UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
TRANSITION REPORT PURSANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-20797
RUSH ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Texas
74-1733016
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
555 IH 35 South, New Braunfels, TX
(Address of principal executive offices)
78130
(Zip Code)
Registrant’s telephone number, including area code: (830) 302-5200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A Common Stock, $0.01 par value
Class B Common Stock, $0.01 par value
RUSHA
RUSHB
NASDAQ Global Select Market
NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes
No
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
No
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files).
Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller Reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark if the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
No
The aggregate market value of common stock held by non-affiliates of the registrant as of June 30, 2020 was approximately
$1,308,563,538 based upon the last sales price on June 30, 2020 on The NASDAQ Global Select MarketSM of $27.64 for the registrant’s
Class A Common Stock and $23.77 for the registrant’s Class B Common Stock. Shares of Common Stock held by each executive officer
and director and by each shareholder affiliated with a director or an executive officer have been excluded from this calculation because
such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other
purposes.
The registrant had 42,677,577 shares Class A Common Stock and 12,397,082 shares of Class B Common Stock outstanding on
February 16, 2021.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of registrant’s definitive proxy statement for the registrant’s 2021 Annual Meeting of Shareholders, to be filed with the
Securities and Exchange Commission not later than 120 days after December 31, 2020, are incorporated by reference into Part
III of this Form 10-K.
RUSH ENTERPRISES, INC.
Index to Form 10-K
Year ended December 31, 2020
Item 1
Item 1A
Item 1B
Item 2
Item 3
Item 4
Item 5
Item 6
Item 7
Item 7A
Item 8
Item 9
Item 9A
Item 9B
Item 10
Item 11
Item 12
Item 13
Item 14
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Part I
Part II
Market for Registrant’s Common Equity, Related Shareholder Matters
and Issuer Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results
of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Controls and Procedures
Other Information
Part III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management
and Related Shareholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Item 15
Item 16
Exhibits, Financial Statement Schedules
Form 10-K Summary
Part IV
Page No.
1
18
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27
27
27
28
30
31
44
45
78
78
80
80
80
80
80
80
81
84
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Form 10-K (or otherwise made by the Company or on the Company’s behalf
from time to time in other reports, filings with the Securities and Exchange Commission (“SEC”), news releases,
conferences, website postings or otherwise) that are not statements of historical fact constitute “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities
Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act of 1934, as amended (the
“Exchange Act”), notwithstanding that such statements are not specifically identified. Forward-looking statements
include statements about the Company’s financial position, business strategy and plans and objectives of
management of the Company for future operations. These forward-looking statements reflect the best judgments of
the Company about the future events and trends based on the beliefs of the Company’s management as well as
assumptions made by and information currently available to the Company’s management. Use of the words “may,”
“should,” “continue,” “plan,” “potential,” “anticipate,” “believe,” “estimate,” “expect” and “intend” and words
or phrases of similar import, as they relate to the Company or its subsidiaries or Company management, are
intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
Forward-looking statements reflect our current view of the Company with respect to future events and are subject
to risks and uncertainties that could cause actual results to differ materially from those in such statements. Please
read Item 1A. “Risk Factors” for a discussion of certain of those risks. Other unknown or unpredictable factors
could also have a material adverse effect on future results. Although the Company believes that its expectations are
reasonable as of the date of this Form 10-K, it can give no assurance that such expectations will prove to be correct.
The Company does not intend to update or revise any forward-looking statements unless securities laws require it
to do so, and the Company undertakes no obligation to publicly release any revisions to forward-looking statements,
whether because of new information, future events or otherwise.
NOTE REGARDING TRADEMARKS COMMONLY USED IN THE COMPANY’S FILINGS
Peterbilt® is a registered trademark of Peterbilt Motors Company. PACCAR® is a registered trademark of PACCAR,
Inc. PacLease® is a registered trademark of PACCAR Leasing Corporation. Navistar® is a registered trademark
of Navistar International Corporation. International® is a registered trademark of Navistar International
Transportation Corp. Idealease is a registered trademark of Idealease, Inc. aka Idealease of North America, Inc.
Blue Bird® is a registered trademark of Blue Bird Investment Corporation. IC Bus® is a registered trademark of IC
Bus, LLC. Hino® is a registered trademark of Hino Motors, Ltd. Isuzu® is a registered trademark of Isuzu Motors
Limited. Ford Motor Credit Company® is a registered trademark of Ford Motor Company. Ford® is a registered
trademark of Ford Motor Company. SAP® is a registered trademark of SAP Aktiengesellschaft. This report contains
additional trade names or trademarks of other companies. Our use of such trade names or trademarks should not
imply any endorsement or relationship with such companies.
Item 1. Business
PART I
References herein to “the Company,” “Rush Enterprises,” “we,” “our” or “us” mean Rush Enterprises, Inc.,
a Texas corporation, and its subsidiaries unless the context requires otherwise.
Access to Company Information
We electronically file annual reports, quarterly reports, proxy statements and other reports and information
statements with the SEC. You may read and copy any of the materials that we have filed with the SEC at the SEC’s
Public Reference Room at 100 F Street NE, Washington, DC 20549. You may obtain information about the Public
Reference Room by calling the SEC at 1-800-SEC-0330. Our filings are also available to you on the SEC’s website
at www.sec.gov.
We make certain of our SEC filings available, free of charge, through our website, including annual reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to these reports.
These filings are available as soon as reasonably practicable after such material is electronically filed with, or
furnished to, the SEC. Our website address is www.rushenterprises.com. The information contained on our website,
or on other websites linked to our website, is not incorporated into this report or otherwise made part of this report.
4
General
Rush Enterprises, Inc. was incorporated in Texas in 1965 and consists of one reportable segment, the Truck
Segment, and conducts business through its subsidiaries. Our principal offices are located at 555 IH 35 South, Suite
500, New Braunfels, Texas 78130.
We are a full-service, integrated retailer of commercial vehicles and related services. The Truck Segment
includes the Company’s operation of a network of commercial vehicle dealerships under the name “Rush Truck
Centers.” Rush Truck Centers primarily sell commercial vehicles manufactured by Peterbilt, International, Hino,
Ford, Isuzu, IC Bus or Blue Bird. Through our strategically located network of Rush Truck Centers, we provide
one-stop service for the needs of our commercial vehicle customers, including retail sales of new and used
commercial vehicles, aftermarket parts sales, service and repair facilities, financing, leasing and rental, and insurance
products.
Our Rush Truck Centers are principally located in high traffic areas throughout the United States. Since
commencing operations as a Peterbilt heavy-duty truck dealer in 1966, we have grown to operate over 100 Rush
Truck Centers in 22 states. In 2019, we purchased a 50% equity interest in an entity in Canada, Rush Truck Centres
of Canada Limited (“RTC Canada”), which currently owns and operates 14 International locations in Ontario,
Canada.
Our business strategy consists of providing solutions to the commercial vehicle industry through our
network of commercial vehicle dealerships. We offer an integrated approach to meeting customer needs by providing
service, parts and collision repairs in addition to new and used commercial vehicle sales and leasing, plus financial
services, vehicle upfitting, CNG fuel systems and vehicle telematics products. We intend to continue to implement
our business strategy, reinforce customer loyalty and remain a market leader by continuing to develop our Rush
Truck Centers as we expand our product offerings and extend our dealership network through strategic acquisitions
of new locations and opening new dealerships in existing areas of operations to enable us to better serve our
customers.
Rush Truck Centers. Our Rush Truck Centers are located in Alabama, Arizona, California, Colorado,
Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Missouri, Nevada, New Mexico, North Carolina, Ohio,
Oklahoma, Pennsylvania, Tennessee, Texas, Utah and Virginia. The following chart reflects our franchises and
parts, service and collision repair operations by location as of February 15, 2021:
Rush Truck Center Location Commercial Vehicle Franchise(s)
Alabama
Birmingham
Mobile
Arizona
Flagstaff
Phoenix
Phoenix East
Tucson
Yuma
California
Fontana Heavy-Duty
Fontana Medium-Duty
Fontana Vocational
Long Beach
Ceres
Pico Rivera
San Diego
Sylmar
Whittier
None
Peterbilt
Peterbilt
Peterbilt, Hino
Peterbilt
Peterbilt, Hino
Peterbilt
Peterbilt
Peterbilt, Hino, Isuzu
None
Peterbilt
Ford
Peterbilt
Peterbilt, Hino, Ford
Peterbilt
Ford, Isuzu
5
Truck
Sales
Parts
and
Service
Collision
Center
Yes
Yes
No
Yes
No
Yes
Yes
Yes
Yes
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
No
Yes
No
No
No
Yes
No
No
No
No
Yes
No
No
No
Rush Truck Center Location
Commercial Vehicle Franchise(s)
Truck
Sales
Parts
and
Service
Collision
Center
Colorado
Colorado Springs
Denver
Greeley
Pueblo
Florida
Haines City
Jacksonville
Jacksonville East
Lake City
Miami
Orlando Heavy-Duty
Orlando Light & Medium-Duty
Orlando North
Orlando South
Tampa
Georgia
Atlanta
Atlanta Bus Center
Augusta
Columbus
Doraville
Gainesville
Macon
Smyrna
Tifton
Valdosta
Idaho
Boise
Idaho Falls
Lewiston
Twin Falls
Illinois
Bloomington
Carol Stream
Champaign
Chicago
Effingham
Huntley
Joliet
Quincy
Springfield
Indiana
Gary
Indianapolis
Kansas
Kansas City
Kentucky
Bowling Green
Missouri
St. Peters
St. Louis
Nevada
Las Vegas
New Mexico
Albuquerque
Farmington
Las Cruces
Peterbilt
Peterbilt, Ford, Isuzu
Peterbilt
Peterbilt
Peterbilt
Peterbilt, Hino
Peterbilt
Peterbilt
None
Peterbilt, Isuzu
Ford
Isuzu
Isuzu
Peterbilt
International, Hino, Isuzu, IC Bus
IC Bus
International, IC Bus
International, Isuzu, IC Bus
International, Hino, Isuzu, IC Bus
International, IC Bus
International
International, Hino, Isuzu, IC Bus
International, IC Bus
International
International, Hino, IC Bus
International, IC Bus
International
International
International, Hino
International
International
International
International
International
International
International
International
International
International
Hino, Isuzu
Peterbilt
International
International
Peterbilt
Peterbilt
Peterbilt
Peterbilt
6
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
No
No
Yes
No
No
No
No
No
No
No
No
No
No
Yes
No
No
No
No
No
No
No
No
Yes
Yes
No
No
No
No
Yes
Yes
Yes
No
No
No
Yes
No
Yes
No
No
No
No
No
Yes
No
No
Rush Truck Center Location
Commercial Vehicle Franchise(s)
Truck
Sales
Parts
and
Service
Collision
Center
North Carolina
Asheville
Charlotte
Hickory
Ohio
Akron
Cincinnati
Cleveland
Columbus
Dayton
Lima
Oklahoma
Ardmore
Oklahoma City
Tulsa
Pennsylvania
Greencastle
Tennessee
Memphis
Nashville
Texas
Abilene
Amarillo
Arlington
Austin
Austin North
Beaumont
Brownsville
College Station
Corpus Christi
Cotulla
Dalhart
Dallas Heavy-Duty
Dallas Medium-Duty
Dallas Light & Medium-Duty
Dallas South
El Paso
Fort Worth
Houston
Houston Medium-Duty
Laredo
Lubbock
Lufkin
Odessa
Pharr
International
International, Hino, Isuzu
International
International, IC Bus
International, IC Bus, Isuzu, Ford
International, IC Bus
International, IC Bus, Isuzu(1)
International, IC Bus, Isuzu
International, IC Bus
Peterbilt
Peterbilt, Hino, Ford, Isuzu
Peterbilt, Hino
None
None
Peterbilt
Peterbilt
Peterbilt
Peterbilt, Blue Bird, Micro Bird,
Elkhart
Peterbilt, Hino, Isuzu, Blue Bird, Micro
Bird, Elkhart
Peterbilt
Peterbilt
Peterbilt, Elkhart
Peterbilt
Peterbilt, Hino, Isuzu, Blue Bird,
Elkhart
Peterbilt
Peterbilt
Peterbilt, Blue Bird, Micro Bird,
Elkhart
Peterbilt, Hino,
Blue Bird, Micro Bird, Elkhart
Ford, Isuzu
Peterbilt
Peterbilt, Hino, Isuzu
Peterbilt, Blue Bird, Micro Bird,
Elkhart
Peterbilt, Hino, Blue Bird, Micro Bird,
Elkhart
Peterbilt, Hino
Peterbilt, Blue Bird, Micro Bird,
Elkhart
Peterbilt
Peterbilt, Blue Bird, Micro Bird,
Elkhart
Peterbilt
Peterbilt, Hino, Blue Bird, Micro Bird,
Elkhart
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
No
No
Yes
No
No
No
No
No
Yes
Yes
No
No
Yes
No
No
No
No
No
No
No
No
No
No
No
Yes
No
No
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
(1) Our Isuzu franchise is operated out of our Rush Truck Leasing - Columbus location.
7
Rush Truck Center Location
San Antonio
Sealy
Texarkana
Tyler
Victoria
Waco
Utah
Ogden
Salt Lake City
Springville
St. George
Virginia
Chester
Richmond
Commercial Vehicle Franchise(s)
Peterbilt, Hino, Blue Bird, Micro Bird,
Elkhart
Peterbilt, Isuzu, Blue Bird, Micro Bird,
Elkhart
Peterbilt, Hino, Isuzu,
Blue Bird, Micro Bird, Elkhart
Peterbilt, Blue Bird, Micro Bird,
Elkhart
Peterbilt
Peterbilt, Hino, Isuzu,
Blue Bird, Micro Bird, Elkhart
International, IC Bus
International, IC Bus
International
International
International, Hino
International
Truck
Sales
Yes
Parts
and
Service
Yes
Collision
Center
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
No
No
No
Yes
No
No
No
Yes
Leasing and Rental Services. Through certain of our Rush Truck Centers and several stand-alone Rush
Truck Leasing locations, we provide a broad line of product selections for lease or rent, including Class 4 through
Class 8 commercial vehicles, heavy-duty cranes and refuse vehicles. Our lease and rental fleets are offered to
customers on a daily, monthly or long-term basis. Substantially all of our long-term leases also contain a service
provision, whereby we agree to service the vehicle through the life of the lease. The following chart reflects our
leasing franchises by location:
Rush Truck Leasing
Location
Franchise
Standalone or in a
Rush Truck Center
Alabama
Birmingham
Arizona
Phoenix
California
Fontana
Pico Rivera
San Diego
Sylmar
Colorado
Denver
Florida
Orlando
Tampa
Jacksonville
Georgia
Macon
Idaho
Boise
Idaho Falls
Illinois
Carol Stream
Chicago
Effingham
Huntley
Joliet
Springfield
PacLease
In RTC
PacLease
Standalone
PacLease
PacLease
PacLease
PacLease
Standalone
Standalone
Standalone
In RTC
PacLease
Standalone
Standalone
In RTC
Standalone
In RTC
In RTC
In RTC
In RTC
In RTC
In RTC
In RTC
In RTC
In RTC
PacLease
PacLease
PacLease
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
8
Rush Truck Leasing
Location
Indiana
Indianapolis
Gary
Missouri
St. Louis
St. Peters
New Mexico
Albuquerque
Nevada
Las Vegas
North Carolina
Charlotte
Ohio
Cincinnati
Cleveland
Columbus
Dayton
Oklahoma
Oklahoma City
Tennessee
Nashville
Texas
Austin
El Paso
Arlington
Houston
Houston NW
Odessa
San Antonio
Tyler
Virginia
Richmond
Norfolk
Utah
Salt Lake City
Franchise
Idealease
Idealease
Idealease
Idealease
Standalone or in a
Rush Truck Center
In RTC
In RTC
In RTC
In RTC
PacLease
Standalone
PacLease
Standalone
Idealease
Idealease
Idealease
Idealease
Idealease
PacLease
PacLease
PacLease
PacLease
PacLease
PacLease
PacLease
PacLease
PacLease
PacLease
Idealease
Idealease
Standalone
Standalone
Standalone
Standalone
In RTC
In RTC
In RTC
Standalone
In RTC
In RTC
Standalone
In RTC
Standalone
In RTC
Standalone
Standalone
Standalone
Idealease
Standalone
In addition to the locations in the above table, Rush Truck Leasing also provides full-service maintenance
on customers’ vehicles at several of our customers’ facilities.
Financial and Insurance Products. At our Rush Truck Centers, we offer third-party financing to assist
customers in purchasing new and used commercial vehicles. Additionally, we sell, as agent through our insurance
agency, a complete line of property and casualty insurance, including collision and liability insurance on commercial
vehicles, cargo insurance and credit life insurance.
Other Businesses. Perfection Equipment offers installation of equipment, equipment repair, parts
installation, and paint and body repair at our location in Oklahoma City. Perfection Equipment specializes in up-
fitting trucks used by oilfield service providers and other specialized service providers.
Momentum Fuel Technologies manufactures compressed natural gas fuel systems and related component
parts for commercial vehicles at its facility in Roanoke, Texas.
Custom Vehicle Solutions operates at locations in Denton, Texas and Greencastle, Pennsylvania. Custom
Vehicle Solutions provides new vehicle pre-delivery inspections, truck modifications, natural gas fuel system
installations, body and chassis upfitting and component installation.
The House of Trucks operates at locations in Miami, Florida, Dallas, Texas and Chicago, Illinois. The
House of Trucks sells used commercial vehicles, new and used trailers and offers third-party financing and insurance
products.
9
World Wide Tires stores operate in two locations in Texas. World Wide Tires primarily sells tires for use
on commercial vehicles.
Industry
See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of
Operations – Industry” for a description of our industry and the markets in which we operate.
Our Business Strategy
Operating Strategy. Our strategy is to operate an integrated nationwide dealership network that provides
service solutions to the commercial vehicle industry. Our strategy includes the following key elements:
Management by Dealership Units. At each of our dealerships, we operate one or more of the following
departments: new commercial vehicle sales, used commercial vehicle sales, financial services, parts,
service or a collision center. Our general managers measure and manage the operations of each
dealership according to the specific departments operating at that location. We believe that this system
enhances the profitability of all aspects of a dealership and increases our overall operating margins.
Operating goals for each department at each of our dealerships are established annually and managers
are rewarded for performance relative to these goals.
One-Stop Centers. We have developed our larger commercial vehicle dealerships as “one-stop centers”
that offer an integrated approach to meeting customer needs. We provide service, including collision
repairs, parts, new and used commercial vehicles sales, leasing and rental, plus financial services
including finance and insurance. We believe that this full-service strategy helps to mitigate cyclical
economic fluctuations because our parts, service and collision center operations (referred to herein
collectively as “Aftermarket Products and Services”) at our dealerships generally tend to be less
volatile than our new and used commercial vehicle sales.
Aftermarket Products and Services. Our aftermarket capabilities include a wide range of services and
products, including a fleet of mobile service units, mobile technicians who work in our customers’
facilities, technology solutions, including vehicle telematics support, a proprietary line of parts and
accessories, and factory-certified service for assembly services for specialized bodies and equipment.
We believe that offering a variety of Aftermarket Products and Services at our dealerships and other
locations allows us to meet the expanding needs of our customers. We continually strive to leverage
our dealership network to offer more products and services to our customers.
Branding Program. We employ a branding program at all of our dealerships through distinctive signage
and uniform marketing programs to take advantage of our existing name recognition and to
communicate the standardized high quality of our products and reliability of our services throughout
our dealership network.
Growth Strategy. Through our strategic expansion and acquisition initiatives, we have grown to operate a
large, multistate, full-service network of commercial vehicle dealerships. We also own a 50% equity interest in RTC
Canada that owns and operates 14 International locations in Ontario, Canada. We have an option to purchase the
remaining 50% through February 25, 2024. As described below, we intend to continue to grow our business by
expanding our product and service offerings, through acquisitions in new geographic areas and by opening new
locations to enable us to better serve our customers.
Expansion of Product and Service Offerings. We intend to continue to expand our product lines within
our existing locations by adding product categories and service capabilities that are both
complementary to our existing product lines and well suited to our operating model. We will continue
to take advantage of technological advances that will provide us with the opportunity to offer vehicle
owners more aftermarket options and the ability to maximize the performance of vehicles in their fleets
using telematics and other technologies.
Expansion Into New Geographic Areas. We plan to continue to expand our dealership network by
acquiring existing dealerships or opening new locations in areas where we do not already have
10
locations. We believe the geographic diversity of our Rush Truck Center network has significantly
expanded our customer base while reducing the effects of local economic cycles.
Open New Rush Truck Centers in Existing Areas of Operation. We continually evaluate opportunities
to increase our market presence by adding new Rush Truck Centers within our current franchises’ areas
of operation.
Management of Our Dealerships
Rush Truck Centers
Our Rush Truck Centers are responsible for sales of new and used commercial vehicles, as well as related
parts and services.
Aftermarket Products and Services. Revenues from Aftermarket Products and Services accounted for
approximately $1,600.5 million, or 33.8%, of our total revenues for 2020, and 66.7% of our gross profit. Rush Truck
Centers carry a wide variety of commercial vehicle parts in inventory. Certain Rush Truck Centers also feature fully
equipped service and collision center facilities, the combination and configuration of which varies by location,
capable of handling a broad range of repairs on most commercial vehicles. Each Rush Truck Center with a service
department is a warranty service center for the commercial vehicle manufacturers represented at that location, if any,
and most are also authorized service centers for other vehicle component manufacturers, including Cummins, Eaton,
Caterpillar and Allison. We also have mobile service technicians and technicians who staff our customers’ facilities
upon request.
Our service departments perform warranty and non-warranty repairs on commercial vehicles. The cost of
warranty work is generally reimbursed by the applicable manufacturer at retail commercial rates. Warranty-related
parts and service revenues accounted for approximately $127.1 million, or 2.7%, of our total revenues for 2020.
Additionally, we provide a wide array of services, including assembly services for specialized commercial vehicle
bodies and commercial vehicle mounted equipment. Our goal is to provide our customers with any service that they
need related to their commercial vehicles.
As part of our leasing and rental operations, we also enter into contracts to provide full-service maintenance
on certain customers’ vehicles. We had 1,407 vehicles under contract maintenance as of December 31, 2020. The
full-service maintenance revenues and retail service revenues are included as Aftermarket Products and Services
revenues on our Consolidated Statements of Income.
New Commercial Vehicle Sales. New commercial vehicle sales represent the largest portion of our
revenues, accounting for approximately $2,571.8 million, or 54.3%, of our total revenues in 2020. Of this total, new
Class 8 heavy-duty truck sales accounted for approximately $1,587.9 million, or 33.5%, of our total revenues for
2020, and 61.7% of our new commercial vehicle revenues for 2020.
Our Rush Truck Centers that sell new and used Class 8 heavy-duty trucks manufactured by Peterbilt or
International may also sell medium-duty and light-duty commercial vehicles. Certain Rush Truck Centers sell
medium-duty commercial vehicles manufactured by Peterbilt, Hino, Isuzu, Ford, or International, buses
manufactured by Blue Bird, IC Bus or Elkhart and light-duty commercial vehicles manufactured by Ford (see Part
I, Item 1, “General – Rush Truck Centers” for information on which brands we sell at each Rush Truck Center).
New medium-duty commercial vehicle sales, excluding new bus sales, accounted for approximately $811.4 million,
or 17.1%, of our total revenues for 2020, and 31.5% of our new commercial vehicle revenues for 2020. New light-
duty commercial vehicle sales accounted for approximately $50.1 million, or 1.1%, of our total revenues for 2020,
and 1.9% of our new commercial vehicle revenues for 2020. New bus sales accounted for approximately
$108.3 million, or 2.3%, of our total revenues for 2020, and 4.2% of our new commercial vehicle revenues for 2020.
A significant portion of our new commercial vehicle sales are to customers with large fleets of commercial
vehicles. Because of the size and geographic scope of our Rush Truck Center network, our strong relationships with
our fleet customers and our ability to manage large quantities of used commercial vehicle trade-ins, we are able to
successfully market and sell to fleet customers nationwide. We believe that we have a competitive advantage over
many dealerships because we can absorb multi-unit trade-ins often associated with fleet sales and effectively disperse
the used commercial vehicles for resale throughout our dealership network. We believe that the broad range of
11
products and services we offer to purchasers of commercial vehicles at the time of purchase and post-purchase results
in a high level of customer loyalty.
Used Commercial Vehicle Sales. Used commercial vehicle sales accounted for approximately
$291.5 million, or 6.2%, of our total revenues for 2020. We sell used commercial vehicles at most of our Rush
Truck Centers and also at our non-franchised used commercial vehicle facilities. We believe that we are well
positioned to market used commercial vehicles due to our ability to recondition them for resale utilizing the service
and collision center departments of our Rush Truck Centers and our ability to move used commercial vehicles
between our dealerships as customer demand warrants. The majority of our used commercial vehicle inventory
consists of commercial vehicles taken as trade-ins from new commercial vehicle customers or retired from our lease
and rental fleet, but we also supplement our used commercial vehicle inventory by purchasing used commercial
vehicles from third parties for resale, as market conditions warrant.
Vehicle Leasing and Rental. Vehicle leasing and rental revenues accounted for approximately
$236.2 million, or 5.0%, of our total revenues for 2020. At our Rush Truck Leasing locations, we engage in full-
service commercial vehicle leasing through PacLease and Idealease. Rental vehicles are also generally serviced at
our facilities. We had 8,104 vehicles in our lease and rental fleet, including cranes, as of December 31, 2020.
Generally, we sell commercial vehicles that have been retired from our lease and rental fleet through our used
commercial vehicles sales operations. Historically, we have realized gains on the sale of used lease and rental
commercial vehicles.
New and Used Commercial Vehicle Financing and Insurance. The sale of financial and insurance products
accounted for approximately $21.9 million, or 0.5%, of our total revenues for 2020. Finance and insurance revenues
have minimal direct costs and therefore, contribute a disproportionate share to our operating profits.
Many of our Rush Truck Centers have personnel responsible for arranging third-party financing for our
product offerings. Generally, commercial vehicle finance contracts involve an installment contract, which is secured
by the commercial vehicle financed and requires a down payment, with the remaining balance generally financed
over a two-year to seven-year period. The majority of these finance contracts are sold to third parties without recourse
to us. We provide an allowance for repossession losses and early repayment penalties that we may incur under these
finance contracts.
We sell, as agent, a complete line of property and casualty insurance to commercial vehicle owners. Our
agency, which operates at locations around the United States outside of our Rush Truck Centers, is licensed to sell
commercial vehicle liability, collision and comprehensive, workers’ compensation, cargo, and credit life insurance
coverage offered by a number of leading insurance companies. Our renewal rate in 2020 was approximately 79%.
We also have licensed insurance agents at several Rush Truck Centers.
Human Capital Management
On December 31, 2020, the company employed 6,307 people. Of these employees, less than 1% of the
workforce was classified as part-time. We do not regularly use independent contractors in our business operations.
We strive to provide our employees with the security of long-term employment, competitive compensation and
benefits and opportunities to improve their skills and advance within the Company.
Core Values. Our core values define our culture and reflect who we are and the way we interact with our
customers, suppliers, co-workers and shareholders. Our core values are Productivity, Fairness, Excellence and
Positive Attitude.
Productivity means constantly striving toward efficiency and success in all interactions and activities while
working with a common purpose and sense of urgency.
Fairness characterizes our honesty, integrity, truthfulness, dependability and reliability in everything we
do.
Excellence means doing it better than everyone else does. Excellence is reflected in our first-class facilities,
quality products and services, motivated and talented employees, superior results for the customer and
consistency throughout our organization.
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Positive Attitude means approaching every day with excitement and passion for the work and dedication to
our customers with positive intensity.
Each of these core values is embodied in our code of conduct, which we call our Rush Driving Principles.
Employees are required to train and certify to these Rush Driving Principles annually. We believe that our core
values are the foundation of a strong culture that is a strength for us, and we intend to continue building upon that
culture to improve performance across our business.
Employee Recruitment. We strive to attract the best talent from a variety of sources to meet the current and
future needs of our business. We have established relationships with multiple trade schools and universities across
the country, which we utilize as a source for entry-level talent. Additionally, we believe it is incumbent upon all our
managers to continuously monitor their local markets for experienced individuals who might be successful additions
to our organization.
Compensation Programs and Employee Benefits. Our compensation programs are designed to provide a
compensation package that will attract, retain, motivate and reward employees who must operate in a highly
competitive, fast-paced environment. In general, our compensation programs consist of a base salary or hourly rate,
commissions for employees in front-line customer facing roles, cash performance bonuses for certain employees,
equity incentive awards for senior leaders, vacation leave, sick leave and other forms of paid time off.
We are committed to fair pay. In 2020, the Company established a minimum hourly wage of $15.00 an
hour. Our employees receive a base level of monthly or hourly compensation that we believe is commensurate with
their expertise, skills, knowledge and experience.
We provide our full-time employees with comprehensive benefit options that allow our employees and their
families to live healthier and more secure lives. Some examples of our wide-ranging benefits offered are: Medical
insurance, prescription drug benefits, dental insurance, vision insurance, hospital indemnity insurance, accident
insurance, critical illness insurance, smoking cessation assistance program, life insurance, disability insurance, health
savings accounts and flexible spending accounts.
Training and Development. Our training and development programs are designed to facilitate the
development and advancement of talent from within our organization to ensure we continuously fill our ranks with
qualified employees for critical positions in the organization. Members of our Learning and Development team
collaborate with employees from our various operations teams to identify our strategic training needs and prioritize
the development of appropriate training content.
Our Rush Foundational Leader Program is focused on developing key management and leadership skills.
The Rush Foundational Leader Program consists of a series of courses ranging from basic management skills to
more advanced leadership concepts and skills that are designed for managers throughout our organization. We also
have a New Graduate Management Trainee Program that identifies and recruits new talent from universities across
the country and provides on-the-job training for them to fill various roles within our dealership network. Employees
in the New Graduate Management Trainee Program work as full-time employees for three, two-month periods at a
Rush Truck Center. Program participants gain experience in the areas of new and used vehicle sales, parts operations
and service operations to provide them with a working knowledge of all aspects of our dealership operations. When
participants complete the New Graduate Management Trainee Program, they are equipped with the knowledge
needed to contribute to the successful operations of our dealerships.
To enhance and develop the technical skills of entry-level service and body shop technicians to increase
their likelihood of success in their chosen careers, we established a formal mentorship program lead by experienced
service and body shop technicians who serve as mentors to newly hired, entry level service and body shop
technicians. This formal mentorship program also helps us identify top performers and we believe it improves
employee performance and retention for participants in the program.
Ethics and Compliance. We are committed to the highest standards of corporate conduct. We maintain an
Ethics and Compliance Program that is designed to meet external requirements, as well as our core values and code
of conduct embodied in the Rush Driving Principles. A central component of our Ethics and Compliance Program
is the continuous training and education of our employees on general ethics and compliance training topics. We also
regularly reinforce our commitment to ethics and integrity in communications with our employees.
13
Employee Engagement and Retention. We conduct an annual comprehensive employee engagement survey
designed to measure organizational culture and engagement. The purpose of the survey is to monitor overall
employee engagement with the goal of identifying actions that can be taken to continuously improve our employee
engagement and lead to increased employee retention. Data collected in each annual employee engagement survey
is maintained and used to track our progress against our internal goals.
Management continually monitors employee turnover data, which is supplemented with additional data
from exit surveys to assist in determining the reasons for voluntary employee terminations. In 2020, our overall
turnover rate was 42.62%, which is significantly higher than normal because of involuntary reductions in our
workforce that were made at the onset of the COVID-19 pandemic. The turnover rate of our service and body shop
technicians is also monitored closely by management, as the retention of skilled service and body shop technicians
is critical to the success of the Company. Demand for service and body shop technicians across the country is very
high, and turnover in this role is also traditionally high for commercial vehicle dealers. In 2020, our turnover rate
for service and body shop technicians was 39.24%.
Health and Safety. Promoting a safe and healthy workplace is our highest priority and is embodied in our
core values. We utilize a mixture of leading and lagging indicators to assess the health and safety performance of
our operations. Lagging indicators include the OSHA Total Recordable Incident Rate ("TRIR") and the Lost Time
(or Lost Workday) Incident Rate ("LTIR") based upon the number of incidents per 100 employees (or per 200,000
work hours). Leading indicators include training completion rates, tracking of local safety committee meeting
minutes, and recording of near misses, as well as other proactive actions taken to ensure employee safety. In 2020,
we had a TRIR of 4.44, a LTIR of 0.41.
Refer to “The COVID-19 Pandemic and Its Impact on Our Business" included in Item 7, "Management’s
Discussion and Analysis of Financial Condition and Results of Operations" for information on Human Capital
Management actions taken by the Company in response to the COVID-19 pandemic.
Labor Relations. We have entered into collective bargaining agreements covering certain employees in
Chicago, Illinois, which will expire on May 8, 2021, Joliet, Illinois, which will expire on May 7, 2022 and Carol
Stream, Illinois, which will expire on May 6, 2023. There have been no strikes, work stoppages or slowdowns during
the negotiations of the foregoing collective bargaining agreements or at any time in the Company’s history, although
no assurances can be given that such actions will not occur. We believe that our relations with the labor unions that
represent these employees are generally good.
Sales and Marketing
Our established history of operations in the commercial vehicle business has resulted in a strong customer
base that is diverse in terms of geography, industry and scale of operations. Our customers include regional and
national truck fleets, corporations, local and state governments and owner-operators. During 2020, no single
customer accounted for more than 10% of our sales by dollar volume. We generally promote our products and
related services through direct customer contact by our sales personnel and advertising.
Facility Management
Personnel. Each of our facilities is typically managed by a general manager who oversees the operations,
personnel and the financial performance of the location, subject to the direction of a regional manager and personnel
at our corporate headquarters. Additionally, each full-service Rush Truck Center is typically staffed by department
managers, sales representatives and other employees, as appropriate, given the services offered. The sales staff of
each Rush Truck Center is compensated on a salary plus commission, or a commission only basis, while department
managers receive a combination of salary and performance bonus. We believe that our employees are among the
highest paid in the industry, which enables us to attract and retain qualified personnel.
Compliance with Policies and Procedures. Each Rush Truck Center is audited regularly for compliance
with corporate policies and procedures. These internal audits objectively measure dealership performance with
respect to corporate expectations in the management and administration of sales, commercial vehicle inventory, parts
inventory, parts sales, service sales, collision center sales, corporate policy compliance and environmental and safety
compliance matters.
Purchasing and Suppliers. Because of our size, we benefit from volume purchases at favorable prices that
permit us to achieve a competitive pricing position in the industry. We purchase our commercial vehicle inventory
14
and proprietary parts and accessories directly from the applicable vehicle manufacturer, wholesale distributors, or
other sources that provide the most favorable pricing. Most purchasing commitments are negotiated by personnel
at our corporate headquarters. Historically, we have been able to negotiate favorable pricing levels and terms, which
enable us to offer competitive prices for our products.
Commercial Vehicle Inventory Management. We utilize our management information systems to monitor
the inventory level of commercial vehicles at each of our dealerships and transfer new and used commercial vehicle
inventory among Rush Truck Centers as needed.
Parts Distribution and Inventory Management. We utilize a parts inventory distribution and management
system that allows for the prompt transfer of parts inventory among various Rush Truck Centers. The transfer of
inventory reduces delays in delivery, helps maximize inventory turns and assists in controlling problems created by
overstock and understock situations. Our network is linked to our major suppliers for purposes of ordering parts and
managing parts inventory levels. Automated reordering and communication systems allow us to maintain proper
parts inventory levels and permit us to have parts inventory delivered to our locations, or directly to customers,
typically within 24 hours of an order being placed.
Recent Acquisitions, Dispositions and Equity Method Investment
On October 31, 2019, we, along with our joint venture partner, sold substantially all of the assets of Central
California Truck & Trailer Sales, LLC. The transaction was valued at approximately $12.7 million, with the
purchase price paid in cash.
On May 6, 2019, we acquired certain assets of Stover Sales, Inc., which included real estate and a used
truck dealership in Jacksonville, Florida, along with commercial vehicle and parts inventory. The transaction was
valued at approximately $2.3 million, with the purchase price paid in cash.
On February 25, 2019, we acquired a 50% equity interest in RTC Canada, which acquired the operating
assets of Tallman Group, the largest International Truck dealer in Canada. RTC Canada currently operates a network
of 14 International Truck full-service dealerships throughout the Province of Ontario. We were also granted a call
option in the purchase agreement that provides us with the right to acquire the remaining 50% equity interest in RTC
Canada until the close of business on February 25, 2024.
On February 11, 2019, we acquired certain assets of Country Ford Trucks, which included real estate and
a Ford truck franchise in Ceres, California, along with commercial vehicle and parts inventory. The transaction was
valued at approximately $7.9 million, with the purchase price paid in cash.
Competition
There is, and will continue to be, significant competition both within our current markets and in new
markets we may enter. We anticipate that competition between us and other dealership groups will continue to
increase in our current markets and on a national level based on the following:
the ability to keep customers’ vehicles operational, which is dependent on the accessibility of
dealership locations;
the number of dealership locations representing the manufacturers that we represent and other
manufacturers, which impacts manufacturers’ ability to provide more consistent, higher quality service
in a timely manner across their dealership networks;
price, value, quality and design of the products sold; and
our attention to customer service (including technical service).
Our dealerships compete with dealerships representing other manufacturers, including commercial vehicles
manufactured by Mack, Freightliner, Kenworth and Volvo. We believe that our dealerships are able to compete
with other franchised dealerships, independent service centers, parts wholesalers, commercial vehicle wholesalers,
rental service companies and industrial auctioneers in distributing our products and providing service because of the
following: the overall quality and reputation of the products we sell; the “Rush” brand name recognition and
reputation for quality service; the geographic scope of our dealership network; the breadth of commercial vehicles
15
offered in our dealership network; and our ability to provide comprehensive Aftermarket Products and Services, as
well as financing, insurance and other customer services.
Dealership Agreements
Peterbilt. We have entered into nonexclusive dealership agreements with Peterbilt that authorize us to act
as a dealer of Peterbilt heavy- and medium-duty trucks. Our Peterbilt areas of responsibility currently encompass
areas in the states of Alabama, Arizona, California, Colorado, Florida, Kentucky, New Mexico, Nevada, Oklahoma,
Tennessee and Texas. These dealership agreements currently have terms expiring between November 2021 and
September 2022. Our dealership agreements with Peterbilt may be terminated by Peterbilt in the event that the
aggregate voting power of the estate of W. Marvin Rush, W.M. “Rusty” Rush, other members of the Rush family
and certain executives of the Company decreases below 22%. Sales of new Peterbilt commercial vehicles accounted
for approximately 32.1% of our total revenues for 2020.
International. We have entered into nonexclusive dealership agreements with Navistar that authorize us to
act as a dealer of International heavy- and medium-duty trucks and, in certain markets, IC buses. Our Navistar areas
of responsibility currently encompass areas in the states of Georgia, Idaho, Illinois, Indiana, Missouri, North
Carolina, Ohio, Utah and Virginia. These dealership agreements currently have terms expiring between March 2021
and May 2025. Sales of new International commercial vehicles accounted for approximately 12.3% of our total
revenues for 2020.
Other Commercial Vehicle Suppliers. In addition to our dealership agreements with Peterbilt and Navistar,
various Rush Truck Centers have entered into dealership agreements with other commercial vehicle manufacturers,
including Blue Bird, and Micro Bird, which currently have terms expiring between March 2021 and August 2024
and Ford, Hino and Isuzu, which have perpetual terms. Sales of new non-Peterbilt and non-International commercial
vehicles accounted for approximately 9.9% of our total revenues for 2020.
All of our dealership agreements impose certain operational obligations and financial requirements upon us
and the relevant dealerships. In addition, each of our dealership agreements requires the consent of the relevant
manufacturer for the sale or transfer of a franchise.
Any termination or nonrenewal of our dealership agreements must follow certain guidelines established by
both state and federal legislation designed to protect motor vehicle dealers from arbitrary termination or nonrenewal
of franchise agreements. The federal Automobile Dealers Day in Court Act and certain other similar state laws
generally provide that the termination or nonrenewal of a motor vehicle dealership agreement must be done in “good
faith” and upon a showing of “good cause” by the manufacturer for such termination or nonrenewal, as such terms
have been defined by statute and interpreted in case law.
Floor Plan Financing
Most of our commercial vehicle inventory purchases are made on terms requiring payment to the
manufacturer within 15 days or less from the date the commercial vehicles are invoiced from the factory. We finance
the majority of all new commercial vehicle inventory and the loan value of our used commercial vehicle inventory
under our credit agreement with BMO Harris Bank N.A. (“BMO Harris”) (the “Floor Plan Credit Agreement”). The
Floor Plan Credit Agreement includes an aggregate loan commitment of $1.0 billion. Borrowings under the Floor
Plan Credit Agreement bear interest at an annual rate equal to (A) the greater of (i) zero and (ii) one month London
Inter-Bank Offer Rate (“LIBOR”) rate, determined on the last day of the prior month, plus (B) 1.25% and are payable
monthly. Loans under the Floor Plan Credit Agreement for the purchase of used commercial vehicle inventory are
limited to $150.0 million and loans for working capital purposes are limited to $200.0 million. The Floor Plan Credit
Agreement expires June 30, 2022, although BMO Harris has the right to terminate at any time upon 360 days written
notice and we may terminate at any time, subject to specified limited exceptions. On December 31, 2020, we had
approximately $451.5 million outstanding under the Floor Plan Credit Agreement. The average daily outstanding
borrowings under the Floor Plan Credit Agreement were $600.1 million during the twelve months ended December
31, 2020. We utilize our excess cash on hand to pay down our outstanding borrowings under the Floor Plan Credit
Agreement, and the resulting interest earned is recognized as an offset to our gross interest expense under the Floor
Plan Credit Agreement.
16
Product Warranties
The manufacturers we represent provide retail purchasers of their products with a limited warranty against
defects in materials and workmanship, excluding certain specified components that are separately warranted by the
suppliers of such components. We provide a warranty on our proprietary line of parts and related service and the
fuel systems manufactured by Momentum Fuel Technologies. We also provide an extended warranty beyond the
manufacturer’s warranty on new Blue Bird school buses that we sell in Texas, as required by state law.
We generally sell used commercial vehicles in “as is” condition without a manufacturer’s warranty,
although manufacturers sometimes will provide a limited warranty on their used products if such products have been
properly reconditioned prior to resale or if the manufacturer’s warranty on such product is transferable and has not
expired. Although we do not provide any warranty on used commercial vehicles, we offer for sale third-party
warranties.
Trademarks
The trademarks and trade names of the manufacturers we represent, which are used in connection with our
marketing and sales efforts, are subject to limited licenses included in our dealership agreements with each
manufacturer. The licenses are for the same periods as our dealership agreements. These trademarks and trade names
are widely recognized and are important in the marketing of our products. Each licensor engages in a continuous
program of trademark and trade name protection. We hold registered trademarks from the U.S. Patent and
Trademark Office for the following names used in this document: “Rush Enterprises,” “Rush Truck Center” and
“Momentum Fuel Technologies.”
Seasonality
Our Truck Segment is moderately seasonal. Seasonal effects on new commercial vehicle sales related to
the seasonal purchasing patterns of any single customer type are mitigated by the diverse geographic locations of
our dealerships and our diverse customer base, including regional and national fleets, local and state governments,
corporations and owner-operators. However, commercial vehicle Aftermarket Products and Services operations
historically have experienced higher sales volumes in the second and third quarters.
Backlog
On December 31, 2020, our backlog of commercial vehicle orders was approximately $1,247.2 million,
compared to a backlog of commercial vehicle orders of approximately $1,236.5 million on December 31, 2019. Our
backlog is determined quarterly by multiplying the number of new commercial vehicles for each particular type of
commercial vehicle ordered by a customer at our Rush Truck Centers by the recent average selling price for that
type of commercial vehicle. We include only confirmed orders in our backlog. However, such orders are subject to
cancellation. In the event of order cancellation, we have no contractual right to the total revenues reflected in our
backlog. The delivery time for a custom-ordered commercial vehicle varies depending on the truck specifications
and demand for the particular model ordered. We sell the majority of our new heavy-duty commercial vehicles by
customer special order and we sell the majority of our medium- and light-duty commercial vehicles out of inventory.
Orders from a number of our major fleet customers are included in our backlog as of December 31, 2020, and we
expect to fill the majority of our backlog orders during 2021.
Environmental Standards and Other Governmental Regulations
We are subject to federal, state and local environmental laws and regulations governing the following:
discharges into the air and water; the operation and removal of underground and aboveground storage tanks; the use,
handling, storage and disposal of hazardous substances, petroleum and other materials; and the investigation and
remediation of environmental impacts. As with commercial vehicle dealerships generally, and vehicle service, parts
and collision center operations in particular, our business involves the generation, use, storage, handling and
contracting for recycling or disposal of hazardous materials or wastes and other environmentally sensitive materials.
We have incurred, and will continue to incur, capital and operating expenditures and other costs in complying with
such laws and regulations.
Our operations involving the use, handling, storage and disposal of hazardous and nonhazardous materials
are subject to the requirements of the federal Resource Conservation and Recovery Act, or RCRA, and comparable
state statutes. Pursuant to these laws, federal and state environmental agencies have established approved methods
17
for handling, storage, treatment, transportation and disposal of regulated substances with which we must comply.
Our business also involves the operation and use of aboveground and underground storage tanks. These storage
tanks are subject to periodic testing, containment, upgrading and removal under RCRA and comparable state statutes.
Furthermore, investigation or remediation may be necessary in the event of leaks or other discharges from current
or former underground or aboveground storage tanks.
We may also have liability in connection with materials that were sent to third-party recycling, treatment,
or disposal facilities under the federal Comprehensive Environmental Response, Compensation and Liability Act,
or CERCLA, and comparable state statutes. These statutes impose liability for investigation and remediation of
environmental impacts without regard to fault or the legality of the conduct that contributed to the impacts.
Responsible parties under these statutes may include the owner or operator of the site where impacts occurred and
companies that disposed, or arranged for the disposal, of the hazardous substances released at these sites. These
responsible parties also may be liable for damages to natural resources. In addition, it is not uncommon for
neighboring landowners and other third parties to file claims for personal injury and property damage allegedly
caused by the release of hazardous substances or other materials into the environment.
The federal Clean Water Act and comparable state statutes require containment of potential discharges of
oil or hazardous substances, and require preparation of spill contingency plans. Water quality protection programs
govern certain discharges from some of our operations. Similarly, the federal Clean Air Act and comparable state
statutes regulate emissions of various air emissions through permitting programs and the imposition of standards and
other requirements.
The Environmental Protection Agency (“EPA”) and the National Highway Traffic Safety Administration
(“NHTSA”), on behalf of the U.S. Department of Transportation, issued rules associated with reducing greenhouse
gas (“GHG”) emissions and improving the fuel efficiency of medium and heavy-duty trucks and buses for model
years 2021 through 2027. We do not believe that these rules will negatively impact our business, however, future
legislation or other new regulations that may be adopted to address GHG emissions or fuel efficiency standards may
negatively impact our business. Additional regulations could result in increased compliance costs, additional
operating restrictions or changes in demand for our products and services, which could have a material adverse effect
on our business, financial condition and results of operations.
We do not believe that we currently have any material environmental liabilities or that compliance with
environmental laws and regulations will have a material adverse effect on our results of operations, financial
condition or cash flows. However, soil and groundwater impacts are known to exist at some of our dealerships.
Further, environmental laws and regulations are complex and subject to change. In addition, in connection with
acquisitions, it is possible that we will assume or become subject to new or unforeseen environmental costs or
liabilities, some of which may be material. In connection with our dispositions, or prior dispositions made by
companies we acquire, we may retain exposure for environmental costs and liabilities, some of which may be
material. Compliance with current or amended, or new or more stringent, laws or regulations, stricter interpretations
of existing laws or the future discovery of environmental conditions could require additional expenditures by us, and
those expenditures could be material.
Item 1A. Risk Factors
An investment in our common stock is subject to certain risks inherent to our business. In addition to the
other information contained in this Form 10-K, we recommend that you carefully consider the following risk factors
in evaluating our business. If any of the following risks actually occur, our financial condition and results of
operations could be materially adversely affected. If this were to happen, the value of our common stock could
decline significantly, and you could lose all or part of your investment. This report is qualified in its entirety by
these risk factors.
Risks Related to Our Business
We are dependent upon PACCAR for the supply of Peterbilt trucks and parts, the sale of which generates the majority
of our revenues.
At certain Rush Truck Centers, we operate as a dealer of Peterbilt trucks and parts pursuant to dealership
agreements with Peterbilt, a division of PACCAR. We have no control over the management or operation of Peterbilt
or PACCAR. During 2020, the majority of our revenues resulted from sales of trucks purchased from Peterbilt and
18
parts purchased from PACCAR Parts. Due to our dependence on PACCAR and Peterbilt, we believe that our long-
term success depends, in large part, on the following:
● our ability to maintain our dealership agreements with Peterbilt;
●
the manufacture and delivery of competitively-priced, technologically current, high-quality Peterbilt
trucks in quantities sufficient to meet our requirements;
●
the overall success of PACCAR and Peterbilt;
● PACCAR’s continuation of its Peterbilt division; and
●
the maintenance of goodwill associated with the Peterbilt brand, which can be adversely affected by
decisions made by PACCAR, Peterbilt and the owners of other Peterbilt dealerships.
A negative change in any of the preceding, or a change in control of PACCAR, could have a material
adverse effect on our operations, revenues and profitability.
We are dependent upon Navistar for the supply of International trucks and parts and IC buses and parts, the sale of
which generate a significant portion of our revenues.
At certain Rush Truck Centers, we operate as a dealer of International trucks and parts and IC buses and
parts pursuant to dealership agreements with International and IC Bus, each of which are divisions of Navistar. We
have no control over the management or operation of International, IC Bus or Navistar. During 2020, a significant
portion of our revenues resulted from sales of trucks purchased from International, buses purchased from IC Bus
and parts purchased from Navistar. Due to our dependence on Navistar, International and IC Bus, we believe that
our long-term success depends, in large part, on the following:
● our ability to maintain our dealership agreements with International and IC Bus;
●
the manufacture and delivery of competitively-priced, technologically current, high-quality
International trucks and IC buses in quantities sufficient to meet our requirements;
●
the overall success of Navistar; and
●
the maintenance of goodwill associated with the International and IC Bus brands, which can be
adversely affected by decisions made by Navistar and the owners of other International and IC Bus
dealerships.
A negative change in any of the preceding, or a change in control of Navistar, could have a material adverse
effect on our operations, revenues and profitability. On November 7, 2020, Navistar and Traton SE (“Traton”), a
subsidiary of Volkswagen AG, disclosed that they entered into a definitive merger agreement pursuant to which
Traton will purchase all of Navistar’s outstanding stock. The transaction is expected to close in mid-2021 and is
subject to shareholder and regulatory approvals. Assuming the transaction is accepted by Navistar’s shareholders
and approved by regulatory authorities, we cannot predict how new ownership of Navistar might affect our business;
provided, however, that at this time, our senior management is not aware of any circumstances associated with the
proposed sale that would result in a material adverse effect on our operations, revenues or profitability.
Our dealership agreements may be terminable upon a change of control and we cannot control whether our
controlling shareholder and management maintain their current ownership positions.
We have entered into nonexclusive dealership agreements with Peterbilt that authorize us to act as a dealer
of Peterbilt trucks. Peterbilt may terminate our dealership agreements in the event of a change of control of the
Company or if we violate any number of provisions in the dealership agreements. Under our Peterbilt dealership
agreements, the following constitute a change of control: (i) with respect to the election of directors, the aggregate
voting power held by the estate of W. Marvin Rush, W. M. “Rusty” Rush, James Thor, Scott Anderson, Derrek
Weaver, Steven Keller and Corey Lowe, along with certain other persons who no longer work for the company
(collectively, the “Dealer Principals”) decreases below 22% (the estate of W. Marvin Rush and such persons,
excluding those who no longer work for the company, controlled 39.11% of the aggregate voting power with respect
to the election of directors as of December 31, 2020); or (ii) any person or entity other than the Dealer Principals
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and their respective associates, or any person or entity who has been approved in writing by PACCAR, owns
common stock with a greater percentage of the voting power with respect to the election of our directors than the
Dealer Principals and their respective associates, in the aggregate, or any person other than W. M. “Rusty” Rush,
Robin M. Rush or any person who has been approved in writing by PACCAR holds the office of Chairman of the
Board, President or Chief Executive Officer of the Company. We have no control over the transfer or disposition by
the estate of W. Marvin Rush or W.M. “Rusty” Rush, or his estate, of their common stock. If the estate of W. Marvin
Rush or W.M. “Rusty” Rush were to sell their Class B Common Stock or bequest their Class B Common Stock to a
person or entity other than the Dealer Principals, or if their estates are required to liquidate their Class B Common
Stock that they own, directly or indirectly, to pay estate taxes or otherwise, the change of control provisions of the
Peterbilt dealership agreements may be triggered, which would give Peterbilt the right to terminate our dealership
agreements. If our dealership agreements with Peterbilt are terminated, we will lose the right to purchase Peterbilt
products and operate as an authorized Peterbilt dealer, which would have a material adverse effect on our operations,
revenues and profitability.
Our dealership agreements are non-exclusive and have relatively short terms which could result in nonrenewal or
imposition of less favorable terms upon renewal.
Our dealership agreements generally do not provide us with exclusive dealerships in any of the areas of
responsibility assigned in each dealer agreement. The manufacturers we represent could elect to create additional
dealers in our areas of responsibility in the future, subject to restrictions imposed by state laws. While dealership
agreements typically restrict dealers from operating franchised sales or service facilities outside their areas of
responsibility, such agreements do not restrict sales or marketing activity outside the areas of responsibility.
Accordingly, we engage in sales and other marketing activities outside our assigned areas of responsibility and other
dealers engage in similar activities within our areas of responsibility.
Our dealership agreements with the manufacturers we represent have current terms expiring between March
2021 and May 2025. Upon expiration of each agreement, we must negotiate a renewal. Management expects that,
consistent with in some cases decades of past practice, each of our dealership agreements will be renewed or
otherwise extended before its termination date, provided that we do not breach any of the material terms of such
agreement.
Management attempts to mitigate the risk that any manufacturer would not renew a dealership agreement
by providing superior representation of each brand that we represent in each of our areas of responsibility. We deliver
superior representation to our manufacturers by continuously investing substantial capital into our dealership
locations, marketing and personnel. Senior members of our management team also communicate with management
of the manufacturers that we represent on a regular basis, which we believe allows us to identify any potentially
problematic issues as early as possible so that we can begin working on mutually agreeable solutions. In addition to
the proactive steps that management takes, the risks that our dealership agreements will not be renewed are also
mitigated by dealer protection laws that exist in each of the states that our dealerships are located. Many of these
state dealer franchise laws restrict manufacturers’ ability to refuse to renew dealership agreements or to impose new
terms upon renewal. However, to the extent such laws did allow for nonrenewal or the imposition of new terms, the
relatively short terms would give manufacturers the opportunity to exercise such rights. Any nonrenewal or
imposition of less favorable terms upon renewal could have an adverse impact on our business and in the case of the
Peterbilt or Navistar dealership agreements, would have an adverse impact on our business.
If state dealer laws are repealed or weakened, our dealerships will be more susceptible to termination, nonrenewal
or renegotiation of their dealership agreements.
We depend on our vehicle dealership agreements for a substantial portion of our revenues and profitability.
State dealer laws generally provide that a manufacturer may not terminate or refuse to renew a dealership agreement
unless it has first provided the dealer with written notice setting forth good cause and stating the grounds for
termination or nonrenewal. Vehicle manufacturers’ lobbying efforts may lead to the repeal or revision of state motor
vehicle dealer laws. If motor vehicle dealer laws are repealed or amended in the states in which we operate
dealerships, the manufacturers we represent may be able to terminate our vehicle dealership agreements without
providing advance notice, an opportunity to cure or a showing of good cause. Without the protection of state dealer
laws, or if such laws are weakened, we will be subject to higher risk of termination or nonrenewal of our vehicle
dealership agreements. Termination or nonrenewal of our vehicle dealership agreements would have a material
adverse effect on our operations, revenues and profitability.
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We may be required to obtain additional financing to maintain adequate inventory levels.
Our business requires new and used commercial vehicle inventories held for sale to be maintained at dealer
locations in order to facilitate immediate sales to customers on demand. We generally purchase new and used
commercial vehicle inventories with the assistance of floor plan financing agreements. Our primary floor plan
financing agreement, the Floor Plan Credit Agreement, expires on June 30, 2022, and may be terminated without
cause upon 360 days’ notice. In the event that our floor plan financing becomes insufficient to satisfy our future
requirements or our floor plan providers are unable to continue to extend credit under our floor plan agreements, we
would need to obtain similar financing from other sources. There is no assurance that such additional floor plan
financing or alternate financing could be obtained on commercially reasonable terms.
Changes in interest rates could have a material adverse effect on our profitability.
Our Floor Plan Credit Agreement and some of our other debt are subject to variable interest rates. Therefore,
our interest expense would rise with any increase in interest rates. Currently, our outstanding borrowings under our
Floor Plan Credit Agreement and certain other loan agreements are borrowed at LIBOR plus an applicable margin.
The U.K. Financial Conduct Authority has announced that it intends to stop persuading or compelling banks to
submit LIBOR rates after 2021. However, it is anticipated at this time that LIBOR quotes will be available for
existing credit agreements until mid-2023, which would mean that our Floor Plan Credit Agreement would not be
impacted by the end of LIBOR, since it expires on June 30, 2022. Currently, it appears that the Secured Overnight
Funding Rate (“SOFR”) will replace LIBOR in the majority of credit agreements which currently use LIBOR. It is
unclear how increased regulatory oversight and changes in the method for determining benchmark interest rates may
affect our results of operations or financial conditions. At this time, it is not possible to predict the effect of any such
changes, any establishment of alternative reference rates such as SOFR, or any other reforms to benchmark interest
rates that may be enacted in the United Kingdom or elsewhere, including the potential impact to our Floor Plan
Credit Agreement. However, any rise in interest rates generally may also have the effect of depressing demand in
the interest rate sensitive aspects of our business, particularly new and used commercial vehicle sales, because many
of our customers finance such purchases. As a result, a rise in interest rates may have the effect of simultaneously
increasing our costs and reducing our revenues, which could materially affect our business, financial condition and
results of operations. See “Quantitative and Qualitative Disclosures about Market Risk” for a discussion regarding
our interest rate sensitivity.
COVID-19 has disrupted, and may continue to disrupt, our business, which could adversely affect our financial
performance.
In March 2020, the World Health Organization made the assessment that COVID-19 could be characterized
as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The
COVID-19 pandemic adversely impacted our financial performance in 2020. While our Rush Truck Centers have
remained operational throughout the COVID-19 pandemic and have been classified as “essential businesses,” the
pandemic is a fluid and evolving situation and we cannot anticipate whether we may be forced to close any of our
locations due to potential restrictions imposed by a governmental authority in one of the jurisdictions that we operate
or due to a COVID-19 outbreak at one of our locations that forces us to close such affected dealership. In addition,
all of the commercial vehicle manufacturers that we represent were forced to suspend manufacturing operations at
certain plants, and while all of the plants are currently operating, we cannot predict with any certainty whether such
plants may be forced to suspend operations again at some point in the future due to COVID-19.
Although the COVID-19 pandemic had a significant negative impact on our business in 2020, the
magnitude of the impact for 2021 cannot be predicted at this time due to numerous uncertainties, the effectiveness
of actions taken to contain the spread of the disease and other unintended consequences. Some of the potential
impacts to our business that we believe are directly related to the COVID-19 pandemic and that we are currently
monitoring include, but are not limited to:
The impact that the pandemic will have on customer demand. For example, our parts and service business
was severely impacted in the second quarter of 2020 as a result of orders from state and local governments
to shut down a wide range of businesses that we support, but has since recovered gradually as those shut
down orders expired or were rescinded;
The impact that the pandemic will have on our workforce availability. For example, in the fourth quarter
of 2020, as the number of COVID-19 cases increased throughout the country, we experienced our highest
levels of pandemic-related employee absenteeism, which directly impacted our ability to serve customers;
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The impact that the pandemic will have on the supply chains of the commercial vehicle manufacturers and
parts manufacturers that we represent. For example, production shutdowns in 2020 for some of the
manufacturers we represent led to supply constraints, which negatively impacted our results for 2020.
Currently, the commercial vehicle manufacturers that we represent are attempting to increase build
capacity, but there is concern that component manufacturers’ supply chain issues, particularly with respect
to microchip manufacturers, may limit certain of our commercial vehicle manufacturers’ ability to meet
demand throughout the year; and
The impact of the pandemic on global capital markets, which depending on future developments, could
impact our capital resources and liquidity in the future.
The potential impacts that we list above, and other impacts of the COVID-19 pandemic, are likely to also have the
effect of heightening many of the other risk factors described herein.
Impairment in the carrying value of goodwill and other indefinite-lived intangible assets could negatively affect
our operating results.
We have a substantial amount of goodwill on our balance sheet as a result of acquisitions we have
completed. Approximately 99% of this goodwill is concentrated in our Truck Segment. The carrying value of
goodwill represents the fair value of an acquired business in excess of identifiable assets and liabilities as of the
acquisition date. Goodwill is not amortized, but instead is evaluated for impairment at least annually, or more
frequently if potential interim indicators exist that could result in impairment. In testing for impairment, if the
carrying value of a reporting unit exceeds its current fair value as determined based on the discounted future cash
flows of the reporting unit, the goodwill is considered impaired and is reduced to fair value via a non-cash charge to
earnings. Events and conditions that could result in impairment include weak economic activity, adverse changes in
the regulatory environment, any matters that impact the ability of the manufacturers we represent to provide us with
commercial vehicles or parts, issues with our franchise rights, or other factors leading to reductions in expected long-
term sales or profitability. Determination of the fair value of a reporting unit includes developing estimates that are
highly subjective and incorporate calculations that are sensitive to minor changes in underlying assumptions.
Changes in these assumptions or a change in the Company’s reportable segments could result in an impairment
charge in the future, which could have a significant adverse impact on our reported earnings. See “Management’s
Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and
Estimates — Goodwill” for more information regarding the potential impact of changes in assumptions.
Our business is subject to a number of economic risks.
New and used commercial vehicle retail sales tend to experience periods of decline when general economic
conditions worsen. We may experience sustained periods of decreased commercial vehicle sales in the future. Any
decline or change of this type could materially affect our business, financial condition and results of operations. In
addition, adverse regional economic and competitive conditions in the geographic markets in which we operate could
materially adversely affect our business, financial condition and results of operations. Our commercial vehicle sales
volume therefore may differ from industry sales fluctuations.
Economic conditions and the other factors described above also may materially adversely impact our sales
of parts and repair services, and finance and insurance products.
We depend on relationships with the manufacturers we represent and component suppliers for sales incentives,
discounts and similar programs which are material to our operations.
We depend on the manufacturers we represent and component suppliers for sales incentives, discounts,
warranties and other programs that are intended to promote the sales of their commercial vehicles or our use of their
components in the vehicles we sell. Most of the incentives and discounts are individually negotiated and not always
the same as those made available to commercial vehicle manufacturers or our competitors. These incentives and
discounts are material to our operations. A reduction or discontinuation of a commercial vehicle manufacturer’s or
component supplier’s incentive program could have a material adverse effect on our profitability.
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We are dependent on the ongoing success of the manufacturers we represent and adverse conditions affecting the
manufacturers we represent may negatively impact our revenues and profitability.
The success of each of our dealerships is dependent on the manufacturers represented at each dealership.
Our ability to sell new vehicles that satisfy our customers’ demands and replacement parts is dependent on the ability
of the manufacturers we represent to produce and deliver new vehicles and replacement parts to our dealerships.
Additionally, our dealerships perform warranty work for vehicles under manufacturer product warranties, which are
billed to the appropriate vehicle manufacturer or component supplier as opposed to invoicing our customer. We
generally have significant receivables from vehicle manufacturers and component suppliers for warranty and service
work performed for our customers. In addition, we rely on vehicle manufacturers and component suppliers to varying
extents for product training, marketing materials, and other items for our stores. Our business, results of operations,
and financial condition could be materially adversely affected as a result of any event that has a material adverse
effect on the vehicle manufacturers or component suppliers we represent.
The manufacturers we represent may be adversely impacted by economic downturns, significant declines
in the sales of their new vehicles, labor strikes or similar disruptions (including within their major suppliers), rising
raw materials costs, rising employee benefit costs, adverse publicity that may reduce consumer demand for their
products (including due to bankruptcy), product defects, vehicle recall campaigns, litigation, poor product mix or
unappealing vehicle design, governmental laws and regulations, or other adverse events. Our results of operations,
financial condition or cash flows could be adversely affected if one or more of the manufacturers we represent are
impacted by any of the foregoing adverse events.
Actions taken in response to continued operational losses by manufacturers we represent, including
bankruptcy or reorganizations, could have a material adverse effect on our sales volumes and profitability. In
addition, such actions could lead to the impairment of one or more of our franchise rights, inventories, fixed assets
and other related assets, which in turn could have a material adverse effect on our financial condition and results of
operations. Actions taken in response to continued operational losses by manufacturers we represent, including
bankruptcy or reorganizations, could also eliminate or reduce such manufacturers’ indemnification obligations to
our dealerships, which could increase our risk in products liability actions.
The dollar amount of our backlog, as stated at any given time, is not necessarily indicative of our future earnings.
As of December 31, 2020, our backlog of new commercial vehicle orders was approximately
$1,247.2 million. Our backlog is determined quarterly by multiplying the number of new commercial vehicles for
each particular type of commercial vehicle ordered by a customer at our Rush Truck Centers by the recent average
selling price for that type of commercial vehicle. We only include confirmed orders in our backlog. However, such
orders are subject to cancellation. In the event of order cancellation, we have no contractual right to the total revenues
reflected in our backlog.
Reductions in backlog due to cancellation by a customer or for other reasons will adversely affect,
potentially to a material extent, the revenue and profit we actually receive from orders projected in our backlog. If
we were to experience significant cancellations of orders in our backlog, our financial condition could be adversely
affected.
Our growth strategies may be unsuccessful if we are unable to successfully execute our strategic initiatives
or identify and complete future acquisitions.
Over the past few years, we have spent significant resources and efforts attempting to grow and enhance
our Aftermarket Products and Services business and increase profitability through new business process management
initiatives. These efforts require timely and continued investment in technology, facilities, personnel and financial
and management systems and controls. We may not be successful in implementing all of the processes that are
necessary to support any of our growth initiatives, which could result in our expenses increasing disproportionately
to our incremental revenues, causing our operating margins and profitability to be adversely affected.
Historically, we have achieved a significant portion of our growth through acquisitions and we will continue
to consider potential acquisitions on a selective basis. There can be no assurance that we will be able to identify
suitable acquisition opportunities in the future or that we will be able to consummate any such transactions on terms
and conditions acceptable to us. Moreover, there can be no assurance that we will obtain manufacturers’ consents
to acquisitions of additional franchises.
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In the long-term, technological advances in the commercial vehicle industry, including drivetrain electrification or
other alternative fuel technologies, could have a material adverse effect on our business.
The commercial vehicle industry is predicted to experience change over the long-term. We see these
changes beginning to occur, as certain of the manufacturers we represent now have vehicles with electric drivetrains
available for purchase. Technological advances, including with respect to drivetrain electrification or other
alternative fuel technologies, could potentially have a material adverse effect on our parts and service business, as
such vehicles are currently being described as potentially requiring less service and having fewer parts. The effect
of these technological advances on our business is still uncertain, as there are many factors that are unknowable at
this time, including when the infrastructure to support widespread adoption of such vehicles will be in place and
when such vehicles may be commercially available at price points that would lead to their widespread
adoption. Regardless of where the industry goes with respect to alternative fuel vehicles, we believe that, due to the
geographic reach of our dealership network, relationships with both the manufacturers we represent and our
customers and our access to capital, we are well-positioned to serve our customers’ evolving needs.
Similarly, although we are aware of ongoing efforts to facilitate the development of autonomous
commercial vehicles, the eventual timing of the availability of autonomous commercial vehicles is uncertain due to
regulatory requirements and additional technological requirements. The effect of autonomous commercial vehicles
on the commercial vehicle industry is uncertain and could include changes in the level of new and used commercial
vehicles sales, the price of new commercial vehicles, and the role of franchised dealers, any of which could materially
adversely affect our business, financial condition and results of operations.
Our dealerships are subject to federal, state and local environmental regulations that may result in claims and
liabilities, which could be material.
We are subject to federal, state and local environmental laws and regulations governing the following:
discharges into the air and water; the operation and removal of underground and aboveground storage tanks; the use,
handling, storage and disposal of hazardous substances, petroleum and other materials; and the investigation and
remediation of contamination. As with commercial vehicle dealerships generally, and service, parts and collision
center operations in particular, our business involves the generation, use, storage, handling and contracting for
recycling or disposal of hazardous materials or wastes and other environmentally sensitive materials. Any non-
compliance with these laws and regulations could result in significant fines, penalties and remediation costs which
could adversely affect our results of operations, financial condition or cash flows.
We may also have liability in connection with materials that were sent to third party recycling, treatment,
or disposal facilities under federal and state statutes. Applicable laws may make us responsible for liability relating
to the investigation and remediation of contamination without regard to fault or the legality of the conduct that
contributed to the contamination. In connection with our acquisitions, it is possible that we will assume or become
subject to new or unforeseen environmental costs or liabilities, some of which may be material. In connection with
dispositions of businesses, or dispositions previously made by companies we acquire, we may retain exposure for
environmental costs and liabilities, some of which may be material.
Further, environmental laws and regulations are complex and subject to change. For example, in July 2020,
a group of fifteen U.S. states and the District of Columbia entered into a joint memorandum of understanding that
commits each of them to work together to advance and accelerate the market for electric Class 3 through 8
commercial vehicles. Three of the states that signed are states where we sell new commercial vehicles: California,
Colorado and North Carolina. The signatories to the memorandum all agreed on a goal of ensuring that 100% of new
Class 3 through 8 commercial vehicles are zero emission, with an interim target of 30% zero emission by 2030.
Attaining these goals would likely require the adoption of new laws and regulations and we cannot predict at this
time whether such laws and regulations would have an adverse impact on our business. Compliance with current or
amended, or new or more stringent, laws or regulations, stricter interpretations of existing laws or the future
discovery of environmental conditions could require additional expenditures by us which could materially adversely
affect our results of operations, financial condition or cash flows. In addition, such laws could affect demand for the
products that we sell.
Disruptions to our information technology systems and breaches in data or system security could adversely affect
our business.
We rely upon our information technology systems to manage all aspects of our business, including
processing and recording sales to, and payments from, customers, managing inventory, communicating with
24
manufacturers and vendors, processing employee payroll and benefits and financial reporting. Any inability to
manage these systems, including with respect to matters related to system and data security, privacy, reliability,
compliance, performance and access, as well as any inability of these systems to fulfill their intended purpose within
our business, could have an adverse effect on our business. In addition, in the ordinary course of business, we collect
and store sensitive data and information, including our proprietary business information and that of our customers,
suppliers and business partners, as well as personally identifiable information about our employees and customers.
Despite the security measures we have in place, our facilities and systems, and those of our third-party service
providers, could be vulnerable to cyberattacks and other security breaches, computer viruses, lost or misplaced data,
programming errors, human errors or other events, and such incidents can remain undetected for a period of time
despite our best efforts to detect and respond to them in a timely manner. We routinely monitor our systems for
cyber threats and have processes in place to detect and remediate vulnerabilities. Nevertheless, we have experienced
occasional cyberattacks and attempted breaches, including phishing emails and ransomware infections. We detected
and remediated all of these incidents, all of which we categorized as “commodity threats,” or general attacks common
to companies connected to the internet and communicating via email. No known leakage of financial, technical or
customer data occurred and none of the incidents had a material adverse effect on our business, operations,
reputation, or consolidated results of operations or consolidated financial condition.
Any cyberattack, security breach or other event resulting in the misappropriation, loss, or other
unauthorized disclosure of confidential information of personal identifiable information of employees or customers,
whether by us directly or our third-party service providers, could adversely affect our business operations, sales,
reputation with current and potential customers, associates or vendors and employees and result in litigation or
regulatory actions, all of which could have a material adverse effect on our business and reputation.
We are exposed to a variety of claims relating to our business and the liability associated with such claims may
exceed the level of our insurance coverage.
In the course of our business, we are exposed to claims for personal injury, death or property damage
resulting from: (i) our customers’ use of commercial vehicles that we sell, service, lease or rent; (ii) our customers’
purchase of other products that we design, manufacture, sell or install, such as commercial vehicle parts, custom
vehicle modifications and CNG fuel tank systems; and (iii) injuries caused by motor vehicle accidents that our
service or delivery personnel are involved in. In addition, we have employees who work remotely from time to time
at certain customers’ locations that are considered inherently dangerous, such as oil or gas well drilling sites,
commercial construction sites and manufacturing facilities. We could also be subject to potential litigation associated
with compliance with various laws and governmental regulations at the federal, state or local levels, such as those
relating to vehicle and highway safety, health and workplace safety, security and employment-related claims.
We carry comprehensive liability insurance, subject to deductibles, at levels we believe are sufficient to
cover existing and future claims. However, we may be exposed to claims for which coverage is not afforded or the
damages exceed the limits of our insurance coverage or multiple claims causing us to incur significant out-of-pocket
costs before reaching the deductible amount, all of which could adversely affect our financial condition and results
of operations. In addition, the cost of such insurance policies may increase significantly upon renewal of those
policies as a result of general rate increases for the type of insurance we carry as well as our historical experience
and experience in our industry. Although we have not experienced any material losses that were not covered by
insurance, our existing or future claims may exceed the coverage level of our insurance, and such insurance may not
continue to be available on economically reasonable terms, or at all. If we are required to pay significantly higher
premiums for insurance, are not able to maintain insurance coverage at affordable rates or if we must pay amounts
in excess of claims covered by our insurance, we could experience higher costs that could adversely affect our
financial condition and results of operations.
Climate change concerns may impact our business in the future; natural disasters and adverse weather events can
disrupt our business.
The concerns over climate change may impact our business in the future. Our current business model
depends on our ability to sell, and provide services to, commercial vehicles primarily powered by diesel and gasoline
internal combustion engines, which result in greenhouse gas emissions. While the manufacturers we represent have
made substantial progress in reducing the amount of greenhouse gas emissions that result from internal combustion
engines, it is widely accepted that alternative fuel vehicles are necessary to address climate change. Reductions in
the sale and use of commercial vehicles powered by internal combustion engines creates risks to our historical
business operations and we cannot predict the future costs to our business resulting from these developments.
However, we also believe that an industry transition away from internal combustion engines presents significant
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opportunities for us. Due in large part to the geographic reach of our dealership network, relationships with both the
manufacturers we represent and our customers and our access to capital, we believe we are well-positioned to serve
our customers’ evolving needs and help them reduce their greenhouse gas emissions by helping them integrate more
alternative fuel vehicles into their fleets and providing various services related thereto.
Scientific evidence suggests that a warming climate potentially results in an environment more prone to
natural disasters, such as hurricanes and flooding. To date, we have seen increases in our cost to insure against such
risks, which costs could continue to increase should this trend continue. Some of our dealerships are located in
regions of the United States where natural disasters and severe weather events (such as hurricanes, earthquakes,
fires, floods, tornadoes and hail storms) may disrupt our operations, which may adversely impact our business,
results of operations, financial condition and cash flows. In addition to business interruption, our business is subject
to substantial risk of property loss due to the significant concentration of property at dealership locations. Although
we have substantial insurance to cover this risk, we may be exposed to uninsured or underinsured losses that could
have a material adverse effect on our business, financial condition, results of operations or cash flows.
Risks Related to Our Common Stock
We are controlled by two shareholders and their affiliates.
Collectively, the estate of W. Marvin Rush and W. M. “Rusty” Rush and their affiliates own approximately
0.6% of our issued and outstanding shares of Class A Common Stock and 45.8% of our issued and outstanding
Class B Common Stock. The estate of W. Marvin Rush and W.M. “Rusty” Rush collectively control approximately
36.3% of the aggregate voting power of our outstanding shares, which is substantially more than any other person
or group. The interests of the estate of W. Marvin Rush and W.M. “Rusty” Rush may not be consistent with the
interests of all shareholders, or each other. As a result of such ownership, the estate of W. Marvin Rush and W.M.
“Rusty” Rush have the power to effectively control the Company, including the election of directors, the
determination of matters requiring shareholder approval and other matters pertaining to corporate governance.
Our dealership agreements could discourage another company from acquiring us.
Our dealership agreements with Peterbilt impose ownership requirements on certain officers of the
Company. All of our dealership agreements include restrictions on the sale or transfer of the underlying franchises.
These ownership requirements and restrictions may prevent or deter prospective acquirers from acquiring control of
us and, therefore, may adversely impact the value of our common stock.
Additionally, W. Marvin Rush and W.M. “Rusty” Rush granted Peterbilt a right of first refusal to purchase
their respective shares of common stock in the event that they desire to transfer in excess of 100,000 shares in any
12-month period to any person other than an immediate family member, an associate or another Dealer Principal.
However, in the case of the estate of W. Marvin Rush, certain shares of his Class B Common Stock of the Company
are exempt from his rights of first refusal agreement. These rights of first refusal, the number of shares owned by
the estate of W. Marvin Rush and W.M. “Rusty” Rush and their affiliates, the requirement in our dealership
agreements that the Dealer Principals retain a controlling interest in us and the restrictions on the sale or transfer of
our franchises contained in our dealer agreements, combined with the ability of the Board of Directors to issue shares
of preferred stock without further vote or action by the shareholders, may discourage, delay or prevent a change in
control without further action by our shareholders, which could adversely affect the market price of our common
stock or prevent or delay a merger or acquisition that our shareholders may consider favorable.
Actions by our shareholders or prospective shareholders that would violate any of the above restrictions on
our dealership agreements are generally outside of our control. If we are unable to renegotiate these restrictions, we
may be forced to terminate or sell one or more of our dealerships, which could have a material adverse effect on us.
These restrictions may also inhibit our ability to raise required capital or to issue our stock as consideration for future
acquisitions.
Class A Common Stock has limited voting power.
Each share of Class A Common Stock ranks substantially equal to each share of Class B Common Stock
with respect to receipt of any dividends or distributions declared on shares of common stock and the right to receive
proceeds on liquidation or dissolution of us after payment of our indebtedness and liquidation preference payments
to holders of any preferred shares. However, holders of Class A Common Stock have 1/20th of one vote per share
on all matters requiring a shareholder vote, while holders of Class B Common Stock have one full vote per share.
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Our Class B Common Stock has a low average daily trading volume. As a result, sales of our Class B Common
Stock could cause the market price of our Class B Common Stock to drop, and it may be difficult for a stockholder
to liquidate its position in our Class B Common Stock quickly without adversely affecting the market price of such
shares.
The volume of trading in our Class B Common Stock varies greatly and may often be light. As of December
31, 2020, the three-month average daily trading volume of our Class B Common Stock was approximately 12,400
shares, with twenty-one days having a trading volume below 7,500 shares. If any large shareholder were to begin
selling shares in the market, the added available supply of shares could cause the market price of our Class B
Common Stock to drop. In addition, the lack of a robust resale market may require a shareholder to sell a large
number of shares of our Class B Common Stock in increments over time to mitigate any adverse impact of the sales
on the market price of our Class B Common Stock.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Our corporate headquarters are located in New Braunfels, Texas. As of December 2020, we also own or
lease numerous facilities used in our operations in the following states: Alabama, Arizona, California, Colorado,
Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Missouri, New Mexico, Nebraska, Nevada, North
Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, Utah and Virginia.
We lease a hangar in New Braunfels, Texas for the corporate aircraft. We also own and operate a guest
ranch of approximately 9,500 acres near Cotulla, Texas, which is used for client development purposes.
Item 3. Legal Proceedings
From time to time, we are involved in litigation arising out of our operations in the ordinary course of
business. We maintain liability insurance, including product liability coverage, in amounts deemed adequate by
management. To date, aggregate costs to us for claims, including product liability actions, have not been material.
However, an uninsured or partially insured claim, or claim for which indemnification is not available, could have a
material adverse effect on our financial condition or results of operations. We believe that there are no claims or
litigation pending, the outcome of which could have a material adverse effect on our financial position or results of
operations. However, due to the inherent uncertainty of litigation, there can be no assurance that the resolution of
any particular claim or proceeding would not have a material adverse effect on our financial condition or results of
operations for the fiscal period in which such resolution occurred.
Item 4. Mine Safety Disclosures
Not applicable.
27
PART II
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity
Securities
Our common stock trades on The NASDAQ Global Select MarketSM under the symbols RUSHA and
RUSHB. During 2020, our Board of Directors approved four quarterly cash dividends on all outstanding shares of
common stock totaling $0.54 per share. We expect to continue paying cash dividends on a quarterly basis. However,
there is no assurance as to the payment of future dividends because the declaration and payment of such dividends
is subject to the business judgment of our Board of Directors and will depend on historic and projected earnings,
capital requirements, covenant compliance, financial conditions and such other factors as the Board of Directors
deems relevant.
The following table sets forth the high and low sales prices for our Class A Common Stock and Class B
Common Stock for the fiscal periods indicated and as quoted on The NASDAQ Global Select MarketSM and dividends
declared.
2020
2019
Dividends
Declared
High
Low
Dividends
Declared
High
Low
Class A Common Stock
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Class B Common Stock
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
$
$
$
$
.09
.09
.09
.14
.09
.09
.09
.14
31.22 $
31.23
34.65
43.08
18.17 $
18.85
26.45
33.37
.08 $
.08
.09
.09
29.52 $
30.66
27.95
32.85
22.54
23.15
22.49
23.21
32.11 $
27.30
29.90
38.38
14.43 $
17.40
22.09
28.67
.08 $
.08
.09
.09
29.62 $
30.34
29.23
32.33
23.35
23.68
23.47
24.45
As of February 5, 2021, there were approximately 18 record holders of Class A Common Stock and
approximately 26 record holders of Class B Common Stock. On October 12, 2020, we effected a three-for-two stock
split with respect to both our Class A and Class B Common Stock in the form of a stock dividend. The foregoing
stock prices and the following share amounts have been adjusted to give retroactive effect to the stock split for all
periods presented.
As of December 31, 2020, we have not sold any securities in the last three years that were not registered
under the Securities Act.
A summary of our stock repurchase activity for the fourth quarter of 2020 is as follows:
Total
Number of
Shares
Purchased
(1)(2)(3)
9,972
500
48,408
58,880
Average
Price Paid
Per Share
(1)
$ 30.93 (4)
31.95 (5)
37.80 (6)
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs (2)
9,972
500
48,408
58,880
Approximate
Dollar Value of
Shares that May
Yet be
Purchased Under
the Plans or
Programs (3)
$ 76,532,409
76,516,419
98,168,939
Period
October 1 – October 31, 2020
November 1 – November 30, 2020
December 1 – December 31, 2020
Total
(1)
(2)
The calculation of the average price paid per share does not give effect to any fees, commissions or other
costs associated with the repurchase of such shares.
The shares represent Class A and Class B Common Stock repurchased by us.
28
(3)
We repurchased shares in 2020 under a stock repurchase program announced on December 3, 2019,
which authorized the repurchase of up to $100.0 million of our shares of Class A Common Stock and/or
Class B Common Stock. This plan was terminated effective December 3, 2020; we repurchased $23.5
million shares of our Class A and Class B Common Stock under the plan prior to its termination. On
December 8, 2020, we announced the approval of a new stock repurchase program authorizing
management to repurchase, from time to time, up to an aggregate of $100.0 million of our shares of Class
A Common Stock and/or Class B Common Stock.
Represents 9,972 shares of Class B Common Stock at an average price paid per share of $30.93.
Represents 500 shares of Class B Common Stock at an average price paid per share of $31.95.
Represents 10,335 shares of Class A Common Stock at an average price paid per share of $39.66 and
38,073 shares of Class B Common Stock at an average price paid per share of $37.29.
(4)
(5)
(6)
Information regarding our equity compensation plans is incorporated by reference from Item 12, “Security
Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters,” of this annual report
on Form 10-K and should be considered an integral part of this Item 5.
Performance Graph
The following graph shows the cumulative 5-Year total return as of December 31, 2020, of a $100
investment in the Company’s common stock made on December 31, 2015 (with dividends reinvested), as compared
with similar investments based on (i) the cumulative total returns of the S&P 500 Index (with dividends reinvested)
and (ii) the cumulative total returns of a market-weighted Peer Group Index composed of the common stock of
PACCAR, Inc., Werner Enterprises, Inc., Penske Automotive Group, Inc. and Lithia Motors, Inc., assuming
reinvestment of dividends. The market-weighted Peer Group Index values were calculated from the beginning of the
performance period. The historical stock price performance shown below is not necessarily indicative of future stock
price performance.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL
RETURN*
Among Rush Enterprises, Inc., the S&P 500 Index,
and a Peer Group
$300
$250
$200
$150
$100
$50
$0
12/15
12/16
12/17
12/18
12/19
12/20
Rush Enterprises, Inc.
S&P 500
Peer Group
*$100 invested on 12/31/15 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.
Copyright© 2021 Standard & Poor's, a division of S&P Global. All rights reserved.
29
Rush Enterprises, Inc.
S&P 500
Peer Group
2015
$ 100.00
100.00
100.00
2016
$ 143.34
111.96
130.27
2017
$ 226.12
136.40
148.68
2018
$ 160.98
130.42
123.39
2019
$ 214.36
171.49
179.84
2020
$ 280.50
203.04
216.55
December 31,
The foregoing performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC
for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall
not be deemed to be incorporated by reference into any filing of the Company under the Securities Act or the
Exchange Act. The stock price performance included in this graph is not necessarily indicative of future stock price
performance.
Item 6. Selected Financial Data
The information below was derived from the audited consolidated financial statements included in this
report and reports we have previously filed with the SEC. This information should be read together with those
consolidated financial statements and the notes to those consolidated financial statements. These historical results
are not necessarily indicative of the results to be expected in the future. The selected financial data presented below
may not be comparable between periods in all material respects or indicative of our future financial position or results
of operations due primarily to acquisitions which occurred during the periods presented. See Note 15 to the
Company’s Consolidated Financial Statements for a discussion of such acquisitions. The selected financial data
presented below should be read in conjunction with our other financial information included elsewhere herein.
SUMMARY OF INCOME STATEMENT DATA
Revenues
New and used commercial vehicle sales
Aftermarket products and services sales
Lease and rental
Finance and insurance
Other
Total revenues
Cost of products sold
Gross profit
Selling, general and administrative
Depreciation and amortization
Gain (loss) on sale of assets
Operating income
Other income
Interest expense, net
Income before income taxes
Provision (benefit) for income taxes
Net income
Net income per common share:
Basic
Diluted
2020
$ 2,863,309
1,600,445
236,223
21,949
14,014
4,735,940
3,860,473
875,467
665,258
57,456
1,852
154,605
6,132
9,014
151,723
36,836
$ 114,887
Year Ended December 31,
2018
2017
2019
(in thousands, except per share amounts)
$ 3,757,584
1,762,510
247,549
24,443
17,761
5,809,847
4,784,219
1,025,628
753,749
55,372
(102)
216,405
1,925
28,807
189,523
47,940
$ 141,583
$ 3,558,637
1,670,052
238,238
20,535
18,728
5,506,190
4,527,921
978,269
705,226
70,489
297
202,851
−
19,682
183,169
44,107
$ 139,062
$ 2,993,015
1,471,266
217,356
17,988
14,257
4,713,882
3,883,946
829,936
631,053
50,069
(105)
148,709
−
12,310
136,399
(35,730)
$ 172,129
2016
$ 2,640,019
1,332,356
208,154
18,582
15,503
4,214,614
3,496,602
718,012
587,778
51,261
1,755
80,728
−
14,279
66,449
25,867
$ 40,582
$ 2.09
$ 2.04
$ 2.57
$ 2.51
$ 2.36
$ 2.30
$ 2.89
$ 2.80
$ 0.68
$ 0.67
Cash dividends declared per share
$ 0.41
$ 0.34
$ 0.16
−
−
Weighted average shares outstanding:
Basic
Diluted
54,866
56,242
54,988
56,356
58,835
60,440
59,441
61,470
59,907
60,905
30
OPERATING DATA
Unit vehicle sales −
New vehicles
Used vehicles
Total unit vehicles sales
Commercial vehicle lease and rental units
BALANCE SHEET DATA
Working capital
Inventories
Total assets
2020
Year Ended December 31,
2018
2019
2017
2016
23,113
7,400
30,513
8,104
31,675
7,741
39,416
8,506
29,776
8,021
37,797
8,092
25,696
7,060
32,756
7,993
23,627
7,008
30,635
7,841
2020
2019
December 31,
2018
(in thousands)
2017
2016
$ 330,932
858,291
2,985,393
$ 205,162
1,326,080
3,407,329
$ 194,649
1,339,923
3,201,350
$ 202,891
1,033,294
2,890,139
$ 118,318
840,304
2,603,047
Floor plan notes payable
Long-term debt, including current portion
Finance lease obligations, including current portion
Total shareholders’ equity
511,786
529,654
117,113
1,268,037
996,336
627,678
92,370
1,159,493
1,023,019
601,173
69,114
1,066,928
778,561
611,528
83,141
1,040,373
646,945
604,003
84,493
862,825
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
We are a full-service, integrated retailer of commercial vehicles and related services. We operate one
segment - the Truck Segment. The Truck Segment operates a network of commercial vehicle dealerships primarily
under the name “Rush Truck Centers.” Most Rush Truck Centers are a franchised dealer for commercial vehicles
manufactured by Peterbilt, International, Hino, Ford, Isuzu, IC Bus or Blue Bird. Through our strategically located
network of Rush Truck Centers, we provide one-stop service for the needs of our commercial vehicle customers.
We offer an integrated approach to meeting customer needs by providing service, parts and collision repair
(collectively, “Aftermarket Products and Services”) in addition to new and used commercial vehicle sales and
leasing, insurance and financial services, vehicle upfitting, CNG fuel systems and vehicle telematics products.
Our goal is to continue to serve as the premier service solutions provider to the end-users of commercial
vehicles. Our strategic efforts to achieve this goal include continuously expanding our portfolio of Aftermarket
Products and Services, broadening the diversity of our commercial vehicle product offerings and extending our
network of Rush Truck Centers. Our commitment to provide innovative solutions to service our customers’ needs
continues to drive our strong Aftermarket Products and Services revenues.
Our Aftermarket Products and Services include a wide range of capabilities and products such as providing
parts, service and collision repairs at certain of our Rush Truck Centers, a fleet of mobile service units, technicians
who work in our customers’ facilities, a proprietary line of commercial vehicle parts and accessories, vehicle
upfitting, a broad range of diagnostic and analysis capabilities, a suite of telematics products and assembly services
for specialized bodies and equipment. Aftermarket Products and Services accounted for 66.7% of our total gross
profits in 2020.
Stock Split
On September 15, 2020, our Board of Directors declared a 3-for-2 stock split of our Class A common stock
and Class B common stock, to be effected in the form of a stock dividend. On October 12, 2020, we distributed one
additional share of stock for every two shares of Class A common stock, par value $0.01 per share, and Class B
common stock, par value $0.01 per share, held by shareholders of record as of September 28, 2020. All share and
per share data in this Form 10-K have been adjusted and restated to reflect the stock split as if it occurred on the first
day of the earliest period presented.
31
The COVID-19 Pandemic and Its Impact on Our Business
Rush Truck Centers are classified as “essential businesses” and our dealership network has remained
operational since the beginning of the COVID-19 pandemic, although some hours of operation have been modified.
Despite our dealerships remaining open, the COVID-19 pandemic had a significant negative impact on our revenues
for 2020. We expect that the negative impact of the COVID-19 pandemic on our revenues, and business in general,
will be substantial for the foreseeable future. However, based on current market conditions and the steps we have
taken to reduce expenses, we continue to believe the worst of the pandemic’s effect on our business may be behind
us.
We are monitoring and complying with CDC guidelines for limiting the spread of COVID-19 and
complying with all applicable federal, state and local executive orders. We also provide employees who are unable
to work as a direct result of COVID-19 with up to two weeks of additional sick leave despite the fact that we are
generally not legally obligated to do so. We are also providing our employees with an additional four hours of paid
time off if they choose to obtain a COVID-19 vaccination. In accordance with CDC guidelines, we have mandated
that all employees stay at least 6 feet away from each other and our customers. In addition, we are requiring all our
employees to wear face coverings, regardless of whether state or local laws require face coverings, and we are
cleaning and disinfecting our facilities on a regular basis. We are also providing curbside parts pick-up, online parts
ordering and web-based vehicle service communication to reduce in-person interactions. Our service teams are
minimizing contact with customers and taking extra precautions to keep high-touch areas on customer vehicles clean
and disinfected.
Commercial Vehicle Sales
All of the commercial vehicle manufacturers that we represent have resumed operations and their plants are
currently producing vehicles. Supply chain delays related to manufacturing components may limit the commercial
vehicle industry’s ability to meet commercial vehicle sales demand throughout 2021.
Aftermarket Products and Services
With respect to our Aftermarket Products and Services, with only a few minor exceptions, our parts supply
chain has remained uninterrupted to-date. We believe that the investments we have made over the years in our
aftermarket strategic initiatives have enabled us to mitigate the impact of the COVID-19 pandemic on our
Aftermarket Products and Service business.
Rental and Leasing Operations
With respect to our rental and leasing operations, we allowed certain credit-worthy customers that serve
industries that have been dramatically impacted by the COVID-19 pandemic to skip up to three months of lease
payments and either extended the lease term by three months or increased the remaining payments to keep the same
lease term. These customers have resumed payments.
Liquidity
As of December 31, 2020, our total net liquidity was approximately $417.2 million, including $312.0
million in cash and $105.2 million available under our various credit agreements, excluding our floor plan credit
agreements. Our working capital facility (“the Working Capital Facility”) with BMO Harris Bank N.A. (“BMO
Harris”) includes up to $100.0 million of revolving credit loans that are available to us for working capital, capital
expenditures and other general corporate purposes. We currently have no outstanding draws on this line of credit.
We continue to believe that we are well positioned to navigate the economic challenges that may lie ahead as a result
For further discussion of our liquidity, see the Liquidity and Capital
of the COVID-19 pandemic.
Resources discussion set forth herein.
Summary of 2020
Our results of operations for the year ended December 31, 2020 are summarized below as follows:
Our gross revenues totaled $4,735.9 million in 2020, an 18.5% decrease from gross revenues of
$5,809.8 million in 2019, largely as a result of decreased commercial vehicle sales and the impact of
32
the COVID-19 pandemic.
Gross profit decreased $150.2 million, or 14.6%, in 2020, compared to 2019. Gross profit as a
percentage of sales increased to 18.5% in 2020, from 17.7% in 2019.
Our 2020 new Class 8 heavy-duty unit sales, which accounted for 5.5% of the total U.S. market,
decreased 28.8% in 2020, compared to 2019.
Our 2020 new Class 4-7 medium-duty unit sales, including buses, which accounted for 4.9% of the
total U.S. market, decreased 21.8% in 2020, compared to 2019. New light-duty truck unit sales
decreased 49.0% in 2020, compared to 2019.
Aftermarket Products and Services revenues decreased $162.1 million, or 9.2%, to $1,600.4 million
in 2020, compared to $1,762.5 million in 2019, largely as a result of the impact of the COVID-19
pandemic.
Lease and rental revenues decreased $11.3 million, or 4.6%, to $236.2 million in 2020, compared to
$247.5 million in 2019, largely as a result of the impact of the COVID-19 pandemic.
Selling, General and Administrative expenses decreased $88.5 million, or 11.7%, to $665.3 million
in 2020, compared to $753.7 million in 2019.
2021 Outlook
According to A.C.T. Research Co., LLC (“A.C.T. Research”), a commercial vehicle industry data and
forecasting service provider, new U. S. Class 8 truck retail sales are estimated to total 243,000 truck units in 2021,
a 24.2% increase compared to 195,687 units sold in 2020. We expect our market share of new Class 8 truck sales
to range between 5.5% and 6.0% in 2021. This market share percentage would result in the sale of approximately
12,500 to 13,500 of new Class 8 trucks in 2021, based on A.C.T. Research’s current U.S. retail sales estimate of
243,000 units.
According to A.C.T. Research, new U. S. Class 4 through 7 commercial vehicle retail sales are estimated
to total 249,500 units in 2021, a 7.5% increase compared to 232,042 units sold in 2020. We expect our market share
of new Class 4 through 7 commercial vehicle sales to range between 4.7% and 5.3% in 2021. This market share
percentage would result in the sale of approximately 11,200 to 12,500 of new Class 4 through 7 commercial vehicles
in 2021, based on A.C.T. Research’s current U.S. retail sales estimates of 249,500 units.
We expect to sell approximately 1,600 light-duty vehicles and approximately 7,000 to 7,500 used
commercial vehicles in 2021. We expect lease and rental revenue to increase 6% to 9% during 2021, compared to
2020.
We continue to make progress on our strategic initiatives to increase our Aftermarket Products and Services
revenues. We believe our Aftermarket Products and Services revenues will increase 8% to 10% in 2021, compared
to 2020.
Key Performance Indicator
Absorption Ratio. Management uses several performance metrics to evaluate the performance of our
commercial vehicle dealerships and considers Rush Truck Centers’ “absorption ratio” to be of critical importance.
Absorption ratio is calculated by dividing the gross profit from the parts, service and collision center departments
by the overhead expenses of all of a dealership’s departments, except for the selling expenses of the new and used
commercial vehicle departments and carrying costs of new and used commercial vehicle inventory. When 100%
absorption is achieved, all of the gross profit from the sale of a commercial vehicle, after sales commissions and
inventory carrying costs, directly impacts operating profit. Our commercial vehicle dealerships achieved a 118.7%
absorption ratio for the year ended December 31, 2020 and 120.2% absorption ratio for the year ended December
31, 2019.
33
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based on our
consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting
principles. The preparation of these consolidated financial statements requires us to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. There can be no assurance that actual results
will not differ from those estimates. We believe the following accounting policies affect our more significant
judgments and estimates used in the preparation of our consolidated financial statements.
Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined by specific
identification of new and used commercial vehicle inventory and by the first-in, first-out method for tires, parts and
accessories. As the market value of our inventory typically declines over time, reserves are established based on
historical loss experience and market trends. These reserves are charged to cost of sales and reduce the carrying
value of our inventory on hand. An allowance is provided when it is anticipated that cost will exceed net realizable
value less a reasonable profit margin.
Goodwill
Goodwill is tested for impairment by reporting unit utilizing a two-step process at least annually, or more
frequently when events or changes in circumstances indicate that the asset might be impaired. The first step requires
us to compare the fair value of the reporting unit (we consider our Truck Segment to be a reporting unit for purposes
of this analysis), which is the same as the segment, to the respective carrying value. If the fair value of the reporting
unit exceeds its carrying value, the goodwill is not considered impaired. If the carrying value is greater than the fair
value, there is an indication that impairment may exist and a second step is required. In the second step of the
analysis, the implied fair value of the goodwill is calculated as the excess of the fair value of a reporting unit over
the fair values assigned to its assets and liabilities. If the implied fair value of goodwill is less than the carrying
value of the reporting unit’s goodwill, the difference is recognized as an impairment loss.
We determine the fair value of our reporting unit using the discounted cash flow method. The discounted
cash flow method uses various assumptions and estimates regarding revenue growth rates, future gross margins,
future selling, general and administrative expenses and an estimated weighted average cost of capital. The analysis
is based upon available information regarding expected future cash flows of each reporting unit discounted at rates
consistent with the cost of capital specific to the reporting unit. This type of analysis contains uncertainties because
it requires us to make assumptions and to apply judgment regarding our knowledge of our industry, information
provided by industry analysts and our current business strategy in light of present industry and economic conditions.
If any of these assumptions change, or fail to materialize, the resulting decline in our estimated fair value could result
in a material impairment charge to the goodwill associated with the reporting unit.
We do not believe there is a reasonable likelihood that there will be a material change in the future estimates
or assumptions we used to test for impairment losses on goodwill. However, if actual results are not consistent with
our estimates or assumptions, or certain events occur that might adversely affect the reported value of goodwill in
the future, we may be exposed to an impairment charge that could be material.
Goodwill was tested for impairment during the fourth quarter of 2020 and no impairment was required.
The fair value of our reporting unit exceeded the carrying value of its net assets. As a result, we were not required
to conduct the second step of the impairment test. We do not believe our reporting unit is at risk of failing step one
of the impairment test.
Insurance Accruals
We are partially self-insured for a portion of the claims related to our property and casualty insurance
programs, which requires us to make estimates regarding expected losses to be incurred. We engage a third-party
administrator to assess any open claims and we adjust our accrual accordingly on a periodic basis. We are also
partially self-insured for a portion of the claims related to our workers’ compensation and medical insurance
programs. We use actuarial information provided from third-party administrators to calculate an accrual for claims
incurred, but not reported, and for the remaining portion of claims that have been reported.
34
Changes in the frequency, severity and development of existing claims could influence our reserve for
claims and financial position, results of operations and cash flows. We do not believe there is a reasonable likelihood
that there will be a material change in the estimates or assumptions we used to calculate our self-insured liabilities.
However, if actual results are not consistent with our estimates or assumptions, we may be exposed to losses or gains
that could be material.
Accounting for Income Taxes
Management’s judgment is required to determine the provisions for income taxes and to determine whether
deferred tax assets will be realized in full or in part. Deferred income tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled. When it is more likely than not that all or some portion of specific deferred income tax
assets will not be realized, a valuation allowance must be established for the amount of deferred income tax assets
that are determined not to be realizable. Accordingly, the facts and financial circumstances impacting deferred
income tax assets are reviewed quarterly and management’s judgment is applied to determine the amount of
valuation allowance required, if any, in any given period.
Our income tax returns are periodically audited by tax authorities. These audits include questions regarding
our tax filing positions, including the timing and amount of deductions. In evaluating the exposures associated with
our various tax filing positions, we adjust our liability for unrecognized tax benefits and income tax provision in the
period in which an uncertain tax position is effectively settled, the statute of limitations expires for the relevant
taxing authority to examine the tax position or when more information becomes available.
Our liability for unrecognized tax benefits contains uncertainties because management is required to make
assumptions and to apply judgment to estimate the exposures associated with our various filing positions. Our
effective income tax rate is also affected by changes in tax law, the level of earnings and the results of tax audits.
Although we believe that the judgments and estimates are reasonable, actual results could differ, and we may be
exposed to losses or gains that could be material. An unfavorable tax settlement would generally require use of our
cash and result in an increase in our effective income tax rate in the period of resolution. A favorable tax settlement
would be recognized as a reduction in our effective income tax rate in the period of resolution. Our income tax
expense includes the impact of reserve provisions and changes to reserves that we consider appropriate, as well as
related interest.
Revenue Recognition
Effective January 1, 2018, we adopted ASU 2014-09, “Revenue from Contracts with Customers (“Topic
606”),” using the modified retrospective transition method. This standard applies to all contracts with customers,
except for contracts that are within the scope of other standards, such as leases, insurance, collaboration
arrangements and financial instruments. Under Topic 606, we recognize revenue when our customer obtains control
of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange
for those goods or services. To determine revenue recognition for arrangements that we determine are within the
scope of Topic 606, we perform the following five steps: (i) identify the contract with a customer; (ii) identify the
performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to
the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance
obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration
we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, once the
contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each
contract and determine those that are performance obligations. We then assess whether each promised good or
service is distinct and recognize as revenue the amount of the transaction price that is allocated to the respective
performance obligation when (or as) the performance obligation is satisfied.
35
Results of Operations
The following discussion and analysis includes our historical results of operations for 2020, 2019 and 2018.
The following table sets forth for the years indicated certain financial data as a percentage of total revenues:
Year Ended December 31,
2019
2020
2018
New and used commercial vehicle sales
Aftermarket Products and Services sales
Lease and rental
Finance and insurance
Other
Total revenues
Cost of products sold
Gross profit
Selling, general and administrative
Depreciation and amortization
Gain (loss) on sale of assets
Operating income
Other income
Interest expense, net
Income from continuing operations before income taxes
Provision (benefit) for income taxes
Net income
60.5 %
33.8
5.0
0.4
0.3
100.0
81.5
18.5
14.0
1.2
0.0
3.3
0.1
0.2
3.2
0.8
2.4 %
64.7 %
30.3
4.3
0.4
0.3
100.0
82.3
17.7
13.0
1.0
0.0
3.7
0.0
0.5
3.2
0.8
2.4 %
64.6 %
30.3
4.3
0.4
0.4
100.0
82.2
17.8
12.8
1.3
0.0
3.7
0.0
0.4
3.3
0.8
2.5 %
The following table sets forth the unit sales and revenue for new heavy-duty, new medium-duty, new
light-duty and used commercial vehicles and the absorption ratio for the years indicated (revenue in millions):
Vehicle unit sales:
New heavy-duty vehicles
New medium-duty vehicles
New light-duty vehicles
Total new vehicle unit sales
2020
2019
2018
% Change
2020
vs
2019
2019
vs
2018
10,670
11,311
1,132
23,113
14,986
14,470
2,219
31,675
14,666
12,949
2,161
29,776
-28.8%
-21.8%
-49.0%
-27.0%
2.2%
11.7%
2.7%
6.4%
Used vehicles sales
7,400
7,741
8,021
-4.4%
-3.5%
Vehicle revenue:
New heavy-duty vehicles
New medium-duty vehicles
New light-duty vehicles
Total new vehicle revenue
$ 1,587.9 $ 2,192.3 $ 2,120.5
971.3
1,124.0
86.7
90.6
$ 3,406.9 $ 3,178.5
919.7
50.1
$ 2,557.7
-27.6%
-18.2%
-44.7%
-24.9%
3.4%
15.7%
4.5%
7.2%
Used vehicle revenue
$ 291.5 $ 330.3 $ 360.1
-11.7%
-8.3%
Other vehicle revenue:(1)
$ 14.1 $ 20.4 $ 20.0
-30.9%
2.0%
Dealership absorption ratio:
118.7%
120.2%
122.4%
-1.2%
-1.8%
(1) Includes sales of truck bodies, trailers and other new equipment.
36
The following table sets forth for the periods indicated the percent of gross profit by revenue source:
Gross Profit:
New and used commercial vehicle sales
Aftermarket Products and Services sales
Lease and rental
Finance and insurance
Other
Total gross profit
Industry
2020
2019
2018
25.3 %
66.7
3.9
2.5
1.6
100.0 %
27.0 %
64.9
4.0
2.4
1.7
100.0 %
28.4 %
63.4
4.2
2.1
1.9
100.0 %
We operate in the commercial vehicle market. There has historically been a high correlation between new
product sales in the commercial vehicle market and the rate of change in U.S. industrial production and the U.S.
gross domestic product.
Heavy-Duty Truck Market
T he U.S. retail heavy-duty truck market is affected by a number of factors, including general economic
conditions, fuel prices, other methods of transportation, environmental and other government regulation, interest rate
fluctuations and customer business cycles. According to data published by A.C.T. Research, over the last 10 years,
total U.S. retail sales of new Class 8 trucks have ranged from a low of approximately 110,000 in 2010 to a high of
approximately 281,440 in 2019. Class 8 trucks are defined by the American Automobile Association as trucks with
a minimum gross vehicle weight rating above 33,000 pounds.
Typically, Class 8 trucks are assembled by manufacturers utilizing certain components that may be
manufactured by other companies, including engines, transmissions, axles, wheels and other components. As
commercial vehicles and certain commercial vehicle components have become increasingly complex, the ability to
provide service for commercial vehicles has become an increasingly competitive factor in the industry. The ability
to provide such service requires a significant capital investment in diagnostic and other equipment, parts inventory
and highly trained service personnel. EPA and Department of Transportation regulatory guidelines for service
processes, including collision center, paint work and waste disposal, require sophisticated equipment to ensure
compliance with environmental and safety standards. Differentiation between commercial vehicle dealers has
become less dependent on price competition and is increasingly based on a dealer’s ability to offer a wide variety of
services to their clients in a timely manner to minimize vehicle downtime. Such services include the following:
efficient, conveniently located and easily accessible commercial vehicle service centers with an adequate supply of
replacement parts; financing for commercial vehicle purchases; leasing and rental programs; and the ability to accept
multiple unit trade-ins related to large fleet purchases. We believe our one-stop center concept and the size and
geographic diversity of our dealership network gives us a competitive advantage in providing these services.
A.C.T. Research currently estimates approximately 243,000 new Class 8 trucks will be sold in the United
States in 2021, compared to approximately 195,687 new Class 8 trucks sold in 2020. A.C.T. Research currently
forecasts sales of new Class 8 trucks in the U.S. to be approximately 275,000 in 2022.
Medium-Duty Truck Market
Many of our Rush Truck Centers sell medium-duty commercial vehicles manufactured by Peterbilt,
International, Hino, Ford or Isuzu, and provide parts and service for medium-duty commercial vehicles. Medium-
duty commercial vehicles are principally used in short-haul, local markets as delivery vehicles; they typically operate
locally and generally do not leave their service areas overnight. We also sell light-duty vehicles (Class 3 and under)
at several of our Ford dealerships.
A.C.T. Research currently forecasts sales of new Class 4 through 7 commercial vehicles in the U.S. to be
approximately 249,500 units in 2021, compared to 232,042 units in 2020. A.C.T. Research currently forecasts sales
of new Class 4 through 7 commercial vehicles in the U.S. to be approximately 257,000 in 2022.
37
Year Ended December 31, 2020 Compared to Year Ended December 31, 2019
Revenues
Total revenues decreased $1,073.9 million, or 18.5%, in 2020, compared to 2019. This decline was
primarily due to a substantial decrease in new commercial vehicle sales resulting from the anticipated downturn in
demand for new commercial vehicles due to the record to near-record sales of commercial vehicles in 2018 and
2019 and the effects of the COVID-19 pandemic.
Our Aftermarket Products and Services revenues decreased $162.1 million, or 9.2%, in 2020, compared to
2019. This decline was primarily due to weak demand from the energy sector and the effects of the COVID-19
pandemic.
Our revenues from sales of new and used commercial vehicles decreased $894.3 million, or 23.8%, in 2020,
compared to 2019. This decline was a result of the anticipated downturn in new commercial vehicle sales.
We sold 10,670 new heavy-duty trucks in 2020, a 28.8% decrease compared to 14,986 new heavy-duty
trucks in 2019. Our share of the new U.S. Class 8 commercial vehicle sales market increased to approximately 5.5%
in 2020, from 5.3% in 2019.
We sold 11,311 new medium-duty commercial vehicles, including 1,097 buses, in 2020, a 21.8% decrease
compared to 14,470 new medium-duty commercial vehicles, including 1,272 buses, in 2019. In 2020, we achieved
a 4.9% share of the Class 4 through 7 commercial vehicle market in the U.S., compared to 5.4% in 2019.
We sold 1,132 new light-duty vehicles in 2020, a 49.0% decrease compared to 2,219 new light-duty vehicles
in 2019.
We sold 7,400 used commercial vehicles in 2020, a 4.4% decrease compared to 7,741 used commercial
vehicles in 2019.
Commercial vehicle lease and rental revenues decreased $11.3 million, or 4.6%, in 2020, compared to 2019.
This decrease is primarily related to the decrease in size and utilization of the rental fleet, especially during
lockdowns put in place by state governments during the onset of the COVID-19 pandemic.
Finance and insurance revenues decreased $2.5 million, or 10.2%, in 2020, compared to 2019. Finance and
insurance revenues have limited direct costs and, therefore, contribute a disproportionate share of our operating
profits.
Other revenues decreased $3.7 million, or 21.1% in 2020, compared to 2019. Other revenues consist
primarily of document fees related to commercial vehicle sales.
Gross Profit
Gross profit decreased $150.2 million, or 14.6%, in 2020, compared to 2019. This decline was a result of
both the COVID-19 pandemic and the anticipated downturn in demand for new commercial vehicles resulting from
record to near-record sales of commercial vehicles in 2018 and 2019. Gross profit as a percentage of sales increased
to 18.5% in 2020, from 17.7% in 2019. This increase in gross profit as a percentage of sales is a result of a change
in our product sales mix. Commercial vehicle sales, a lower margin revenue item, decreased as a percentage of total
revenues to 60.5% in 2020, from 64.7% in 2019. Aftermarket Products and Services revenues, a higher margin
revenue item, increased as a percentage of total revenues to 33.8% in 2020, from 30.3% in 2019.
Gross margins from our Aftermarket Products and Services operations decreased to 36.5% in 2020, from
37.7% in 2019. This decrease is primarily related to the decrease in parts rebates from parts suppliers and the
increase in inventory obsolescence reserves in 2020. Gross profit for Aftermarket Products and Services decreased
to $583.9 million in 2020, from $665.2 million in 2019. This decrease in gross profit is consistent with the decrease
in Aftermarket Products and Services revenues, primarily due to weak demand from the energy sector and the effects
of the COVID-19 pandemic. Historically, parts operations’ gross margins range from 27% to 29% and service and
collision center operations range from 66% to 68%. Gross profits from parts sales represented 59.4% of total gross
profit for Aftermarket Products and Services operations in 2020 and 59.3% in 2019. Service and collision center
38
operations represented 40.6% of total gross profit for Aftermarket Products and Services operations in 2020 and
40.7% 2019. We expect blended gross margins on Aftermarket Products and Services operations to range from
36.0% to 37.0% in 2021.
Gross margins on new heavy-duty truck sales increased to 8.2% in 2020, from 8.1% in 2019. In 2021, we
expect overall gross margins from new heavy-duty truck sales of approximately 7.5% to 8.0%.
Gross margins on new medium-duty commercial vehicle sales increased to 6.3% in 2020, from 5.7% in
2019. For 2021, we expect overall gross margins from new medium-duty commercial vehicle sales of approximately
5.5% to 6.3%, but this will largely depend upon the mix of purchasers and types of vehicles sold.
Gross margins on used commercial vehicle sales increased to 9.9% in 2020, from 8.9% in 2019. This
increase is due to the unanticipated increased demand for used commercial vehicles resulting from the COVID-19
pandemic. We expect margins on used commercial vehicles to range between 9.0% and 10.0% during 2021.
Gross margins from commercial vehicle lease and rental sales decreased to 14.3% in 2020, from 16.7% in
2019. This decrease is primarily related to decreased rental fleet utilization. We expect gross margins from lease
and rental sales of approximately 16.5% to 17.0% during 2021. Our policy is to depreciate our lease and rental fleet
using a straight-line method over each customer’s contractual lease term. The lease unit is depreciated to a residual
value that approximates fair value at the expiration of the lease term. This policy results in us realizing reasonable
gross margins while the unit is in service and a corresponding gain or loss on sale when the unit is sold at the end of
the lease term.
Finance and insurance revenues and other revenues, as described above, have limited direct costs and,
therefore, contribute a disproportionate share of gross profit.
Selling, General and Administrative Expenses
Selling, General and Administrative (“SG&A”) expenses decreased $88.5 million, or 11.7%, in 2020,
compared to 2019. This decrease resulted from expense reductions that began in the fourth quarter of 2019 due to
the anticipated downturn in demand for new commercial vehicles and subsequent expense reductions necessitated
by the COVID-19 pandemic and decreased selling expense, compared to 2020. SG&A expenses as a percentage of
total revenues increased to 14.0% in 2020, from 13.0% in 2019. Annual SG&A expenses as a percentage of total
revenues have ranged from 12.4% to 14.0% over the last five years. In general, when new and used commercial
vehicle revenues decrease as a percentage of total revenues, SG&A expenses as a percentage of total revenues will
be at the higher end of this range. For 2021, we expect SG&A expenses as a percentage of total revenues to range
from 13.0% to 14.0%, due to the increase in revenues from sales of new and used commercial vehicle and
Aftermarket Products and Services. For 2021, we expect the selling portion of SG&A expenses to be approximately
25.0% to 30.0% of new and used commercial vehicle gross profit.
Depreciation and Amortization Expense
Depreciation and amortization expense increased $2.1 million, or 3.8%, in 2020, compared to 2019.
Interest Expense, Net
Net interest expense decreased $19.8 million, or 68.7%, in 2020, compared to 2019. This decrease in
interest expense is a result of the decrease in inventory levels and lower floor plan interest rates in 2020, compared
to 2019. We expect net interest expense in 2021 to decrease, but the amount of the decrease will depend on inventory
levels, interest rate fluctuations and the amount of cash available to make prepayments on our floor plan
arrangements.
Income before Income Taxes
Income before income taxes decreased $37.8 million, or 19.9%, in 2020, compared to 2019, as a result of
the factors described above.
39
Income Taxes
Income tax expense decreased $11.1 million, or 23.2%, in 2020, compared to 2019, as a result of the factors
described above.
We provided for taxes at a 24.3% effective rate in 2020, compared to an effective rate of 25.3% in 2019.
We expect our effective tax rate to be approximately 24.0% to 25.5% of pretax income in 2021.
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
For a discussion of information on the year ended December 31, 2019, refer to Part II Item 7 in the 2019
Annual Report on Form 10-K. https://www.sec.gov/ix?doc=/Archives/edgar/data/1012019/000143774920003589/rusha20191119_10k.htm
Liquidity and Capital Resources
Our short-term cash requirements are primarily for working capital, inventory financing, the renovation and
expansion of existing facilities and the construction or purchase of new facilities. Historically, these cash
requirements have been met through the retention of profits, borrowings under our floor plan arrangements and bank
financings. As of December 31, 2020, we had working capital of approximately $330.9 million, including $312.0
million in cash, available to fund our operations. From time to time, we utilize our excess cash on hand to pay down
our outstanding borrowings under our floor plan credit agreement with BMO Harris Bank N.A. (“BMO Harris”) (the
“Floor Plan Credit Agreement”), and the resulting interest earned is recognized as an offset to our gross interest
expense under the Floor Plan Credit Agreement.
We continually evaluate our liquidity and capital resources based upon (i) our cash and cash equivalents on
hand, (ii) the funds that we expect to generate through future operations, (iii) current and expected borrowing
availability under our secured line of credit, our Working Capital Facility and our Floor Plan Credit Agreement, and
(iv) the potential impact of our capital allocation strategy and any contemplated or pending future transactions,
including, but not limited to, acquisitions, equity repurchases, dividends, or other capital expenditures. We believe
we will have sufficient liquidity to meet our debt service and working capital requirements, commitments and
contingencies, debt repayments, acquisitions, capital expenditures and any operating requirements for at least the
next twelve months.
We have a secured line of credit that provides for a maximum borrowing of $17.5 million. There were no
advances outstanding under this secured line of credit at December 31, 2020, however, $12.3 million was pledged
to secure various letters of credit related to self-insurance products, leaving $5.2 million available for future
borrowings as of December 31, 2020.
The Working Capital Facility with BMO Harris includes up to $100.0 million of revolving credit loans
available to us for working capital, capital expenditures and other general corporate purposes. The amount of the
borrowings under the Working Capital Facility are subject to borrowing base limitations based on the value of our
eligible parts inventory and company vehicles. The Working Capital Facility includes a $20 million letter of credit
sublimit. Borrowings under the Working Capital Facility bear interest at rates based on LIBOR or the Base Rate (as
such terms are defined in the Working Capital Facility), plus an applicable margin determined based on outstanding
borrowing under the Working Capital Facility. In addition, we are required to pay a commitment fee on the amount
unused under the Working Capital Facility. The Working Capital Facility expires on the earlier of (i) June 30, 2022
and (ii) the date on which all commitments under the Working Capital Facility shall have terminated, whether as a
result of the occurrence of the Commitment Termination Date (as defined in the Working Capital Facility) or
otherwise. There were no advances outstanding under the Working Capital Facility as of December 31, 2020.
Our long-term real estate debt, floor plan financing agreements and the Working Capital Facility require
us to satisfy various financial ratios such as the debt-to-worth ratio, leverage ratio and the fixed charge coverage
ratio and certain requirements for tangible net worth and Generally Accepted Accounting Principles (“GAAP”) net
worth. As of December 31, 2020, we were in compliance with all debt covenants related to debt secured by real
estate, lease and rental units, our floor plan credit agreements and the Working Capital Facility. We do not anticipate
any breach of the covenants in the foreseeable future.
We expect to purchase or lease commercial vehicles worth approximately $150.0 million to $180.0 million
for our leasing operations during 2021, depending on customer demand, all of which will be financed. We also
40
expect to make capital expenditures for recurring items such as computers, shop tools and equipment and vehicles
of approximately $30.0 million to $35.0 million during 2021.
During the fourth quarter of 2020, we paid a cash dividend of $7.6 million. Additionally, on February 10,
2021, our Board of Directors declared a cash dividend of $0.18 per share of Class A and Class B Common Stock,
to be paid on March 16, 2021, to all shareholders of record as of February 25, 2021. The total dividend disbursement
is estimated at approximately $10.1 million. We expect to continue paying cash dividends on a quarterly basis.
However, there is no assurance as to future dividends because the declaration and payment of such dividends is
subject to the business judgment of our Board of Directors and will depend on historic and projected earnings, capital
requirements, covenant compliance and financial conditions and such other factors as our Board of Directors deem
relevant.
On December 8, 2020, we announced that our Board of Directors approved a new stock repurchase program
authorizing management to repurchase, from time to time, up to an aggregate of $100.0 million of our shares of
Class A Common Stock and/or Class B Common Stock. In connection with the adoption of the new stock repurchase
plan, we terminated the prior stock repurchase plan, which was scheduled to expire on December 31, 2020.
Repurchases, if any, will be made at times and in amounts as we deem appropriate and may be made through open
market transactions at prevailing market prices, privately negotiated transactions or by other means in accordance
with federal securities laws. The actual timing, number and value of repurchases under the stock repurchase program
will be determined by management at its discretion and will depend on a number of factors, including market
conditions, stock price and other factors, including those related to the ownership requirements of our dealership
agreements with Peterbilt. As of December 31, 2020, we had repurchased $1.8 million of our shares of common
stock under the current stock repurchase program. The current stock repurchase program expires on December 31,
2021, and may be suspended or discontinued at any time.
We anticipate funding the capital expenditures for the improvement and expansion of existing facilities and
recurring expenses through our operating cash flows. We have the ability to fund the construction or purchase of
new facilities through our operating cash flows or by financing.
We have no other material commitments for capital expenditures as of December 31, 2020. However, we
will continue to purchase vehicles for our lease and rental operations and authorize capital expenditures for the
improvement or expansion of our existing dealership facilities and construction or purchase of new facilities based
on market opportunities.
Cash Flows
Cash and cash equivalents increased by $130.4 million during the year ended December 31, 2020, compared
to the year ended December 31, 2019, and increased by $49.9 million during the year ended December 31, 2019,
compared to the year ended December 31, 2018. The major components of these changes are discussed below.
Cash Flows from Operating Activities
Cash flows from operating activities include net income adjusted for non-cash items and the effects of
changes in working capital. During 2020, operating activities resulted in net cash provided by operations of $763.0
million. Net cash provided by operating activities primarily consisted of $114.9 million in net income, as well as
non-cash adjustments related to depreciation and amortization of $177.3 million, deferred income tax of $37.9
million and stock-based compensation of $19.4 million. Cash used in operating activities included an aggregate of
$495.9 million net change in operating assets and liabilities. Included in the net change in operating assets and
liabilities were cash inflows of $11.2 million from a decrease in accounts receivable, $536.7 million from a decrease
in inventory, $5.8 million from the decrease in other current assets, $31.5 million from the increase in customer
deposits and $49.0 million from the increase in accrued liabilities, which were offset by cash outflows of $23.3
million from the decreases in accounts payable and $115.0 million from the net payments on floor plan (trade). The
majority of commercial vehicle inventory is financed through our floor plan credit agreements.
During 2019, operating activities resulted in net cash provided by operations of $421.3 million. Net cash
provided by operating activities primarily consisted of $141.6 million in net income, as well as non-cash adjustments
related to depreciation and amortization of $175.5 million, deferred income tax of $23.0 million and stock-based
compensation of $19.0 million. Cash used in operating activities included an aggregate of $62.1 million net change
in operating assets and liabilities. Included in the net change in operating assets and liabilities were cash inflows of
$19.8 million from a decrease in accounts receivable, $81.7 million from a decrease in inventory and $6.5 million
41
from the increase in customer deposits, which were offset by cash outflows of $10.5 million from the decreases in
accounts payable and accrued liabilities, $26.6 million from the net payments on floor plan (trade) and $7.9 million
from the increase in other current assets.
Cash Flows from Investing Activities
During 2020, cash used in investing activities totaled $127.5 million. Cash flows used in investing activities
consist primarily of cash used for capital expenditures. Capital expenditures totaled $136.2 million during 2020 and
consisted primarily of purchases of property and equipment, improvements to our existing dealership facilities and
$93.0 million for purchases of rental and lease vehicles for the rental and leasing operations, which were directly
offset by borrowings of long-term debt.
During 2019, cash used in investing activities totaled $320.5 million. Cash flows used in investing activities
consist primarily of cash used for capital expenditures. Capital expenditures totaled $293.5 million during 2019 and
consisted primarily of purchases of property and equipment, improvements to our existing dealership facilities and
$209.3 million for purchases of rental and lease vehicles for the rental and leasing operations, which were directly
offset by borrowings of long-term debt. Business acquisitions of $10.2 million consisted of the purchase of a Ford
dealership in Ceres, California, and a used truck dealership in Jacksonville, Florida, including the real estate
associated with each dealership. In addition, we purchased 50% of the equity interest in RTC Canada for $22.5
million, which is treated as an equity method investment.
Cash Flows from Financing Activities
Cash flows provided by (used in) financing activities include borrowings and repayments of long-term debt
and net payments of floor plan notes payable. During 2020, our financing activities resulted in net cash used in
financing of $505.1 million. The cash outflows consisted primarily of $266.5 million used for principal repayments
of long-term debt and capital lease obligations, $369.6 million from net payments on floor plan notes payable (non-
trade), and $24.9 million used to purchase 843,020 shares of Rush Class A common stock and 225,444 shares of
Rush Class B common stock during 2020. Additionally, during 2020, we paid cash dividends of $22.5 million.
These cash outflows were partially offset by borrowings of $157.3 million of long-term debt for the purchase of
additional units for our rental and leasing operations and $21.0 million from the issuance of shares related to equity
compensation plans.
During 2019, our financing activities resulted in net cash used in financing of $50.9 million. The cash
outflows consisted primarily of $191.9 million used for principal repayments of long-term debt and capital lease
obligations, $135.0 million for payments on a line of credit, $104,000 from net payments on floor plan notes payable
(non-trade), and $58.2 million used to purchase 1,264,032 shares of Rush Class A common stock and 275,554 shares
of Rush Class B common stock during 2019. Additionally, during 2019, we paid cash dividends of $18.3 million.
These cash outflows were partially offset by borrowings of $210.0 million of long-term debt for the purchase of
additional units for our rental and leasing operations, $135.0 million from draws on a line of credit and $8.2 million
from the issuance of shares related to equity compensation plans.
Most of our commercial vehicle inventory purchases are made on terms requiring payment to the
manufacturer within 15 days or less from the date the commercial vehicles are invoiced from the factory. We finance
the majority of all new commercial vehicle inventory and the loan value of our used commercial vehicle inventory
under the Floor Plan Credit Agreement. The Floor Plan Credit Agreement includes an aggregate loan commitment
of $1.0 billion. Borrowings under the Floor Plan Credit Agreement bear interest at an annual rate equal to (A) the
greater of (i) zero and (ii) one month LIBOR rate, determined on the last day of the prior month, plus (B) 1.25% and
are payable monthly. Loans under the Floor Plan Credit Agreement for the purchase of used commercial vehicle
inventory are limited to $150.0 million and loans for working capital purposes are limited to $200.0 million. The
Floor Plan Credit Agreement expires June 30, 2022, although BMO Harris has the right to terminate at any time
upon 360 days written notice and we may terminate at any time, subject to specified limited exceptions. On
December 31, 2020, we had approximately $451.5 million outstanding under the Floor Plan Credit Agreement. The
average daily outstanding borrowings under the Floor Plan Credit Agreement were $600.1 million during the year
ended December 31, 2020. We utilize our excess cash on hand to pay down our outstanding borrowings under the
Floor Plan Credit Agreement, and the resulting interest earned is recognized as an offset to our gross interest expense
under the Floor Plan Credit Agreement.
42
Navistar Financial Corporation and Peterbilt offer trade terms that provide an interest-free inventory
stocking period for certain new commercial vehicles. This interest-free period is generally 15 to 60 days. If the
commercial vehicle is not sold within the interest-free period, we then finance the commercial vehicle under the
Floor Plan Credit Agreement.
Cyclicality
Our business is dependent on a number of factors including general economic conditions, fuel prices,
interest rate fluctuations, credit availability, environmental and other government regulations and customer business
cycles. Unit sales of new commercial vehicles have historically been subject to substantial cyclical variation based
on these general economic conditions. According to data published by A.C.T. Research, in recent years, total U.S.
retail sales of new Class 8 commercial vehicles have ranged from a low of approximately 110,000 in 2010, to a high
of approximately 281,440 in 2019. Through geographic expansion, concentration on higher margin Aftermarket
Products and Services and diversification of our customer base, we have attempted to reduce the negative impact of
adverse general economic conditions or cyclical trends affecting the Class 8 commercial vehicle industry on our
earnings.
Off-Balance Sheet Arrangements
Other than operating leases entered into prior to the adoption of ASU No. 2016-02, “Leases (“Topic 842”)”
on January 1, 2019, we do not have any obligation under any transaction, agreement or other contractual
arrangement to which an entity unconsolidated with the Company is a party, that has or is reasonably likely to have,
a material effect on our financial condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is material to investors.
Contractual Obligations
We have certain contractual obligations that will impact both our short and long-term liquidity. As of
December 31, 2020, such obligations were as follows (in thousands):
Contractual Obligations
Long-term debt obligations (1)
Finance lease obligations(2)
Operating lease obligations(2)
Floor plan debt obligation
Interest obligations (3)
Purchase obligations (4)
Total
Total
3-5
years
More than
5 years
Less than 1
year
Payments Due by Period
1-3
years
(in thousands)
$ 529,654 $ 141,672 $ 232,656 $ 128,694 $ 26,632
16,931
28,573
−
555
−
$190,210 $ 72,691
47,267
21,223
−
21,911
−
$ 724,889 $ 323,057
134,411
78,927
511,786
56,069
−
$1,310,847
31,579
13,055
511,786
26,797
−
38,634
16,076
−
6,806
−
Refer to Note 8 of Notes to Consolidated Financial Statements.
(1)
Refer to Note 10 of Notes to Consolidated Financial Statements. Amounts include interest.
(2)
(3)
In computing interest expense, we used our weighted average interest rate outstanding on fixed rate debt to
estimate our interest expense on fixed rate debt. We used our weighted average variable interest rate on outstanding
variable rate debt as of December 31, 2020, and added 0.25 percent per year to estimate our interest expense on
variable rate debt.
(4)
The Company does not have any material purchase obligations as of December 31, 2020.
43
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Market risk represents the risk of loss that may impact the financial position, results of operations, or cash
flows of the Company due to adverse changes in financial market prices, including interest rate risk, and other
relevant market rate or price risks.
We are exposed to market risk through interest rates related to our floor plan financing agreements, the
Working Capital Facility, variable rate real estate debt and discount rates related to finance sales. The majority of
our floor plan debt and variable rate real estate debt is based on LIBOR. As of December 31, 2020, we had floor
plan borrowings of $511.8 million and variable interest rate real estate debt of approximately $41.0 million.
Assuming an increase or decrease in LIBOR of 100 basis points, annual interest expense could correspondingly
increase or decrease by approximately $5.5 million.
44
Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
Consolidated Balance Sheets as of December 31, 2020 and 2019
Consolidated Statements of Income for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2020, 2019 and 2018
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018
Notes to Consolidated Financial Statements
46
79
48
49
50
51
52
53
45
Report of Independent Registered Public Accounting Firm
The Shareholders and the Board of Directors of Rush Enterprises, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Rush Enterprises, Inc. and subsidiaries (the
Company) as of December 31, 2020 and 2019, and the related consolidated statements of income, comprehensive
income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2020, and
the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020
and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December
31, 2020, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 Framework), and our report dated February 24, 2021, expressed an unqualified opinion
thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion
on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter
below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.
New and Used Commercial Vehicle Inventory Reserves
Description of the
Matter
At December 31, 2020, the Company’s new and used commercial vehicle inventory balance is
approximately $613.0 million, which is net of management’s estimate of inventory reserves. As
described in Note 6 to the consolidated financial statements, management adjusts the value of its
inventory to net realizable value to the extent it determines inventory cost cannot be recovered.
Management estimates future demand and sales prices to calculate the inventory reserves and to
46
make corresponding adjustments to the carrying value of these inventories to reflect the lower of
cost or net realizable value.
Auditing management’s estimate of the inventory excess reserves involved auditor subjective
judgment because the estimate is sensitive to changes in management’s assumptions for forecasted
product demand and future sales prices.
How We
Addressed the
Matter in Our
Audit
We evaluated and tested the design and operating effectiveness of controls over the Company’s
processes to estimate the inventory reserves, which included management’s review of the
underlying significant assumptions.
Our substantive audit procedures included, among others, evaluating the significant assumptions
described above, and we tested the completeness and accuracy of underlying data used in the
estimation calculations and evaluating significant assumptions. We also compared the cost of on-
hand inventories to customer demand forecasts and historical sales. We assessed the historical
accuracy of management’s estimates and performed sensitivity analyses of significant
assumptions to evaluate the changes in the inventory reserves that would result from changes in
the assumptions.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2002.
San Antonio, Texas
February 24, 2021
47
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Shares and Per Share Amounts)
Assets
Current assets:
Cash and cash equivalents
Accounts receivable, net
Inventories, net
Prepaid expenses and other
Assets held for sale
Total current assets
Property and equipment, net
Operating lease right-of-use assets, net
Goodwill, net
Other assets, net
Total assets
Liabilities and shareholders’ equity
Current liabilities:
Floor plan notes payable
Current maturities of long-term debt
Current maturities of finance lease obligations
Current maturities of operating lease obligations
Trade accounts payable
Customer deposits
Accrued expenses
Total current liabilities
Long-term debt, net of current maturities
Finance lease obligations, net of current maturities
Operating lease obligations, net of current maturities
Other long-term liabilities
Deferred income taxes, net
Shareholders’ equity:
Preferred stock, par value $.01 per share; 1,000,000 shares
authorized; 0 shares outstanding in 2020 and 2019
Common stock, par value $.01 per share; 60,000,000 Class A
shares and 20,000,000 Class B shares authorized; 42,503,925
Class A shares and 12,470,308 Class B shares outstanding in
2020; and 41,930,472 Class A shares and 12,360,729 Class B
shares outstanding in 2019
Additional paid-in capital
Treasury stock, at cost: 10,335 Class A shares and 73,437 Class B
shares in 2020 and 7,583,674 Class A shares and 7,959,511 Class B
shares in 2019
Retained earnings
Accumulated other comprehensive income
Total shareholders’ equity
December 31,
2020
December 31,
2019
$ 312,048
172,481
858,291
14,906
–
1,357,726
1,203,719
60,577
292,142
71,229
$ 181,620
183,704
1,326,080
20,728
419
1,712,551
1,279,931
57,197
292,142
65,508
$ 2,985,393
$ 3,407,329
$ 511,786
141,672
26,373
10,196
110,728
74,209
151,830
1,026,794
387,982
90,740
51,155
34,246
126,439
$ 996,336
189,265
22,892
10,114
133,697
42,695
112,390
1,507,389
438,413
69,478
47,555
20,704
164,297
–
–
551
437,646
(2,879)
831,850
869
1,268,037
465
397,267
(304,129)
1,065,553
337
1,159,493
Total liabilities and shareholders’ equity
$ 2,985,393
$ 3,407,329
The accompanying notes are an integral part of these consolidated financial statements.
48
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
Revenues
New and used commercial vehicle sales
Aftermarket products and services sales
Lease and rental
Finance and insurance
Other
Total revenue
Cost of products sold
New and used commercial vehicle sales
Aftermarket products and services sales
Lease and rental
Total cost of products sold
Gross profit
Selling, general and administrative
Depreciation and amortization
Gain (loss) on sale of assets
Operating income
Other income
Interest income (expense):
Interest income
Interest expense
Total interest expense, net
Income before taxes
Income tax provision
Net income
Earnings per common share
Basic
Diluted
2020
Year Ended December 31,
2019
2018
$ 2,863,309
1,600,445
236,223
21,949
14,014
4,735,940
$ 3,757,584
1,762,510
247,549
24,443
17,761
5,809,847
$ 3,558,637
1,670,052
238,238
20,535
18,728
5,506,190
2,641,487
1,016,574
202,412
3,860,473
875,467
665,258
57,456
1,852
154,605
6,132
713
(9,727)
9,014
151,723
36,836
3,480,682
1,097,337
206,200
4,784,219
1,025,628
753,749
55,372
(102)
216,405
1,925
1,680
(30,487)
28,807
189,523
47,940
3,280,966
1,049,684
197,271
4,527,921
978,269
705,226
70,489
297
202,851
−
1,376
(21,058)
19,682
183,169
44,107
$ 114,887
$ 141,583
$ 139,062
$ 2.09
$ 2.04
$ 2.57
$ 2.51
$ 2.36
$ 2.30
Dividends declared per common share
$ 0.41
$ 0.34
$ 0.16
The accompanying notes are an integral part of these consolidated financial statements.
49
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands)
Year Ended December 31,
2019
2020
2018
Net income
$ 114,887
$ 141,583
$ 139,062
Other comprehensive income net of tax and net of
reclassification adjustments:
Change in currency translation
Comprehensive income
532
337
–
$ 115,419
$ 141,920
$ 139,062
The accompanying notes are an integral part of these consolidated financial statements.
50
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In Thousands)
Common Stock
Shares
Outstanding
Class A Class B
$0.01
Par
Value
Additional
Paid-In
Capital
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Total
47,017
12,703
$ 454
$348,044
$ (120,682)
$ 812,557
$ –
$1,040,373
207
–
1
2,742
–
–
126
(4,285)
–
–
–
–
340
–
(608)
–
–
–
–
2
1
–
–
–
–
18,059
(1,749)
2,929
–
–
(125,160)
–
–
–
–
–
–
(7,324)
(2,008)
139,062
43,065
12,435
$ 458
$370,025
$ (245,842)
$ 942,287
$ –
$1,066,928
586
–
4
7,585
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
175
(1,896)
–
–
–
–
–
339
–
(414)
–
–
–
–
–
2
1
–
–
–
–
–
19,005
(2,834)
3,486
–
–
(58,287)
–
–
–
–
–
–
–
–
(14,037)
(4,280)
–
141,583
–
–
–
–
–
–
–
–
2,743
18,059
(1,747)
2,930
(125,160)
(7,324)
(2,008)
139,062
–
–
–
–
–
–
–
337
–
7,589
19,005
(2,832)
3,487
(58,287)
(14,037)
(4,280)
337
141,583
Balance, December 31, 2017
Stock options exercised and stock
awards
Stock-based compensation related
to stock options, restricted
shares and employee stock
purchase plan
Vesting of restricted share awards
Issuance of common stock under
employee stock purchase plan
Common stock repurchases
Cash dividends declared on Class
A common stock
Cash dividends declared on Class
B common stock
Net income
Balance, December 31, 2018
Stock options exercised and stock
awards
Stock-based compensation related
to stock options, restricted
shares and employee stock
purchase plan
Vesting of restricted share awards
Issuance of common stock under
employee stock purchase plan
Common stock repurchases
Cash dividends declared on Class
A common stock
Cash dividends declared on Class
B common stock
Other comprehensive income
Net income
Balance, December 31, 2019
Stock options exercised and stock
41,930
12,360
$ 465
$397,267
$ (304,129)
$1,065,553
$ 337
$1,159,493
awards
1,247
–
10
19,582
Stock-based compensation related
to stock options, restricted
shares and employee stock
purchase plan
Vesting of restricted share awards
Issuance of common stock under
employee stock purchase plan
Common stock repurchases
Cancellation of treasury stock
Cash dividends declared on Class
A common stock
Cash dividends declared on Class
B common stock
Other comprehensive income
Net income
–
–
177
(843)
(7)
–
–
–
–
–
339
–
(225)
(4)
–
–
–
–
–
2
2
–
72
–
–
–
–
19,356
(2,459)
3,900
–
–
–
–
–
–
–
–
–
–
(24,807)
326,057
–
–
–
–
–
–
–
–
–
(326,129)
(17,062)
(5,399)
–
114,887
–
–
–
–
–
–
–
–
532
–
19,592
19,356
(2,457)
3,902
(24,807)
–
–
(17,062)
(5,399)
532
114,887
Balance, December 31, 2020
42,504
12,470
$ 551
$437,646
$ (2,879)
$ 831,850
$ 869
$1,268,037
The accompanying notes are an integral part of these consolidated financial statements.
51
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization
(Gain) loss on sale of property and equipment, net
Stock-based compensation expense related to employee stock
options and employee stock purchases
(Benefit) provision for deferred income tax expense
Change in accounts receivable, net
Change in inventories
Change in prepaid expenses and other, net
Change in trade accounts payable
(Payments) draws on floor plan notes payable – trade, net
Change in customer deposits
Change in accrued expenses
Other, net
Net cash provided by operating activities
Cash flows from investing activities:
Acquisition of property and equipment
Proceeds from the sale of property and equipment
Business acquisitions
Purchase of equity method investment and call option
Proceeds from the sale of available for sale securities
Other
Net cash used in investing activities
Cash flows from financing activities:
(Payments) draws on floor plan notes payable – non-trade, net
Proceeds from long-term debt
Principal payments on long-term debt
Principal payments on finance lease obligations
Draws on line of credit
Payments on line of credit
Proceeds from issuance of shares relating to employee stock options
and employee stock purchases
Payments of cash dividends
Common stock repurchased
Debt issuance costs
Net cash (used in) provided by financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Year Ended December 31,
2019
2018
2020
$ 114,887
$ 141,583
$ 139,062
177,347
(1,852)
19,356
(37,858)
11,223
536,682
5,822
(23,336)
(114,958)
31,514
48,974
(4,819)
762,982
(136,200)
5,783
−
−
−
2,960
(127,457)
(369,592)
157,255
(255,279)
(11,192)
−
−
21,037
(22,461)
(24,865)
−
(505,097)
130,428
181,620
175,484
102
19,005
22,989
19,831
81,722
(10,237)
2,241
(26,579)
6,512
(12,757)
1,376
421,272
(293,493)
2,310
(10,168)
(22,499)
−
3,394
(320,456)
(104)
210,043
(183,538)
(8,331)
135,000
(135,000)
8,244
(18,317)
(58,188)
(731)
(50,922)
49,894
131,726
185,122
(297)
18,059
5,997
(7,746)
(255,040)
1,907
18,490
76,646
8,833
24,331
−
215,364
(238,260)
6,325
−
−
6,375
(1,683)
(227,243)
167,812
156,751
(167,106)
(12,429)
−
−
3,926
(9,332)
(120,558)
−
19,064
7,185
124,541
Cash and cash equivalents, end of year
$ 312,048
$ 181,620
$ 131,726
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest
Income taxes paid, net
Noncash investing and financing activities:
Assets acquired under finance leases
Guaranty agreement
$ 38,806
$ 36,364
$ 57,373
$ 42,440
$ 42,752
$ 28,674
$ 49,523
−
$ 44,904
$ 5,025
$ 4,914
−
The accompanying notes are an integral part of these consolidated financial statements.
52
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
ORGANIZATION AND OPERATIONS:
Rush Enterprises, Inc. (the “Company”) was incorporated in 1965 under the laws of the State of Texas. The Company
operates a network of commercial vehicle dealerships that primarily sell commercial vehicles manufactured by Peterbilt,
International, Hino, Ford, Isuzu, IC Bus or Blue Bird. Through its strategically located network of Rush Truck Centers, the
Company provides one-stop service for the needs of its commercial vehicle customers, including retail sales of new and used
commercial vehicles, aftermarket parts sales, service and repair facilities, financing, leasing and rental, and insurance
products.
Stock Split
On September 15, 2020, the Board of Directors of the Company declared a 3-for-2 stock split of the Company’s Class A
common stock and Class B common stock, to be effected in the form of a stock dividend. On October 12, 2020, the Company
distributed one additional share of stock for every two shares of Class A common stock, par value $0.01 per share, and Class
B common stock, par value $0.01 per share, held by shareholders of record as of September 28, 2020. All share and per
share data in this Form 10-K have been adjusted and restated to reflect the stock split as if it occurred on the first day of the
earliest period presented.
COVID-19 Risks and Uncertainties
In March 2020, the World Health Organization made the assessment that COVID-19 could be characterized as a pandemic,
and the President of the United States declared the COVID-19 outbreak a national emergency. The Company’s nationwide
network of commercial vehicle dealerships are classified as “essential businesses” and have remained operational across the
Company’s dealership network. Despite the dealerships remaining open, the COVID-19 pandemic had a significant negative
impact on the Company’s financial results during the year ended December 31, 2020. The Company is unable to predict the
impact that the COVID-19 pandemic will have on its future business and operating results due to numerous uncertainties,
including the duration and severity of the outbreak.
2.
SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements presented herein include the accounts of Rush Enterprises, Inc. together with its
consolidated subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation.
Estimates in Financial Statements
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results may differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents generally consist of cash and other money market instruments. The Company considers all highly
liquid investments with an original maturity of ninety days or less to be cash equivalents.
53
Allowance for Credit Losses and Repossession Losses
The Company maintains an allowance for credit losses based on the probability of default, its historical rate of losses, aging
and current economic conditions. Accounts receivable consists primarily of commercial vehicle sales receivables,
manufacturers’ receivables, leasing and parts and service receivables and other trade receivables. The Company writes off
account balances when it has exhausted reasonable collection efforts and determined that the likelihood of collection is
remote. These write-offs are charged against the allowance for credit losses.
The Company provides an allowance for repossession losses after considering historical loss experience and other factors
that might affect the ability of customers to meet their obligations on finance contracts sold by the Company when the
Company has a potential liability.
Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined by specific identification of new and
used commercial vehicle inventory and by the first-in, first-out method for tires, parts and accessories. As the market value
of the Company’s inventory typically declines over time, reserves are established based on historical loss experience and
market trends. These reserves are charged to cost of sales and reduce the carrying value of the Company’s inventory on
hand. An allowance is provided when it is anticipated that cost will exceed net realizable value less a reasonable profit
margin.
Property and Equipment
Property and equipment are stated at cost and depreciated over their estimated useful lives. Leasehold improvements are
amortized over the useful life of the improvement, or the term of the lease, whichever is shorter. Provision for depreciation
of property and equipment is calculated primarily on a straight-line basis. The Company capitalizes interest on borrowings
during the active construction period of major capital projects. Capitalized interest, when incurred, is added to the cost of
underlying assets and is amortized over the estimated useful life of such assets. The Company recorded capitalized interest
of approximately $163,500 related to major capital projects during 2020. The cost, accumulated depreciation and
amortization and estimated useful lives of certain of the Company’s property and equipment are summarized as follows (in
thousands):
Land
Buildings and improvements
Leasehold improvements
Machinery and shop equipment
Furniture, fixtures and computers
Transportation equipment
Lease and rental vehicles
Construction in progress
Accumulated depreciation and amortization
2020
$ 136,024
495,808
38,767
87,090
81,834
96,319
905,465
2,989
(640,577)
2019
$ 137,416
474,106
34,350
82,594
73,846
99,127
968,121
16,874
(606,503)
Total
$ 1,203,719
$ 1,279,931
Estimated Life
(Years)
–
10 – 39
2 – 39
5 – 20
3 – 15
3 – 15
1 – 8
The Company recorded depreciation expense of $157.8 million and amortization expense of $19.5 million for the year ended
December 31, 2020, depreciation expense of $158.7 million and amortization expense of $16.8 million for the year ended
December 31, 2019, and depreciation expense of $149.1 million and amortization expense of $36.0 million for the year ended
December 31, 2018.
As of December 31, 2020, the Company had $109.5 million in lease and rental vehicles under various finance leases included
in property and equipment, net of accumulated amortization of $40.2 million. The Company recorded depreciation and
amortization expense of $119.9 million related to lease and rental vehicles in lease and rental cost of products sold for the
year ended December 31, 2020, $120.1 million for the year ended December 31, 2019 and $114.6 million for the year ended
December 31, 2018.
54
Goodwill
Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations
accounted for under the purchase method. The Company tests goodwill for impairment annually during the fourth quarter,
or when indications of potential impairment exist. These indicators would include a significant change in operating
performance, or a planned sale or disposition of a significant portion of the business, among other factors. The Company
tests for goodwill impairment utilizing a fair value approach at the reporting unit level. The Company has deemed its
reporting unit to be the Truck Segment, as all components of the Truck Segment are similar.
The impairment test for goodwill involves comparing the fair value of a reporting unit to its carrying amount, including
goodwill. If the carrying amount of the reporting unit exceeds its fair value, a second step is required to measure the goodwill
impairment loss. The second step includes hypothetically valuing all the tangible and intangible assets of the reporting unit
as if the reporting unit had been acquired in a business combination and comparing the hypothetical implied fair value of the
reporting unit’s goodwill to the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill
exceeds the hypothetical implied fair value of the goodwill, the Company would recognize an impairment loss in an amount
equal to the excess, not to exceed the carrying amount. The Company determines the fair values calculated in an impairment
test using the discounted cash flow method, which requires assumptions and estimates regarding future revenue, expenses
and cash flow projections. The analysis is based upon available information regarding expected future cash flows of its
reporting unit discounted at rates consistent with the cost of capital specific to the reporting unit.
No impairment write down was required in the fourth quarter of 2020. However, the Company cannot predict the occurrence
of certain events that might adversely affect the reported value of goodwill in the future.
The carrying amount of goodwill for the Company for the years ended December 31, 2020 and 2019 was $292.1 million.
Other Assets
ERP Platform
The total capitalized costs of the Company’s SAP enterprise resource planning software platform (“the ERP Platform”) of
$7.0 million are recorded on the Consolidated Balance Sheet in Other Assets. Amortization expense relating to the ERP
Platform, which is recognized in depreciation and amortization expense in the Consolidated Statements of Income and
Comprehensive Income, was $1.9 million for the year ended December 31, 2020 and $1.9 million for the year ended
December 31, 2019. The Company estimates that amortization expense relating to the ERP Platform will be approximately
$1.2 million for each of the next five years.
In the first quarter of 2018, as part of an assessment that involved a technical feasibility study of the then current ERP
Platform, the Company determined that a majority of the components of this ERP Platform would require replacement earlier
than originally anticipated; in prior disclosures, the Company had referred to the ERP Platform separately as the SAP
enterprise software and SAP dealership management system. In accordance with Accounting Standards Codification
(“ASC”) Topic 350-40, in the first quarter of 2018, the Company adjusted the useful life of these components that were
replaced so that the respective net book values of the components were fully amortized upon replacement in May 2018. The
Company amortized the remaining net book value of the components that were replaced on a straight-line basis in February
2018 through May 2018. The Company recorded amortization expense of $19.9 million in 2018 related to the components
of the ERP Platform that were replaced. The ERP Platform asset and related amortization are reflected in the Truck Segment.
Franchise Rights
The Company’s only significant identifiable intangible assets, other than goodwill, are rights under franchise agreements
with manufacturers. The fair value of the franchise right is determined at the acquisition date by discounting the projected
cash flows specific to each acquisition. The carrying value of the Company’s manufacturer franchise rights was $7.0 million
at December 31, 2020 and 2019, and is included in Other Assets on the accompanying Consolidated Balance Sheet. The
Company has determined that manufacturer franchise rights have an indefinite life, as there are no economic or other factors
that limit their useful lives and they are expected to generate cash flows indefinitely due to the historically long lives of the
manufacturers’ brand names. Furthermore, to the extent that any agreements evidencing manufacturer franchise rights have
55
expiration dates, the Company expects that it will be able to renew those agreements in the ordinary course of business.
Accordingly, the Company does not amortize manufacturer franchise rights.
Due to the fact that manufacturer franchise rights are specific to a geographic region, the Company has determined that
evaluating and including all locations acquired in the geographic region is the appropriate level for purposes of testing
franchise rights for impairment. Management reviews indefinite-lived manufacturer franchise rights for impairment annually
during the fourth quarter, or more often if events or circumstances indicate that an impairment may have occurred. The
Company is subject to financial statement risk to the extent that manufacturer franchise rights become impaired due to
decreases in the fair market value of its individual franchises.
The significant estimates and assumptions used by management in assessing the recoverability of manufacturer franchise
rights include estimated future cash flows, present value discount rate and other factors. Any changes in these estimates or
assumptions could result in an impairment charge. The estimates of future cash flows, based on reasonable and supportable
assumptions and projections, require management’s subjective judgment. Depending on the assumptions and estimates used,
the estimated future cash flows projected in the evaluations of manufacturer franchise rights can vary within a range of
outcomes.
No impairment write-down was required in the period presented. The Company cannot predict the occurrence of certain
events that might adversely affect the reported value of manufacturer franchise rights in the future.
Equity Method Investment and Call Option
On February 25, 2019, the Company acquired 50% of the equity interest in Rush Truck Centres of Canada Limited (“RTC
Canada”), which acquired the operating assets of Tallman Group, the largest International Truck dealer in Canada. The
Company was also granted a call option in the purchase agreement that provides the Company with the right to acquire the
remaining 50% equity interest in RTC Canada until the close of business on February 25, 2024. The value of the Company’s
call option was $3.6 million as of December 31, 2020, and is reported in Other Assets on the Consolidated Balance Sheet.
On April 25, 2019, the Company entered into a Guaranty Agreement (“Guaranty”) with Bank of Montreal (“BMO”),
pursuant to which the Company agreed to guaranty up to CAD250 million (the “Guaranty Cap”) of certain credit facilities
entered into by and between Tallman Truck Centre Limited (“TTCL”) and BMO. The Company owned a 50% equity
interest in TTCL, which was the sole owner of RTC Canada. Later in 2019, RTC Canada and TTCL were amalgamated
into RTC Canada. Interest, fees and expenses incurred by BMO to enforce its rights with respect to the guaranteed
obligations and its rights against the Company under the Guaranty are not subject to the Guaranty Cap. In exchange for the
Guaranty, RTC Canada is receiving a reduced rate of interest on its credit facilities with BMO. The Guaranty was valued
at $5.2 million as of December 31, 2020 and $5.1 million as of December 31, 2019, and is included in the investment in
RTC Canada. As of December 31, 2020, the Company’s investment in RTC Canada is $32.0 million. The Company’s
equity income in RTC Canada is included in Other income on the Consolidated Statements of Income.
Income Taxes
Management’s judgment is required to determine the provisions for income taxes and to determine whether deferred tax
assets will be realized in full or in part. Deferred income tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or
settled. When it is more likely than not that all or some portion of specific deferred income tax assets will not be realized,
a valuation allowance must be established for the amount of deferred income tax assets that are determined not to be
realizable. Accordingly, the facts and financial circumstances impacting deferred income tax assets are reviewed quarterly
and management’s judgment is applied to determine the amount of valuation allowance required, if any, in any given period.
In determining its provision for income taxes, the Company uses an annual effective income tax rate based on annual income,
permanent differences between book and tax income, and statutory income tax rates. The effective income tax rate also
reflects its assessment of the ultimate outcome of tax audits. The Company adjusts its annual effective income tax rate as
additional information on outcomes or events becomes available. Discrete events such as audit settlements or changes in tax
laws are recognized in the period in which they occur.
The Company’s income tax returns are periodically audited by tax authorities. These audits include questions regarding the
Company’s tax filing positions, including the timing and amount of deductions. In evaluating the exposures associated with
56
its various tax filing positions, the Company adjusts its liability for unrecognized tax benefits and income tax provision in
the period in which an uncertain tax position is effectively settled, the statute of limitations expires for the relevant taxing
authority to examine the tax position or when more information becomes available.
The Company’s liability for unrecognized tax benefits contains uncertainties because management is required to make
assumptions and to apply judgment to estimate the exposures associated with its various filing positions. The Company’s
effective income tax rate is also affected by changes in tax law, the level of earnings and the results of tax audits. Although
the Company believes that the judgments and estimates are reasonable, actual results could differ, and the Company may be
exposed to losses or gains that could be material. An unfavorable tax settlement would generally require use of the
Company’s cash and result in an increase in its effective income tax rate in the period of resolution. A favorable tax
settlement would be recognized as a reduction in the Company’s effective income tax rate in the period of resolution. The
Company’s income tax expense includes the impact of reserve provisions and changes to reserves that it considers
appropriate, as well as related interest.
Revenue Recognition Policies
Effective January 1, 2018, the Company adopted ASU 2014-09, “Revenue from Contracts with Customers (“Topic 606”),”
using the modified retrospective transition method. This standard applies to all contracts with customers, except for contracts
that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial
instruments. Under Topic 606, the Company recognizes revenue when its customer obtains control of promised goods or
services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or
services. To determine revenue recognition for arrangements that the Company determines are within the scope of Topic
606, the Company performs the following five steps: (i) identify the contract with a customer; (ii) identify the performance
obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance
obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The
Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled
to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined
to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and
determines those that are performance obligations. The Company then assesses whether each promised good or service is
distinct and recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation
when (or as) the performance obligation is satisfied. For a complete discussion of accounting for revenue, see Note 18 –
Revenue of the Notes to Consolidated Financial Statements.
Cost of Sales
For the Company’s new and used commercial vehicle operations, cost of sales consists primarily of the Company’s actual
purchase price, plus make-ready expenses, less any applicable manufacturers’ incentives. For the Company’s parts
operations, cost of sales consists primarily of the Company’s actual purchase price, less any applicable manufacturers’
incentives. For the Company’s service and collision center operations, technician labor cost is the primary component of
cost of sales. For the Company’s rental and leasing operations, cost of sales consists primarily of depreciation and
amortization, rent, maintenance costs, license costs and interest expense on the lease and rental fleet owned and leased by
the Company. There are no costs of sales associated with the Company’s finance and insurance revenue or other revenue.
Leases
The Company leases commercial vehicles and real estate under finance and operating leases. The Company determines
whether an arrangement is a lease at its inception. For leases with terms greater than twelve months, the Company records
a lease asset and liability at the present value of lease payments over the term. Many of the Company’s leases include renewal
options and termination options that are factored into its determination of lease payments when appropriate.
When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most
of its leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate its incremental
borrowing rate to discount the lease payments based on information available at lease commencement.
The Company leases commercial vehicles that the Company owns to customers. Lease and rental revenue is recognized
over the period of the related lease or rental agreement. Variable rental revenue is recognized when it is earned.
57
Taxes Assessed by a Governmental Authority
The Company accounts for sales taxes assessed by a governmental authority that are directly imposed on a revenue-producing
transaction on a net (excluded from revenues) basis.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of incentive based compensation for sales, finance and general
management personnel, salaries for administrative personnel and expenses for rent, marketing, insurance, utilities, research
and development and other general operating purposes.
Stock Based Compensation
The Company applies the provisions of ASC topic 718-10, “Compensation – Stock Compensation,” which requires the
measurement and recognition of compensation expense for all share-based payment awards made to employees and directors,
including grants of employee stock options, restricted stock units, restricted stock awards and employee stock purchases
under the Employee Stock Purchase Plan, based on estimated fair values.
The Company uses the Black-Scholes option-pricing model to estimate the fair value of share-based payment awards on the
date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the
requisite service periods.
Compensation expense for all share-based payment awards is recognized using the straight-line single-option method. Stock-
based compensation expense is recognized based on awards expected to vest. Accordingly, stock based compensation
expense has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary,
in subsequent periods if actual forfeitures differ from those estimates.
The Company determines the fair value of share-based payment awards on the date of grant using an option-pricing model
that is affected by the Company’s stock price, as well as assumptions regarding a number of highly complex and subjective
variables. These variables include the Company’s expected stock price volatility over the term of the awards and actual and
projected stock option exercise behaviors. Option-pricing models were developed for use in estimating the value of traded
options that have no vesting or hedging restrictions and are fully transferable. Because the Company’s stock options have
characteristics that are significantly different from traded options and because changes in the subjective assumptions can
materially affect the estimated value, in management’s opinion, the existing valuation models may not provide an accurate
measure of fair value and it may not be indicative of the fair value observed in a market transaction between a willing buyer
and a willing seller.
The following table reflects the weighted-average fair value of stock options granted during each period using the Black-
Scholes option valuation model with the following weighted-average assumptions used:
Expected stock volatility
Weighted-average stock volatility
Expected dividend yield
Risk-free interest rate
Expected life (years)
Weighted-average fair value of
stock options granted
2020
33.11%
33.11%
1.20%
0.80%
2019
31.29%
31.29%
1.13%
2.45%
2018
31.68%
31.68%
0.00%
2.69%
6.0
6.0
6.0
$ 6.36
$ 8.37
$ 10.31
The Company computes its historical stock price volatility in accordance with ASC Topic 718-10. The risk-free interest
rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of
grant. The dividend yield assumption is based on the Company’s history and expectation of dividend payouts. The expected
life of stock options represents the weighted-average period the stock options are expected to remain outstanding.
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Advertising Costs
Advertising costs are expensed as incurred. Advertising and marketing expense was $7.9 million for 2020, $11.5 million for
2019 and $10.4 million for 2018. Advertising and marketing expense is included in selling, general and administrative
expense.
Accounting for Internal Use Software
The Company’s accounting policy with respect to accounting for computer software developed or obtained for internal use
is consistent with ASC topic 350-40, which provides guidance on accounting for the costs of computer software developed
or obtained for internal use and identifies characteristics of internal-use software. The Company has capitalized software
costs, including capitalized interest, of approximately $7.0 million as of December 31, 2020, net of accumulated amortization
of $12.1 million, and had $8.9 million as of December 31, 2019, net of accumulated amortization of $10.2 million.
Insurance
The Company is partially self-insured for a portion of the claims related to its property and casualty insurance programs.
Accordingly, the Company is required to estimate expected losses to be incurred. The Company engages a third-party
administrator to assess any open claims and the Company adjusts its accrual accordingly on an annual basis. The Company
is also partially self-insured for a portion of the claims related to its worker’s compensation and medical insurance programs.
The Company uses actuarial information provided from third-party administrators to calculate an accrual for claims incurred,
but not reported, and for the remaining portion of claims that have been reported.
Fair Value Measurements
The Company has various financial instruments that it must measure at fair value on a recurring basis. See Note 9 – Financial
Instruments and Fair Value of the Notes to Consolidated Financial Statements, for further information. The Company also
applies the provisions of fair value measurement to various nonrecurring measurements for its financial and nonfinancial
assets and liabilities.
Applicable accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date (an exit price). The Company
measures its assets and liabilities using inputs from the following three levels of the fair value hierarchy:
Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability
to access at the measurement date.
Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar
assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability
(i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data
by correlation or other means (market corroborated inputs).
Level 3 includes unobservable inputs that reflect the Company’s assumptions about what factors market participants would
use in pricing the asset or liability. The Company develops these inputs based on the best information available, including
its own data.
Acquisitions
The Company uses the acquisition method of accounting for the recognition of assets acquired and liabilities assumed through
acquisitions at their estimated fair values as of the date of acquisition. Any excess consideration transferred over the estimated
fair values of the identifiable net assets acquired is recorded as goodwill. While the Company uses its best estimates and
assumptions to measure the fair value of the identifiable assets acquired and liabilities assumed at the acquisition date, the
estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which is not to
exceed one year from the date of acquisition, any changes in the estimated fair values of the net assets recorded for the
acquisitions will result in an adjustment to goodwill. Upon the conclusion of the measurement period or final determination
of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the
Consolidated Statements of Income.
59
Recent Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, "Financial Instruments - Credit
Losses (Topic 326)," which modified the measurement of expected credit losses of certain financial instruments. Credit losses
on trade and other receivables, held-to-maturity debt securities, and other instruments reflect the Company's current estimate
of the expected credit losses and generally results in the earlier recognition of allowance for losses. The Company adopted
the standard effective January 1, 2020. The adoption of this standard did not have a material impact on the Company’s
consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848),” which provides temporary optional
guidance to ease the potential financial reporting burden of the expected market transition away from LIBOR. The new
guidance provides optional expedients and exceptions for applying U.S. GAAP to contract modifications, hedge accounting,
and other transactions affected by reference rate reform if certain criteria are met through December 31, 2022. The Company
is currently evaluating the effect this standard will have on its financial position, results of operations and related disclosures.
3.
SUPPLIER CONCENTRATION:
Major Suppliers and Dealership Agreements
The Company has entered into dealership agreements with various manufacturers of commercial vehicles and buses
(“Manufacturers”). These agreements are nonexclusive agreements that allow the Company to stock, sell at retail and service
commercial vehicles and sell parts from the Manufacturers in the Company’s defined market. The agreements allow the
Company to use the Manufacturers’ names, trade symbols and intellectual property and expire as follows:
Manufacturer
Peterbilt
International
Isuzu
Hino
Ford
Blue Bird
IC Bus
Expiration Dates
November 2021 through September 2022
March 2021 through May 2025
Indefinite
Indefinite
Indefinite
August 2024
March 2021 through May 2025
These agreements, as well as agreements with various other Manufacturers, impose a number of restrictions and obligations
on the Company, including restrictions on a change in control of the Company and the maintenance of certain required levels
of working capital. Violation of these restrictions could result in the loss of the Company’s right to purchase the
Manufacturers’ products and use the Manufacturers’ trademarks.
The Company purchases its new Peterbilt vehicles from Peterbilt and most of the parts sold at its Peterbilt dealerships from
PACCAR, Inc, the parent company of Peterbilt, at prevailing prices charged to all franchised dealers. Sales of new Peterbilt
trucks accounted for approximately 59.0% of the Company’s new vehicle sales revenue for the year ended December 31,
2020, 61.6% of the Company’s new vehicle sales revenue for the year ended December 31, 2019, and 62.5% of the
Company’s new vehicle sales revenue for the year ended December 31, 2018.
Primary Lenders
The Company purchases its new and used commercial vehicle inventories with the assistance of floor plan financing
programs as described in Note 7 to these Notes to Consolidated Financial Statements. The Company’s floor plan financing
agreements provide that the occurrence of certain events will be considered events of default. In the event that the Company’s
floor plan financing becomes insufficient, or its relationship with any of its current primary lenders terminates, the Company
would need to obtain similar financing from other sources. Management believes it can obtain additional floor plan financing
or alternative financing if necessary.
The Company also acquires lease and rental vehicles with the assistance of financing agreements with PACCAR Leasing
Company and Bank of America. The financing agreements are secured by a lien on the acquired vehicle. The terms of the
financing agreements are similar to the corresponding lease agreements with the Company’s customers.
60
Concentrations of Credit Risks
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of
cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with what it considers
to be quality financial institutions based on periodic assessments of such institutions. The Company’s cash and cash
equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation insurance limit.
The Company controls credit risk through credit approvals and by selling a majority of its trade receivables, other than
vehicle accounts receivable, without recourse. Concentrations of credit risk with respect to trade receivables are reduced
because a large number of geographically diverse customers make up the Company’s customer base; however, substantially
all of the Company’s business is concentrated in the United States commercial vehicle markets and related aftermarkets.
The Company generally sells finance contracts it enters into with customers to finance the purchase of commercial vehicles
to third parties. These finance contracts are sold by the Company both with and without recourse. A majority of the
Company’s finance contracts are sold without recourse. The Company provides an allowance for doubtful receivables and a
reserve for repossession losses related to finance contracts sold with recourse. Historically, the Company’s allowances and
reserves have covered losses inherent in these receivables.
4.
ACCOUNTS RECEIVABLE:
The Company’s accounts receivable, net, consisted of the following (in thousands):
Trade accounts receivable from sale of vehicles
Trade receivables other than vehicles
Warranty claims
Other accounts receivable
Less allowance for credit losses
Total
5.
INVENTORIES:
The Company’s inventories, net, consisted of the following (in thousands):
New commercial vehicles
Used commercial vehicles
Parts and accessories
Other
Less allowance
Total
December 31,
2020
2019
$ 82,338
58,689
9,032
24,027
(1,605)
$ 82,991
68,376
16,819
16,942
(1,424)
$ 172,481
$ 183,704
December 31,
2020
2019
$ 563,097
56,214
238,195
16,175
(15,390)
$ 967,785
84,610
273,185
17,763
(17,263)
$ 858,291
$ 1,326,080
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6.
VALUATION ACCOUNTS:
Valuation and allowance accounts include the following (in thousands):
Balance
Beginning
of Year
Net
Charged to
Costs and
Expenses
Net Write-
Offs
Balance
End
of Year
2020
Reserve for parts inventory
Reserve for commercial vehicle inventory
$ 7,661
9,602
$ 4,501 $ (2,847) $ 9,315
6,075
(13,125)
9,598
2019
Reserve for accounts receivable
Reserve for warranty receivables
Reserve for parts inventory
Reserve for commercial vehicle inventory
2018
Reserve for accounts receivable
Reserve for warranty receivables
Reserve for parts inventory
Reserve for commercial vehicle inventory
$ 987
429
7,050
4,587
$ 2,065 $ (2,038)
(1,680)
(3,849)
(7,474)
1,661
4,460
12,489
$ 1,014
410
7,661
9,602
$ 616 $ 2,183
2,031
2,744
3,550
210
6,230
5,953
$ (1,812)
(1,812)
(1,924)
(4,916)
$ 987
429
7,050
4,587
Accounts Receivable and Allowance for Credit Losses
The Company adopted Topic 326 on January 1, 2020. The Company did not recognize an adjustment to the beginning
balance of retained earnings because the new accounting standard did not have a material impact on its consolidated financial
statements. The Company establishes an allowance for credit losses to present the net amount of accounts receivable
expected to be collected. Under Topic 326, the Company is required to remeasure expected credit losses for financial
instruments held on the reporting date based on historical experience, current conditions and reasonable forecasts.
Accounts receivable consists primarily of commercial vehicle sales receivables, manufacturers’ receivables and leasing, parts
and service sales receivables and other trade receivables. The Company maintains an allowance for credit losses based on
the probability of default, its historical rate of losses, aging and current economic conditions. The Company’s assessment of
future losses in 2020 considered the impact of the COVID-19 pandemic on forecasted economic trends. The Company writes
off account balances when it has exhausted reasonable collection efforts and determined that the likelihood of collection is
remote. These write-offs are charged against the allowance for credit losses.
The following table summarizes the changes in the allowance for credit losses (in thousands):
Balance
December 31,
2019
Provision for
the Year
Ended
December 31,
2020
Write offs
Against
Allowance, net
of Recoveries
Balance
December 31,
2020
Commercial vehicle receivables
Manufacturers’ receivables
Leasing, parts and service receivables
Other receivables
Total
$
$
11 $
410
989
14
1,424 $
161 $
1,169
1,852
21
3,203 $
− $
(1,443)
(1,563)
(16)
(3,022) $
172
136
1,278
19
1,605
Inventory
The Company provides a reserve for obsolete and slow moving parts. The reserve is reviewed and, if necessary, adjustments
are made on a quarterly basis. The Company relies on historical information to support its reserve. Once the inventory is
written down, the Company does not reverse any reserve balance until the inventory is sold.
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The valuation for new and used commercial vehicle inventory is based on specific identification. A detail of new and used
commercial vehicle inventory is reviewed and, if necessary, adjustments to the value of specific vehicles are made on a
quarterly basis.
7.
FLOOR PLAN NOTES PAYABLE AND LINES OF CREDIT:
Floor Plan Notes Payable
Floor plan notes are financing agreements to facilitate the Company’s purchase of new and used commercial vehicle
inventory. These notes are collateralized by the inventory purchased and accounts receivable arising from the sale thereof.
The Company’s Floor Plan Credit Agreement provides for a loan commitment of up to $1.0 billion and has the interest rate
benchmarked to LIBOR, as defined in the agreement. The interest rate under the Company’s Floor Plan Credit Agreement
is the one month LIBOR rate plus 1.25%. The effective interest rate applicable to the Company’s Floor Plan Credit
Agreement was approximately 1.4% as of December 31, 2020. The Company utilizes its excess cash on hand to pay down
its outstanding borrowings under its Floor Plan Credit Agreement, and the resulting interest earned is recognized as an offset
to the Company’s gross interest expense under the Floor Plan Credit Agreement. The Company is required to pay a monthly
working capital fee equal to 0.16% per annum multiplied by the amount of voluntary prepayments of new and used inventory
loans.
The Company finances substantially all of the purchase price of its new commercial vehicle inventory and the loan value of
its used commercial vehicle inventory under its Floor Plan Credit Agreement, under which BMO Harris pays the
manufacturer directly with respect to new commercial vehicles. Amounts borrowed under the Company’s Floor Plan Credit
Agreement are due when the related commercial vehicle inventory (collateral) is sold and the sales proceeds are collected by
the Company. The Company’s Floor Plan Credit Agreement expires June 30, 2022, although BMO Harris has the right to
terminate the Floor Plan Credit Agreement at any time upon 360 days written notice and the Company may terminate at any
time, subject to specified limited exceptions. On December 31, 2020, the Company had approximately $451.5 million
outstanding under its Floor Plan Credit Agreement.
In June 2012, the Company entered into a wholesale financing agreement with Ford Motor Credit Company that provides
for the financing of, and is collateralized by, the Company’s new Ford vehicle inventory. This wholesale financing agreement
bore interest at a rate of Prime plus 150 basis points minus certain incentives and rebates. As of December 31, 2020, the
Company had did not have an outstanding balance under the Ford Motor Credit Company wholesale financing agreement.
The Company’s weighted average interest rate for floor plan notes payable was 1.2% for the year ended December 31, 2020,
and 2.6% for the year ended December 31, 2019, which is net of interest related to prepayments of new and used inventory
loans.
Assets pledged as collateral were as follows (in thousands):
Inventories, new and used vehicles at cost based on specific identification,
net of allowance
Vehicle sale related accounts receivable
Total
December 31,
2020
2019
$ 613,236
82,338
$ 1,042,794
82,991
$ 695,574
$ 1,125,785
Floor plan notes payable related to vehicles
$ 511,786
$ 996,336
Lines of Credit
The Company has a secured line of credit that provides for a maximum borrowing of $17.5 million. There were no advances
outstanding under this secured line of credit at December 31, 2020; however, $12.3 million was pledged to secure various
letters of credit related to self-insurance products, leaving $5.2 million available for future borrowings as of December 31,
2020.
The Company’s Working Capital Facility with BMO Harris includes up to $100.0 million of revolving credit loans available
to it for working capital, capital expenditures and other general corporate purposes. The amount of the borrowings under the
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Working Capital Facility are subject to borrowing base limitations based on the value of the Company’s eligible parts
inventory and company vehicles. The Working Capital Facility includes a $20 million letter of credit sublimit. Borrowings
under the Working Capital Facility bear interest at rates based on LIBOR or the Base Rate (as such terms are defined in the
Working Capital Facility), plus an applicable margin determined based on outstanding borrowing under the Working Capital
Facility. In addition, the Company is required to pay a commitment fee on the amount unused under the Working Capital
Facility. The Working Capital Facility expires on the earlier of (i) June 30, 2022 and (ii) the date on which all commitments
under the Working Capital Facility shall have terminated, whether as a result of the occurrence of the Commitment
Termination Date (as defined in the Working Capital Facility) or otherwise. There were no advances outstanding under the
Working Capital Facility as of December 31, 2020.
8.
LONG-TERM DEBT:
Long-term debt was comprised of the following (in thousands):
Variable interest rate term notes
Fixed interest rate term notes
Total debt
Less: current maturities
December 31,
2020
2019
$ 40,975
488,679
$ 58,416
569,262
529,654
627,678
(141,672)
(189,265)
Total long-term debt, net of current maturities
$ 387,982
$ 438,413
As of December 31, 2020, long-term debt maturities were as follows (in thousands):
2021
2022
2023
2024
2025
Thereafter
Total
141,672
125,511
107,145
81,916
46,778
26,632
$ 529,654
The interest rates on the Company’s variable interest rate notes are based on various LIBOR and Prime benchmark rates.
The interest rates on the notes ranged from approximately 1.6% to 3.5% on December 31, 2020. Payments on the notes
range from approximately $5,330 to $522,636 per month, plus interest. Maturities of these notes range from October 2022
to October 2025.
The Company’s fixed interest rate notes had interest rates that ranged from approximately 2.0% to 6.19% on December 31,
2020. Payments on the notes range from $254 to $72,316 per month. Maturities of these notes range from January 2021 to
May 2029.
The proceeds from the issuance of the notes were used primarily to acquire land, buildings and related property
improvements, in addition to vehicles for the Company’s lease and rental fleet. The notes are secured by the assets acquired
with the proceeds of such notes.
The Company’s long-term real estate debt agreements, floor plan financing arrangements and the Working Capital Facility
require the Company to satisfy various financial ratios such as the debt to worth ratio, leverage ratio, the fixed charge
coverage ratio and certain requirements for tangible net worth and GAAP net worth. As of December 31, 2020, the Company
was in compliance with all debt covenants. The Company does not anticipate any breach of the covenants in the foreseeable
future.
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9.
FINANCIAL INSTRUMENTS AND FAIR VALUE:
The Company measures certain financial assets and liabilities at fair value on a recurring basis. Financial instruments consist
primarily of cash, accounts receivable, accounts payable and floor plan notes payable. The carrying values of the Company’s
financial instruments approximate fair value due either to their short-term nature or existence of variable interest rates, which
approximate market rates. Certain methods and assumptions were used by the Company in estimating the fair value of
financial instruments as of December 31, 2020, and 2019. The carrying value of current assets and current liabilities
approximates the fair value due to the short maturity of these items.
The fair value of the Company’s long-term debt is based on secondary market indicators. Because the Company’s debt is
not quoted, estimates are based on each obligation’s characteristics, including remaining maturities, interest rate, credit
rating, collateral and liquidity. Accordingly, the Company concluded that the valuation measurement inputs of its long-term
debt represent, at its lowest level, current market interest rates available to the Company for similar debt and the Company’s
current credit standing. The Company has categorized such debt within Level 2 of the hierarchy framework. The carrying
amount approximates fair value.
10.
LEASES:
In February 2016, the FASB issued ASU No. 2016-02, “Leases (“Topic 842”),” which was intended to increase the
transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet
and disclosing key information about leasing arrangements. The standard requires lessees to record assets and liabilities on
the balance sheet for all leases with terms longer than twelve months. Leases are classified as either finance or operating,
with classification affecting the pattern of expense recognition in the income statement.
A lease is classified as a finance lease if any of the following conditions exist on the date of lease commencement:
The lease transfers ownership of the underlying asset to the lessee by the end of the lease
term.
The lease provides the lessee an option to purchase the underlying asset, and that option is
reasonably certain to be exercised.
The lease term is for the major part of the remaining economic life of the underlying asset.
The present value of the lease payments equals or exceeds substantially all of the fair value
of the underlying asset.
The underlying asset is of such a specialized nature that only the lessee can use it without
major modifications.
The lessor expects to have no alternative use for the leased asset at the end of the lease.
The Company adopted Topic 842 on January 1, 2019. The Company applied a modified retrospective transition approach
for all leases existing at, or entered into after, January 1, 2019. The Consolidated Financial Statements for the year ended
December 31, 2020 and December 31, 2019 are presented under the new standard, while the comparative year ended
December 31, 2018 is not adjusted and continues to be reported in accordance with the Company’s historical accounting
policy. The Company applied the practical expedients permitted within Topic 842, which among other things, allowed it to
retain its existing assessment of whether an arrangement is, or contains, a lease and whether such lease is classified as an
operating or finance lease. The Company made an accounting policy election that keeps leases with an initial term of twelve
months or less off of the balance sheet and results in recognizing those lease payments in the Consolidated Statements of
Income and Comprehensive Income on a straight-line basis over the lease term.
The Company leases commercial vehicles and real estate under finance and operating leases. The Company determines
whether an arrangement is a lease at its inception. For leases with terms greater than twelve months, the Company records
the related asset and obligation at the present value of lease payments over the term. Many of the Company’s leases include
renewal options and/or termination options that are factored into its determination of lease payments when appropriate. The
Company has elected not to account for lease and nonlease components as a single combined lease component as lessee.
When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most
of its leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate its incremental
borrowing rate to discount the lease payments based on information available at lease commencement.
65
Lease of Vehicles as Lessee
The Company leases commercial vehicles as the lessee under finance leases and operating leases. The lease terms vary from
one month to ten years. Commercial vehicle finance leases continue to be reported on the Consolidated Balance Sheet, while
operating leases were added to the Consolidated Balance Sheet in 2019 with the adoption of Topic 842. These vehicles are
then subleased or rented by the Company to customers under various agreements. The Company received sublease income
under non-cancelable subleases of $26.9 million for the year ended December 31, 2020 and $24.0 million for the year ended
December 31, 2019.
The Company usually guarantees the residual value of vehicles under operating lease and finance lease arrangements. As of
December 31, 2020, the Company guaranteed commercial vehicle residual values of approximately $59.5 million under
operating lease and finance lease arrangements.
Lease of Facilities as Lessee
The Company’s facility leases are classified as operating and finance leases and primarily reflect its use of dealership
facilities and office space. The lease terms vary from one year to 83 years, some of which include options to extend the lease
term, and some of which include options to terminate the lease within one year. The Company considers these options in
determining the lease term used to establish its right-of-use assets and lease liabilities.
Lease costs and Supplemental Information
Components of lease cost are as follows (in thousands):
Component
Classification
Twelve Months Ended
December 31,
2020
December 31,
2019
Operating lease cost
Operating lease cost
Finance lease cost – amortization of right-of-use assets
Finance lease cost – interest on lease liabilities
Short-term lease cost
SG&A expense
Lease and rental cost of products
Lease and rental cost of products
Lease and rental cost of products
SG&A expense
$
9,986 $
4,654
16,791
4,678
66
9,479
4,154
14,312
3,372
594
Supplemental cash flow information and non-cash activity related to operating and finance leases are as follows (in
thousands):
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities
Financing cash flow information:
Cash paid for amounts included in the measurement of lease liabilities
Non-cash activity:
Operating lease right-of-use assets obtained in exchange for lease
obligations
Twelve Months Ended
December 31,
2020
December 31,
2019
$
$
$
19,318 $
17,005
11,192 $
8,331
16,545 $
57,197
Weighted-average remaining lease term and discount rate for operating and finance leases as of December 31, 2020 are as
follows:
Weighted-average remaining lease term
Weighted-average discount rate
68 months
5.3%
66
Maturities of lease liabilities by fiscal year for finance leases and operating leases as of December 31, 2020 are
as follows (in thousands):
2021
2022
2023
2024
2025
2026 and beyond
Total lease payments
Less: Imputed interest
Present value of lease liabilities
Finance
Leases
Operating
Leases
$
31,579 $
25,714
21,553
22,797
15,837
16,931
$
$
134,411 $
(17,298)
117,113 $
13,055
11,333
9,890
9,835
6,242
28,572
78,927
(17,576)
61,351
Lease of Vehicles as Lessor
The Company leases commercial vehicles that the Company owns to customers primarily over periods of one to ten years.
The Company applied the practical expedient permitted within Topic 842 that allows it not to separate lease and nonlease
components. Nonlease components typically consist of maintenance and licensing for the commercial vehicle. The variable
nonlease components are generally based on mileage. Some leases contain an option for the lessee to purchase the
commercial vehicle.
The Company’s policy is to depreciate its lease and rental fleet using a straight-line method over each customer’s contractual
lease term. The lease unit is depreciated to a residual value that approximates fair value at the expiration of the lease term.
This policy results in the Company realizing reasonable gross margins while the unit is in service and a corresponding gain
or loss on sale when the unit is sold at the end of the lease term.
Sales-type leases are recognized by the Company as lease receivables. The lessee obtains control of the underlying asset and
the Company recognizes sales revenue upon lease commencement. The receivable for sales-type leases as of December 31,
2020 in the amount of $5.6 million is reflected in Other Assets on the Consolidated Balance Sheet.
Minimum rental payments to be received for non-cancelable leases and subleases in effect as of December 31, 2020, are as
follows (in thousands):
2021
2022
2023
2024
2025
Thereafter
Total
$
130,063
105,791
82,312
57,813
32,112
17,927
$
426,018
Rental income during the year ended December 31, 2020, and 2019, consisted of the following (in thousands):
2020
2019
205,640 $
215,288
30,583
32,261
236,223 $
247,549
Minimum rental
Nonlease payments
Total
$
$
67
11.
SHARE BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS:
Employee Stock Purchase Plan
The Company’s 2004 Employee Stock Purchase Plan, as amended and restated (the “Employee Stock Purchase Plan”)
allows eligible employees to contribute up to $10,625 of their base earnings every six months toward the semi-annual
purchase of the Company’s Class A Common Stock. The employee’s purchase price is 85% of the lesser of the closing
price of the Class A Common Stock on the first business day or the last business day of the semi-annual offering period,
as reported by The NASDAQ Global Select Market. Employees may purchase shares having a fair market value of up
to $25,000 (measured as of the first day of each semi-annual offering period) for each calendar year. On May 12, 2020,
the Company’s shareholders approved the amendment and restatement of the Employee Stock Purchase Plan to increase
the number of shares of Class A Common Stock authorized for issuance thereunder by 600,000 shares. Under the
Employee Stock Purchase Plan, there are approximately 743,716 shares remaining of the 2,700,000 shares of the
Company’s Class A Common Stock that were reserved for issuance. The Company issued 176,807 shares under the
Employee Stock Purchase Plan during the year ended December 31, 2020 and 175,925 shares during the year ended
December 31, 2019. Of the 6,307 employees eligible to participate, approximately 1,650 elected to participate in the plan
as of December 31, 2020.
Non-Employee Director Stock Option Plan
The Rush Enterprises, Inc. 2006 Non-Employee Director Stock Option Plan, as amended and restated (the “Director Plan”),
reserved 750,000 shares of Class A Common Stock for issuance upon exercise of any awards granted under the plan. The
Director Plan is designed to attract and retain highly qualified non-employee directors. Currently, each non-employee
director receives a grant of the Company’s Class A Common Stock, or up to 40% cash, equivalent to a compensation value
of $125,000. In 2020, three non-employee directors received a grant of 5,235 shares of the Company’s Class A Common
Stock and three non-employee directors received a grant of 3,141 shares of the Company’s Class A Common Stock and
$50,000 cash, for total compensation equivalent to $125,000 each. In 2019, three non-employee directors received a grant
of 4,756 shares of the Company’s Class A Common Stock, two non-employee directors received a grant of 2,854 shares of
the Company’s Class A Common Stock and $50,000 cash, for total compensation equivalent to $125,000 each. In 2019, one
director who was appointed to the Company’s Board of Directors in October of 2019 received 1,584 shares of the Company’s
Class A Common Stock and $18,750 cash, for total compensation equivalent to $62,500. Under the Director Plan, there are
approximately 163,878 shares remaining for issuance of the 750,000 shares of the Company’s Class A Common Stock that
were reserved for issuance. The Company granted 25,128 shares of Class A Common Stock under the Director Plan during
the year ended December 31, 2020 and 21,560 shares of Class A Common Stock under the Director Plan during the year
ended December 31, 2019.
Employee Incentive Plans
In May 2007, the Board of Directors and shareholders adopted the Rush Enterprises, Inc. 2007 Long-Term
Incentive Plan (the “2007 Incentive Plan”). The 2007 Incentive Plan provides for the grant of stock options (which may be
nonqualified stock options or incentive stock options for tax purposes), stock appreciation rights issued independent of or in
tandem with such options (“SARs”), restricted stock awards and performance awards. The 2007 Incentive Plan was amended
and restated on May 20, 2014, May 16, 2017 and again on May 12, 2020 to increase the number of shares available for
issuance under the plan to 13,200,000 shares of Class A Common Stock and 4,800,000 shares of Class B Common Stock
and to make certain other changes intended to bring the 2007 Incentive Plan into conformance with current best practices.
The aggregate number of shares of common stock subject to stock options or SARs that may be granted to any one participant
in any year under the 2007 Incentive Plan is 150,000 shares of Class A Common Stock or 150,000 shares of Class B Common
Stock. Each option granted pursuant to the 2007 Incentive Plan has a ten year term from the grant date and vests in three
equal annual installments beginning on the third anniversary of the grant date. The Company has 13,200,000 shares of Class
A Common Stock and 4,800,000 shares of Class B Common Stock reserved for issuance under the Company’s 2007 Incentive
Plan. As of December 31, 2020, approximately 2,736,479 shares of Class A Common Stock and 1,648,275 shares of Class
B Common Stock are available for issuance under the Company’s 2007 Incentive Plan. The Company issues new shares of
its Class A or Class B Common Stock upon the exercise of stock options or vesting of restricted stock units and upon the
issuance of restricted stock awards. During the year ended December 31, 2020, the Company granted to employees 753,600
options to purchase Class A Common Stock and 518,400 restricted Class B Common Stock awards under the 2007 Incentive
Plan. Restricted stock awards are issued when granted, but are subject to vesting requirements. During the year ended
68
December 31, 2019, the Company granted to employees 723,995 options to purchase Class A Common Stock and 476,385
restricted Class B Common Stock awards under the 2007 Incentive Plan.
Valuation and Expense Information
Stock-based compensation expense related to stock options, restricted stock awards, restricted stock units and employee
stock purchases was $19.4 million for the year ended December 31, 2020, $19.0 million for the year ended December 31,
2019, and $18.1 million for the year ended December 31, 2018. Cash received from options exercised and shares purchased
under all share-based payment arrangements was $23.5 million for the year ended December 31, 2020, $11.1 million for the
year ended December 31, 2019, and $5.7 million for the year ended December 31, 2018.
The following table presents a summary of the Company’s stock option activity and related information for the year ended
December 31, 2020:
Options
Balance of Outstanding Options at January 1, 2020
Granted
Exercised
Forfeited
Shares
4,601,438
753,600
(1,221,594)
(52,500)
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (in Years)
Aggregate
Intrinsic
Value
$ 20.41
22.28
16.04
24.63
Balance of Outstanding Options at December 31, 2020
4,080,944
$ 22.01
Expected to vest after December 31, 2020
2,705,026
$ 24.31
Vested and exercisable at December 31, 2020
1,343,187
$ 17.31
6.4
7.7
3.8
$ 79,205,864
$ 46,284,768
$ 32,378,174
The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on the closing price of
the Company’s Class A Common Stock on December 31, 2020, which was $41.42. The total intrinsic value of options
exercised was $20.8 million during the year ended December 31, 2020, $8.7 million during the year ended December 31,
2019, and $2.7 million during the year ended December 31, 2018.
The following table presents a summary of the status of the number of shares underlying Company’s non-vested stock options
as of December 31, 2020, and changes during the year ended December 31, 2020:
Non-vested Shares
Non-vested at January 1, 2020
Granted
Vested
Forfeited
Number of
Shares
2,712,147
753,600
(675,490)
(52,500)
Weighted
Average
Grant Date
Fair Value
$ 8.07
6.36
6.69
7.91
Non-vested at December 31, 2020
2,737,757
$ 7.95
The total fair value of vested options was $4.5 million during the year ended December 31, 2020, $5.0 million during the
year ended December 31, 2019, and $5.7 million during the year ended December 31, 2018. The weighted-average grant
date fair value of options granted was $6.36 per share during the year ended December 31, 2020, $8.37 per share during the
year ended December 31, 2019, and $10.31 per share during the year ended December 31, 2018.
Stock Awards
The Company granted restricted stock awards to certain of its employees under the 2007 Incentive Plan and unrestricted
stock awards to its non-employee directors under the Director Plan during the year ended December 31, 2020. The restricted
stock awards and previously granted restricted stock units granted to employees vest in three equal installments on the first,
69
second and third anniversary of the grant date and are forfeited in the event the recipient’s employment or relationship with
the Company is terminated prior to vesting, except as a result of retirement or under certain circumstances associated with a
change of control or involuntary termination, as further described in the Company’s executive transition plan. The fair value
of the restricted stock awards and restricted stock unit awards granted to the Company’s employees is amortized to expense
on a straight-line basis over the restricted stock’s vesting period. The shares granted to non-employee directors are expensed
on the grant date.
The following table presents a summary of the Company’s non-vested restricted stock awards and restricted stock unit awards
outstanding at December 31, 2020:
Stock Awards and Units
Shares
Outstanding non-vested shares at January 1, 2020
Granted
Vested
Outstanding non-vested at December 31, 2020
Expected to vest after December 31, 2020
915,604
543,528
(471,404)
987,728
986,332
Weighted
Average
Remaining
Contractual
Life (in Years)
Aggregate
Intrinsic
Value
Weighted
Average
Grant Date
Fair Value
$ 26.04
21.98
25.04
$ 24.28
8.6
8.6
$37,425,013
$37,372,147
The total fair value of the shares issued upon the vesting of restricted and unrestricted stock awards and restricted stock unit
awards during the year ended December 31, 2020 was $11.8 million. The weighted-average grant date fair value of stock
awards and units granted was $21.98 per share during the year ended December 31, 2020, $26.91 per share during the year
ended December 31, 2019 and $26.97 per share during the year ended December 31, 2018.
As of December 31, 2020, the Company had $8.0 million of unrecognized compensation expense related to non-vested
employee stock options to be recognized over a weighted-average period of 2.1 years and $7.8 million of unrecognized
compensation cost related to non-vested restricted stock awards and restricted stock unit awards to be recognized over a
weighted-average period of 1.3 years.
Defined Contribution Plan
The Company has a defined contribution plan (the “Rush 401k Plan”), which is available to all Company employees. Each
employee who has completed 30 days of continuous service is entitled to enter the Rush 401k Plan on the first day of the
following month. Participating employees may contribute from 1% to 50% of their total gross compensation. However,
certain highly compensated employees are limited to a maximum contribution of 15% of total gross compensation. Effective
February 1, 2012, for the first 10% of an employee’s contribution, the Company contributed an amount equal to 20% of the
employees’ contributions for those employees with less than five years of service and an amount equal to 40% of the
employees’ contributions for those employees with more than five years of service. Effective June 16, 2020, for the first
10% of an employee’s contribution, the Company contributed an amount equal to 5% of the employees’ contributions for
those employees with less than five years of service and an amount equal to 10% of the employees’ contributions for those
employees with more than five years of service. The Company incurred expenses related to the Rush 401k Plan of
approximately $6.0 million during the year ended December 31, 2020, $9.4 million during the year ended December 31,
2019 and $8.9 million during the year ended December 31, 2018.
Deferred Compensation Plan
On November 6, 2010, the Board of Directors of the Company adopted the Rush Enterprises, Inc. Deferred Compensation
Plan (the “Deferred Compensation Plan”) pursuant to which certain employees and directors may elect to defer a portion of
their annual compensation. The Deferred Compensation Plan also provides the Company with the discretion to make
matching contributions to participants’ accounts. The Company established a rabbi trust to finance obligations under the
Deferred Compensation Plan with corporate-owned variable life insurance contracts. Participants are 100% vested in their
respective deferrals and the earnings thereon. The first deferral election period began on January 1, 2011. The Company’s
liability related to the Deferred Compensation Plan was $19.5 million on December 31, 2020 and $15.6 million on December
31, 2019. The related cash surrender value of the life insurance contracts was $11.5 million on December 31, 2020 and $10.6
million on December 31, 2019.
70
The Company currently does not provide any post-retirement benefits nor does it provide any post-employment benefits.
12.
EARNINGS PER SHARE:
Basic earnings per share (“EPS”) were computed by dividing income from continuing operations by the weighted average
number of shares of common stock outstanding during the period. Diluted EPS differs from basic EPS due to the assumed
conversions of potentially dilutive options, restricted shares awards and restricted stock unit awards that were outstanding
during the period.
Each share of Class A Common Stock ranks equal to each share of Class B Common Stock with respect to receipt of any
dividends or distributions declared on shares of common stock and the right to receive proceeds on liquidation or dissolution
of the Company after payment of its indebtedness and liquidation preference payments to holders of any preferred shares.
However, holders of Class A Common Stock have 1/20th of one vote per share on all matters requiring a shareholder vote,
while holders of Class B Common Stock have one full vote per share.
The following is a reconciliation of the numerators and the denominators of the basic and diluted per share computations for
income from continuing operations (in thousands, except per share amounts):
Numerator-
Numerator for basic and diluted earnings per share −
Net income available to common shareholders
Denominator-
Denominator for basic earnings per share –
weighted average shares
Effect of dilutive securities−
Employee and director stock options and restricted share awards
Denominator for diluted earnings per share − adjusted weighted
average shares outstanding and assumed conversions
Basic earnings per common share
Diluted earnings per common share and common share equivalents
2020
2019
2018
$114,887
$141,583
$139,062
54,866
54,988
58,835
1,376
1,368
1,605
56,242
$ 2.09
$ 2.04
56,356
$ 2.57
$ 2.51
60,440
$ 2.36
$ 2.30
Options to purchase shares of common stock that were outstanding for the years ended December 31, 2020, 2019 and 2018
that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive are
as follows (in thousands):
Anti-dilutive options – weighted average
2020
1,349
2019
1,663
2018
769
71
13.
INCOME TAXES:
The tax provisions are summarized as follows (in thousands):
Income before income taxes:
Domestic
Foreign
Total
Current provision
Federal
State
Total
Deferred provision
Federal
State
Foreign
Total
Provision (benefit) for income taxes
$
$
Year Ended December 31,
2019
2020
2018
146,055 $
5,668
151,723
188,174 $
1,349
189,523
183,169
−
183,169
67,988 $
6,706
74,694
(37,683)
(1,254)
1,079
(37,858)
$
36,836 $
20,303 $
4,648
24,951
20,925
2,064
−
22,989
47,940 $
31,819
6,291
38,110
6,082
(85)
−
5,997
44,107
A reconciliation of taxes based on the federal statutory rates and the provisions (benefits) for income taxes are summarized
as follows (in thousands):
Income taxes at the federal statutory rate
State income taxes, net of federal benefit
Tax effect of permanent differences
Foreign tax rate differential
Other, net
Provision (benefit) for income taxes
2020
Year Ended December 31,
2019
2018
$
$
31,862 $
4,487
283
(111)
315
36,836 $
39,530 $
5,303
1,562
−
1,545
47,940 $
38,469
4,913
596
−
129
44,107
The following summarizes the components of net deferred income tax liabilities included in the balance sheet (in thousands):
Deferred income tax (assets) liabilities:
Inventory
Accounts receivable
Finance lease obligations
Finance and operating leases
Stock options
Accrued liabilities
State net operating loss carry forward
State tax credit
Other
Difference between book and tax basis- Operating lease assets
Difference between book and tax basis- Depreciation and amortization
Valuation allowance
Net deferred income tax liability
December 31,
2020
2019
$
(4,329) $
(168)
(27,522)
(13,607)
(7,463)
(7,680)
(1,101)
(193)
(3,302)
13,444
178,360
126,439
−
$
126,439 $
(5,086)
(140)
(21,618)
(12,726)
(8,749)
(2,989)
(2,381)
(196)
(3,817)
12,628
209,250
164,176
121
164,297
As of December 31, 2020, the Company had approximately $22.8 million in state net operating loss carry forwards that
expire from 2020 to 2039, which result in a deferred tax asset of $1.1 million. The Company has evaluated whether its state
72
net operating losses are realizable and has not recorded a valuation allowance against them. The valuation allowance
decreased $121,000 over the prior year ending December 31, 2019.
The Company had unrecognized income tax benefits totaling $3.3 million as a component of accrued liabilities as of
December 31, 2020, and $3.0 million at December 31, 2019, the total of which, if recognized, would impact the Company’s
effective tax rate. An unfavorable settlement would require a charge to income tax expense and a favorable resolution would
be recognized as a reduction to income tax expense. The Company recognizes interest accrued related to unrecognized tax
benefits in income tax expense. During the years ended December 31, 2020, 2019 and 2018, the Company recognized
approximately $6,150, $5,220, and $(27,450) in interest expense (income). No amounts were accrued for penalties. The
Company had approximately $150,000, $144,000 and $139,000 of interest accrued as of December 31, 2020, 2019 and 2018,
respectively.
Undistributed earnings of certain of the Company’s foreign subsidiaries amounted to approximately $7.0 million at
December 2020. Those earnings are considered to be indefinitely reinvested. Upon repatriation of those earnings in the form
of dividends or otherwise, the Company may be subject to state and local taxes, and/or withholding taxes payable to the
various foreign countries. The Company expects to be able to take a 100% dividends received deduction to offset any U.S.
federal income tax liability on the undistributed earnings.
The Company does not anticipate a significant change in the amount of unrecognized tax benefits in the next 12 months. As
of December 31, 2020, the tax years ended December 31, 2017 through 2020 remained subject to audit by federal tax
authorities and the tax years ended December 31, 2016 through 2020, remained subject to audit by state tax authorities.
The table below presents the reconciliation of the change in the unrecognized tax benefits (in thousands):
Unrecognized tax benefits at beginning of period
Gross increases – tax positions in current year
Reductions due to lapse of statute of limitations
Unrecognized tax benefits at end of period
2020
2019
2018
$
$
3,007 $
651
(353)
3,306 $
2,389 $
1,188
(570)
3,007 $
2,555
504
(670)
2,389
14.
COMMITMENTS AND CONTINGENCIES:
From time to time, the Company is involved in litigation arising out of its operations in the ordinary course of business. The
Company maintains liability insurance, including product liability coverage, in amounts deemed adequate by management.
To date, aggregate costs to the Company for claims, including product liability actions, have not been material. However, an
uninsured or partially insured claim, or claim for which indemnification is not available, could have a material adverse effect
on the Company’s financial condition or results of operations. The Company believes that there are no claims or litigation
pending, the outcome of which could have a material adverse effect on its financial position or results of operations. However,
due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding
would not have a material adverse effect on the Company’s financial condition or results of operations for the fiscal period
in which such resolution occurred.
15.
ACQUISITIONS, DISPOSITIONS AND EQUITY METHOD INVESTMENT:
On October 31, 2019, the Company and its joint venture partner sold substantially all of the assets of Central California
Truck & Trailer Sales, LLC. The transaction was valued at approximately $12.7 million, with the purchase price paid in
cash.
On May 6, 2019, the Company acquired certain assets of Stover Sales, Inc., which included real estate and a used truck
dealership in Jacksonville, Florida, along with commercial vehicle and parts inventory. The transaction was valued at
approximately $2.3 million, with the purchase price paid in cash.
On February 25, 2019, the Company acquired 50% of the equity interest in RTC Canada, which acquired the operating assets
of Tallman Group, the largest International Truck dealer in Canada. RTC Canada currently operates a network of 14
International Truck full-service dealerships throughout the Province of Ontario. The Company does not consolidate RTC
Canada. RTC Canada is accounted for as an equity method investment. As of December 31, 2020, the Company’s
investment in RTC Canada is $32.0 million and is reported in Other Assets on the Consolidated Balance Sheet.
73
On February 11, 2019, the Company acquired certain assets of Country Ford Trucks, which included real estate and a Ford
truck franchise in Ceres, California, along with commercial vehicle and parts inventory. The transaction was valued at
approximately $7.9 million, with the purchase price paid in cash.
16.
UNAUDITED QUARTERLY FINANCIAL DATA:
(In thousands, except per share amounts.)
2020
Revenues
Gross profit
Operating income
Income before income taxes
Net income
Earnings per share:
Basic
Diluted
2019
Revenues
Gross profit
Operating income
Income before income taxes
Net income
Earnings per share:
Basic
Diluted
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
1,286,663 $
234,501
35,197
31,669
23,107 $
1,002,512 $
192,331
23,001
22,512
16,816 $
1,178,568 $
212,452
42,868
43,928
33,939 $
1,268,197
236,183
53,539
53,614
41,025
0.42 $
0.41 $
0.31 $
0.30 $
0.62 $
0.60 $
0.74
0.72
1,348,317 $
256,916
56,867
49,558
37,104 $
1,544,561 $
269,506
61,792
54,410
41,621 $
1,599,265 $
264,768
58,323
52,210
39,104 $
1,317,704
234,438
39,423
33,345
23,754
0.67 $
0.65 $
0.75 $
0.74 $
0.71 $
0.70 $
0.43
0.42
$
$
$
$
$
$
$
$
17.
SEGMENTS:
The Company currently has one reportable business segment - the Truck Segment. The Truck Segment includes the
Company’s operation of a nationwide network of commercial vehicle dealerships that provide an integrated one-stop source
for the commercial vehicle needs of its customers, including retail sales of new and used commercial vehicles; aftermarket
parts, service and collision center facilities; and financial services, including the financing of new and used commercial
vehicle purchases, insurance products and truck leasing and rentals. The commercial vehicle dealerships are deemed a single
reporting unit because they have similar economic characteristics. The Company’s chief operating decision maker considers
the entire Truck Segment, not individual dealerships or departments within its dealerships, when making decisions about
resources to be allocated to the segment and assessing its performance.
The Company also has revenues attributable to three other operating segments. These segments include a retail tire company,
an insurance agency and a guest ranch operation and are included in the All Other column below. None of these segments
has ever met any of the quantitative thresholds for determining reportable segments.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies.
The Company evaluates performance based on operating income.
The Company accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current
market prices. There were no material intersegment sales during the years ended December 31, 2020, 2019 or 2018.
74
The following table contains summarized information about reportable segment revenue, segment income or loss from
continuing operations and segment assets for the periods ended December 31, 2020, 2019 and 2018 (in thousands):
2020
Revenues from external customers
Interest income
Interest expense
Depreciation and amortization
Segment operating income
Segment income from continuing
operations before taxes
Segment assets
Goodwill
Expenditures for segment assets
2019
Revenues from external customers
Interest income
Interest expense
Depreciation and amortization
Segment operating income (loss)
Segment income from continuing
operations before taxes
Segment assets
Goodwill
Expenditures for segment assets
2018
Revenues from external customers
Interest income
Interest expense
Depreciation and amortization
Segment operating income
Segment income (loss) from continuing
operations before taxes
Segment assets
Goodwill
Expenditures for segment assets
Truck
Segment
All
Other
$
4,721,058 $
713
9,444
57,162
153,841
151,222
2,939,390
289,582
135,956
14,882 $
–
283
294
764
501
46,003
2,560
244
Totals
4,735,940
713
9,727
57,456
154,605
151,723
2,985,393
292,142
136,200
$
$
5,794,155 $
1,680
30,201
55,036
216,691
15,692 $
–
286
336
(286)
5,809,847
1,680
30,487
55,372
216,405
188,122
3,369,517
289,582
292,980
1,401
37,812
2,560
513
189,523
3,407,329
292,142
293,493
5,488,787 $
1,376
20,850
70,170
202,725
17,403 $
–
208
319
126
5,506,190
1,376
21,058
70,489
202,851
183,251
3,166,174
288,831
238,229
(82)
35,176
2,560
31
183,169
3,201,350
291,391
238,260
18.
REVENUE:
The Company’s revenues are primarily generated from the sale of finished products to customers. Those sales predominantly
contain a single delivery element and revenue for such sales is recognized when the customer obtains control, which is
typically when the finished product is delivered to the customer. The Company’s material revenue streams have been
identified as the following: the sale of new and used commercial vehicles, arrangement of associated commercial vehicle
financing and insurance contracts, the performance of commercial vehicle repair services and the sale of commercial vehicle
parts. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded
from revenues.
75
The following table summarizes the Company’s disaggregated revenue by revenue source for the years ended December 31,
2020, December 31, 2019 and December 31, 2018 (in thousands):
Commercial vehicle sales revenue
Parts revenue
Commercial vehicle repair service
Finance revenue
Insurance revenue
Other revenue
2020
2019
2018
$ 2,863,309
911,102
689,343
12,047
9,902
14,014
$ 3,757,584
993,288
769,222
14,618
9,825
17,761
$ 3,558,637
937,241
732,811
10,795
9,740
18,728
Total
$ 4,499,717
$ 5,562,298
$ 5,267,952
All of the Company's performance obligations are generally transferred to customers at a point in time. The Company does
not have any material contract assets or contract liabilities on the balance sheet as of December 31, 2020 or December 31,
2019. Revenues related to commercial vehicle sales, parts sales, commercial vehicle repair service, finance and the majority
of other revenues are related to the Truck Segment.
For the sale of new and used commercial vehicles, revenue is recognized at a point in time when control is transferred to the
customer, which is when delivery of the commercial vehicle occurs. Revenue is measured as the amount of consideration
the Company expects to receive in exchange for transferring the commercial vehicle. When control is transferred to the
customer, the Company has an unconditional right to payment and a receivable is recorded for any consideration not received.
The Company controls the commercial vehicle before it is transferred to the customer and it obtains all of the remaining
benefits from the commercial vehicle relating to the sale, ability to pledge the asset or hold the asset. The Company is a
principal in all commercial vehicle transactions. The Company retains inventory risk, determines the selling price to the
customer and delivers the commercial vehicle to the customer. The Company generally pays a commission to internal sales
representatives for the sale of a commercial vehicle. The Company will continue to expense the commission and recognize
it concurrently with the respective commercial vehicle sale revenue upon delivery of the commercial vehicle to a customer.
Revenue from the sale of parts is recognized when the Company transfers control of the goods to the customer and
consideration has been received in the form of cash or a receivable from the customer. The Company provides its customers
the right to return certain eligible parts, estimates the expected returns based on an analysis of historical experience and
records an allowance for estimated returns, which has historically not been material.
Revenue from the sale of commercial vehicle repair service is recognized when the service performed by the Company on a
customer’s vehicle is complete and the customer accepts the repair. Because the Company does not have an enforceable
right to payment while the repair is being performed, revenue is recognized when the repair is complete. After a customer’s
acceptance, the Company has no remaining obligations to transfer goods or services to the customer and consideration has
been received in the form of cash or a receivable from the customer.
Any remaining performance obligations represent service orders for which work has not been completed. The Company’s
service contracts are predominantly short-term in nature with a contract term of one month or less. For those contracts, the
Company has utilized the practical expedient in Topic 606 exempting the Company from disclosure of the transaction price
allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected
duration of one year or less.
The Company receives commissions from third-party lenders for arranging customer financing for the purchase of
commercial vehicles. The receipt of such commissions is deemed to be a single performance obligation that is satisfied when
a financing agreement is executed and accepted by the financing provider. Once the contract has been accepted by the
financing provider, the Company’s performance obligation has been satisfied and the Company generally has no further
obligations under the contract. The Company is the agent in this transaction, as it does not have control over the acceptance
of the customer’s financing arrangement by the financing provider. Consideration paid to the Company by the financing
provider is based on the agreement between the Company and the financing provider.
76
The Company receives commissions from third-party insurance companies for arranging insurance coverage for customers.
The receipt of such commissions is deemed to be a single performance obligation that is satisfied when the insurance coverage
is bound. The Company has no further obligations under the contract. The Company is the agent in this transaction because
it does not have control over the insurance coverage provided by the insurance carrier. Consideration paid to the Company
by the insurance provider is based on the agreement between the Company and the insurance provider.
The Company records revenues from finance and insurance products at the net commission amount, which includes estimates
of chargebacks that can occur if the underlying contract is not fulfilled. Chargeback amounts for commissions from financing
companies are estimated assuming financing contracts are terminated before the customer has made six monthly
payments. Chargeback amounts for commissions from insurance companies are estimated assuming insurance contracts are
terminated before the underlying insurance contractual term has expired. Chargeback reserve amounts are based on historical
chargebacks and have historically been immaterial. The Company does not have any right to retrospective commissions
based on future profitability of finance and insurance contracts arranged.
Other revenue is mostly documentation fees that are charged to customers in connection with the sale of a commercial vehicle
and recognized as other revenue when a truck is sold. The Company recognizes the documentation fees at the point in time
when the commercial vehicle is delivered to the customer.
19.
ACCUMULATED OTHER COMPREHENSIVE INCOME:
The following table shows the components of accumulated other comprehensive income (in thousands):
Balance as of December 31, 2019
Foreign currency translation adjustment
Balance as of December 31, 2020
$
$
337
532
869
The equity method investment in RTC Canada was valued using the exchange rate of one US Dollar to 1.27 Canadian dollars
as of December 31, 2020. The adjustment is reflected in Other Assets on the Consolidated Balance Sheet.
77
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In accordance with Exchange Act Rules 13a-15 and 15d-15, the Company carried out an evaluation, under the supervision
and with the participation of management, including its Chief Executive Officer and Chief Financial Officer, of the
effectiveness of its disclosure controls and procedures as of the end of the period covered by this report. Based on that
evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that its disclosure controls and
procedures were effective as of December 31, 2020, to ensure that information required to be disclosed in its reports filed or
submitted under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in
the Securities and Exchange Commission’s rules and forms and (2) accumulated and communicated to the Company’s
management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the quarter ended December 31,
2020, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial
reporting.
Management’s Annual Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial
reporting for the Company. The Company’s internal control over financial reporting is a process designed under the
supervision of the Company’s President and Chief Executive Officer and Chief Financial Officer to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for
external purposes in accordance with generally accepted accounting principles.
As of December 31, 2020, management assessed the effectiveness of the Company’s internal control over financial reporting
based on the criteria for effective internal control over financial reporting established in “Internal Control – Integrated
Framework,” issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission (2013
Framework). Based on the assessment, management determined that the Company maintained effective internal control over
financial reporting as of December 31, 2020, based on those criteria.
Ernst & Young LLP, the independent registered public accounting firm that audited the consolidated financial statements of
the Company included in this annual report on Form 10-K, has issued an attestation report on the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2020. The report, which expresses an unqualified
opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020, is included
in this Item 9A under the heading “Attestation Report of Independent Registered Public Accounting Firm.”
78
Report of Independent Registered Public Accounting Firm
The Shareholders and Board of Directors of Rush Enterprises, Inc.
Opinion on Internal Control over Financial Reporting
We have audited Rush Enterprises, Inc. and subsidiaries’ internal control over financial reporting as of December 31,
2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Rush Enterprises,
Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2020, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related
consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three
years in the period ended December 31, 2020, and the related notes and our report dated February 24, 2021, expressed an
unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s
Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that
our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
79
/s/ Ernst & Young LLP
San Antonio, Texas
February 24, 2021
Item 9B. Other Information
None.
Item 10. Directors, Executive Officers and Corporate Governance
PART III
The information called for by Item 10 of Form 10-K is incorporated herein by reference to such information included in the
Company’s Proxy Statement for the 2021 Annual Meeting of Shareholders.
Item 11. Executive Compensation
The information called for by Item 11 of Form 10-K is incorporated herein by reference to such information included in the
Company’s Proxy Statement for the 2021 Annual Meeting of Shareholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
The information called for by Item 12 of Form 10-K, other than the equity compensation plan information set forth below,
is incorporated herein by reference to such information included in the Company’s Proxy Statement for the 2021 Annual
Meeting of Shareholders.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information called for by Item 13 of Form 10-K is incorporated herein by reference to such information included in the
Company’s Proxy Statement for the 2021 Annual Meeting of Shareholders.
Item 14. Principal Accountant Fees and Services
The information called for by Item 14 of Form 10-K is incorporated herein by reference to such information included in the
Company’s Proxy Statement for the 2021 Annual Meeting of Shareholders.
80
Item 15. Exhibits, Financial Statement Schedules
(a)(1) Financial Statements
PART IV
Included in Item 8 of Part II of this annual report on Form 10-K are the following:
Report of Independent Registered Public Accounting Firm;
Consolidated Balance Sheets as of December 31, 2020, and 2019;
Consolidated Statements of Income for the years ended December 31, 2020, 2019, and 2018;
Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019, and 2018;
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2020, 2019, and 2018;
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019, and 2018; and
Notes to Consolidated Financial Statements.
(a)(2) Financial Statement Schedules
These schedules are omitted as the required information is inapplicable or the information is presented in the consolidated
financial statements or related notes.
(a)(3) Exhibits
Index to Exhibits:
Exhibit
No.
3.1
3.2
4.1
4.2
4.3
10.1
10.2
Identification of Exhibit
Restated Articles of Incorporation of Rush Enterprises, Inc. (incorporated herein by reference to
Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q (File No. 000-20797) for the quarter
ended June 30, 2008)
https://www.sec.gov/Archives/edgar/data/1012019/000110465908051789/a08-18770_1ex3d1.htm
Rush Enterprises, Inc. Amended and Restated Bylaws (incorporated herein by reference to Exhibit
3.1 of the Company’s Current Report on Form 8-K (File No. 000-20797) filed May 21, 2013)
https://www.sec.gov/Archives/edgar/data/1012019/000143774913006455/rusha20130517_8kex3-1.htm
Specimen of certificate representing Common Stock (now Class B Common Stock), $.01 par value, of
Rush Enterprises, Inc. (incorporated herein by reference to Exhibit 4.1 of the Company’s Registration
Statement No. 333-03346 on Form S-1 filed April 10, 1996)
https://www.sec.gov/Archives/edgar/data/1012019/0000950129-96-000812-index.html
Specimen of certificate representing Class A Common Stock, $.01 par value, of the Registrant
(incorporated herein by reference to Exhibit 4.1 of the Company’s Registration Statement on Form 8-
A filed July 9, 2002)
https://www.sec.gov/Archives/edgar/data/1012019/000091205702026743/a2083861zex-4_1.htm
Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange
Act of 1934 (incorporated herein by reference to Exhibit 4.3 of the Company’s Form 10-K filed
February 26, 2020 (File No. 000-20797) for the year ended December 31, 2019)
ex_174053.htm (sec.gov)
Right of First Refusal dated December 19, 2012 between Peterbilt Motors Company and W. Marvin
Rush (incorporated herein by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K
(File No. 000-20797) filed December 20, 2012)
https://www.sec.gov/Archives/edgar/data/1012019/000143774912013051/ex10-2.htm
Right of First Refusal dated December 19, 2012 between Peterbilt Motors Company and W.M. “Rusty”
Rush (incorporated herein by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K
(File No. 000-20797) filed December 20, 2012)
https://www.sec.gov/Archives/edgar/data/1012019/000143774912013051/ex10-3.htm
81
10.3+
10.4+
10.5+
10.6+
10.7+
10.8+
10.9+
10.10+
10.11+
10.12+
10.13+
10.14+
10.15
Rush Enterprises, Inc. 2004 Employee Stock Purchase Plan (Amended and Restated on May 12,
2020) (incorporated herein by reference to Exhibit 10.2 of the Company’s Current Report on Form
8-K (File No. 000-20797) filed May 15, 2020)
ex_186990.htm (sec.gov)
Rush Enterprises, Inc. Amended and Restated 2006 Non-Employee Director Stock Plan
(incorporated herein by reference to Exhibit 10.10 of the Company’s Form 10-K (File No. 000-
20797) for the year ended December 31, 2010)
https://www.sec.gov/Archives/edgar/data/1012019/000095012311024520/c13928exv10w10.htm
Form of Rush Enterprises, Inc. 2006 Non-Employee Director Stock Option Agreement (incorporated
herein by reference to Exhibit 4.4 of the Company’s Registration Statement No. 333-138556 on Form
S-8 filed November 9, 2006)
https://www.sec.gov/Archives/edgar/data/1012019/000110465906073551/a06-23617_2ex4d4.htm
Form of Rush Enterprises, Inc. 2006 Non-Employee Director Stock Plan Restricted Stock Unit
Award Agreement (incorporated herein by reference to Exhibit 10.1 of the Company’s Form 10-Q
(File No. 000-20797) for the quarter ended June 30, 2012)
https://www.sec.gov/Archives/edgar/data/1012019/000143774912008036/ex10-1.htm
Rush Enterprises, Inc. Amended and Restated 2007 Long-Term Incentive Plan (incorporated herein
by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No. 000-20797)
filed May 15, 2020)
ex_186989.htm (sec.gov)
Form of Rush Enterprises, Inc. 2007 Long-Term Incentive Plan Restricted Stock Unit Agreement
(incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K
(File No. 000-20797) filed March 14, 2012)
https://www.sec.gov/Archives/edgar/data/1012019/000119312512114188/d315042dex101.htm
Form of Rush Enterprises, Inc. 2007 Long-Term Incentive Plan Stock Option Agreement
(incorporated herein by reference to Exhibit 4.4 of the Company’s Form S-8 (File No. 333-144821)
filed July 24, 2007)
https://www.sec.gov/Archives/edgar/data/1012019/000110465907055737/a07-20147_1ex4d4.htm
Form of Rush Enterprises, Inc. Amended and Restated 2007 Long-Term Incentive Plan Stock Option
Agreement (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on
Form 8-K (File No. 000-20797) filed March 8, 2019)
https://www.sec.gov/Archives/edgar/data/1012019/000143774919004483/ex_137075.htm
Form of Rush Enterprises, Inc. Amended and Restated 2007 Long-Term Incentive Plan Restricted
Stock Award Agreement (incorporated herein by reference to Exhibit 10.2 of the Company’s Current
Report on Form 8-K (File No. 000-20797) filed March 8, 2019)
https://www.sec.gov/Archives/edgar/data/1012019/000143774919004483/ex_137076.htm
Rush Enterprises, Inc. Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.1
of the Company’s Current Report on Form 8-K (File No. 000-20797) filed November 12, 2010)
https://www.sec.gov/Archives/edgar/data/1012019/000095012310104889/c08447exv10w1.htm
Form of Indemnity Agreement (incorporated herein by reference to Exhibit 10.1 of the Company’s
Current Report on Form 8-K (File No. 000-20797) filed January 7, 2015)
https://www.sec.gov/Archives/edgar/data/1012019/000143774915000385/ex10-1.htm
Rush Enterprises, Inc. Executive Transition Plan (as Amended and Restated Effective as of February
20, 2018) (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form
8-K (File No. 000-20797) filed February 26, 2018)
https://www.sec.gov/Archives/edgar/data/1012019/000110465908047652/a08-20031_1ex10d1.htm
Form of dealer agreement between Peterbilt Motors Company and Rush Truck Centers (incorporated
herein by reference to Exhibit 10.18 of the Company’s Form 10-K (File No. 000-20797) for the year
ended December 31, 1999)
https://www.sec.gov/Archives/edgar/data/1012019/000095013400002832/0000950134-00-002832.txt
82
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
Amended and Restated Amendment to Dealer Sales and Service Agreements, dated December 19,
2012, by and among Peterbilt Motors Company, a division of PACCAR, Inc., Rush Enterprises, Inc.
and the subsidiaries of Rush Enterprises, Inc. named a party therein (incorporated herein by reference
to Exhibit 10.1 of the Company's Form 8-K (File No. 000-20797) filed December 20, 2012)
https://www.sec.gov/Archives/edgar/data/1012019/000143774912013051/ex10-1.htm
Guaranty Agreement, dated December 31, 2010, by Rush Enterprises, Inc. and each other Guarantor
party thereto in favor of General Electric Capital Corporation. (incorporated herein by reference to
Exhibit 10.2 of the Company’s Current Report on Form 8-K (File No. 000-20797) filed January 6,
2011)
https://www.sec.gov/Archives/edgar/data/1012019/000095012311001052/c10658exv10w2.htm
Credit Agreement, dated as of March 21, 2017 by and among the Company, the Lenders signatory
thereto and BMO Harris Bank N.A., as Administrative Agent incorporated herein by reference to
Exhibit 10.1 of the Company's Form 8-K (File No. 000-20797) filed March 27, 2017)
https://www.sec.gov/Archives/edgar/data/1012019/000143774917005336/ex10-1.htm
First Amendment to Credit Agreement, dated as of April 25, 2019 by and among the Company, the
Lenders signatory thereto and BMO Harris Bank N.A., as Administrative Agent (incorporated herein
by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K (File No. 000-20797)
filed May 1, 2019)
https://www.sec.gov/Archives/edgar/data/1012019/000143774919008424/ex_142493.htm
Second Amendment and Joinder to Credit Agreement, dated as of March 19, 2020 by and among the
Company, the Lenders signatory thereto and BMO Harris Bank N.A., as Administrative Agent
(incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K
(File No. 000-20797) filed March 25, 2020)
ex_178665.htm (sec.gov)
Security Agreement, dated as of March 21, 2017, made by the Company in favor of BMO Harris
Bank N.A., as Administrative Agent incorporated herein by reference to Exhibit 10.2 of the
Company's Form 8-K (File No. 000-20797) filed March 27, 2017)
https://www.sec.gov/Archives/edgar/data/1012019/000143774917005336/ex10-2.htm
Intercreditor Agreement, dated as of March 21, 2017, by and among BMO Harris Bank N.A., as
Administrative Agent under the Credit Agreement, BMO Harris Bank N.A., as Administrative Agent
and Collateral Agent under the Third Amended and Restated Credit Agreement, dated as of July 7,
2016, and the Company incorporated herein by reference to Exhibit 10.3 of the Company's Form 8-
K (File No. 000-20797) filed March 27, 2017)
https://www.sec.gov/Archives/edgar/data/1012019/000143774917005336/ex10-3.htm
Fourth Amended and Restated Credit Agreement, dated as of April 25, 2019 by and among the
Company, the Lenders signatory thereto and BMO Harris Bank N.A., as Administrative Agent and
Collateral Agent (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report
on Form 8-K (File No. 000-20797) filed May 1, 2019)
https://www.sec.gov/Archives/edgar/data/1012019/000143774919008424/ex_142492.htm
First Amendment to Fourth Amended and Restated Credit Agreement, dated as of June 28, 2019, by and among the
Company, the Lenders signatory thereto and BMO Harris Bank N.A., as Administrative Agent and Collateral Agent.
(incorporated herein by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q
(File No. 000-20797) filed August 9, 2019)
https://www.sec.gov/Archives/edgar/data/1012019/000143774919016186/ex_153546.htm
Consent and Third Amendment to Credit Agreement, dated April 17, 2020 by and among the
Company, the Lenders signatory thereto and BMO Harris Bank N.A., as Administrative Agent
(incorporated herein by reference to Exhibit 10.0 of the Company’s Quarterly Report on From 10-Q
(File No. 000-20797) filed August 7, 2020)
ex_197438.htm (sec.gov)
83
10.26
21.1*
23.1*
31.1*
31.2*
32.1++
32.2++
101.INS
101.SCH*
101.CAL*
101.DEF*
101.LAB*
101.PRE*
104
Guaranty Agreement, dated as of April 25, 2019 between Rush and the Bank of Montreal
(incorporated herein by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K
(File No. 000-20797) filed May 1, 2019)
https://www.sec.gov/Archives/edgar/data/1012019/000143774919008424/ex_142494.htm
Subsidiaries of the Company
Consent of Ernst & Young LLP
Certification of President and Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
XBRL Instance Document – The instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the inline XBRL document
Inline XBRL Taxonomy Extension Schema Document.
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
Inline XBRL Taxonomy Extension Definition Linkbase Document.
Inline XBRL Taxonomy Extension Label Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101)
*
+
++
Filed herewith.
Management contract or compensatory plan or arrangement.
This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of
1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
Item 16. Form 10-K Summary
Intentionally left blank.
84
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RUSH ENTERPRISES, INC.
By: /s/ W. M.”RUSTY” RUSH
W. M. “Rusty” Rush
President, Chief Executive Officer and
Chairman of the Board
Date: February 24, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below
by the following persons on behalf of the registrant and in the capacities on the dates indicated:
Signature
Capacity
Date
/s/ W. M. “RUSTY” RUSH
W. M. “Rusty” Rush
President, Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)
February 24, 2021
/s/ STEVEN L. KELLER
Steven L. Keller
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
February 24, 2021
February 24, 2021
February 24, 2021
February 24, 2021
February 24, 2021
February 24, 2021
February 24, 2021
/s/ THOMAS A. AKIN
Thomas A. Akin
Director
/s/ JAMES C. UNDERWOOD
James C. Underwood
Director
/s/ RAYMOND J. CHESS
Raymond J. Chess
Director
/s/ DR. KENNON GUGLIELMO Director
Dr. Kennon Guglielmo
/s/ WILLIAM H. CARY
William H. Cary
Director
/s/ ELAINE MENDOZA
Elaine Mendoza
Director
85
SUBSIDIARIES OF THE COMPANY
EXHIBIT 21.1
Rush Truck Centers of Alabama, Inc.
Name
State of
Incorporation
Delaware
Rush Truck Centers of Arizona, Inc.
Delaware
Rush Medium Duty Truck Centers of
California, Inc.
Rush Truck Centers of California, Inc.
Delaware
Delaware
Rush Medium Duty Truck Centers of
Colorado, Inc.
Delaware
Rush Truck Centers of Colorado, Inc.
Delaware
Rush Truck Centers of Florida, Inc.
Delaware
86
Names Under Which Subsidiary Does Business
Rush Truck Center, Mobile
Rush Peterbilt Truck Center, Mobile
Rush Truck Center, Phoenix
Rush Peterbilt Truck Center, Phoenix
Rush Truck Center, Phoenix East
Rush Peterbilt Truck Center, Phoenix East
Rush Truck Center, Flagstaff
Rush Peterbilt Truck Center, Flagstaff
Rush Truck Center, Tucson
Rush Peterbilt Truck Center, Tucson
Rush Truck Center, Yuma
Rush Peterbilt Truck Center, Yuma
Rush Truck Center, Ceres
Rush Peterbilt Truck Center, Pico Rivera
Rush Truck Center, Pico Rivera
Rush Peterbilt Truck Center, Fontana
Rush Truck Center, Fontana
Rush Peterbilt Truck Center, Fontana Medium Duty
Rush Isuzu Trucks, Fontana
Rush Medium Duty Truck Center, Fontana
Rush Towing Systems, Fontana
Rush Truck Center, Fontana Used Trucks
Rush Truck Center, Fontana Vocational Service
Rush Truck Center, Long Beach
Rush Peterbilt Truck Center, Long Beach
Rush Truck Center, Sylmar
Rush Peterbilt Truck Center, Sylmar
Rush Truck Center, San Diego
Rush Peterbilt Truck Center, San Diego
Rush Truck Center, Whittier
Rush Isuzu Trucks, Whittier
Rush Peterbilt Truck Center, Whittier
Rush Peterbilt Truck Center, Los Angeles
Rush Truck Center, Los Angeles
Rush Truck Center, Fontana Collision Center
Rush Medium Duty Truck Center, Denver
Rush Medium Duty Ford Trucks, Denver
Rush Towing Systems, Denver
Rush Peterbilt Truck Center, Denver
Rush Truck Center, Denver
Rush Peterbilt Truck Center, Greeley
Rush Truck Center, Greeley
Rush Peterbilt Truck Center, Pueblo
Rush Truck Center, Pueblo
Rush Truck Center, Colorado Springs
Rush Peterbilt Truck Center, Colorado Springs
Rush Isuzu Trucks, Denver
Rush Isuzu Trucks, Orlando
Rush Truck Center, Orlando
Rush Isuzu Truck Center, Orlando
Rush Peterbilt Truck Center, Orlando
Rush Truck Center, Orlando Light & Medium Duty
Rush Isuzu Trucks, Orlando North
Rush Truck Center, Orlando North
Rush Truck Center, Orlando South
Rush Peterbilt Truck Center, Orlando South
Rush Truck Center, Orlando Used Trucks
Rush Truck Center, Haines City
Rush Peterbilt Truck Center, Haines City
Rush Truck Center, Tampa
Rush Peterbilt Truck Center, Tampa
Rush Truck Center, Jacksonville
Rush Peterbilt Truck Center, Jacksonville
Rush Truck Center, Jacksonville East
Rush Peterbilt Truck Center, Jacksonville East
Rush Truck Center, Lake City
Rush Peterbilt Truck Center, Lake City
Rush Truck Center, Miami
House of Trucks, Miami
Rush Medium Duty Truck Center, Atlanta
Rush Isuzu Trucks, Atlanta
Rush Truck Center, Atlanta
Rush Bus Center, Atlanta
Rush Truck Center, Atlanta Collision Center
Rush Truck Center, Doraville
Rush Isuzu Trucks, Doraville
Rush Truck Center, Smyrna
Rush Truck Center, Tifton
Rush Bus Center, Tifton
Rush Truck Center, Columbus
Rush Truck Center, Gainesville
Rush Truck Center, Augusta
Rush Truck Center, Macon
Rush Truck Center, Valdosta
Rush International Truck Center, Boise
Rush International Truck Center, Idaho Falls
Rush International Truck Center, Lewiston
Rush International Truck Center, Twin Falls
Rush Truck Center, Boise
Rush Truck Center, Idaho Falls
Rush Truck Center, Lewiston
Rush Truck Center, Twin Falls
Rush Truck Center, Bloomington
Rush Truck Center, Carol Stream
Rush Truck Center, Champaign
Rush Truck Center, Chicago
Rush Truck Center, Effingham
Rush Truck Center, Huntley
Rush Truck Center, Joliet
Rush Truck Center, Quincy
Rush Truck Center, Springfield
House of Trucks, Willowbrook
Rush Truck Center, Gary
Rush Truck Center, Indianapolis
Rush Truck Center, Kansas City
Rush Truck Center, Bowling Green
Rush Truck Center, St. Peters
Rush Truck Centers of Georgia, Inc.
Delaware
Rush Truck Centers of Idaho, Inc.
Delaware
Rush Truck Centers of Illinois, Inc.
Delaware
Rush Truck Centers of Indiana, Inc.
Delaware
Rush Truck Centers of Kansas, Inc.
Rush Truck Centers of Kentucky, Inc.
Rush Truck Centers of Missouri, Inc.
Delaware
Delaware
Delaware
87
Rush Truck Centers of Nebraska, Inc.
Rush Truck Centers of Nevada, Inc.
Delaware
Delaware
Rush Truck Centers of New Mexico, Inc.
Delaware
Rush Truck Centers of North Carolina, Inc.
Delaware
Rush Truck Centers of Ohio, Inc.
Delaware
Rush Truck Centers of Oklahoma, Inc.
Delaware
Rush Truck Centers of Pennsylvania, Inc.
Delaware
Rush Truck Centers of Tennessee, Inc.
Delaware
Rush Truck Centers of Texas, L.P.
Texas
88
Rush Truck Center, St. Louis
Rush Truck Center, Omaha
Rush Truck Center, Las Vegas
Rush Peterbilt Truck Center, Las Vegas
Rush Truck Center, Albuquerque
Rush Peterbilt Truck Center, Albuquerque
Rush Truck Center, Farmington
Rush Peterbilt Truck Center, Farmington
Rush Truck Center, Las Cruces
Rush Peterbilt Truck Center, Las Cruces
Rush International Truck Center, Charlotte
Rush Isuzu Trucks, Charlotte
Rush Truck Center, Charlotte
Rush Truck Center, Charlotte Collision Center
Rush Truck Center, Hickory
Rush Truck Center, Asheville
Rush Truck Center, Akron
Rush Truck Center, Cincinnati
Rush Isuzu Trucks, Cincinnati
Rush Truck Center, Cleveland
Rush Truck Center, Columbus
Rush Truck Center, Columbus West
Rush Isuzu Trucks, Columbus West
Rush Truck Center, Dayton
Rush Isuzu Trucks, Dayton
Rush Truck Center, Lima
Rush Bus Center, Cincinnati
Rush Bus Center, Akron
Rush Bus Center, Cleveland
Rush Bus Center, Columbus
Rush Bus Center, Dayton
Rush Bus Center, Lima
Rush Peterbilt Truck Center, Ardmore
Rush Peterbilt Truck Center, Oklahoma City
Rush Peterbilt Truck Center, Tulsa
Rush Truck Center, Ardmore
Rush Truck Center, Oklahoma City
Rush Truck Center, Tulsa
Rush Isuzu Trucks, Oklahoma City
Rush Used Truck Center, Tulsa
Rush Truck Rigging
Perfection Equipment
Perfection Truck Parts & Equipment, Oklahoma City
Perfection Crane Repair
Custom Vehicle Solutions
Rush Truck Center, Greencastle
Rush Truck Center, Nashville
Rush Peterbilt Truck Center, Nashville
Rush Towing Systems, Nashville
Rush Truck Center, Memphis
Custom Vehicle Solutions
Rig Tough Used Trucks, Dallas
Rush Bus Center, Arlington
Rush Bus Center, Austin
Rush Bus Center, Corpus Christi
Rush Bus Center, Dallas
Rush Bus Center, Fort Worth
Rush Bus Center, Houston
Rush Bus Center, Laredo
Rush Bus Center, Lufkin
Rush Bus Center, Pharr
Rush Bus Center, San Antonio
Rush Bus Center, Sealy
Rush Bus Center, Texarkana
Rush Bus Center, Tyler
Rush Bus Center, Waco
Rush Isuzu Trucks, Austin
Rush Isuzu Trucks, College Station
Rush Isuzu Trucks, Corpus Christi
Rush Isuzu Trucks, Dallas
Rush Isuzu Trucks, El Paso
Rush Isuzu Trucks, Sealy
Rush Isuzu Trucks, Waco
Rush Medium Duty Truck Center, Dallas
Rush Medium Duty Truck Center, Waco
Rush Peterbilt Truck Center, Abilene
Rush Peterbilt Truck Center, Amarillo
Rush Peterbilt Truck Center, Arlington
Rush Peterbilt Truck Center, Austin
Rush Peterbilt Truck Center, Beaumont
Rush Peterbilt Truck Center, Brownsville
Rush Peterbilt Truck Center, College Station
Rush Peterbilt Truck Center, Corpus Christi
Rush Peterbilt Truck Center, Cotulla
Rush Peterbilt Truck Center, Dalhart
Rush Peterbilt Truck Center, Dallas
Rush Peterbilt Truck Center, Dallas South
Rush Peterbilt Truck Center, El Paso
Rush Peterbilt Truck Center, Fort Worth
Rush Peterbilt Truck Center, Houston
Rush Peterbilt Truck Center, Houston Northwest
Rush Peterbilt Truck Center, Laredo
Rush Peterbilt Truck Center, Lubbock
Rush Peterbilt Truck Center, Lufkin
Rush Peterbilt Truck Center, Odessa
Rush Peterbilt Truck Center, Pharr
Rush Peterbilt Truck Center, San Antonio
Rush Peterbilt Truck Center, Sealy
Rush Peterbilt Truck Center, Texarkana
Rush Peterbilt Truck Center, Tyler
Rush Peterbilt Truck Center, Victoria
Rush Peterbilt Truck Center, Waco
Rush Refuse Systems
Rush Towing Systems, Houston
Rush Towing Systems, San Antonio
Rush Truck Center, Abilene
Rush Truck Center, Amarillo
Rush Truck Center, Arlington
Rush Truck Center, Austin
Rush Truck Center, Austin North
Rush Truck Center, Beaumont
Rush Truck Center, Bryan
Rush Truck Center, Brownsville
Rush Truck Center, College Station
89
Rush Truck Center, Corpus Christi
Rush Truck Center, Cotulla
Rush Truck Center, Dalhart
Rush Truck Center, Dallas
Rush Truck Center, Dallas Medium Duty
Rush Truck Center, Dallas Light and Medium Duty
Rush Truck Center, Dallas South
Rush Truck Center, Denton
Rush Truck Center, El Paso
Rush Truck Center, Fort Worth
Rush Truck Center, Houston
Rush Truck Center, Houston Medium Duty
Rush Truck Center, Houston Northwest
Rush Truck Center, Laredo
Rush Truck Center, Lubbock
Rush Truck Center, Lufkin
Rush Truck Center, Odessa
Rush Truck Center, Pharr
Rush Truck Center, San Antonio
Rush Truck Center, Sealy
Rush Truck Center, Texarkana
Rush Truck Center, Tyler
Rush Truck Center, Victoria
Rush Truck Center, Waco
Rush Crane and Refuse Systems International
World Wide Tires
House of Trucks, Dallas
Rush International Truck Center, Salt Lake City
Rush International Truck Center, Springville
Rush International Truck Center, St. George
Rush International Truck Center, Ogden
Rush Truck Center, Salt Lake City
Rush Truck Center, Springville
Rush Truck Center, St. George
Rush Truck Center, Ogden
Rush Truck Center, Farr West
Rush Truck Center, Richmond
Rush Truck Center, Chester
Rush Crane Systems
Rush Idealease, Charlotte
Rush Refuse Systems
Augusta Idealease
Asheville Idealease
Boise Idealease
Champaign Idealease
Charlotte Idealease
Chicago Idealease
Cincinnati Idealease
Cleveland Idealease
Columbus Idealease
Dayton Idealease
Effingham Idealease
Hickory Idealease
Indianapolis Idealease
Indy Idealease
Lima Idealease
90
Rush Truck Centers of Utah, Inc.
Delaware
Rush Truck Centers of Virginia, Inc.
Delaware
Rush Truck Leasing, Inc.
Delaware
Advance Premium Finance, Inc.
AiRush, Inc.
Associated Acceptance, Inc.
Associated Acceptance of Florida, Inc.
Associated Acceptance of Georgia, Inc.
Associated Acceptance of Illinois, Inc.
Associated Acceptance of Oklahoma, Inc.
Commercial Fleet Technologies, Inc.
Idealease of Chicago LLC
International General Agency, Inc.
Los Cuernos, Inc.
Natural Gas Fuel Systems, Inc.
Rig Tough, Inc.
RTC Central San Antonio, Inc.
RTC Nevada, LLC
Rush Accessories Corporation
Rush Administrative Services, Inc.
Rushcare, Inc.
Rushco, Inc.
Rush Logistics, Inc.
Rush Real Estate Holdings, Inc.
Rush Retail Centers, Inc.
Rushtex, Inc.
Truck & Trailer Finance, Inc.
1187394B.C. Ltd.
California
Delaware
Texas
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Texas
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Canada
Macon Idealease
Norfolk Idealease
Quincy Idealease
Richmond Idealease
Salt Lake City Idealease
Springfield Idealease
St. Louis Idealease
None
None
Automotive Industry Insurance
Associated Truck Insurance Services
Rush Truck Insurance Services
None
None
None
None
Partsriver, Inc.
None
None
Los Cuernos Ranch
Momentum Fuel Technologies
Rush Truck Center, Birmingham
None
None
Chrome Country
None
None
None
None
None
None
None
None
None
91
EXHIBIT 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
1. Form S-8 No. 333-242488 pertaining to the Rush Enterprises, Inc. Amended and Restated 2007 Long-
Term Incentive Plan and Rush Enterprises, Inc. Amended and Restated 2004 Employee Stock Purchase
Plan,
2. Form S-8 No. 333-219878 pertaining to the Rush Enterprises, Inc. Amended and Restated 2007 Long-
Term Incentive Plan,
3. Form S-8 No. 333-198080 pertaining to the Rush Enterprises, Inc. 2007 Long-Term Incentive Plan,
4. Form S-8 No. 333-170732 pertaining to the Rush Enterprises, Inc. Deferred Compensation Plan,
5. Form S-8 No. 333-138556 pertaining to the Rush Enterprises, Inc. 2006 Non-Employee Director Stock
Plan, and
6. Form S-8 No. 333-121355 pertaining to the Rush Enterprises, Inc. Long-Term Incentive Plan, the Rush
Enterprises, Inc. 2004 Employee Stock Purchase Plan and Certain Non-Plan Options
of our reports dated February 24, 2021, with respect to the consolidated financial statements of Rush
Enterprises, Inc. and subsidiaries and the effectiveness of internal control over financial reporting of Rush
Enterprises, Inc. and subsidiaries, included in this Annual Report (Form 10-K) of Rush Enterprises, Inc. for the
year ended December 31, 2020.
/s/ Ernst & Young LLP
San Antonio, Texas
February 24, 2021
92
EXHIBIT 31.1
I, W. M. “Rusty” Rush, certify that:
CERTIFICATION
1.
I have reviewed this annual report on Form 10-K of Rush Enterprises, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
d)
disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
5.
internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s
board of directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrant’s internal control over financial reporting.
Date: February 24, 2021
By: /S/ W. M. “RUSTY” RUSH
W. M. “Rusty” Rush
President, Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)
93
CERTIFICATION
EXHIBIT 31.2
I, Steven L. Keller, certify that:
1.
I have reviewed this annual report on Form 10-K of Rush Enterprises, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
d)
disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s
board of directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrant’s internal control over financial reporting.
Date: February 24, 2021
By: /S/ STEVEN L. KELLER
Steven L. Keller
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
94
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.1
In connection with this annual report of Rush Enterprises, Inc. (the “Company”) on Form 10-K for the
year ended December 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the
“Report”), I, W. M. “Rusty” Rush, President, Chief Executive Officer and Chairman of the Board of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, that:
1.
Exchange Act of 1934; and
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
2.
condition and results of operations of the Company.
The information contained in the Report fairly presents, in all material respects, the financial
By: /S/ W. M. “RUSTY” RUSH
Name: W. M. “Rusty” Rush
Title: President, Chief Executive Officer and
Chairman of the Board
Date: February 24, 2021
95
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.2
In connection with this annual report of Rush Enterprises, Inc. (the “Company”) on Form 10-K for the
year ended December 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the
“Report”), I, Steven L. Keller, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.
Exchange Act of 1934; and
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
2.
condition and results of operations of the Company.
The information contained in the Report fairly presents, in all material respects, the financial
By: /S/ STEVEN L. KELLER
Name: Steven L. Keller
Title: Chief Financial Officer and
Treasurer
Date: February 24, 2021
96