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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
APRIL 2, 2005 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 0-19791 USF CORPORATION (Exact name of
registrant as specified in its charter)
 Delaware
(State of Incorporation)
    
    36-3790696
(IRS Employer
Identification No.)8550 W. Bryn Mawr Avenue, Suite 700
Chicago, Illinois
(Address of principal executive offices)
    
    60631
(Zip Code)
 Registrants telephone number
including area code: (773) 824-1000 N/A
(Former name or former address, if changed since the last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
þ No o Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date. As of April 29, 2005, 28,522,026 shares of common stock were outstanding.




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TABLE OF CONTENTS  PART I: FINANCIAL INFORMATIONItem 1Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures about Market RiskItem 4. Controls and ProceduresPART II: OTHER INFORMATIONItem 1. Legal ProceedingsItem 2. Unregistered Sales of Equity Securities and Use of Proceeds.Item 3. Defaults Upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Security HoldersItem 5. Other InformationItem 6. ExhibitsSIGNATURESSection 302 CertificationsSection 1350 Certifications    Table of Contents  
 PART I: FINANCIAL INFORMATION 
 Item 1. Financial Statements USF Corporation
Condensed Consolidated Balance Sheets
Unaudited (Dollars in Thousands) As ofApril 2,
    
    
    December 31,2005
    
    
    2004AssetsCurrent assets:Cash
    
    $
    151,679
    
    
    $
    150,798Accounts receivable, net
    
    
    317,355
    
    
    
    310,172Operating supplies and prepaid expenses
    
    
    35,491
    
    
    
    31,749Deferred income taxes
    
    
    35,450
    
    
    
    37,724Total current assets
    
    
    539,975
    
    
    
    530,443Property and equipment, net
    
    
    777,489
    
    
    
    775,940Goodwill
    
    
    99,551
    
    
    
    100,813Other assets
    
    
    33,988
    
    
    
    33,999Total Assets
    
    $
    1,451,003
    
    
    $
    1,441,195Liabilities and Stockholders EquityCurrent liabilities:Current debt
    
    $
    65
    
    
    $
    65Accounts payable
    
    
    79,774
    
    
    
    65,756Accrued salaries, wages and benefits
    
    
    93,609
    
    
    
    92,164Accrued claims and other
    
    
    114,923
    
    
    
    118,021Total current liabilities
    
    
    288,371
    
    
    
    276,006Long-term liabilitiesNotes payable and long-term debt
    
    
    250,006
    
    
    
    250,022Accrued claims and other
    
    
    108,524
    
    
    
    111,551Deferred income taxes
    
    
    101,187
    
    
    
    100,638Total liabilities
    
    
    748,088
    
    
    
    738,217Commitments and contingencies (Note 8)Total stockholders equity
    
    
    702,915
    
    
    
    702,978Total Liabilities and Stockholders Equity
    
    $
    1,451,003
    
    
    $
    1,441,195
 See accompanying Notes to Condensed Consolidated Financial Statements. 2




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USF Corporation
Condensed Consolidated Statements of Operations
Unaudited (Dollars in Thousands, Except Share and Per Share Amounts) Quarter EndedApril 2,
    
    
    April 3,2005
    
    
    2004Revenue:LTL Trucking
    
    $
    507,494
    
    
    $
    519,697TL Trucking
    
    
    31,142
    
    
    
    34,274Logistics
    
    
    63,905
    
    
    
    66,437Intercompany eliminations
    
    
    (4,564
    )
    
    
    (3,641
    )597,977
    
    
    
    616,767Operating expenses:LTL Trucking
    
    
    494,413
    
    
    
    495,659TL Trucking
    
    
    30,012
    
    
    
    33,462Logistics
    
    
    69,533
    
    
    
    64,807Corporate and Other
    
    
    12,152
    
    
    
    9,392Intercompany eliminations
    
    
    (4,564
    )
    
    
    (3,641
    )Total operating expenses
    
    
    601,546
    
    
    
    599,679Income/(loss) from operations
    
    
    (3,569
    )
    
    
    17,088Non-operating income/(expense):Interest expense
    
    
    (5,291
    )
    
    
    (5,209
    )Interest income
    
    
    746
    
    
    
    571Other, net
    
    
    (351
    )
    
    
    (390
    )Net non-operating expense
    
    
    (4,896
    )
    
    
    (5,028
    )Income/(loss) before income taxes
    
    
    (8,465
    )
    
    
    12,060Income tax expense/(benefit)
    
    
    2,674
    
    
    
    (4,944
    )Net income/(loss)
    
    $
    (5,791
    )
    
    $
    7,116Net income/(loss) per sharebasic
    
    
    (0.20
    )
    
    
    0.26Net income/(loss) per sharediluted
    
    
    (0.20
    )
    
    
    0.26Average shares outstandingbasic
    
    
    28,369,107
    
    
    
    27,556,632Average shares outstandingdiluted
    
    
    28,369,107
    
    
    
    27,802,815
 See accompanying Notes to Condensed Consolidated Financial Statements. 3




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USF Corporation
Condensed Consolidated Statements of Cash Flows
Unaudited (Dollars in Thousands) Quarter EndedApril 2,
    
    
    April 3,2005
    

    
    2004Cash flows from operating activities:Net income/(loss)
    
    $
    (5,791
    )
    
    $
    7,116Adjustments to reconcile net income/(loss) to net cash
provided by operating activities:Depreciation of property and equipment
    
    
    25,111
    
    
    
    26,225Amortization of intangible assets
    
    
    32
    
    
    
    992Deferred taxes
    
    
    2,823
    
    
    
    (6,442
    )Gains on sale of property and equipment
    
    
    (3,280
    )
    
    
    (789
    )Loss on sale of USF Processors
    
    
    7,080
    
    
    
    Decrease in other items affecting cash from operating activities
    
    
    (7,097
    )
    
    
    (14,941
    )Net cash provided by operating activities
    
    
    18,878
    
    
    
    12,161Cash flows from investing activities:Mexico loan
    
    
    
    
    
    
    (500
    )Capital expenditures
    
    
    (37,053
    )
    
    
    (21,445
    )Proceeds from sale of property and equipment
    
    
    8,724
    
    
    
    2,197Proceeds from sale of USF Processors
    
    
    4,500
    
    
    
    Net cash used in investing activities
    
    
    (23,829
    )
    
    
    (19,748
    )Cash flows from financing activities:Dividends paid
    
    
    (2,628
    )
    
    
    (2,562
    )Employee and director stock transactions
    
    
    8,427
    
    
    
    6,703Proceeds from the re-issuance of treasury stock
    
    
    49
    
    
    
    Net change in short-term bank debt
    
    
    
    
    
    
    1Payments on long-term bank debt
    
    
    (16
    )
    
    
    (16
    )Net cash provided by financing activities
    
    
    5,832
    
    
    
    4,126Net increase/(decrease) in cash
    
    
    881
    
    
    
    (3,461
    )Cash at beginning of period
    
    
    150,798
    
    
    
    121,659Cash at end of period
    
    $
    151,679
    
    
    $
    118,198Supplemental disclosure of cash flow information:Cash paid during the period for:Interest
    
    $
    77
    
    
    $
    49Income taxes
    
    
    1,831
    
    
    
    669
 See accompanying Notes to Condensed Consolidated Financial Statements. 4




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USF Corporation
Condensed Consolidated Statements of Changes in Stockholders Equity
Unaudited (Dollars in Thousands) Quarter EndedApril 2,
    
    
    April 3,2005
    
    
    2004Stockholders equity balance as of December 31, 2004 and 2003, respectively
    
    $
    702,978
    
    
    $
    664,789Net income/(loss)
    
    
    (5,791
    )
    
    
    7,116Foreign currency translation adjustments
    
    
    (87
    )
    
    
    238Comprehensive income/(loss)
    
    
    (5,878
    )
    
    
    7,354Employee and director stock transactions
    
    
    8,427
    
    
    
    6,703Treasury stock transactions
    
    
    49
    
    
    
    Dividends declared
    
    
    (2,661
    )
    
    
    (2,584
    )Stockholders equity balance as of April 2, 2005 and April 3, 2004, respectively
    
    $
    702,915
    
    
    $
    676,262
 See accompanying Notes to Condensed Consolidated Financial Statements. 5




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Notes to Condensed Consolidated Financial Statements (Unaudited)(Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated) 1. Summary of Significant Accounting Policies Basis of Presentation These interim financial statements of USF Corporation have been prepared in accordance with
accounting principles generally accepted in the United States for interim financial information and
the instructions to Quarterly Reports on Form 10-Q and Rule 10-01 of Regulation S-X, and should be
read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2004.
Accordingly, significant accounting policies and other disclosures normally provided have been
omitted since such items are disclosed therein. In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all
adjustments (including normal recurring adjustments) necessary to fairly present our consolidated
financial position as of April 2, 2005 and the consolidated results of our operations and our
consolidated cash flows for the quarters ended April 2, 2005 and April 3, 2004. Operating results
for the quarter ended April 2, 2005 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2005. We report on a calendar year basis. Our quarters consist of thirteen weeks that end on a Saturday
either before or after the end of March, June and September. Certain reclassifications have been made to prior year amounts to conform to the current year
presentation. Recent Accounting Pronouncements In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 123 (R)  a revision of SFAS No. 123  Accounting for Stock -
Based Compensation. This statement supersedes APB Opinion No. 25 and provides guidance on the
accounting for transactions in which an entity obtains employee services for share-based payments.
This statement does not change the guidance for share-based transaction with non-employees nor
employee stock ownership plans originally provided by SFAS No. 123. This statement requires,
effective for interim periods beginning January 1, 2006, that share-based payments made to
employees are recognized as compensation expense in an amount equal to the fair value of the
share-based payments, typically over any related vesting period. We plan to adopt the modified
prospective method as proposed in SFAS No. 123(R) in our 2006
first quarter. The modified prospective method proposes the recording
of compensation expense based on grant date fair value for all awards
granted, modified or settled after the date of initial adoption and
for the unvested portion of previously issued awards that remain
outstanding as of the date of adoption. We are currently evaluating
the impact that adoption of SFAS No. 123(R) will have on our
2006 financial statements. 2. Stock Based Compensation SFAS No. 123, Accounting for Stock Based Compensation, establishes a fair value based method of
accounting for stock options. We have elected to continue using the intrinsic value method
prescribed under Accounting Principals Board (APB) Opinion No. 25 as permitted by SFAS No. 123.
For all stock options that have been granted, the exercise prices of the stock options were equal
to the market prices of the underlying stock on the grant dates, therefore no compensation expense
was recognized. If we had elected to recognize compensation expense based on the fair value of the
options at grant date, as prescribed by SFAS No. 123, our net income and earnings per share would
have been reduced to the pro forma amounts indicated in the table below: Quarter EndedApril 2,
    
    
    April 3,2005
    
    
    2004Net income/(loss)as reported
    
    $
    (5,791
    )
    
    $
    7,116Less: total stock-based employee compensation expense determined
under fair value based method for all awards, net of related tax effects
    
    
    (660
    )
    
    
    (878
    )Net income/(loss)pro forma
    
    
    (6,451
    )
    
    
    6,238Basic earnings/(loss) per shareas reported
    
    
    (0.20
    )
    
    
    0.26Basic earnings per sharepro forma
    
    
    (0.23
    )
    
    
    0.23Diluted earnings/(loss) per shareas reported
    
    
    (0.20
    )
    
    
    0.26Diluted earnings per sharepro forma
    
    
    (0.23
    )
    
    
    0.22
 3. Restructuring and Impairment Charges In the 2004 second quarter we shut down USF Red Star, our former Northeast carrier. Subsequent to
the closure of USF Red Star, we announced plans to expand USF Hollands operations into the
Northeast. As a result of USF Hollands expansion and following the guidance of SFAS No. 144,
Accounting for the Impairment of Long-Lived Assets, the results of USF Red Star are reported in
continuing operations in the LTL Trucking Revenue and Operating Expenses lines in our financial
statements. 6




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Notes to Condensed Consolidated Financial Statements (Unaudited)(Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated) USF Red Star shutdown costs and operating losses included in our 2005 first quarter net operating
loss are presented below: Quarter-to-Date
    
    
    Quarter-to-DateApril 2, 2005
    
    
    April 2, 2004Shutdown costs:Employee severance
    
    $
    (136
    )
    
    $
    Write-off of assets and change in
allowance for uncollectible accounts
    
    
    (250
    )
    
    
    Operating leases and property taxes
    
    
    81
    
    
    
    Contractual obligations to employees of the
International Brotherhood of Teamsters
    
    
    4,485
    
    
    
    MEPPA payments
    
    
    2,756
    
    
    
    6,936
    
    
    
    Operating (income)/losses:Prior to shutdown
    
    
    
    
    
    
    (2,234
    )After shutdown
    
    
    (2,042
    )
    
    
    (2,042
    )
    
    
    (2,234
    )Total shutdown costs and operating losses
    
    $
    4,894
    
    
    $
    (2,234
    )
 The above shutdown costs of $6,936 were offset by $2,042 in operating income, including $2,818
in gains on the sale of properties, and $776 in expenses for salaries and benefits for our
employees assisting in the wind-down of operations, legal fees, and other miscellaneous expenses.
Due to the shutdown of USF Red Star, we are subject to withdrawal liability for up to 11
multi-employer pension plans. Of the $6,936 in shutdown costs, $4,485 relates to contractual
obligations due International Brotherhood of Teamsters employees as a result of the shutdown of USF
Red Star, and $2,756 relates to Multi-Employer Pension Plan Amendment Act of 1980 (MEPPA)
payments. In addition, MEPPA payments of $35 were made from an accrual established in the prior
year. Refer to Note 8 for more information. The following is a summary of the accruals recorded on the balance sheet for lease obligations and
severance costs related to the shutdown of USF Red Star: Lease Obligations
    
    
    Severance Costs
    
    
    MEPPA
    
    
    TotalBalance at December 31, 2004
    
    $
    315
    
    
    $
    1,114
    
    
    $
    2,083
    
    
    $
    3,512Charges
    
    
    81
    
    
    
    (136
    )
    
    
    
    
    
    
    (55
    )Payments
    
    
    (159
    )
    
    
    (290
    )
    
    
    (35
    )
    
    
    (484
    )Balance at April 2, 2005
    
    $
    237
    
    
    $
    688
    
    
    $
    2,048
    
    
    $
    2,973
 4. Earnings Per Share Basic earnings per share are calculated on net income divided by the weighted-average number of
common shares outstanding during the period. Diluted earnings per share are calculated by dividing
net income by the weighted-average number of common shares outstanding plus the shares that would
have been outstanding assuming the issuance of common shares for all dilutive potential common
shares for the period. Unexercised stock options are the only reconciling items between our basic
and diluted earnings per share. The following table presents information necessary to calculate basic and diluted earnings per
share: 7




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Notes to Condensed Consolidated Financial Statements (Unaudited)(Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated) Quarter EndedApril 2,
    
    
    April 3,2005
    
    
    2004Weighted-average shares outstandingbasic
    
    
    28,369,107
    
    
    
    27,556,632Common stock equivalents
    
    
    
    
    
    
    246,183Weighted-average shares and equivalentsdiluted
    
    
    28,369,107
    
    
    
    27,802,815Anti-dilutive unexercised stock options excluded from calculations
    
    
    452,864
    
    
    
    364,834
 5. Debt Our debt includes $100,000 of unsecured guaranteed notes due May 1, 2009 and $150,000 of unsecured
guaranteed notes due April 15, 2010. Our guaranteed notes are fully and unconditionally guaranteed, on a joint and several basis, and on
an unsecured senior basis, by substantially all of our direct and indirect domestic subsidiaries
(the Subsidiary Guarantors). All of the assets are owned by the Subsidiary Guarantors and
substantially all of our operations are conducted by the Subsidiary Guarantors. Accordingly, the
aggregate assets, liabilities, earnings and equity of the Subsidiary Guarantors are substantially
equivalent to the assets, liabilities, earnings and equity shown in our consolidated financial
statements. There are no material restrictions on our ability to obtain funds from our subsidiaries
by dividend or loan. We, therefore, are not required to present separate financial statements of
our Subsidiary Guarantors, and other disclosures relating to them. We have a $200,000 credit facility with a group of banks that will expire in October 2005. This
facility is for working capital, general corporate funding needs, and up to $125,000 for letters of
credit to support our self-insurance program. As of April 2, 2005 we had no borrowings drawn under
the facility and $117,442 in issued letters of credit. In addition to our committed credit
facility, we maintained a $10,000 uncommitted line of credit that had no outstanding borrowings at
April 2, 2005. On December 28, 2004, we and certain of our subsidiaries completed arrangements for a $100,000
3-year trade receivables securitization facility with ABN AMRO, Inc. As part of this arrangement,
we formed a special-purpose, bankruptcy-remote subsidiary (USF Finance Company LLC) with two
classes of stock: Class A shares, which have 100% of the voting rights but no beneficial interests,
are held exclusively by an external independent entity; and Class B shares, which have no voting
rights but have 100% of the beneficial interests, are held exclusively by USF Corporation. The
sole purpose of USF Finance Company LLC is to buy receivables from certain subsidiaries of ours and
sell undivided interests in accounts receivable to certain commercial paper conduits of ABN AMRO
Inc. and to USF Assurance Company Ltd (100% owned subsidiary of USF Corporation). The assets of USF
Finance Company LLC are not available to pay our claims. USF Finance Company LLC had $196,149 of
net accounts receivable at April 2, 2005. There were no securitized borrowings outstanding at April
2, 2005. 8




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Notes to Condensed Consolidated Financial Statements (Unaudited)(Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated) 6. Goodwill and Other Intangible Assets The changes in carrying amounts of goodwill by segment for the quarter-to-date period ended April
2, 2005 were as follows: LTL
    
    
    TL
    
    
    Logistics
    
    
    TotalBalance as of December 31, 2004
    
    $
    57,273
    
    
    $
    10,878
    
    
    $
    32,662
    
    
    $
    100,813Disposition from the sale of USF Processors
    
    
    
    
    
    
    
    
    
    
    (1,262
    )
    
    
    (1,262
    )Balance as of April 2, 2005
    
    $
    57,273
    
    
    $
    10,878
    
    
    $
    31,400
    
    
    $
    99,551
 Intangible assets subject to amortization consist of the following: As of
    
    
    As ofApril 2, 2005
    
    
    December 31, 2004Gross
    
    
    
    
    
    
    GrossAverage
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedLife (Yrs)
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationAmortized intangible assets:Customer lists
    
    
    5
    
    
    $
    270
    
    
    $
    (193
    )
    
    $
    270
    
    
    $
    (171
    )Non-competes
    
    
    5
    
    
    
    191
    
    
    
    (83
    )
    
    
    191
    
    
    
    (73
    )Total
    
    
    
    
    
    $
    461
    
    
    $
    (276
    )
    
    $
    461
    
    
    $
    (244
    )
 Aggregate amortization expense for the quarters ended April 2, 2005, and April 3, 2004 was $32
and $992, respectively. The 2004 first quarter included $959 in amortization expense for USF Red
Star. Estimated amortization expense for each of the years ending December 31 is as follows: Year2005
    
    $
    1282006
    
    
    89Total
    
    $
    217
 9




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Notes to Condensed Consolidated Financial Statements (Unaudited)(Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated) 7. Segment Reporting Quarter EndedApril 2,
    
    
    April 3,2005
    
    
    2004RevenueLTL Trucking
    
    $
    507,494
    
    
    $
    519,697TL Trucking
    
    
    31,142
    
    
    
    34,274Logistics
    
    
    63,905
    
    
    
    66,437Intercompany eliminations
    
    
    (4,564
    )
    
    
    (3,641
    )Total Revenue from Continuing Operations
    
    $
    597,977
    
    
    $
    616,767Income From OperationsLTL Trucking
    
    $
    13,081
    
    
    $
    24,038TL Trucking
    
    
    1,130
    
    
    
    812Logistics
    
    
    (5,628
    )
    
    
    1,630Corporate and Other
    
    
    (12,152
    )
    
    
    (9,392
    )Income/(loss) from operations
    
    
    (3,569
    )
    
    
    17,088Net non-operating expense
    
    
    (4,896
    )
    
    
    (5,028
    )Income/(loss) before income taxes
    
    $
    (8,465
    )
    
    $
    12,060
 10




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Notes to Condensed Consolidated Financial Statements (Unaudited)(Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated) 8. Contingencies We contribute to several union sponsored multi-employer pension plans. These plans are not
administered by us, and contributions are determined in accordance with provisions of negotiated
labor contracts. The Multi-Employer Pension Plan Amendments Act of 1980 established a continuing
liability to such union sponsored plans for an allocated share of each plans unfunded vested
benefits upon substantial or total withdrawal by us or upon termination of the pension plans. We
believe any withdrawal liability could be material. No withdrawal or termination has occurred or is
contemplated other than the potential liability for USF Red Star discussed below. Due to the shutdown of USF Red Star, it is probable that we will be subject to withdrawal payments
for up to 11 multi-employer pension plans. We continue to gather information to determine the
extent of such withdrawal liability from each of the plans. We accrued $2,083 in 2004 related to
two of these plans, and made payments of $35 in the 2005 first quarter from the accrual. Given the
lack of current information, complexity of the calculations and the expected mitigation relative to
the USF Holland expansion, the final withdrawal liability, which may be material to our financial
position, cannot currently be estimated for the remaining 9 plans, and therefore we have not
accrued any costs related to these 9 plans. We believe the process to determine withdrawal
liability will likely take at least several months, but it could extend to a year or more for the
following reasons: the time it will take to obtain information from the pension plans and analyze
such information; substantial negotiations with these pension plans over withdrawal liability; and
any potential arbitration of the issues, other legal proceedings, and the unknown mitigating effect
of the USF Holland expansion. In the 2005 first quarter, we expensed MEPPA related payments of
$2,756. While we cannot estimate the ultimate liability, these payments were required to be made
to certain of these plans under MEPPA. However, we are entitled to review and contest liability
assessments provided by various funds as well as determine the mitigating effect of USF Hollands
expansion into certain of the geographic areas previously covered by USF Red Star. On November 19, 2004, the Teamsters National Freight Industry Negotiating Committee (TNFINC)
filed a complaint against USF Corporation, USF Red Star Inc. and USF Holland Inc. in the United
States District Court for the Eastern District of Pennsylvania. On January 13, 2005, service of
process was effectuated on all three USF defendants. TNFINC alleges certain violations of the
National Labor Relations Act and asks for damages. Additionally, TNFINC filed a class action suit
on behalf of the employees of USF Red Star alleging violations of the federal Worker Adjustment and
Retraining Notification Act (WARN) similar to other WARN actions mentioned below. Including the TNFINC WARN action mentioned above, USF Corporation and/or USF Red Star, Inc. are
currently named in five class action lawsuits alleging violations of the federal WARN Act. Three
WARN class actions are pending in the United States District Court for the Eastern District of
Pennsylvania and one each is pending in the United States District Court for the District of
Connecticut and the United States District Court for the Western District of New York. The WARN
action in the Western District of New York was filed in late January 2005 by former mechanics of
USF Red Stars Buffalo, New York terminal. On September 30, 2004 USF Red Star filed a motion to transfer and consolidate the three original
WARN actions with the Multidistrict Litigation Judicial Panel (MDL Panel) requesting that all three
cases be consolidated and transferred to the United States District Court for Northern District of
New York where USF Red Stars former headquarters are located in Auburn, New York. On February 16,
2005, the MDL Panel transferred three of the five WARN cases to the United States District Court
for the Eastern District of Pennsylvania. On December 23, 2003, Idealease Services, Inc. (Idealease) filed a complaint against USF
Logistics, in the Circuit Court of Cook County in Chicago, Illinois. Idealease is asking the court
to require USF Logistics to specifically perform an alleged contractual obligation to buy back from
Idealease a fleet of vehicles it claims is valued at approximately $14,500 or to pay Idealease that
amount. Idealease also contends that Logistics is liable for $557 in
lease payments and that certain riders to a lease agreement are invalid due to a lack of
consideration. USF Logistics denies the material allegations in the Idealease complaint and plans
to vigorously contest the lawsuit in court. 11




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##### Table of Contents



Notes to Condensed Consolidated Financial Statements (Unaudited)(Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated) On January 14, 2005, USF Corporation was served with a complaint which was filed by Guaranteed
Overnight Delivery, Inc. (G.O.D.) on December 29, 2004 in the Superior Court of New Jersey, Bergen
County. In the complaint, G.O.D. alleges that USF Corporation owes G.O.D. $1,324 for services
performed by G.O.D. for USF Corporation pursuant to an interline
agreement. On January 26, 2005,
USF Corporation filed an answer to the Complaint denying all
allegations. In addition, USF Corporation asserted numerous affirmative defenses (including, but not limited to, failure to sue proper
parties, failure to state a claim, offset, and lack of jurisdiction) and filed a Notice of Removal
of the case to the United States District Court for the District of
New Jersey. USF Corporation believes that
the debt alleged by G.O.D. is overstated, and that the entire amount owed to G.O.D. is offset by
amounts owed by G.O.D. to USF Corporation. On January 26, 2005, USF Bestway, Inc., USF Dugan, Inc., USF Holland, Inc., USF Reddaway, Inc. and
USF Red Star, Inc. (USF Carriers) filed a Complaint against G.O.D. in the United States District
Court for the District of New Jersey. In the Complaint the USF Carriers allege that G.O.D. owes
the USF Carriers $890 for services performed by the USF Carriers for G.O.D. as well as additional
undetermined amounts for damage claims sustained in connection with services performed by G.O.D.
for the USF Carriers. At no point prior to receipt of the complaint was USF Corporation aware that
G.O.D.s claim allegedly amounted to $1,324. USF Carriers intend to vigorously defend against
G.O.D.s claim and pursue the counterclaim. We are involved in other litigation arising in the ordinary course of business, primarily involving
claims for bodily injury, property damage, and workers compensation. We believe the ultimate
recovery or liability, if any, resulting from such litigation, individually or in total, would not
materially adversely affect our financial condition or results of operations. 12




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##### Table of Contents



Notes to Condensed Consolidated Financial Statements (Unaudited)(Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated) The following reflects the accruals estimated for the ultimate cost of self-insured claims
incurred, but not paid, for bodily injury, property damage, cargo loss and damage, and workers
compensation. As of
    
    
    As ofApril 2, 2005
    
    
    December 31, 2004Current
    
    $
    53,689
    
    
    $
    53,647Long-term
    
    
    93,236
    
    
    
    94,034Total
    
    $
    146,925
    
    
    $
    147,681
 We believe the outcome of these matters is not expected to have any material adverse effect on
our consolidated financial position or results of our operations, and have been adequately provided
for in our financial statements. We use underground storage tanks at certain terminal facilities and maintain a comprehensive policy
of testing, upgrading, replacing or eliminating these tanks to protect the environment and comply
with various Federal and state laws. We take prompt remedial action whenever any contamination is
detected. When we can reasonably estimate liabilities associated with environmental matters, we
record the necessary accrual. As of April 2, 2005 there were no material liabilities recorded. 9. Divestiture During the 2005 first quarter, we sold 100% of the stock of USF Processors Inc. for $4,500 in cash
to Carolina Logistic Services Inc. Following the guidance of SFAS No. 144, Accounting for the
Impairment of Long-Lived Assets, the results of USF Processors are reported in continuing
operations in the Logistics Revenue and Operating Expenses lines in our financial statements. We
recorded a loss on sale of $7,080 from the sale of USF Processors. In addition, USF Processors had
operating losses of $711 in the 2005 first quarter prior to its sale. 10. Proposed Merger On February 27, 2005, USF Corporation (USF) and Yellow Roadway Corporation (Yellow Roadway)
entered into a merger agreement pursuant to which Yellow Roadway will acquire USF. On May 1, 2005,
USF and Yellow Roadway amended their merger agreement. At the effective time of the merger, a
subsidiary of Yellow Roadway will be merged with and into USF, and USF will become a wholly owned
subsidiary of Yellow Roadway. Each share of USF common stock (other than shares owned directly or
indirectly by USF or Yellow Roadway or by dissenting stockholders of USF) will be cancelled and
converted into the right to receive 0.31584 shares of Yellow Roadway common stock and $29.25 in
cash. The transaction will be taxable to shareholders of USF. Stockholders of USF must vote to adopt the amended merger agreement before the merger can be
consummated. USF has presently scheduled a special meeting of its stockholders on May 23, 2005 to
vote on a proposal to adopt the amended merger agreement. The merger does not require a vote or
approval by the stockholders of Yellow Roadway. USF and Yellow Roadway received notice of the
termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, on April 14, 2005. Under the terms of the amended merger agreement, regulatory
approval is no longer a condition to closing the transaction. 13




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##### Table of Contents



(Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated) 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations EXECUTIVE SUMMARY On February 27, 2005, USF Corporation (USF) and Yellow Roadway Corporation (Yellow Roadway)
entered into a merger agreement pursuant to which Yellow Roadway will acquire USF. The merger
agreement was subsequently amended by USF and Yellow Roadway on May 1, 2005. Under the amended
merger agreement, a subsidiary of Yellow Roadway will merge with and into USF at the effective
time, whereupon USF will become a wholly owned subsidiary of Yellow Roadway. The transaction is
subject to a vote by the stockholders of USF to adopt the amended merger agreement. USF has
presently scheduled a special meeting of its stockholders on May 23, 2005 to vote on the adoption
of the merger agreement. Yellow Roadway is not required to obtain any vote or approval from its
stockholders to consummate the merger. USF and Yellow Roadway received notice of the early
termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, on April 14, 2005. Under the terms of the amended merger agreement, regulatory
approval is no longer a condition to closing the transaction. We reported a net loss of $5,791, or $.20 per diluted share, for the first quarter ended April 2,
2005. This compares to net income of $7,116, or $.26 diluted earnings per share, for the prior year
period. Our net loss included after-tax operating losses and the loss on the sale of USF Processors
of $5,165, or $.19 per diluted share, USF Red Star shutdown costs and
operating losses of $3,245,
or $.11 per diluted share, and costs related to the proposed merger with Yellow Roadway
Corporation of $2,322, or $.08 per diluted share. Revenue in the LTL Trucking segment for the 2005 first quarter was $507,494, compared to $519,697
in the prior year period, and income from operations was $13,081 compared to $24,038 in the prior
year. Revenue and operating losses for USF Red Star in the 2004 first quarter were $57,202 and
$2,234, respectively. During the 2005 first quarter, we were negatively impacted by a slowdown in
the automotive sector that resulted in reduced volume and productivity in the Midwest region; a
highly competitive Southeast region from both a density and pricing perspective; and slower than
anticipated growth in our Northeast region. Our TL Trucking segment revenue for the 2005 first quarter was $31,142 compared to $34,274 in
the prior year period, and income from operations was $1,130, an all-time first quarter record,
compared to $812 in the prior year period. The decrease in revenue reflected a smaller fleet size
and a lower seated truck percentage than the prior year. The increase in income from operations is
the result of increased demand for services and density in the Northeast Region of our truckload
operations. Revenue in the Logistics segment for the 2005 first quarter was $63,905 compared to $66,437 in the
prior year period, and loss from operations was $5,628 compared to income from operations of $1,630
in the prior year. Included in the 2005 operating loss were $711 in operating losses at USF
Processors and a $7,080 loss on the sale of USF Processors. 14




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##### Table of Contents



(Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated) CONSOLIDATED RESULTS Our revenue and net income for the quarters ended April 2, 2005 and April 3, 2004 were as follows: Quarter EndedApril 2,
    
    
    April 3,2005
    
    
    2004Revenue
    
    $
    597,977
    
    
    $
    616,767Net Income/(Loss)
    
    
    (5,791
    )
    
    
    7,116
 Our 2005 first quarter revenue decreased 3.0% from the 2004 first quarter primarily due to the
shutdown of USF Red Star in the 2004 second quarter. USF Red Stars revenue for the 2004 first
quarter was $57,202. The 2005 first quarter contains 64.5 working days compared to 66 working days
in the 2004 first quarter. Our 2005 first quarter resulted in a net loss of $5,791 compared to net income of $7,116 in the
prior year. Our net loss included after-tax operating losses and the loss on the sale of USF
Processors of $5,165, after-tax USF Red Star shutdown costs and operating losses of $3,245, and
costs related to the proposed merger with Yellow Roadway Corporation of $2,322. The 2004
first quarter included after-tax USF Red Star operating losses of $1,318, amortization
expense of USF Red Star intangible assets of $566, and USF Processors losses of $89. In order to provide a better understanding of our ongoing financial performance, the following
table presents the significant items that impacted our consolidated financial results for the
periods shown: Quarter Ended April 2, 2005
    
    
    Quarter Ended April 3, 2004Diluted
    
    
    
    
    
    
    
    
    
    
    DilutedPre-tax
    
    
    After-tax
    
    
    EPS
    
    
    Pre-tax
    
    
    After-tax
    
    
    EPSSignificant items:USF Red Star operating losses and shutdown costs
    
    $
    4,894
    
    
    $
    3,245
    
    
    $
    0.11
    
    
    $
    2,234
    
    
    $
    1,318
    
    
    $
    0.05Write-off/amortization expense of USF Red Star intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    959
    
    
    
    566
    
    
    
    0.02USF Processors operating losses
    
    
    711
    
    
    
    471
    
    
    
    0.02
    
    
    
    156
    
    
    
    89
    
    
    
    0.00Loss on the sale of USF Processors
    
    
    7,080
    
    
    
    4,694
    
    
    
    0.17
    
    
    
    
    
    
    
    
    
    
    
    Fees related
to proposed merger with Yellow Roadway Corporation
    
    
    3,503
    
    
    
    2,322
    
    
    
    0.08
    
    
    
    
    
    
    
    
    
    
    
    
 15




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##### Table of Contents



(Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated) RESULTS OF OPERATIONS LTL Trucking Our revenue, income from operations, and operating ratios for our LTL segment for the quarters
ended April 2, 2005 and April 3, 2004 were as follows: Quarter EndedApril 2,
    
    
    April 3,2005
    
    
    2004Total revenue
    
    $
    507,494
    
    
    $
    519,697Income from operations
    
    
    13,081
    
    
    
    24,038Operating Ratio
    
    
    97.4
    %
    
    
    95.4
    %
 Our LTL segment includes our LTL operating companies, each of which generates revenue from LTL
and TL shipments. Revenue from LTL shipments represents over 90% of the revenue in the LTL
segment. LTL statistics presented in the table below exclude TL shipments. LTL StatisticsRevenue
    
    Revenue
    
    Weight per
    
    LengthRevenue
    
    Tons
    
    Shipments
    
    per
    
    per Hundred-
    
    Shipment
    
    of HaulQuarter Ended
    
    (thousands)
    
    (thousands)
    
    (thousands)
    
    Shipment
    
    weight
    
    (pounds)
    
    (miles)April 2, 2005
    
    $
    476,591
    
    
    
    2,061.6
    
    
    
    3,406.3
    
    
    
    139.91
    
    
    
    11.56
    
    
    
    1,210
    
    
    
    492April 3, 2004
    
    
    489,855
    
    
    
    2,194.3
    
    
    
    3,753.7
    
    
    
    130.50
    
    
    
    11.16
    
    
    
    1,169
    
    
    
    497
 In the 2005 first quarter our LTL segments total revenue decreased from the 2004 first
quarter by 2.3% and income from operations decreased by 45.6%. The shutdown of USF Red Star in the
2004 second quarter negatively impacted year over year financial and statistical comparisons as
there were 66 working days of USF Red Star shipments in the 2004 first quarter and none in the 2005
first quarter. Also there were 64.5 working days in the 2005 first quarter compared to 66 working
days in the 2004 first quarter. The following provides an understanding of the factors that
impacted our operating results in the 2005 first quarter compared to the 2004 first quarter:  
    The 2004 second quarter shutdown of our USF Red Star operations in the Northeast
resulted in $4,894 in pre-tax operating losses and shutdown costs in the 2005 first
quarter which were reported in the LTL segment. Of these costs, $6,936 were exit
and disposal activities per Statement of Financial Accounting Standards (SFAS)
No. 146, Accounting for Costs Associated with Exit or Disposal Activities
including $4,485 related to contractual obligations to employees of the
International Brotherhood of Teamsters, and $2,756 for payments related to the
Multi-Employer Pension Plan Amendment Act of 1980 (MEPPA). These shutdown costs
were partially offset by $2,042 in operating income including $2,818 in gains on
the sale of properties, and $776 in expenses for salaries and benefits for our
employees assisting in the wind-down of operations, legal fees, and other
miscellaneous expenses. The closure of USF Red Star negatively impacted the LTL
segments statistics and operating results for the 2005 first quarter.
    We generated approximately $20,000 in revenue from USF Hollands expansion into the
Northeast; however, the lack of full Northeast coverage and the inability to sell
intra-Northeast service limited revenue growth in the Northeast. As a result of
this revenue shortfall our linehaul operation was less efficient into and out of
the Northeast during the 2005 first quarter, resulting in approximately a $3,500
loss.
    The 2005 first quarter also saw an increasingly competitive Southeast region in
terms of pricing and density. These issues along with certain operational
inefficiencies resulted in approximately a $3,100 loss for the 2005 first quarter. 16




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##### Table of Contents



(Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated)  
    During the 2005 first quarter, we reduced our workers compensation accrual by
$3,700 due to improved performance resulting from our safety initiatives.
    USF PremierPlus® revenue decreased 6.8% to $64,187 from $68,855 due to the shutdown of USF Red Star, while the
remaining segment experienced growth in inter-regional service. USF Red Stars portion of USF PremierPlus® revenue was
approximately $13,700 in the first quarter of 2004.
    LTL tonnage decreased 6.0% to 2.06 million tons from 2.19 million tons as the absence of USF Red Star tonnage was
partially offset by increased tonnage in the remaining segment. USF Red Star accounted for approximately 10% of the
segments tonnage or 0.2 million tons in the 2004 first quarter.
    Revenue per hundredweight increased 3.6% while revenue per shipment increased 7.2%. TL Trucking Quarter EndedApril 2,
    
    
    April 3,2005
    
    
    2004Revenue
    
    $
    31,142
    
    
    $
    34,274Income from operations
    
    
    1,130
    
    
    
    812Operating Ratio
    
    
    96.4
    %
    
    
    97.6
    %
 The following provides an understanding of the factors that impacted our operating results in
the 2005 first quarter compared to the 2004 first quarter:  
    Revenue decreased by $3,132 or 9.1% as a result of operating a smaller fleet size in the 2005 first quarter.  
    Revenue per tractor per day, excluding fuel surcharge, increased by 5% from the prior year.  
    Income from operations was an all-time record first quarter high despite record highs in fuel costs.  
    Income from operations improved as productivity and efficiency improved as a result of truckload capacity constraints,
solid customer demand for truckload services, and increased density
in USF Glen Moores Northeast regional operations. Logistics Quarter EndedApril 2,
    
    
    April 3,2005
    
    
    2004Revenue
    
    $
    63,905
    
    
    $
    66,437Income/(loss) from operations
    
    
    (5,628
    )
    
    
    1,630Operating Ratio
    
    
    108.8
    %
    
    
    97.5
    %
 The following provides an understanding of the factors that impacted our operating results in
the 2005 first quarter compared to the 2004 first quarter:  
    Revenue decreased $2,532 or 3.8%, primarily as a result of the sale of USF Processors in February. The 2004 first
quarter included an entire quarter of USF Processor revenue of $8,892, whereas the 2005 first quarter only includes two months of
USF Processors revenue of $5,165.  
    The loss from operations in the 2005 first quarter includes the $7,080 loss on the sale of USF Processors, and $711 in
USF Processors operating losses prior to the sale. USF Processors had
operating losses of $156 in the prior year. 17




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##### Table of Contents



(Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated) Corporate and Other Quarter EndedApril 2,
    
    
    April 3,2005
    
    
    2004Corporate & Other
    
    $
    (12,152
    )
    
    $
    (9,392
    )
 Corporate and Other expenses were $2,760 higher in the 2005 first quarter compared to the 2004
first quarter primarily due to $3,503 in legal and advisory fees related to the proposed merger
with Yellow Roadway Corporation. The 2004 first quarter included $959 in amortization expense for
USF Red Star intangible assets. Non-operating Income and Expense Interest expense principally includes interest on our guaranteed unsecured notes of $250,000. We
had cash invested in interest bearing instruments during the first quarters of 2005 and 2004. At
the end of the first quarters of 2005 and 2004, we had cash and cash equivalents of $151,679 and
$118,198, respectively. Interest income for the 2005 first quarter increased to $746 from $571 in
the 2004 first quarter as a result of the higher cash balances available for investment in the 2005
first quarter. 18




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##### Table of Contents



(Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated) Proposed Merger On February 27, 2005, USF and Yellow Roadway entered
into a merger agreement pursuant to which Yellow Roadway will acquire USF. On May 1, 2005,
USF and Yellow Roadway amended their merger agreement. At the effective time of the merger, a
subsidiary of Yellow Roadway will be merged with and into USF, and USF will become a wholly owned
subsidiary of Yellow Roadway. Each share of USF common stock (other than shares owned directly or
indirectly by USF or Yellow Roadway or by dissenting stockholders of USF) will be cancelled and
converted into the right to receive 0.31584 shares of Yellow Roadway common stock and $29.25 in
cash. The transaction will be taxable to shareholders of USF. Stockholders of USF must vote to adopt the amended merger agreement before the merger can be
consummated. USF has presently scheduled a special meeting of its stockholders on May 23, 2005 to
vote on a proposal to adopt the amended merger agreement. The merger does not require a vote or
approval by the stockholders of Yellow Roadway. USF and Yellow Roadway received notice of the
termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, on April 14, 2005. Under the terms of the amended merger agreement, regulatory
approval is no longer a condition to closing the transaction. 19




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##### Table of Contents



OutlookUnknown Trends or Uncertainties We are providing second quarter guidance of 40 cents to 45 cents per diluted share which includes a
loss per share of approximately 10 cents for projected USF Red Star related expenses. We believe achieving improved operating results are dependent on us executing our strategic
initiatives, the level of competition, and the overall condition of the U.S. economy. We have been subject to organization efforts by the International Brotherhood of Teamsters. We
understand there will be union issues over time. We will deal with these organization efforts
appropriately, but ultimately we cannot predict the outcome of these activities. Statements in this report contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts and
are subject to a number of risks and uncertainties and actual results may differ materially. These
risks and uncertainties are detailed from time to time in reports filed by the Company with the SEC
including forms 8-K, 10-Q and 10-K. 20




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##### Table of Contents



(Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated) LIQUIDITY AND CAPITAL RESOURCES The following is a table of our contractual obligations and other commercial commitments as of
April 2, 2005: Payments & Commitments by PeriodThroughDecember 31
    
    
    23
    
    
    45
    
    
    After 5Total
    
    
    2005
    
    
    Years
    
    
    Years
    
    
    YearsContractual ObligationsLong-Term Debt
    
    $
    250,071
    
    
    $
    43
    
    
    $
    28
    
    
    $
    100,000
    
    
    $
    150,000Operating Leases
    
    
    50,837
    
    
    
    13,025
    
    
    
    24,429
    
    
    
    10,199
    
    
    
    3,184Total Contractual Obligations
    
    $
    300,908
    
    
    $
    13,068
    
    
    $
    24,457
    
    
    $
    110,199
    
    
    $
    153,184Other CommitmentsInterest Commitments
    
    $
    96,717
    
    
    $
    19,655
    
    
    $
    39,194
    
    
    $
    34,203
    
    
    $
    3,665Purchase Commitments (1)
    
    
    95,467
    
    
    
    95,467
    
    
    
    
    
    
    
    
    
    
    
    
   (1)
    
    At April 2, 2005 our primary capital
purchase commitments included $8,531 for land and improvements, $84,769
for revenue equipment and $1,947 for information technology related projects. We believe that projected cash flows from operating activities, cash on hand and funding from
our committed credit facilities will be adequate to finance our anticipated cash needs for 2005. Sources and Uses of Cash Cash increased by $881 in the 2005 first quarter to $151,679 compared to a decrease of $3,461 in
the 2004 first quarter to $118,198. Capital expenditures in the 2005 first quarter were $15,608
higher than in the 2004 first quarter, whereas proceeds from the sale of property and equipment
were $6,527 higher in the 2005 first quarter than the 2004 first quarter. We also received $4,500
in proceeds from the sale of USF Processors. Operations Our primary sources and uses of cash result from the realization of trade accounts receivable and
settlement of payroll, trade accounts payable, and operating accruals including insurance and
claims as part of our ongoing operating activities. As a result of the shutdown of USF Red Star,
we are subject to withdrawal liability for up to 11 multi-employer pension plans. MEPPA related
payments and USF Red Star shutdown costs would reduce our cash position. However, we do not
believe the closure of USF Red Star materially changes the underlying drivers of our operating cash
flows. We believe that cash generated from our core operations and cash on hand will be sufficient
to fund our operations and any potential liabilities resulting from the closure of USF Red Star. Net cash provided by operating activities increased $6,717 in the 2005 first quarter compared to
the 2004 first quarter, primarily due to less working capital
requirements in the 2005 first quarter. Investing We maintain an appropriate level of tractors and trailers to ensure the effectiveness of our
operations. Purchases of tractors and trailers have been, and are expected to be, our most
significant type of capital expenditure. These purchases may be deferred or accelerated in order
for us to respond to changes in economic conditions and the market for these assets. Purchases of
tractors and trailers were $29,432 and $1,922, and total capital expenditures were $37,053 and
$21,445 in the 2005 and 2004 first quarters, respectively. Purchases of land and buildings were
$3,793 compared to $9,653 in the 2005 and 2004 first quarters, respectively. 21




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(Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated) Financing We have a $200,000 committed credit facility that expires in October 2005. The facility allows up
to $125,000 for standby letters of credit to cover our self-insurance programs and other
miscellaneous letter of credit requirements. In addition to our committed credit facility, we
maintain an uncommitted line of credit, which provides $10,000 of short-term funds. At April 2,
2005, we had no borrowings under these facilities and had $117,442 of outstanding standby letters
of credit under our credit facility. On December 28, 2004, we and certain of our subsidiaries completed arrangements for a $100,000
3-year trade receivables securitization facility with ABN AMRO, Inc. As part of this arrangement,
we formed a special-purpose, bankruptcy-remote subsidiary (USF Finance Company LLC) with two
classes of stock: Class A shares, which have 100% of the voting rights but no beneficial interests,
are held exclusively by an external independent entity; and Class B shares, which have no voting
rights but have 100% of the beneficial interests, are held exclusively by USF Corporation. The
sole purpose of USF Finance Company LLC is to buy receivables from certain subsidiaries of ours and
sell undivided interests in accounts receivable to certain commercial paper conduits of ABN AMRO
Inc. and to USF Assurance Company Ltd (100% owned subsidiary of USF Corporation). The assets of USF
Finance Company LLC are not available to pay our claims. USF Finance Company LLC had $196,149 of
accounts receivable at April 2, 2005. There were no securitized borrowings outstanding at April 2,
2005. Our external debt financing
arrangements are discussed in Note 5 to the Condensed Consolidated
Financial Statements. Debt Instruments, Guarantees, and Related Covenants Our financing arrangements include covenants that require us to comply with certain financial
ratios including net worth and funded debt to adjusted cash flows. We are in compliance with these
covenants and do not believe these covenants would restrict us from securing additional financing,
if necessary. Dividends Our quarterly dividend rate is .0933 per share. During the 2005 first quarter, we paid cash
dividends totaling $2,628. Recent Accounting Pronouncements In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 123 (R)  a revision of SFAS No. 123  Accounting for Stock 
Based Compensation. This statement supersedes APB Opinion No. 25 and provides guidance on the
accounting for transactions in which an entity obtains employee services for share-based payments.
This statement does not change the guidance for share-based transaction with non-employees nor
employee stock ownership plans originally provided by SFAS No. 123. This statement requires,
effective for interim periods beginning January 1, 2006, that share-based payments made to
employees are recognized as compensation expense in an amount equal to the fair value of the
share-based payments, typically over any related vesting period. We plan to adopt the modified
prospective method as proposed in SFAS No. 123(R) in our 2006
first quarter. The modified prospective method proposes the recording
of compensation expense based on grant date fair value for all awards
granted, modified or settled after the date of initial adoption and
for the unvested portion of previously issued awards that remain
outstanding as of the date of adoption. We are currently evaluating
the impact that adoption of SFAS No. 123(R) will have on our
2006 financial statements. 22




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(Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated) 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk We are exposed to the impact of interest rate changes. Our exposure to changes in interest rates
is limited to our short-term investments and borrowings under a line of credit agreement, which has
variable interest rates tied to LIBOR and our credit ratings. There have been no borrowings under
this agreement in the current year-to-date period nor during 2004. In addition, we have $150,000 of
unsecured notes with an 8 1/2% fixed annual interest rate and $100,000 of unsecured notes with a 6
1/2% fixed annual interest rate. We have no hedging instruments. At April 2, 2005, we had
approximately $129,228 in short-term investments. We have a $200,000 credit facility with a group of banks that will expire in October 2005. This
facility is for working capital, general corporate funding needs, and up to $125,000 for letters of
credit issued under our self-insurance program. As of April 2, 2005 we had no borrowings drawn
under the facility and $117,442 in issued letters of credit. The facility bears interest at LIBOR, plus a margin depending on our debt rating. In addition,
there are other fees associated with the facility and certain financial covenants including minimum
net worth and maximum funded debt to adjusted cash flow. 
 Item 4. Controls and Procedures In order to ensure that information for disclosure in our filings of periodic reports with the
Securities and Exchange Commission is identified, recorded, processed, summarized, and reported on
a timely basis, we have adopted disclosure controls and procedures.
Our Principal Executive
Officer and Principal Financial Officer, Thomas E. Bergmann, has reviewed and evaluated our disclosure controls and procedures as
of April 2, 2005, and has concluded that our disclosure controls
and procedures were effective as of
that date. There were no changes in our internal controls over financial reporting identified in connection
with the foregoing evaluation that occurred during our current
years first quarter that has
materially affected, or is reasonably likely to materially affect, our internal controls over
financial reporting. 23




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PART II: OTHER INFORMATION (Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated) 
 Item 1. Legal Proceedings. Our trucking subsidiaries are parties to a number of proceedings brought under the Comprehensive
Environmental Response, Compensation and Liability Act, (CERCLA). They have been made parties to
these proceedings as an alleged generator of waste disposed of at hazardous waste disposal sites.
In each case, the Government alleges that the parties are jointly and severally liable for the
cleanup costs. Although joint and several liability is alleged, these proceedings are frequently
resolved on the basis of the quantity of waste disposed of at the site by the generator. Our
potential liability varies greatly from site to site. For some sites the potential liability is de
minimisand for others the costs of cleanup have not yet been determined. It is not feasible to
predict or determine the outcome of these or similar proceedings brought by state agencies or
private litigants. We believe such liability, if any, would not materially adversely affect our
financial condition or results of operations. On November 19, 2004, the Teamsters National Freight Industry Negotiating Committee (TNFINC)
filed a complaint against USF Corporation, USF Red Star Inc. and USF Holland Inc. in the United
States District Court for the Eastern District of Pennsylvania. On January 13, 2005, service of
process was effectuated on all three USF defendants. TNFINC alleges certain violations of the

National Labor Relations Act and asks for damages. Additionally, TNFINC filed a class action suit
on behalf of the employees of USF Red Star alleging violations of the federal Worker Adjustment and
Retraining Notification Act (WARN) similar to other WARN actions mentioned below. Including the TNFINC WARN action mentioned above, USF Corporation and/or USF Red Star, Inc. are
currently named in five class action lawsuits alleging violations of the federal WARN Act. Three
WARN class actions are pending in the United States District Court for the Eastern District of
Pennsylvania and one each is pending in the United States District Court for the District of
Connecticut and the United States District Court for the Western District of New York. The WARN
action in the Western District of New York was filed in late January 2005 by former mechanics of
USF Red Stars Buffalo, New York terminal. On September 30, 2004 USF Red Star filed a motion to transfer and consolidate the three original
WARN actions with the Multidistrict Litigation Judicial Panel (MDL Panel) requesting that all three
cases be consolidated and transferred to the United States District Court for Northern District of
New York where USF Red Stars former headquarters are located in Auburn, New York. On February 16,
2005, the MDL Panel transferred three of the five WARN cases to the United States District Court
for the Eastern District of Pennsylvania. On December 23, 2003, Idealease Services, Inc. (Idealease) filed a complaint against USF
Logistics, in the Circuit Court of Cook County in Chicago, Illinois. Idealease is asking the court
to require USF Logistics to specifically perform an alleged contractual obligation to buy back from
Idealease a fleet of vehicles it claims is valued at approximately $14,500 or to pay Idealease that
amount. Idealease also contends that USF Logistics is liable for $557 in lease payments and that
certain riders to a lease agreement are invalid due to a lack of consideration. USF Logistics
denies the material allegations in the Idealease complaint and plans to vigorously contest the
lawsuit in court. On January 14, 2005, USF Corporation was served with a complaint which was filed by Guaranteed
Overnight Delivery, Inc. (G.O.D.) on December 29, 2004 in the Superior Court of New Jersey, Bergen
County. In the complaint, G.O.D. alleges that USF Corporation owes G.O.D. $1,324 for services
performed by G.O.D. for USF Corporation pursuant to an interline
agreement. On January 26, 2005,
USF Corporation filed an answer to the Complaint denying all
allegations. In addition, USF Corporation asserted numerous affirmative defenses (including, but not limited to, failure to sue proper
parties, failure to state a claim, offset, and lack of jurisdiction) and filed a Notice of Removal
of the case to the United States District Court for the District of
New Jersey. USF Corporation believes that
the debt alleged by G.O.D. is overstated, and that the entire amount owed to G.O.D. is offset by
amounts owed by G.O.D. to USF Corporation. 24




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(Dollars in Thousands, Except Share and Per Share Amounts, Unless Otherwise Indicated) On January 26, 2005, USF Bestway, Inc., USF Dugan, Inc., USF Holland, Inc., USF Reddaway, Inc. and
USF Red Star, Inc. (USF Carriers) filed a Complaint against G.O.D. in the United States District
Court for the District of New Jersey. In the Complaint the USF Carriers allege that G.O.D. owes
the USF Carriers $890 for services performed by the USF Carriers for G.O.D. as well as additional
undetermined amounts for damage claims sustained in connection with services performed by G.O.D.
for the USF Carriers. At no point prior to receipt of the complaint was USF Corporation aware that
G.O.D.s claim allegedly amounted to $1,324. USF Carriers intend to vigorously defend against
G.O.D.s claim and pursue the counterclaim. We are involved in other litigation arising in the ordinary course of business, primarily involving
claims for bodily injury, property damage, and workers compensation. We believe the ultimate recovery or liability, if any, resulting
 from such litigation, individually or in total, would not
materially adversely affect our financial condition or results of operations. 25




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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. N/A 
 Item 3. Defaults Upon Senior Securities. N/A 
 Item 4. Submission of Matters to a Vote of Security Holders. N/A 
 Item 5. Other Information. N/A 
 Item 6. Exhibits. 1.
    
    
    Exhibit 31.1-Section 302 Certification of Principal Executive Officer
and Principal Financial Officer.2.
    
    
    Exhibit 32.1-Statement of Principal Executive Officer
and Principal Financial Officer Pursuant to Section 1350(a) of Title 18,
United States Code (furnished not filed with this Quarterly Report on Form
10-Q).(b) Current Reports on Form 8-K were filed:1.
    
    
    A Current Report on Form 8-K was filed on January 27, 2005
announcing the appointment of Glenn R. Richter as a new director of USF
Corporation.2.
    
    
    A Current Report on Form 8-K was filed on February 7, 2005
announcing that USF Corporation (the Company) entered into letter agreements with its Executive
Chairman, Paul J. Liska, and its Interim Chief Executive Officer, Thomas E.
Bergmann.3.
    
    
    A Current Report on Form 8-K was filed on February 27, 2005
announcing that the Company entered into a definitive Agreement and Plan of
Merger with Yellow Roadway Corporation; that the Companys Board of Directors
authorized the amendment of severance protection agreements it had previously
entered into with nine of its executives; that the Companys Board of Directors
authorized the Company to enter into severance protection agreements with seven
other executives; and that the Company adopted an executive retention program that,
subject to the terms and conditions therein, authorizes the making of retention
payments to 13 eligible executives of the Company in an aggregate amount of
$4.7 million; and that the Company and the Companys Executive Chairman, Paul J. Liska,
entered into a letter agreement pursuant to which the Company will pay Mr. Liska a
transaction fee in the amount of $2.19 million if the Company completes the merger
with Yellow Roadway Corporation.4.
    
    
    A Current Report on Form 8-K was filed on March 3, 2005
announcing that on February 25, 2005, its subsidiary, USF Logistics Services
Inc. (USF Logistics), had entered into a Stock Purchase Agreement with
Carolina Logistics Services, Inc. (Carolina Logistics),
pursuant to which USF Logistics sold and Carolina Logistics purchased all of
the issued and outstanding capital stock of USF Processors Inc., a
subsidiary of USF Logistics.
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SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized. Dated: May 5, 2005 USF CORPORATIONBy:
    
    /s/ Thomas E. BergmannThomas E. BergmannInterim Chief Executive Officer(Principal Financial Officer)By:
    
    /s/ James T. CastroJames T. CastroVice President, Controller(Principal Accounting Officer)
 27