##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 0-20797
 RUSH ENTERPRISES, INC.
  Texas
(State or other jurisdiction of 
incorporation or organization)
    
    74-1733016
(I.R.S. Employer Identification No.)
 
 
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ
  Title
of Class
    
    Number of
Shares
OutstandingClass A Common Stock, $.01 Par Value 
Class B Common Stock, $.01 Par Value
    
    26,679,991
10,693,641




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##### 



RUSH ENTERPRISES, INC. AND SUBSIDIARIES
 INDEX
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets  September 30, 2010 (unaudited) and December 31, 2009
    
    
    3Consolidated Statements of Operations  For the Three Months and Nine Months
Ended September 30, 2010 and 2009 (unaudited)
    
    
    4Consolidated Statements of Cash Flows  For the Nine Months Ended
September 30, 2010 and 2009 (unaudited)
    
    
    5Notes to Consolidated Financial Statements (unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    29Item 4. Controls and Procedures
    
    
    29PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    30Item 1A. Risk Factors
    
    
    30Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31Item 3. Defaults Upon Senior Securities
    
    
    31Item 5. Other Information
    
    
    31Item 6. Exhibits
    
    
    32SIGNATURES
    
    
    33Exhibit 10.1Exhibit 10.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1.
    
    Financial Statements.
 RUSH ENTERPRISES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 SEPTEMBER 30, 2010 AND DECEMBER 31, 2009
 (In Thousands, Except Shares)
 September 30,
    
    
    December 31,2010
    
    
    2009(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    150,902
    
    
    $
    149,095Accounts receivable, net
    
    
    67,889
    
    
    
    38,869Inventories, net
    
    
    335,995
    
    
    
    252,219Prepaid expenses and other
    
    
    3,754
    
    
    
    3,650Assets held for sale
    
    
    
    
    
    
    22,719Deferred income taxes, net
    
    
    9,670
    
    
    
    11,414Total current assets
    
    
    568,210
    
    
    
    477,966Investments
    
    
    7,575
    
    
    
    7,575Property and equipment, net
    
    
    414,754
    
    
    
    353,841Goodwill, net
    
    
    147,213
    
    
    
    136,761Other assets, net
    
    
    6,972
    
    
    
    1,154Total assets
    
    $
    1,144,724
    
    
    $
    977,297Liabilities and shareholders equityCurrent liabilities:Floor plan notes payable
    
    $
    252,383
    
    
    $
    189,256Current maturities of long-term debt
    
    
    52,359
    
    
    
    55,545Current maturities of capital lease obligations
    
    
    6,843
    
    
    
    5,730Trade accounts payable
    
    
    37,533
    
    
    
    22,427Accrued expenses
    
    
    64,511
    
    
    
    40,843Total current liabilities
    
    
    413,629
    
    
    
    313,801Long-term debt, net of current maturities
    
    
    193,159
    
    
    
    153,957Capital lease obligations, net of current maturities
    
    
    30,170
    
    
    
    28,714Other long-term liabilities
    
    
    1,114
    
    
    
    Deferred income taxes, net
    
    
    53,910
    
    
    
    54,600Shareholders equity:Preferred stock, par value $.01 per
share; 1,000,000 shares
authorized; 0 shares outstanding
in 2010 and 2009
    
    
    
    
    
    
    Common stock, par value $.01 per
share; 60,000,000 class A shares
and 20,000,000 class B shares
authorized; 26,663,588 class A
shares and 10,693,641 class B
shares outstanding in 2010; and
26,437,848 class A shares
and 10,689,375 class B shares outstanding in 2009
    
    
    390
    
    
    
    388Additional paid-in capital
    
    
    193,227
    
    
    
    188,116Treasury stock, at cost: 1,639,843 class B shares
    
    
    (17,948
    )
    
    
    (17,948
    )Retained earnings
    
    
    277,753
    
    
    
    255,669Accumulated other comprehensive loss, net of tax
    
    
    (680
    )
    
    
    Total shareholders equity
    
    
    452,742
    
    
    
    426,225Total liabilities and shareholders equity
    
    $
    1,144,724
    
    
    $
    977,297
   3




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RUSH ENTERPRISES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In Thousands, Except Per Share Amounts)
 (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues:New and used commercial vehicle sales
    
    $
    248,324
    
    
    $
    179,121
    
    
    $
    620,237
    
    
    $
    562,263Parts and service
    
    
    136,095
    
    
    
    98,805
    
    
    
    356,452
    
    
    
    302,271Lease and rental
    
    
    18,254
    
    
    
    13,300
    
    
    
    48,541
    
    
    
    40,012Finance and insurance
    
    
    2,182
    
    
    
    1,729
    
    
    
    5,714
    
    
    
    5,600Other
    
    
    986
    
    
    
    986
    
    
    
    4,024
    
    
    
    3,857Total revenue
    
    
    405,841
    
    
    
    293,941
    
    
    
    1,034,968
    
    
    
    914,003Cost of products sold:New and used commercial vehicle sales
    
    
    228,864
    
    
    
    167,396
    
    
    
    570,027
    
    
    
    530,069Parts and service
    
    
    83,190
    
    
    
    59,668
    
    
    
    218,041
    
    
    
    184,215Lease and rental
    
    
    15,590
    
    
    
    11,756
    
    
    
    41,461
    
    
    
    35,273Total cost of products sold
    
    
    327,644
    
    
    
    238,820
    
    
    
    829,529
    
    
    
    749,557Gross profit
    
    
    78,197
    
    
    
    55,121
    
    
    
    205,439
    
    
    
    164,446Selling, general and administrative
    
    
    60,392
    
    
    
    50,340
    
    
    
    165,677
    
    
    
    149,257Depreciation and amortization
    
    
    4,068
    
    
    
    3,724
    
    
    
    11,291
    
    
    
    12,247(Loss) gain on sale of assets
    
    
    (5
    )
    
    
    88
    
    
    
    (9
    )
    
    
    166Operating income
    
    
    13,732
    
    
    
    1,145
    
    
    
    28,462
    
    
    
    3,108Interest expense, net
    
    
    1,357
    
    
    
    1,428
    
    
    
    4,051
    
    
    
    4,388Income (loss) from continuing operations before taxes
    
    
    12,375
    
    
    
    (283
    )
    
    
    24,411
    
    
    
    (1,280
    )Provision (benefit) for income taxes
    
    
    4,344
    
    
    
    (3,271
    )
    
    
    9,042
    
    
    
    (4,914
    )Income from continuing operations
    
    
    8,031
    
    
    
    2,988
    
    
    
    15,369
    
    
    
    3,634Income from discontinued operations, net of tax
    
    
    6,128
    
    
    
    20
    
    
    
    6,715
    
    
    
    716Net income
    
    $
    14,159
    
    
    $
    3,008
    
    
    $
    22,084
    
    
    $
    4,350Earnings per common share  Basic:Income from continuing operations
    
    $
    .22
    
    
    $
    .08
    
    
    $
    .41
    
    
    $
    .10Net income
    
    $
    .38
    
    
    $
    .08
    
    
    $
    .59
    
    
    $
    .12Earnings per common share  Diluted:Income from continuing operations
    
    $
    .21
    
    
    $
    .08
    
    
    $
    .40
    
    
    $
    .10Net income
    
    $
    .37
    
    
    $
    .08
    
    
    $
    .58
    
    
    $
    .12Weighted average shares outstanding:Basic
    
    
    37,350
    
    
    
    37,110
    
    
    
    37,271
    
    
    
    37,047Diluted
    
    
    38,198
    
    
    
    37,780
    
    
    
    38,087
    
    
    
    37,469
   4




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RUSH ENTERPRISES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In Thousands)
 (Unaudited)
 Nine Months EndedSeptember 30,2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    22,084
    
    
    $
    4,350Adjustments to reconcile net income to
net cash provided by operating activities:Depreciation and amortization
    
    
    33,205
    
    
    
    30,617Gain on sale of property and equipment
    
    
    (34
    )
    
    
    (165
    )Gain on disposition of equipment centers
    
    
    (10,091
    )
    
    
    Stock-based compensation expense related to stock options
and employee stock purchases
    
    
    3,583
    
    
    
    3,086Provision (benefit) for deferred income tax expense
    
    
    1,488
    
    
    
    (3,867
    )Excess tax benefits from stock-based compensation
    
    
    (232
    )
    
    
    (227
    )Change in accounts receivable, net
    
    
    (24,623
    )
    
    
    13,867Change in inventories
    
    
    (68,307
    )
    
    
    97,047Change in prepaid expenses and other, net
    
    
    98
    
    
    
    1,099Change in trade accounts payable
    
    
    14,931
    
    
    
    (5,860
    )Change in accrued expenses
    
    
    24,149
    
    
    
    (9,238
    )Net cash (used in) provided by operating activities
    
    
    (3,749
    )
    
    
    130,709Cash flows from investing activities:Acquisition of property and equipment
    
    
    (44,643
    )
    
    
    (32,978
    )Proceeds from the sale of property and equipment
    
    
    221
    
    
    
    464Business acquisitions
    
    
    (33,674
    )
    
    
    Proceeds from disposition of equipment centers
    
    
    26,234
    
    
    
    Change in other assets
    
    
    (985
    )
    
    
    11Net cash (used in) investing activities
    
    
    (52,847
    )
    
    
    (32,503
    )Cash flows from financing activities:Draws (payments) on floor plan notes payable, net
    
    
    58,297
    
    
    
    (86,053
    )Proceeds from long-term debt
    
    
    46,262
    
    
    
    14,423Principal payments on long-term debt
    
    
    (41,834
    )
    
    
    (33,768
    )Principal payments on capital lease obligations
    
    
    (5,692
    )
    
    
    (3,489
    )Debt issuance costs
    
    
    (160
    )
    
    
    (27
    )Excess tax benefits from stock-based compensation
    
    
    232
    
    
    
    227Proceeds from issuance of shares relating to employee stock options
and
employee stock purchases
    
    
    1,298
    
    
    
    801Net cash provided by (used in) financing activities
    
    
    58,403
    
    
    
    (107,886
    )Net increase (decrease) in cash and cash equivalents
    
    
    1,807
    
    
    
    (9,680
    )Cash and cash equivalents, beginning of period
    
    
    149,095
    
    
    
    146,411Cash and cash equivalents, end of period
    
    $
    150,902
    
    
    $
    136,731Supplemental disclosure of cash flow information:Cash paid during the period for:Interest
    
    $
    9,874
    
    
    $
    11,055Income taxes, net of refunds
    
    $
    3,749
    
    
    $
    3,512Noncash investing activities:Note receivable related to disposition of equipment centers
    
    $
    4,750
    
    
    $
    Assets acquired under capital leases
    
    $
    8,261
    
    
    $
    17,953
   5




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RUSH ENTERPRISES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited
 1  Principles of Consolidation and Basis of Presentation
  Derivative Instruments and Hedging Activities
  .
 2  Goodwill and Other Intangible Assets
     6




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Balance January 1, 2010
    
    $
    136,761Acquisition of Lake City International (See Note 9)
    
    
    9,164Acquisition of Joe Cooper Truck Center LLC (See Note 9)
    
    
    1,100Adjustment to prior acquisition
    
    
    188Balance September 30, 2010
    
    $
    147,213
 3  Commitments and Contingencies
    4  Earnings Per Share
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Numerator:Numerator for basic and diluted earnings per
share, income from continuing operations
available to common shareholders
    
    $
    8,031,000
    
    
    $
    2,988,000
    
    
    $
    15,369,000
    
    
    $
    3,634,000Denominator:Denominator for basic earnings per share,
adjusted weighted average shares outstanding
    
    
    37,349,899
    
    
    
    37,109,673
    
    
    
    37,271,416
    
    
    
    37,046,915Effect of dilutive securities:Employee and director stock options and
restricted
share awards
    
    
    848,479
    
    
    
    670,701
    
    
    
    815,593
    
    
    
    421,659Denominator for diluted earnings per share,
adjusted weighted average shares outstanding
and assumed conversions
    
    
    38,198,378
    
    
    
    37,780,374
    
    
    
    38,087,009
    
    
    
    37,468,574Basic earnings per common share
    
    $
    0.22
    
    
    $
    0.08
    
    
    $
    0.41
    
    
    $
    0.10Diluted earnings per common share and common
share equivalents
    
    $
    0.21
    
    
    $
    0.08
    
    
    $
    0.40
    
    
    $
    0.10
  7




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Three Months Ended
    
    
    Nine months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Anti-dilutive options
    
    
    990,330
    
    
    
    505,830
    
    
    
    985,830
    
    
    
    1,557,356
 5  Stock Options and Restricted Stock Awards
 Valuation and Expense Information
  6  Segment Information
      8




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##### Table of Contents



TruckSegment
    
    
    All Other
    
    
    TotalsAs of and for the three months ended
September 30, 2010Revenues from external customers
    
    $
    401,890
    
    
    $
    3,951
    
    
    $
    405,841Segment income from continuing operations
before taxes
    
    
    12,838
    
    
    
    (463
    )
    
    
    12,375Segment assets
    
    
    1,112,454
    
    
    
    32,270
    
    
    
    1,144,724For the nine months ended September 30, 2010Revenues from external customers
    
    $
    1,023,321
    
    
    $
    11,647
    
    
    $
    1,034,968Segment income from continuing operations
before taxes
    
    
    25,185
    
    
    
    (774
    )
    
    
    24,411As of and for the three months ended
September 30, 2009Revenues from external customers
    
    $
    289,994
    
    
    $
    3,947
    
    
    $
    293,941Segment income from continuing operations
before taxes
    
    
    326
    
    
    
    (609
    )
    
    
    (283
    )Segment assets
    
    
    900,657
    
    
    
    56,853
    
    
    
    957,510For the nine months ended September 30, 2009Revenues from external customers
    
    $
    901,503
    
    
    $
    12,500
    
    
    $
    914,003Segment income from continuing operations
before taxes
    
    
    201
    
    
    
    (1,481
    )
    
    
    (1,280
    )
  7  Income Taxes
   8  Medium-Duty GMC Truck Franchises
  9  Acquisitions
   9




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Prepaid expenses
    
    $
    205Accounts and notes receivable
    
    
    5,955Inventories
    
    
    10,722Property and equipment, including real estate
    
    
    47,802Other assets
    
    
    309Accounts payable
    
    
    (175
    )Accrued expenses
    
    
    (3,555
    )Floor plan notes payable
    
    
    (275
    )Notes payable
    
    
    (178
    )Goodwill
    
    
    9,164Total
    
    $
    69,974
    10  Sale of Equipment Centers
    10




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Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net Sales
    
    $
    7,563
    
    
    $
    8,497
    
    
    $
    25,772
    
    
    $
    29,649Earnings before income taxes:Results of operations from
discontinued operations before
income taxes
    
    
    (95
    )
    
    
    33
    
    
    
    917
    
    
    
    1,174Gain on disposition
    
    
    10,091
    
    
    
    
    
    
    
    10,091
    
    
    
    Income tax (expense)
    
    
    (3,868
    )
    
    
    (13
    )
    
    
    (4,293
    )
    
    
    (458
    )Net income from discontinued operations
    
    $
    6,128
    
    
    $
    20
    
    
    $
    6,715
    
    
    $
    716
  December 31,2009Inventories
    
    $
    17,736Goodwill
    
    
    4,075Property and equipment, net
    
    
    908Assets held for sale
    
    $
    22,719
 11  Financial Instruments and Fair Value
        11




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Interest Rate Swap Agreements
     FixedNotional
    
    
    InterestAgreement
    
    Amount
    
    
    Rate
    
    
    Expiration Date
    
    Fair ValueInterest Rate Swap
    
    $
    2,196
    
    
    
    5.075
    %
    
    July 1, 2015
    
    $
    (41
    )Interest Rate Swap
    
    $
    4,536
    
    
    
    5.075
    %
    
    July 1, 2015
    
    $
    (86
    )Interest Rate Swap
    
    $
    7,847
    
    
    
    5.39
    %
    
    December 31, 2014
    
    $
    (179
    )Interest Rate Swap
    
    $
    1,517
    
    
    
    5.39
    %
    
    December 31, 2014
    
    $
    (35
    )Interest Rate Swap
    
    $
    2,700
    
    
    
    5.39
    %
    
    December 31, 2014
    
    $
    (61
    )Interest Rate Swap
    
    $
    6,109
    
    
    
    5.39
    %
    
    December 31, 2014
    
    $
    (139
    )Interest Rate Swap
    
    $
    5,616
    
    
    
    5.38
    %
    
    June 29, 2015
    
    $
    (172
    )Interest Rate Swap
    
    $
    864
    
    
    
    5.29
    %
    
    June 30, 2015
    
    $
    (24
    )Interest Rate Swap
    
    $
    1,656
    
    
    
    5.29
    %
    
    June 30, 2015
    
    $
    (46
    )Interest Rate Swap
    
    $
    8,352
    
    
    
    5.29
    %
    
    June 30, 2015
    
    $
    (231
    )Interest Rate Swap
    
    $
    720
    
    
    
    5.29
    %
    
    June 30, 2015
    
    $
    (20
    )Interest Rate Swap
    
    $
    2,894
    
    
    
    5.29
    %
    
    June 30, 2015
    
    $
    (80
    )
  Derivatives Designated as
    
    Asset Derivatives
    
    Liability DerivativesHedging Instruments
    
    Balance Sheet Location
    
    
    Fair Value
    
    Balance Sheet Location

    
    Fair ValueInterest Rate Swaps
    
    
    
    
    
    
    
    Other Long-Term Liabilities
    
    $
    1,114
  12




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12  Comprehensive Income
  For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income
    
    $
    14,159
    
    
    $
    3,008
    
    
    $
    22,084
    
    
    $
    4,350Other comprehensive income:Change in fair value of cash flow swaps
    
    
    (1,114
    )
    
    
    
    
    
    
    (1,114
    )
    
    
    Income tax benefit associated with
cash flow swaps
    
    
    434
    
    
    
    
    
    
    
    434
    
    
    
    Comprehensive income
    
    $
    13,479
    
    
    $
    3,008
    
    
    $
    21,404
    
    
    $
    4,350
 13  Subsequent Events
   13




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ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations.
 Certain statements contained in this Form 10-Q (or otherwise made by the Company or on
the Companys behalf from time to time in other reports, filings with the Securities and
Exchange Commission, news releases, conferences, website postings or otherwise) that are not
statements of historical fact constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of
1934, as amended (the Exchange Act), notwithstanding that such statements are not
specifically identified. Forward-looking statements include statements about the Companys
financial position, business strategy and plans and objectives of management of the Company
for future operations. These forward-looking statements reflect the best judgments of the
Company about the future events and trends based on the beliefs of the Companys management as
well as assumptions made by and information currently available to the Companys management.
Use of the words may, should, continue, plan, potential, anticipate, believe,
estimate, expect and intend and words or phrases of similar import, as they relate to
the Company or its subsidiaries or Company management, are intended to identify
forward-looking statements but are not the exclusive means of identifying such statements.
Forward-looking statements reflect the current view of the Company with respect to future
events and are subject to risks and uncertainties that could cause actual results to differ
materially from those in such statements. Important factors that could cause actual results to
differ materially from those in the forward-looking statements include, but are not limited
to, those set forth under Item 1ARisk Factors in the Companys Annual Report on Form 10-K
for the year ended December 31, 2009 as well as future growth rates and margins for certain of
our products and services, future demand for our products and services, competitive factors,
general economic conditions, cyclicality, market conditions in the new and used commercial
vehicle and equipment markets, customer relations, relationships with vendors, the interest
rate environment, governmental regulation and supervision, seasonality, distribution networks,
product introductions and acceptance, technological change, changes in industry practices,
one-time events and other factors described herein and in the Companys quarterly and other
reports filed with the Securities and Exchange Commission (collectively, Cautionary
Statements). Although the Company believes that its expectations are reasonable, it can give
no assurance that such expectations will prove to be correct. Based upon changing conditions,
should any one or more of these risks or uncertainties materialize, or should any underlying
assumptions prove incorrect, actual results may vary materially from those described in any
forward-looking statements. All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly qualified in their
entirety by the applicable Cautionary Statements. All forward-looking statements speak only as
the date on which they are made and the Company undertakes no duty to update or revise any
forward-looking statements.
  Note Regarding Trademarks Commonly Used in the Companys SEC Filings
 Peterbilt ® is a registered trademark of Peterbilt Motors Company.
PACCAR ® is a registered trademark of PACCAR, Inc. GMC ® is a registered
trademark of General Motors Corporation. Hino ® is a registered trademark of Hino
Motors, Ltd. UD ® is a registered trademark of UD Truck North America, Ltd.
Isuzu ® is a registered trademark of Isuzu Motors Limited. John Deere ® is
a registered trademark of Deere & Company. Kenworth ® is a registered trademark of
PACCAR, Inc. doing business as Kenworth Truck Company. Volvo ® is a registered
trademark of Volvo Trademark Holding AB. Freightliner ® is a registered trademark of
Freightliner Corporation. Mack ® is a registered trademark of Mack Trucks, Inc.
Navistar ® is a registered trademark of Navistar International Corporation.
Caterpillar ® is a registered trademark of Caterpillar, Inc. PacLease ® is
a registered trademark of PACCAR Leasing Corporation. CitiCapital ® is a registered
trademark of Citicorp. Ford ® is a registered trademark of Ford Motor Company.
Cummins ® is a registered trademark of Cummins Intellectual Property, Inc.
Eaton ® is a registered trademark of Eaton Corporation. Arvin Meritor ® is a registered trademark of Meritor Technology, Inc.  Case ® is a
registered trademark of Case Corporation. Komatsu ® is a registered trademark of
Kabushiki Kaisha Komatsu Seisakusho Corporation Japan. The CIT Group ® is a
registered trademark of CIT Group Holdings, Inc. JPMorgan Chase ® is a registered
trademark of JP Morgan Chase & Co. SAP ® is a registered trademark of SAP
Aktiengesellschaft. International ® is a registered trademark of Navistar
International Transportation Corp. Blue Bird ® is a registered trademark of Blue
Bird Investment Corporation. Autocar ® is a registered trademark of Shem, LLC. IC
Bus ® is a registered trademark of IC Bus, LLC. Collins Bus Corporation ® is a registered trademark of Collins Bus Corporation. Fuso ® is a registered
trademark of Mitsubishi Fuso Truck and Bus Corporation. Workhorse ® is a registered
trademark of Workhorse Custom Chassis, LLC.
 General
   14




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Critical Accounting Policies
  Inventories
  Goodwill
    15




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Finance and Insurance Revenue Recognition
   Insurance Accruals
   Accounting for Income Taxes
   16




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Stock-Based Compensation Expense
   Derivative Instruments and Hedging Activities
  .
  17




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Results of Operations
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009New and used commercial vehicle sales
    
    
    61.3
    %
    
    
    61.0
    %
    
    
    59.9
    %
    
    
    61.5
    %Parts and service sales
    
    
    33.5
    
    
    
    33.6
    
    
    
    34.4
    
    
    
    33.1Lease and rental
    
    
    4.5
    
    
    
    4.5
    
    
    
    4.7
    
    
    
    4.4Finance and insurance
    
    
    0.5
    
    
    
    0.6
    
    
    
    0.6
    
    
    
    0.6Other
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.4
    
    
    
    0.4Total revenues
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Cost of products sold
    
    
    80.7
    
    
    
    81.2
    
    
    
    80.2
    
    
    
    82.0Gross profit
    
    
    19.3
    
    
    
    18.8
    
    
    
    19.8
    
    
    
    18.0Selling, general and administrative
    
    
    14.9
    
    
    
    17.1
    
    
    
    16.0
    
    
    
    16.3Depreciation and amortization
    
    
    1.0
    
    
    
    1.3
    
    
    
    1.1
    
    
    
    1.3Gain on sale of assets
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0Operating income
    
    
    3.4
    
    
    
    0.4
    
    
    
    2.7
    
    
    
    0.4Interest expense, net
    
    
    0.3
    
    
    
    0.5
    
    
    
    0.4
    
    
    
    0.5Income from continuing operations
before income taxes
    
    
    3.1
    
    
    
    (0.1
    )
    
    
    2.3
    
    
    
    (0.1
    )Provision for income taxes
    
    
    1.1
    
    
    
    (1.1
    )
    
    
    0.9
    
    
    
    (0.5
    )Income from continuing operations
    
    
    2.0
    
    
    
    1.0
    
    
    
    1.4
    
    
    
    0.4Income from discontinued operations
    
    
    1.5
    
    
    
    0.0
    
    
    
    0.6
    
    
    
    0.1Net income
    
    
    3.5
    %
    
    
    1.0
    %
    
    
    2.0
    %
    
    
    0.5
    %
  Three Months Ended
    
    
    
    
    
    
    Nine Months EndedSeptember 30,
    
    
    %
    
    
    September 30,
    
    
    %2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    ChangeTruck unit sales:New heavy-duty trucks
    
    
    1,283
    
    
    
    1,030
    
    
    
    24.6
    %
    
    
    3,065
    
    
    
    3,016
    
    
    
    1.6
    %New medium-duty trucks
    
    
    678
    
    
    
    637
    
    
    
    6.4
    %
    
    
    2,121
    
    
    
    2,029
    
    
    
    4.5
    %Total new truck unit sales
    
    
    1,961
    
    
    
    1,667
    
    
    
    17.6
    %
    
    
    5,186
    
    
    
    5,045
    
    
    
    2.8
    %Used truck unit sales
    
    
    899
    
    
    
    760
    
    
    
    18.3
    %
    
    
    2,474
    
    
    
    2,113
    
    
    
    17.1
    %Truck revenue:New heavy-duty trucks
    
    $
    163.8
    
    
    $
    116.2
    
    
    
    41.0
    %
    
    $
    386.6
    
    
    $
    356.5
    
    
    
    8.4
    %New medium-duty trucks
    
    
    46.9
    
    
    
    37.1
    
    
    
    26.4
    %
    
    
    135.0
    
    
    
    126.6
    
    
    
    6.6
    %Total new truck revenue
    
    $
    210.7
    
    
    $
    153.3
    
    
    
    37.4
    %
    
    $
    521.6
    
    
    $
    483.1
    
    
    
    8.0
    %Used truck revenue
    
    $
    37.4
    
    
    $
    25.6
    
    
    
    46.1
    %
    
    $
    97.5
    
    
    $
    78.1
    
    
    
    24.8
    %Other truck revenue(1)
    
    $
    0.2
    
    
    $
    0.2
    
    
    
    0.0
    %
    
    $
    1.1
    
    
    $
    1.1
    
    
    
    0.0
    %Absorption rate:
    
    
    109.1
    %
    
    
    96.4
    %
    
    
    13.2
    %
    
    
    103.9
    %
    
    
    96.3
    %
    
    
    7.9
    %
 (1)
    
    Includes sales of glider kits, truck bodies, trailers and other new equipment.  18




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Key Performance Indicator
 Absorption Rate
  Three Months Ended September 30, 2010 Compared to Three Months Ended September 30, 2009
         19




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Revenues
         20




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Gross Profit
        Selling, General and Administrative Expenses
   21




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Interest Expense, Net
  Income from Continuing Operations before Income Taxes
  Income Taxes
  Income from Discontinued Operations, net
  Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009
  Revenues
      22




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Gross Profit
        Selling, General and Administrative Expenses
  Interest Expense, Net
  Income from Continuing Operations before Income Taxes
  Provision for Income Taxes
   23




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Income from Discontinued Operations, net
  Liquidity and Capital Resources
         24




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Cash Flows
  Cash Flows from Operating Activities
     25




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##### Table of Contents



Nine months EndedSeptember 30,2010
    
    
    2009Net cash (used in) provided by operating activities (U.S. GAAP)
    
    $
    (3,749
    )
    
    $
    130,709(Draws) payments on floor plan notes payable
    
    
    58,297
    
    
    
    (86,053
    )Adjusted Cash Flows from Operating Activities (Non-GAAP)
    
    $
    54,548
    
    
    $
    44,656
 Cash Flows from Investing Activities
   Cash Flows from Financing Activities
     26




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##### Table of Contents



Backlog
  Seasonality
  Cyclicality
  Off-Balance Sheet Arrangements
  Environmental Standards and Other Governmental Regulations
    27




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##### Table of Contents



28




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##### Table of Contents



ITEM 3.
    
    Quantitative and Qualitative Disclosures about Market Risk.
       
 ITEM 4.
    
    Controls and Procedures.
    29




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1.
    
    Legal Proceedings.
  
 ITEM 1A.
    
    Risk Factors.
   We are dependent on the ongoing success of the manufacturers we represent and adverse
conditions affecting the manufacturers we represent may negatively impact our revenues and
profitability.
    Climate change legislation or regulations restricting emissions of greenhouse gases
could result in increased costs and reduced demand for our products and services.
   30




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##### Table of Contents



ITEM 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
   Total Number of
    
    
    Maximum NumberShares
    
    
    (or ApproximatePurchased as
    
    
    Dollar Value) ofTotal
    
    
    Average
    
    
    Part of  Publicly
    
    
    Shares that MayNumber of
    
    
    Price
    
    
    Announced
    
    
    Yet Be PurchasedShares
    
    
    Paid Per
    
    
    Plans or
    
    
    Under the Plans orPeriod
    
    Purchased
    
    
    Share
    
    
    Programs
    
    
    Programs (1)(2)July 1  31, 2010
    
    
    
    
    
    $
    0.00
    
    
    
    
    
    
    $
    2,093,321August 1
 31, 2010
    
    
    
    
    
    
    0.00
    
    
    
    
    
    
    
    2,093,321September 1
  30,
2010
    
    
    
    
    
    
    0.00
    
    
    
    
    
    
    
    2,093,3213rd Quarter Total
    
    
    
    
    
    $
    0.00
    
    
    
    
    
    
    $
    2,093,321
 (1)
    
    On July 22, 2008, the Companys Board of Directors approved a stock repurchase program
authorizing the Company to repurchase, from time to time, up to an aggregate of $20,000,000 of
its shares of Class A Common Stock and/or Class B Common Stock. The stock repurchase program
has no expiration date and may be suspended or discontinued at any time.(2)
    
    As of September 30, 2010, the Company has repurchased 1,639,843 shares of its Class B
common stock at a cost of $17.9 million, none of which occurred during the third quarter of
2010. 
 ITEM 3.
    
    Defaults Upon Senior Securities.
  
 ITEM 5.
    
    Other Information.
 Not Applicable
  31




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##### Table of Contents



ITEM 6.
    
    Exhibits.
 Exhibit
 Number
    
    Exhibit Title3.1
    
    
    Restated Articles of Incorporation of Rush Enterprises, Inc. (incorporated herein by
reference to Exhibit 3.1 of the Companys Quarterly Report on Form 10-Q (File No.
000-20797) for the quarter ended June 30, 2008)3.2
    
    
    Rush Enterprises, Inc. Amended and Restated Bylaws (incorporated herein by reference to
Exhibit 3.1 of the Companys Current Report on Form 8-K (File No. 000-20797) filed
December 9, 2008)10.1
    *
    
    Rush Enterprises, Inc. Amended and Restated 1997 Non-Employee Director Stock Option Plan10.2
    *
    
    Rush Enterprises, Inc. Amended and Restated 2006 Non-Employee Director Stock Plan31.1
    *
    
    Certification of CEO pursuant to Rules 13a-14(a) and 15d-14(a) adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    *
    
    Certification of CFO pursuant to Rules 13a-14(a) and 15d-14(a) adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    **
    
    Certification of CEO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.32.2
    **
    
    Certification of CFO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
 *
    
    filed herewith**
    
    furnished herewith  32




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##### Table of Contents



SIGNATURES
  RUSH ENTERPRISES, INC.Date:      November 9, 2010
    By:

/s/
W.M. RUSTY RUSHW.M. Rusty RushPresident and Chief Executive Officer
(Principal Executive Officer)Date:      November 9, 2010
    By:

/s/ STEVEN L. KELLERSteven L. KellerVice President and Chief Financial Officer
(Principal Financial and Accounting Officer)  33




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##### Table of Contents



EXHIBIT INDEX
 Exhibit
 Number
    
    Exhibit Title10.1
    *
    
    Rush Enterprises, Inc. Amended and Restated 1997 Non-Employee Director Stock Option Plan10.2
    *
    
    Rush Enterprises, Inc. Amended and Restated 2006 Non-Employee Director Stock Plan31.1
    *
    
    Certification of CEO pursuant to Rules 13a-14(a) and 15d-14(a) adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    *
    
    Certification of CFO pursuant to Rules 13a-14(a) and 15d-14(a) adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    **
    
    Certification of CEO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.32.2
    **
    
    Certification of CFO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
 *
    
    filed herewith**
    
    furnished herewith  34