.

By:
Name:
Title:



Joseph Kaiser


Signature

$30,000
Amount of Relocation services Benefit

Exhibit A

Noncompete and Confidentiality Agreement

THIS NONCOMPETE AGREEMENT (the "Agreement") is entered into, to be effective as of the 14^th day of July 2014, between USA Truck, Inc., ("the Company"), a Delaware corporation and Joseph Kaiser ("Employee").

RECITALS:

In consideration of the mutual promises, undertakings and agreements herein contained and for other good and valuable consideration including, but not limited to, the Company's agreement to employ Employee or to continue Employee in his/her employment, as the case maybe, subject to all other terms and conditions of Employee's at will employment, and Employee's acceptance or continuance of employment, the Company and Employee agree as follows:

Employment. The parties hereto acknowledge and agree that the Employee's employment by the Company is an "at will" employment and nothing in this Agreement shall in any way limit the Company's ability to terminate Employee with or without cause.

Non-Compete Agreement. If employee is a new employee, then as a condition of his/her employment, or if the employee is an existing employee, then as a condition of his/her continued employment, Employee agrees and promises that during the term of his/her employment by the Company and for a period of one (1) year after the voluntary or involuntary termination of his/her employment with the Company, Employee will not:

accept employment from any business which performs services for customers whose accounts Employee serviced or about which Employee learned specific account information during Employee's employment with the Company;

accept employment that would utilize information about accounts Employee serviced or about which Employee learned specific account information during his/her employment with the Company;

use confidential, proprietary or account specific information acquired during his/her employment with the Company to compete in any manner, either directly or indirectly, with the Company;

solicit, induce, or attempt to induce any past or current customer of the Company with whom the Company did any business or for which it performed services at any time during Employee's employment with the Company to either (1) cease doing business in whole or in part with or through the Company, or (2) to do business with any other person, firm, partnership, corporation, or other entity which performs services materially similar to or competitive with those provided by the Company;●or

serve in any position or capacity in which Employee may inevitably disclose, utilize or consider confidential information Employee acquired during his/her employment with the Company.

The "confidential" and "proprietary" information of the Company as used in this paragraph 2 is information falling within the description of "proprietary and confidential information" in paragraph 4 of this Agreement.

The term "services" as used in this paragraph 2 means any services provided to customers by the Company, including but not limited to freight brokerage and freight hauling services.

Non-Solicitation of Employees. For a period of one (1) year after termination of Employee's employment with the Company, Employee shall not, directly or indirectly, induce or influence or attempt to induce or influence any person who is engaged as an employee, agent, independent contractor or otherwise by the Company to terminate his or her employment or engagement with the Company.

Proprietary and Confidential Information. The parties hereto acknowledge and agree that proprietary and confidential information means information or material which is not generally available to or used by others outside the Company or the utility or value of which is not generally known or recognized as standard practice, whether or not the underlying details are in the public domain. Information and material which is considered proprietary and confidential by the Company includes, but is not limited to, the following:

customer lists and information, specific price and rate information or models, the content of any Company contract or documents, profits earned by the Company on its customer contracts; Company's methods of doing business including its processes, operations or marketing programs, Company's strategic planning or its vendor information, trade secrets, litigation and claims information, personal information regarding employees, including social security information, health information, credit and/or credit card information, financial, salary and/or wage information, information concerning the business, finances, operations, assets, liabilities, transactions or affairs of the Company, its customers and/or employees, information and other information that may be entrusted to the Employee or that may arise or come into his or her knowledge during the course of employment, or otherwise information regarding pricing customer identification or customer list,

all files, records, documents, drawings, specifications, electronic data, equipment and similar items relating to the business of the Company, its customers and employees, whether prepared by the Employee or otherwise coming into his or her possession, and

any of the information of the type described above which the Company obtained from another source and which the Company treats as proprietary or designates as confidential, whether or not owned or developed by the Company.

Use of Confidential or Proprietary Information. Employee acknowledges and agrees that he or she, during the term of his/her employment with the Company and as a consequence of the trust and confidence reposed in Employee by the Company, Employee will receive proprietary and confidential information and/or trade secrets of the Company, as previously defined in this Agreement. In partial consideration for the mutual promises contained herein, Employee agrees not to directly or indirectly divulge, publish, communicate, use to the detriment of the Company, use for the benefit of any person, firm, corporation, or business or misuse in any way any such proprietary and confidential information and/or trade secrets either during or subsequent to employment with the Company, whether or not conceived, originated, discovered or developed in whole or in part by Employee. Upon his or her termination, Employee shall immediately deliver to the Company all confidential information, documents, papers, data, disks, media, equipment and other property belonging to the Company, its customers or employees, including property that may have been created or prepared by Employee or which may have come into Employee's possession in the course of employment, and Employee shall not retain any copies thereof without the express written permission of the Company.

Reasonableness of Restriction. Employee has carefully read and considered the provisions contained herein, and having done so agrees that the restrictions set forth are fair and reasonable and are required for the protection of the interest of the Company. Employee acknowledges that the Company is engaged in the transportation business throughout the United States, Mexico and Canada and that the depth and breadth of the restrictions set forth herein are reasonable and necessary to protect the Company from unfair competition and the disclosure of confidential or proprietary information. Employee further agrees to waive his right to challenge the validity of the restriction set forth herein. Further, if such waiver is determined to be invalid and Employee nevertheless challenges the validity of the restrictions set forth herein, Employee agrees to pay the Company's attorney's fees and costs incurred in the defense of the validity of the restrictions.

Availability of Injunctive Relief. The parties acknowledge that compliance with the covenants in Sections 2, 4, and 5 is necessary to protect the business goodwill and proprietary interests of the Company. The parties further agree that the remedy at law for breach of any of the provisions of such covenants is inadequate and that the Company shall be entitled, in addition to other such remedies as it may have, to injunctive relief for any breach or threatened breach of Sections 2, 4, and 5 without proof of any actual damages that may have been or may be caused to the Company by such breach or threatened breach.

Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings of the parties, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth herein. No supplement, modification, waiver or termination of this Agreement shall be binding unless executed writing by the party to be bound thereby. No Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver or continuing waiver of any other provision hereof.

Partial Invalidity. In the event one or more of the provisions contained in this Agreement, or any portion of any such provisions, shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, or any portion of any such provision, but the Agreement shall be construed as if such invalid, illegal or unenforceable provision, or portion thereof, had never been contained herein.

10.

Place of Contracting and Governing Law. This Agreement is accepted by the Company and entered into in Crawford County, Arkansas, and this Agreement and all rights, obligations and liabilities arising hereunder shall be construed and enforced in accordance with the laws of the State of Arkansas. Employee consents to personal jurisdiction in the Circuit Court of Crawford County, Arkansas, for all claims and causes of action arising under this Agreement or for the enforcement of this Agreement.

11.

Titles and Headings. Titles and headings to provisions of this Agreement are for the purpose of reference only and shall in no way limit, define or otherwise affect the interpretation or construction of such provisions.

12.

Binding Agreement. The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding on the successors and assigns of the Company.

IN WITNESS WHEREOF, the parties have hereto executed this Agreement as to the day and year first written above.

EMPLOYEE:

	(signature)
	(printed name)
	(social security number)
	(address)

USA TRUCK, INC.


By: Burton Weis, Vice President of Human Resources

Exhibit B

General Release

FOR AND IN CONSIDERATION OF the compensation pursuant to a Payment Trigger or the Company's election under Section 14 when there is no Payment Trigger to be provided me in connection with the termination of my engagement with USA Truck, Inc. (“Company”), as that term is defined in that certain Executive Severance and Change in Control Agreement between Company and me, dated as of August 3, 2016 (the “Agreement”), which are conditioned on my signing this General Release and to which I am not otherwise entitled, I, on my own behalf and on behalf of my heirs, executors, administrators, beneficiaries, representatives, and assigns, and all others connected with or claiming through me, hereby release and forever discharge Company, each of its affiliates, and all of their respective past, present, and future officers, directors, trustees, shareholders, employees, agents, general and limited partners, members, managers, joint venturers, representatives, successors, and assigns, and all others connected with any of them, both individually and in their official capacities, from any and all causes of action, rights, or claims of any type or description, known or unknown, which I have had in the past, now have, or might now have, through the date of my signing of this General Release, in any way resulting from, arising out of, or connected with my engagement with Company or the termination of that engagement or pursuant to any federal, state or local law, regulation, or other requirement, including if deemed to be an employee of Company (including without limitation Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the fair employment practices laws of the state or states in which I have been employed by Company, each as amended from time to time).

In signing this General Release, I acknowledge my understanding that I may not sign it prior to the termination of my engagement with Company, but that I may consider the terms of this General Release for up to thirty (30) days (or such longer period as Company may specify) from the date my engagement with Company terminates. I also acknowledge that I have been advised by Company to seek the advice of an attorney prior to signing this General Release; that I have had a full and sufficient time to consider this General Release and to consult with an attorney, if I wished to do so, or to consult with any other person of my choosing before signing; and that I am signing this General Release voluntarily and with a full understanding of its terms. I understand that I have seven (7) days following my execution of this General Release to revoke this General Release and that this General Release will not be effective until the eighth day after I execute and do not revoke this General Release.

I hereby acknowledge and reaffirm my continuing obligations to the Company under the Agreement, in particular as the Agreement relates to certain restrictive covenants, which was signed in connection with my employment.

I further acknowledge that, in signing this General Release, I have not relied on any promises or representations, expressed or implied, that are not set forth expressly in the Agreement.

[Signature page follows]

Intending to be legally bound, I have signed this General Release as of the date written below.

Signature:
Date signed:

Exhibit 10.2

USA TRUCK, INC.

2014 OMNIBUS INCENTIVE PLAN

AWARD NOTICE

GRANTEE:
TYPE OF AWARD:		Restricted Shares
NUMBER OF RESTRICTED SHARES ("RESTRICTED SHARES"):
DATE OF GRANT:

1. Grant of Restricted Stock. This Award Notice (this "Award Notice") serves to notify you that USA Truck, Inc., a Delaware corporation (the “Company”), hereby grants to you, under the Company’s 2014 Omnibus Incentive Plan (the “Plan”), a Restricted Stock Award (the “Award”), on the terms and conditions set forth in this Award Notice and the Plan, of the number of Restricted Shares set forth above of the Company’s Common Stock, par value $0.01 per share (the “Common Stock”). A copy of the Plan is available to you on the Company's intranet. You should review the terms of this Award Notice and the Plan carefully.

2. Restrictions and Vesting. Subject to the terms and conditions set forth in this Award Notice, the Restricted Shares will vest as set forth on Schedule A.

3. Additional Vesting Matters. Subject to Section 4, any unvested Restricted Shares that do not vest as a result of your failure to have been continuously in the employment or service of the Company or a Subsidiary thereof from the date of grant until the vesting dates set forth on Schedule A will automatically be forfeited on the date your employment or service is terminated without any obligation of the Company to pay any amount or deliver any Restricted Shares to you or to any other person or entity.

4. Effect of Change In Control.

(a) In General. If, during the twelve (12) months following a Change In Control (as defined below), the Company or its successor terminates your employment without Cause (as defined below) or you are subject to a Constructive Termination (as defined below), then any unvested portion of the Restricted Shares will immediately vest in full on the date of such termination without Cause or Constructive Termination.

(b) “Change In Control” Defined. The term “Change In Control” shall mean the occurrence of any of the following:

This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.

The date of the prospectus is [Date]

(i) Any “Person” as defined in Section 3(a)(9) of the Exchange Act, and as used in Section 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) of the Exchange Act (but excluding the Company and any employee benefit plan sponsored or maintained by the Company (including any trustee of such plan acting as trustee)), directly or indirectly, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities (other than indirectly as a result of the Company’s redemption of its own securities); or

(ii) The consummation of any merger or other business combination of the Company, a sale of more than 50% of the Company’s assets, the liquidation or dissolution of the Company or any combination of one or more of the foregoing transactions (the “Transactions”) other than a Transaction immediately following which either (x) the stockholders of the Company and any trustee or fiduciary of any Company employee benefit plan immediately prior to the Transaction own more than 50% of the voting power, directly or indirectly, of (A) the surviving corporation in any such merger or other business combination; (B) the purchaser of or successor to the Company’s assets; (C) both the surviving corporation and the purchaser in the event of any combination of Transactions; or (D) the parent company owning 100% of such surviving corporation, purchaser or both the surviving corporation and the purchaser, as the case may be ((A), (B), (C) or (D), as applicable, the “Surviving Entity”) or (y) the Incumbent Directors, as defined below, shall continue to serve as a majority of the board of directors of the Surviving Entity without an agreement or understanding that such Incumbent Directors will later surrender such majority; or

(iii) Within any twenty-four (24)-month period, the individuals who were directors immediately before the beginning of such period (the “Incumbent Directors”) shall cease (for any reason other than death) to constitute at least a majority of the board of directors of the Company (the "Board") or the board of directors of any successor to the Company, including any Surviving Entity. For this purpose, any director who was not a director at the beginning of such period shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of, or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors (so long as such director was not nominated by a Person who commenced or threatened to commence an election contest or proxy solicitation by or on behalf of a Person (other than the Board) or who has entered into an agreement to effect a Change in Control or expressed an intention to cause such a Change in Control).

(c) "Constructive Termination" Defined. The term “Constructive Termination” shall mean the occurrence of any of the following, without your express written consent, at any time within twelve (12) months following a Change in Control:

(i) geographic relocation of your assigned principal business location to a location greater than seventy-five (75) miles from the place of your principal business location immediately prior to the time of a Change in Control; or

(ii) diminution by ten percent (10%) or more of your annual base salary or target bonus in effect immediately prior to the time of a Change in Control.

(d) "Cause" Defined. With respect to termination of your employment by the Company or its successor, the term "Cause" shall mean (i) the willful violation of Company policy or willful failure by you to substantially perform your duties with the Company, other than any failure resulting from your incapacity due to physical or mental illness, that continues for at least 30 days after the Board or management delivers to you a written demand for performance that identifies in reasonable detail the manner in which the Board or management believes that you willfully have failed substantially to perform your duties; (ii) the willful violation of any law, rule or regulation applicable to the Company’s business operations; (iii) the willful engaging by you in misconduct that is demonstrably and materially injurious to the Company, from a monetary or reputational standpoint; (iv) a material violation by you of the corporate governance guidelines, code of ethics, insider trading policy, or other governance policy of the Company; (v) a material violation by you of the requirements of the Sarbanes-Oxley Act of 2002 or other federal or state securities law, rule, or regulation; (vi) a material breach by you of any restrictive covenants in favor of the Company or its affiliates; or (vii) the repeated use of alcohol by you that materially interferes with your duties, the use of illegal drugs by you, or a violation by you of the drug and/or alcohol policies of the Company. For purposes of this definition following a Change in Control, no act, or failure to act, on your part shall be deemed “willful” unless done, or omitted to be done, by you without reasonable belief that your act, or failure to act, was in the best interest of the Company.

5. Book-Entry Registration. The Restricted Shares initially will be evidenced by book-entry registration only, without the issuance of a certificate representing the Restricted Shares.

6. Issuance of Shares. Subject to Sections 7 and 12 of this Award Notice, upon the vesting of any Restricted Shares pursuant to this Award Notice, the Company will issue a certificate or do book entry registration representing such vested Restricted Shares as promptly as practicable following the date of vesting. The Restricted Shares may be issued during your lifetime only to you, or after your death to your designated beneficiary, or, in the absence of such beneficiary, to your duly qualified personal representative.

7. Withholding. You will pay to the Company or a Subsidiary thereof, or make other arrangements satisfactory to the Company regarding the payment of, any federal, state, or local taxes of any kind required by applicable law to be withheld with respect to the Restricted Shares awarded under this Award Notice. Your right to receive the Restricted Shares under this Award Notice is subject to, and conditioned on, your payment of such withholding amounts.

8. Nonassignability. The Restricted Shares and the right to vote such shares and to receive dividends thereon, may not, except as otherwise provided in the Plan, be sold, assigned, transferred, pledged, or encumbered in any way prior to the vesting of such shares, whether by operation of law or otherwise, except by will or the laws of descent and distribution. After vesting, the sale or other transfer of the shares of Common Stock will be subject to applicable laws and regulations under federal and state securities laws.

9. Rights as a Stockholder; Limitation on Rights. Unless the Award is cancelled or forfeited as provided in Section 3 of this Award Notice, you will have all of the other rights of a stockholder with respect to the Restricted Shares, including, but not limited to, the right to receive such cash dividends, if any, as may be declared on such shares from time to time and the right to vote (in person or by proxy) such shares at any meeting of stockholders of the Company. Neither the Plan, the granting of the Award, nor this Award Notice gives you any right to remain in the employment or service of the Company or a Subsidiary thereof.

10. Obligation to Maintain Stock Ownership. Your ability to dispose of Restricted Shares after vesting may be limited by stock ownership guidelines adopted by the Company for certain officers and key employees, and the Company is authorized to place a restrictive legend on such shares, issue stop-transfer instructions to the transfer agent, or take such other actions as may be advisable, in the Committee’s sole discretion, to enforce such ownership guidelines. Please determine whether you are subject to the guidelines and how many Restricted Shares may be disposed of prior to attempting to dispose of any shares.

11. Rights of the Company and Subsidiaries. This Award Notice does not affect the right of the Company or a Subsidiary thereof to take any corporate action whatsoever, including without limitation its right to recapitalize, reorganize, or make other changes in its capital structure or business, merge or consolidate, issue bonds, notes, shares of Common Stock, or other securities, including preferred stock, or options therefor, dissolve or liquidate, or sell or transfer any part of its assets or business.

12. Restrictions on Issuance of Shares. If at any time the Company determines that the listing, registration, or qualification of the Restricted Shares upon any securities exchange or quotation system, or under any state or federal law, or the approval of any governmental agency, is necessary or advisable as a condition to the issuance of a certificate representing any vested Restricted Shares, such issuance may not be made in whole or in part unless and until such listing, registration, qualification, or approval will have been effected or obtained free of any conditions not acceptable to the Company.

13. Plan Controls; Definitions. The Award is subject to all of the provisions of the Plan, which is hereby incorporated by reference, and is further subject to all the interpretations, amendments, rules, and regulations that may from time to time be promulgated and adopted by the Committee pursuant to the Plan. Except as set forth in the last sentence of this Section 13, in the event of any conflict among the provisions of the Plan and this Award Notice, the provisions of the Plan will be controlling and determinative. The capitalized terms used in this Award Notice and not otherwise defined herein are defined in the Plan.

14. Amendment. Except as otherwise provided herein or by the Plan, the Company may only alter, amend, or terminate this Award with your consent.

15. Governing Law. This Award Notice will be governed by and construed in accordance with the laws of the State of Delaware, except as superseded by applicable federal law, without giving effect to its conflicts of law provisions.

16. Notices. All notices and other communications to the Company required or permitted under this Award Notice will be written, and will be either delivered personally or sent by registered or certified first-class mail, postage prepaid and return receipt requested addressed to the Company’s office at 3200 Industrial Park Road, Van Buren, Arkansas 72956, Attention: Chief Financial Officer. Each such notice and other communication delivered personally will be deemed to have been given when delivered. Each such notice and other communication delivered by mail will be deemed to have been given when it is deposited in the United States mail in the manner specified herein, and each such notice and other communication delivered by facsimile or electronically will be deemed to have been given when it is so transmitted and the appropriate confirmation is received.

* * * * * * * * * *

ACKNOWLEDGEMENT

The undersigned acknowledges receipt of, and understands and agrees to be bound by, this Award Notice and the Plan. The undersigned further acknowledges that this Award Notice and the Plan set forth the entire understanding between him or her and the Company regarding the restricted stock granted by this Award Notice and that this Award Notice and the Plan supersede all prior oral and written agreements on that subject.

Dated: _______________, 2016

	Grantee:


	[Name]


	USA Truck, Inc.


	By:
Name:		John R. Rogers
Title:		President and Chief Executive Officer (As duly authorized by the Executive Compensation Committee)

Schedule A

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

USA TRUCK, INC.

I, John R. Rogers, certify that:

I have reviewed this quarterly report on Form 10-Q of USA Truck, Inc. for the quarter ended September 30, 2016;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 9, 2016	By:	/s/ John R. Rogers
			John R. Rogers
			Principal Executive Officer

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

USA TRUCK, INC.

I, Joseph M. Kaiser, certify that:

I have reviewed this quarterly report on Form 10-Q of USA Truck, Inc. for the quarter ended September 30, 2016;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 9, 2016	By:	/s/ Joseph M. Kaiser
			Joseph M. Kaiser
			Principal Financial Officer

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with this quarterly report on Form 10-Q of USA Truck, Inc. (the “Company”) for the period ended September 30, 2016 (the “Report”), I, John R. Rogers, Principal Executive Officer of the Company, certify pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	November 9, 2016	By:	/s/ John R. Rogers
			John R. Rogers
			Principal Executive Officer

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with this quarterly report on Form 10-Q of USA Truck, Inc. (the “Company”) for the period ended September 30, 2016 (the “Report”), I, Joseph M. Kaiser, Principal Financial Officer of the Company, certify pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	November 9, 2016	By:	/s/ Joseph M. Kaiser
			Joseph M. Kaiser
			Principal Financial Officer