<PAGE>
 
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-K


    (Mark One)
    [ X ]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
           EXCHANGE ACT OF 1934 (FEE REQUIRED)

    For the Fiscal Year Ended March 31, 1997

                                       OR

    [   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
           EXCHANGE ACT OF 1934 (NO FEE REQUIRED).

    For the transition period from ____________________ to ____________________

                         Commission file number 0-24806
                                                -------

                          U.S. XPRESS ENTERPRISES, INC.

             (Exact name of registrant as specified in its charter)

             Nevada                                     62-1378182
  (State or Other Jurisdiction             (I.R.S. Employer Identification No.)
of Incorporation or Organization)           

      2931 South Market Street
      Chattanooga, Tennessee                               37410
(Address of Principal Executive Offices)                 (Zip Code)

Registrant's telephone number, including area code: (423) 697-7377
                                                    --------------

Securities Registered Pursuant to Section 12(b) of the Act: None
                                                            ----

Securities Registered Pursuant to Section 12(g) of the Act: Class A Common
                                                            --------------
Stock, $0.01 Par Value
----------------------

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 registrant's knowledge, in definitive proxy or information
    statements incorporated by reference in Part III of this Form 10-K or any
    amendments to this Form 10-K. [____]

The aggregate market value of the voting stock held by non-affiliates of the
    registrant was $66,603,787 as of June 6, 1997 (based upon the $19.25 per
    share average of the closing bid and asked price on that date as reported by
    NASDAQ). In making this calculation the registrant has assumed, without
    admitting for any purpose, that all executive officers, directors, and
    holders of more than 10% of a class of outstanding common stock, and no
    other persons, are affiliates.

As of June 6, 1997, the registrant had 9,073,674 shares of Class A Common
    Stock and 3,040,262 shares of Class B Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: The information set forth under Part III,
    Items 11, 12, and 13 of this Report is incorporated by reference from the
    registrant's definitive proxy statement dated June 25, 1997 for the 1997
    annual meeting of stockholders.

                                       1
<PAGE>
 
                             CROSS REFERENCE INDEX

The following cross reference index indicates the document and location of the
information contained herein and incorporated by reference into the Form 10-K.

<TABLE> 
<CAPTION> 

                               Part I                                              Document and Location
                               ------                                              ---------------------
<S>                                                                                <C> 
Item 1     Business                                                                Pages 3 to 14 herein

Item 2     Properties                                                              Page 14 to 15 herein

Item 3     Legal Proceedings                                                       Page 15 herein

Item 4     Submission of matters to a Vote of Security Holders                     Page 15 herein


                               Part II
                               -------
Item 5     Market for the Registrant's Common Equity and
                Related Stockholder Matters                                        Page 15 herein

Item 6     Selected Financial Data                                                 Page 16 herein

Item 7     Management's Discussion and Analysis of Financial
                Condition and Results of Operations                                Pages 17 to 21 herein

Item 8     Financial Statements and Supplementary Data                             Pages 22 to 37 herein

Item 9     Changes in and Disagreements with Accountants on
                Accounting and Financial Disclosure                                Page 37 herein


                               Part III
                               --------

Item 10    Directors and Executive Officers of the Registrant                      Pages 38 and 39 herein

Item 11    Executive Compensation                                                  Pages 7 to 9 of the Proxy Statement

Item 12    Security Ownership of Certain Beneficial Owners and
                Management                                                         Pages 3 and 4 of the Proxy Statement

Item 13    Certain Relationships and Related Transactions                          Page 6 of the Proxy Statement


                               Part IV
                               -------

Item 14    Exhibits, Consolidated Financial Statement Schedules,
                and Reports on Form 8-K                                            Pages 40 to 44 herein

</TABLE> 

                                       2
<PAGE>
 
                                    PART I

ITEM 1.    BUSINESS

General

       Except for the historical information contained herein, the following
       "Business" section contains forward-looking statements that involve risks
       and uncertainties. The Company's actual results could differ materially
       from those discussed herein.

       U.S. Xpress Enterprises, Inc. (the "Company") provides transportation and
       logistics services in the United States, Canada and Mexico. The Company
       has two operating subsidiaries, U.S. Xpress, Inc. ("U.S. Xpress") and
       CSI/Crown, Inc. ("CSI/Crown").

       U.S. Xpress, the Company's largest subsidiary, accounted for 82% of the
       Company's fiscal 1997 revenues. U.S. Xpress targets customers that
       require time-definite and expedited truckload services. These services
       are provided in three ways: i) long-haul services utilizing two-person
       driver teams that travel over lengths of haul ranging generally from 800
       to 3,000 miles; ii) regional services with lengths of haul from 100 to
       1,000 miles in the Western and Southeastern regions of the United States;
       and iii) expedited truckload transportation brokerage services that
       primarily serve the air freight industry.

       CSI/Crown's target market is the floorcovering industry. CSI/Crown
       consolidates floorcovering products into truckload quantities, arranges
       truckload transportation to distribution centers throughout the United
       States and agent facilities throughout the U.S. and Canada for local
       delivery, provides warehousing facilities and sells floorcovering
       installation supplies.

       The Company's operating strategy is focused on seizing the opportunities
       that are emerging from five evolving trends in the transportation
       industry. These trends are:

       1) Growth opportunities are attractive for high-service providers. U.S.
       Xpress was founded in 1985 to provide high levels of transportation-
       related services utilizing technology. Over the last five years, the
       Company's revenues have grown at a 24% compounded annual rate. The
       Company's services have attracted customers across many industries,
       particularly among those who operate just-in-time systems in
       manufacturing and distribution. In addition, the Company's growth is
       attributable to providing services that are unique or differentiated from
       other carriers in the truckload industry. The Company was one of the
       first in the industry to establish time-definite pickups and deliveries
       to exact appointment times as a standard for service quality. Time-
       definite service is a critical element of efficient supply chain and
       distribution systems management as practiced by an ever-increasing number
       of shippers. In addition, the Company is one of only a few truckload
       carriers that provides expedited, time-definite service to and from any
       point in the Continental United States and bordering provinces of Canada.
       This is particularly important to shippers that operate multiple,
       geographically-separated facilities. The Company also has consistently
       utilized leading-edge technologies that provide value to customers. The
       most recent service enhancement is the Xpress Connect(TM) system which
       enables U.S. Xpress and CSI/Crown customers to trace freight, tender
       loads, exchange invoice information and perform other functions through
       the Internet. Management believes that this system is a distinct
       competitive advantage in the truckload industry and establishes a basis
       for the Company to enhance its Internet-based services.

       2) Shippers are increasingly eliminating or reducing the size of their
       private fleets and reducing the number of "core carriers" they use. This
       trend provides full-service carriers such as U.S. Xpress with
       opportunities for growth. In order to be considered as a core carrier by
       major shippers, the 

                                       3
<PAGE>
 
       Company has positioned itself with national and regional truckload
       capabilities, expedited and time-definite service, industry-leading
       technology that adds value to customers' supply chain and administrative
       systems, modern and efficient operating equipment, specialized equipment
       to serve specific customer needs, quality management processes and
       equipment and drivers that can be assigned to dedicated customers and
       routes. In seeking customers, the Company emphasizes its commitment to
       flexibility, responsiveness, analytical planning and information
       management systems that position the Company to serve customers' demands
       for time-definite pickup and delivery, expedited service, instant
       information and logistics planning. The Company is a core carrier for
       many of its major customers, including Federal Express, Hewlett Packard,
       Avery Dennison, Carrier Corporation and Amana.

       3) The labor market for qualified professional truck drivers is extremely
       competitive, providing a competitive advantage to driver-friendly
       employers like the Company. Due to the continuing shortage of qualified
       drivers in the truckload transportation industry, particularly in the
       longer haul market, the recruiting, training and retention of qualified
       drivers is essential to support the Company's continued growth. The
       Company focuses significant resources and attention on the successful
       recruiting, hiring, and retention of qualified professional drivers. In
       fiscal 1997, the Company increased its fleet size to 2,246 tractors, a
       14% increase over fiscal 1996, and employed a sufficient number of
       drivers to operate this larger fleet. The Company plans to increase its
       fleet size in fiscal 1998 through internal growth and strategic
       acquisitions. Two acquisitions were completed after the close of fiscal
       1997 and the Company may pursue other acquisitions. Hiring and retaining
       drivers to fuel continued growth is an essential element of the Company's
       continuing growth and profitability. In fiscal 1997, the competition for
       professional drivers intensified, as several competing carriers raised
       driver mileage pay. Some carriers reported that they increased wages more
       than ten percent. While the Company has not had a significant problem
       with hiring and retaining sufficient numbers of drivers, management
       believes it is critical that the Company remain in the upper tier of
       carriers for total driver compensation in order to continue to keep its
       growing fleet fully staffed. Therefore, mileage pay for U.S. Xpress
       drivers will be increased between 0.5 to 3 cents per mile effective July
       6, 1997. Most drivers will receive a 2 cent per mile increase.

       4) Shippers are increasingly outsourcing their logistics and
       transportation requirements to logistics firms, providing opportunities
       for the Company to obtain significant new customer accounts by
       establishing working relationships with important logistics suppliers.
       Some shippers recognize significant cost savings and improved performance
       by outsourcing transportation requirements and focusing their resources
       on their core businesses. A small number of logistics providers have
       jumped to the forefront of this young industry and have obtained
       significant business volumes from large shippers. The Company has
       established relationships with three of the leading logistics suppliers
       and these relationships have resulted in significant business
       opportunities. The Company believes that as it demonstrates its
       capabilities and performs to the demanding requirements of logistics
       suppliers, it could earn additional business opportunities with these
       logistics providers. In addition, relationships are being developed with
       other logistics providers.

       5) The trucking industry is consolidating, with financial and service
       pressures on many carriers offering attractive opportunities for well-
       capitalized carriers like the Company to acquire other carriers. Many
       carriers are having difficulty growing, or even surviving, in an
       increasingly competitive industry. This provides growth opportunities for
       the Company through acquisitions that fit its strategies, such as
       national or regional truckload carriers, carriers specializing in
       expedited services, floorcovering logistics providers and other high-
       service providers. The Company seeks strategic acquisition opportunities
       that fit the Company's established market niches and complement its
       existing business. Management believes that market and financial forces
       will continue to make acquisition opportunities attractive. The Company
       recently made three such acquisitions: 1) in July, 1996, the Company
       purchased equipment assets and assumed a customer contract of Michael
       Lima 

                                       4
<PAGE>
 
       Transportation, a California carrier involved in providing expedited
       truckload services; 2) effective April 1, 1997, the Company purchased
       assets of Rosedale Transport, Inc., a floorcovering logistics provider
       based in Georgia in which CSI/Crown assumed the management of eight
       distribution centers in the Midwest and East.; and 3) effective May 1,
       1997, the Company acquired JTI, Inc., a Nebraska-based regional carrier.
       Management continues to explore other acquisition opportunities that fit
       its strategic direction.

Services

       The Company's principal service specialty is time-definite service, which
       is the pickup and delivery of freight to prescribed schedules over
       distances ranging from 200 to 3,000 miles. Time-definite transportation
       requires pickups and deliveries to be performed to exact appointment
       times or within a specified number of minutes. This service is a key
       point of differentiation from many other trucking companies, which
       typically provide service only within windows ranging from several hours
       to a few days. Time-definite service is particularly important to the
       Company's customers that operate just-in-time manufacturing, distribution
       and retail inventory systems, and to the Company's customers that operate
       in the air freight industry.

       Management estimates that over half of the Company's typical freight
       volume is of a time-definite nature. Industry analysts estimate that
       about one-third of transportation shipments in the U.S. are made on a
       just-in-time basis, but that number is expected to increase to 40% by
       2000. As more shippers value time-definite service for its impact on
       improving asset utilization through improved inventory management, the
       Company believes it is positioned to capitalize on this growth.

       Management has targeted five markets and is striving to achieve 20%
       annual growth in each market: expedited services, regional services,
       logistics partnerships, dedicated fleets and floorcovering logistics. In
       fiscal 1997, growth in each of these areas exceeded 20%. Revenue reported
       for these markets do, however, have some overlap. For example, freight
       that was shipped for a logistics customer, on an expedited basis, within
       a defined regional service area, using a dedicated truck and driver,
       would be counted as revenue in each of the target markets.

Expedited Service

       U.S. Xpress specializes in the pickup and delivery of freight on a time-
       definite schedule at transit times competitive to deferred air freight
       service. In fiscal 1997, revenue from expedited services was $124.8
       million, an increase of 176% from fiscal 1996. Customers in the air
       freight industry accounted for 21% of expedited services revenue, with
       the remainder provided by manufacturers, distributors, retailers, freight
       forwarders and consolidators. Examples of this service are as follows:

<TABLE> 
<CAPTION> 
                                                                                      Transit
                                                                                      Times
Origin                        Destination                       Miles                 (in hours)
------------------------------------------------------------------------------------------------
<S>                           <C>                               <C>                   <C>  
Charlotte, NC                 Los Angeles, CA                   2,381                    53
Atlanta, GA                   San Francisco, CA                 2,482                    55
Seattle, WA                   Miami, FL                         3,263                    73
Dallas, TX                    Chicago, IL                         923                    20
Newark, NJ                    Columbus, OH                        527                    12
</TABLE> 

       Expedited truckload service is provided at a much lower cost than typical
       deferred air freight service. It is used by manufacturers, distributors,
       air cargo services and freight forwarders that operate geographically
       separated, but tightly controlled just-in-time manufacturing,
       distribution and express delivery systems.

                                       5
<PAGE>
 
         Expedited service is provided primarily by two-person driver teams. In
         addition, freight relays are often used among U.S. Xpress' solo
         drivers. While expedited service is time critical, management directs
         the Company's drivers to observe all speed limits and the Company's
         tractors are equipped with electronic speed controls. The Company
         monitors its drivers to assure that they comply with DOT regulations
         regarding hours-of-service compliance that specify the maximum number
         of hours drivers may drive in 24-hour and 70-hour periods. The
         Company's integrated information and satellite communications systems
         provide real-time information to the Company's operations and customers
         and are used to manage all aspects of its expedited service.

         U.S. Xpress also operates a logistics group that provides expedited
         services. This group, formerly a separate operating subsidiary of the
         Company, National Xpress Logistics ("NXL"), was merged into U.S. Xpress
         on December 1, 1996. The logistics group obtains its business through
         relationships with agents who secure freight accounts and through
         direct relationships with customers. Freight services are provided by
         U.S. Xpress equipment and drivers and by independent contractors.

         In fiscal 1997, the Company almost entirely discontinued its
         coordination of freight services using other transportation modes, such
         as truck-rail intermodal, and its marketing of contract logistics
         management services. The logistics group now focuses on truckload
         services for expedited customers, with most of the customers
         participating in the air freight industry. Other freight business
         opportunities, such as non-expedited truckload services, are provided
         by the Company through its logistics group when these opportunities do
         not fit U.S. Xpress' targeted market segments or when U.S. Xpress
         equipment is not available. Prior to the formation of NXL, these
         opportunities were declined and the Company lost revenue opportunities.
         Likewise, other carriers utilize the Company's logistics group to
         reposition previously unloaded equipment, fill unused capacity with
         dedicated fleet opportunities and provide flexibility to reposition
         fleets and manage traffic lanes.

Regional Service

         About 70% of the freight transported in the U.S. moves over distances
         of less than 1,000 miles. In addition, shippers are reducing the number
         of core carriers they use and are seeking carriers that offer a range
         of services to meet their needs. Many shippers are also bringing the
         various elements of their supply and distribution chains into closer
         geographical proximity. These trends lead shippers to use carriers,
         like the Company, that can provide short-haul, medium-haul and long-
         haul services in key areas of the U.S. The ability to provide regional
         service is an important factor to the Company obtaining certain core
         carrier accounts.

         Prior to 1994, the Company primarily offered medium and long-haul
         services. Recognizing the strategic importance of offering regional
         services, the Company embarked on a strategy to expand regional
         service. In 1994, the Company began providing regional service in the
         Southeast when it acquired Hall Systems, Inc., based in Birmingham,
         Alabama. Hall Systems, Inc. was merged into U.S. Xpress in December
         1996. In 1995, the Company began providing regional service in the
         West. Regional service in the Midwest was offered by U.S. Xpress on a
         limited basis as a service to key customers and to reposition
         equipment. In fiscal 1997, revenue from regional services was $77.0
         million, an increase of 92.5% from fiscal 1996.

         Effective May 1, 1997, the Company acquired JTI, Inc. ("JTI"), based in
         Lincoln, Nebraska, to expand regional service in the Midwest.
         Management expects that JTI's customer base, which has little overlap
         with the Company's customer base, offers opportunities to provide long-
         haul service outside of JTI's operating area. In addition, JTI has
         opportunities to expand regional service in the Midwest with U.S.
         Xpress customers.

                                       6
<PAGE>
 
Logistics Provider Relationships

         Manufacturers and distributors are increasingly outsourcing management
         of their logistics and transportation requirements to third parties.
         The Company has established working relationships with several premier
         logistics suppliers, and in particular, with the three largest in the
         industry. Logistics providers typically manage transportation
         purchasing, coordination and freight allocation for their customers.
         Industry analysts have estimated that about 5% of freight in the U.S.
         is being managed by logistics providers, and this share is expected to
         grow to 10% by the year 2000. Management believes that establishing a
         reputation for consistent and excellent performance is critical to
         future growth with these logistics providers. Revenue from logistics
         provider relationships in fiscal 1997 was $33.1 million, an increase of
         196% from fiscal 1996.

Dedicated Fleets

         The Company provides equipment and drivers that are dedicated to
         specific customers and specific traffic lanes. In fiscal 1996, the
         Company increased its emphasis on providing dedicated equipment and
         drivers to key customers as part of its core carrier strategy. The
         Company and its drivers experience significant benefits from its
         dedicated operations. The Company benefits by receiving increased
         business volume from key customers, improving planning of equipment
         requirements and enhancing the safety of its drivers who travel the
         same lanes repeatedly. Drivers benefit through enhanced predictability
         of their schedules, reduced downtime between loads and more predictable
         off-duty time. At March 31, 1997 the Company operated 301 tractors that
         were dedicated to specific customers or lanes, compared with 60
         tractors at March 31, 1996.

Floorcovering Logistics

         In 1994, the Company acquired Crown Transport Systems, Inc. ("Crown
         Transport") as the first step in building a floorcovering logistics
         business that serves the U.S. and Canada. In 1995, the Company acquired
         CSI/Reeves, Inc. and merged it with Crown Transport in January 1996 to
         form CSI/Crown. CSI/Crown picks up floorcovering products from
         manufacturers; consolidates shipments into truckloads bound for
         specific destinations; contracts with U.S. Xpress and other truckload
         carriers to deliver the products to CSI/Crown service centers or to
         contract agents and delivery services; and delivers the products to
         floorcovering distributors and retailers in all 50 states, Canada and
         Mexico. In addition, CSI/Crown provides warehouse facilities, cutting
         services and retail sales of installation supplies to the floorcovering
         industry.

         CSI/Crown, in coordination with U.S. Xpress and other truckload
         carriers, delivers floorcovering products from its primary dock
         operations in North Georgia (located in close proximity to many carpet
         manufacturers) to its service centers throughout the continental U.S.
         with transit times that are among the best in the floorcovering
         industry. In conjunction with the acquisition and merger, CSI/Crown
         replaced all of its outdated tractors, trailers and forklifts with
         updated equipment. The newer equipment significantly improved equipment
         reliability and enabled CSI/Crown to show immediate improvements in
         customer service and equipment utilization.
         
         Revenue from floorcovering logistics in fiscal 1997 was $65.8 million,
         an increase of 38% from fiscal 1996. In April 1997, CSI/Crown purchased
         the floorcovering distribution system assets, including dock and
         material handling equipment, and assumed leases of terminal facilities
         and customer agreements of Dalton, Georgia-based Rosedale Transport,
         Inc. Eight distribution centers in the Midwest and East were added to
         CSI/Crown's network through the transaction. At fiscal year-end,
         CSI/Crown operated 20 distribution centers and contracted with others
         to provide distribution services at 31 other locations.

                                       7
<PAGE>
 
Technology
         The Company utilizes proven new technologies that yield both
         competitive service advantages and the ability to more profitably serve
         its niche markets. The Company has developed a computerized information
         system that is integrated with the QUALCOMM Omnitracs satellite
         communication system ("the QUALCOMM system") to enhance customer
         service and equipment utilization. The Company's Electronic Data
         Interchange ("EDI") capabilities provide customers with an efficient
         means of tracing freight and performing several administrative
         functions. In November, 1996, the Company introduced its proprietary
         Internet-based "Xpress Connect" system which enables customers to trace
         freight, tender loads and exchange invoice information via the
         Internet. Management believes that this system is a base from which it
         will provide enhanced customer service, and ultimately provide direct
         connectivity between customers and drivers via the Internet.

         The Company is a leader in the innovation of computer information
         systems that are integrated with the QUALCOMM system. Management
         believes that proven technologies provide both competitive service
         advantages and the ability to more profitably serve its niche markets.

Operating Systems
         Management believes that the Company's information systems are one of
         principal competitive advantages. These systems integrate operations
         systems and the principal back-office functions of payroll, billing,
         fuel and accounting with the QUALCOMM system.

Satellite Communications
         The QUALCOMM system was first implemented by the Company in 1990. The
         QUALCOMM system simplifies the location of equipment and permits timely
         and efficient communication of critical operating data, such as
         shipment orders, loading instructions, routing, fuel, taxes paid and
         mileage operated, payroll, safety, traffic and maintenance information.
         For example, load planners assign loads by entering the required
         information into the system. Drivers then access the previously-planned
         load from the system and acquire all the necessary customer, order and
         routing information through their onboard display unit, thus
         eliminating waiting time and inefficient dependence on truck stop
         telephones. Management estimates that carriers without satellite
         communications typically lose one hour or more of productive time per
         driver per day waiting for telephones. The QUALCOMM system permits
         transmission of load assignments directly to the onboard display unit,
         and will even signal a driver when an assignment is available so that
         he or she may sleep in the tractor pending an assignment. In addition,
         through the QUALCOMM system, drivers have direct access to the
         Company's IBM AS/400 computer. This capability enables the driver to
         access information from operations and payroll systems, such as
         requesting and receiving cash advances on the road.

Load Planning/Dispatch
         The Company operates the QUALCOMM Decision Support System ("QDSS"), a
         dispatch optimization software system. This software package provides
         the capability to efficiently allocate equipment and drivers to
         available loads. QDSS maximizes utilization of the Company's equipment
         and contributes to improved customer and driver satisfaction. Load
         planners convert customer orders into daily pre-planned freight
         dispatches. Driver managers then send instructions to drivers via the
         QUALCOMM system. Drivers access the order when they are ready for the
         next load assignment. Drivers can obtain shipment orders, pickup and
         delivery instructions, customer location and routing information
         through the onboard computer. Through QDSS, the Company seeks to
         identify potential problems of too much or too little freight in a
         particular geographic region. The Company seeks additional freight in
         the affected area, or through its logistics group, seeks alternative
         carriers to handle overflow loads.

                                       8
<PAGE>
 
Electronic Data Interchange
         The Company's automated administrative (e.g. billing, fuel tax,
         payroll) and operating systems enable dial-up tracing and full EDI of
         administrative and shipment status information between the Company and
         its customers. This system provides significant operating advantages to
         U.S. Xpress and its customers, including real-time information flow,
         reduction or elimination of paperwork, error-free transcription and
         reductions in clerical personnel. EDI allows the Company to exchange
         data with its customers in a variety of formats, depending on
         individual customer's capabilities, which can significantly enhance
         quality control, customer service and customer efficiency.

Xpress Connect
         The Company's Xpress Connect system is an Internet-based system that
         makes it easier for shippers to track freight, tender loads and
         communicate with the Company via Internet e-mail. The system, which is
         a featured part of the Company's World Wide Web site, is designed to
         assist shippers in better managing their transportation shipments by
         providing up-to-date information on the location and status of active
         shipments, as well as historical information on completed shipments.
         The Company believes that Xpress Connect is the first World Wide Web
         application of its type that permits a customer to track shipments
         without prior knowledge of shipment or order numbers. Xpress Connect is
         customer-specific and password protected to guarantee the security of
         proprietary information. The system is being continually improved and
         upgraded, and in fiscal 1998, management expects to add enhancements
         that provide: 1) customers the ability to obtain proofs of delivery
         from the Company's document imaging system; 2) an on-line freight
         rating system; and 3) automatic notifications to customers' pagers of
         expected delays in transit.

Customer Service
         The Company's customer service functions are handled by three-person
         teams in each geographic region. Each customer has a primary contact
         within the Company who enters orders, monitors delivery status at
         various times each day, coordinates order revisions and special needs
         and alerts customers when scheduling revisions are required. The
         Company's technology provides instant information concerning location
         and estimated delivery time for shipments in transit.

Tractor and Trailer Technology
         The Company's management and a group of its drivers have worked with
         the Company's principal tractor supplier, Freightliner, to design
         improvements in its conventional tractors, such as more spacious and
         functional sleeper compartments and improved aerodynamics. In fiscal
         1997, the Company was among the first to purchase the new Freightliner
         Century Class tractors, which provide superior levels of operating
         safety, fuel efficiency, information management capabilities and driver
         comforts. At March 31, 1997, 842 Century Class tractors were operating
         in the Company's fleet.

         The Company was among the first to use Detroit Diesel 60 Series
         engines, which provide significant performance improvements and
         maintenance cost reductions over non-electronic engines. The Company's
         engines are designed with enough power to enable the tractor to stay
         with the flow of traffic on most upgrades, which enhances safety and
         minimizes driver frustration. In addition, they contain electronic
         speed controls. Many of the Company's tractors are also equipped with
         anti-lock braking systems for improved safety. The Company's custom-
         designed trailers feature cubic capacity that is among the largest in
         the industry. The Company primarily uses Dorsey Cargo Guard trailers,
         many of which include translucent trailer tops that enhance safety in
         loading and unloading. In fiscal 1998, the Company will begin
         purchasing composite plate trailers from Wabash National Corporation
         that are more durable, have greater cubic capacity and stiffer
         sidewalls and do not fracture as easily as conventional aluminum
         trailers.

                                       9
<PAGE>
 
Eaton Vorad

         Eaton Vorad collision avoidance systems are specified equipment on
         Century Class tractors used by U.S. Xpress. These radar-based systems
         are designed to detect traffic ahead and to the side of trucks. The
         Eaton Vorad system is designed to provide drivers with additional
         response time, resulting in a safer vehicle for drivers and the
         motoring public. Over 800 such systems were in operation at fiscal 
         year-end. In fiscal 1997, there were 87 accidents in the U.S. Xpress
         fleet involving lane changes or right turns. Seven of those involved
         Vorad-equipped trucks. There were 32 accidents during the fiscal year
         in which U.S. Xpress trucks were involved in rear-end collisions. Four
         of those involved Vorad-equipped trucks.

Document Scanning

         The Company has installed an optical character recognition system that
         scans documents such as bills of lading, driver logs and fuel receipts
         onto optical disks or other storage media. This system has reduced
         clerical and management time required to enter and retrieve
         information, while enhancing the availability and increasing the
         utilization of data by customers.

Debit Cards for Long Distance Telephone and Internet E-Mail

         The Company also makes available to all of its drivers a debit card,
         which enables a driver to prepay long distance telephone calls and
         Internet e-mail. The prepaid debit card system offers per minute rates
         lower than those currently offered by the three primary long distance
         carriers. Drivers have the capability to easily "reload" capacity, or
         add value, to the cards when the prepaid portion has been used.

Drivers

         At March 31, 1997, the Company employed 3,154 drivers at U.S. Xpress.
         Over 41% of the Company's drivers have been employed at least one year
         with the Company, and over 29% have been employed at least three years
         with the Company. Employment turnover of over-the-road drivers is a
         significant industry-wide problem. Recruiting, training and retention
         of qualified drivers is essential to support the Company's continued
         growth. Management believes that one of the key elements to retaining
         professional drivers is providing competitive compensation. Most
         companies in the truckload industry pay drivers based on the miles that
         they drive and provide various additional bonuses and incentives.
         Management believes that drivers' primary interest in compensation is
         their take-home pay rather than their base mileage pay. While other
         carriers may offer marginally higher mileage pay, management believes
         that the Company's drivers' compensation is comparable to those of
         other carriers because the Company's high equipment utilization
         maximizes driver productivity, miles driven and pay.

         To maintain high equipment utilization, particularly during periods of
         rapid additions of equipment to the fleet and periods of soft freight
         demand, the Company has implemented a number of ongoing initiatives to
         retain existing drivers and recruit new ones, such as handling driver-
         friendly freight, adopting an attractive compensation and benefits
         package, providing equipment with desirable driver amenities and
         providing a Company-wide culture of support for drivers' needs.

Recruiting

         Management believes that meeting drivers' reasonable expectations is
         critical to driver satisfaction and retention. Driver recruiters are
         trained to provide candidates with a realistic view of work
         requirements and the lifestyles required of a long-haul, over-the-road
         driver. The Company's recruiting efforts include targeted advertising,
         recruitment by the Company drivers and other methods. Detailed
         statistics are continually maintained and evaluated to determine the
         effectiveness of recruiting efforts. The Company compensates its
         drivers for successful recruiting efforts and periodically holds
         special incentive contests to encourage drivers to assist with
         recruiting.

                                       10
<PAGE>
 
         The Company also maintains a "quick response" system that investigates
         prospective drivers' credentials and driving histories and in most
         instances approves drivers for hiring within one business day of
         application. Management believes that this system is critical to hiring
         quality drivers who are making a job change and may have applied to
         several prospective employers at the same time. New driver candidates
         are carefully screened on the basis of prior driving and safety
         records. In accordance with DOT requirements, the Company operates a
         drug-free workplace. Accordingly, all drivers are required to submit to
         pre-employment, random, reasonable cause, post-accident and post-injury
         drug testing.

Training
         The Company works closely with a community college in Oklahoma to
         recruit and train prospective drivers. All new drivers, regardless of
         experience, are trained under strict guidelines. A two-day orientation
         program provides drivers with information about the Company, its
         equipment and its expectations. The orientation program also stresses
         safety instruction and proper operation of the tractors and trailers
         used by the Company. New drivers with less over-the-road experience are
         placed in the Company's driver training program and teamed with driver
         trainers to gain additional over-the-road experience. Driver trainers
         are carefully selected based on driving and safety records and receive
         additional instruction prior to being assigned to the driver training
         program. The Company has found that drivers completing this driver
         training program tend to have better safety and retention records.

Driver Managers
         An important aspect of driver retention is driver managers. Each
         Company driver is assigned a driver manager who is responsible for all
         aspects of driver satisfaction: miles, home time and helping drivers
         resolve work-related issues. Driver managers' performance is evaluated
         based on equipment utilization, driver turnover, driver miles and
         driver safety performance. The driver managers communicate with drivers
         daily through the satellite communications system and by telephone when
         personal communication is warranted. Typical matters in which
         assistance is provided include payroll issues and scheduling a driver's
         load so that he or she can return home. The Company recognizes that the
         first 90 days of employment is a critical retention and safety period
         for new drivers. New drivers are assigned to specific driver managers
         who are specially trained to assist new drivers. Each driver manager is
         responsible for approximately 45 trucks.

Driver-Friendly Freight
         Management believes that the kind of freight the Company typically
         handles is a significant factor in driver retention. Although drivers
         do occasionally load and unload freight, the Company focuses much of
         its marketing efforts on customers with freight which is "driver-
         friendly" in that it requires minimal or no loading or unloading by
         drivers. The Company also is increasingly extending this driver-
         friendly concept to customers that do not keep drivers waiting for
         extensive periods of time while trailers are loaded and those whose
         employees, usually loading dock personnel, treat the Company's drivers
         as professionals.

Compensation and Benefits
         The Company's compensation and benefits package has been structured to
         attract and retain quality drivers. Company drivers are compensated
         primarily on the basis of miles driven, with base pay per mile
         increasing with a driver's length of employment. Because the Company
         has an average length of haul that is longer than most truckload
         carriers, drivers accumulate more miles and thus earn above average
         pay. Drivers also can earn additional mileage pay through safety and
         mileage incentive bonuses. Based on recent surveys performed by the
         Company with respect to compensation paid by competitors, management
         believes the Company's driver compensation ranks among the highest in
         the truckload industry. Employee benefits include paid holidays and
         vacations, health insurance and a 

                                       11
<PAGE>
 
         401(k) retirement plan in which the Company matches 50% of employee
         contributions, up to six percent of compensation.

Driver Amenities

         The Company's late-model, conventional tractors are designed for driver
         comfort and safety. Standard equipment includes double sleeper bunks,
         extra large cabs, air-ride suspensions and additional storage for
         personal items. The Company also has developed specific satellite
         communications applications that enable drivers to remain in touch with
         their families, receive information about pay and expense advances,
         directions to customer locations, weather updates and load assignments.
         The Company also provides pre-paid telephone calling cards that contain
         30 minutes of free calling time per month to drivers. Drivers have the
         ability to add time to the cards by charging a personal credit card or
         through payroll deduction. In July 1996 the Company began testing a
         system in which drivers could send and receive electronic mail via the
         Internet using their satellite communications system. The costs of 
         e-mail messaging are paid by drivers through their telephone calling
         cards. The test was successful and in October 1996, Internet e-mail
         capability was provided to the entire fleet. In fiscal 1997, the
         Company began purchasing Freightliner Century Class tractors, which set
         a new industry standard for efficiency and driver amenities.

Equipment

         U.S. Xpress operated 2,246 Freightliner conventional tractors and 5,470
         dry van trailers at March 31, 1997. Most of the trailers are 53' x 102"
         high-cubic capacity vans. At fiscal year-end, management was
         implementing a program to reduce the size of the trailer fleet to an
         approximate 2:1 trailer to tractor ratio.

         Growth of the Company's tractor and trailer fleets is managed based on
         market conditions and the Company's experience and expectations with
         respect to equipment utilization levels. During fiscal 1997, the
         Company focused on improving equipment utilization. The fleet size was
         increased only as utilization goals were achieved. Utilization of the
         U.S. Xpress fleet in fiscal 1997 (including tractors associated with
         Hall Systems, which was merged into U.S. Xpress during the year) was
         $2,761 in revenue per tractor per week, a 4.3% increase from fiscal
         1996. The U.S. Xpress fleet size increased 13.7% during fiscal 1997,
         less than its revenue growth of 17.9%.

         The Company determines the specifications of equipment purchases based
         on such factors as vehicle and component quality, warranty service,
         driver preferences, new vehicle prices and the likely resale market.
         Because the fleet is standardized and has warranty maintenance
         agreements with original equipment suppliers, the Company has minimized
         parts inventories and maintenance costs.

         Tractors are typically replaced every 36 to 48 months, generally well
         in advance of the need for major engine overhauls. This schedule can be
         accelerated or delayed based on resale values in the used truck market
         and the differential between those values and new truck prices. The
         Company maintains third party relationships that enable it to retail,
         rather than wholesale, a large percentage of used equipment. Management
         believes that this practice has resulted in significant gains through
         the sale of used trucks over what could have been obtained from trade-
         in values offered by the manufacturer. With respect to tractors and
         trailers scheduled for purchase during fiscal 1998, the Company has
         negotiated attractive repurchase commitments from its primary equipment
         vendors. These agreements reduce the Company's risks related to
         equipment disposal values.

Competition

         The transportation services business is extremely competitive. The
         Company competes primarily with other truckload carriers and,
         particularly in the longer haul markets, with intermodal
         transportation, railroads and providers of deferred air-freight
         service. Competition from railroads and

                                       12
<PAGE>
 
         intermodal transportation likely would increase if state or federal
         highway fuel taxes were increased without a corresponding increase in
         taxes imposed on fuel used by railroads.

         Generally, competition for the freight transported by the Company is
         based more on service and efficiency than on freight rates. However,
         historically, increased competition has created downward pressure on
         the truckload industry's pricing structure. Prolonged weakness in
         freight markets or downward pressure on freight rates could adversely
         effect the Company's results of operations or financial condition. Some
         competitors do have greater financial resources, operate more equipment
         and transport more freight than the Company.

Regulation

         The Company is a motor carrier that ascribes to safety rules and
         regulations promulgated by the Department of Transportation ("DOT") and
         various laws and regulations enforced by state agencies. These
         regulatory authorities have broad powers, generally governing
         activities such as authority to engage in motor carrier operations,
         accounting systems, certain mergers, consolidations, acquisitions and
         periodic financial reporting. Subject to federal, state and provincial
         regulatory authorities, the Company may transport most types of freight
         to and from any point in the United States, Mexico and certain Canadian
         provinces over any route selected by the Company. The trucking industry
         is subject to possible regulatory and legislative changes (such as
         increasingly stringent environmental regulations or limits on vehicle
         weight and size) that may affect the economics of the industry by
         requiring changes in operating practices or by affecting the cost of
         providing truckload services.

         The Company has underground storage tanks for diesel fuel in use at
         terminals in Chattanooga, Tennessee, Tunnel Hill, Georgia, Oklahoma
         City, Oklahoma and Birmingham, Alabama. JTI has an underground storage
         tank in Lincoln, Nebraska. As a result, the Company is subject to
         regulations promulgated by the EPA in 1988 governing the design,
         construction and operation of underground fuel storage tanks from
         installation to closure. For underground fuel storage tanks in
         existence at the time the regulations were promulgated in 1988, which
         include tanks at the terminal in Chattanooga, the regulations require
         that tanks be upgraded to meet specified standards concerning corrosion
         protection, spill or overfill protection and release detection on a
         phased timetable which began in 1989 and ends in 1998. The Company
         believes all of its tanks are in compliance with EPA regulations.

Safety and Risk Management

         The Company is committed to ensuring that it has safe drivers. The
         Company regularly communicates with drivers to promote safety and to
         instill safe work habits through Company media, safety review sessions
         and ethics and responsibility training. These programs reinforce the
         importance of driving safely, abiding by all laws and regulations such
         as speed limits and driving hours, performing regular equipment
         inspections and acting as good citizens on the road. The Company's
         accident review committee meets regularly to review any new accidents,
         take appropriate action related to drivers, examine accident trends and
         implement changes in procedures or communications to address any safety
         issues.

         Management's emphasis on safety also is demonstrated through its
         equipment specifications, such as anti-lock brakes, electronic engines,
         special mirrors, conspicuity tape and the implementation of Eaton Vorad
         collision avoidance systems on all Freightliner Century Class tractors.
         The Eaton Vorad systems are designed to provide drivers with visible
         and audible warnings when other vehicles are beside them and when
         vehicles ahead are traveling at slower speeds than the truck. The
         system provides drivers with additional response time to prevent
         accidents.

         The Company requires prospective drivers to meet higher qualification
         standards than those required by the DOT. The DOT requires the
         Company's drivers to obtain national commercial driver's licenses

                                       13
<PAGE>
 
         pursuant to the regulations promulgated by the DOT. The DOT also
         requires that the employer implement a drug-testing program in
         accordance with DOT regulations. The Company's program includes pre-
         employment, random, reasonable cause, post-accident and post-injury
         drug testing.

         Interstate motor carrier operations are subject to safety requirements
         prescribed by the DOT. Such matters as equipment weight and dimensions
         are also subject to federal and state regulations. An unpublished March
         1993 change in the enforcement standards applied by the DOT has
         resulted in the reclassification of a number of motor carriers' safety
         ratings from "satisfactory" to "conditional" or "unsatisfactory".
         Currently, U.S. Xpress, JTI and CSI/Crown each have satisfactory
         ratings.

         The Company's Director of Risk Management and Chief Financial Officer
         are responsible for securing appropriate insurance coverage at cost
         effective rates. The primary claims arising in the Company's business
         consist of cargo loss and damage and auto liability (personal injury
         and property damage). The Company currently purchases primary and
         excess coverage for these types of claims in levels which management
         believes are sufficient to adequately protect the Company from
         significant claims. The Company also maintains primary and excess
         coverage for employee medical expenses and hospitalization, damage to
         physical properties and equipment damage resulting from collisions or
         other losses.

Personnel

         The Company considers relations with its employees, all of whom are 
         non-union, to be good. At March 31, 1997, the Company and its
         subsidiaries employed 4,416 persons, including 3,154 drivers at U.S.
         Xpress. In addition, 50 independent contractor/drivers provided
         services to U.S. Xpress.

         On August 1, 1996, the Company ended its arrangement with a third-party
         leasing company in which the Company leased its drivers and most office
         and maintenance employees. On that date, all persons employed through
         the leasing company became employees of the Company or its
         subsidiaries. On January 1, 1997, the Company entered into an
         arrangement with a third party in which the Company outsources payroll
         and benefits administration, unemployment insurance and workers'
         compensation. Under this arrangement, the Company pays the third party
         a fixed amount per employee. The Company believes that this arrangement
         enables it to achieve cost savings on payroll administration, personnel
         benefits and insurance premiums.


ITEM 2.       PROPERTIES

         All of the Company's offices and terminals are leased. The Company's
         headquarters are located in two leased buildings in Chattanooga,
         Tennessee. U.S. Xpress is also based in Chattanooga. CSI/Crown is based
         in Tunnel Hill, Georgia, approximately 25 miles from the Chattanooga
         location. In addition to the headquarters locations, U.S. Xpress
         operates 14 terminal facilities and CSI/Crown operates 20 distribution
         service centers.

         Effective April 1, 1997, the Company purchased assets from Rosedale
         Transport, Inc. and assumed the operation and existing leases of
         floorcovering service centers in Eagan, Minnesota; Grand Rapids and
         Detroit, Michigan; Akron, Ohio; Pittsburgh, Pennsylvania; Newark,
         Delaware; and Rochester and Syracuse, New York. Effective May 1, 1997
         the Company acquired JTI, Inc., which owns a headquarters facility and
         terminal in Lincoln, Nebraska and leases terminals in N. Sioux City,
         South Dakota, Green Bay, Wisconsin and Loudon, Tennessee.

         Each of the Company's terminals and service centers are headed by a
         terminal or service center manager. Six U.S. Xpress terminals and one
         JTI terminal include maintenance facilities. Several terminals include
         driver lounges and customer service functions for local pickups and
         deliveries. In fiscal 1997, expansion of the CSI/Crown consolidation
         dock facility was completed and expansion of the U.S. Xpress
         maintenance facility at Tunnel Hill was begun. The Company believes
         that its current facilities are suitable and adequate for its present
         needs. The Company also periodically seeks improved locations and
         facilities and has not encountered any significant impediments to the
         location of new or additional facilities.


                                       14
<PAGE>
 

ITEM 3.       LEGAL PROCEEDINGS

         The Company is party to various legal proceedings arising in the normal
         course of its business. Management does not believe that the outcome of
         any of these proceedings will have a material adverse effect on the
         Company.

ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         During the fourth quarter of the year ended March 31, 1997, no matters
         were submitted to a vote of security holders.


                                    PART II

ITEM 5.       MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
              MATTERS


Common Stock and Stockholder Data

         Class A Common Stock is traded on the NASDAQ National Market System
         under the symbol XPRSA. At June 6, 1997, there were 164 registered
         stockholders and an estimated 1,650 beneficial owners. At June 6, 1997
         there were 9,073,674 shares of Class A Common Stock outstanding and
         3,040,262 shares of Class B Common Stock outstanding. Listed below is
         the trading activity for each quarter in the last two fiscal years.

<TABLE> 
<CAPTION> 


                                                                                Average
         Quarter Ending               High                 Low                Daily Volume
         ----------------------------------------------------------------------------------
         <S>                         <C>                 <C>                  <C>   
         June 30, 1995               11.125                8.125                 37,881
         September 30, 1995          11.125                7.00                  22,099
         December 31, 1995            9.50                 6.75                  20,395
         March 31, 1996               8.75                 6.625                  5,154
         June 30, 1996                8.50                 6.625                  8,998
         September 30, 1996           9.75                 5.75                  19,869
         December 31, 1996           16.125                8.50                  36,735
         March 31, 1997              17.75                12.25                  22,081

</TABLE> 

Dividends
         The Company does not pay cash dividends and intends to continue to
         retain earnings to finance growth of the Company.

                                       15
<PAGE>
 
ITEM 6.    SELECTED FINANCIAL DATA
(In thousands, except per share and operating data)

<TABLE> 
<CAPTION> 


Year Ended March 31,                               1997         1996         1995          1994       1993           1992
------------------------------------------------------------------------------------------------------------------------- 

<S>                                        <C>             <C>         <C>           <C>         <C>           <C>   
Income Statement Data/(1)/                                  
  Operating revenue
  U.S. Xpress                               $   296,974    $ 251,880   $  230,416    $  191,403  $ 164,856     $  135,389

CSI/Crown                                        65,845       47,817       23,915        24,001     21,288         21,827
                                            ----------------------------------------------------------------------------- 
       Consolidated                         $   362,819    $ 299,697   $  254,331    $  215,404  $ 186,144     $  157,216
                                            ============================================================================= 

Income from operations                      $    19,716    $   5,251   $   18,159    $   14,095  $   7,790     $    6,038
Income before taxes and cumulative                                                                               
  effect of change in accounting method          14,236           75       13,557         9,714      3,313          3,678
Net income                                        7,878           94        8,263         6,042      1,867          2,454
Earnings per share                                  .65          .01          .76           .63        .19            .25
Weighted average number                                                                                          
  of shares outstanding                          12,168       12,003       10,806         9,665      9,665          9,665

Truckload Operating Data/(2)/                                                                                    
Total revenue miles (in thousands)              261,596      222,496      204,804       180,609    160,664        134,770
Average revenue per mile                    $      1.15    $    1.14   $     1.14    $     1.09  $    1.08     $     1.06
Tractors (at end of period)                       2,246        1,975        1,721         1,504      1,323          1,095
Average revenue per tractor per week        $     2,761    $   2,646   $    2,807    $    2,796  $   2,795     $    2,637
                                                                                                                 
Balance Sheet Data                                                                                               
Working capital                             $    33,829    $  19,606   $   10,786    $    2,636  $   8,611     $   10,949
Total assets                                    178,084      177,821      146,070       103,385     89,412         53,267
Long-term debt, net of current                                                                                   
  maturities                                     59,318       61,789       46,157        49,871     51,628         29,307
Stockholders' equity/(3)/                        63,162       55,086       54,082        13,436      7,394          5,527

</TABLE> 

/(1)/    Data for U.S. Xpress includes data for all truckload operations. Data
         for CSI/Crown includes data for CSI/Reeves from its date of acquisition
         in August 1995.

/(2)/    Data for U.S. Xpress truckload operations. Average revenue per mile is
         net of fuel surcharges. Tractor data includes owned and leased
         tractors.

/(3)/    Reflects the sale by the Company of 2,500,000 shares of Class A Common
         Stock on October 6, 1994.

                                       16
<PAGE>
 
ITEM 7.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
              CONDITION AND RESULTS OF OPERATIONS 


         Comparison of the Year Ended March 31, 1997 to the Year Ended 
         March 31, 1996

         The Company's initiatives to improve equipment utilization and to
         reduce operating expenses as a percent of revenue had favorable results
         for the fiscal year ended March 31, 1997. In this period, utilization
         for the combined truckload operations increased 4.3% to $2,761 in
         revenue per tractor per week, compared to $2,646 during the same period
         in 1996. The operating ratio (operating expenses as a percentage of
         revenue) improved 3.6 percentage points, reflecting a 21% increase in
         revenue versus a 16.5% increase in operating expenses. The smaller
         increase in operating expenses, compared to revenues, was due to
         reductions in several fixed and variable expense items.

Operating revenue during the fiscal year ended March 31, 1997 increased $63.1
         million, or 21.1%, to $362.8 million, compared to $299.7 million during
         the same period in 1996. This increase resulted partially from the
         fiscal 1996 acquisitions of CSI/Reeves and Hall Systems, which together
         contributed $29.7 million of the $63.1 million increase. U.S. Xpress
         linehaul operations contributed $33.4 million to the increase.
         Increased U.S. Xpress linehaul revenue resulted from increased revenue
         miles and a slight increase in the rate per revenue mile.

Operating expenses represented 94.6% of operating revenue for the year ended
         March 31, 1997, compared to 98.2% during the same period in 1996.

Salaries, wages and employee benefits as a percentage of operating revenue was
         41.0% for the year ended March 31, 1997, compared to 43.0% during the
         same period in 1996. This decrease is a result of salaries and wages
         for both Hall Systems and CSI/Crown representing a lower percentage of
         operating revenue due to the utilization of owner-operators at Hall
         Systems and the utilization of outside linehaul carriers at CSI/Crown.
         All owner-operator expenses and purchased linehaul services are
         reflected as purchased transportation.

Fuel and fuel taxes as a percentage of operating revenue was 16.9% for the year
         ended March 31, 1997, compared to 16.3% during the same period in 1996.
         This increase was primarily attributable to an 11.0% increase in the
         average prices per gallon, offset by a 2.2% increase in average miles
         per gallon.

Vehicle rents as a percentage of operating revenue was 6.0% for the year ended
         March 31, 1997, compared to 5.8% for the same period in 1996.
         Depreciation and amortization as a percentage of operating revenue was
         4.0% for the year ended March 31, 1997, compared to 5.6% during the
         same period in 1996. Overall, as a percentage of operating revenue,
         vehicle rents and depreciation were 10.0% for the year ended March 31,
         1997, compared to 11.4% during the same period in 1996. This decrease
         was due in part to increased non-transportation revenue from CSI/Crown
         and an increase in owner-operator revenue from Hall Systems, both of
         which do not require expenditures for revenue equipment. Additionally,
         utilization for U.S. Xpress linehaul operations increased to $2,761 in
         revenue per tractor per week for the year ended March 31, 1997, a 4.3%
         increase from the previous fiscal year, which reduced the number of 
         tractors required.

Purchased transportation as a percentage of operating revenue was 6.3% for the
         fiscal year 1997, compared to 6.6% in the same period in 1996. This
         decrease is due to increased non-transportation revenue at CSI/Crown
         which does not require expenditures for purchased transportation.

Operating expenses and supplies as a percentage of operating revenue was 6.3%
         for the year ended March 31, 1997, compared to 7.1% during the same
         period in 1996. This decrease results from two factors: 1) an increase
         in non-transportation revenue from CSI/Crown and an increase in owner-
         operator revenue from Hall Systems, which do not require

                                       17
<PAGE>
 
         incremental company expenditures for operating expenses and supplies;
         and 2) reductions in maintenance expenses.

Cost of installation supplies sold during the year ended March 31, 1997 was $8.2
         million, compared to $5.2 million during the same period in 1996. This
         increase is due to an increase in installation supplies sold to $11.0
         million in 1997, from $6.6 million in 1996. This expense item reflects
         the cost of carpet installation supplies which are sold through
         CSI/Crown retail outlets.

Income from operations for the year ended March 31, 1997 increased $14.5
         million, or 275.5 %, to $19.7 million from $5.3 million during the same
         period in 1996. As a percentage of operating revenue, income from
         operations was 5.4% during the year ended March 31, 1997, compared to
         1.8% during the same period in 1996.

Income tax provision for the year ended March 31, 1997 was $6.4 million,
         compared to a $19,000 benefit during the same period in 1996. This
         reflects an effective federal and state income tax rate of 44.7% for
         fiscal 1997 as compared to the statutory federal and state rate of
         approximately 39.0%. This higher rate is primarily the result of non-
         deductible per diems paid to drivers during part of fiscal 1997.
         Subsequent to December 31, 1996 per diems paid to drivers were
         eliminated. Comparison of the Year Ended March 31, 1996 to the Year
         Ended March 31, 1995.


                                       18
<PAGE>
 

Operating expenses represented 98.2% of operating revenue during the year ended
         March 31, 1996 and 92.9% during the same period in 1995.

Salaries, wages and employee benefits as a percentage of operating revenue was
         43.0% during the year ended March 31, 1996, compared to 42.5% during
         the same period in 1995. This increase was due to a 6.0% increase in
         driver pay in mid-March 1995 and an increase in the empty miles
         percentage to 6.9% of total miles in fiscal 1996, compared to 5.5% in
         fiscal 1995. Partly offseting these factors was lower salaries and
         wages at Hall Systems as a percentage of operating revenue, due to that
         company's utilization of owner-operators. All owner-operator expenses
         are reflected as purchased transportation.

Fuel and fuel taxes as a percentage of operating revenue was 16.3% during the
         year ended March 31, 1996, compared to 16.8% during the same period in
         1995. This decrease resulted from an increase of $5.4 million in
         logistics revenues and the addition of $7.9 million of non-
         transportation revenue from the newly acquired CSI/Reeves, both of
         which do not require Company expenditures for fuel and fuel taxes. As a
         percentage of operating revenue, excluding the increase in logistics
         and non-transportation revenue, fuel and fuel taxes was 17.0% during
         the year ended March 31, 1996.

Vehicle rents as a percentage of operating revenue was 5.8% during the year
         ended March 31, 1996, compared to 6.6% during the same period in 1995.
         Depreciation and amortization represented 5.6% of operating revenue in
         1996, compared to 5.9% in 1995. Overall, as a percentage of operating
         revenue, vehicle rents and depreciation were 11.4% during the year
         ended March 31, 1996, compared to 12.5% during the same period in 1995.
         This decrease was primarily attributable to increased revenues from
         warehousing, transportation logistics services and the sale of
         installation supplies, none of which required significant expenditures
         for revenue equipment. Revenue from warehousing, logistics services and
         the sale of installation supplies was $19.2 million during the year
         ended March 31, 1996, compared to $5.9 million in the same period in
         1995. As a percentage of operating revenue, excluding the increase in
         logistics and non-transportation revenue, vehicle rents and
         depreciation were 11.9% during the year ended March 31, 1996.

Purchased transportation as a percentage of operating revenue was 6.6% during
         the year ended March 31, 1996, compared to 4.1% during the same period
         in 1995. This increase resulted primarily from increased third-party
         transportation purchases by CSI/Reeves and NXL, and owner-operator
         expense from Hall Systems. The majority of transportation services
         provided by NXL and CSI/Reeves result in the purchase of transportation
         from third parties.

Operating expenses and supplies as a percentage of operating revenue was 7.1%
         during the year ended March 31, 1996, compared to 6.8% during the same
         period in 1995. This increase reflected high parts, tires and repair
         costs incurred in fiscal 1996 associated with preparing used tractors
         for disposal during the Company's second quarter.

Cost of installation supplies sold during the year ended March 31, 1996 reflects
         costs of carpet installation supplies sold through CSI/Reeves retail
         outlets from the date of acquisition (August 31, 1995).

                                       19
<PAGE>
 
Building rental as a percentage of operating revenue was 1.2% during the year
         ended March 31, 1996, compared to 0.8% during the same period in 1995.
         This increase is primarily attributable to building rental expenses
         associated with the acquired warehousing operations of CSI/Reeves.

Gain on sales of equipment as a percentage of operating revenue was 0.4% during
         the year ended March 31, 1996, compared to 1.1% during the same period
         in 1995. Proceeds from the disposals of used equipment were $17,383
         during the year ended March 31, 1996, compared to $17,582 during the
         same period in 1995.

Income from operations for the year ended March 31, 1996 decreased $12.9
         million, or 71.1%, to $5.3 million from $18.2 million. As a percentage
         of operating revenue, income from operations was 1.8% in the year ended
         March 31, 1996, compared to 7.1% during the same period in 1995.


Special Considerations
----------------------

Certain factors affect U.S. Xpress Enterprises and the transportation industry.
         The trucking industry is affected by economic risks and uncertainties,
         some of which are beyond its control. These include economic recessions
         and downturns in customers' business cycles, increases in fuel prices,
         the availability of qualified drivers and fluctuations in interest
         rates.

         The trucking industry is highly competitive and includes numerous
         regional, inter-regional and national truckload carriers. Many of these
         carriers have greater financial resources, equipment and freight
         capacity than the Company. Management believes its strategies of
         controlled growth and focused marketing will continue to provide
         freight at sufficient volumes and prices to remain profitable. Changes
         in economic conditions could reduce both the amount of freight
         available and freight rates, which could have a material adverse effect
         on the Company's results.

         Fuel is one of the Company's largest expenditures. In April 1996, the
         industry experienced a rapid increase in fuel prices. These increased
         prices remained throughout fiscal 1997. The Company partially offset
         the effect of these increases through fuel surcharges to customers or
         rate increases in lieu of fuel surcharges. Future increases or
         decreases in fuel prices are uncertain. To the extent the Company is
         unable to offset fuel price increases through fuel surcharges or rate
         increases, increased fuel prices could have a material adverse effect
         on the Company's results.

         Competition for available qualified drivers in the truckload industry
         is intense, and will likely remain so for the foreseeable future. The
         Company and many of its competitors experience high rates of turnover
         and occasionally have difficulty in attracting and retaining qualified
         drivers in sufficient numbers to operate all available equipment.
         Management believes the Company's current pay structure, benefits,
         policies and procedures related to drivers are effective in attracting
         and retaining drivers. However, there can be no assurance that it will
         not be affected by a shortage of qualified drivers in the future. The
         inability to attract and retain qualified drivers would have a material
         adverse effect on the Company's results.

         The trucking industry is extremely capital intensive. The Company
         depends on operating leases, lines of credit, secured equipment
         financing and cash flows from operations to finance the expansion and
         maintenance of its modern and cost efficient revenue equipment and
         facilities. At present, the Company is more highly leveraged than some
         of its competitiors. If the Company were unable in the future to obtain
         financing at acceptable levels it could be forced to limit the growth
         or replacement of its equipment and facilities. If interest rates
         increased significantly it could have a material adverse effect on the
         Company's results.

                                       20
<PAGE>
 
Liquidity and Capital Resources
-------------------------------

The Company's primary sources of liquidity during the year ended March 31, 1997
         were funds provided by operations, borrowings under long-term debt
         facilities, lines of credit and proceeds from the sales of used
         property and equipment. At March 31, 1997, the Company had in place a
         $50.0 million credit facility with a group of banks, of which $14.5
         million was available for borrowing. In fiscal 1998, the Company's
         primary sources of liquidity are expected to be funds provided by
         operations, borrowings under installment notes payable and borrowings
         under lines of credit.

Cash generated from operations decreased to $7.9 million in fiscal 1997 from
         $9.0 million in fiscal 1996. Net cash used in investment activities was
         $3.2 million in fiscal 1997 and $17.3 million in fiscal 1996. Of the
         cash used in investment activities in fiscal 1997, $24.8 million was
         used to acquire additional property and equipment, compared to $28.2
         million in fiscal 1996. The decrease in amounts expended for purchases
         of new equipment in fiscal 1997, compared to fiscal 1996, reflects the
         Company's leasing of more revenue equipment under operating leases
         rather than purchasing such equipment.

Net cash used for financing activities was $4.1 million in fiscal 1997, compared
         to $6.3 million provided in fiscal 1996. This decrease relates
         primarily to the Company's greater use of leased equipment in fiscal
         1997. As a result, the net repayments under lines of credit and long-
         term debt during the year ended March 31, 1997 was $4.1 million,
         compared to net borrowings of $5.4 million during fiscal 1996. Net
         borrowings under lines of credit were $1.0 million during the year
         ended March 31, 1997, compared to net borrowings of $30.3 million
         during fiscal 1996. During fiscal 1996, the Company obtained a new
         revolving line of credit with capacity up to $50.0 million. A portion
         of the availability under this new line was immediately used to repay
         certain existing long-term indebtedness bearing higher interest rates.

         Management believes that funds provided by operations, borrowings under
         installment notes payable and available borrowings under the Company's
         existing line of credit will be sufficient to fund its cash needs and
         anticipated capital expenditures through at least the next twelve
         months.


Inflation
---------

Inflation has not had a material effect on the Company's results of operations
         or financial condition during the past three years. However, inflation
         higher than experienced during the past three years could have an
         adverse effect on the Company's future results.


Seasonality
-----------

In the trucking industry, revenue generally shows a seasonal pattern as
         customers reduce shipments during and after the winter holiday season
         and its inherent weather variations. The Company's operating expenses
         also have historically been higher in the winter months, due primarily
         to decreased fuel efficiency and increased maintenance costs for
         revenue equipment in colder weather.

                                       21
<PAGE>
 
ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    The information set forth under the following captions are contained 
    on the following pages in this Form 10K.

Report of Independent Public Accountants................................   22
Consolidated Statements of Operations...................................   23
Consolidated Balance Sheets.............................................24-25
Consolidated Statements of Cash Flows...................................   26
Consolidated Statements of Stockholders' Equity.........................   27
Notes to Consolidated Financial Statements..............................28-37
Financial Statement Schedules...........................................40-41


                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors and Stockholders of U.S. Xpress Enterprises, Inc.:

        We have audited the accompanying consolidated balance sheets of U.S. 
Xpress Enterprises, Inc. (a Nevada corporation) and subsidiaries as of March 31,
1997 and 1996 and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended March 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

        We conducted our audits in accordance with generally accepted auditing 
standards. 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 financial position of U.S. Xpress 
Enterprises, Inc. and subsidiaries as of March 31, 1997 and 1996 and the results
of their operations and their cash flows for each of the three years in the 
period ended March 31, 1997 in conformity with generally accepted accounting 
principles.


                                               ARTHUR ANDERSEN LLP

Chattanooga, Tennessee
May 7, 1997


                                       22
<PAGE>
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In thousands, except per share amounts)

<TABLE> 
<CAPTION> 

Year Ended March 31,                                                                1997             1996                  1995
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>               <C>                  <C> 
Operating Revenue                                                                $ 362,819         $299,697             $ 254,331
                                                                                 ------------------------------------------------

Operating Expenses:
Salaries, wages and employee benefits, including contract wages                    148,850          129,311               108,074 
Fuel and fuel taxes                                                                 61,268           48,782                42,586 
Vehicle rents                                                                       21,603           17,263                16,767 
Depreciation and amortization                                                       14,492           16,765                15,070 
Purchased transportation                                                            22,682           19,929                10,493 
Operating expenses and supplies                                                     22,503           21,321                17,398 
Insurance premiums and claims                                                       15,265           12,874                10,457 
Operating taxes and licenses                                                         5,984            5,227                 4,608 
Communications and utilities                                                         6,301            5,343                 4,332 
Cost of installation supplies sold                                                   8,180            5,214                    -- 
Building rental                                                                      4,878            3,495                 2,063 
Bad debt expense                                                                       880              784                   543 
General and other operating expenses                                                11,506            9,582                 6,949 
Gain on sales of equipment                                                          (1,289)          (1,320)               (2,979)
Equity in earnings of unconsolidated affiliate                                          --             (124)                 (189)
                                                                                 -------------------------------------------------
  Total operating expenses                                                         343,103          294,446               236,172
                                                                                 -------------------------------------------------

Income from Operations                                                              19,716            5,251                18,159
                                                                                 -------------------------------------------------

Other Income (Expense):
Interest expense, net                                                               (5,542)          (5,251)               (4,796)
Other income, net                                                                       62               75                   194
                                                                                 -------------------------------------------------
  Total other expense                                                               (5,480)          (5,176)               (4,602)
                                                                                 -------------------------------------------------

Income Before Income Tax Provision                                                  14,236               75                13,557

Income Tax (Provision) Benefit                                                      (6,358)              19                (5,294)
                                                                                 -------------------------------------------------
Net Income                                                                       $   7,878         $     94             $   8,263
                                                                                 =================================================

Earnings Per Share                                                               $     .65         $    .01             $     .76
                                                                                 =================================================

Weighted Average Common Shares and Common
Share Equivalents Outstanding                                                       12,168           12,003                10,806
                                                                                 =================================================
</TABLE> 

 The accompanying notes are an integral part of these consolidated statements.

                                       23
<PAGE>
 
                          CONSOLIDATED BALANCE SHEETS
                   (In thousands, except per share amounts)

<TABLE> 
<CAPTION> 

March 31,                                                                                               1997                  1996
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                               <C>                   <C> 
Assets

Current Assets
Cash and cash equivalents                                                                         $    5,092            $    4,378
Customer receivables, net of allowance of $2,733 in 1997 and $3,033 in 1996                           50,056                41,910
Other receivables                                                                                      3,969                 4,318
Prepaid insurance and licenses                                                                         3,853                 4,837
Operating and installation supplies                                                                    4,904                 4,033
Deferred income taxes                                                                                  4,443                 3,888
Other current assets                                                                                     719                   482
                                                                                                  --------------------------------
          Total current assets                                                                        73,036                63,846
                                                                                                  --------------------------------
                                                                                                  
Property and Equipment, at cost                                                                   
Land and buildings                                                                                     2,717                 2,232
Revenue and service equipment                                                                        112,076               126,501
Furniture and equipment                                                                               11,265                10,325
Leasehold improvements                                                                                 7,619                 5,086
                                                                                                  --------------------------------
                                                                                                     133,677               144,144
Less accumulated depreciation and amortization                                                       (39,803)              (39,702)
                                                                                                  --------------------------------
          Net property and equipment                                                                  93,874               104,442
                                                                                                  --------------------------------
                                                                                                  
Other Assets                                                                                      
Goodwill, net                                                                                          7,700                 6,579
Other                                                                                                  3,474                 2,954
                                                                                                  --------------------------------
          Total other assets                                                                          11,174                 9,533
                                                                                                  --------------------------------
                                                                                                  
Total Assets                                                                                      $  178,084            $  177,821
                                                                                                  ================================
</TABLE> 

The accompanying notes are an integral part of these consolidated balance
sheets.

                                       24
<PAGE>
 
                          CONSOLIDATED BALANCE SHEETS
                   (In thousands, except per share amounts)


<TABLE> 
<CAPTION>

March 31,                                                                                               1997                  1996
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                               <C>                   <C> 
Liabilities and Stockholders' Equity
                                       
Current Liabilities
Accounts payable                                                                                  $    8,708            $   10,025
Accrued wages and benefits                                                                             5,086                 5,543
Claims and insurance accruals                                                                          9,601                11,465
Other accrued liabilities                                                                              2,804                 3,378
Current maturities of long-term debt                                                                  13,008                13,829
                                                                                                  --------------------------------
          Total current liabilities                                                                   39,207                44,240
                                                                                                  --------------------------------
                                                                                                  
Long-Term Debt, net of current maturities                                                             59,318                61,789
                                                                                                  --------------------------------
Deferred Income Taxes                                                                                 14,543                10,885
                                                                                                  --------------------------------
Other Long-Term Liabilities                                                                            1,854                 5,821
                                                                                                  --------------------------------
                                                                                                  
Commitments and Contingencies (Notes 6 and 8)                                                     
                                                                                                  
Stockholders' Equity                                                                              
Preferred Stock, $.01 par value, 2,000,000 shares authorized, no shares issued                            --                    --
Common Stock Class A, $.01 par value, 30,000,000 shares authorized,                               
  9,046,044 and 9,034,884 shares issued and outstanding at                                        
  March 31, 1997 and 1996, respectively                                                                   90                    89
Common Stock Class B, $.01 par value, 7,500,000 shares authorized,                                
  3,040,262 shares issued and outstanding at March 31, 1997 and 1996                                      30                    30
Additional paid-in capital                                                                            33,832                33,774
Retained earnings                                                                                     29,443                21,565
Notes receivable from stockholders                                                                      (233)                 (372)
                                                                                                  --------------------------------
Total stockholders' equity                                                                            63,162                55,086
                                                                                                  --------------------------------
Total Liabilities and Stockholders' Equity                                                        $  178,084            $  177,821
                                                                                                  ================================
</TABLE> 

  The accompanying notes are an integral part of these consolidated balance 
sheets.

                                       25
<PAGE>
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)

<TABLE> 
<CAPTION> 

For the Year Ended March 31,                                                   1997                  1996                   1995
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                        <C>                  <C> 
Cash Flows from Operating Activities:
Net income                                                         $          7,878           $        94          $       8,263
Adjustments to reconcile net income to net cash provided
by operating activities:
  Deferred income tax provision                                               3,103                 2,737                  1,953
  Depreciation and amortization                                              14,492                16,765                 15,070
  Gain on sales of equipment                                                 (1,289)               (1,320)                (2,979)
  Equity in earnings of unconsolidated affiliate                                 --                  (124)                  (189)
  Increase in receivables                                                    (7,309)               (9,674)                (3,279)
  (Increase) decrease in prepaid insurance and licenses                         984                  (497)                (1,484)
  (Increase) decrease in operating supplies                                    (575)                 (688)                    10
  (Increase) decrease in other assets                                        (1,141)                 (559)                   190
  Increase (decrease) in accounts payable and
  other accrued liabilities                                                  (7,722)                3,606                  2,669
  Increase (decrease) in accrued wages and benefits                            (457)               (1,317)                 2,190
  Other                                                                          18                    16                     -- 
                                                                   -------------------------------------------------------------
  Net cash provided by operating activities                                   7,982                 9,039                 22,414
                                                                   -------------------------------------------------------------
Cash Flows from Investing Activities:
Payments for purchases of property and equipment                            (24,868)              (28,247)               (61,072)
Proceeds from sales of property and equipment                                24,618                17,383                 17,582
Repayment of notes receivable from stockholders                                  94                    --                    838
Acquisition of business, net of cash acquired                                (3,048)               (6,227)                  (308)
Acquisition of remaining 50% of unconsolidated
affiliate, net of cash acquired                                                  --                  (239)                    --
                                                                   -------------------------------------------------------------
  Net cash used in investing activities                                      (3,204)              (17,330)               (42,960)
                                                                   -------------------------------------------------------------
Cash Flows from Financing Activities:
Net borrowings (payments) under lines of credit                               1,000                30,325                 (7,158)
Payment of long-term debt                                                   (26,450)              (36,355)               (31,305)
Borrowings under long-term debt                                              21,300                11,468                 32,215
Proceeds from exercise of stock options                                         128                    --                     --
Proceeds from issuance of common stock                                           --                    --                 31,588
Repurchase of restricted common stock                                           (42)                  (42)                   (42)
Increase in other liabilities                                                    --                   906                    481
                                                                   -------------------------------------------------------------
  Net cash provided by (used in) financing activities                        (4,064)                6,302                 25,779
                                                                   -------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents                            714                (1,989)                 5,233
Cash and Cash Equivalents, beginning of year                                  4,378                 6,367                  1,134
                                                                   -------------------------------------------------------------
Cash and Cash Equivalents, end of year                             $          5,092           $     4,378          $       6,367
                                                                   =============================================================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for interest                             $          5,643           $     5,198          $       5,227
                                                                   =============================================================
Cash paid (refunded) during the year for income taxes, net         $          2,766           $      (470)         $       2,621
                                                                   =============================================================
Supplemental Disclosure of Significant Noncash
Investing and Financing Activities:
Issuance of long-term debt in connection
with purchase of business                                          $            792           $       --           $         600
                                                                   =============================================================
</TABLE> 

 The accompanying notes are an integral part of these consolidated statements.

                                       26
<PAGE>
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                (In thousands)

<TABLE> 
<CAPTION> 

                                                                                                           
                                                                                                           Notes
                                                                        Additional                       Receivable
For the years ended March 31,                  Common Stock               Paid-In       Retained            From
1995, 1996 and 1997                       Class A       Class B           Capital       Earnings        Stockholders        Total
---------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>           <C>             <C>            <C>             <C>            <C>    
Balance, March 31, 1994                   $       73    $       22      $     1,433    $   13,208       $   (1,300)   $    13,436
Net income                                        --            --               --         8,263              --           8,263
Conversion of 815,680 shares of
Class A Common Stock to
Class B Common Stock                              (8)            8               --            --              --             -- 
Issuance of 2,500,000 shares of
Class A Common Stock in initial
public offering                                   25            --           31,563            --              --         31,588
Repayment of notes receivable
from stockholders                                 --            --               --            --              838           838
Repurchase of 18,390 shares of
restricted stock                                  (1)           --              (87)           --               45           (43)
                                          --------------------------------------------------------------------------------------

Balance, March 31, 1995                           89            30           32,909        21,471             (417)       54,082
Net income                                        --            --               --            94               --            94
Repurchase of 18,390 shares of
restricted stock                                  (1)           --              (87)           --               45           (43)
Issuance of 1,744 shares of Class A
Common Stock for non-employee
director compensation                             --            --               16            --               --            16
Issuance of 110,182 shares of
Class A Common Stock for
purchase of Hall Systems                           1            --              936            --               --           937
                                          --------------------------------------------------------------------------------------

Balance, March 31, 1996                           89            30           33,774        21,565             (372)       55,086
Net income                                        --            --               --         7,878               --         7,878
Repurchase of 18,390 shares of
restricted stock                                  --            --              (87)           --               45           (42)
Repayment of notes receivable
from stockholders                                 --            --               --            --               94            94
Issuance of 2,542 shares of Class A
Common Stock for non-employee
director compensation                             --            --               18            --               --            18
Proceeds from exercise of 27,008
stock options                                      1            --              127            --               --           128
                                          --------------------------------------------------------------------------------------

Balance, March 31, 1997                   $       90    $       30      $    33,832    $   29,443      $      (233)   $   63,162
                                          ======================================================================================
</TABLE> 

 The accompanying notes are an integral part of these consolidated statements.

                                       27
<PAGE>
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Organization and Operations
-------------------------------

        U. S. Xpress Enterprises, Inc. (the "Company") provides transportation
        services through two subsidiaries. U.S. Xpress, Inc. ("U.S. Xpress") is
        a truckload carrier serving the Continental United States, Canada and
        Mexico. CSI/Crown, Inc. ("CSI/Crown") provides transportation and
        logistics services to the floorcovering industry.

2.  Acquisitions
----------------

        Effective March 31, 1994, the Company acquired 50% of the outstanding
        stock of Hall Systems, Inc. ("Hall Systems") for $625,000 cash and a
        $625,000 note payable. Effective October 31, 1995, the Company acquired
        the remaining 50% of the outstanding stock of Hall Systems for
        $1,000,000 cash and 110,182 shares of the Company's Class A Common Stock
        in a transaction accounted for by the purchase method of accounting.

        Effective August 31, 1995, the Company acquired 100% of the outstanding
        stock of CSI/Reeves, Inc. ("CSI/Reeves") for cash of $6,240,000 in a
        transaction accounted for by the purchase method of accounting.
        Effective January 1, 1996, CSI/Reeves was merged into the Company's
        existing freight consolidator (Crown Transport Systems, Inc.) to form
        CSI/Crown, Inc.

        The results of operations of CSI/Reeves and Hall Systems are included in
        the accompanying consolidated financial statements from the dates of
        their respective acquisition. On a pro forma (unaudited) basis,
        operating revenue for the Company would have been approximately $332
        million and $310 million, respectively, for fiscal 1996 and 1995, had
        the acquisitions taken place at the beginning of the respective periods.
        The impact on net income and earnings per share is insignificant. This
        information is for comparative purposes only and does not purport to be
        indicative of the results of operations had the transactions been
        completed at the beginning of the respective periods or indicative of
        the results which may occur in the future.

        In June 1996, the Company acquired certain equipment and the right to
        fulfill a contract to provide expedited truckload services in the
        Western United States to a major air freight company from Michael Lima
        Transportation for $3,048,000 cash and a $792,000 note payable. In
        addition, $1,000,000 will be paid to the seller if the Company is able
        to extend the contract. The pro forma effect of this transaction on
        prior period financial statements is immaterial. Subsequent to March 31,
        1997, the Company acquired eight distribution centers and certain
        equipment from Rosedale Transport, Inc. and acquired JTI, Inc.

3.  Summary of Significant Accounting Policies
----------------------------------------------

Principles of Consolidation  The consolidated financial statements include the
        accounts of the Company and its subsidiaries. All significant
        intercompany transactions and accounts have been eliminated.

Use of Estimates in the Preparation of Financial Statements  The preparation of
        financial statements in conformity with generally accepted accounting
        principles requires management to make estimates and assumptions that
        affect the reported amounts of assets and liabilities and disclosure of
        contingent assets and liabilities at the date of the financial
        statements and the reported amounts of revenues and expenses during the
        reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents  Cash and cash equivalents include all highly liquid
        investment instruments with an original maturity of three months or
        less.

                                       28
<PAGE>
 
Recognition of Revenue  For financial reporting purposes, the Company recognizes
        revenue and direct cost when shipments are completed.

Concentration of Credit Risk  Concentrations of credit risk with respect to
        customer receivables are limited due to the large number of entities
        comprising the Company's customer base and their dispersion across many
        different industries. The Company performs ongoing credit evaluations
        and generally does not require collateral.

Operating and Installation Supplies  Operating supplies consist primarily of
        tires, parts, materials and supplies for servicing the Company's revenue
        and service equipment. Installation supplies consist of various
        accessories used in the installation of floorcoverings and are held for
        sale at various CSI/Crown distribution centers. Operating and
        installation supplies are recorded at the lower of cost (on a first-in,
        first-out basis) or market. Tires and tubes purchased as part of revenue
        and service equipment are capitalized as part of the cost of the
        equipment. Replacement tires and tubes are charged to expense when
        placed in service.

Property and Equipment  Property and equipment is carried at cost. Depreciation
        and amortization of property and equipment are computed using the
        straight-line method for financial reporting purposes and accelerated
        methods for tax purposes over the estimated useful lives of the related
        assets (net of salvage value) as follows:

<TABLE> 
              <S>                                             <C> 
                                  Buildings...............    10-30 years

              Revenue and service equipment...............    3-7 years

                    Furniture and equipment...............    3-7 years

                     Leasehold improvements...............    5-6 years
</TABLE> 

        The Company recognized $13,837,000, $16,066,000 and $14,813,000 in
        depreciation expense during the years ended March 31, 1997, 1996 and
        1995, respectively. Upon the retirement of property and equipment, the
        related asset cost and accumulated depreciation are removed from the
        accounts and any gain or loss is reflected in the Company's statement of
        operations with the exception of gains on trade-ins, which are included
        in the basis of the new asset.

        Expenditures for normal maintenance and repairs are expensed. Renewals
        or betterments that affect the nature of an asset or increase its useful
        life are capitalized.

Goodwill  The excess of the consideration paid by the Company over the estimated
        fair value of net assets acquired has been recorded as goodwill and is
        being amortized on the straight-line basis over periods ranging from 20
        to 40 years. The Company continually evaluates whether subsequent events
        and circumstances have occurred that indicate that the remaining
        estimated useful life of goodwill may warrant revision or that the
        remaining balance may not be recoverable. The Company recognized
        $272,000, $220,000 and $204,000 of goodwill amortization expense during
        the years ended March 31, 1997, 1996 and 1995, respectively. Accumulated
        amortization was $1,028,000 and $756,000 at March 31, 1997 and 1996,
        respectively.

Claims and Insurance Accruals  The primary claims in the Company's business are
        cargo loss and damage, physical damage and automobile liability. Prior
        to January 1, 1997, most of the Company's insurance provided for large
        self-insurance levels with excess coverage sufficient to protect the
        Company from catastrophic claims. Beginning January 1997, the Company
        began purchasing policies with low deductibles which essentially fully
        insure cargo and auto liability, while physical damage has an annual

                                       29
<PAGE>
 
        aggregate deductible. For claims with self-insurance levels, estimated
        costs are accrued based upon information provided by insurance adjustors
        for reported claims and adjusted for expected loss development factors.

Other Long-Term Liabilities  Periodically, the Company receives volume rebates
        from vendors related to certain operating leases for new revenue and
        service equipment. Additionally, certain equipment leases include spare
        tires, which increase tire inventories. The Company defers recognition
        of these rebates and amortizes such amounts as a reduction of vehicle
        rent expense over the respective lease terms. At March 31, 1997 and
        1996, other long-term liabilities include deferred rents of $1,295,000
        and $1,802,000, respectively.

Income Taxes  Deferred tax assets and liabilities are computed based on the
        difference between the financial statement and income tax bases of
        assets and liabilities using the enacted marginal tax rate. Deferred
        income tax expenses or credits are based on the changes in the asset or
        liability from period to period.

Contract Wages  Prior to August 1996, the Company leased a substantial portion 
        of its personnel, including drivers, from an independent personnel
        leasing company. Under the lease agreements, the Company paid a
        contracted amount per person and the personnel leasing company had the
        responsibility for payroll, unemployment insurance and workers'
        compensation claims. In August 1996, the lease agreements with the
        independent personnel leasing company were terminated and the personnel
        previously leased under these agreements became employees of the
        Company. Effective January 1, 1997, the Company entered into an
        agreement with a Professional Employer Organization (PEO) in which the
        PEO is a co-employer with the Company for all of the Company's
        personnel. The PEO is responsible for processing and administration of
        the Company's payroll, including tax reporting, and provides group
        health benefits and worker's compensation coverage.

Hedging Instruments  For a small percentage of the Company's fuel requirements,
        the Company hedges the effects of fluctuations in the price of fuel. The
        resulting gains or losses are accounted for as a decrease or increase in
        fuel expense. The impact of the Company's hedging program is not
        significant in relation to total fuel purchases.

Earnings Per Share  Earnings per share is computed based on the weighted average
        number of common shares outstanding plus the dilutive effect of
        outstanding common stock options. The weighted average number of shares
        and equivalents used in the computation were 12,167,890, 12,002,754, and
        10,806,336 for fiscal 1997, 1996 and 1995, respectively.

Reclassifications  Certain reclassifications have been made in the fiscal 1996
        and 1995 financial statements to conform with the 1997 presentation.

Stock-Based Compensation  The Company accounts for its stock-based compensation
        plans under Accounting Principles Board Opinion No. 25, "Accounting for
        Stock Issued to Employees" ("APB No. 25"). Effective fiscal 1997, the
        Company adopted the disclosure option of SFAS No. 123, "Accounting for
        Stock-Based Compensation."

Recent Accounting Pronouncements  In 1997, the Financial Accounting Standards
        Board issued Statement of Financial Accounting Standard No. 128
        "Earnings Per Share" ("SFAS 128"). SFAS 128 changes the criteria for
        reporting earnings per share ("EPS") by replacing primary EPS with basic
        EPS and fully diluted EPS with diluted EPS. The Company is required to
        adopt SFAS 128 for periods ending after December 15, 1997, and all prior
        period EPS data must be restated. The impact of adopting SFAS 128 will
        not have a material impact on EPS for any period presented.

                                       30
<PAGE>
 
4.  Income Taxes
----------------
The income tax provision (benefit) in fiscal 1997, 1996 and 1995 consisted of 
the following (in thousands):

<TABLE> 
<CAPTION> 
                                                    1997        1996        1995
                                               ---------------------------------
<S>                                            <C>        <C>          <C>
Current                                                                   
  Federal                                      $   2,726  $   (2,876)  $   2,989
  State                                              529         120         352
                                               ---------------------------------
                                                   3,255      (2,756)      3,341
                                                                          
Deferred                                           3,103       2,737       1,953
                                               ---------------------------------
                                               $   6,358  $      (19)  $   5,294
                                               =================================
</TABLE> 

The income tax provision (benefit) as reported in the consolidated statements 
of operations differs from the amounts computed by applying federal statutory 
rates due to the following (in thousands):

<TABLE> 
<CAPTION> 
                                                    1997        1996        1995
                                               ---------------------------------
<S>                                            <C>        <C>          <C>
Federal income tax at statutory rate           $   4,840  $       25   $   4,609
State income taxes, net of federal income                             
  tax benefit                                        349          73         419
Goodwill amortization                                 75          75          78
Nondeductible driver per diems                       650          --          --
Other                                                444        (192)        188
                                               ---------------------------------
  Income tax provision (benefit)               $   6,358  $      (19)  $   5,294
                                               =================================
</TABLE> 

The tax effect of temporary differences that give rise to significant portions
  of deferred tax assets and liabilities at March 31, 1997 and 1996 consisted
  of the following (in thousands):

<TABLE> 
<CAPTION> 
                                                    1997                    1996
                                               ---------------------------------
<S>                                            <C>                     <C>
                                                                 
Deferred tax assets                                              
Allowance for doubtful accounts                $     952               $   1,133
Insurance reserves                                 3,721                   3,743
Net operating loss carryforwards                      --                   6,117
Alternative minimum tax credit carryforwards       2,362                   2,883
Claims and other reserves                            826                     694
Other                                                284                      84
                                               ---------------------------------
                                                                 
  Total deferred tax assets                    $   8,145               $  14,654
                                               =================================
Deferred tax liabilities                                         
Book over tax basis of property and equipment  $  16,880               $  20,376
Prepaid license fees                               1,279                   1,248
Other                                                 86                      27
                                               ---------------------------------
  Total deferred tax liabilities               $  18,245               $  21,651
                                               =================================
</TABLE> 

                                       31
<PAGE>
 
5.  Long-Term Debt
------------------

Long-term debt at March 31, 1997 and 1996 consisted of the following 
(in thousands):

<TABLE> 
<CAPTION> 
                                                              1997       1996
                                                           ---------------------
<S>                                                        <C>         <C> 
Obligation under line of credit with a group
 of banks, weighted average interest rate of
 6.77% at March 31, 1997, maturing August 1998             $ 32,500    $ 31,500

Installment notes with banks, weighted average 
 interest rate of 7.19% at March 31, 1997, maturing 
 at various dates ranging from November 1997
 to December 2002                                            14,673      23,160

Installment notes with finance companies, 
 weighted average interest rate of 7.73% at March 31, 
 1997, maturing at various dates ranging from May
 1997 to December 1998                                       23,598      20,055

Note payable to former stockholder of National Freight 
 Systems, interest payable at 7% at March 31, 1997,
 due in annual installments through October 1997                200         400

Note payable to stockholder of Lima Transportation, Inc.,
 interest payable at 9%, due July 1998                          792          --

Other                                                           563         503
                                                           --------------------
                                                           $ 72,326    $ 75,618
Less:  current maturities of long-term debt                 (13,008)    (13,829)
                                                           --------------------
                                                           $ 59,318    $ 61,789
                                                           ====================
</TABLE> 

        The aggregate annual maturities of long-term debt for each of the next
        five years ending March 31 are (in thousands):

<TABLE> 
                                     <S>                   <C> 
                                     1998                  $ 13,008
                                     1999                    50,079
                                     2000                     5,465
                                     2001                       768
                                     2002                     1,592
</TABLE> 

        The installment notes with banks and finance companies are
        collateralized by certain property and equipment of the Company.

        In November 1995, the Company entered into an unsecured credit agreement
        (the "Credit Agreement") with a group of banks. The Credit Agreement
        operates as a revolving credit facility until August 1998, at which time
        it will convert to a three year installment loan, if not extended or
        renewed.

        Borrowings (including letters of credit) under the Credit Agreement are
        limited to the lesser of: (a) 90% of the book value of eligible revenue
        equipment plus 85% of eligible accounts receivable; or (b) $50,000,000.

                                       32
<PAGE>
 
         Borrowings under the Credit Agreement bear interest rates, at the
         option of the Company, equal to either: (i) the greater of the bank
         prime rate or the federal funds rate plus 1/2%, (ii) the rate offered
         in the Eurodollar market for amounts and periods comparable to the
         relevant loan plus a margin that is determined by several financial
         covenants, or (iii) the rate offered to the Company for a loan of a
         specific amount and maturity by any of the participating banks under a
         competitive bid process. At March 31, 1997, the margin applicable to
         the Eurodollar interest rate was equal to 1.25%.

         The Credit Agreement contains covenants that limit, among other things,
         the payment of dividends, the incurrence of additional debt, and the
         pledging of assets as security on other indebtedness. The Credit
         Agreement also requires the Company to meet certain financial tests,
         including a minimum amount of tangible net worth, a minimum fixed
         charge coverage and a maximum amount of leverage.

6. Leases
---------

         The Company leases certain revenue and service equipment and office and
         terminal facilities under long-term non-cancelable operating lease
         agreements expiring at various dates through December 2002. For the
         years ended March 31, 1997, 1996 and 1995, rental expense under these
         agreements was approximately $26,388,000, $ 19,437,000 and $17,092,000,
         respectively.

         Approximate aggregate minimum future rentals payable under these
         operating leases for each of the next five years are (in thousands):

<TABLE> 
                          <S>                <C> 
                          1998               $  30,481
                          1999                  27,774
                          2000                  15,010
                          2001                   4,751
                          2002                     686
</TABLE> 

7. Related Party Transactions
-----------------------------

         The Company leases certain office and terminal facilities from entities
         owned by the two principal stockholders of the Company. The lease
         agreements are for five-year terms and provide the Company with the
         option to renew the lease agreements for four three-year terms. Rent
         expense of approximately $1,639,000, $1,256,000 and $1,210,000 was
         recognized in connection with these leases during the years ended March
         31, 1997, 1996 and 1995, respectively.

         The two principal stockholders of the Company own 100% of the
         outstanding common stock of Paragon Leasing LLC ("Paragon"). Paragon
         leases certain revenue and service equipment to the Company on a
         temporary basis. Rent expense of approximately $869,000, $1,028,000,
         and $1,181,000 was recognized in connection with these leases during
         the years ended March 31, 1997, 1996 and 1995, respectively.

         Prior to December 31, 1995, a principal stockholder of the Company
         directly controlled 50% of the outstanding stock of LTL Express
         Systems. During the years ended March 31, 1996 and 1995, the Company
         recognized operating revenue from LTL Express Systems of approximately
         $427,000 and $897,000, respectively. The principal stockholder disposed
         of his interest in LTL Express Systems effective December 31, 1995.

         The two principal stockholders of the Company and certain partnerships
         controlled by their families own 43% of the outstanding common stock of
         Transcom Technologies, Inc. ("Transcom"). Transcom makes

                                       33
<PAGE>
 
         a debit card system available to the Company's drivers through which
         phone calls and Internet e-mail can be credited while the driver is on
         the road. Total payments by the Company to Transcom were approximately
         $143,000, $148,000 and $87,000 in the years ended March 31, 1997, 1996
         and 1995, respectively.

8. Commitments and Contingencies
--------------------------------

         The Company is party to certain legal proceedings incidental to its
         business. The ultimate disposition of these matters, in the opinion of
         management, based in part on the advice of legal counsel, will not have
         a material adverse effect on the Company's financial position or
         results of operations.

         Letters of credit of $3,055,000 were outstanding at March 31, 1997. The
         letters of credit are maintained primarily to support the Company's
         insurance program (see Note 3). Commitment fees of 1% on the
         outstanding portion of the letters of credit are paid by the Company.

9. Employee Benefit Plans
-------------------------

         The Company has in place an employee profit-sharing plan covering
         substantially all non-driver employees. The plan provides for
         additional compensation to employees, the amount of which is based on
         results of operations exceeding certain goals.

         The Company has a 401(k) retirement plan covering substantially all
         employees of the Company, whereby participants may contribute a
         percentage of their compensation, as allowed under applicable laws. The
         plan provides for a matching contribution by the Company. Participants
         are 100% vested in participant contributions and become vested in
         employer matching contributions over a period of four years.

         During 1997, 1996 and 1995, the Company recognized $400,000, $290,000
         and $2,827,000, respectively, of expense under these employee benefit
         plans.

10. Stockholders' Equity
------------------------

Initial Public Offering In October 1994, the Company completed its initial
         public offering through the issuance of 2,500,000 shares of Class A
         Common Stock. As a result of this offering, the Company received
         proceeds, net of underwriting discounts and commissions and issuance
         costs, of $31,588,000. The Company utilized the net proceeds to reduce
         outstanding debt and acquire certain equipment previously leased under
         operating leases.

Common Stock Holders of Class A Common Stock are entitled to one vote per share.
         Holders of Class B Common Stock are entitled to two votes per share.
         Once the Class B Common Stock is no longer held by the two principal
         stockholders of the Company, or their families, as defined, the stock
         is automatically converted into Class A Common Stock on a share per
         share basis.

Preferred Stock Effective December 31, 1993, the Board of Directors approved the
         designation of 2,000,000 shares of preferred stock with par value of
         $.01 per share. The Board of Directors has the authority to issue these
         shares and to determine the rights, terms and conditions of the
         preferred stock as needed.

Incentive Stock Plan In November 1993, the Company adopted the U.S. Xpress
         Enterprises, Inc. Incentive Stock Plan (the "Plan"). The Plan provides
         for the issuance of shares of restricted common stock of the Company,
         as well as both incentive and nonstatutory stock options. There may be
         issued under the Plan (as restricted stock, in payment of performance
         grants, or pursuant to the exercise of stock options) an aggregate of
         not more than the greater of (a) 1,038,138 shares of Class A Common
         Stock, or (b) 8% of

                                       34
<PAGE>
 
         the total number of common shares of the Company outstanding at any
         given time. Participants of the Plan may include key employees as
         selected by the compensation committee of the Board of Directors. Under
         the terms of the Plan, the Company may sell restricted shares of common
         stock, grant options, or issue performance grants to participants in
         amounts and for such prices as determined by the compensation
         committee. All options will vest immediately in the event of a change
         in control of the Company, or the death, disability, or retirement of
         the employee.

         On November 30, 1993, 289,195 shares of restricted stock were sold to
         employees at $4.72 per share, which approximated the fair market value
         of the shares at the date of sale. Employees issued recourse notes
         payable to the Company in the aggregate amount of $1,365,000 as
         proceeds for the issuance of the restricted shares. The notes bear
         interest at 6% and are due in three equal annual installments beginning
         November 30, 1999. The restricted stock may not be sold, assigned,
         transferred, pledged or otherwise disposed of during the restriction
         period.

         In fiscal 1995, the board authorized, upon the completion of the
         initial public offering, the removal of the restrictions on 91,800
         shares scheduled to expire on November 30, 1996. In exchange for the
         removal of restrictions on these shares, the affected employees repaid
         an aggregate of $837,800 of the related notes receivable. During each
         of the years ended March 31, 1997, 1996 and 1995, 18,390 shares of
         restricted stock were forfeited, and related notes receivable of
         $44,900 were canceled in each year. At March 31, 1997, 91,750 shares of
         restricted stock were outstanding. The restrictions expire on November
         30, 1997 and 1998. Restrictions also expire in the event of a change in
         control of the Company or upon the death, disability or retirement of
         the employee.

Non-Employee Directors Stock Plan In August 1995, the Company adopted the 1995
         Non-Employee Directors Stock Award and Option Plan (the "Directors
         Stock Plan") providing for the issuance of stock options to non-
         employee directors upon their election to the Company's Board of
         Directors. The Directors Stock Plan also provides non-employee
         directors the option to receive certain board-related compensation in
         the form of stock. The number of shares of Class A Common Stock
         available for option or issue under the Directors Stock Plan may not
         exceed 50,000 shares.

         The Directors Stock Plan provides for grant of 1,200 options to
         purchase the Company's Class A Common Stock to each non-employee
         director upon the election of each such director to the Board. The
         exercise price of options issued under the plan is set at the fair
         market value of the Company's stock on the date granted. Options vest
         at the rate of 400 options on each of the first, second and third
         anniversaries of the date of grant. In August 1996 and 1995, 2,400
         options were granted to non-employee directors with an exercise price
         of $6.625 and $9.50, respectively.

         The Directors Stock Plan also provides non-employee directors the
         option to receive compensation earned for board-related activities in
         the form of the Company's Class A Common Stock in lieu of cash. If a
         board member elects to receive board-related compensation in the form
         of stock, the number of shares issued to each director in lieu of cash
         is determined based on the amount of earned compensation divided by the
         fair market value of the Company's stock on the date compensation is
         earned. During the years ended March 31, 1997 and 1996, 2,542 and 1,744
         shares, respectively, of the Company's Class A Common Stock were issued
         to non-employee directors in lieu of cash compensation of $18,000 and
         $16,000, respectively, for each of those years.

Accounting for Stock Based Compensation The Company accounts for its stock-based
         compensation under APB No. 25, under which no compensation expense has
         been recognized for stock options granted with exercise prices equal to
         the fair value of the Company's common stock on the date of grant. The
         Company adopted SFAS No. 123 for disclosure purposes only in fiscal
         1997. For SFAS No. 123 purposes, the fair value of each option grant
         has been estimated as of the date of grant using the Black-

                                       35
<PAGE>
 
         Scholes option pricing model with the following weighted average
         assumptions for 1997 and 1996, respectively: risk-free interest rate of
         6.56% and 6.24%, expected life of five years, expected dividend yield
         of 0% and expected volatility of 58% for 1997 and 1996. Using these
         assumptions, the fair value of the stock options granted in 1997 and
         1996 is $294,000 and $9,000, respectively, which would be amortized as
         compensation expense over the vesting period of the options. Had
         compensation cost for the plan been determined in accordance with SFAS
         No. 123, utilizing the assumptions detailed above, the Company's pro
         forma net income would have been $7,816,000 and $93,000 for the years
         ended March 31, 1997 and 1996, respectively. Pro forma net income per
         share would have been $.64 and $.01 for the years ended March 31, 1997
         and 1996, respectively.


         The pro forma effect on net income in this pro forma disclosure may not
         be representative of the pro forma effect on net income in future
         years, because it does not take into consideration pro forma
         compensation expense related to grants made prior to fiscal 1996.


A summary of the Company's stock option activity for 1997, 1996 and 1995
follows:

<TABLE> 
<CAPTION> 
                                                                                      Weighted-Average
                                           Shares               Option Price           Exercise Price
                                          ------------------------------------------------------------
<S>                                       <C>                 <C>                       <C> 
Outstanding at March 31, 1995             165,064             $         4.72             $    4.72
Granted at market price                     2,400             $         9.50             $    9.50
                                          --------                                                 
Outstanding at March 31, 1996             167,464             $  4.72-$ 9.50             $    4.79
Granted at market price                    99,400             $  6.63-$ 6.80             $    6.87
Exercised                                 (27,008)            $         4.72             $    4.72
Canceled or expired                       (40,514)            $  4.72-$ 9.50             $    5.12
                                          --------                                         
                                                                                           
Outstanding at March 31, 1997             199,342             $  4.72-$ 9.50             $    5.77
                                          ========
</TABLE> 

         There was no option activity in fiscal 1995. The weighted-average fair
         value of options granted during 1997 and 1996 was $3.89 and $5.35,
         respectively. Shares subject to options outstanding at March 31, 1997
         have a weighted-average remaining contractual life of 8.38 years. Of
         the options outstanding at March 31, 1997, 73,050 are currently
         exercisable with a weighted-average exercise price of $5.66 per share.
         As of March 31, 1996, 33,412 of the options outstanding were
         exercisable with a weighted average exercise price of $4.78 per share.
         No options were exercisable at March 31, 1995.

11. Fair Value of  Financial Instruments
----------------------------------------

         The carrying values of cash and cash equivalents, customer and other
         receivables, accounts payable and accrued liabilities are reasonable
         estimates of their fair values because of the short maturity of these
         financial instruments. Based on the borrowing rates available to the
         Company for long-term debt with similar terms and average maturities,
         the carrying amounts approximate the fair value of such financial
         instruments.

                                       36
<PAGE>
 
12. Quarterly Financial Data (Unaudited)
----------------------------------------
(In thousands, except share amounts)

<TABLE> 
<CAPTION> 
                                               First            Second            Third            Fourth            Full
                                              Quarter           Quarter          Quarter          Quarter            Year
                                             ------------------------------------------------------------------------------
<S>                                          <C>               <C>              <C>              <C>              <C> 
Fiscal 1997
Operating revenue                            $ 87,817          $ 92,259         $ 91,179         $  91,564        $ 362,819
Income from operations                          2,241             6,026            6,473             4,976           19,716
Income before income tax provision                896             4,611            5,120             3,609           14,236
Net income                                        552             2,745            2,411             2,170            7,878
Earnings per share/(1)/                      $   0.05          $   0.23         $   0.20         $    0.18        $    0.65
                                                                                                                
Fiscal 1996                                                                                                     
Operating revenue                            $ 65,031          $ 71,744         $ 81,807         $  81,115        $ 299,697
Income from operations                          1,055             1,780            2,168               248            5,251
Income (loss) before income tax provision        (203)              571              906            (1,199)              75
Net income (loss)                                 (88)              351              551              (720)              94
Earnings (loss) per share                     $ (0.01)         $   0.03         $   0.05          $  (0.06)       $    0.01
</TABLE> 

/(1)/ The sum of quarterly earnings per share amounts differs from annual
         earnings per share because of differences in the weighted average
         number of common shares used in the quarterly and annual computations.


ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
           ACCOUNTING AND FINANCIAL DISCLOSURE

         No items have occurred within the 24 months prior to March 31, 1997
         involving a change of accountants or disagreements on accounting and
         financial disclosure.

                                       37
<PAGE>
 
                                   PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

<TABLE> 
<CAPTION> 

Name                          Age              Position
-------------------------------------------------------------------------------------------------------------------------
<S>                           <C>              <C> 
James B. Baker                51               Director
Steven J. Cleary              39               CEO and General Manager of CSI/Crown, Inc.
Thor N. Edman, Jr.            53               President of CSI/Crown, Inc.
William K. Farris             44               Director, Executive Vice President of Operations and President,
                                               U.S. Xpress, Inc.
Max L. Fuller                 44               Co-Chairman of the Board of Directors, Vice President and
                                               Secretary
Ray M. Harlin                 47               Chief Financial Officer
Alan J. Hingst                50               President, JTI, Inc.
E. William Lusk, Jr.          41               Director and Executive Vice President of Marketing
L.D. Miller, III              43               Chairman of CSI/Crown, Inc.
David R. Parker               57               Chairman, JTI, Inc.
Ronald E. Pate                54               President of U.S. Xpress Leasing, Inc.
Patrick E. Quinn              51               Co-Chairman of the Board of Directors, President and Treasurer
A. Alexander Taylor, II       44               Director
</TABLE> 

James B. Baker has served as a director of the Company since 1994. Mr. Baker has
      been a partner in River Associates, LLC since 1993. Previously, Mr. Baker
      was employed by CONSTAR International, Inc. as a Senior Vice President
      from 1988 to 1991 and as the President and Chief Operating Officer from
      1991 to 1992. Mr. Baker is also a director of Wellman, Inc. (chemical
      company).

Steven J. Cleary joined the Company in 1991 as Director of Human Resources and
      was named Vice President of Human Resources and Safety in 1994. He was
      named Executive Vice President of Human Resources in 1996 and Chief
      Executive Officer and General Manager of CSI/Crown in 1997. Prior to
      joining the Company, he served in operations and human resources
      management positions for Ryder Distribution Services and Rollins
      Transportation Services.

Thor N. Edman, Jr., served as President and Chief Executive Officer of
      CSI/Reeves, Inc. from September 1990 until August 1995, when the Company
      acquired CSI/Reeves, Inc. Mr. Edman now serves as President of CSI/Crown.
      He has been employed in the floorcovering industry for 29 years.

William K. Farris was named Executive Vice President of Operations of the
      Company and President of U.S. Xpress in 1996. He previously had served as
      Vice President of Operations of the Company since 1993. Prior to that, Mr.
      Farris was Vice President of Operations of Southwest Motor Freight, a
      former operating subsidiary of the Company, from 1991 to 1993. Mr. Farris
      was first elected a director of the Company in 1994.

Max L. Fuller has served as Co-Chairman of the Board of the Company since March
      1994 and Vice President and Secretary of the Company since 1985. Mr.
      Fuller was first elected a director of the Company in 1985.

                                       38
<PAGE>
 
Ray M. Harlin joined the Company effective June 15, 1997. Mr. Harlin was
      employed for 25 years with the public accounting firm of Arthur Andersen
      LLP. He was a partner with that firm for the last 14 years.

Alan J. Hingst co-founded JTI, Inc. in 1985 with David R. Parker and has served
      as its President since 1986. He has been employed in the transportation
      industry for 33 years.

E. William Lusk, Jr. has served as Vice President of Marketing of the Company
      since 1991 and was named an Executive Vice President of the Company in
      1996. Mr. Lusk previously served as Vice President of U.S. Xpress, an
      operating subsidiary of the Company, from 1987 to 1990. Mr. Lusk was first
      elected a director of the Company in 1994.

L.D. Miller, III served as President of Crown Transport from its inception in
      1985 until the merger of Crown Transport and CSI/Reeves in January, 1996.
      He now serves as Chairman of CSI/Crown. He has been employed in the
      transportation industry since 1974.

David R. Parker has served as Chairman of JTI, Inc. since co-founding the
      company with Alan J. Hingst in 1985. Prior to that, Mr. Parker served as
      Vice President and General Counsel of Crete Carrier Corp. and affiliated
      companies.

Ronald E. Pate joined the Company in 1994 as Assistant Director of Maintenance.
      He was named Director of Maintenance later that year and was named
      Executive Vice President of U.S. Xpress Leasing, Inc., the Company's
      equipment leasing and maintenance subsidiary, in 1995. He was named
      President of U.S. Xpress Leasing, Inc. in 1996. Prior to joining the
      Company, Mr. Pate was Vice President of Chattanooga Operations for
      Universal Tire Company in Chattanooga, Tennessee.

Patrick E. Quinn has served as Co-Chairman of the Board of the Company since
      March 1994 and President and Treasurer of the Company since 1985. Mr.
      Quinn was first elected a director of the Company in 1985.

A. Alexander Taylor, II has served as a director of the Company since 1994. Mr.
      Taylor has been a partner with the law firm of Miller & Martin since 1983.
      Mr. Taylor is also a director of Chattem, Inc. (consumer products).


ITEM 11.   EXECUTIVE COMPENSATION

      The information set forth under the caption "Executive Compensation and
      Other Information" on pages 7 through 8 of the Proxy Statement is
      incorporated herein by reference.


ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT      

      The information set forth under the caption "Voting Securities and
      Principal Holders Thereof" on pages 3 and 4 of the Proxy Statement is
      incorporated herein by reference.

                                       39
<PAGE>
 
ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The information set forth under the caption "Election of Directors" on
      pages 4 and 5 and "Certain Transactions" on page 6 of the Proxy Statement
      is incorporated herein by reference.


                                    PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON     
           FORM 8-K

     (A)   1.   FINANCIAL STATEMENTS:
                The financial statements are set forth in the Index to Financial
                Statements and Schedules found in Part II, Item 8.
               
           2.   FINANCIAL STATEMENT SCHEDULES:
       
                Report of Independent Public Accountants
                Schedule II--Valuation and Qualifying Accounts 

           3.   EXHIBITS
                See the Exhibit Index on page 42 of this Form 10-K

     (B)   REPORTS ON FORM 8-K
           There were no reports on Form 8-K filed during the quarter ended 
           March 31, 1997.


                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF U. S. XPRESS ENTERPRISES, INC.

We have audited, in accordance with generally accepted auditing standards, the 
consolidated financial statements of U. S. XPRESS ENTERPRISES, INC. (a Nevada 
corporation) AND SUBSIDIARIES in this Form 10-K and have issued our report 
thereon dated May 7, 1997.  Our audit was made for the purpose of forming an 
opinion on the financial statements taken as a whole.  Schedule II is the 
responsibility of the Company's management and is presented for purposes of 
complying with the Securities and Exchange Commission's rules and is not part of
the basic consolidated financial statements.  This schedule has been subjected 
to the auditing procedures applied in the audit of the basic consolidated 
financial statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in elation to the basic 
consolidated financial statements taken as a whole.



                                               ARTHUR ANDERSEN LLP

Chattanooga, Tennessee
May 7, 1997

                                       40

<PAGE>
 
                                   SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) 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, on the 26th day of June,
1997.

                                                U.S. XPRESS ENTEPRISES, INC.


Date:  June 26, 1997                            By: /s/    Ray M. Harlin
     -----------------------                       -----------------------------
                                                           Ray M. Harlin
                                                      Chief Financial Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant in
the capacities and on the dates indicated.

<TABLE> 
<CAPTION> 

     Signature                                  Title                                    Date
     ---------                                  -----                                    ----
<S>                              <C>                                                <C> 
/s/ Patrick E. Quinn             Co-Chairman of the Board of Directors,             June 26, 1997
--------------------------       President and Treasurer
 Patrick E. Quinn                               
                         
/s/ Max L. Fuller                Co-Chairman of the Board of Directors,             June 26, 1997
--------------------------       Vice President and Secretary        
   Max L. Fuller                                            
                         
/s/ Ray M. Harlin                Executive Vice President of Finance and            June 26, 1997
--------------------------       Chief Financial Officer (principal financial         
    Ray M. Harlin                and accounting officer)                            
                                                                    
/s/ E. William Lusk, Jr.         Director and Executive Vice President of           June 26, 1997
--------------------------       Marketing          
 E. William Lusk, Jr.                           
                         
/s/ William K. Farris            Director and Executive Vice President              June 26, 1997
--------------------------       of Operations          
  William K. Farris                              
                         
/s/ A. Alexander Taylor, II      Director                                           June 26, 1997
--------------------------         
A. Alexander Taylor, II  
                         
/s/ James B. Baker               Director                                           June 26, 1997
--------------------------                 
    James B. Baker
</TABLE> 

                                       45
<PAGE>
 
(c)    Exhibits

Exhibit No.   Description
-------------------------

*       3.1   Restated Articles of Incorporation of the Company.

*       3.2   By-Laws of the Company.

*       4.1   Restated Articles of Incorporation of the Company filed as 
              Exhibit 3.1 and incorporated herein by reference.

*       4.2   By-Laws of the Company filed as Exhibit 3.2 and incorporated 
              herein by reference.

*       4.3   Stock Purchase Agreement dated June 10, 1993 by and among 
              Max L. Fuller, Patrick E. Quinn and the Company.

*       4.4   Agreement of Right of First Refusal with regard to Class B 
              Shares of the Company dated May 11, 1994 by and between 
              Max L. Fuller and Patrick E. Quinn.

*      10.1   Accounts Financing Agreement (Security Agreement) dated 
              February 2, 1988, as amended, between Congress Financial Corp. 
              (Southern) and Southwest Motor Freight, Inc.

*      10.2   Security Agreement dated December 18, 1985, as amended, by and 
              between Exchange National Bank of Chicago and U.S. Xpress, Inc.

*      10.3   Security Agreement dated September 17, 1987, as amended, by and 
              between Exchange National Bank of Chicago and Crown Transport 
              Systems, Inc.

*      10.4   1993 Incentive Stock Plan of the Company.

*      10.5   Stock Option Agreement Under 1993 Incentive Stock Plan.

*      10.6   Stock Rights and Restrictions Agreement for Restricted Stock 
              Award Under 1993 Incentive Stock Plan.

*      10.7   Self-Funded Employee Benefits Plan Document of the Company.

*      10.8   Service Agreement dated May 2, 1994 by and between TTC, Illinois, 
              Inc. and the Company for the provision of leased personnel to 
              the Company.

*      10.9   Salary Continuation Agreement dated June 10, 1993 by and between 
              the Company and Max L. Fuller.

*      10.10  Salary Continuation Agreement dated June 10, 1993 by and between 
              the Company and Patrick E. Quinn.

*      10.11  Stock Purchase Agreement dated November 28, 1990 by and between 
              the Company and Clyde Fuller for the acquisition by the Company 
              of the capital stock of Southwest Motor Freight, Inc. held by 
              Mr. Fuller, such stock constituting all of the issued and 
              outstanding capital stock of Southwest Motor Freight, Inc.

*      10.12  Stock Purchase Agreement dated September 30, 1992 by and between 
              the Company and Clyde Fuller for the acquisition by the Company of
              the capital stock of Chattanooga Leasing, Inc. held by Mr. Fuller,
              such stock constituting all of the issued and outstanding capital
              stock of Chattanooga Leasing, Inc.

                                      42
<PAGE>
 
Exhibit No.   Description
----------------------------

*      10.13  Articles of Merger and Plan of Merger filed February 24, 1993,
              pursuant to which Chattanooga Leasing, Inc. was merged with and
              into Southwest Motor Freight, Inc.

*      10.14  Stock Purchase Agreement dated January 1, 1993 by and among 
              Max L. Fuller, Patrick E. Quinn and the Company for the
              acquisition by the Company of the capital stock of U.S. Xpress,
              Inc. held by Messrs. Fuller and Quinn, such stock constituting all
              of the issued and outstanding capital stock of U.S. Xpress, Inc.

*      10.15  Stock Purchase Agreement dated January 1, 1993 by and among 
              Max L. Fuller, Patrick E. Quinn and the Company for the
              acquisition by the Company of the capital stock of U.S. Xpress
              Leasing, Inc. held by Messrs. Fuller and Quinn, such stock
              constituting all of the issued and outstanding capital stock of
              U.S. Xpress Leasing, Inc.

*      10.16  Stock Purchase Agreement dated March 10, 1994 by and between the
              Company and L.D. Miller, III for the acquisition by the Company 
              of the capital stock of Crown Transport Systems, Inc. held by 
              Mr. Miller, such stock constituting 40% of the issued and
              outstanding capital stock of Crown Transport Systems, Inc.

*      10.17  Stock Purchase Agreement dated March 17, 1994 by and between the
              Company, Patrick E. Quinn and Max L. Fuller for the acquisition by
              the Company of the capital stock of Crown Transport Systems, Inc.
              held by Messrs. Quinn and Fuller, such stock constituting 60% of
              the issued and outstanding capital stock of Crown Transport
              Systems, Inc.

*      10.18  Stock Purchase Agreement dated March 18, 1994 by and between the
              Company and Ken Adams for the acquisition by the Company of 50% of
              the capital stock of Hall Systems, Inc. held by Mr. Adams and the
              grant of an option to the Company to purchase the remaining 50% of
              the capital stock of Hall Systems, Inc. from Mr. Adams,
              exercisable beginning April 1, 1997.

***    10.19  Software Acquisition Agreement dated September 15, 1994 by and
              among QUALCOMM Incorporated, XPRESS Data Services, Inc., U.S.
              Xpress Enterprises, Inc., Patrick E. Quinn, Max L. Fuller,
              Information Management Solutions, Inc. and James Coppinger.

****   10.20  Stock Purchase Agreement dated October 31, 1994 by and between the
              Company and Ken Frohlich for the acquisition by the Company of the
              capital stock of National Freight Systems, Inc. held by Mr.
              Frohlich, such stock constituting all of the issued and
              outstanding capital stock of National Freight Systems, Inc.

*****  10.21  Asset Purchase Agreement with respect to acquisition of
              CSI/Reeves, Inc.

****** 10.22  Stock Purchase Agreement with respect to Hall Systems, Inc.

****** 10.23  Credit Agreement with NationsBank.

*******10.24  Amendment No. 1 to Credit Agreement with NationsBank.

       10.25  Asset Purchase Agreement dated June 18, 1996 with respect to
              acquisition of Michael Lima Transportation, Inc.

       10.26  Asset Purchase Agreement dated April 1, 1997 with respect to
              acquisition of assets from Rosedale Transport, Inc. and Rosedale
              Transport, Ltd.

                                      43
<PAGE>
 
Exhibit No.   Description
----------------------------
       10.27  Asset Purchase Agreement dated April 25, 1997 with respect to 
              acquisition of JTI, Inc.

       22     List of the current subsidiaries of the Company.

       23     Consent of Arthur Andersen LLP, Independent Public Accountants.

       27     Financial Data Schedule

----------------------------------
*          Filed in Registration Statement on Form S-1 dated May 20, 1994. 
           (SEC File No. 33-79208)
***        Filed in Pre-Effective Amendment No. 2 to Registration Statement 
           on Form S-1 dated October 4, 1994.  (SEC File No. 33-79208)
****       Filed in Form 10-Q dated November 17, 1994
*****      Filed in Form 10-Q dated November 10, 1995
******     Filed in Form 10-Q dated February 13, 1996
*******    Filed in Form 10-Q dated November 14, 1996

                                      44

<PAGE>
 
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                FOR THE YEARS ENDED MARCH 31, 1995, 1996 AND 1997
                                 (In Thousands)

<TABLE>
<CAPTION>


                                  Balance at
                                  Beginning      Charged to      Charged to                     Balance at
Description                       of Period      Cost/Expenses   Other (1)     Deductions(2)    End of Period
----------------------------------------------------------------------------------------------------------------
<S>                              <C>              <C>            <C>           <C>              <C> 
FOR THE YEAR ENDED 3/31/95
Reserve for doubtful accounts    $  1,212         $    543       $     181     $     306        $    1,630

FOR THE YEAR ENDED 3/31/96
Reserve for doubtful accounts    $  1,630         $    784       $   1,036     $     417        $    3,033

FOR THE YEAR ENDED 3/31/97
Reserve for doubtful accounts    $  3,033         $  1,259       $     113     $   1,672        $    2,733
</TABLE>


<TABLE> 
<CAPTION> 
<S>      <C>                                                     <C> 
(1)      For the year ended 3/31/95
         Recoveries on accounts written off                      $     181
                                                                 ---------

         For the year ended 3/31/96
         Recoveries on accounts written off                      $      25
         Balance acquired through purchase of CSI/Reeves               886
         Balance acquired through purchase of Hall Systems             125
                                                                 ---------
                                                                     1,036

         For the year ended 3/31/97
         Recoveries on accounts written off                      $     113
                                                                 ---------
</TABLE> 

(2)      Accounts written off

                                      41