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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

For the fiscal year ended December 31, 2003

OR

For the transition period from                      to                     

Commission File Number 0-19858

USA Truck, Inc.

(Exact name of Registrant as specified in its charter)

Registrant’s telephone number, including area code: (479) 471-2500

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

None

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

Common Stock, par value $.01 per share

(Title of class)

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended). Yes ¨ No x

The aggregate market value of the voting stock held by nonaffiliates of the Registrant computed by reference to the price at which the common equity was last sold as of the last business day of the Registrant’s most recently completed second quarter was $42,266,133 (the characterization of officers and directors of the Registrant as affiliates for purposes of this computation should not be construed as an admission for any other purpose that any such person is in fact an affiliate of the Registrant).

The number of shares outstanding of the Registrant’s Common Stock, par value $ .01, as of February 25, 2004 is 9,334,546.

DOCUMENTS INCORPORATED BY REFERENCE

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USA TRUCK, INC.

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PART I

We are a dry van truckload carrier transporting general commodities throughout the continental United States and between locations in the United States and Quebec and Ontario, Canada. We also transport freight into Mexico by transferring our trailers to tractors operated by Mexican trucking companies, with which we have contracts, at our facility in Laredo, Texas. Overall, our operations within the United States produce more than 93% of our revenues. We transport freight over irregular routes, with a medium length of haul, which is generally defined as between 800 and 1,200 miles per trip. We have also recently begun offering regional service, with a length of haul of less than 500 miles. We provide these services both as a common carrier and under contracts that require us to dedicate equipment to a specific customer. We also provide services that do not involve transporting freight in our trucks, including third party logistics services and freight brokerage.

We transport many types of freight and have over 1,300 active customers. We focus on customers and markets that demand premium service where we can achieve premium rates and develop long-term, service-oriented relationships. In 2003, more than 96% of our operating revenues were derived from existing customers. We are a major carrier of freight for such industries as industrial machinery and equipment, rubber and plastics, retail stores, paper products, durable consumer goods, metals, electronics and chemicals.

We were incorporated in Delaware in September 1986 as a wholly-owned subsidiary of ABF Freight System, Inc. The company was purchased by management in December 1988, and we completed the initial public offering of our common stock in March 1992.

The Company’s principal offices are located at 3200 Industrial Park Road, Van Buren, Arkansas 72956, and its telephone number is (479) 471-2500.

Our Internet address is http://www.usa-truck.com. You can review the filings USA Truck has made with the U.S. Securities and Exchange Commission (“SEC”), free of charge by linking directly from the investor relations section of our web site to EDGAR, a database maintained by the SEC. EDGAR is the Electronic Data Gathering, Analysis and Retrieval system where you can find our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934.

Growth Strategy

We are committed to controlled, profitable growth. Since our initial public offering, we have grown our revenues, before fuel surcharge, from $63.0 million in 1992 to $286.1 million in 2003, an average compounded rate of 15%. With the exception of one acquisition in 1999, our growth has been internal. Since that acquisition we have slowed our rate of growth in the face of generally unfavorable economic conditions in the industry. Recently, however, we have implemented new initiatives designed to support future growth.

We are currently implementing an aggressive fleet modernization and expansion program. This program will reduce the average age of our tractors and trailers and expand capacity. We believe that a larger, more modern fleet will support our growth initiatives and will have a positive impact on our operations, including less frequent repairs and lower maintenance costs, improved customer service and higher driver retention. In 2003, we purchased 686 new tractors and 555 new trailers, and in 2004, we plan to acquire 1,014 new tractors and 1,590 new trailers. Our acquisitions and disposals resulted in net increases in 2003 of 169 tractors and 182 trailers. Our projected 2004 acquisitions and disposals will result in net increases of 220 tractors and 908 trailers.

We expect future growth to come from the following areas:

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Operating Strategy

We intend to improve our profitability by doing the following things:

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Marketing and Sales

We focus our marketing efforts on customers with premium service requirements and heavy shipping needs within our primary operating areas. This permits us to concentrate available equipment strategically so that we can be more responsive to customer needs.

Our marketing department solicits and responds to customer orders and maintains close customer contact regarding service requirements and rates. We typically establish rates through individual negotiations with customers. For our dedicated freight and private fleet conversion services, rates are fixed under contracts tailored to the specific needs of shippers. A high percentage of our business is from repeat customers. In 2003, more than 96% of our operating revenues were derived from customers that were customers prior to 2002.

In 2003, our direct customers provided 72.6% of our total revenue, and 27.4% of our total revenue came through transportation service companies acting as intermediaries for shippers. No single customer represents more than 10% of the total revenue that we derive from direct customers.

Although we prefer direct relationships with shippers, we recognize that obtaining shipments through other providers of logistics services is a significant marketing opportunity. Securing freight through a third party enables

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us to provide services for high-volume shippers to which we might not otherwise have access as many of them require their carriers to conduct business with their designated third party.

Customers are required to have credit approval before dispatch. We bill customers at or shortly after delivery and, for the last three years, receivables collection has averaged approximately 33 days from the billing date.

We have recently made our load coordinator group part of our marketing department. Load coordinators are responsible for efficiently matching available equipment with customer shipments, and they serve as the contact with customers’ receiving and shipping personnel. Load coordinators also have primary responsibility for minimizing empty miles and they work closely with other marketing department personnel to increase equipment utilization. The load coordinators were previously part of our operations department.

Operations

We conduct most of our freight transport operations east of the Rocky Mountains. We are not required to have intrastate authority in most states because, with the exception of our regional operations, most of our routes take us across state lines. Our freight transport business consists primarily of medium-haul shipments, more than 800 but less than 1,200 miles. Our average length of haul was 851 miles in 2003, 859 miles in 2002 and 852 miles in 2001. We have also recently begun providing regional services, with an average length of haul of less than 500 miles. The regional operations are intended to improve our ability to hire and retain drivers and to enable us to obtain additional business in our existing markets.

The average distance traveled between loads as a percentage of total paid miles traveled, commonly referred to as the empty mile factor, is a standard measurement in the truckload industry. The empty mile factor generally decreases as average length of haul and density of trucks in an area increase. Our commitment to on-time pickup often requires a tractor to travel farther to complete a pickup than it would have to travel if we delayed the pickup until a tractor became available in the area. Our empty mile factor was 8.97% for 2003 and 9.24% for 2002.

Our operations department consists primarily of our fleet managers. Fleet managers supervise fleets of approximately 60 tractors each and are our primary contact with drivers. They monitor the location of equipment and direct its movement in the most efficient and safe manner practicable. The operations department focuses on achieving continual improvement in the areas of customer service, safety, equipment utilization and driver retention.

Drivers and Other Personnel

Driver recruitment and retention are vital to success in our industry. Recruiting drivers is challenging because our standards are high and because enrollment in driving schools has been declining. Retention is difficult because of wage and job fulfillment considerations. Driver turnover, especially in the early months of employment, is a significant problem, and the competition for qualified drivers is intense. Although we have had significant driver turnover during certain periods in the past, we have been able to attract and retain a sufficient number of qualified drivers to support our operations. To attract and retain drivers we must continue to provide safe, attractive and comfortable equipment, direct access to management and competitive wages and benefits designed to encourage longer-term employment.

Drivers’ pay is calculated primarily on the basis of miles driven and increases with tenure. In 2003, our drivers averaged 478 paid miles per workday. Our current pay scale is competitive with industry peers.

One of the steps we have taken to control compensation expense is the implementation of a per diem driver pay program. Per diem pay is designed to approximately reimburse drivers for meals and other incidental expenses incurred while away from home overnight on business, and is typically paid in lieu of an approximately equivalent portion of salary. Although the deductibility of per diem payments is limited, there are certain tax benefits to drivers that allow us to decrease overall wages per mile for those drivers who elect to receive the per diem payments. We implemented a per diem pay program in the second quarter of 2002, and gave our drivers the option to elect whether or not to receive a portion of their compensation in the form of per diem payments. As of December 31, 2003, approximately 64% of our drivers had elected to receive per diem payments.

On December 31, 2003, we had 2,776 employees, including 2,120 drivers, 82 operations personnel, 75 marketing and sales personnel, 252 maintenance personnel, 20 safety personnel, 187 finance and administration personnel, and 40 management personnel. None of our employees is represented by a collective bargaining unit. In the opinion of management, our relationship with our employees is satisfactory.

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Safety

We have designed our safety program to minimize accidents and to enforce governmental safety regulations. We control the maximum speed of our tractors with electronic governing equipment, and all of our tractors are equipped with anti-lock braking systems.

The evaluation of safety records is one of several criteria that we use to hire driver employees. Safe equipment handling techniques are an important part of new driver training. We also conduct pre-employment, random and post-accident drug testing in accordance with Department of Transportation regulations.

In addition to our management team’s overall commitment to safety and compliance, we have implemented many programs designed to manage fleet safety including, but not limited to:

Revenue Equipment and Maintenance

Our current policy is to replace most tractors within 36 to 42 months from the date of purchase, which permits us to maintain substantial warranty coverage throughout the period of ownership. However, during 2002 we delayed replacing tractors beyond 42 months due to a depressed used equipment market. See “Business—Revenue Equipment Acquisition Program.” We replace tractors and trailers based on various factors, including the used equipment market, prevailing interest rates, technological improvements, fuel efficiency and durability.

The following table shows the number of units and age of revenue equipment that we owned or operated under capital leases, as of the indicated dates:

To simplify driver and mechanic training, control the cost of spare parts and tire inventory and provide for a more efficient vehicle maintenance program, we buy tractors and trailers manufactured to our specifications. In deciding which equipment to buy, we consider a number of factors, including safety, fuel economy, expected resale value and driver comfort. We have a strict preventive maintenance program designed to minimize equipment downtime and to enhance trade-in value.

Our trailer to tractor ratio, including owner-operator tractors and leased tractors and trailers, was 2.20-to-1 at December 31, 2003. We believe that this ratio will be sufficient for our anticipated 2004 operations, in that it promotes efficiency and provides the flexibility needed to serve customer needs.

During 2002 and 2003, we financed revenue equipment purchases through our senior credit facility, capital lease-purchase arrangements, the proceeds from sales or trades of used equipment and cash flows from operations. See Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and

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Capital Resources.” All of our revenue equipment is pledged to secure our obligations under financing arrangements.

In addition to company-owned tractors, we contract with owner-operators for the use of their tractors and drivers in our operations. At December 31, 2003, 42 owner-operator tractors were under contract with us. The size of our owner-operator fleet varies from time to time as market conditions require. It is unlikely that the size of our owner-operator fleet in proportion to our company-owned fleet will increase significantly during 2004.

Revenue Equipment Acquisition Program

We pursue equipment trade intervals that economically balance our maintenance costs and expected trade values. Accordingly, due to a depressed used equipment market, we extended the useful lives and reduced the salvage values on those groups of tractors that we would have traded in 2002 under normal used tractor market conditions. These extended lives (60 months) and reduced salvage values (14% of original cost of equipment) yielded an increased depreciation charge to pre-tax earnings in 2002 of approximately $400,000. Extending the lives of tractors resulted in increased maintenance costs in 2002 and 2003. We instituted an aggressive trade schedule in 2003 and have instituted an aggressive trade schedule in 2004 to reduce the average age of our tractor fleet and to resume trading most tractors within 42 months from the date of purchase, as we did prior to 2002. As the average age of the tractor fleet decreases, maintenance costs should decrease as well.

During 2003, we acquired 686 new tractors and 555 new trailers. These acquisitions, and the disposals during the year, resulted in net increases of 169 tractors and 182 trailers. During 2004, we plan to acquire 1,014 new tractors and 1,590 new trailers. These acquisitions and the disposals planned during that year should result in net increases of 220 tractors and 908 trailers.

In April 2003, we took delivery of our first tractors with the new exhaust gas recirculation engines required by the Environmental Protection Agency. Compliance with these regulations has increased the cost of our new tractors and could substantially reduce equipment productivity and reliability, lower fuel mileage and increase our operating expenses. Manufacturers have significantly increased new equipment prices, in part to meet new engine design requirements imposed by these regulations. These adverse effects could increase our costs or otherwise negatively affect our business or operations.

Technology

We maintain a state-of-the-art data center through the efforts of more than 20 computer professionals. We currently use several different computing platforms ranging from personal computers to an IBM mainframe system. We have developed the majority of our software applications internally, including payroll, billing, dispatching, accounting and maintenance programs. We believe that the familiarity and proficiency with the systems that have resulted from these development efforts give us the ability to meet the ever-changing needs of our customers quickly and efficiently. Our computer systems are monitored 24 hours a day by experienced computer operators. This monitoring system has allowed us to provide 99.9% system availability to our users.

The technology that we use in our business enhances the efficiency of all aspects of our operations and enables us to deliver consistently superior service to our customers. This technology includes a Qualcomm satellite-based equipment tracking and driver communication system, which allows us to closely monitor the location of all of our equipment and to communicate with our drivers in real time. This enables us to efficiently dispatch drivers in response to customers’ requests, to provide real-time information to our customers about the status of their shipments and to provide documentation supporting our assessorial charges. We have also implemented sophisticated software programs, such as load optimization software, which is designed to match available equipment with shipments in a way that best satisfies a number of criteria, including empty miles, the driver’s available hours of service and home-time needs. We also use licensed software that assists us in planning for transfers of loaded trailers between our tractors, allowing us to further enhance efficient allocation of our equipment, improve customer service and take full advantage of our drivers’ available hours of service. This software also improves our ability to get drivers home on a more regular basis. Our other licensed software programs include a sophisticated route-planning software program. We also employ a variety of computing hardware and an assortment of other software programs, many of which were developed internally, that provide management the tools necessary to make fact-based business decisions, salespersons the sales tools necessary to make successful presentations to customers and managers the tools necessary to control costs.

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Insurance and Claims

The primary risks for which we obtain insurance are cargo loss and damage, personal injury, property damage and workers’ compensation claims. We self-insure for a portion of claims exposure in each of these areas. We are not currently insured for terrorist acts because we believe the potential risk does not justify the cost of the available coverage. We reevaluate all our coverage decisions on an annual basis.

Beginning October 1, 2003, our self-insurance retention levels were $750,000 for workers’ compensation claims per occurrence and $100,000 for cargo loss and damage claims per occurrence. For bodily injury and property damage claims, our self-insurance retention level on that date was $1.5 million per occurrence. We are also responsible for the first $500,000 of damages, in the aggregate, above our self-insured retention levels for bodily injury and property damage claims. We are completely self-insured for physical damage to our tractors and trailers, except that we carry catastrophic physical damage coverage to protect against natural disasters. For medical benefits, we self-insure up to $250,000 per claim per year with an aggregate claim exposure limit determined by our year-to-date claims experience and our number of covered lives. We maintain insurance above the amounts for which we self-insure, to certain limits, with licensed insurance carriers. We have excess general, auto and employer’s liability coverage in amounts substantially exceeding minimum legal requirements, and we believe this coverage is sufficient to protect us against catastrophic loss. Insurance carriers have recently raised premiums for many businesses, including trucking companies. As a result, our insurance and claims expense could increase, or we could raise our self-insured retention when our policies are renewed. We believe that our policy of self-insuring up to set limits, together with our safety and loss prevention programs, are effective means of managing insurance costs.

Industry and Competition

The trucking industry includes both private fleets and “for hire” carriers. Private fleets consist of trucks owned and operated by shippers that move their own goods. For hire carriers include both truckload and less-than-truckload operations. Truckload carriers dedicate an entire trailer to one customer from origin to destination. Less-than-truckload carriers pick up multiple shipments from multiple shippers on a single truck and then route the goods through terminals or service centers, where freight may be transferred to other trucks with similar destinations for delivery. Truckload carriers typically transport shipments weighing more than 10,000 pounds while less-than-truckload carriers typically transport shipments weighing less than 10,000 pounds.

We operate primarily in the highly fragmented for hire truckload segment of the market which, according to the American Trucking Association, accounted for an estimated $277 billion in 2002. The for hire segment is highly competitive and includes thousands of carriers, none of which dominates the market. It is characterized by many small carriers having revenues of less than $1 million per year and relatively few carriers with revenues exceeding $100 million per year. Measured by annual revenue, the ten largest dry van truckload carriers accounted for approximately $12 billion, or approximately 5%, of the for hire market in 2002. The industry continues to undergo consolidation. In addition, the recent challenging economic times have caused the failure of many trucking companies and made entry into the industry more difficult.

We compete primarily with other truckload carriers, shipper-owned fleets and, to a lesser extent, with railroads and less-than-truckload carriers. A number of truckload carriers have greater financial resources, own more revenue equipment and carry a larger volume of freight than we do. We also compete with truckload and less-than-truckload carriers for qualified drivers.

The principal means of competition in the truckload segment of the industry are service and price, with rate discounting being particularly intense during economic downturns. Although we compete primarily on the basis of service rather than rates, rate discounting continues to be a factor in obtaining and retaining business. Furthermore, a depressed economy tends to increase both price and service competition from alternative modes such as less-than-truckload carriers and railroads. We believe that successful truckload carriers are likely to grow primarily by acquiring greater market share and, to a lesser extent, through an increase in the size of the market.

Regulation

USA Truck is a motor carrier regulated by the U.S. Department of Transportation and other federal and state agencies. Our business activities in the United States are subject to broad federal, state and local laws and regulations beyond those applicable to most business activities. These regulated business activities include, among other things, service area, routes traveled, equipment specifications, commodities transported, rates and charges, accounting systems, financial reporting and insurance coverages. Our Canadian business activities are subject to similar requirements imposed by the laws and regulations of the Dominion of Canada and provincial laws and regulations.

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Motor carrier operations are subject to safety requirements prescribed by the U.S. Department of Transportation, governing interstate operation and by Canadian provincial authorities. Matters such as weight and equipment dimensions are also subject to federal, state and provincial regulations.

The Federal Motor Carrier Safety Administration of the U.S. Department of Transportation issued a final rule on April 24, 2003 that made several changes to the regulations governing the hours of service for drivers of commercial motor vehicles that carry freight. Truckload carriers were required to comply with the new rules beginning on January 4, 2004. In general, the new rules are intended to increase safety by giving drivers more opportunity to rest and obtain restorative sleep during each work cycle by, for example, increasing the minimum off duty time during each work cycle. Moreover, under the new rules, the maximum on duty period after which a driver may no longer drive has been shortened and may no longer be extended by time spent off duty (such as meal stops and other rest breaks) once the on duty period has begun. Therefore, delays during a driver’s on duty time (such as those caused by loading/unloading problems) may limit drivers’ available hours behind the wheel, particularly if such delays occur late in an on duty period. This, and other operational issues that the new rules may create, could increase our operating costs. We are continuing to evaluate the new rules to determine the effect they may have on our operations.

In April 2003, we took delivery of our first tractors with new exhaust gas recirculation (EGR) engines. These new engines are the product of lower emission standards established by the Environmental Protection Agency and are required on all class eight diesel engines produced in the United States effective October 1, 2002. The engine technology is designed to emit cleaner emissions by recirculating exhaust gasses back through the engine instead of directly into the atmosphere. The reliability, fuel efficiency and maintenance costs of the new engines are relatively unknown because the engines have been re-engineered, have more complex components and burn at hotter temperatures.

We are subject to federal, state, provincial and local environmental laws and regulations. We believe that we are in substantial compliance with such laws and regulations and that costs of such compliance will not have a material adverse effect on our competitive position, operations or financial condition or require a material increase in currently anticipated capital expenditures.

Seasonality

See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Seasonality.”

Forward-Looking Statements

This report contains forward-looking statements and information that are based on our current beliefs and expectations and assumptions we have made based upon information currently available. Forward-looking statements include statements relating to our plans, strategies, objectives, expectations, intentions and adequacy of resources, and may be identified by words such as “will,” “could,” “should,” “may,” “believe,” “expect,” “intend,” “plan,” “schedule,” “estimate,” “project” and similar expressions. These statements are based on current expectations and are subject to uncertainty and change. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot assure you that such expectations will be realized. If one or more of the risks or uncertainties underlying such expectations materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those expected. Among the key factors that are not within our control and that have a direct bearing on operating results are increases in fuel prices, adverse weather conditions, increased regulatory burdens and the impact of increased rate competition. Our results have also been, and will continue to be, significantly affected by fluctuations in general economic conditions, as our utilization rates are directly related to business levels of shippers in a variety of industries. In addition, shortages of qualified drivers and intense or increased competition for drivers have adversely impacted our operating results and our ability to grow and will continue to do so. Results for any specific period could also be affected by various unforeseen events, such as unusual levels of equipment failure or vehicle accident claims.

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

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We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this report might not occur.

Risk Factors

The following are some of the risks and uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements contained in this report and in our other filings with the Securities and Exchange Commission.

Our business is subject to general economic and business factors that are largely out of our control, any of which could have a material adverse effect on our operating results.

The factors that have negatively affected us, and may do so in the future, include volatile fuel prices, excess capacity in the trucking industry, surpluses in the market for used equipment, higher interest rates, higher license and registration fees, increases in insurance premiums, higher self-insurance levels, increases in accidents and adverse claims, and difficulty in attracting and retaining qualified drivers and independent contractors.

We are also affected by recessionary economic cycles and downturns in customers’ business cycles. Economic conditions may adversely affect our customers and their ability to pay for our services. It is not possible to predict the effects of armed conflicts or terrorist attacks and subsequent events on the economy or on consumer confidence in the United States, or the impact, if any, on our future results of operations.

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We operate in a highly competitive and fragmented industry, and our business may suffer if we are unable to adequately address downward pricing pressures and other factors that may adversely affect our ability to compete with other carriers.

Numerous competitive factors could impair our ability to maintain our current profitability. These factors include:

We depend heavily on the availability of fuel, and fuel shortages or increases in fuel costs or fuel taxes could have a material adverse effect on our operating results.

Fuel prices have fluctuated greatly and fuel taxes have generally increased in recent years. In some periods, our operating performance was adversely affected because we were not able to fully offset the impact of higher diesel fuel prices through increased freight rates and fuel surcharges. We do not have any long-term fuel purchase contracts, and we have not entered into any other hedging arrangements, that protect us against fuel price increases. Volatile fuel prices and potential increases in fuel taxes will continue to impact us significantly. A significant increase in fuel costs, or a shortage of diesel fuel, could materially and adversely affect our results of operations. These costs could also exacerbate the driver shortages our industry experiences by forcing independent contractors to cease operations.

Increased prices for new revenue equipment and decreases in the value of used revenue equipment may continue to adversely affect our earnings and cash flows.

In the past, we acquired new tractors and trailers at favorable prices and traded or disposed of them at prices significantly higher than today’s market values. In 2002, there was a large supply of used tractors and trailers on the market, which has depressed the market value of used equipment to levels significantly below the values we historically received. For this reason, we did not trade any used equipment during 2002, which caused a significant increase in the average age of our tractors. This extended the use of the current fleet and contributed to a significant increase in maintenance costs, negatively affected our utilization and yielded an increased depreciation charge to pre-tax earnings in 2002 of approximately $400,000. Although the condition of the used equipment market has improved somewhat, prices for used tractors and trailers are still significantly below historical levels. In addition, manufacturers have recently raised the prices of new equipment significantly. If we continue to be unable to obtain favorable prices for our used equipment, or if the cost of new equipment continues to increase, we will increase our depreciation expense or recognize less gain (or a loss) on the disposition of our tractors and trailers. This has and may continue to adversely affect our earnings and cash flows.

Ongoing insurance and claims expenses could significantly reduce our earnings.

We currently self-insure for a portion of our claims exposure for amounts up to the first $1.5 million for each bodily injury or property damage claim, $750,000 for each workers’ compensation claim and $100,000 for each

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cargo claim. We are also responsible for the first $500,000 in the aggregate for bodily injury or property damage claims above our self-insured amounts. We maintain insurance for liabilities above the amounts for which we self-insure, to certain limits. We completely self-insure for collision damage to our own equipment. During 2002 and 2003, we experienced significant increases in costs associated with adverse claims. If the number or severity of claims does not return to historical levels or increases, our operating results will be adversely affected. In addition, the timing of the incurrence of these costs may significantly impact our operating results for a particular quarter, as compared to the comparable quarter in the prior year.

After several years of aggressive pricing, insurance carriers have begun to raise premiums for many trucking companies. We experienced an increase of $500,000 in insurance premiums in 2003 and could experience an additional increase in our insurance costs after our current coverage expires in October 2004. If our insurance or claims expenses increase, and we are unable to offset the increase with higher freight rates, our earnings could be materially and adversely affected.

Difficulty in attracting and retaining drivers could affect our profitability and ability to grow.

Periodically, the transportation industry experiences increased difficulty in attracting and retaining qualified drivers, including independent contractors, resulting in intense competition for drivers. If we are unable to continue to attract and retain drivers and contract with independent contractors, we could incur higher driver recruiting and compensation expenses or be required to let trucks sit idle, which could adversely affect our growth and profitability.

We have significant ongoing capital requirements that could affect our profitability if we are unable to generate sufficient cash from operations.

The trucking industry is very capital intensive. If we are unable to generate sufficient cash from operations in the future, we may have to limit our growth, enter into financing arrangements or operate our revenue equipment for longer periods, any of which could have a material adverse affect on our profitability.

We depend on the proper functioning and availability of our information systems.

We depend on the proper functioning and availability of our communications and data processing systems in operating our business. Our information systems are protected through physical and software safeguards. However, they are still vulnerable to fire, storm, flood, power loss, telecommunications failures, physical or software break-ins and similar events. We do not have a catastrophic disaster recovery plan or a fully redundant backup system to protect against a loss of the data on any of our computer systems. If any of our critical information systems fail or become otherwise unavailable, we would have to perform the functions manually, which could temporarily impact our ability to manage our fleet efficiently, to respond to customers’ requests effectively, to maintain billing and other records reliably and to bill for services accurately or in a timely manner. Our business interruption insurance may be inadequate to protect us in the event of a catastrophe. Any system failure, security breach or other damage could interrupt or delay our operations, damage our reputation and cause us to lose customers.

New regulations regarding drivers’ hours of service could materially and adversely affect our operating efficiency and increase costs.

The Federal Motor Carrier Safety Administration of the U.S. Department of Transportation issued a final rule on April 24, 2003 that made several changes to the regulations governing hours of service for drivers of commercial motor vehicles that carry freight. Truckload carriers were required to comply with the new rules beginning on January 4, 2004. In general, the new rules are intended to increase safety by giving drivers more opportunity to rest and sleep during each work cycle by, for example, increasing the minimum off-duty time during each work cycle. Moreover, under the new rules, the maximum on-duty period after which a driver may no longer drive has been shortened and may no longer be extended by time spent off duty (such as meal stops and other rest breaks) once the on-duty period has begun. Therefore, delays during a driver’s on-duty time (such as those caused by loading and unloading) may limit the driver’s available hours behind the wheel. Shippers may be unable or unwilling to assist us in managing our drivers’ on-duty time or to pay higher rates to compensate for our costs of complying with these regulations. This, and other operational issues that the new rules may create, could increase our operating costs.

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The engines used in our newer tractors are subject to new emissions control regulations, which may substantially increase our operating expenses.

The Environmental Protection Agency recently adopted new emissions control regulations, which require progressive reductions through 2007 in exhaust emissions from diesel engines manufactured on or after October 1, 2002. Compliance with these regulations has increased the cost of our new tractors and could substantially reduce equipment productivity and reliability, lower fuel mileage and increase our operating expenses. Manufacturers have significantly increased new equipment prices, in part to meet new engine design requirements imposed by these regulations. These adverse effects could increase our costs or otherwise negatively affect our business or operations.

We depend on our major customers, the loss of one or more of which could have a material adverse effect on our business.

A significant portion of our revenue is generated from our major customers. For 2003, our top five customers accounted for approximately 24% of our revenue, our top 10 customers accounted for approximately 39% of our revenue and our largest customer accounted for approximately 6% of our revenue. Generally, we do not have long-term contracts with our major customers and we cannot assure you that our customer relationships will continue as presently in effect. A reduction in or termination of our services by one or more of our major customers could have a material adverse effect on our business and operating results.

Seasonality and the impact of weather can affect our profitability.

Our tractor productivity generally decreases during the winter season because inclement weather impedes operations and some shippers reduce their shipments. At the same time, operating expenses generally increase, with fuel efficiency declining because of engine idling and harsh weather creating higher accident frequency, increased claims and more equipment repairs.

If we are unable to retain our key executives, our business, financial condition and results of operations could be harmed.

We are dependent upon the services of Robert M. Powell, our chief executive officer, and Jerry D. Orler, our president. We do not maintain key-man life insurance on either of these executives. The loss of their services could have a material adverse effect on our operations and future profitability. We must continue to develop and retain a core group of managers if we are to realize our goal of expanding our operations and continuing our growth.

We operate in a highly regulated industry and increased costs of compliance with, or liability for violation of, existing or future regulations could have a material adverse effect on our business.

The U.S. Department of Transportation and various state agencies exercise broad powers over our business, generally governing such activities as authorization to engage in motor carrier operations, safety, insurance requirements and financial reporting. We may also become subject to new or more restrictive regulations relating to fuel emissions, drivers’ hours in service and ergonomics. Our Canadian business activities are subject to similar requirements imposed by the laws and regulations of the Dominion of Canada and provincial laws and regulations. Compliance with such regulations could substantially reduce equipment productivity and increase our operating expenses. Our company drivers and independent contractors also must comply with the safety and fitness regulations promulgated by the Department of Transportation, including those relating to drug and alcohol testing and hours-of-service. The Transportation Security Administration of the U.S. Department of Homeland Security has recently adopted regulations that will require all drivers who carry hazardous materials to undergo background checks by the Federal Bureau of Investigation. While we have historically required all our drivers to obtain this qualification, these new regulations could reduce the availability of qualified drivers, which could require us to adjust our driver compensation package or let trucks sit idle. These regulations could also complicate the process of matching available equipment with shipments that include hazardous materials, thereby increasing the time it takes us to respond to customer orders and our empty miles. The Transportation Security Administration has delayed implementation of these new regulations until April 1, 2004.

The U.S. Department of Transportation conducted a compliance review of our operations in late 2002 that revealed deficiencies in our safety and compliance program. The Department of Transportation downgraded our safety rating from “Satisfactory” to “Conditional” on November 22, 2002, and our “Satisfactory” rating was not reinstated until January 13, 2003, after we had taken corrective actions and the Department of Transportation had completed a follow-up compliance review. As a result of this temporary downgrade in our safety rating, we lost our authority to self-insure for cargo loss and damage claims and for bodily injury and property damage claims from

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January 6, 2003 to January 13, 2003. During that period, we were required to obtain first-dollar insurance for all amounts for which we had been self-insured. Future failures to comply with Department of Transportation safety regulations or downgrades in our safety rating could have a material adverse impact on our operations or financial condition. The loss of our ability to self-insure for any significant period of time would materially increase our insurance costs. In addition, we may experience difficulty in obtaining adequate levels of coverage in that event.

Our operations are subject to various environmental laws and regulations, the violation of which could result in substantial fines or penalties.

We are subject to various environmental laws and regulations dealing with the handling of hazardous materials and similar matters. We operate in industrial areas where truck terminals and other industrial activities are located and where groundwater or other forms of environmental contamination could occur. We also maintain bulk fuel storage and fuel islands at some of our facilities. Our operations involve the risks of fuel spillage or seepage, environmental damage and hazardous waste disposal, among others. If we are involved in a spill or other accident involving hazardous substances, or if we are found to be in violation of applicable laws or regulations, it could have a material adverse effect on our business and operating results. If we should fail to comply with applicable environmental regulations, we could be subject to substantial fines or penalties and to civil and criminal liability.

We may be unable to successfully integrate businesses we acquire into our operations.

From time to time, we consider the possibility of acquiring smaller companies as a way to expand our operations. Although we have not acquired any companies since 1999, it is possible that we will make strategic acquisitions in the future, including acquisitions of companies that will allow us to accelerate the expansion of our third party logistics and brokerage operations. Integrating businesses we acquire may involve unanticipated delays, costs or other operational or financial problems. Successful integration of the businesses we acquire will depend on a number of factors, including our ability to transition acquired companies to our management information systems. In integrating businesses we acquire, we may not achieve expected economies of scale or profitability or realize sufficient revenues to justify our investment. We also face the risk that an unexpected problem at one of the companies we acquire will require substantial time and attention from senior management, diverting management’s attention from other aspects of our business.

Our executive offices and headquarters are located on 63 acres in Van Buren, Arkansas. This facility consists of approximately 84,000 square feet of office space, 12,000 square feet of maintenance space, a 2,500 square foot dock, and training and driver housing space within two structures.

We own and operate several maintenance and driver facilities, including a 32-acre facility in West Memphis, Arkansas, a 20-acre facility in Shreveport, Louisiana, a 44-acre facility in Butler Township, Ohio and a ten-acre facility in Laredo, Texas. We own the land on which each of these four facilities is located, except for three of the acres in West Memphis, Arkansas, which we lease under a long-term lease. We are also holding for sale an eight-acre facility in Vandalia, Ohio that we no longer operate.

We lease a 10-acre facility containing a shop and transfer building in Bethel, Pennsylvania under a lease expiring in November 2004 with two one-year renewal options and a 10-acre facility containing a shop in Roanoke, Virginia under a lease expiring in January 2009 with an option to terminate the lease in January 2007. We also lease, on a month-to-month basis, an office facility in East Peoria, Illinois, and a parking facility in Blue Island, Illinois.

We intend to increase the capacity of our current maintenance facilities, lease additional maintenance facilities and expand our executive offices during 2004 and 2005.

We are a party to routine litigation incidental to our business, primarily involving claims for personal injury and property damage incurred in the transportation of freight. We maintain insurance covering liabilities exceeding our self-insured retention levels resulting from bodily injury and property damage claims. We believe these claims to be routine and immaterial to our financial position, although any adverse results of any of these claims could materially affect our consolidated results of operations, financial position or cash flows.

The Company did not submit any matter to a vote of security holders during the fourth quarter of the fiscal year covered by this Annual Report.

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PART II

Our common stock is quoted on the Nasdaq National Market under the symbol “USAK.” The following table sets forth, for the periods indicated, the high and low closing prices of our common stock as reported by the Nasdaq National Market.

On February 25, 2004, the last reported sale price of our common stock on the Nasdaq National Market was $11.33 per share. As of February 25, 2004, there were approximately 196 owners of record of our common stock.

Dividend Policy

We have not paid any dividends on our common stock to date and we do not anticipate paying any dividends in the foreseeable future. We currently intend to retain all of our earnings, if any, for use in the expansion and development of our business.

The following table provides information about our equity compensation plans as of December 31, 2003, including both stockholder approved plans and non-stockholder approved plans. The section entitled “Compensation of Directors” in our proxy statement for the annual meeting of stockholders to be held on May 5, 2004 contains a summary explanation of the Nonemployee Director’s Stock Option Plan, which has been adopted without the approval of stockholders, and is incorporated herein by reference.

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You should read the following selected consolidated financial data and other operating information along with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements and Supplementary Data.” We derived the selected consolidated Statement of Income and Balance Sheet data as of and for each of the five years ended December 31, 2003 from our audited financial statements.

SELECTED CONSOLIDATED FINANCIAL AND OPERATING INFORMATION

(in thousands, except per share data and key operating statistics)

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The following discussion should be read in conjunction with our consolidated financial statements and notes thereto and other financial information that appears elsewhere in this report.

Overview

We derive the largest portion of our revenues from our traditional business of transporting truckload quantities of general commodities in dry vans, as a medium-haul common carrier for shippers in a variety of industries. These operations generated approximately 85% of our revenues, before fuel surcharge, in 2002 and approximately 82% during 2003. We also provide services for shippers pursuant to contracts that require us to dedicate some of our tractors and trailers for the purpose of transporting freight over specified routes on a regular schedule. In some cases, we are engaged by a shipper to assume operations that the shipper previously conducted itself with a private fleet. In the third quarter of 2003, we began offering regional freight service in selected geographic areas. Dedicated freight operations generated approximately 9% of our revenues, before fuel surcharge, in 2002, and our dedicated freight and regional operations generated approximately 12% of our revenues, before fuel surcharge, during 2003.

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Since 1998, we have also provided third party logistics and brokerage services. Third party logistics services involve our managing a customer’s inbound or outbound freight, or both. In some cases, the freight shipment may require a dry van truckload carrier, and in those cases, we may provide the freight transport services using our equipment. Typically, however, multiple modes of transportation are required, and our services include making arrangements for transportation by appropriate third parties. We also provide traditional freight brokerage services, where we match a customer’s shipments with available equipment of other truckload carriers. Our fees for third party logistics and brokerage services consists primarily of the difference between the amounts we charge our customers, on a per mile basis, and the amounts we pay to the third party carriers we engage, on our customer’s behalf, to move the freight. Third party logistics and brokerage services represented approximately 6% of our revenues, before fuel surcharge, in 2002 and 2003.

We anticipate that dedicated freight and regional freight operations, third party logistics and brokerage services will become larger components of our business, although our traditional medium-haul common carrier services will continue to provide the largest portion of our revenues.

Our major cash requirements include the recruitment and compensation of qualified drivers, the purchase of tractors and trailers and the related costs of operating our business. These costs include diesel fuel and related fuel taxes, insurance premiums, liabilities associated with self-insured claims and revenue equipment maintenance. We have historically been successful mitigating the impact of increases in fuel prices by adding fuel surcharges to our fees, which is a standard practice in our industry. Our financial results are also affected by the market for new and used tractors and trailers as it affects the depreciation costs and residual values relating to the equipment. The weather and the legal and regulatory environment are also significant factors impacting our financial results.

Critical Accounting Policies

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. Actual results could differ from those estimates.

The most significant accounting policies and estimates that affect our financial statements include the following:

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We periodically re-evaluate these estimates and allocations as circumstances change. Together with the effects of the matters discussed above, these factors may significantly impact our consolidated results of operations, financial position and cash flow from period to period.

Results of Operations

Note Regarding Presentation

By agreement with our customers, and consistent with industry practice, we add a graduated surcharge to the rates we charge our customers as diesel fuel prices increase above an industry-standard baseline price per gallon. The surcharge is designed to approximately offset increases in fuel costs above the baseline. Fuel prices are volatile, and the fuel surcharge increases our revenue at different rates for each period. We believe that comparing operating costs and expenses to total revenue, including the fuel surcharge, could provide a distorted comparison of our operating performance, particularly when comparing results for current and prior periods. Therefore, we have excluded the fuel surcharge from revenue and, instead, taken it as a credit against the fuel and fuel taxes line item in the table below. We believe that this presentation is a more meaningful measure of our operating performance than a presentation comparing operating costs and expenses to total revenue, including the fuel surcharge.

We do not believe that a reconciliation of the information presented on this basis and corresponding information comparing operating costs and expenses to total revenue would be meaningful. Revenue data, on both a total basis and excluding the fuel surcharge, is included in the consolidated statements of income included in this report.

The following period-to-period comparisons should be read in conjunction with the following table and the consolidated statement of income. Unless otherwise indicated, references to increases or decreases in expense items refer to increases or decreases as a percentage of revenue, before fuel surcharge.

Revenues from our third party logistics and brokerage services have increased in recent periods. These services do not typically involve the use of our tractors and trailers. Therefore, the increase in these revenues tends to cause expenses related to our operations that do involve our equipment — including depreciation and amortization expense, operations and maintenance expense, salaries, wages and employee benefits, and insurance and claims expense—to decrease as a percentage of revenue. Since the increase in these revenues generally affects all such expenses, as a percentage of revenue, we do not specifically mention it as a factor in our discussion of increases or decreases in those expenses in the period-to-period comparisons below.

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The following table sets forth the percentage relationship of certain items to operating revenues, before fuel surcharge, for the years indicated:

Fiscal Year Ended December 31, 2003 compared to Fiscal Year Ended December 31, 2002

Operating revenue, before fuel surcharge, increased 6.5% from $268.5 million in 2002 to $286.1 million in 2003. This increase was due primarily to an increase of 4.2% in the average number of tractors operated from 1,882 (including 74 owner-operators) in 2002 to 1,961 (including 42 owner-operators) in 2003, an increase in average rates per mile and a 9.1% increase in third party logistics and brokerage revenues from $16.5 million in 2002 to $18.0 million in 2003. These effects were partially offset by a decrease in the number of workdays from 253 in 2002 compared to 252 in 2003.

Average revenue per mile, before fuel surcharge, increased from $1.209 in 2002 to $1.236 in 2003 due to an increase in the average rate per mile charged to customers and to a lesser extent an increase in third party logistics and brokerage revenues. The number of shipments increased 11.2% from 253,063 in 2002 to 281,336 in 2003. The empty mile factor decreased from 9.24% of paid miles in 2002 to 8.97% of paid miles in 2003. The decreased empty mile factor was primarily the result of improved freight demand in our operating areas and, to a lesser extent, reduced quantities of inbound loads into areas where there were few available outbound loads. We experienced a decrease in the percentage of unmanned tractors from 5.89% of the fleet in 2002 to 3.85% of the fleet in 2003. The decrease in the percentage of unmanned tractors was primarily the result of the number of drivers hired exceeding drivers lost through turnover.

The decrease in salaries, wages and employee benefits expense, as a percentage of revenue, was primarily the result of our implementing a reduction in the drivers’ pay rate per mile in December 2002 and a per diem pay program for drivers in April 2002, an increase in average revenue per mile, before fuel surcharge, and a decrease in employee medical benefit expenses. Although the deductibility of per diem payments is limited, there are certain tax benefits to drivers that allow us to decrease overall wages per mile for those drivers who elect to receive the per diem payments. These effects were partially offset by a decrease in the average number of owner-operators in our fleet from 74 in 2002 to 39 in 2003.

The increase in depreciation and amortization, as a percentage of revenue, expense was due to slightly higher depreciation expense on tractors that we chose not to trade in accordance with our historical trade-in cycle. See

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“Business—Revenue Equipment Acquisition Program.” The decrease in average number of owner-operators also contributed to the increase.

The increase in operations and maintenance expense, as a percentage of revenue, was primarily due to increased maintenance expense on tractors that we chose not to trade in accordance with our historical trade-in cycle and, to a lesser extent, the decrease in the size of our owner-operator fleet. See “Business—Revenue Equipment Acquisition Program.”

The decrease in purchased transportation expense was primarily due to the decrease in the size of our owner-operator fleet. Owner-operators are independent contractors who provide their own tractors (including tractor maintenance), fuel and most insurance and drive for the Company on a contract basis for a fixed rate per mile that is higher than that paid to Company drivers, who are not directly responsible for these expenses. This effect was partially offset by an increase in carrier expense for third party transportation services incurred in connection with our third party logistics and brokerage services. All expenses associated with our third party logistics and brokerage services and owner-operator fees comprise purchased transportation expense.

The increase in insurance and claims expense was primarily due to an increase in adverse claims accruals, and, to a lesser extent, an increase in liability, cargo and workers’ compensation insurance premiums.

The increase in other costs was primarily due to an increase in recruiting expense to reduce the number of unmanned tractors as described above.

Our effective tax rate increased from 59.1% in 2002 to 59.2% in 2003. The effective rates varied from the statutory federal tax rate of 34% primarily due to state income taxes and certain non-deductible expenses including a per diem pay structure that we implemented in April 2002. Due to the partially nondeductible effect of per diem, our 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.

Fiscal Year Ended December 31, 2002 compared to Fiscal Year Ended December 31, 2001

Operating revenues, before fuel surcharge, increased 9.9% from $244.4 million in 2001 to $268.5 million in 2002. This increase is due primarily to an increase of 7.5% in the average number of tractors operated from 1,751 (including 25 owner-operators) in 2001 to 1,882 (including 74 owner-operators) in 2002 and to a 162.2% increase in third party logistics and brokerage revenues from $6.3 million for 2001 to $16.5 million in 2002 and, to a lesser extent, the increase in the average rate per mile. Average revenue per mile, excluding fuel surcharge, increased from $1.155 in 2001 to $1.209 in 2002 primarily due to the increase in third party logistics and brokerage revenues and, to a lesser extent, an increase in the average rate per mile charged. The number of shipments increased 9.6% from 231,002 in 2001 to 253,063 in 2002. Miles per tractor per week decreased 1.4% from 2,398 in 2001 to 2,332 in 2002 primarily due to an increase in the percentage of unmanned tractors from 1.20% of the fleet in 2001 to 5.89% of the fleet in 2002. The increase in the percentage of unmanned tractors was primarily the result of an increase in the number of company-owned tractors and driver turnover exceeding the number of drivers hired. The empty mile factor decreased from 9.82% of paid miles in 2001 to 9.24% of paid miles in 2002. The decreased empty mile factor was primarily the result of improved freight demand in our operating areas and, to a lesser extent, reduced quantities of inbound loads into areas where there are few available outbound loads.

The decrease in salaries, wages and employee benefits costs was primarily the result of our implementing a per diem pay program for our drivers during April 2002 and increases in the size of our owner-operator fleet. The average number of owner-operators in our fleet increased from 25 in 2001 to 74 in 2002.

The decrease in fuel and fuel taxes costs was primarily due to a decrease in fuel prices and the increase in the size of our owner-operator fleet.

The decrease in depreciation and amortization expense, as a percentage of revenue, was primarily the result of the increase in the size of our owner-operator fleet. This decrease was partially offset by slightly higher depreciation expense on tractors that we chose not to trade in accordance with our historical trade-in cycle. See “Business—Revenue Equipment Acquisition Program.”

The decrease in operations and maintenance costs was primarily the result of the increase in the size of our owner-operator fleet and a reduction in operations and maintenance costs per company-owned tractor. We were able to reduce operations and maintenance costs per tractor by performing a greater percentage of maintenance work at our terminal facilities and implementing more cost-effective methods for purchasing tires and equipment parts.

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The increase in purchased transportation costs was primarily due to an increase in carrier expense for third party transportation services incurred in connection with our third party logistics and brokerage services and an increase in the size of our owner-operator fleet.

The increase in insurance and claims costs was primarily due to an increase in liability, cargo and workers’ compensation insurance premiums and, to a lesser extent, an increase in adverse claims accruals from 2001 to 2002. These increases were partially offset by the increase in the size of our owner-operator fleet.

Interest expense decreased from $4.3 million in 2001 to $3.1 million in 2002, resulting primarily from interest rate decreases on our senior credit facility and, to a lesser extent, from a decrease in average borrowings under our senior credit facility. See “Liquidity and Capital Resources.”

Our effective tax rate was 38.9% in 2001 and 59.1% in 2002. The effective rates varied from the statutory federal tax rate of 34% primarily due to state income taxes and certain non-deductible expenses including a per diem pay structure that we implemented during the second quarter of 2002. Due to the nondeductible effect of per diem, our tax rate will fluctuate in future periods as earnings and the number of drivers who elect to receive this pay structure fluctuate.

Seasonality

In the trucking industry generally, revenues decrease as customers reduce shipments during the winter holiday season and as inclement weather impedes operations. At the same time, operating expenses increase, due primarily to decreased fuel efficiency and increased maintenance costs. Future revenues could be impacted if customers, particularly those with manufacturing operations, reduce shipments due to temporary plant closings. Historically, many of our customers have closed their plants for maintenance or other reasons during July and January.

Inflation

Although most of our operating expenses are inflation sensitive, with increases in inflation generally resulting in increased operating costs and expenses, the effect of inflation on revenue and operating costs has been minimal in recent years. The effect of inflation-driven cost increases on our overall operating costs are not expected to be greater for us than for our competitors.

Fuel Availability and Cost

The motor carrier industry is dependent upon the availability of fuel. Fuel shortages or increases in fuel taxes or fuel costs have adversely affected our profitability and will continue to do so. Fuel prices have fluctuated widely and fuel taxes have generally increased in recent years. We have not experienced difficulty in maintaining necessary fuel supplies and in the past we generally have 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 a certain baseline price. Typically, we are not able to fully recover increases in fuel prices through rate increases and fuel surcharges. We do not have any long-term fuel purchase contracts and we have not entered into any other hedging arrangements that protect us against fuel price increases. Overall, we experienced higher fuel prices per gallon in 2003 than in 2002 and 2001.

Off-Balance Sheet Arrangements

We do not currently have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. From time to time we may enter into operating leases that would not be reflected in our balance sheet.

Liquidity and Capital Resources

The continued growth of our business has required significant investments in new equipment. We have financed new tractor and trailer purchases with cash flows from operations, the proceeds from sales or trades of used equipment, borrowings under the senior credit facility and capital lease-purchase arrangements. We have historically met our working capital needs with cash flows from operations and with borrowings under the senior credit facility. We use the senior credit facility to minimize fluctuations in cash flow needs and to provide flexibility in financing revenue equipment purchases. Cash flows from operations were $36.9 million for 2003 and $32.9 million for 2002.

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On April 28, 2000, we signed a senior credit facility, which we amended on March 30, 2001, June 17, 2003, December 30, 2003 and January 31, 2004. The senior credit facility, as amended, provides a working capital line of credit of $75.0 million, including letters of credit not exceeding $10.0 million. Bank of America, N.A. is the agent bank and SunTrust Bank, U.S. Bank and Regions Bank are participants in the senior credit facility. As of December 31, 2003, approximately $29.7 million was available under the senior credit facility. The senior credit facility matures on April 30, 2007. At any time prior to April 30, 2007, subject to certain conditions, we have the option to convert the balance outstanding on the senior credit facility to a four-year term loan requiring 48 equal monthly principal payments plus interest. The senior credit facility bears variable interest based on the lender’s prime rate, the federal funds rate plus a certain percentage or LIBOR plus a certain percentage, which is determined based on our attainment of certain financial ratios. The effective interest rate on our borrowings under the credit facility for the year ended December 31, 2003 was 2.81%. We have hedged a portion of our exposure to the volatility in variable interest rates by entering into an interest rate swap agreement effective March 27, 2003, on a notional amount of $10 million. See “Item 7A. Quantitative and Qualitative Disclosures about Market Risk.” A quarterly commitment fee is payable on the unused credit line at a rate which is determined based on our attainment of certain financial ratios. As of December 31, 2003 the rate was 0.20%. This credit facility is collateralized by accounts receivable and otherwise unencumbered tractors, trailers and other equipment.

On December 31, 2003, we had debt obligations of approximately $85.1 million, including amounts borrowed under the senior credit facility and approximately $51.7 million of capital lease commitments. Approximately $10.8 million of these debt obligations were current obligations. During the year ended December 31, 2003, the Company made borrowings under the senior credit facility and lease commitments of $118.4 million, while retiring $101.7 million in debt under these facilities. The borrowings had an average interest rate of approximately 2.8% while the retired debt had an average interest rate of approximately 3.4%.

During the year ended December 31, 2003, we made $64.6 million in capital expenditures including equipment purchases under capital lease arrangements, $62.8 million of which we used for revenue equipment and the balance of $1.8 million we used for maintenance and office equipment, facility improvements and for the purchase of a maintenance facility in Laredo, Texas.

We plan significant capital expenditures throughout 2004, primarily to modernize our aging revenue equipment fleet, which has become increasingly expensive to operate. At December 31, 2003, we planned to make approximately $112.7 million in capital expenditures during 2004. We were committed to spend $68.2 million and budgeted to spend an additional $34.8 million of this amount for revenue equipment in 2004. We expect to use the balance of our planned capital expenditures for 2004, in the amount of approximately $9.7 million, for facility improvements and maintenance and office equipment. We can cancel these commitments to purchase revenue equipment upon advance notice. We believe that the proceeds of our traditional sources of capital will be sufficient to fund the expenditures we anticipate making in 2004. We restructured the senior credit facility to meet our future expenditure needs and may consider additional financing sources, possibly including public or private offerings of securities.

The following table represents the Company’s outstanding contractual obligations at December 31, 2003, excluding letters of credit:

Payments Due By Period

(in thousands)

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New Accounting Pronouncements

See “Item 8. Financial Statements and Supplementary Data—Note 1. to the Financial Statements: New Accounting Pronouncements.”

In an effort to manage the risks associated with changing interest rates, we entered into an interest rate swap agreement effective March 27, 2003 on a notional amount of $10 million. The transaction is intended to provide interest rate protection for us by creating an interest rate neutral position by specifically matching notional amounts, maturity dates and interest rate indices, and does not provide us with any additional borrowing capacity. We believe that the effect, if any, of reasonably possible near-term changes in interest rates on our financial position, results of operations, and cash flows should not be material.

All customers are required to pay for our services in U.S. dollars. Although the Canadian Government makes certain payments, such as tax refunds, to us in Canadian dollars, any foreign currency exchange risk associated with such payments is not material.

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USA TRUCK, INC.

ANNUAL REPORT ON FORM 10-K

YEAR ENDED DECEMBER 31, 2003

INDEX TO FINANCIAL STATEMENTS

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REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Shareholders

USA Truck, Inc.

We have audited the accompanying consolidated balance sheets of USA Truck, Inc. as of December 31, 2003 and 2002, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2003. Our audits also included the financial statement schedule listed in the Index at Item 14(d). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of USA Truck, Inc. at December 31, 2003 and 2002, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

Tulsa, Oklahoma

January 29, 2004

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USA Truck, Inc.

CONSOLIDATED BALANCE SHEETS

See accompanying notes.

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USA Truck, Inc.

CONSOLIDATED STATEMENTS OF INCOME