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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K

                 Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


For the Fiscal Year Ended September 30, 1997              Commission No. 0-27288

                           EAGLE USA AIRFREIGHT, INC.
             (Exact name of registrant as specified in its charter)

             TEXAS                                             76-0094895
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)

          3214 LODESTAR
          HOUSTON, TEXAS                                          77032
  (Principal executive offices)                                 (Zip Code)

       Registrant's telephone number, including area code: (281)-821-0300

          Securities Registered Pursuant to Section 12(g) of the Act:

                         Common Stock, $.001 par value
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                 YES X   NO
                                    ---    ---

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

At November 26, 1997, the aggregate market value of the registrant's Common
Stock held by non-affiliates of the registrant was approximately $237,726,777
based on the closing price of such stock on such date of $30.625.

At November 26, 1997, the number of shares outstanding of registrant's Common
Stock was 18,267,861.


                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement for the Registrant's 1998 Annual
Meeting of Shareholders to be held on February 23, 1998 are incorporated by
reference in Part III of this Form 10-K. Such definitive proxy statement will
be filed with the Securities and Exchange Commission not later than 120 days
subsequent to September 30, 1997.

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                               TABLE OF CONTENTS


<TABLE>
<S>      <C>                                                                                                           <C>
PART I  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
         Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
         Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
         Item 3. Legal Proceedings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12
         Item 4. Submission of Matters to a Vote of Security Holders  . . . . . . . . . . . . . . . . . . . . . . . .  12

PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
         Item 5. Market for Registrant's Common Stock and Related Shareholder Matters . . . . . . . . . . . . . . . .  13
         Item 6. Selected Financial Data  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
         Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations  . . . . . . .  16
         Item 8. Financial Statements and Supplementary Data  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
         Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . .  21
         Item 10. Directors and Executive Officers of the Registrant  . . . . . . . . . . . . . . . . . . . . . . . .  22
         Item 11. Executive Compensation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
         Item 12. Security Ownership of Certain Beneficial Owners and Management  . . . . . . . . . . . . . . . . . .  22
         Item 13. Certain Relationships and Related Party Transactions  . . . . . . . . . . . . . . . . . . . . . . .  22
         Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K  . . . . . . . . . . . . . . . . .  22
</TABLE>
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                                     PART I

ITEM 1. BUSINESS

         Eagle USA Airfreight, Inc. ("Eagle" and together with its
subsidiaries, the "Company") is engaged in the business of providing air
freight forwarding and other transportation and logistics services.
Historically, the Company has grown through the expansion of its domestic air
freight forwarding customer base and terminal network. In the past two fiscal
years, the Company has rapidly expanded its terminal network from 37 in
September 1995 to 60 in September 1997. As the Company has expanded nationwide,
it has broadened the services it provides to include local pick-up and delivery
and truck brokerage services as well as various "value added" logistics
services. Recently, the Company has begun expanding its international air
freight forwarding operations and establishing arrangements with cargo agents
in international locations. The Company believes that its growth has been
largely attributable to its ability to work closely with its customers to
provide customized freight shipping services on a price competitive basis.

INDUSTRY OVERVIEW

         As business requirements for efficient and cost-effective distribution
services have increased, so has the importance and complexity of effectively
managing freight transportation. Businesses increasingly strive to minimize
inventory levels, perform manufacturing and assembly operations in different
locations and distribute their products to numerous destinations. As a result,
companies frequently desire expedited or time-definite shipment services. Time-
definite shipments are required to be delivered at a specific, typically less
expedited time, which may result in lower rates than expedited shipments.

         Companies requiring some form of expedited or time-definite handling
generally have two principal alternatives to transport freight: they may use an
air freight forwarder or ship via a fully integrated carrier. An air freight
forwarder procures shipments from customers, makes arrangements for
transportation of the cargo on a carrier and may arrange both for pick-up from
the shipper to the carrier and for delivery of the shipment from the carrier to
the recipient. Air freight forwarders often tailor the routing of each shipment
to meet the price and service requirements of the customer. Fully integrated
carriers provide pick-up and delivery service, primarily through their own
captive fleets of trucks and aircraft. Since air freight forwarders select from
various transportation options in routing customer shipments, they are often
able to serve their customers less expensively and with greater flexibility
than integrated carriers. In addition to the high fixed expenses associated
with owning, operating and maintaining fleets of aircraft, trucks and related
equipment, integrated carriers often have significant restrictions on delivery
schedules and shipment weight, size and type. Air freight forwarders, however,
generally handle shipments of any size and can offer customized shipping
options, thus offering an effective alternative for shippers of freight.

         Most air freight forwarders, like the Company, focus on the shipment
of heavy cargo and do not directly compete for the majority of their business
with integrated shippers of primarily small parcels such as Federal Express
Corporation, United Parcel Service of America, Inc., Airborne Freight
Corporation, DHL Worldwide Express, Inc. and the United States Postal Service,
certain of which on occasion serve as a source of cargo space to forwarders.
However, certain integrated carriers, such as Emery Air Freight Corporation and
BAX Global, Inc., focus on shipment of heavy cargo in competition with
forwarders. Additionally, most air freight forwarders do not generally compete
with the major commercial airlines, which to a certain extent depend on
forwarders to procure shipments and supply freight to fill cargo space on their
scheduled flights.

         The domestic air freight forwarding industry is highly fragmented.
Many industry participants are capable of meeting only a portion of their
customers' required transportation service needs. Some national domestic air
freight forwarders rely on networks of terminals operated by franchisees or
agents. The Company believes that the development and operation of
Company-owned terminals and staff under the supervision of the Company's
management have enabled it to provide a higher degree of financial and
operational control and service assurance than that offered by franchise-based
networks.

DOMESTIC AIR FREIGHT FORWARDING SERVICES

         The Company's freight forwarding operations involve obtaining shipment
orders from customers, determining the best means to transport the shipment to
its destination and arranging and monitoring all aspects of the shipment.
Typically, the transportation is provided by a commercial air carrier. In
addition, the Company prepares all required shipping documents and delivers
shipments to the transporting carrier. For much of its customer traffic, the
Company makes arrangements for three separate transportation segments--pick-up
from the shipper to the Company's terminal in the origin city, shipment via air
or overland carrier and delivery from the Company's terminal in the destination
city to the recipient. Local transportation services





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are performed either by independent cartage companies or, increasingly, by the
Company's Eagle Freight Services subsidiary as described below under "--Local
Delivery Services." If delivery schedules permit, the Company will typically
use lower-cost, overland truck transportation services, including those
obtained through its truck brokerage operations. As part of its routine
services, the Company also provides handling, packing and containerizing
services, arranges for the tracking of shipments, provides physical breakbulk
and arranges for insurance.

         The Company neither owns nor operates any aircraft and, consequently,
places no restrictions on delivery schedules or shipment size. It arranges for
transportation of its customers' shipments via commercial airlines and, to a
lesser extent, air cargo carriers. All of the Company's air shipments can be
accommodated by either narrow-body or wide- body aircraft. The Company selects
the carrier for a shipment on the basis of route, departure time, available
cargo capacity and cost. The Company has begun regularly-scheduled dedicated
charters of four cargo airplanes under short term leases to service specific
transportation lanes. On occasion, the Company charters cargo aircraft for use
in other transportation lanes, as needed.

         Due to the high volume of freight controlled by the Company, it is
able to obtain discounted rates from airlines and is often able to reserve
space at times when available space is limited. As a result, the Company can
provide shipment options not directly available to its customers. Occasionally,
the Company is able to consolidate shipments to further reduce its costs of
transportation. The Company's rate schedule generally offers increasing
discounts for shipment options with later scheduled delivery times. The
Company's per pound rates are also based on shipment weight and generally
decrease as the weight of the shipment increases.

         The Company offers its customers five major delivery schedule options:
(i) next flight - immediate pick-up and placement of the shipment on the next
available flight; (ii) next day AM priority - shipments that take precedence
for delivery by the morning of the following day; (iii) next day PM - shipments
delivered by the afternoon of the following day; (iv) second day - shipments
delivered by the afternoon of the second following day; and (v) economy -
shipments typically delivered by the afternoon of the third - fifth day after
shipment. The Company draws on its logistics expertise to provide forwarding
services that are customized to meet the needs of the customer and, in addition
to regularly scheduled service, offers customized schedules to do so. In
addition, the Company's services are customized to address each client's
individual shipping requirements, generally without restrictions on shipment
weight, size or type.  Once the requirements for an individual shipment have
been established, the Company proactively manages the execution of the shipment
to ensure the fulfillment of the customer's service requirements.

         During the fiscal year ended September 30, 1997, the Company's
principal forwarding customers included shippers of computers and other
electronic and high-technology equipment, printed and publishing materials,
automotive parts, trade show exhibit materials, telecommunications equipment,
machinery and machine parts and apparel. Shipments that are relatively less
time-sensitive or for which expedited delivery is not economical are often
shipped second day or economy. These options enhance the Company's opportunity
to achieve savings by the use of truck transportation, the consolidation of
shipments and the increased air cargo options afforded by the additional time
for shipment. During the fiscal year ended September 30, 1997, average shipment
weight was approximately 521 pounds, ranging in size from small packages of
documents to 60,000 pound deliveries of trade show exhibit material. Although
the Company imposes no size or weight restrictions on shipments, it focuses on
shipments of over 50 pounds. As a result, it does not directly compete for most
of its business with overnight courier or small parcel companies, such as
Federal Express Corporation and United Parcel Service of America, Inc. Such
companies typically use their own captive airplane fleets, which on occasion
serve as a source of cargo space for the Company's forwarding operations.

         When acting as a forwarder, the Company is legally responsible to its
customer for the safe delivery of the customer's cargo to its ultimate
destination, subject to a contractual limitation on liability to the lesser of
$0.50 per pound or $50 for domestic flights and the greater of $50 or $20 per
kilogram ($9.07 per pound) for international flights. However, because an air
freight forwarder's relationship to an airline is that of a shipper to a
carrier, the airline generally has the same responsibility to the Company as
the Company has to its customers. Additionally, shippers may purchase insurance
on shipments. The Company may have sole carrier liability for a shipment prior
to or after delivery to the carrier, and in certain other cases. The Company's
claims expenses have generally been limited, totaling $652,000, $468,000, and
$324,000 for the fiscal years ended 1997, 1996 and 1995, respectively.

         The Company's ability to serve its customers depends on the
availability of air cargo space, including that on passenger and cargo airlines
that service the relevant transportation lanes. Shortages of cargo space are
most likely to develop around holidays and in especially heavy transportation
lanes. In addition, available cargo space could be reduced as a result of
decreases in the number of passenger airlines serving particular transportation
lanes at particular times, which could occur as a result of





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economic conditions, transportation strikes, regulatory changes and other
factors beyond the control of the Company.  Although the Company does not
believe that the lack of cargo space has had a significant impact on its
ability to book cargo space to date, future operating results could be
adversely affected by significant shortages of suitable cargo space and
associated increases in rates charged by passenger airlines for cargo space.

INTERNATIONAL AIR FREIGHT FORWARDING SERVICES

         The Company continues to expand its international forwarding
operations by entering into agreements with independent cargo agents at
strategic worldwide locations. These agents provide breakbulk, pick-up and
delivery, and customs brokerage services for cargo generated by the Company's
North American based locations, as well as arranging for overseas sales of
cargo bound for North America. The Company plans to expand its overseas
presence through a variety of means that may include exclusive or nonexclusive
agency agreements, direct equity positions within selected overseas agencies
and strategic acquisitions. The Company is also emphasizing the marketing of
its international services throughout its North American network, particularly
at some of its largest locations, including: Atlanta, Chicago, Dallas, Houston,
Los Angeles, Miami, Monterrey (Mexico), New York, San Francisco, and Toronto
(Canada). See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

         To support its international operations, in the third quarter of
fiscal year 1997 the Company received certification from the Federal Maritime
Commission as an NVOCC (Non-Vessel Owning Common Carrier) to facilitate the
handling of ocean shipments. Additionally, the Company intends to pursue a
customs brokerage license from the U.S.  Department of the Treasury. The
Company generated $20.9 million in international revenues in the fiscal year
ended September 30, 1997, or an increase of $11.1 million over the previous
fiscal year ended September 30, 1996. The Company intends to utilize its
relationships with the major U.S. based air carriers to secure competitive rate
and space agreements for its international cargo. In addition, the Company
continues to emphasize the use of both Eagle Transportation Services and Eagle
Freight Services to facilitate the pick-up, delivery and line-haul for the
domestic portion of international freight shipments. The Company is also
developing an exclusive international information management system which is
expected to utilize Internet-based technology to facilitate its operations and
communications network.

         The Company's international operations may be influenced by a number
of factors and subject to risks, many which are beyond the Company's control,
including the volume of international trade, economic and political conditions
in the United States and abroad, work stoppages, exchange controls, currency
fluctuations, wars and other armed conflicts and laws relating to tariffs,
trade restrictions, foreign investment and taxation.

LOCAL DELIVERY SERVICES

         Through its subsidiary, Eagle Freight Services, Inc., the Company
provides same-day local pick-up and delivery services, both for shipments for
which it is acting as an air freight forwarder as well as for third-party
customers requiring pick-up and delivery within the same metropolitan area. The
Company believes that Eagle Freight Services provides an important complement
to its air freight forwarding services by allowing for quality control over the
critical pick-up and delivery segments of the transportation process as well as
allowing for prompt, updated information on the status of a customer's shipment
at each step in such process. Eagle Freight Services focuses on obtaining and
servicing those accounts with a relatively high volume of business, which the
Company believes provides a greater potential for profitability than a broader
base of small, infrequent customers. The Company is in the process of upgrading
the information systems used by Eagle Freight Services. Such improvements
included bar code and signature scanners that are currently being field tested
and would allow for enhanced tracking of shipments and real-time access by
shippers of receipt signatures for proof of delivery information. The Company
used a portion of the proceeds from its initial public offering to fund this
upgrade during fiscal years 1997 and 1996

         Eagle Freight Services commenced service in Houston in 1989 and in
recent years has rapidly expanded its operations. On October 1, 1994, the
Company acquired a 50% ownership interest in Eagle Freight Services and
acquired the remaining 50% at the closing of the initial public offering on
December 6, 1995. As of September 30, 1997, local delivery services were
offered in 43 of the 60 cities in which the Company's terminals were located,
with 15 of such locations being established during fiscal 1997. Such cities are
generally the sites of the Company's busiest forwarding operations. The Company
currently intends to initiate local pick-up and delivery services in
approximately 20 additional locations in fiscal 1998, although such plans may
change based on several factors. Eagle Freight Services is currently offered at
one location without airfreight forwarding operations. On-demand pick-up and
delivery services are available 24 hours a day, seven days a week. In most
locations, delivery drivers are independent contractors who operate their own
vehicles. The Company's Houston and Columbus operations





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include a number of Company-owned or leased trailers, trucks and other ground
equipment primarily to service certain specific customer accounts.

         During the fiscal years ended September 30, 1997 and 1996, Eagle
Freight Services had revenues of $65.0 million and $31.7 million, respectively.
Approximately $47.9 million and $20.2 million of such revenues in the fiscal
years ended September 30, 1997 and 1996, respectively, were attributable to the
Company's air freight forwarding operations, which were approximately 83% and
63%, respectively, of the total cost of providing local pick-up and delivery
for the Company's freight forwarding customers. The remaining $17.1 million and
$11.5 million, respectively, of Eagle Freight Service's revenues in such years
was attributable to local delivery services for third-party (non-forwarding)
customers.

TRUCK BROKERAGE

         In April 1995, the Company established Eagle Transportation Services,
Inc. the Company's truck brokerage subsidiary, to provide additional logistical
support to its forwarding operations and, to a lesser extent, to provide
truckload service to selected customers. Eagle Transportation Services locates
and secures capacity when overland transportation is the most efficient means
of meeting customer delivery requirements, especially in cases of air freight
customers choosing the economy delivery option. The use of Eagle Transportation
Services enables the Company to meet delivery requirements without having to
rely on third-party truck brokerage services. Additionally, by providing for
its own truck brokerage, the Company has been able to achieve greater
efficiencies and utilize purchasing power over transportation providers. Eagle
Transportation Services does not own any trucks, but instead utilizes carriers
or independent owner-operators of trucks and trailers on an as-needed basis.
The Company utilizes its relationships with a number of independent trucking
companies to obtain truck and trailer space. If space is not available through
such companies, the Company utilizes electronic bulletin boards to communicate
with independent truckers as to the Company's needs. The average length of haul
was approximately 1,061 and 1,245 miles, during the fiscal years ended
September 30, 1997 and 1996, respectively. Eagle Transportation Services is
operated out of the Company's Houston offices. As with local pick-up and
delivery services, the Company views Eagle Transportation Services primarily as
a means of maintaining quality control and enhancing customer service of its
core air freight forwarding business as well as a means of capturing a portion
of profits that would otherwise be earned by third parties. The Company may
expand its truck brokerage operations selectively in the future beyond
providing support to its air freight operations, to providing truck brokerage
services to customers that do not utilize the Company's air freight services.

INFORMATION SYSTEMS

         A primary component of the Company's business strategy is the
continued development of advanced information systems. The Company has invested
substantial management and financial resources in the development of its
information systems in an effort to provide accurate and timely information to
its management and customers. The Company believes the ability to provide
accurate up-to-date information on the status of shipments, both internally (to
ensure on-time delivery and efficient operations) and to customers (through
whatever medium they request), will become increasingly important.

         The Company has developed and continues to upgrade its information
systems. The Company's integrated information systems (collectively,
"Worldport") include logistics information, management information and
accounting systems. A central computer located at the Company's headquarters in
Houston, Texas is accessible from computer terminals located at all of its
facilities and from computer terminals located at the facilities of many of the
Company's customers through the use of a toll-free dial-in program developed by
the Company. The Worldport system provides a comprehensive source of
information for managing the logistics of the Company's sourcing and
distribution activities. Specifically, the Worldport system permits the Company
to track the flow of a particular shipment from purchase order through the
transportation process to the point of delivery. Through the system, the
Company can also access daily financial information for the entire Company, a
particular terminal, a particular customer or a given shipment. Worldport
permits on-line entry and retrieval of shipment, pricing, scheduling, booking
and tracking data and interfaces with the Company's management information and
accounting systems. Electronic data interchange connections to selected
airlines permit instant retrieval by the Company, and those of its customers
interfacing with Worldport, of information on the status of shipments in the
custody of those airlines. Worldport's electronic data interchange also allows
for status updates, electronic invoicing, funds exchange and file exchange.
Worldport provides the Company's sales force with margin information on
customers and shipments, thereby enhancing the Company's ability to bid
aggressively for future forwarding business and to avoid committing to
unprofitable shipments. Worldport can provide the Company's management and
customers with reports customized to meet their information requirements. The
Company believes that its systems have been instrumental in the productivity of
its personnel and the quality of its operations and service, and have resulted
in substantial reductions in paperwork and expedited the entry, processing,
retrieval and dissemination of critical





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information, both internally and to customers. The Company's web site allows
customers to obtain shipment tracing information via the Internet.

         The expansion of the Company's local pick-up and delivery service is
expected to further improve the Company's logistics system by enabling data
with respect to a shipment to be input remotely from point of pick-up through
point of delivery. The Company has purchased and is field testing the use of
remote hand-held bar code and signature scanners for use by its pick-up and
delivery operations. Worldport is integrated with these scanners to
automatically apply the proof of delivery information to the system. This
information is then made immediately available to all on-line locations as well
as customers' dial-in facilities, allowing for enhanced tracking of shipments
and immediate viewing by shippers of receipt signatures.

         The Company's systems also include Eagle-Ship (formally, ASAM), which
allows its customers to automate their shipping process and consolidate their
shipping systems. Eagle-Ship was developed by, and through January 2001 is
licensed to the Company from, ASAM International, which is restricted from
making the system available to most other major air freight forwarders during
that time. For customers using Eagle-Ship, the Company provides a dedicated
personal computer, printer and bar code scanner that allow the customer's
shipping dock personnel to process and weigh boxes, record the shipment,
produce customized box labels and print an Eagle house airway bill or bill of
lading. Eagle-Ship also provides customers with weight analysis, tariff
reporting, assistance in consolidation of like orders and price comparison
among shipping options.

         Eagle-Ship enables the Company's customers to process shipments for
many carriers with one personal computer and to compare the cost and service
options of various carriers, consolidate Eagle-Ship label printing and generate
reports that profile the customer's shipping activity. Eagle-Ship is designed
to run shipping systems for United Parcel Service of America, Inc., Federal
Express Corporation, Airborne Freight Corporation and Emery Air Freight
Corporation, and can be customized to run the systems of up to 99 other air and
truck carriers. The Company believes that Eagle-Ship gives it a competitive
advantage among a growing number of customers that are resistant to the
proliferation of dedicated shipper systems because of the cost, complexity and
dock space required to maintain a separate personal computer for each carrier,
and that the use of Eagle-Ship should lead to increased use of the Company's
services by helping to ensure that customers will allocate dock space to
Eagle-Ship rather than multiple systems from other carriers. Although
Eagle-Ship does provide customers with assistance in selecting competitors for
the Company's shipping services, the Company believes that much of such
information, such as that relating to Federal Express Corporation, is used in
the delivery of documents and small packages, which constitute a small portion
of the Company's cargoes, and that, overall, Eagle-Ship will demonstrate to
customers the advantages of the Company's services in comparison to its more
direct competitors. As of September 30, 1997 and 1996, the Company had
installed 62 and 31, respectively, Eagle-Ship personal computers for its
customers. The Company believes that Eagle-Ship enhances its ability to market
to national accounts.

LOGISTICS SERVICES

         Many customers are increasingly demanding more than the simple
movement of freight from their transportation suppliers. To meet these needs,
suppliers, such as the Company, seek to customize their services, by, among
other things, providing information on the status of materials, components and
finished goods through the logistics pipeline and providing performance reports
on and proof of delivery for each shipment.

         The Company utilizes its logistics expertise to maximize the
efficiency and performance of its forwarding and other transportation services
to its customers. In addition, the Company provides transportation consulting
services and makes available its expertise and resources to assist customers in
balancing their transportation needs against budgetary constraints by
developing logistics plans for its customers. The Company staffs and manages
the shipping department of certain of its customers that outsource their
transportation function and may seek to provide outsourcing services to other
customers in the future. The Company also provides other ancillary services,
such as electronic data interchange, custom shipping reports, computerized
tracking of shipments, customs brokerage, air charters, warehousing, cargo
assembly and protective packing and crating.

         The Company has established Eagle Exhibitor Services, an internal
group that focuses on the special needs of exhibitors in the trade show
industry. In addition to air freight forwarding and charter services, this
group provides special exhibit handling, by-appointment delivery, caravan
services and short-term warehousing.





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MARKETING AND CUSTOMERS

         The Company's customers include large manufacturers and distributors
of computers and other electronic and high-technology equipment, printed and
publishing materials, automotive parts, trade show exhibit materials,
telecommunications equipment, machinery and machine parts and apparel. For the
fiscal year ended September 30, 1997, no customer accounted for greater than
10% of the Company's revenues. Adverse conditions in the industries of the
Company's customers or loss of a significant customer could negatively impact
the Company. The Company expects that demand for the Company's services (and
consequently its results of operations) will continue to be sensitive to
domestic and, increasingly, global economic conditions and other factors beyond
its control.

         The Company markets its services through an organization consisting of
approximately 175 full-time salespersons supported by the sales efforts of
senior management, its six regional managers, its ten regional sales managers,
its terminal managers and its national services center. The Company plans to
emphasize the marketing of international services through a separate sales
force. Managers at each terminal are responsible for customer service and
coordinate the reporting of customers' requirements and expectations with the
regional managers and regional sales managers. In addition, the regional
managers are responsible for the financial performance of the stations in their
region. Company employees are available 24 hours a day to respond to customer
inquiries.

         The Company has increased its emphasis on obtaining high-revenue
national accounts with multiple shipping locations. These accounts typically
impose numerous requirements on those competing for their freight business,
such as electronic data interchange and proof of delivery capabilities, the
ability to generate customized shipping reports and a nationwide network of
terminals. These requirements often limit the competition for these accounts to
integrated carriers and a very small number of forwarders. The Company believes
that its recent growth and development has enabled it to more effectively
compete for and obtain these accounts.

COMPETITION AND INDUSTRY TRENDS

         Competition within the freight industry is intense. Although the
industry is highly fragmented, with a large number of participants, the Company
competes most often with a relatively small number of forwarders with
nationwide networks and the capability to provide the breadth of services
offered by the Company and with fully integrated carriers focusing on heavy
cargo, including Emery Air Freight Corporation and BAX Global, Inc. The Company
also encounters competition from passenger and cargo air carriers, trucking
companies and others. As the Company expands its international operations, it
expects to encounter increased competition from those forwarders that have a
predominantly international focus, including Fritz Companies Inc., Expeditors
International of Washington Inc., Circle Group, Inc. and Air Express
International Corporation, as well as from its competitors for domestic
forwarding. Many of the Company's competitors have substantially greater
financial resources than the Company. The Company also encounters competition
from regional and local air freight forwarders, cargo sales agents and brokers,
surface freight forwarders and carriers and associations of shippers organized
for the purpose of consolidating their members' shipments to obtain lower
freight rates from carriers. The Company believes that quality of service,
including reliability, responsiveness, expertise and convenience, scope of
operations, information technology and price are the most important competitive
factors in its industry.

EMPLOYEES

         The Company had approximately 1,575 full-time employees at September
30, 1997, including 175 sales personnel.  None of the Company's employees are
currently covered by a collective bargaining agreement. The Company has
experienced no work stoppages and considers its relations with its employees to
be good. The Company also has contracts with approximately 659 independent
owner/operators of local delivery services as of September 30, 1997. The
independent owner/operators own, operate and maintain the vehicles they use in
their work for the Company and may employ qualified drivers of their choice.
Company-owned vehicles are driven by 137 Company employees as of September 30,
1997.

         The Company pays its entire sales force and most of its operations
personnel what it believes is significantly more than the industry average and
offers a broad-based compensation plan to these employees. Sales personnel are
paid a gross commission on shipments sold, while operations personnel and
management are paid bonuses based on the profitability of their terminals, as
well as the profitability of the Company. To ensure quality control and the
profitability of accounts, terminal managers retain the final approval on all
accounts.





                                       8
<PAGE>   9
         From time to time, third parties, including the Internal Revenue
Service ("IRS") and state authorities, have sought to assert, and at times have
been successful in asserting, that independent owner/operators in the
transportation industry, including those of the type utilized in connection
with the Company's local pick-up and delivery operations, are "employees,"
rather than "independent contractors," thus requiring the withholding of
employee and payroll taxes.  Although the Company believes that the independent
owner/operators utilized by it are not employees, there can be no assurance
that the IRS and state authorities will not challenge this position, or that
federal and state tax or other applicable laws, or interpretations thereof,
will not change. If they do, the Company could incur additional employee
benefit-related expenses and could be liable for additional taxes, penalties
and interest for prior periods and additional taxes for future periods. From
time to time drivers for Eagle Freight Services are involved in accidents.
Although most of these drivers are independent contractors, there can be no
assurance that the Company will not be held liable for the actions of such
drivers or that claims against the Company will not exceed the amount of
insurance coverage. An increase in the costs relating to accidents, claims or
insurance could adversely affect the Company.

REGULATION

         The Company's air freight forwarding business is subject to
regulation, as an indirect air cargo carrier, under the Federal Aviation Act by
the Department of Transportation, although air freight forwarders are exempted
from most of such Act's requirements by the Economic Aviation Regulations
promulgated thereunder. The Company's foreign air freight forwarding operations
are subject to similar regulation by the regulatory authorities of the
respective foreign jurisdictions. The air freight forwarding industry is
subject to regulatory and legislative changes which can affect the economics of
the industry by requiring changes in operating practices or influencing the
demand for, and the costs of providing, services to customers.

         The Company's delivery operations are subject to various state and
local regulations and, in many instances, require permits and licenses from
state authorities. In addition, certain of the Company's delivery operations
are regulated by the Surface Transportation Board. These state and federal
authorities have broad power, including the power to approve certain mergers,
consolidations and acquisitions, and the power to regulate the delivery of
certain types of shipments and operations within certain geographic areas, and
the Surface Transportation Board has the power to regulate motor carrier
operations, approve certain rates, charges and accounting systems and require
periodic financial reporting. Interstate motor carrier operations are also
subject to safety requirements prescribed by the Federal Department of
Transportation. In some potential locations for the Company's delivery
operations, state and local permits and licenses may be difficult to obtain.

         The Company's truck brokerage operations require it to be regulated as
a property broker by the Surface Transportation Board for which the Company has
obtained a property broker license and surety bond. The Company's current
domestic customs brokerage agents are, and any such future internal customs
brokerage operations will be, subject to the licensing requirements of the
United States Department of the Treasury and are regulated by the United States
Customs Service. The Company's foreign customs brokerage agents are licensed in
and subject to the regulations of their respective countries. The Federal
Maritime Commission will regulate the Company's expected ocean forwarding
operations (the "FMC"). The FMC licenses ocean freight forwarders. Indirect
ocean carriers (Non-Vessel Operating Common Carriers) are subject to FMC
regulation, under the FMC tariff filing and surety bond requirements, and under
the Shipping Act of 1984, particularly those terms proscribing rebating
practices.

         In the United States, the Company is subject to federal, state and
local provisions relating to the discharge of materials into the environment or
otherwise for the protection of the environment. Similar laws apply in many
foreign jurisdictions in which the Company may operate in the future. Although
current operations have not been significantly affected by compliance with
these environmental laws, governments are becoming increasingly sensitive to
environmental issues, and the Company cannot predict what impact future
environmental regulations may have on its business. The Company does not
anticipate making any material capital expenditures for environmental control
purposes during the remainder of the current or succeeding fiscal years.

         Certain federal officials are considering implementing increased
security measures with respect to air cargo.  There can be no assurance as to
what, if any, regulations will be adopted or, if adopted, as to their ultimate
effect on the Company. The Company does not believe that costs of regulatory
compliance have had a material adverse impact on its operations to date.
However, failure of the Company to comply with the applicable regulations or to
maintain required permits or licenses could result in substantial fines or
revocation of the Company's operating permits or authorities.  There can be no
assurance as to the degree or cost of future regulations on the Company's
business.





                                       9
<PAGE>   10
ITEM 2. PROPERTIES

         As of September 30, 1997, the Company's corporate office occupied
approximately 51,000 square feet of space in facilities located in Houston,
Texas. All corporate office space is leased under agreements that expire in
1998. The Company's 60 terminal locations typically are located at or near
major metropolitan airports and occupy approximately 1,000 to 52,000 square
feet of leased space each and typically consist of offices, warehouse space,
bays for loading and unloading and facilities for packing. In addition, the
Company has locations that are limited to sales and administrative activities.
Currently, other than its Newark terminal, all of such properties are leased,
although the Company may purchase or construct facilities if it believes it can
do so on a more attractive basis. The Company has purchased a site near its
Houston terminal and is constructing a new terminal, warehouse and headquarters
facility expected to be completed in February 1998. Generally, each terminal
location lease is for a term of three to six years and expires between fiscal
1998 and fiscal 2003. From time to time, the Company may expand or relocate
certain terminals to accommodate growth.

         The Company's terminals as of September 30, 1997 were:

<TABLE>
<CAPTION>
 LOCATION                                   AIRPORT SERVED                                      MONTH AND YEAR OPENED
 --------                                   --------------                                      ---------------------
 <S>                                        <C>                                                 <C>
 Houston, Texas*                            Houston Intercontinental Airport                    March 1984
 Dallas, Texas*                             Dallas Ft. Worth International Airport              November 1988
 St. Louis, Missouri*                       Lambert St. Louis International Airport             February 1989
 Atlanta, Georgia*                          Atlanta Hartsfield International Airport            October 1989
 Los Angeles, California*                   Los Angeles International Airport                   May 1991
 San Francisco, California*                 San Francisco International Airport                 June 1991
 Chicago, Illinois*                         Chicago O'Hare International Airport                February 1992
 Newark, New Jersey*                        Newark International Airport                        May 1992
 Boston, Massachusetts*                     Boston Logan International Airport                  February 1993
 Charlotte, North Carolina*                 Charlotte Douglas International Airport             March 1993
 Denver, Colorado*                          Denver International Airport                        March 1993
 San Antonio, Texas*                        San Antonio International Airport                   March 1993
 El Paso, Texas                             El Paso International Airport                       September 1993
 Orlando, Florida*                          Orlando International Airport                       September 1993
 San Diego, California*                     San Diego Lindbergh Field International Airport     October 1993
 Seattle, Washington*                       Seattle Tacoma International Airport                October 1993
 Kansas City, Missouri*                     Kansas City International Airport                   January 1994
 Oklahoma City, Oklahoma*                   Will Rogers International Airport                   January 1994
 Raleigh-Durham, North Carolina*            Raleigh-Durham Airport                              January 1994
 Austin, Texas*                             Robert Mueller Municipal Airport                    February 1994
 Greenville, South Carolina*                Greenville/Spartanburg Airport                      March 1994
 Cincinnati, Ohio*                          Cincinnati/N. Kentucky International Airport        April 1994
 Minneapolis, Minnesota*                    Minneapolis St. Paul International Airport          May 1994
 Memphis, Tennessee*                        Memphis International Airport                       July 1994
 Detroit, Michigan*                         Detroit Metro Airport                               September 1994
 Portland, Oregon*                          Portland International Airport                      September 1994
 Baltimore, Maryland/Washington, D.C.*      Baltimore/Washington International Airport          September 1994
 Phoenix, Arizona*                          Phoenix Sky Harbor International Airport            November 1994
 Cleveland, Ohio*                           Cleveland Hopkins International Airport             December 1994
 Philadelphia, Pennsylvania*                Philadelphia International Airport                  December 1994
 McAllen, Texas*                            McAllen Miller International Airport                January 1995
 Albuquerque, New Mexico*                   Albuquerque International Airport                   June 1995
 Las Vegas, Nevada                          McCarran International Airport                      July 1995
 Indianapolis, Indiana*                     Indianapolis International Airport                  July 1995
 Sacramento, California*                    Sacramento Metro Airport                            July 1995
 San Juan, Puerto Rico                      Luis Munoz Marin International Airport              August 1995
 Pittsburgh, Pennsylvania*                  Pittsburgh International Airport                    September 1995
 Milwaukee, Wisconsin*                      Mitchell International Field                        December 1995
 New Orleans, Louisiana*                    New Orleans International Airport                   January 1996
</TABLE>





                                       10
<PAGE>   11
<TABLE>
<CAPTION>
 LOCATION                                   AIRPORT SERVED                                      MONTH AND YEAR OPENED
 --------                                   --------------                                      ---------------------
 <S>                                        <C>                                                 <C>
 Miami, Florida*                            Miami International Airport                         March 1996
 Hartford, Connecticut                      Bradley International Airport                       April 1996
 Salt Lake City, Utah                       Salt Lake City International Airport                May 1996
 Honolulu, Hawaii                           Honolulu International Airport                      May 1996
 Columbus, Ohio*                            Port Columbus International Airport                 June 1996
 Tulsa, Oklahoma                            Tulsa International Airport                         July 1996
 Omaha, Nebraska                            Eppley Airport                                      July 1996
 Tucson, Arizona*                           Tucson International Airport                        July 1996
 Laredo, Texas                              Laredo International Airport                        October 1996
 Anchorage, Alaska                          Anchorage International Airport                     October 1996
 Richmond, Virginia*                        Richmond International Airport                      October 1996
 Toronto, Ontario*                          Pearson International Airport                       December 1996
 Monterey, Mexico                           Aeropuerto Internacional Mariano Escobedo           April 1997
 South Bend, Indiana                        Michiana Regional Airport                           April 1997
 Harrisburg, Pennsylvania *                 Harrisburg International Airport                    April 1997
 Washington, D.C.**                         Dulles International Airport                        April 1997
 Boise, Idaho                               Boise Air Terminal                                  June 1997
 Reno, Nevada                               Reno/Tahoe International                            June 1997
 Nashville, Tennessee *                     Barryfield Nashville Airport                        July 1997
 Little Rock, Arkansas                      Little Rock National Airport                        August 1997
 Guadalajara, Mexico                        Aeropuerto Internacional Miguel Hidalgo             September 1997
 Mexico City, Mexico                        Aeropuerto Internacional De La CD. De Mexico        September 1997
</TABLE>

 -----------------------
 *  Includes Eagle Freight Services local pick-up and delivery operations.
 ** Eagle Freight Services location only.





                                       11
<PAGE>   12
ITEM 3. LEGAL PROCEEDINGS

         In December 1997, the U.S. Equal Employment Opportunity Commission
("EEOC") issued a Commissioner's Charge against the Company and certain of its
subsidiaries (the "Commissioner's Charge") pursuant to Sections 706 and 707 of
Title VII of the Civil Rights Act of 1964, as amended ("Title VII").  The
Company intends to vigorously defend against the allegations contained in the
Commissioner's Charge.  In the Commissioner's Charge, the EEOC charged the
Company and certain of its subsidiaries with violations of Section 703 of Title
VII, as amended, the Age Discrimination in Employment Act of 1967, and the Equal
Pay Act of 1963, resulting from (i) engaging in unlawful discriminatory hiring,
recruiting, and promotion practices and maintaining a hostile work environment,
based on one or more of race, national origin, age and gender, (ii) failures to
investigate, (iii) failures to maintain proper records and (iv) failures to file
accurate reports.  The Commissioner's Charge states that the persons aggrieved
include all Blacks, Hispanics, Asians and females who are, have been or might be
affected by the alleged unlawful practices.  The Company cannot currently
predict with any great degree of certainty the length of time it will take to
resolve this matter, the likely outcome of this matter or the effect of any such
outcome.  An adverse determination of the matters in the Commissioner's Charge
would likely result in a civil action by the EEOC that could seek back pay,
other compensatory damages, and punitive damages for the allegedly aggrieved
persons.

         From time to time the Company is a party to various legal proceedings
arising in the ordinary course of business.  Except as described above, the
Company is not currently a party to any material litigation and is not aware of
any litigation threatened against it which it believes would have a material
adverse effect on its business.         

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

         None.

                      EXECUTIVE OFFICERS OF THE REGISTRANT

         Pursuant to Instruction 3 to Item 401(b) of Regulation S-K and General
Instruction G(3) to Form 10-K, the following information is included in Part I
of this Form 10-K.

         The following table sets forth certain information concerning the
executive officers of the Company as of October 1, 1997:

<TABLE>
<CAPTION>
         NAME                AGE                POSITION
         ----                ---                --------
<S>                          <C>       <C>
James R. Crane               43        Chairman, President and Chief Executive Officer
                                   
Douglas A. Seckel            46        Chief Financial Officer, Secretary and Treasurer
                                   
OTHER KEY EMPLOYEES:               

Ron Talley                   46        Chief Operating Officer (since December, 1997)

Dan DiGregorio               43        Vice President of Management Information Systems
                                   
Wayne Tompkins               46        Senior Vice President of Operations
</TABLE>                           

         The following background material is provided for each executive
officer and other key employees, including employment history for at least the
last five years:

         James R. Crane has served as President and a director of the Company
since he founded the Company in March 1984.

         Douglas A. Seckel has served as Chief Financial Officer of the Company
since April 1989, has served as Secretary and Treasurer of the Company since
May 1991 and has served as director of the Company since May 1995. Mr. Seckel
and Mr. Crane are first cousins.

         Ron Talley was appointed Chief Operating Officer of the Company in
December 1997.  He joined the Company in 1990 as a station manager, and later
served as a regional manager.  In 1996, he served as a Senior Vice President of
Eagle Freight Services, Eagle Transportation and Eagle Charter, and most
recently, he has served as Senior Vice President of Air and Truck Operations for
the Company.  Prior to joining the Company, Mr. Talley served as a station
manager at Holmes Freight Lines from 1982 to 1990.  From 1979 to 1982, Mr.
Talley held a variety of management positions with Trans Con Freight Lines.
From 1969 to 1979, Mr. Talley served in several management positions at Roadway
Express.

         Dan DiGregorio has served as Vice President of Management Information
Systems since October 1996. Previously, Mr. DiGregorio served as a director of
Worldwide Technical Support for Air Express International Corp. since 1986 and
has over 20 years experience related to management information systems in
international and domestic airfreight forwarding operations.

         Wayne Tompkins has served as Senior Vice President of Operations since
October 1996. Mr. Tompkins joined the Company in January 1996 and served as the
manager of the Company's San Francisco terminal during a transitional period
before assuming his current position. Prior to joining the Company, he served
as President of Red Arrow Freight Lines Inc. from 1994 to 1995 and served in
various senior management positions at Roadway Express Inc. from 1976 to 1993.
Mr. Tompkins has over 20 years of transportation experience.

                                       12
<PAGE>   13
                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS

         (a)     The Company's common stock has been publicly traded through
the Nasdaq National Market tier of The Nasdaq Stock Market under the symbol
EUSA since the Company's initial public offering effective November 30, 1995.
The following table sets forth the quarterly high and low closing sales prices
for each indicated quarter of fiscal 1997 and 1996, as adjusted retroactively
for a 2-for-1 stock split which occurred August 1, 1996:

<TABLE>
<CAPTION>
Quarter Ended             High              Low
-------------             ----              ---
<S>                       <C>               <C>
December 31, 1995         13 1/8             9 1/8
March 31, 1996            15 1/2            12 1/4
June 30, 1996             19                13 3/4
September 30, 1996        26                17 1/4
                                     
December 31,1996          27 3/4            25 1/4
March 31, 1997            33 1/2            25 1/4
June 30, 1997             31 3/8            18
September 30, 1997        36 1/8            24 1/8
</TABLE>                             

         There were approximately 1,674 shareholders of record (including
brokerage firms and other nominees) of the Company's common stock as of
November 26, 1997.

         From October 1992 to the Company's initial public offering, the
Company was an S Corporation and distributed to its shareholders all of its
taxable income. Prior to its initial public offering, the Company made
distributions of cash and/or notes to its pre-IPO shareholders in an estimated
amount of $2.7 million and $14.6 million in fiscal 1996 and 1995, respectively.
A final payment on the notes of approximately $635,000 was made during the
fiscal year ended September 30, 1997. Since its initial public offering, the
Company has not paid cash dividends on its common stock and it is the current
intention of management to retain earnings to finance the growth of the
Company's business. The Company's credit facility limits dividend payments to
25% of the Company's cumulative net worth generated after the date of the
initial public offering.

         (b)     Use of Proceeds.

         The Company's Registration Statement on Form S-1 (Registration No.
33-97606), as amended, with respect to the initial public offering (the
"Offering") of shares of Company's Common Stock, par value $0.001 per share
(the "Common Stock"), was declared effective by the Securities and Exchange
Commission on November 30, 1995. The Offering commenced on December 1, 1995,
and has since terminated, resulting in the sale by the Company of 2,300,000
shares of Common Stock on December 6, 1995 (including 300,000 shares of Common
Stock sold pursuant to the exercise of the underwriters' over-allotment
option). The shares sold constitute all of the shares of Common Stock covered
by the Registration Statement.  The managing underwriters for the Offering were
Donaldson, Lufkin & Jenrette Securities Corporation and The Robinson-Humphrey
Company, Inc.

         The aggregate price to the public for the shares sold in the Offering
was $37,950,000. The expenses incurred by the Company with respect to the
Offering were as follows:

<TABLE>
<S>                                                              <C>
Underwriter Discounts and Commissions  . . . . . . . . . . . .   $ 2,656,500
Other Expenses   . . . . . . . . . . . . . . . . . . . . . . .       734,000
                                                                 -----------
Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,390,500
                                                                 ===========
</TABLE>

         Approximately $22,000 of Other Expenses consisted of payments to a
corporation owned by the Company's Chairman of the Board in reimbursement for
expenses related to the use of that corporation's owned aircraft in the
Offering. None of the other amounts set forth above as Other Expenses were
direct or indirect payments to directors or officers of the Company or their
associates, to persons owning ten percent or more of any class of equity
securities of the Company or to affiliates of the Company.

         The net proceeds to the Company from the Offering were $34.6 million.
As of September 30, 1997, the Company has used such net proceeds as follows:
(i) to repay $2.1 million of indebtedness outstanding under the Company's
revolving credit





                                       13
<PAGE>   14
facility, (ii) to repay $11.6 million of promissory notes outstanding to
certain of the Company's directors and officers, (iii) to pay $3.9 million of
expenses relating to the upgrade of the Company's information systems, (iv) to
pay $5.6 million for a fiscal 1997 acquisition, (v) to pay $900,000 to purchase
the site of the Company's Newark terminal, and (vi) to make $10.5 million in
temporary investments. Except as set forth in clause (ii), none of such
payments were direct or indirect payments to directors or officers of the
Company or their associates, to persons owning ten percent or more of any class
of equity securities of the Company or to affiliates of the Company.

Recent Sales of Unregistered Securities.

         As described in more detail under "Management's Discussion and
Analysis of Financial Condition and Results of Operations-Liquidity and Capital
Resources" the Company issued 33,362 shares of Common Stock on September 19,
1997 as partial consideration for the acquisition of the assets of Michael
Burton Enterprises, Inc. Such transaction is exempt from the registration
requirements of the Securities Act by virtue of Section 4(2) thereof as a
transaction not involving any public offering.

         As described in "Management's Discussion and Analysis of Financial
Condition and Results of Operations-General" above and the Company's Prospectus
dated November 30, 1995, concurrent with the closing of Company's initial
public offering on December 6, 1995, the Company issued 223,025 shares of
Common Stock to James R. Crane to purchase his interests in the Company's
subsidiaries. Such transaction is exempt from the registration requirements of
the Securities Act by virtue of Section 4(2) thereof as a transaction not
involving any public offering.





                                       14
<PAGE>   15
ITEM 6. SELECTED FINANCIAL DATA

         The following table sets forth selected financial data of the Company
which have been derived from consolidated financial statements that have been
audited by Price Waterhouse LLP, independent accountants. The selected
financial data should be read in conjunction with the Company's Consolidated
Financial Statements and Notes thereto, included elsewhere in this report.

<TABLE>
<CAPTION>
                                                                          FISCAL YEAR ENDED 
                                              ---------------------------------------------------------------------------------
                                              SEPTEMBER 30,    SEPTEMBER 30,    SEPTEMBER 30,    SEPTEMBER 30,    SEPTEMBER 30,
                                                  1997             1996             1995             1994             1993
                                              -------------    -------------    -------------    -------------    -------------
                                                                 (IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
<S>                                              <C>              <C>              <C>               <C>              <C>
STATEMENT OF INCOME DATA:
Revenues                                         $291,767         $185,445         $126,214          $83,276          $47,425
Operating income                                   25,699           17,849           12,205            5,886            2,390
Net Income(1)                                      16,798           11,481            7,507            3,554            1,462
Net income per share (1)(2)                           .90              .66              .51              --                --
Weighted average shares outstanding (2)            18,682           17,521           14,782           12,000           12,000

OPERATING DATA:
Gross margin                                        43.9%            44.3%            42.7%            40.2%            39.9%
Operating margin                                     8.8%             9.6%             9.7%             7.0%             5.0%
Operating ratio (3)                                 91.2%            90.4%            90.3%            93.0%            95.0%
Same terminal revenue growth(4)                     48.7%            29.3%            29.1%            44.0%            63.0%
Air freight terminals at period end                    60               47               37               27               14
Local delivery locations at period end                 44               28               11                0                0
Freight forwarding shipments                      832,704          524,685          382,583          291,956          178,545
Average revenue per freight forwarding               $329             $331             $314             $285             $266
 shipment
Average weight (lbs) per freight                      521              576              608              520              506
 forwarding shipment

BALANCE SHEET DATA: (at year end)
Working capital                                   $60,638          $41,487           $6,852           $3,510           $1,025
Total assets                                      106,871           71,729           24,468           16,612            9,884
Long-term indebtedness, net of                          0                0            8,474               11               18
 current portion
Shareholders' equity                               80,504           50,442            1,699            5,031            2,032
</TABLE>

-----------------------

(1)      Net income for fiscal 1996, 1995, 1994, and 1993 includes a pro forma
         charge of $945, $3,682, $1,916 and $823, respectively, which
         represents the estimated federal income taxes that would have been
         reported had Eagle USA been a C Corporation prior to December 4, 1995.

(2)      Net income per share for fiscal 1996 and 1995 is computed by dividing
         net income by the weighted average number of shares of common stock
         outstanding during the period, adjusted to include the following: (i)
         the retroactive restatement giving effect to the 2-for-1 stock split
         in August 1996; (ii) the weighted average of common stock equivalents
         issuable upon exercise of stock options, less the number of shares
         that could have been repurchased with the exercise proceeds using the
         treasury stock method; and (iii) the number of shares required to be
         sold by the Company to fund S Corporation shareholder distributions
         upon closing of the initial public offering. The computation for the
         year ended September 30, 1996 also includes the number of shares that
         the Company's Chairman of the Board received upon the closing of the
         initial public offering in connection with the Company's acquisition
         of interests in subsidiaries. Historical earnings per share is not
         provided for fiscal 1994 and 1993, as such inclusion is considered to
         be irrelevant.

(3)      Operating expenses as a percentage of revenue.

(4)      Percentage increase in revenues for those terminals open as of the
         beginning of the prior fiscal year.





                                       15
<PAGE>   16
        Forward Looking Statements. The statements contained in all parts of
this document (including the portion, if any, appended to the Form 10-K)
including, but not limited to, those relating to the availability of cargo
space; the Company's overseas presence and the plans for and effects and results
of international air freight forwarding services and agreements for
international cargo; future international revenue and international market
growth; the future expansion and results of the Company's terminal network;
plans for local delivery services and truck brokerage; future improvements in
the Company's information systems and logistic systems and services;
technological advancements; future marketing results; construction of the new
facilities; the effect of litigation; future costs of transportation; future
operating expenses; technological advancements; future margins; any seasonality
of the Company's business; future dividend plans; future acquisitions; effects
of Columbus and any other acquisition; use of offering proceeds; ability to
continue growth and implement growth and business strategy; the ability of
expected sources of liquidity to support working capital and capital expenditure
requirements; the tax benefit of any stock option exercises; fiscal 1998
expectations; and any other statements regarding future growth, future cash
needs, future terminals, future operations, business plans, future financial
results, financial targets and goals and any other statements which are not
historical facts are forward-looking statements. When used in this document, the
words "anticipate," "estimate," "expect," "may," "plans," "project," and similar
expressions are intended to be among the statements that identify
forward-looking statements. Such statements involve risks and uncertainties,
including, but not limited to, those relating to the Company's dependence on its
ability to attract and retain skilled managers and other personnel; the intense
competition within the freight industry; the uncertainty of the Company's
ability to manage and continue its growth and implement its business strategy;
the Company's dependence on the availability of cargo space to serve its
customers; the potential for liabilities if certain independent owner/operators
that serve the Company are determined to be employees; effects of regulation;
results of litigation; the Company's vulnerability to general economic
conditions and dependence on its principal customers; the control by the
Company's principal shareholder; the Company's potential exposure to claims
involving its local pick-up and delivery operations; the Company's future
financial and operating results, cash needs and demand for its services; and the
Company's ability to maintain and comply with permits and licenses, as well as
other factors detailed in this document and the Company's other filings with the
Securities and Exchange Commission.  Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual outcomes may vary materially from those indicated. The Company undertakes
no responsibility to update for changes related to these or any other factors
that may occur subsequent to this filing.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

         The following management's discussion and analysis of financial
condition and results of operations should be read in conjunction with the
Company's consolidated financial statements and the notes thereto.

GENERAL

         During the past two fiscal years, the Company's revenues increased at
a compound annual rate of 52.1% to $291.8 million in the fiscal year ended
September 30, 1997 from $126.2 million in the fiscal year ended September 30,
1995, and its operating income increased at a compound annual rate of 45.1% to
$25.7 million in fiscal 1997 from $12.2 million in fiscal 1995. The Company's
recent growth has been generated almost exclusively by increasing the number of
terminals operated by the Company and growth in revenue produced by existing
terminals. Since October 1, 1995, it has added 23 terminals, increasing the
total to 60 at September 30, 1997. At that date, 13 of these 60 terminals had
been open less than 12 months.

         The Company plans to continue to expand its terminal network. The
Company currently plans to open terminals in approximately 15 additional cities
in fiscal 1998. Such plans, however, are subject to change based on a variety
of factors. The expansion of the Company's terminals is expected to occur
primarily in the United States, Canada and Mexico. The Company may complement
its internal expansion with selective acquisitions.

         The opening of a new terminal generally has an initial negative impact
on the Company's profitability due to operating losses of the new terminal. The
opening of a new terminal generally does not require significant capital
expenditures. Additionally, personnel costs are contained at the time of the
opening of a new terminal because commissions are generally not paid until
salesmen achieve minimum sales levels and until managers achieve terminal
profitability. Although future new terminals may be opened in cities smaller
than those in which the Company's more mature terminals are located, the
Company believes the results of new terminals should benefit from a ready base
of business provided by its existing customers.





                                       16
<PAGE>   17
         The Company intends to continue to expand its international freight
forwarding business. International shipments typically generate higher revenues
per shipment than domestic shipments. The Company anticipates that the costs of
transportation for international freight will be higher than for domestic
freight as a percentage of such revenues, resulting in lower gross margins than
domestic shipments; however, the Company does not expect its operating expenses
to increase in proportion to such revenues. The Company also intends to
continue the growth of its local pick- up and delivery operations. By providing
local pick-up and delivery services with respect to shipments for which it is
the freight forwarder, the Company has been able to increase its gross margin
with respect to such shipments because it captures margins which were
previously paid to third parties. However, the Company's local pick-up and
delivery services provided to other (non-forwarding) customers generate a lower
gross margin than the Company's domestic forwarding operations due to their
higher transportation costs as a percentage of revenues.

         Effective October 1, 1992, Eagle elected to be treated as an S
Corporation under Subchapter S of the Internal Revenue Code and comparable
provisions of certain state tax laws. From October 1, 1992 until the
termination of its S Corporation status, the Company paid no federal income
tax. For financial reporting purposes, for periods prior to the Company's
initial public offering, Eagle recorded a provision for state income taxes for
all states in which it operated. The Company also has recorded for fiscal 1996
and 1995 the federal income tax liability for each of its subsidiaries, which
had paid federal income taxes. Shortly prior to the initial public offering in
December 1995, Eagle's status as an S Corporation was terminated, and for
periods thereafter, Eagle has been liable for federal income taxes and state
income taxes in certain states. Prior to the closing of the initial public
offering, Eagle declared distributions payable both in cash and in the form of
special distribution notes in an amount equal to all of Eagle's undistributed S
Corporation earnings up through such closing. The final payment of these notes
was made in fiscal 1997.  The Company has no plans to pay any dividends or
distributions in the foreseeable future.

         On October 1, 1994, the Company purchased a 50% interest in Eagle
Freight Services, Inc. and C&D Freight Services of California, Inc. from a
third party and, during fiscal 1995 purchased a 50% interest in Freight
Services Management, Inc. from the Company's Chairman of the Board and
initiated operation of Eagle USA Transportation Services, Inc. and Eagle USA
Import Brokers, Inc. (the "Eagle Subsidiaries"). The remaining interests in the
Eagle Subsidiaries were purchased from the Company's Chairman of the Board
immediately prior to the closing of the initial public offering in December
1995. Because Eagle controlled the Eagle Subsidiaries, results for fiscal 1995
and 1996 reflect the operations of all of the Eagle Subsidiaries as if they had
been 100% owned by the Company as of the beginning of the period presented.

         The Company has experienced significant growth primarily through
increases in sales at existing terminals and opening new terminals. The Company
has also recently completed the acquisition of the assets of a Columbus, Ohio
transportation provider. See "--Liquidity and Capital Resources." The Company
anticipates that its growth strategy in the future will include internal growth
in its domestic and international freight forwarding, local pick-up and
delivery and truck brokerage business, and could also include additional
acquisitions. The Company's ability to continue its growth will depend on a
number of factors, including existing and emerging competition, the ability to
open new terminals, the ability to maintain profit margins in the face of
competitive pressures, the continued recruitment, training and retention of
operating and management employees, the strength of demand for its services and
the availability of capital to support such growth and the ability to identify,
negotiate and fund acquisitions when appropriate. International operations are
likely to involve increased costs and risks including those related to foreign
regulation, intensified competition, currency fluctuations and exchange
controls. Acquisitions involve risks, including those relating to the
integration of acquired business, retention of prior levels of business,
retention of employees, diversion of management attention, amortization of
acquired intangible assets, unexpected liabilities and other problems. There
can be no assurance that the Company will be successful in implementing any of
its business strategy or plans for future growth.

         The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standard No. 128 ("SFAS 128"), "Earnings Per Share." The
Company will adopt SFAS 128 as required effective October 1, 1997. SFAS 128
replaces the presentation of primary earnings per share with a presentation of
"basic" earnings per share. Basic earnings per share excludes dilution and is
computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding for the period. It also requires
presentation of diluted earnings per share, which reflects the potential
dilution that could occur if securities convertible into common stock were
exercised. See Note 1 of Notes to Consolidated Financial Statements.





                                       17
<PAGE>   18
RESULTS OF OPERATIONS

         The following table presents certain statement of income data as a
percentage of revenues for the periods indicated.

<TABLE>
<CAPTION>
                                                                          FISCAL YEAR ENDED SEPTEMBER 30,
                                                                          -------------------------------
                                                                      1997                1996             1995
                                                                      ----                ----             ----
<S>                                                                  <C>                 <C>              <C>
Revenues                                                             100.0%              100.0%           100.0%
Cost of transportation                                                56.1                55.7             57.3
                                                                      ----                ----             ----
Gross profit                                                          43.9                44.3             42.7

 Personnel costs                                                      23.2                22.5             22.1
 Other selling, general and administrative expenses                   11.9                12.2             10.9
                                                                      ----                ----             ----
Operating expenses                                                    35.1                34.7             33.0
                                                                      ----                ----             ----
Operating income                                                       8.8%                9.6%             9.7%
                                                                       ====                ===              === 
Net income                                                             5.8%                6.2%             6.0%
</TABLE>


FISCAL YEAR ENDED SEPTEMBER 30, 1997 COMPARED TO FISCAL YEAR ENDED SEPTEMBER
30, 1996

         Revenues increased 57.3% to $291.8 million in fiscal 1997 from $185.4
million in fiscal 1996 primarily due to increases in the number of shipments
and total weight of cargo shipped, which resulted from an increase in the
number of terminals open during such period, an increase in penetration in
existing markets, and the addition of significant national account customers.
The number of shipments increased 58.7% (in part attributable to an increased
number of smaller shipments during the UPS strike) and the total weight of
cargo shipped increased 43.5% over fiscal 1996. For those terminals open as of
the beginning of fiscal 1996, revenues increased approximately 48.7% to $253.4
million in fiscal 1997 from $170.5 million in fiscal 1996. Revenues for fiscal
1997 were comprised of $273.7 million of forwarding revenues, $17.1 million of
local pick-up and delivery revenues and $1.0 million of other freight
forwarding revenues.  Total local pick-up and delivery revenues for the
Company's Eagle Freight Services subsidiary for fiscal 1997 were $65.0 million,
an amount that includes $47.9 million of intercompany sales to Eagle (which
were eliminated upon consolidation) and $17.1 million in services to
third-party (non-forwarding) customers.

         Cost of transportation increased as a percentage of revenues to 56.1%
in fiscal 1997 from 55.7% in fiscal 1996.  The increase was the result of
several factors. For the period October 1996 to May 1997, several of the
Company's transportation providers implemented a fuel surcharge which was not
in effect during fiscal 1996. Increased revenues from international freight
(which generally have lower gross margins than domestic shipments), which were
$20.9 million in fiscal 1997 as compared to $9.8 million in fiscal 1996, also
contributed to the higher cost of transportation as a percentage of revenues.
Additionally, the reinstatement on March 7, 1997 of the Federal Air Cargo
Transportation Excise Tax (the "Federal Excise Tax"), which had previously
expired January 1, 1997, negatively impacted cost of transportation as a
percentage of revenues for the year. In fiscal 1996, the Federal Excise Tax
expired January 1, 1996 and was not reinstated until August 27, 1996. These
factors were additionally offset by the continued expansion of the Company's
local pick-up and delivery operations, which enabled the Company to capture
margins previously paid to third parties.  Cost of transportation increased in
absolute terms by 58.4% to $163.6 million in fiscal 1997 from $103.3 million in
fiscal 1996 as a result of increases in air freight shipped. Gross margins
decreased to 43.9% in fiscal 1997 from 44.3% in fiscal 1996. Gross profit
increased 56.0% to $128.2 million in fiscal 1997 from $82.1 million in fiscal
1996.

         Operating expenses increased as a percentage of revenues to 35.1% in
fiscal 1997 from 34.7% in fiscal 1996.  Operating expenses increased in
absolute terms by 59.4% to $102.5 million in fiscal 1997 from $64.3 million in
fiscal 1996. Personnel costs increased as a percentage of revenues to 23.2% in
fiscal 1997 from 22.5% in fiscal 1996, and increased in absolute terms by 62.9%
to $67.8 million due to increased staffing needs associated with the opening of
13 new terminals and to a lesser extent with respect to the UPS strike,
expanded operations at existing terminals and increased revenues, which
resulted in an increase in commissions and expanded corporate infrastructure.
Such personnel costs include all compensation expenses, including those
relating to sales commissions and salaries to headquarters employees and
executive officers. Other selling, general and administrative expenses
decreased as a percentage of revenues to 11.9% in fiscal 1997 from 12.2% in
fiscal 1996, and increased in absolute terms by 52.8% to $34.6 million in
fiscal 1997 from $22.7 million in fiscal 1996. In fiscal 1997, selling expenses
decreased by 0.2% and other general and administrative expenses decreased by
0.1% compared to fiscal 1996. The absolute





                                       18
<PAGE>   19
increases in selling, general and administrative expenses were due to overall
increases in the level of the Company's activities in fiscal year 1997.

         Operating income increased 44.0% to $25.7 million in fiscal 1997 from
$17.8 million in fiscal 1996 for the reasons indicated above. Non-operating
income increased to approximately $1.7 million in fiscal 1997 from
approximately $934,000 in fiscal 1996 due to increased amounts of short-term
investments as a result of the cash proceeds from the Company's initial and
secondary public offerings and a one-time payment of $375,000, in reimbursement
of internal costs related to the February 1997 secondary public offering (see
"--Liquidity and Capital Resources").

         Income before income taxes increased 45.8% to $27.4 million in fiscal
1997 from $18.8 million in fiscal 1996.  Provision for income taxes for fiscal
1997 was $10.6 million compared to provision for income taxes of $6.4 million
for fiscal 1996. A portion of the increase in provision for income taxes was
from the termination of Eagle's S Corporation status shortly prior to the
initial public offering on December 6, 1995. Net income increased 35.2% to
$16.8 million in fiscal 1997 from net income of $12.4 million in fiscal 1996
and increased 46.3% from pro forma net income of $11.5 million in fiscal 1996.
Net income per share increased 36.4% to $0.90 in fiscal 1997 from $0.66 pro
forma net income per share in fiscal 1996.

         The Company's fiscal 1997 results were affected by the United Parcel
Service ("UPS") strike occurring during a two-week period in the fourth quarter
of fiscal 1997 as the Company shipped freight that would have ordinarily been
shipped by UPS. The Company estimates that the UPS strike resulted in
approximately $6 million in incremental revenue which generated approximately
5% after tax profit on such revenue. The strike had a slightly positive impact
on gross profit margin as the increased traffic from the strike carried higher
yields on a per-pound basis. The strike, however, resulted in higher operating
expenses (primarily personnel costs) which offset these higher yields. The
Company does not expect to retain any of the business it gained through the UPS
strike, as the two companies generally occupy separate niches within the
freight transportation marketplace.

FISCAL YEAR ENDED SEPTEMBER 30, 1996 COMPARED TO FISCAL YEAR ENDED SEPTEMBER
30, 1995

         Revenues increased 46.9% to $185.4 million in fiscal 1996 from $126.2
million in fiscal 1995 primarily due to increases in the number of shipments
and total weight of cargo shipped, which resulted from an increase in the
number of terminals open during such period, an increase in penetration in
existing markets, and the addition of significant national account customers.
For those terminals open as of the beginning of fiscal 1995, revenues increased
approximately 29.3% to $151.6 million in fiscal 1996 from $117.2 million in
fiscal 1995. Revenues for fiscal 1996 were comprised of $173.4 million of
forwarding revenues, $11.5 million of local pick-up and delivery revenues and
$500,000 of other freight forwarding revenues. Total local pick-up and delivery
revenues for the Company's Eagle Freight Services subsidiary for fiscal 1996
were $31.7 million, an amount that includes $20.2 million of inter-company
sales to Eagle (which were eliminated upon consolidation) and $11.5 million in
services to third party (non-forwarding) customers.

         Cost of transportation decreased as a percentage of revenues to 55.7%
in fiscal 1996 from 57.3% in fiscal 1995.  The decrease was primarily
attributable to the continued expansion of the local pick-up and delivery
operations, enabling the Company to capture margins previously paid to third
parties, and to a lesser extent was attributable to the January 1, 1996
expiration of the Federal Excise Tax, which was reinstated on August 27, 1996.
Cost of transportation increased in absolute terms by 42.8% to $103.3 million
in fiscal 1996 from $72.4 million in fiscal 1995 as a result of increases in
air freight shipped. Gross margin increased to 44.3% in fiscal 1996 from 42.7%
in fiscal 1995. Gross profit increased 52.5% to $82.1 million in fiscal 1996
from $53.9 million in fiscal 1995.

         Operating expenses increased as a percentage of revenues to 34.7% in
fiscal 1996 from 33.0% in fiscal 1995.  Operating expenses increased in
absolute terms by 54.4% to $64.3 million in fiscal 1996 from $41.6 million in
fiscal 1995. Personnel costs increased slightly as a percentage of revenues to
22.5% in fiscal 1996 from 22.1% in fiscal 1995, and increased in absolute terms
by 49% to $41.6 million due to increased staffing needs associated with the
opening of ten new terminals, expanded operations at existing terminals and
increased revenues, which resulted in an increase in commissions. Such costs
include all compensation expenses, including those relating to sales
commissions and salaries and to headquarters employees and executive officers.
Other selling, general and administrative expenses increased as a percentage of
revenues to 12.2% in fiscal 1996 from 10.9% in fiscal 1995, and increased in
absolute terms by 65.4% to $22.7 million in fiscal 1996 from $13.7 million in
fiscal 1995. In fiscal 1996, selling expenses increased by 0.1% and other
general and administrative expenses increased 1.2% compared to fiscal 1995. The





                                       19
<PAGE>   20
absolute increases in selling, general and administrative expenses were due to
overall increases in the level of the Company's activities in fiscal year 1996.

         Operating income increased 46.2% to $17.8 million in fiscal 1996 from
$12.2 million in fiscal 1995 for the reasons indicated above. Non-operating
income increased to approximately $934,000 in fiscal 1996 from approximately
$319,000 in fiscal 1995 due to increased amounts of short-term investments as a
result of the cash proceeds from the Company's initial public offering.

         Income before income taxes increased 50.0% to $18.8 million in fiscal
1996 from $12.5 million in fiscal 1995.  Provision for income taxes for fiscal
1996 was $6.4 million compared to provision for income taxes of $1.3 million
for fiscal 1995. Provision for income tax for fiscal 1996 included federal
taxes for the portion of the year following the initial public offering when
Eagle became a C corporation. For fiscal 1996 and 1995, provision for income
taxes included state income taxes and federal income taxes paid by the Eagle
Subsidiaries. Pro forma net income increased 52.9% to $11.5 million in fiscal
1996 from $7.5 million in fiscal 1995. Pro forma net income per share increased
29.4% to $0.66 per share in fiscal 1996 from $0.51 per share in fiscal 1995,
even with the significant increase in shares outstanding as a result of the
initial public offering.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's cash and short-term investments decreased $2.3 million
to $27.8 million at September 30, 1997 from $30.1 million at September 30,
1996. At September 30, 1997, the Company had working capital of $60.6 million
and a current ratio of 3.30 compared to working capital of $41.5 million and a
current ratio of 2.95 at September 30, 1996.  The Company's working capital has
increased primarily as a result of the proceeds from the Company's secondary
public offering, profitable growth associated with the expansion of the
Company's operations and the resultant increase in accounts receivable and
payable. Capital expenditures for the fiscal year ended September 30, 1997 were
approximately $6.5 million. The Company believes that cash flow from
operations, its $10 million credit facility and the remaining proceeds from its
public offerings will be adequate to support its normal working capital and
capital expenditures requirements for at least the next 12 months.

         Other than its initial and 1997 public offerings, the Company's cash
generated from operations has been its primary source of liquidity, although it
has from time to time made limited use of bank borrowing and lease purchase
arrangements. The Company has a $10 million revolving credit facility with
NationsBank of Texas, N.A. As of September 30, 1997, no amounts were
outstanding under this credit facility. The borrowing base under the credit
facility is equal to 80% of eligible accounts receivable and was approximately
$40.5 million as of October 31, 1997. Borrowings under the credit facility bear
interest, at the Company's option, at the bank's prime rate or LIBOR plus an
interest margin based on leverage ratios. The credit facility expires and
borrowings under the credit facility are due in January 1998.  Borrowings under
the credit facility are collateralized by substantially all of the Company's
inventory and accounts receivable. The credit facility's covenants restrict the
incurrence of other debt in an amount exceeding $1 million, include
restrictions on liens, investments and acquisitions, require the maintenance of
minimum net worth, a fixed charge coverage ratio of 2 to 1 and a leverage ratio
not greater than 2.25 to 1 and restrict the payment of dividends to 25% of the
Company's cumulative net worth generated after the date of the initial public
offering. The Company expects to retain all available earnings generated by its
operations for the development and growth of its business and does not
anticipate paying any cash dividends on its common stock in the foreseeable
future.

         On January 10, 1997, the Company entered into a five-year operating
lease agreement with two unrelated parties for financing the construction of
its Houston terminal, warehouse and headquarters facility (the Houston
facility).  Estimated costs of the Houston facility are $8.0 million. Under the
terms of the lease agreement, average monthly lease payments are estimated to
be approximately $59,000 (including monthly interest costs based upon LIBOR
rate plus 200 basis points) beginning upon the completion of the construction
of the facility and continuing for a term of 52 months with a balloon payment
equal to the outstanding lease balance (initially equal to the cost of the
facility) due at the end of the lease term. The Company has an option,
exercisable at any time during the lease term, and under certain circumstances
may be obligated, to acquire the facility for an amount equal to the
outstanding lease balance. In the event the Company does not exercise the
purchase option, and is not otherwise required to acquire the facility, it is
subject to a deficiency payment computed as the amount equal to the outstanding
lease balance minus the then current fair market value of the Houston facility.
The Company expects that the amount of any such deficiency payment would be
expensed. As of September 30, 1997, the lease balance was approximately $4
million. Construction of the facility is estimated to be completed in February
1998.

         The Company made distributions of cash and/or notes to its pre-IPO
shareholders in an estimated amount of $2.7 million and $14.6 million during
the fiscal years ended September 30, 1996 and 1995. Prior to the closing of the
initial public offering,





                                       20
<PAGE>   21
the Company paid a series of distributions of cash and notes in an amount
estimated to equal all of its previously undistributed S Corporation earnings.
A final payment on the notes of approximately $635,000 was made during the
fiscal year ended September 30, 1997 resulting in a total in such cash and note
payments of approximately $17.9 million.

         As of September 30, 1997, the Company had outstanding non-qualified
stock options to purchase an aggregate of 2,109,600 shares of common stock at
exercise prices equal to the fair market value of the underlying common stock
on the dates of grant (prices ranging from $1.25 to $35.125). At the time a
non-qualified stock option is exercised, the Company will generally be entitled
to a deduction for federal and state income tax purposes equal to the
difference between the fair market value of the common stock on the date of
exercise and the option price. As a result of exercises for the years ended
September 30, 1997 and 1996 of non-qualified stock options to purchase an
aggregate of 452,489 and 296,566 shares of common stock, the Company is
entitled to a federal income tax deduction of approximately $10.2 million and
$8.2 million. Assuming an effective tax rate of 40%, the Company expects to
realize a tax benefit of approximately $4.1 million and $3.4 million in fiscal
1997 and 1996, respectively; accordingly, the Company recorded such an increase
in other current assets and additional paid-in capital pursuant to the
provisions of FAS No. 109, "Accounting for Income Taxes". Any exercises of
non-qualified stock options in the future at exercise prices below the then
fair market value of the common stock may also result in tax benefits for the
difference between such amounts, although there can be no assurance as to
whether or not such exercises will occur, the amount of any deductions or the
Company's ability to fully utilize such tax deductions.

         In February 1997, the Company completed an underwritten secondary
public offering of 1,779,922 shares of its common stock at a price to the
public of $28.25 per share. The Company sold 232,164 of these shares, and the
net proceeds received by the Company after deducting underwriting discounts and
commissions were $6.2 million and will be used for general corporate purposes.
The Company did not receive any of the proceeds from the sale of the 1,547,758
of these shares sold by Daniel S. Swannie, a former executive officer and
director of the Company. Pursuant to an agreement between the Company and Mr.
Swannie entered into in connection with the offering, Mr. Swannie reimbursed
the Company for all of its out-of-pocket expenses incurred in connection with
the offering and made a payment to the Company of $375,000 for the Company's
estimated internal costs relating to the offering. The agreement also restricts
Mr. Swannie's ability to compete against the Company for a three-year term and
places certain other limitations on his ability to act against the interests of
the Company.

         On September 19, 1997, the Company acquired the operating assets and
assumed certain liabilities of Michael Burton Enterprises, Inc., a
transportation and value-added logistics service provider in Columbus, Ohio.
The Company paid approximately $5.6 million in cash and issued 33,362 shares of
common stock in this transaction. The acquisition agreement also provides for
three contingent payments of up to $1.8 million each if certain annual sales
goals are achieved. The acquisition was accounted for as a purchase;
accordingly, the purchase price was allocated over the basis of the estimated
fair market value of the net assets acquired. This allocation resulted in
goodwill of approximately $4.8 million and is being amortized over the
estimated useful life of the business acquired. The results of operations for
the acquired operations were included in the consolidated statement of income
from the acquisition date forward.

SEASONALITY

         Historically, the Company's operating results have been subject to a
limited degree to seasonal trends when measured on a quarterly basis. The
second quarter has traditionally been the weakest and the fourth quarter has
traditionally been the strongest. This pattern is the result of, or is
influenced by, numerous factors including climate, national holidays, consumer
demand, economic conditions and a myriad of other similar and subtle forces. In
addition, this historical quarterly trend has been influenced by the growth and
diversification of the Company's terminal network. The Company cannot
accurately forecast many of these factors, nor can the Company estimate
accurately the relative influence of any particular factor and, as a result,
there can be no assurance that historical patterns, if any, will continue in
future periods.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The response to this item is submitted in a separate section of this
report.

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

         None.





                                       21
<PAGE>   22

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information required by this item is incorporated by reference to
information under the caption "Proposal 1--Election of Directors" and to the
Information under the caption "Section 16(a) Reporting Delinquencies" in the
Company's definitive Proxy Statement (the "1998 Proxy Statement") for its
annual meeting of shareholders to be held on February 23, 1998.  The 1998 Proxy
Statement will be filed with the Securities and Exchange Commission (the
"Commission") not later than 120 days subsequent to September 30, 1997.

         Pursuant to Item 401(b) of Regulation S-K, the information required by
this item with respect to executive officers of the Company is set forth in
Part I of this report.

ITEM 11.  EXECUTIVE COMPENSATION

         The information required by this item is incorporated herein  by
reference to the 1998  Proxy Statement, which will be filed with the Commission
not later than 120 days subsequent to September 30, 1997.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by this item is incorporated herein by
reference to the 1998 Proxy Statement, which will be filed with the Commission
not later than 120 days subsequent to September 30, 1997.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

         The information required by this item is incorporated herein by
reference to the 1998 Proxy Statement, which will be filed with the Commission
not later than 120 days subsequent to September 30, 1997.

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

         (a)(1)  FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
ITEM                                                                                                                 PAGE
----                                                                                                                 ----
<S>                                                                                                                   <C>

CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED SEPTEMBER 30, 1997:
   Report of Independent Accountants  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   F-2
   Consolidated Balance Sheet as of September 30, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
   Consolidated Statement of Income for the Three Years Ended September 30, 1997  . . . . . . . . . . . . . . . . . . F-4
   Consolidated Statement of Cash Flows for the Three Years Ended September 30, 1997  . . . . . . . . . . . . . . . . F-5
   Consolidated Statement of Shareholders' Equity for the Three Years Ended September 30, 1997  . . . . . . . . . . . F-6
   Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
</TABLE>

         (a)(2)  FINANCIAL STATEMENT SCHEDULES

         All schedules and other statements for which provision is made in the
applicable regulations of the Commission have been omitted because they are not
required under the relevant instructions or are inapplicable.

         (a)(3) EXHIBITS

<TABLE>
<CAPTION>
 Exhibit Number                                                  Description
 --------------                                                  -----------
         <S>           <C>

         *3.1          Second Amended and Restated Articles of Incorporation of the Company (filed as Exhibit 3.1 to
                       the Company Registration Statement on Form S-1, Registration No. 33-97606, and incorporated
                       herein by reference).

         *3.2          Amended and Restated Bylaws of the Company, as amended (filed as Exhibit 3.2 to the Company's
                       Registration Statement on Form S-1, Registration No. 33-97606, and incorporated herein by
                       reference).
</TABLE>


                                      22
<PAGE>   23
<TABLE>
<CAPTION>
 Exhibit Number                                                  Description
 --------------                                                  -----------
       <S>             <C>

        *10.1          1994 Long-Term Incentive Plan (filed as Exhibit 10.1 to the Company's Registration Statement
                       on Form S-1, Registration No. 33-97606, and incorporated herein by reference).

        *10.2          1995 Non-employee Director Stock Option Plan (filed as Exhibit 10.2 to the Company's
                       Registration Statement on Form S-1, Registration No. 33-97606, and incorporated herein by
                       reference).

        *10.3          401(k) Profit Sharing Plan (filed as Exhibit 10.3 to the Company's Registration Statement on
                       Form S-1, Registration No. 33-97606, and incorporated herein by reference).

        *10.4          Shareholders' Agreement dated as of October 1, 1994 among the Company and Messrs. Crane,
                       Swannie, Seckel and Roberts (filed as Exhibit 10.4 to the Company's Registration Statement on
                       Form S-1, Registration No. 33-97606, and incorporated herein by reference).

        *10.5          Form of Indemnification Agreement (filed as Exhibit 10.6 to the Company's Registration
                       Statement on Form S-1, Registration No. 33-97606, and incorporated herein by reference).

        *10.6          Credit Agreement dated as of October 18, 1995 between the Company and NationsBank of Texas,
                       N.A. (filed as Exhibit 10.8 to the Company's Registration Statement on Form S-1, Registration
                       No. 33-97606, and incorporated herein by reference).

        *10.7          Employment Agreement dated as of October 1, 1996 between the Company and James R. Crane (filed
                       as Exhibit 10.7 to the Company's Annual Report on Form 10-K for the fiscal year ended
                       September 30, 1996).

        *10.8          Employment Agreement dated as of October 1, 1996 between the Company and Douglas A. Seckel
                       (filed as Exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal year ended
                       September 30, 1996).

         10.9          Agreement effective as of October 1, 1997 between the Company and Donald P. Roberts.

       *10.10A         Lease and Development Agreement dated as of January 10, 1997 between Asset XI Holdings
                       Company, L.L.C. and the Company (filed as Exhibit 10 to the Company's Quarterly Report on Form
                       10-Q for the quarter ended December 31, 1996 and incorporated herein by reference).

        10.10B         Participation Agreement dated as of January 10, 1997 among Asset XI Holdings Company, L.L.C.,
                       the Company and Bank One, Texas, N.A.

        10.10C         Loan Agreement dated as of January 10, 1997 between Asset XI Holdings Company, L.L.C. and Bank
                       One, Texas, N.A..

         11.1          Computation of Per Share Earnings

         21.1          Subsidiaries of the Company

         23.1          Consent of Price Waterhouse LLP

         27.1          Financial Data Schedule
</TABLE>
----------
*        Incorporated by reference as indicated.

         (b)     REPORTS ON FORM 8-K

         No reports on Form 8-K were filed during the last quarter of the
period covered by this Annual Report on Form 10-K.





                                      23
<PAGE>   24


                          EAGLE USA AIRFREIGHT, INC.
                                      
                      CONSOLIDATED FINANCIAL STATEMENTS
                                      
                      SEPTEMBER 30, 1997, 1996 AND 1995
<PAGE>   25
                           EAGLE USA AIRFREIGHT, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                    Page
                                                                                                    ----
<S>                                                                                                 <C>
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         F-2

Consolidated Balance Sheet as of September 30, 1997 and 1996  . . . . . . . . . . . . . . .         F-3

Consolidated Statement of Income for the Three Years Ended
  September 30, 1997  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         F-4

Consolidated Statement of Cash Flows for the Three Years
  Ended September 30, 1997  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         F-5

Consolidated Statement of Shareholders' Equity for the Three Years
  Ended September 30, 1997  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         F-6

Notes to Consolidated Financial Statements  . . . . . . . . . . . . . . . . . . . . . . . .         F-7
</TABLE>





                                      F-1
<PAGE>   26
                       REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders of
Eagle USA Airfreight, Inc.


In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of cash flows and of shareholders' equity
present fairly, in all material respects, the financial position of Eagle USA
Airfreight, Inc. and its subsidiaries at September 30, 1997 and 1996, and the
results of their operations and their cash flows for each of the three years in
the period ended September 30, 1997, in conformity with generally accepted
accounting principles.  These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements based on our audits.  We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management and evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for the opinion expressed above.





PRICE WATERHOUSE LLP
Houston, Texas
November 21, 1997





                                      F-2
<PAGE>   27
                           EAGLE USA AIRFREIGHT, INC.


                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                                          September 30,
                                                                                          -------------
                                                                                      1997            1996
                                                                                      ----            ----
                               Assets                                          (in thousands, except par values)
                               ------                                                                           
<S>                                                                               <C>              <C>
Current assets:
   Cash and cash equivalents                                                      $    25,107      $  26,696
   Short-term investments                                                               2,679          3,409
   Accounts receivable - trade, net of allowance for doubtful
     accounts of $566 and $363, respectively                                           54,662         30,379
   Prepaid expenses and other                                                           4,557          2,290
                                                                                  -----------      ---------
          Total current assets                                                         87,005         62,774
Property and equipment, net                                                            14,090          8,333
Other assets                                                                            5,776            622
                                                                                  -----------      ---------

                                                                                  $   106,871      $  71,729
                                                                                  ===========      =========
                Liabilities and Shareholders' Equity
                ------------------------------------

Current liabilities:
   Accounts payable - trade                                                       $     7,757      $   2,459
   Accrued transportation costs                                                         6,062         10,818
   Accrued compensation and employee benefits                                          10,454          6,821
   Other accrued liabilities                                                            2,094          1,189
                                                                                  -----------      ---------
          Total current liabilities                                                    26,367         21,287
                                                                                  -----------      ---------
Shareholders' equity:
   Preferred stock, $0.001 par value, 10,000 shares authorized
   Common stock, $0.001 par value, 30,000 shares authorized,
     18,210 and 17,492 shares issued and outstanding                                       18             17
   Additional paid-in capital                                                          52,387         39,124
   Retained earnings                                                                   28,099         11,301
                                                                                  -----------      ---------
                                                                                       80,504         50,442
                                                                                  -----------      ---------
Commitments and contingencies (Note 11)                                                                     
                                                                                  ------------     ---------

                                                                                  $   106,871      $  71,729
                                                                                  ===========      =========
</TABLE>





         The accompanying notes are an integral part of this statement.
                                      F-3
<PAGE>   28
                           EAGLE USA AIRFREIGHT, INC.


                        CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
                                                                        Year ended September 30,           
                                                             ----------------------------------------------
                                                                 1997             1996            1995
                                                                 ----             ----            ----
                                                                 (in thousands, except per share data)
<S>                                                          <C>             <C>               <C>
Revenues                                                     $   291,767     $    185,445      $   126,214
Cost of transportation                                           163,616          103,312           72,366
                                                             -----------     ------------      -----------
                                                                 128,151           82,133           53,848
                                                             -----------     ------------      -----------
Operating expenses:
Personnel costs                                                   67,813           41,619           27,939
Other selling, general and administrative
  expenses                                                        34,639           22,665           13,704
                                                             -----------     ------------      -----------
                                                                 102,452           64,284           41,643
                                                             -----------     ------------      -----------
Operating income                                                  25,699           17,849           12,205
Interest and other income                                          1,693            1,079              335
Interest expense                                                                     (145)             (16)
                                                             -----------     -----------       ---------- 
Income before provision for income taxes                          27,392           18,783           12,524
Provision for income taxes                                        10,594            6,357            1,335
                                                             -----------     ------------      -----------

Net income                                                   $    16,798     $     12,426      $    11,189
                                                             ===========     ============      ===========

Earnings per share                                           $      0.90
                                                             ===========

Pro forma information:
   Net - income as reported                                                  $     12,426      $    11,189
   Pro forma charge in lieu of income
     taxes (Note 4)                                                                   945            3,682
                                                                             ------------      -----------

Pro forma net income                                                         $     11,481      $     7,507
                                                                             ============      ===========

Weighted average common shares
  outstanding                                                                      17,521           14,782
                                                                             ============      ===========

Pro forma net income per share (Note 1)                                      $       0.66      $      0.51
                                                                             ============      ===========
</TABLE>





         The accompanying notes are an integral part of this statement.
                                      F-4
<PAGE>   29
                           EAGLE USA AIRFREIGHT, INC.


                      CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                        Year ended September 30,           
                                                             ----------------------------------------------
                                                                 1997             1996            1995
                                                                 ----             ----            ----
                                                                             (in thousands)
<S>                                                          <C>             <C>               <C>
Cash flows from operating activities:
   Cash received from customers                              $   266,037     $    172,461      $   121,914
   Cash paid to carriers, suppliers and
     employees                                                  (259,760)        (158,483)        (112,471)
   Interest received                                               1,580              968              284
   Interest paid                                                                     (145)             (16)
   Income taxes paid                                              (6,936)          (3,954)          (1,150)
                                                             -----------      -----------       ---------- 
          Net cash provided by operating activities                  921           10,847            8,561
                                                             -----------     ------------      -----------
Cash flows from investing activities:
   Purchase of investments                                       (11,350)         (27,714)         (10,324)
   Maturity of investments                                        12,080           26,232           10,056
   Acquisition of business                                        (5,574)
   Acquisition of property and equipment                          (6,524)          (7,189)          (1,703)
   Disposition of property and equipment                             319               72                7
   Acquisition of subsidiaries (Note 7)                                                               (139)
   Increase in other assets                                                          (300)
   Advances to affiliates                                                                             (737)
   Advances to shareholders and employees                                             (67)            (684)
   Repayments from affiliates                                                         737              563
                                                             -----------     ------------      -----------
          Net cash used by investing activities                  (11,049)          (8,229)          (2,961)
                                                             -----------      -----------       ---------- 
Cash flows from financing activities:
   Payments on indebtedness                                                        (2,178)            (277)
   Proceeds from indebtedness                                                       1,800              613
   Issuance of common stock, net of related costs                  6,162           34,559
   Offering fee paid by selling shareholder                          375
   Proceeds from exercise of stock options                         2,637              628
   Payments on shareholder distribution notes                       (635)          (8,209)
   Distributions to shareholders                                                   (2,701)          (6,420)
                                                             -----------     ------------       ---------- 
          Net cash (used) provided  by
            financing activities                                   8,539           23,899           (6,084)
                                                             -----------     ------------      ----------- 
Net increase (decrease) in cash and
  cash equivalents                                                (1,589)          26,517             (484)
Cash and cash equivalents, beginning of year                      26,696              179              663
                                                             -----------     ------------      -----------

Cash and cash equivalents, end of year                       $    25,107     $     26,696      $       179
                                                             ===========     ============      ===========
</TABLE>





         The accompanying notes are an integral part of this statement.
                                      F-5
<PAGE>   30
                           EAGLE USA AIRFREIGHT, INC.


                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                 Common stock        Additional            
                                                 ------------         paid-in       Retained      
                                              Shares      Amount      capital       earnings          Total
                                              ------      ------      -------       --------          -----
<S>                                           <C>         <C>         <C>           <C>            <C>
Balance at September 30, 1994                   6,000     $    6                    $   5,025      $    5,031

Distributions to shareholder                                                           (6,420)         (6,420)
Special distribution                                                                   (8,209)         (8,209)
Combination of principal
  shareholder's interest in
  the Company's majority-
  owned subsidiaries                                                  $    108                            108
Net income                                                                             11,189          11,189
                                              -------     ------      --------      ---------      ----------

Balance at September 30, 1995                   6,000          6           108          1,585           1,699

Issuance of common stock to
  majority shareholder for
  acquisition of subsidiaries
  (Note 7)                                        223
Issuance of common stock,
  net of related costs (Note 5)                 2,300          2        34,557                         34,559
Distributions to shareholders                                                          (2,701)         (2,701)
Conversion from S Corporation
  to C Corporation (Note 4)                                                457                            457
Exercise of stock options                         296                      628                            628
Tax benefit from exercise
  of stock options                                                       3,374                          3,374
Two-for-one stock split
  (issuance of 8,673 shares
  of common stock) (Note 8)                     8,673          9                           (9)
Net income                                                                             12,426          12,426
                                              -------     ------      --------      ---------      ----------

Balance at September 30, 1996                  17,492         17        39,124         11,301          50,442

Issuance of common stock, net
  of related costs (Note 5)                       232                    6,162                          6,162
Issuance of common stock for
  acquisition (Note 3)                             33                    1,000                          1,000
Payment on shareholder
  distribution notes                                                      (635)                          (635)
Exercise of stock options                         453          1         2,636                          2,637
Tax benefit from exercise of
  stock options                                                          4,100                          4,100
Net income                                                                             16,798          16,798
                                              -------     ------      --------      ---------      ----------

Balance at September 30, 1997                  18,210     $   18      $ 52,387      $  28,099      $   80,504
                                              =======     ======      ========      =========      ==========
</TABLE>





         The accompanying notes are an integral part of this statement.
                                      F-6
<PAGE>   31
                           EAGLE USA AIRFREIGHT, INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (AMOUNTS IN THOUSANDS, EXCEPT PAR VALUES AND PER SHARE AMOUNTS)

NOTE 1 - ORGANIZATION, OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:

Eagle USA Airfreight, Inc. (the Company) was organized in 1984 to provide
ground and air freight forwarding services.  The Company maintains operating
facilities throughout the United States, Mexico and Canada.  The Company
operates in one principal industry segment.

Summary of Significant Accounting Policies:

Principles of consolidation

The consolidated financial statements include the accounts of Eagle USA
Airfreight, Inc. and its subsidiaries.  All significant intercompany
transactions have been eliminated.

Revenue and expense recognition

Revenues and expenses related to the transportation of freight are recognized
at the time the freight departs the terminal of origin.  This method
approximates recognizing revenues and expenses when the shipment is completed.

Cash equivalents

For purposes of the statement of cash flows, the Company considers all highly
liquid investments with original maturities of three months or less to be cash
equivalents.  Cash equivalents are carried at cost, which approximates market
value.

Short-term investments

At September 30, 1997 and 1996, the Company had short-term investments in U.S.
Treasury Bills and Tax Exempt Municipal Bonds with a carrying value of $2,679
and $3,409, respectively.  Securities with a carrying value of $4,449 at
September 30, 1997 mature in less than one year.  Such investments are
"available for sale", since the Company has the intent to utilize the funds as
needed.  The investments are stated at amortized cost, which approximated
market.  Accordingly, no unrealized holding gains or losses have been recorded
by the Company as of September 30, 1997.  The Company's short-term investments
in U.S. Treasury Bills at September 30, 1996 matured during fiscal 1997 with no
gain or loss recognized.





                                      F-7
<PAGE>   32
Concentration of credit risk

Financial instruments which potentially subject the Company to concentration of
credit risk consist principally of investments and trade receivables.  The
Company places its temporary cash investments in short-term federal government
securities which are guaranteed by the U.S. government and tax-exempt municipal
bonds.

The Company provides services to customers in diverse industries located
primarily in the United States.  Substantially all sales are denominated in the
U.S. dollar.  Management believes that concentrations of credit risk with
respect to trade receivables are limited due to the large number of customers
comprising the Company's customer base and their dispersion across many
different industries and geographic regions.  One customer accounted for
approximately 13.5% of revenue in fiscal 1995.  No customer represented 10% or
more of revenues during fiscal 1996 or 1997.  The Company performs ongoing
credit evaluations of its customers to minimize credit risk.

Property and equipment

Property and equipment is stated at cost.  Property and equipment is
depreciated using the straight line method over its estimated useful life.

Goodwill

Goodwill, which represents the excess of purchase price over the fair value of
net assets acquired, is being amortized on a straight-line basis over the
estimated useful lives of the businesses acquired.

Income taxes

The provision for income taxes is computed based upon the pretax income
included in the consolidated statement of income.  The asset and liability
approach is used to recognize deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities.

Prior to the Company's initial public offering, the Company had elected to be
treated as an S Corporation for federal income tax purposes.  Accordingly, all
income tax liability was the responsibility of the shareholders.  As certain
states do not recognize S Corporation status, the Company remained subject to
income taxation in those jurisdictions.  Effective December 4, 1995, the
Company's S Corporation status was terminated and the Company became liable for
federal and state income taxes since that date.

Use of estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts





                                      F-8
<PAGE>   33
reported in the financial statements and accompanying notes.  Actual results
could differ from those estimates.

Earnings per share and pro forma net income per share

Earnings per share and pro forma net income per share are computed by using the
weighted average number of common and common stock equivalent shares
outstanding during the period.  Common stock equivalents include the number of
shares issuable upon exercise of stock options less the number of shares that
could have been repurchased with the exercise proceeds and related tax benefits
using the treasury stock method.

As a result of the Company's change from an S Corporation to a C Corporation in
December 1995, presentation of pro forma net income per share is necessary for
the years ended September 30, 1996 and 1995.  For purposes of the pro forma net
income per share computation, the two-for-one stock split and the shares issued
to the Company's Chairman of the Board in connection with the acquisition of
his interests in the Company's subsidiaries have been treated as if they had
been effective and outstanding as of October 1, 1994.

The number of shares used in the computation were determined as follows:

<TABLE>
<CAPTION>
                                                                           Year ended
                                                                         September 30,
                                                                         -------------
                                                                      1997           1996           1995
                                                                      ----           ----           ----
                                                                                   Pro forma     Pro forma
                                                                    Earnings      net income     net income
                                                                    per share      per share     per share
<S>                                                                   <C>            <C>            <C>
Weighted average number of common shares
  outstanding                                                         17,792         16,234         12,000
Common stock equivalents                                                 890            939          1,243
Effect of shares issued to the Company's
  Chairman of the Board                                                                  82            446
Number of shares sold by the Company that would
  have been necessary to fund pre-IPO S Corporation
  distributions                                                                         266          1,093
                                                                    --------       --------       --------

                                                                      18,682         17,521         14,782
                                                                    ========       ========       ========
</TABLE>

Historical earnings per share is not provided for the fiscal years ended
September 30, 1996 and 1995 as such inclusion is not considered to be
meaningful.

New accounting pronouncements

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard No. 128 (SFAS 128), "Earnings Per Share".  The Company will
adopt SFAS 128 as





                                      F-9
<PAGE>   34
required effective October 1, 1997.  SFAS 128 replaces the presentation of
primary earnings per share with a presentation of "basic" earnings per share.
Basic earnings per share excludes dilution and is computed by dividing income
available to common shareholders by the weighted average number of common
shares outstanding for the period.  It also requires presentation of diluted
EPS, which reflects the potential dilution that could occur if securities to
issue common stock were exercised.

NOTE 2 - PROPERTY AND EQUIPMENT:

Property and equipment consist of the following at September 30:

<TABLE>
<CAPTION>
                                                           Estimated
                                                          useful lives                 1997           1996
                                                          ------------                 ----           ----
<S>                                                        <C>                      <C>            <C>
Computer equipment, software and
  other equipment                                           5-7 years               $  10,934      $   7,000
Vehicles                                                    3-5 years                   3,960          1,897
Furniture and fixtures                                      5-7 years                   1,031            679
Land                                                                                      731            731
Leasehold improvements                                     lease terms                  2,007            706
                                                                                    ---------      ---------
                                                                                       18,663         11,013
Less - accumulated depreciation
 and amortization                                                                      (4,573)        (2,680)
                                                                                    ---------      -------- 

                                                                                    $  14,090      $   8,333
                                                                                    =========      =========
</TABLE>

Computer equipment and software includes $1,582 at September 30, 1997 related
to new scanning and tracking systems for which depreciation and amortization
are expected to begin in December 1997.

NOTE 3 - BUSINESS ACQUISITION:

On September 19, 1997, the Company acquired the operating assets of Michael
Burton Enterprises, Inc., a transportation and value-added logistics service
provider in Columbus, Ohio.  The Company issued 33 shares of common stock,
valued at $1,000, and paid approximately $5,574 in cash.  The acquisition
agreement also provides for three contingent payments of up to $1,750 each if
certain annual sales goals are achieved over the next three years.  The
acquisition was accounted for as a purchase.  Accordingly, the purchase price
was allocated on the basis of the estimated fair market value of the net assets
acquired, resulting in goodwill of approximately $4,750.  The results of
operations for the acquired business were included in the consolidated
statement of income from the acquisition date forward.

NOTE 4 - INCOME TAXES:

Effective October 1, 1992, the Company elected to be treated as an S
Corporation for federal income tax purposes.  Accordingly, no federal income
tax expense was recorded by the Company





                                      F-10
<PAGE>   35
for the year ended September 30, 1995 because operating results are reported in
the individual income tax returns of the shareholders.  As certain states do
not recognize S Corporation status, the Company was subject to income taxation
in those jurisdictions.  The federal income tax expense recorded in the year
ended September 30, 1995 relates to the separate company income generated by
the Company's subsidiaries, which were all C Corporations for federal income
tax purposes.  The Company became a C Corporation in December 1995 as a result
of the public offering.

The Company's income tax provision was comprised of the following for the years
ended September 30:

<TABLE>
<CAPTION>
                                                     1997             1996             1995
                                                     ----             ----             ----
<S>                                               <C>              <C>            <C>
Current:
  State                                           $   1,525        $  1,152       $      941
  Federal                                             8,686           5,129              468
                                                  ---------        --------       ----------
                                                     10,211           6,281            1,409
                                                  ---------        --------       ----------
Deferred:                                         
  State                                                  67              11              (67)
  Federal                                               316              65               (7)
                                                  ---------        --------       ---------- 
                                                        383              76              (74)
                                                  ---------        --------       ---------- 

Total                                             $  10,594        $  6,357       $    1,335
                                                  =========        ========       ==========
</TABLE>

A reconciliation of the federal statutory tax rate and the Company's provision
for income taxes is as follows for the years ended September 30:

<TABLE>
<CAPTION>
                                                     1997             1996             1995
                                                     ----             ----             ----
<S>                                               <C>              <C>            <C>
Income taxes at the applicable federal
 statutory rates                                  $   9,371        $  6,386       $    4,258
Tax exempt income                                      (158)           (130)
Nondeductible items                                     330             245              216
State income taxes, net of federal
  benefit                                             1,051           1,163              874
S Corporation taxation benefit                                       (1,307)          (4,013)
                                                  ---------        --------       ---------- 

Provision for income taxes                        $  10,594        $  6,357       $    1,335
                                                  =========        ========       ==========
</TABLE>

As of September 30, 1997, the Company had outstanding nonqualified stock
options to purchase an aggregate of 2,110 shares of common stock at exercise
prices equal to the fair market value of the underlying common stock on the
dates of grant (prices ranging from $1.25 to $35.13 per





                                      F-11
<PAGE>   36
share).  At the time a nonqualified stock option is exercised, the Company will
generally be entitled to a deduction for federal and state income tax purposes
equal to the difference between the fair market value of the common stock on
the date of exercise and the option price.  As a result of the exercises for
the years ended September 30, 1997 and 1996 of nonqualified stock options to
purchase an aggregate of 452 and 297 shares of common stock, the Company is
entitled to a federal income tax deduction of approximately $10,200 and $8,200.
Assuming an effective tax rate of 40%, the Company realized a tax benefit of
approximately $4,100 and $3,373; accordingly, the Company recorded an increase
to additional paid-in capital and a reduction in current taxes payable pursuant
to the provisions of Statement of Financial Accounting Standards No. 109 (SFAS
109), "Accounting for Income Taxes".  Any exercises of nonqualified stock
options in the future at exercise prices below the then fair market value of
the common stock may also result in tax deductions equal to the difference
between such amounts, although there can be no assurance as to whether or not
such exercises will occur, the amount of any deductions or the Company's
ability to fully utilize such tax deductions.

Deferred tax assets and liabilities as of September 30, 1997 and 1996 were
comprised of the following:

<TABLE>
<CAPTION>
                                                                              1997      1996
                                                                              ----      ----
                  <S>                                                     <C>          <C>
                  Assets:
                   Bad debt expense                                       $    221     $  150
                   Amortization                                                 50         34
                   Accruals and other                                          625        414
                                                                          --------     ------
                                                                               896        598
                                                                          --------     ------
                  Liabilities:
                   Depreciation                                               (822)      (141)
                                                                          --------     ------ 
                                                                              (822)      (141)
                                                                          --------     ------ 

                                                                          $     74     $  457
                                                                          ========     ======
</TABLE>

NOTE 5 - SHAREHOLDERS' EQUITY:

On December 6, 1995, the Company completed an underwritten public offering of
2,000 shares of common stock at a price to the public of $16.50 per share.  In
connection with the offering, the underwriters fully exercised an
over-allotment option of 300 shares.  Proceeds to the Company after deducting
underwriting discounts, commissions and offering costs were approximately
$34,559.  Such proceeds have and may continue to be used for general corporate
purposes, including acquisitions and working capital.

On July 8, 1996, the Board authorized a two-for-one stock split, effected in
the form of a stock dividend, payable August 1, 1996 to shareholders of record
on July 24, 1996.  All references in the financial statements to earnings per
share information have been retroactively restated to





                                      F-12
<PAGE>   37
reflect the split.  The stock split resulted in the issuance of approximately
8,673 new shares of common stock and a reclassification of $9 from retained
earnings to common stock representing the par value of the shares issued.

On February 18, 1997, the Company completed an underwritten secondary public
offering (the secondary public offering) of 1,548 shares of its common stock by
Daniel S. Swannie, a former executive officer and director of the Company, at a
price to the public of $28.25 per share.  The Company did not receive any of
the proceeds from the sale of shares by Mr. Swannie.  Pursuant to an agreement
between the Company and Mr. Swannie entered into in connection with the
offering, Mr. Swannie reimbursed the Company for all of its out-of-pocket
expenses incurred in connection with the offering and made a payment to the
Company of $375 for the Company's estimated internal costs relating to the
offering.  The agreement also restricts Mr. Swannie's ability to compete
against the Company for a three-year term and places certain other limitations
on his ability to act against the interests of the Company.  In connection with
the secondary public offering on February 21, 1997, the Company sold 232 shares
of common stock to the underwriters pursuant to an over- allotment option at a
price of $28.25 per share.  The net proceeds received by the Company after
deducting underwriting discounts and commissions were $6,162 and will be used
for general corporate purposes.

On November 10, 1997, the Board authorized an increase in the number of common
shares to 100,000 common shares.

NOTE 6 - BENEFIT PLANS AND STOCK PLANS:

Defined Contribution Plans

The Company maintains a 401(K) profit sharing plan for its employees.  During
fiscal 1997, 1996 and 1995, the Company elected to match employee contributions
up to 5% of compensation.  In addition, the Company has agreed to permit
employees to contribute certain bonuses, up to the maximum allowable, to their
401(K) accounts.  Such employee contributions, if made, are also matched by the
Company.  During fiscal 1997, 1996 and 1995, the Company made contributions of
$1,574, $970 and $513, respectively.

Stock Option Plans

In September 1994, the Board adopted the Eagle USA Airfreight, Inc. 1994
Long-Term Incentive Plan (the 1994 Plan) whereby certain employees may be
granted options, appreciation rights or awards related to the Company's common
stock.  The Board has authorized 3,100 shares to be available for grant
pursuant to the 1994 Plan.

Each option has been granted at an exercise price equal to the fair market
value of the common stock on the date of grant.  The options generally vest
ratably over a five-year or seven-year period from the date of issuance (or
100% upon death).  The Company has no obligation to repurchase the options
granted.  Vested options terminate seven years from the date of grant.





                                      F-13
<PAGE>   38
Additional awards may be granted under the 1994 Plan in the form of cash, stock
or stock appreciation rights.  The stock appreciation right awards may consist
of the right to receive payment in cash or common stock.  Any award may be
subject to certain conditions, including continuous service with the Company or
achievement of certain business objectives.

On September 29, 1995, the Board adopted the Eagle USA Airfreight, Inc. 1995
Nonemployee Director Stock Option Plan (the Director Plan), whereby the Company
may grant stock options to purchase up to 200 shares of common stock to its
nonemployee directors at the fair market price on the date of grant.

As of September 30, 1997, options to purchase 2,110 shares of common stock of
the Company under both plans were outstanding as follows:

<TABLE>
<CAPTION>
                                                                           Exercise
                                                                            price
                                                         Options          per share 
                                                         -------         ----------
<S>                                                        <C>          <C>
Outstanding at September 30, 1994                            895         $     2.50

Forfeited during 1995                                        (55)              2.50
Granted during 1995                                            5               8.00
                                                         -------                  

Outstanding at September 30, 1995                            845           2.50- 8.00

Granted prior to stock split                                 535          16.50 - 37.50
Effect of stock split (Note 9)                             1,237           1.25 - 18.75
Granted                                                       22          19.25 - 20.25
Forfeited                                                   (149)             1.25
Exercised                                                   (297)          1.25 - 8.25
                                                         -------                       

Outstanding at September 30, 1996                          2,193           1.25 - 20.25

Granted                                                      437          19.25 - 35.13
Forfeited                                                    (68)          1.25 - 25.75
Exercised                                                   (452)          1.25 - 19.25
                                                         -------                       

Outstanding at September 30, 1997                          2,110         $ 1.25 - 35.13
                                                         =======                      

Shares available for grant at end of year                    298
                                                         =======

Options vested at end of year                                684
                                                         =======
</TABLE>

The two-for-one stock split resulted in the issuance of an additional option
for each one outstanding and a 50% reduction in the exercise price for all
outstanding options (Note 5).





                                      F-14
<PAGE>   39
The following table summarizes information about stock options outstanding at
September 30, 1997:

<TABLE>
<CAPTION>

                                              Outstanding                               Exercisable                      
                            ---------------------------------------------      -----------------------------
                                                Average          Weighted                          Weighted
       Range of                                remaining          average                          average
   exercise prices             Number            life              price          Number            price
   ---------------             ------            ----              -----          ------            -----
<S>                              <C>              <C>             <C>              <C>            <C>
$1.25 - $1.25                    830              4.0             $ 1.25            264             $ 1.25
$4.00 - $14.00                   742              5.6              12.40            402              12.64
$15.38 - $30.63                  530              6.3              22.74             18              16.99
$33.00 - $35.13                    8              7.0              34.52              0               0.00
                               -----             ----            -------          -----             ------
                                                                                                     
$1.25 - $35.13                 2,110             5.16             $10.69            684             $ 8.36
                               =====             ====             ======           ====             ======
</TABLE>                                        

The Company applies APB25 and related interpretations in accounting for its
stock option plans.  Accordingly, no compensation cost has been recognized for
these plans.  The weighted average fair values of options granted during 1997
and 1996 were $12.50 and $6.62, respectively.  Had compensation cost for the
Company's option plans been determined based upon the fair value at the grant
dates for awards under these plans consistent with the method set forth under
Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for
Stock-Based Compensation", the Company's net income for the year ended
September 30, 1997 and pro forma net income for the year ended September 30,
1996 would have been reduced by $2,490 and $636, respectively.  Earnings per
share for fiscal 1997 and pro forma net income per share for fiscal 1996 would
have been reduced by $0.13 and $0.04, respectively.

The fair value of each option granted is estimated on the date of grant using
the Black-Scholes options-repricing model with the following weighted-average
assumptions used for grants in 1997 and 1996, respectively:  expected
volatility of 44% and 70%, risk-free interest rates of 6.3% and 6.1%, zero
dividend yield and an expected life of six years.  The disclosure requirements
of SFAS 123 are not applicable to options granted in fiscal 1995.  The pro
forma effects for 1997 and 1996 are not indicative of the pro forma effects in
future years.

NOTE 7 - RELATED PARTY TRANSACTIONS:

Effective, October 1, 1994, the Company acquired 50% of the common stock of
Eagle Freight Services, Inc. (EFS), formerly C&D Freight Services, Inc., and
C&D Freight Services of California, Inc. (C&D) for an aggregate purchase price
of $250 in cash.  Effective January 1, 1995, the Company acquired 50% of
Freight Services Management, Inc. (FSMI) for a nominal amount.  The
acquisitions were accounted for as purchases.  Shortly before the closing of
the initial public offering in December 1995, the Company acquired the
remaining 50% of EFS, C&D and FSMI from the principal shareholder.  The
operating results of such subsidiaries have been consolidated with the Company
since October 1, 1994 as if the Company owned 100% of these entities.  The
Company's results of operations for fiscal 1994 would not have varied





                                      F-15
<PAGE>   40
materially from actual results had the subsidiaries been consolidated during
fiscal 1994.  EFS and C&D provide same-day local delivery and distribution
management services.  FSMI provides outsourcing of logistics and delivery
management services to certain customers of the Company.

During fiscal 1995, the Company and its principal shareholder formed Eagle USA
Transportation Services, Inc. (ETSI), to provide truck brokerage services
principally to the Company, and Eagle USA Import Brokers, Inc. (EIBI), to
provide certain customs brokerage services in connection with the Company's
international shipments.  The Company owned 70% of ETSI and EIBI while the
Company's principal shareholder owned the remaining 30% interests.  Effective
as of the dates of formation of ETSI and EIBI, the Company's consolidated
accounts include the accounts of ETSI and EIBI as if they were wholly owned
since the Company controls ETSI and EIBI.  The Company acquired the remaining
30% interests of ETSI and EIBI from the principal shareholder shortly before
the closing of the initial public offering of common stock, in exchange for
shares of common stock of the Company.

The Company issued 223 pre-split shares of common stock to its principal
shareholder to affect 100% ownership of these subsidiaries.

The Company utilizes an aircraft owned by an entity that is controlled by the
principal shareholder and is charged $1.4 per hour for actual usage.  Total
travel expense during fiscal years ended September 30, 1997, 1996 and 1995
related to the aircraft was $125, $72 and $77, respectively.

NOTE 8 - FINANCING ARRANGEMENTS:

The Company has a number of operating lease agreements, principally for
computer equipment, office space and freight operation facilities.  These
leases are noncancelable and expire on various dates through 2002.  Following
is a summary of future minimum rental payments required under the operating
leases that have initial or remaining noncancelable lease terms in excess of
one year:

<TABLE>
<CAPTION>
               Year ended
              September 30,
              -------------
                 <S>                                  <C>
                 1998                                 $    5,172
                 1999                                      4,031
                 2000                                      2,596
                 2001                                      1,795
                 Thereafter                                  833
                                                      ----------

                                                      $   14,427
                                                      ==========
</TABLE>

Rent expense under all noncancelable operating leases during 1997, 1996 and
1995 was $4,773, $3,062 and $1,877, respectively.





                                      F-16
<PAGE>   41
On January 10, 1997, the Company entered into a five-year operating lease
agreement with two unrelated parties for financing the construction of its
Houston terminal, warehouse and headquarters facility (the Houston facility).
Estimated costs of the Houston facility are approximately $8 million.  Under
the terms of the lease agreement, average monthly lease payments are
approximately $59 (including monthly interest costs based upon LIBOR rate plus
200 basis points) beginning October 1, 1997 through January 2, 2002 with a
balloon payment equal to the outstanding lease balance (initially equal to the
cost of the facility) due on January 2, 2002.  The Company has an option,
exercisable at any time during the lease term to acquire the facility for an
amount equal to the outstanding lease balance.  In the event the Company does
not exercise the purchase option, it is subject to a deficiency payment
computed as the amount equal to the outstanding lease balance minus the then
current fair market value of the Houston facility.  As of September 30, 1997,
the lease balance was approximately $4,000.

On October 18, 1995 the Company obtained a $10,000 revolving line of credit
facility from a bank.  The facility bears interest at variable rates tied to a
bank LIBOR rate, matures in January 1998 and is secured by accounts receivable.
The Company may borrow up to 80% of eligible accounts receivable, must maintain
certain financial ratios and may not declare dividends in excess of 25% of
cumulative net worth generated subsequent to the Company's initial public
offering.  The facility is guaranteed by certain of the Company's subsidiaries.
During fiscal year 1996, the Company borrowed $1,800 pursuant to such facility.
A portion of the proceeds from the initial public offering were used to repay
this indebtedness.  No amount was outstanding under the facility during the
year ended September 30, 1997.





                                      F-17
<PAGE>   42
NOTE 9 - STATEMENT OF CASH FLOWS:

Following is a reconciliation of net income to net cash provided by operating
activities for the years ended September 30:

<TABLE>
<CAPTION>
                                                                            1997         1996          1995
                                                                            ----         ----          ----
<S>                                                                    <C>            <C>           <C>
Reconciliation of net income to net cash provided by
  operating activities:-
   Net income                                                          $   16,798     $   12,426    $   11,189
Adjustments to reconcile net income to net cash provided
  by operating activities:
   Provision for bad debts                                                  1,447            743           758
   Depreciation and amortization                                            2,092          1,124           700
   Deferred income tax expense (benefit)                                      383             76           (74)
   Other income                                                               694
   Change in assets and liabilities, net:
     Trade accounts receivable                                            (24,486)       (13,727)       (5,109)
     Prepaid expenses and other assets                                     (1,086)          (272)         (720)
     Accounts payable and other accrued liabilities                         5,079         10,477         1,817
                                                                       ----------     ----------    ----------

        Net cash provided by operating
          activities                                                   $      921     $   10,847    $    8,561
                                                                       ==========     ==========    ==========
</TABLE>

Supplemental information on noncash investing and financing activities:

   Dividends of $8,209 were declared in fiscal 1995 in the form of Special
Distribution Notes.

   The exercise of employee stock options resulted in a reduction of the
   Company's tax liability and an increase in its additional paid-in capital of
   $4,100 and $3,374 in fiscal 1997 and 1996.

   A 2-for-1 stock split was paid on August 1, 1996 and resulted in a charge of
   $9 to common stock and retained earnings.

   The conversion from S Corporation resulted in the establishment of $457 of
   deferred tax asset and an increase in additional paid-in capital.





                                      F-18
<PAGE>   43
   NOTE 10 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED):

   The following is a summary of the Company's unaudited quarterly financial
   information for the years ended September 30, 1997 and 1996.

<TABLE>
<CAPTION>
                                                                       Quarter Ended,
                                                  --------------------------------------------------------------
                                                       December 31, March 31,       June 30,      September 30,
                                                           1996       1997            1997            1997
                                                           ----       ----            ----            ----
   <S>                                            <C>             <C>            <C>              <C>
   Revenues                                       $    67,586     $   61,489     $    71,301      $   91,391
   Operating income                                     7,198          4,025           6,352           8,124
   Income before provision for
     income taxes                                       7,471          4,726           6,726           8,469
   Net income                                           4,514          2,948           4,104           5,232
   Earnings per share                                    0.24           0.16            0.22            0.28
</TABLE>

<TABLE>
<CAPTION>
                                                                       Quarter Ended,
                                                   ------------------------------------------------------------
                                                   December 31,     March 31,       June 30,      September 30,
                                                       1995           1996            1996            1996
                                                       ----           ----            ----            ----
   <S>                                             <C>               <C>             <C>             <C>
   Revenues                                          $40,698         $39,051         $48,240         $57,456
   Operating income                                    4,259           3,330           4,515           5,745
   Income before provision for                                   
     income taxes                                      4,291           3,625           4,805           6,062
   Pro forma net income (1)                            2,543           2,106           3,114           3,718
   Pro forma net income per                                      
     share (2)                                          0.16            0.11            0.17            0.20
</TABLE>                                                         

(1) As a result of the initial public offering, Eagle USA's status as an S
    Corporation terminated effective December 4, 1995.  Pro forma net income
    used to compute pro forma net income per share for the first quarter of
    fiscal 1996, reflected the incremental estimated federal tax provision that
    would have been reported had Eagle USA been a C-Corporation during these
    periods.  Pro forma and actual net income do not vary for the last three
    quarters of fiscal 1996.

(2) Quarterly pro forma net income per share is computed using the method
    outlined in Note 1.

NOTE 11 - COMMITMENTS AND CONTINGENCIES:

From time to time, the Company is a party to various legal claims and
proceedings arising in the ordinary course of business.  The Company is not
currently a party to any material litigation and is not aware of any litigation
threatened against it that could have a material effect on its business.





                                      F-19
<PAGE>   44
The Company has agreed to indemnify its shareholders for any possible tax
contingencies relating to periods during which the Company was an S
Corporation.





                                      F-20
<PAGE>   45
                                  SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

         Date:   December 18, 1997

                                    EAGLE USA AIRFREIGHT, INC.
                                   
                                   
                                    By:      /S/ DOUGLAS A. SECKEL          
                                          -----------------------------------
                                             Douglas A. Seckel
                                             Chief Financial Officer, Secretary
                                              and Treasurer


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

<TABLE>
<CAPTION>
               Name                                          Capacity                                     Date
               ----                                          --------                                     ----
<S>                                  <C>                                                        <C>


 /s/ JAMES R. CRANE                  Chairman, President and Chief Executive Officer            December 18, 1997
----------------------------         (Principal Executive Officer)
       James R. Crane                


  /S/ DOUGLAS A. SECKEL              Chief Financial Officer, Secretary and Treasurer           December 18, 1997
----------------------------         and Director (Principal Financial and Accounting
      Douglas A. Seckel              Officer) 
                                     


 /S/ NEIL E. KELLEY                  Director                                                   December 18, 1997
------------------------------                                                                                   
      Neil E. Kelley


 /S/ WILLIAM P. O'CONNELL            Director                                                   December 18, 1997
----------------------------                                                                                     
William P. O'Connell


 /S/ FRANK J. HEVRDEJS               Director                                                   December 18, 1997
--------------------------------                                                                                 
     Frank J. Hevrdejs
</TABLE>





                                      24
<PAGE>   46
                                 EXHIBIT INDEX

  Exhibit Number                           Description
  --------------                           -----------
         

       *3.1           Second Amended and Restated Articles of Incorporation of
                      the Company (filed as Exhibit 3.1 to the Company
                      Registration Statement on Form S-1, Registration
                      No. 33-97606, and incorporated herein by reference).

       *3.2           Amended and Restated Bylaws of the Company, as amended
                      (filed as Exhibit 3.2 to the Company's Registration 
                      Statement on Form S-1, Registration No. 33-97606, and 
                      incorporated herein by reference).

      
       *10.1          1994 Long-Term Incentive Plan (filed as Exhibit 10.1 to
                      the Company's Registration Statement on Form S-1,
                      Registration No. 33-97606, and incorporated herein by 
                      reference).

       *10.2          1995 Non-employee Director Stock Option Plan (filed as
                      Exhibit 10.2 to the Company's Registration Statement on
                      Form S-1, Registration No. 33-97606, and incorporated
                      herein by reference).

       *10.3          401(k) Profit Sharing Plan (filed as Exhibit 10.3 to the
                      Company's Registration Statement on Form S-1,
                      Registration No. 33-97606, and incorporated herein by
                      reference).

       *10.4          Shareholders' Agreement dated as of October 1, 1994 among
                      the Company and Messrs. Crane, Swannie, Seckel and
                      Roberts (filed as Exhibit 10.4 to the Company's
                      Registration Statement on Form S-1, Registration No.
                      33-97606, and incorporated herein by reference).

       *10.5          Form of Indemnification Agreement (filed as Exhibit 10.6
                      to the Company's Registration Statement on Form S-1,
                      Registration No. 33-97606, and incorporated herein by
                      reference).

       *10.6          Credit Agreement dated as of October 18, 1995 between the
                      Company and NationsBank of Texas, N.A. (filed as Exhibit
                      10.8 to the Company's Registration Statement on Form
                      S-1, Registration No. 33-97606, and incorporated herein
                      by reference).

       *10.7          Employment Agreement dated as of October 1, 1996 between
                      the Company and James R. Crane (filed as Exhibit 10.7 to
                      the Company's Annual Report on Form 10-K for the fiscal
                      year ended September 30, 1996).

       *10.8          Employment Agreement dated as of October 1, 1996 between
                      the Company and Douglas A. Seckel (filed as Exhibit 10.8
                      to the Company's Annual Report on Form 10-K for the
                      fiscal year ended September 30, 1996).

       10.9           Agreement effective as of October 1, 1997 between the
                      Company and Donald P. Roberts.

      *10.10A         Lease and Development Agreement dated as of January 10,
                      1997 between Asset XI Holdings Company, L.L.C. and the
                      Company (filed as Exhibit 10 to the Company's Quarterly
                      Report on Form 10-Q for the quarter ended December 31,
                      1996 and incorporated herein by reference).

       10.10B         Participation Agreement dated as of January 10, 1997 among
                      Asset XI Holdings Company, L.L.C., the Company and Bank
                      One, Texas, N.A.

       10.10C         Loan Agreement dated as of January 10, 1997 between Asset
                      XI Holdings Company, L.L.C. and Bank One, Texas, N.A.

       11.1           Computation of Per Share Earnings

       21.1           Subsidiaries of the Company

       23.1           Consent of Price Waterhouse LLP

       27.1           Financial Data Schedule

--------------------------
* Incorporated by reference as indicated.