##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended October 1, 2005
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to .
 Commission File Number: 0-120510
 UNIVERSAL TRUCKLOAD SERVICES, INC.
  Michigan
(State or other jurisdiction of
incorporation or organization)
    
    38-3640097
(I.R.S. Employer
Identification No.)
 11355 Stephens Road
Warren, Michigan 48089
 (586) 920-0100
 N/A
  þ o
  o þ
  o þ




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TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONITEM 1: FINANCIAL STATEMENTSITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4: CONTROLS AND PROCEDURESPART II  OTHER INFORMATIONITEM 1: LEGAL PROCEEDINGSITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSITEM 3: DEFAULTS UPON SENIOR SECURITIESITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 5: OTHER INFORMATIONITEM 6: EXHIBITSSIGNATURESEXHIBIT INDEXFifth Amendment to Loan AgreementFourth Amendment to Security AgreementFourth Amendment to Security AgreementSection 302 Certification of Chief Executive OfficerSection 302 Certification of Chief Financial OfficerSection 906 Certification of Chief Executive & Chief Financial Officers    Table of Contents  
 PART I  FINANCIAL INFORMATION
 
 ITEM 1: FINANCIAL STATEMENTS
 UNIVERSAL TRUCKLOAD SERVICES, INC.
 October 1,
    
    
    December 31,2005
    
    
    2004(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    13,759
    
    
    $
    904Marketable securities
    
    
    17,475
    
    
    
    Accounts receivable  net of allowance of $3,717 and $3,439
    
    
    70,188
    
    
    
    59,441Due from CenTra and affiliates
    
    
    284
    
    
    
    502Loan receivable from CenTra
    
    
    
    
    
    
    1,764Prepaid income taxes
    
    
    534
    
    
    
    Prepaid expenses and other
    
    
    3,839
    
    
    
    5,195Deferred income taxes
    
    
    1,610
    
    
    
    796Total current assets
    
    
    107,689
    
    
    
    68,602Property and equipment
    
    
    49,597
    
    
    
    41,219Less accumulated depreciation
    
    
    (19,648
    )
    
    
    (17,388
    )Property and
equipment  net
    
    
    29,949
    
    
    
    23,831Deferred income taxes
    
    
    
    
    
    
    586Goodwill
    
    
    4,002
    
    
    
    3,192Intangible
assets  net of accumulated amortization of $1,531 and $869
    
    
    7,994
    
    
    
    8,656Other assets
    
    
    574
    
    
    
    417Total
    
    $
    150,208
    
    
    $
    105,284Liabilities and Shareholders Equity (Deficit)Current liabilities:Dividend payable
    
    $
    
    
    
    $
    50,000Lines of credit
    
    
    
    
    
    
    31,598Current portion of long-term debt
    
    
    
    
    
    
    2,290Accounts payable
    
    
    27,507
    
    
    
    21,154Accrued expenses
    
    
    11,186
    
    
    
    10,879Income taxes payable
    
    
    
    
    
    
    224Due to CenTra
    
    
    1,362
    
    
    
    1,375Total current liabilities
    
    
    40,055
    
    
    
    117,520Long-term liabilities:Long-term debt
    
    
    
    
    
    
    4,110Deferred income taxes
    
    
    772
    
    
    
    Other long-term liabilities
    
    
    941
    
    
    
    479Total long-term liabilities
    
    
    1,713
    
    
    
    4,589Shareholders equity (deficit):Common stock, no par value. Authorized 40,000,000 shares; issued
and outstanding 16,117,500 and 10,022,500 shares, respectively
    
    
    16,118
    
    
    
    10,023Paid-in capital
    
    
    79,780
    
    
    
    Retained earnings
    
    
    12,513
    
    
    
    Distributions in excess of CenTras contributed capital
    
    
    
    
    
    
    (26,848
    )Accumulated other comprehensive income
    
    
    29
    
    
    
    Total shareholders equity (deficit)
    
    
    108,440
    
    
    
    (16,825
    )Total
    
    $
    150,208
    
    
    $
    105,284
 See accompanying notes to unaudited consolidated financial statements.
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UNIVERSAL TRUCKLOAD SERVICES, INC.
 Thirteen Weeks Ended
    
    
    Thirty-nine Weeks Ended2005
    
    
    2004
    
    
    2005
    
    
    2004Operating revenues:Truckload
    
    $
    84,166
    
    
    $
    69,044
    
    
    $
    238,184
    
    
    $
    175,280Brokerage
    
    
    38,444
    
    
    
    18,709
    
    
    
    110,406
    
    
    
    46,690Intermodal
    
    
    13,027
    
    
    
    9,203
    
    
    
    35,508
    
    
    
    25,937Total operating revenues
    
    
    135,637
    
    
    
    96,956
    
    
    
    384,098
    
    
    
    247,907Operating expenses:Purchased transportation
    
    
    104,227
    
    
    
    72,507
    
    
    
    292,898
    
    
    
    184,402Commissions expense
    
    
    8,741
    
    
    
    7,260
    
    
    
    24,661
    
    
    
    19,380Other operating expense, net
    
    
    1,668
    
    
    
    1,492
    
    
    
    5,088
    
    
    
    3,589Selling, general, and administrative
    
    
    8,771
    
    
    
    7,090
    
    
    
    27,966
    
    
    
    18,666Insurance and claims
    
    
    3,722
    
    
    
    2,711
    
    
    
    10,212
    
    
    
    6,578Depreciation and amortization
    
    
    1,106
    
    
    
    1,109
    
    
    
    3,166
    
    
    
    2,713Total operating expenses
    
    
    128,235
    
    
    
    92,169
    
    
    
    363,991
    
    
    
    235,328Income from operations
    
    
    7,402
    
    
    
    4,787
    
    
    
    20,107
    
    
    
    12,579Interest income
    
    
    198
    
    
    
    24
    
    
    
    383
    
    
    
    69Interest expense
    
    
    
    
    
    
    (213
    )
    
    
    (200
    )
    
    
    (468
    )Income before provision for income taxes
    
    
    7,600
    
    
    
    4,598
    
    
    
    20,290
    
    
    
    12,180Provision for income taxes
    
    
    2,955
    
    
    
    1,753
    
    
    
    7,777
    
    
    
    4,545Net income
    
    $
    4,645
    
    
    $
    2,845
    
    
    $
    12,513
    
    
    $
    7,635Earnings per common share:Basic
    
    $
    0.29
    
    
    $
    0.28
    
    
    $
    0.83
    
    
    $
    0.76Diluted
    
    $
    0.29
    
    
    $
    0.28
    
    
    $
    0.83
    
    
    $
    0.76Average common shares outstanding:Basic
    
    
    16,118
    
    
    
    10,023
    
    
    
    15,124
    
    
    
    10,023Diluted
    
    
    16,118
    
    
    
    10,023
    
    
    
    15,124
    
    
    
    10,023
 See accompanying notes to unaudited consolidated financial statements.
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UNIVERSAL TRUCKLOAD SERVICES, INC.
 Distributionsin excess of
    
    
    AccumulatedCenTras
    
    
    OtherCommon
    
    
    Paid-in
    
    
    Retained
    
    
    Contributed
    
    
    Comprehensivestock
    
    
    capital
    
    
    earnings
    
    
    Capital
    
    
    Income
    
    
    TotalBalances  January 1, 2005
    
    $
    10,023
    
    
    $
    
    
    
    $
    
    
    
    $
    (26,848
    )
    
    $
    
    
    
    $
    (16,825
    )Net income
    
    
    
    
    
    
    
    
    
    
    12,513
    
    
    
    
    
    
    
    
    
    
    
    12,513Capital contribution (Note 2)
    
    
    
    
    
    
    1,835
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,835Proceeds from issuance of
common stock, net
of offering costs
    
    
    6,095
    
    
    
    77,945
    
    
    
    
    
    
    
    26,848
    
    
    
    
    
    
    
    110,888Unrealized gain on available
for sale
investments, net of
income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29
    
    
    
    29Balances
 October 1, 2005
    
    $
    16,118
    
    
    $
    79,780
    
    
    $
    12,513
    
    
    $
    
    
    
    $
    29
    
    
    $
    108,440
 See accompanying notes to unaudited consolidated financial statements.
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UNIVERSAL TRUCKLOAD SERVICES, INC.
 2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    12,513
    
    
    $
    7,635Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    3,166
    
    
    
    2,713Loss (gain) on disposal of property and equipment
    
    
    26
    
    
    
    (6
    )Bad debt expense
    
    
    1,191
    
    
    
    1,227Deferred income taxes
    
    
    (710
    )
    
    
    (466
    )Change in assets and liabilities:Accounts receivable and due from CenTra and affiliates
    
    
    (11,720
    )
    
    
    (7,424
    )Prepaid expenses and other
    
    
    1,199
    
    
    
    (2,776
    )Accounts payable, accrued expenses and
income taxes payable
    
    
    6,364
    
    
    
    5,637Due to CenTra
    
    
    (13
    )
    
    
    (464
    )Net cash provided by operating activities
    
    
    12,016
    
    
    
    6,076Cash flows from investing activities:Capital expenditures
    
    
    (5,786
    )
    
    
    (2,873
    )Proceeds from the sale of property and equipment
    
    
    98
    
    
    
    53Purchases of marketable securities
    
    
    (17,425
    )
    
    
    Loans to CenTra
    
    
    
    
    
    
    (4,043
    )Repayment of loans to CenTra
    
    
    1,764
    
    
    
    Additions to goodwill
    
    
    (602
    )
    
    
    Acquisition of business
    
    
    (100
    )
    
    
    (13,334
    )Net cash used in investing activities
    
    
    (22,051
    )
    
    
    (20,197
    )Cash flows from financing activities:Repayments of long-term debt
    
    
    (6,400
    )
    
    
    (1,841
    )Long-term debt borrowings
    
    
    
    
    
    
    1,968Net (repayments) borrowings under lines of credit
    
    
    (31,598
    )
    
    
    16,127Payment of dividend
    
    
    (50,000
    )
    
    
    Proceeds from the issuance of common stock
    
    
    113,367
    
    
    
    Payment of offering costs
    
    
    (2,479
    )
    
    
    Net cash provided by financing activities
    
    
    22,890
    
    
    
    16,254Net increase in cash and cash equivalents
    
    
    12,855
    
    
    
    2,133Cash and
cash equivalents  beginning of period
    
    
    904
    
    
    
    423Cash and
cash equivalents  end of period
    
    $
    13,759
    
    
    $
    2,556Supplemental cash flow information:Cash paid for interest
    
    $
    312
    
    
    $
    500Cash paid for taxes
    
    $
    9,289
    
    
    $
    547
 See accompanying notes to unaudited consolidated financial statements.
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UNIVERSAL TRUCKLOAD SERVICES, INC.
   Non-Cash investing transactions:
  See accompanying notes to unaudited consolidated financial statements.
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UNIVERSAL TRUCKLOAD SERVICES, INC.
  (1)
    
    Basis of PresentationPursuant to the rules and regulations of the Securities and Exchange Commission, the accompanying
consolidated financial statements of Universal Truckload Services, Inc. and its wholly-owned
subsidiaries (the Company or UTSI) have been prepared by UTSI, without audit by an independent
registered public accounting firm. In the opinion of management, the unaudited consolidated
financial statements include all normal recurring adjustments necessary to present fairly the
information required to be set forth therein. Certain information and note disclosures normally
included in financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted from these statements
pursuant to such rules and regulations and, accordingly, should be read in conjunction with the
consolidated financial statements as of December 31, 2004 and 2003 and for each of the years in
the three-year period ended December 31, 2004 in the Companys Form 10-K filed with the
Securities and Exchange Commission on March 30, 2005.Through December 31, 2004, UTSI was a wholly-owned subsidiary of CenTra, Inc. On December 31,
2004, CenTra, Inc. distributed all of UTSIs common stock to Matthew T. Moroun and a trust
controlled by Manuel J. Moroun, the sole shareholders of CenTra, Inc.. CenTra, Inc., its
subsidiaries and affiliates are referred to as CenTra.Effective August 8, 2004, UTSI completed the acquisition
of all the issued and outstanding common shares of AFA Enterprises, Inc. (AFA). The accounts of AFA and its wholly-owned subsidiaries are
included in the Companys consolidated balance sheets as of October 1, 2005 and December 31, 2004
and the Companys consolidated income statements for the thirteen and thirty-nine weeks ended
October 1, 2005 and from the acquisition date to October 2, 2004.Effective November 1, 2004, UTSI completed the acquisition of certain assets of Nunn Yoest
Principals & Associates, Inc. (NYP). The accounts of NYP are included in the Companys
consolidated balance sheets as of October 1, 2005 and December 31, 2004 and the Companys
consolidated income statements for the thirteen and thirty-nine weeks ended October 1, 2005.On November 1, 2004, the Company amended its Articles of Incorporation increasing the authorized
common shares to 40,000,000 and authorizing 5,000,000 shares of preferred stock. On November 4,
2004, the Board of Directors approved a 211-for-1 stock split of the Companys common stock. The
stock split was payable in the form of a stock dividend on November 4, 2004. The capital stock
accounts, all share data and earnings per share give effect to the stock split, applied
retroactively, to all periods presented.The Companys fiscal year ends on December 31. The Companys fiscal year consists of four
quarters, each with thirteen weeks.Certain reclassifications have been made to the December 31, 2004 balance sheet in order for it
to conform to the October 1, 2005 presentation.
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UNIVERSAL TRUCKLOAD SERVICES, INC.
  (2)
    
    Transactions with CenTra and AffiliatesCenTra has historically provided management services to UTSI, including treasury, legal, human
resources, and tax services. The cost of these services is based on the utilization of the
specific services. Management believes the allocation methods are reasonable. However, the costs
of these services charged to UTSI are not necessarily indicative of the costs that would have
been incurred if UTSI had internally performed or acquired these services as a separate
unaffiliated entity. In connection with the spin-off on December 31, 2004, UTSI entered into a
Transition Services Agreement with CenTra that ensures UTSI will continue to have access to these
services. Pursuant to the Transition Services Agreement, UTSI has agreed to pay CenTra $305,000
per year. The Transition Services Agreement terminates on December 31, 2006, which will permit
UTSI to engage in an orderly transition of the services to our own administrative staff. The
level of administrative services can be cut back by UTSI without penalty at any time, but CenTra
is not obligated to provide substantial additional services beyond the current level.In addition to management services, UTSI reimburses CenTra for other services. Following is a
schedule of services provided and amounts paid (in thousands):
 Thirteen weeks ended
    
    
    Thirty-nine weeks endedOctober 1,
    
    
    October 2,
    
    
    October 1,
    
    
    October 2,2005
    
    
    2004
    
    
    2005
    
    
    2004Management services
    
    $
    76
    
    
    $
    76
    
    
    $
    229
    
    
    $
    229Building & terminal rents
    
    
    57
    
    
    
    174
    
    
    
    178
    
    
    
    221Maintenance services
    
    
    227
    
    
    
    342
    
    
    
    615
    
    
    
    734Trailer rents
    
    
    17
    
    
    
    27
    
    
    
    48
    
    
    
    50Health insurance
    
    
    257
    
    
    
    180
    
    
    
    802
    
    
    
    614Total
    
    $
    634
    
    
    $
    799
    
    
    $
    1,872
    
    
    $
    1,848
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UNIVERSAL TRUCKLOAD SERVICES, INC.
  (2)
    
    Transactions with CenTra and Affiliates  continuedIn February, March and October of 2004, the Company loaned CenTra an aggregate $5,750,000,
bearing interest at approximately 3.5%. In October 2004, the Company and CenTra agreed to treat
$4,000,000 of these loans and all unpaid interest as a dividend to CenTra. The remaining
$1,750,000 plus accrued interest was due on demand and repaid in February 2005. Interest income
from CenTra for the thirty-nine weeks ended October 1, 2005 and October 2, 2004 was $8,000 and
$69,000, respectively.On December 28, 2004, the Companys board of directors declared a dividend of $50,000,000 payable
to CenTra. The effect of the dividend was a reduction in the balances of retained earnings and
paid-in capital to zero. The portion of the dividend in excess of retained earnings and paid-in
capital was reflected as distributions in excess of CenTras contributed capital at December 31,
2004. Capital contributions in the Company were first allocated to the excess distributions
account to reduce the balance to zero and subsequent capital contributions were allocated to
paid-in capital. UTSI paid this dividend on February 15, 2005, from the proceeds of its initial
public offering (see Note 6).In December 2004, CenTra assigned UTSI its right to acquire a terminal yard in Dearborn, Michigan
from a third-party for $625,000. UTSI acquired the property in January 2005. Additionally, in
February 2005, CenTra paid UTSI $12,500 for an option to acquire the property and a right of
first refusal. Under the option, CenTra will have the right, for a three-year period, to purchase
the property from UTSI for $688,000, plus the cost of any future improvements UTSI makes to the
property. Under the right of first refusal, if UTSI receives a bona fide offer from a third-party
to purchase or lease all or any portion of this property that UTSI decides to accept, UTSI must
notify CenTra of this fact and CenTra may elect to lease or purchase, as applicable, the portion
of the property that is subject to such offer on the same terms.In May 2005, the Company exchanged equipment with CenTra whereby UTSI transferred 429 of its
older trailers with a net book value of $915,000 to CenTra in exchange for 300 newer trailers
owned by CenTra. The Company believes the exchange qualifies as a tax-free exchange under the
Internal Revenue Code. UTSI paid CenTra $1,000,000, the difference in fair values of the
trailers given and received. UTSI recorded the trailers it received at $4,875,000, CenTras net
book value. For tax purposes, UTSI recorded the property at $1,535,000, UTSIs tax basis in the
trailers given of $535,000 plus the $1,000,000 of consideration paid. A deferred tax liability of
$1,125,000 was recorded resulting from the difference in the book and tax bases of the trailers
received less the deferred tax liability that existed on the trailers given. Additionally, UTSI
recorded a deemed capital contribution equaling $1,835,000, the net book value of trailers
received less the net book value of the trailers given, the consideration paid and the deferred
tax liability recorded.(3)
    
    Cash and Cash EquivalentsCash and cash equivalents consist of cash and all investments with an original maturity of three
months or less.(4)
    
    Marketable SecuritiesMarketable securities, all of which are available for sale, consist of common stocks and
municipal bonds. Marketable securities are carried at fair value, with unrealized gains and
losses, net of related income taxes, reported as accumulated other comprehensive income.
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UNIVERSAL TRUCKLOAD SERVICES, INC.
  (5)
    
    GoodwillGoodwill represents the excess purchase price over the fair value of assets acquired in
connection with the Companys acquisitions. Under SFAS 142 Goodwill and Other Intangible
Assets, UTSI is required to test goodwill for impairment annually or more frequently if an
impairment indicator exists. During the thirteen weeks ended October 1, 2005, UTSI completed its
goodwill impairment testing and determined that the fair value of each reporting unit exceeded
the carrying value of the net assets of each reporting unit. Accordingly, no impairment loss was
recognized.(6)
    
    DebtIn March 2002, the Company established a line of credit with First Tennessee Bank, secured by the
accounts receivable of Universal Am-Can, Ltd. (UACL) and Mason & Dixon Lines, Inc (MADL). The
line of credit agreement provided for maximum borrowings of $20,000,000 and contained certain
restrictive covenants to be maintained by UACL and MADL, including limitations on the payment of
dividends. Borrowings on the line of credit were at an interest rate of LIBOR as of the first day
of the calendar month plus 1.65%. On June 29, 2004, the Companys line of credit agreement was
amended, increasing its maximum borrowings to $40,000,000 and changing the interest rate to LIBOR
as of the first day of the calendar month plus 1.80%. The amended line of credit agreement was
secured by all of the Companys accounts receivable, except AFA and CrossRoad Carriers, Inc., and
contained various restrictive covenants. In August 2005, the Companys line of credit was
further amended, reducing its maximum borrowings to $20,000,000, decreasing the interest rate to
LIBOR as of the first day of the calendar month plus 1.65% and extending its expiration date to
August 31, 2006. The amended line of credit agreement is secured by the accounts receivable of
UACL and MADL and contains various financial and restrictive covenants to be maintained by the
Company, UACL and MADL. Amounts outstanding at October 1, 2005 and December 31, 2004 were $0 and
$30,094,000, respectively.Great American Lines, Inc., or GAL, a subsidiary of AFA, maintained a secured line of credit with
PNC Bank National Association allowing GAL to borrow up to a maximum of $6,000,000. GALs secured
line of credit was collateralized by substantially all of AFAs assets and bore interest at the
banks prime rate or LIBOR plus 1.75%. In addition, the agreement, in certain circumstances,
limited AFAs ability and the ability of its subsidiaries to sell or dispose of assets, incur
additional debt, pay dividends or distributions or redeem common stock. The agreement also
contained customary representations and warranties, affirmative and negative covenants and events
of default. The secured line of credit expired in June 2005. The Company did not renew or replace
this line of credit.Equipment purchased by UACL from CenTra in 2002 was financed by three promissory notes with Key
Equipment Finance in the amount $4,998,000 and were secured by the equipment. The notes contained
certain restrictive covenants which the Company was required to maintain. The notes carried an
interest rate of LIBOR as determined as of the 28th day of the month plus 1.53%. The notes were
payable in monthly fixed principal payments of $147,000 plus interest, through January 2005.In 2003, the Company purchased 100 trailers from an unrelated party. The equipment purchase was
financed by two promissory notes with Key Equipment Finance totaling $1,917,000. The loans were
secured by the equipment. The notes carried an interest rate of LIBOR as determined as of the
28th day of the month plus 1.7%. The notes were payable in monthly fixed principal payments of
$32,490 plus interest. These notes were paid in full in April 2005.
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UNIVERSAL TRUCKLOAD SERVICES, INC.
  (6)
    
    Debt  continuedIn August and October 2004, UACL entered into three promissory notes with General Electric
Capital Corporation totaling $2,460,000. The proceeds of these notes were used to finance the
purchase of trailers. The notes were secured by the trailers purchased and were payable in
monthly installments of $50,783, including interest at a weighted average rate of 5.57%. The
agreements also contained customary representations and warranties, affirmative and negative
covenants, and events of default. These loans were paid in full in April 2005.In October and December 2004, Mason Dixon Intermodal, Inc. entered into two promissory notes with
Key Equipment Finance totaling $844,000. The proceeds from the notes were used to acquire
container chassis. The notes were secured by the chassis purchased and were payable in monthly
installments of $20,436 plus interest at rates ranging from LIBOR plus 1.75% to 4.98%. The loan
agreement underlying these notes required Mason Dixon Intermodal to maintain various affirmative
and negative covenants. These loans were paid in full in April 2005.AFA had twelve loans and capital lease obligations outstanding with various financial
institutions, with outstanding balances totaling $1,640,000 as of December 31, 2004. These loans
were paid in full at various times during the twenty-six weeks ended July 2, 2005.(7)
    
    Initial Public OfferingOn February 10, 2005, UTSI completed an initial public offering of 5,300,000 shares common stock
at $20.00 per share. After underwriting discounts and the payment of offering costs, UTSI
received net proceeds of $96,101,000. The proceeds from the offering were used to pay the
$50,000,000 dividend declared to CenTra and to repay all amounts outstanding under UTSIs secured
lines of credit.On March 11, 2005, the underwriters exercised their over-allotment option to purchase an
additional 795,000 shares of common stock. The aggregate offering price of the shares of common
stock issued and sold in connection with the over-allotment option was $15,900,000. UTSI paid an
additional $1,113,000 in underwriting discounts and commissions, resulting in additional proceeds
of $14,787,000.(8)
    
    Earnings Per ShareBasic earnings per common share amounts are based on the weighted average number of common shares
outstanding, and diluted earnings per share amounts are based on the weighted average number of
common shares outstanding plus the incremental shares that would have been outstanding upon the
assumed exercise of all dilutive stock options.At October 1, 2005, 260,000 options were outstanding to purchase shares of common stock, which
have been excluded from the calculations of diluted earnings per share because such options were
anti-dilutive.
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##### Table of Contents



UNIVERSAL TRUCKLOAD SERVICES, INC.
  (9)
    
    Stock Based CompensationIn December 2004, UTSIs board of directors adopted the 2004 Stock Incentive Plan ( the Plan),
which became effective upon completion of the Companys initial public offering. The Plan allows
for the issuance of a total of 500,000 shares. The grants may be made in the form of restricted
stock bonuses, restricted stock purchase rights, stock options, phantom stock units, restricted
stock units, performance share bonuses, performance share units or stock appreciation rights. On
February 11, 2005, UTSI granted 260,000 options to certain of its employees. The stock options
granted vested immediately, mature in seven years and have an exercise price of $22.50 per share.
The Company accounts for stock options issued under the Plan pursuant to the recognition and
measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations. No stock-based employee compensation is reflected in net income from the
Plan, as all options granted under the Plan had an exercise price equal to the fair market value
of the underlying common stock on the date of grant.The following table illustrates the effect on net income and earnings per share from the Plan, as
if UTSI had applied the fair value recognition provisions of Statement of Financial Accounting
Standards (SFAS) No. 123, Accounting for Stock-Based Compensation.
 Thirty-nine weeksThirteen weeks ended
    
    
    endedOctober
    
    
    October
    
    
    October
    
    
    October1, 2005
    
    
    2, 2004
    
    
    1, 2005
    
    
    2, 2004Net income, as reported
    
    $
    4,645
    
    
    $
    2,845
    
    
    $
    12,513
    
    
    $
    7,635Less: Total stock based compensation determined
using the fair value method, net of income tax
    
    
    
    
    
    
    
    
    
    
    1,753
    
    
    
    Pro forma net income
    
    $
    4,645
    
    
    $
    2,845
    
    
    $
    10,760
    
    
    $
    7,635Earnings per
common share  basicAs reported
    
    $
    0.29
    
    
    $
    0.28
    
    
    $
    0.83
    
    
    $
    0.76Pro forma
    
    $
    0.29
    
    
    $
    0.28
    
    
    $
    0.71
    
    
    $
    0.76Earnings per common share  dilutedAs reported
    
    $
    0.29
    
    
    $
    0.28
    
    
    $
    0.83
    
    
    $
    0.76Pro forma
    
    $
    0.29
    
    
    $
    0.28
    
    
    $
    0.71
    
    
    $
    0.76
  Underlying share price
    
    $
    22.50Exercise price of the option
    
    $
    22.50Expected dividend rate
    
    
    0.0
    %Expected volatility
    
    
    39.57
    %Expected term of the option (in years)
    
    
    7Risk-free interest rate
    
    
    4.02
    %
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##### Table of Contents



UNIVERSAL TRUCKLOAD SERVICES, INC.
  (10)
    
    AcquisitionEffective January 1, 2005, UTSI acquired Xxtreme Trucking, LLC (Xxtreme). Xxtreme is a regional
provider of truckload and brokerage services primarily in the Southern United States. The
aggregate purchase price was $100,000 in cash. Under the purchase agreement, the Company is
required to pay additional cash consideration to the former owner of Xxtreme based on a
percentage of all revenues generated during the period from January 1, 2005 to December 31, 2007,
up to an aggregate of $650,000. Any additional consideration paid to the former owners of
Xxtreme will be treated as an additional cost of acquiring Xxtreme and will be recorded as
goodwill. The pro forma effect of acquiring Xxtreme has been omitted as the effect is immaterial
to UTSIs results of operations, financial position and cash flows.(11)
    
    Comprehensive IncomeComprehensive income includes the following for the thirteen and thirty-nine weeks ended October
1, 2005. UTSI did not have any transactions resulting in comprehensive income in 2004 (in
thousands).
 Thirteen
    
    
    Thirty-nineWeeks
    
    
    WeeksEnded
    
    
    EndedOctober 1,
    
    
    October 1,2005
    
    
    2005Net income
    
    $
    4,645
    
    
    $
    12,513Unrealized holding gains on available for sale
investments, net of income tax
    
    
    (17
    )
    
    
    29Comprehensive income
    
    $
    4,628
    
    
    $
    12,542
 (12)
    
    ContingenciesThere are pending actions arising during the ordinary conduct of business. In the opinion of the
Company, the liability, if any, arising from these actions will not have a material effect on the
Companys financial position, results of operations or cash flows.(13)
    
    Recent Accounting PronouncementsIn December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment, to address
the accounting for share-based payment transactions in which an enterprise receives employee
services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are
based on the fair value of the enterprises equity instruments or that may be settled by the
issuance of such equity instruments. SFAS No. 123(R) requires an entity to recognize the grant
date fair value of stock options and other equity based compensation issued to employees in the
statement of income. The revised statement generally requires that an entity account for those
transactions using the fair value based method and eliminates an entitys ability to account for
share-based compensation transactions using the intrinsic value method of accounting. SFAS
123(R) is effective for the Company beginning on January 1, 2006. UTSI will adopt this statement
using a modified version of prospective application on January 1, 2006. The adoption of this
statement will result in compensation expense being recorded for grants of stock or stock options
on or after January 1, 2006.
 13




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##### Table of Contents



UNIVERSAL TRUCKLOAD SERVICES, INC.
  (13)
    
    Recent Accounting Pronouncements  continuedIn May 2005, the FASB issued SFAS No. 154,
Accounting Changes and Error Corrections  a
replacement of APB Opinion No. 20 and FASB Statement No. 3, which changes the requirements for
the accounting and reporting of a change in accounting principle. SFAS No. 154 applies to all
voluntary changes in accounting principle and changes required by an accounting pronouncement in
the unusual instance that the pronouncement does not include specific transition provisions.
SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years
beginning after December 15, 2005. The Company does not believe the adoption of SFAS No. 154
will have a material impact on its financial position, results of operations or cash flows.(14)
    
    Subsequent EventsAcquisition of Mark Largent, Inc.On October 14, 2005, UTSI acquired certain assets of Marc Largent, Inc. (Largent). Largent is a
regional provider of intermodal services primarily in the Western United States. The aggregate
purchase price was $1,000,000 in cash. Under the purchase agreement, the Company is required to
pay additional cash consideration to the former owner of Largent based on a percentage of all
revenues generated during the period from October 14, 2005 to October 13, 2008. Any additional
consideration paid to the former owner of Largent will be treated as an additional cost of
acquiring Largent.Acquisition of PropertyOn August 24, 2005, UTSI acquired a thirty-nine acre property located in Cleveland, Ohio for
$1,700,000 in cash. The Company intends to develop this property into an intermodal container
facility.
 14




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##### Table of Contents



ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Some of the statements and assumptions in this Form 10-Q are forward-looking statements. These
statements identify prospective information. Important factors could cause actual results to
differ, possibly materially, from those in the forward-looking statements. In some cases you can
identify forward-looking statements by words such as anticipate, believe, could, estimate,
plan, intend, may, should, will and would or other similar words. You should read
statements that contain these words carefully because they discuss our future expectations, contain
projections of our future results of operations or of our financial position or state other
forward-looking information. Forward-looking statements should not be read as a guarantee of
future performance or results, and will not necessarily be accurate indications of the times at, or
by which, such performance or results will be achieved. Forward-looking information is based on
information available at the time and/or managements good faith belief with respect to future
events, and is subject to risks and uncertainties that could cause actual performance or results to
differ materially from those expressed in the statements. The factors listed in the section
captioned Factors That May Affect Future Results or Forward Looking Statements in Item 7 in our
Form 10-K for the year ended December 31, 2004, as well as any other cautionary language in Item 7
of that Form 10-K, provide examples of risks, uncertainties and events that may cause our actual
results to differ materially from the expectations we describe in our forward-looking statements.
 Forward-looking statements speak only as of the date the statements are made. We assume no
obligation to update forward-looking statements to reflect actual results, changes in assumptions
or changes in other factors affecting forward-looking information except to the extent required by
applicable securities laws. If we do update one or more forward-looking statements, no inference
should be drawn that we will make additional updates with respect thereto or with respect to other
forward-looking statements.
 Unless the context indicates otherwise, we, our and us refers to Universal Truckload
Services, Inc. and its subsidiaries.
 Overview
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##### Table of Contents



Results of Operations
  Thirty-nine WeeksThirteen Weeks Ended
    
    
    EndedOctober 1,
    
    
    October 2,
    
    
    October 1,
    
    
    October 2,2005
    
    
    2004
    
    
    2005
    
    
    2004Operating revenues
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Operating expenses:Purchased transportation
    
    
    76.8
    
    
    
    74.8
    
    
    
    76.3
    
    
    
    74.4Commissions expense
    
    
    6.4
    
    
    
    7.5
    
    
    
    6.4
    
    
    
    7.8Other operating expenses
    
    
    1.2
    
    
    
    1.5
    
    
    
    1.3
    
    
    
    1.4Selling, general and administrative
    
    
    6.5
    
    
    
    7.3
    
    
    
    7.3
    
    
    
    7.5Insurance and claims
    
    
    2.7
    
    
    
    2.8
    
    
    
    2.7
    
    
    
    2.7Depreciation and amortization
    
    
    0.8
    
    
    
    1.1
    
    
    
    0.8
    
    
    
    1.1Total operating expenses
    
    
    94.5
    
    
    
    95.1
    
    
    
    94.8
    
    
    
    94.9Operating income
    
    
    5.5
    
    
    
    4.9
    
    
    
    5.2
    
    
    
    5.1Interest income (expense), net
    
    
    0.1
    
    
    
    (0.2
    )
    
    
    0.1
    
    
    
    (0.2
    )Income before provision for income taxes
    
    
    5.6
    
    
    
    4.7
    
    
    
    5.3
    
    
    
    4.9Provision for income taxes
    
    
    2.2
    
    
    
    1.8
    
    
    
    2.0
    
    
    
    1.8Net income
    
    
    3.4
    %
    
    
    2.9
    %
    
    
    3.3
    %
    
    
    3.1
    %
 Thirty-nine Weeks Ended October 1, 2005 Compared to Thirty-nine Weeks ended October 2, 2004
 Operating revenues.
 16




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##### Table of Contents



Purchased transportation.
 Commissions expense.
 Other operating expense.
 Selling, general and administrative.
 Insurance and claims.
 17




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##### Table of Contents



Depreciation and amortization.
 Interest expense (income), net
 Provision for income taxes.
 Thirteen Weeks Ended October 1, 2005 Compared to Thirteen Weeks ended October 2, 2004
 Operating revenues.
 Purchased transportation.
 18




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##### Table of Contents



Commissions expense.
 Other operating expense.
 Selling, general and administrative.
 Insurance and claims.
 Depreciation and amortization.
 19




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##### Table of Contents



Interest expense (income), net.
 Provision for income taxes.
 Liquidity and Capital Resources
       20




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Secured Lines of Credit
   Secured Equipment Loans and Capital Lease Obligations
  Discussion of Cash Flows
     21




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##### Table of Contents



Off Balance Sheet Arrangements
    Critical Accounting Policies
  Effect of Recent Accounting Pronouncements
   Effects of Inflation
  Seasonality
  22




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##### Table of Contents



ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
     Commodity Price Risk
  
 ITEM 4: CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Internal Controls
  23




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1: LEGAL PROCEEDINGS
  
 ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3: DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5: OTHER INFORMATION
  
 ITEM 6: EXHIBITS
   24




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##### Table of Contents



SIGNATURES
  Universal Truckload Services, Inc.(Registrant)Date: November 14, 2005By:
    
    /S/ Robert E. SiglerRobert E. Sigler, Vice
President, Chief
Financial Officer, Secretary and TreasurerDate: November 14, 2005By:
    
    /S/ Donald B. CochranDonald B. Cochran, President and
Chief
Executive Officer
 25




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Description2.1
    
    Purchase Agreement, dated as of August 12, 2004, between Angelo A. Fonzi and Universal
Truckload Services, Inc. (Incorporated by reference to Exhibit 2.1 to the Registrants
Registration Statement on Form S-1 filed on November 15, 2004 (Commission File No.
333-120510))3.1
    
    Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to
the Registrants Registration Statement on Form S-1 filed on November 15, 2004 (Commission
File No. 333-120510))3.2
    
    Amended and Restated Bylaws, as amended on December 10, 2004 (Incorporated by reference to
Exhibit 3.2 to the Registrants Registration Statement on Form S-1 filed on January 7, 2005
(Commission File No. 333-120510))4.1
    
    Registration Rights Agreement, dated as of December 31, 2004, among the Registrant, Matthew
T. Moroun and The Manuel J. Moroun Trust (Incorporated by reference to Exhibit 4.1 to the
Registrants Registration Statement on Form S-1 filed on January 7, 2005 (Commission File
No. 333-120510))4.2
    
    Specimen Common Share Certificate (Incorporated by reference to Exhibit 4.2 to the
Registrants Registration Statement on Form S-1 filed on November 15, 2004 (Commission File
No. 333-120510))10.1+
    
    Form of indemnification agreement entered into by the Registrant with each of its directors
and officers (Incorporated by reference to Exhibit 10.1 to the Registrants Registration
Statement on Form S-1 filed on January 7, 2005 (Commission File No. 333-120510))10.2+
    
    Universal Truckload Services, Inc. Stock Incentive Plan (Incorporated by reference to
Exhibit 10.2 to the Registrants Registration Statement on Form S-1 filed on January 7,
2005 (Commission File No. 333-120510))10.3+
    
    Employment Agreement, dated as of September 13, 2004, by and between Universal Truckload
Services, Inc. and Don Cochran (Incorporated by reference to Exhibit 10.3 to the
Registrants Registration Statement on Form S-1 filed on November 15, 2004 (Commission File
No. 333-120510))10.4+
    
    Employment Agreement, dated as of September 13, 2004, by and between Universal Truckload
Services, Inc. and Bob Sigler (Incorporated by reference to Exhibit 10.4 to the
Registrants Registration Statement on Form S-1 filed on November 15, 2004 (Commission File
No. 333-120510))10.5+
    
    Employment Agreement, dated as of September 13, 2004, by and between Universal Truckload
Services, Inc. and Leo Blumenauer (Incorporated by reference to Exhibit 10.5 to the
Registrants Registration Statement on Form S-1 filed on November 15, 2004 (Commission File
No. 333-120510))10.6+
    
    Consulting Agreement, dated as of August 12, 2004, between Universal Am-Can, Ltd. And
Angelo A. Fonzi (Incorporated by reference to Exhibit 10.6 to the Registrants Registration
Statement on Form S-1 filed on November 15, 2004 (Commission File No. 333-120510))10.7+
    
    Covenant Not to Compete, dated as of August 12, 2004, between Angelo A. Fonzi, Universal
Am-Can, Ltd. and Universal Truckload Services, Inc. (Incorporated by reference to Exhibit
10.7 to the Registrants Registration Statement on Form S-1 filed on November 15, 2004
(Commission File No. 333-120510))10.8
    
    Second Amendment to Loan Agreement, dated as of June 29, 2004, by and among Universal
Truckload Services, Inc., Universal Am-Can, Ltd., The Mason and Dixon Lines, Inc.,
Mason-Dixon Intermodal, Inc., Economy Transport, Inc., Louisiana Transportation, Inc. and
First Tennessee Bank National Association (Incorporated by reference to Exhibit 10.8 to the
Registrants Registration Statement on Form S-1 filed on November 15, 2004 (Commission File
No. 333-120510))10.9
    
    Second Amendment to Security Agreement, dated as of June 29, 2004, by and between Universal
Am-Can, Ltd. and First Tennessee Bank National Association (Incorporated by reference to
Exhibit 10.9 to the Registrants Registration Statement on Form S-1 filed on November 15,
2004 (Commission File No. 333-120510))10.10
    
    Second Amendment to Security Agreement, dated as of June 29, 2004, by and between The Mason
and Dixon Lines, Inc. and First Tennessee Bank National Association (Incorporated by
reference to Exhibit 10.10 to the Registrants Registration Statement on Form S-1 filed on
November 15, 2004 (Commission File No. 333-120510))10.11
    
    First Amendment to Security Agreement, dated as of June 29, 2004, by and between Mason
Dixon Intermodal, Inc. and First Tennessee Bank National Association (Incorporated by
reference to Exhibit 10.11 to the Registrants Registration Statement on Form S-1 filed on
November 15, 2004 (Commission File No. 333-120510))10.12
    
    Security Agreement, dated as of June 29, 2004, by and between Economy Transport, Inc. and
First
 26




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##### Table of Contents



Tennessee Bank National Association (Incorporated by reference to Exhibit 10.12 to
the Registrants Registration Statement on Form S-1 filed on January 7, 2005 (Commission
File No. 333-120510))10.13
    
    Security Agreement, dated as of June 29, 2004, by and between Louisiana Transportation, Inc.
and First Tennessee Bank National Association (Incorporated by reference to Exhibit 10.13
to the Registrants Registration Statement on Form S-1 filed on November 15, 2004
(Commission File No. 333-120510))10.14
    
    Tax Separation Agreement, dated as of December 31, 2004, between CenTra, Inc. and the
Registrant (Incorporated by reference to Exhibit 10.14 to the Registrants Registration
Statement on Form S-1 filed on January 7, 2005 (Commission File No. 333-120510))10.15
    
    Transitional Services Agreement, dated as of December 31, 2004, between the Registrant and
CenTra, Inc. (Incorporated by reference to Exhibit 10.15 to the Registrants Registration
Statement on Form S-1 filed on January 7, 2005 (Commission File No. 333-120510))10.16
    
    Fourth Amendment to Loan Agreement, dated as of December 27, 2004, by and among Universal
Truckload Services, Inc., Universal Am-Can, Ltd., The Mason and Dixon Lines, Inc., Mason
Dixon Intermodal, Inc., Economy Transport, Inc., Louisiana Transportation, Inc., Great
American Logistics, Inc. and First Tennessee Bank National Association (Incorporated by
reference to Exhibit 10.16 to the Registrants Registration Statement on Form S-1 filed on
January 7, 2005 (Commission File No. 333-120510))10.17
    
    Debt Subordination Agreement, dated as of December 27, 2004, by and among CenTra, Inc.,
Universal Truckload Services, Inc., and First Tennessee Bank National Association
(Incorporated by reference to Exhibit 10.17 to the Registrants Registration Statement on
Form S-1 filed on January 7, 2005 (Commission File No. 333-120510))10.18+
    
    Universal Truckload Services, Inc. Incentive Compensation Plan C, Calendar Years 2004 
2006 (Incorporated by reference to Exhibit 10.18 to the Registrants Annual Report on Form
10-K filed on March 30, 2005 (Commission File No. 000-51142))10.19+
    
    Amendment No. 1, dated September 28, 2005, to Consulting Agreement dated August 12,
2004 between Universal Am-Can, Ltd. and Angelo A. Fonzi. (Incorporated by reference to
Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on September 30, 2004
(Commission File No. 000-51142))10.20*
    
    Fifth Amendment to Loan Agreement, dated as of August 31, 2005, by and among Universal
Truckload Services, Inc., Universal Am-Can, Ltd., The Mason and Dixon Lines, Inc., Mason
Dixon Intermodal, Inc., Economy Transport, Inc., Louisiana Transportation, Inc., Great
American Lines, Inc., Great American Logistics, Inc. and First Tennessee Bank National
Association10.21*
    
    Fourth Amendment to Security Agreement, dated as of August 31, 2005, by and between
Universal Am-Can, Ltd. and First Tennessee Bank National Association10.22*
    
    Fourth Amendment to Security Agreement, dated as of August 31, 2005, by and between The
Mason and Dixon Lines, Inc. and First Tennessee Bank National31.1*
    
    Chief Executive Officer certification, as adopted pursuant to section 302 of the
Sarbanes-Oxley Act of 200231.2*
    
    Chief Financial Officer certification, as adopted pursuant to section 302 of the
Sarbanes-Oxley Act of 200232.1**
    
    Chief Executive Officer and Chief Financial Officer certification pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    Filed herewith.**
    
    Furnished herewith+
    
    Indicates a management contract, compensatory plan or arrangement. 27