<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-K
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
[NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996]
For the fiscal year ended December 31, 1996
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Act
of 1934
[No Fee Required]
For the transition period from _______ to _______
COMMISSION FILE NO. 0-23948
BOYD BROS. TRANSPORTATION INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 63-6006515
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
3275 HIGHWAY 30 36016
CLAYTON, ALABAMA (Zip Code)
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (334) 775-1400
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
(Title of class)
----------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Aggregate market value of the voting stock held by non-affiliates of
the Registrant:
$7,015,554 as of March 12, 1997
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date.
3,700,888 shares of Common Stock, par value $.001 per share,
outstanding as of March 12, 1997.
Documents incorporated by reference in this Annual Report on Form 10-K:
Portions of the definitive proxy statement relating to the 1997 Annual
Meeting of Stockholders in Part III, Items 10 (as related to Directors), 11, 12
and 13. Portions of the Annual Report to Stockholders for the year ended
December 31, 1996 in Parts II and IV.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PART I
<S> <C>
ITEM 1. BUSINESS............................................................... 1
ITEM 2. PROPERTIES............................................................. 6
ITEM 3. LEGAL PROCEEDINGS...................................................... 6
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................... 6
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS............................................ 7
ITEM 6. SELECTED FINANCIAL DATA................................................ 7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.............................................. 7
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA............................ 7
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE............................................... 7
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..................... 7
ITEM 11. EXECUTIVE COMPENSATION................................................. 7
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT......... 7
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................... 7
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K................................................ 8
</TABLE>
<PAGE> 3
PART I
ITEM 1. Business
THE COMPANY
Boyd Bros. Transportation Inc. (the "Company") is a truckload carrier
that operates exclusively in the flatbed segment of the industry and hauls
primarily steel products and building materials. Since its founding in 1956, the
Company has grown into what management believes is one of the largest
exclusively flatbed carriers in the United States operating only Company-owned
tractors. The Company owns and operates over 575 late model tractors and over
916 flatbed trailers. All of the Company's tractors are equipped with a two-way
satellite communication system produced by QUALCOMM, Inc. ("QUALCOMM") as well
as on-board computers that monitor engine and driver performance.
The Company's strategy is to offer high-quality flatbed transportation
services to high-volume, time-sensitive shippers. Because much of the freight
hauled by the Company consists of steel products and building materials,
time-definite delivery is required. A late delivery can mean a shutdown of a
production line at a plant or a delay in a construction project. The Company
focuses its marketing efforts on the types of shippers that require
time-definite delivery because the Company believes that service, rather than
price, generally will be the primary factor that will dictate their choice of
carrier.
Management believes that its ability to recruit and retain drivers has
been critical to its success, and the Company has sought to attract and retain
drivers by using only high-quality, late-model tractors, installing its two-way
satellite communication equipment and offering financial and other incentives to
drivers. Management recognizes that getting drivers home frequently is critical
to driver retention. Accordingly, the Company makes load assignments to drivers
to enable each driver to attain his or her goals in terms of miles driven as
well as time at home.
STRATEGY
The Company's business strategy is to offer high quality flatbed
transportation services in the truckload carrier market primarily to
high-volume, time-sensitive customers. The key components of the Company's
strategy are as follows:
Company-Owned Equipment. The Company owns all of its revenue equipment
and all drivers are employees of the Company. Management believes that using
Company-owned equipment and Company-employed drivers offers the Company an
advantage over its competitors that depend solely on owner-operators. Management
believes that controlling the dispatch of drivers is necessary for the Company
to meet the needs of time-sensitive customers. The Company is considering the
use of a small number of owner/operators in 1997.
Time-Sensitive Shippers. The Company focuses its marketing efforts on
high-volume, time-sensitive shippers that are involved primarily in the steel
and building materials businesses and require time-definite delivery.
Management believes that many large volume shippers in this segment of
the industry have reduced the number of carriers they use so as to use only
those "core carriers" that offer consistently superior service. The Company
intends to continue its focus on developing relationships as a core-carrier for
high-volume, time-sensitive shippers.
Technology. The Company's strategy has been to utilize technology to
provide better service to its customers and to improve operating efficiency. The
Company became the first major flatbed carrier in the country to install a
satellite tracking system, manufactured by QUALCOMM, in 100% of its tractors.
The tracking system enables the Company to monitor equipment locations and
schedules more effectively and to communicate with both drivers and customers.
The Company has also installed computers on board each of its tractors to
monitor fuel efficiency and other operational data. The Company will continue to
monitor and implement technological developments that will enable the Company to
improve customer service and operating efficiency.
Premium Quality Tractors. The Company continuously upgrades its fleet
of tractors. Maintaining a young, high quality fleet of tractors facilitates the
Company's ability to recruit and retain drivers, achieve maximum on-time
reliability, maximize fuel economy and convey an image of quality to existing
and potential customers.
CUSTOMERS AND MARKETING
The Company markets itself on the basis of quality service and
employees, its satellite communication system, the capabilities of its
information system to interface with the information systems of its customers,
its record of on-time deliveries, and its efficient and well-maintained tractors
and trailers. The Company's marketing efforts
<PAGE> 4
concentrate on attracting customers that require time-definite delivery and ship
multiple loads to and from locations that complement the Company's existing
traffic flows.
The Company has written contracts with most of its customers. The
contracts generally require the customer to use the Company for a specified
minimum amount of shipments each year and may be terminated by either party upon
30 to 60 days' written notice. The largest 25, 10 and 5 customers accounted for
approximately 69%, 52% and 36%, respectively, of the Company's revenues during
1996. Many of those customers are large, publicly-held companies. During 1996,
the only customer that accounted for more than 10% of the Company's revenues was
USG Interiors, Inc. ("USG"), which together with certain affiliates accounted
for approximately 12.8% of the Company's revenues. The Company's contract with
USG specifies that USG will permit the Company to transport at least 100 tons of
USG's goods each year, has no minimum term, and is terminable by either party
upon sixty days written notice. The loss of any of the Company's major customers
could adversely affect the Company's profitability.
OPERATIONS
The Company's operations are designed to maximize efficiency and
provide quality service to customers. All of the Company's fleet operations,
routing and scheduling are centrally coordinated through a satellite tracking
system from its corporate headquarters in Clayton, Alabama. Through the use of
the Company's satellite-based communication system, which is complemented by its
fully-integrated mainframe computer system, dispatchers monitor the location and
delivery schedules of all shipments and equipment to coordinate routes and
maximize utilization of the Company's drivers and equipment. See "--
Transportation Technology."
The Company conducts its operations through a network of 12 regional
and satellite service centers in strategic locations in the eastern two-thirds
of the United States. See "Item 2 - Properties." The Company operates regional
service centers in Clayton and Birmingham, Alabama; Atlanta, Georgia; and
Greenville, Mississippi. The regional service centers are supported by smaller
satellite service centers, each having between one and three employees, located
in Calvert City, Kentucky; Danville, Virginia; Lisbon Falls, Maine; Pittsburgh,
Pennsylvania; Baltimore, Maryland; and Walworth, Wisconsin. These service
centers allow the Company to re-dispatch equipment terminating in a given area,
enhance driver recruiting and return drivers to their homes more regularly. The
Company also has arrangements to deposit trailers near various major customers
or shipping locations to facilitate pre-loading of shipments and thereby
increase efficiency.
DRIVERS AND EMPLOYEES
Recruiting and retaining professional, well-trained drivers is critical
to the Company's success, and all of the Company's drivers must meet specific
guidelines relating primarily to safety record, driving experience and personal
evaluation, including drug testing.
To maintain high equipment utilization, particularly during periods of
growth, the Company strongly emphasizes continuous driver recruiting and
training. Drivers are recruited at all regional terminal locations and at the
corporate headquarters. Competition for qualified drivers is intense. In order
to attract and retain highly qualified drivers and to promote safe operations,
the Company purchases premium quality tractors and equips them with optimal
comfort and safety features, such as air conditioning, high quality interiors,
power steering, engine brakes and sleeper cabs.
Drivers are trained in Company policies and operations, safety
techniques and fuel efficient operation of equipment, and must pass a rigorous
road test prior to assignment to a vehicle. The Company's training programs
range from two to eight weeks of concentrated schooling, depending on a driver's
level of prior experience. In addition, all drivers are required to participate
in annual safety training and defensive driving courses for recertification by
the Company. Recognizing the importance of driver contact while drivers are on
the road for extended periods, the Company maintains toll-free telephone lines
and publishes a newsletter containing Company information, in addition to
maintaining daily contact between dispatchers and drivers.
The short- to medium-haul truckload segment of the trucking industry,
including the Company, experiences significant driver turnover, and the Company
anticipates that the intense competition for qualified drivers in the trucking
industry will continue. The Company experienced driver shortages that resulted
in up to 60 idled tractors during 1996, and currently has approximately 20 idled
tractors due to driver shortages. Management is actively implementing new driver
recruitment and retention programs to better attract and retain drivers, but
expects to continue to experience idled tractors in the near future until those
programs are fully implemented. Additionally, the Company is considering the use
of a small number of owner/operators commencing in 1997.
2
<PAGE> 5
At December 31, 1996, the Company employed 807 persons, of whom
approximately 647 were drivers and trainees and the balance of whom were
mechanics, other equipment maintenance personnel and support personnel,
including management and administration. None of the Company's employees is
subject to a collective bargaining agreement, and the Company has never
experienced a work stoppage. The Company believes that its relations with its
employees are excellent.
REVENUE EQUIPMENT
The Company's philosophy is to purchase premium quality tractors to
help attract and retain drivers and to promote safe operations, and the Company
believes the higher initial cost of such equipment is recovered through better
resale marketability. Each of the Company's tractors is equipped with a sleeper
cab to permit all drivers to comply conveniently and cost-effectively with the
United States Department of Transportation ("DOT") hours of service guidelines
and to facilitate team operations when necessary.
At December 31, 1996, the Company owned 575 tractors and 916 flatbed
trailers. The tractors are manufactured by Freightliner, Kenworth and Navistar,
and the trailers are manufactured by Utility, Dorsey, Fruehauf and Great Dane.
The Company owns all of the tractors and trailers used by it in order to enhance
continued dependability of services, increase equipment utilization and decrease
its costs per mile.
TRANSPORTATION TECHNOLOGY
Management believes that the application of technology is an ongoing
part of providing high quality service at competitive prices, and further
believes that the Company has enhanced its strong reputation for customer
satisfaction through the early, fleet-wide implementation of two computer
systems.
The Company was the first major flatbed carrier to be fully equipped
with the two-way satellite communication system produced by QUALCOMM. The
satellite-based OMNITRACS(C) system ("Omnitracs") was installed and operational
in the entire Company fleet by the end of 1990. Omnitracs has improved the
quality and efficiency of the Company's operations by allowing drivers and
dispatchers to have instant, on-the-road communication ability and by enabling
the Company to provide its customers with accurate information on the status and
estimated delivery time of cargo shipments. As there are further technological
developments or enhancements in such systems the Company intends to remain
committed to investing in and utilizing advanced technology to better serve its
customers.
Omnitracs permits more efficient transmission of load assignments to
drivers, as well as an enhanced capability to monitor loads in transit and
rapidly bill customers for completed deliveries. Once a load is assigned by a
load planner, the assignment is transmitted to the Company's operations
department where it is reviewed by a dispatcher who then relays the assignment
to the appropriate driver through the Omnitracs display unit in each of the
Company's vehicles. The driver can respond to the dispatcher through Omnitracs
in a matter of seconds, thereby eliminating waiting time and inefficient
dependence on truck stop telephones or other methods of communication between
drivers and dispatchers. Through Omnitracs, the Company can electronically
record a load assignment, report the load to the billing department and generate
customer invoices.
In addition, the Company uses Omnitracs to automatically transmit
location and equipment information and other data to the dispatcher, thereby
reducing the need for drivers to stop to communicate with dispatchers in the
event of a problem. The system continually tracks every cargo load with accuracy
within one-tenth of a mile. This information, along with information concerning
available loads, is constantly updated on the Company's on-line computer. Load
planners use this information to match available equipment with available loads,
meet delivery schedules and respond more quickly to customer inquiries.
The Company has also equipped its entire fleet of tractors with the
SENSORTRACS(C) on-board computer system ("Sensortracs"), which is also produced
by QUALCOMM and which monitors fuel efficiency and other operational data.
Information from Sensortracs is periodically processed by one of the Company's
computers, which generates reports on vehicle efficiency and driver performance.
Reports generated by this system enhance the Company's ability to counsel its
drivers on strengths and deficiencies in their driving habits and fuel
efficiency and to monitor the effectiveness of driver training programs.
The Company has a centralized, fully-integrated management information
system that utilizes an IBM mainframe computer located at the corporate
headquarters and is on-line at all the Company's regional service centers. The
Company believes that its commitment to investing in and utilizing advanced
technology has given it electronic data interchange ("EDI") capabilities that
provide a competitive advantage. The system's Company-wide
3
<PAGE> 6
database allows the Company to respond quickly to customer information requests
without having to combine data files from several sources. The EDI capability
allows the Company to exchange billing information with customers and is capable
of providing immediate delivery status updates from all regional service centers
for reporting to customers and for better control and tracking of shipments.
This ability to exchange data directly with customers regarding their shipments
significantly enhances quality control and customer service.
SAFETY AND INSURANCE
The Company's safety department is responsible for training and
supervising personnel to keep safety awareness at its highest level, the Company
has implemented an active safety and loss prevention program at its corporate
headquarters and each of its regional service centers. The emphasis on safety
begins in the hiring and training process, where prospective employees are given
physical examinations and drug tests, and newly hired drivers, regardless of
experience level, must participate in an intensive training program. See "--
Drivers and Employees."
If drivers maintain certain standards in five areas, including safety,
they are paid additional compensation per mile. The Company's Director of Safety
continuously monitors driver performance and has final authority regarding
employment and retention of drivers. The Company is committed to securing
appropriate insurance coverage at cost-effective rates. The primary claims that
arise in the trucking industry consist of cargo loss and damage, personal
injury, property damage and workers' compensation. The Company currently retains
liability up to $100,000 for each claim for personal injury and property damage,
$300,000 for each claim for workers' compensation, $90,000 for each claim for
employee medical and hospitalization, and $10,000 for each claim for cargo
damage. The Company currently purchases excess primary and umbrella insurance
coverage in amounts that management believes are adequate to supplement its
retained liabilities.
FUEL
Motor carrier service is dependent upon the availability of diesel
fuel. The Company's fuel expense comprised 16.5% and 14.9% of revenues in 1996
and 1995, respectively. Through the on-board computers, the Company continually
monitors fuel usage, miles per gallon, cost per mile and cost per gallon. The
Company has not experienced any difficulty in maintaining fuel supplies
sufficient to support its operations. Shortages of fuel, increases in fuel
prices or fuel tax rates or rationing of petroleum products could have a
material adverse effect on the operations and profitability of the Company.
COMPETITION
The trucking industry is highly competitive and fragmented. The Company
competes primarily with other short- to medium-haul, flatbed truckload carriers,
internal shipping conducted by existing and potential customers and, to a lesser
extent, railroads. Deregulation of the trucking industry during the 1980s
created an influx of new truckload carriers which, along with certain other
factors, continues to create substantial downward pressure on the industry's
rate structure. Competition for the freight transported by the Company is based
primarily on service and efficiency and, to a lesser degree, on freight rates.
While management believes that the Company is one of the largest exclusively
flatbed carriers in the United States operating only Company-owned tractors,
there are other trucking companies, including truckload carriers that have
flatbed divisions, which have substantially greater financial resources, operate
more equipment or carry a larger volume of freight than the Company. The Company
also competes with other motor carriers in hiring qualified drivers.
REGULATION
The trucking industry is subject to regulatory oversight and
legislative changes which can affect the economics of the industry by requiring
certain operating practices or influencing the demand for, and the costs of
providing, services to shippers. The Intermodal Surface Transportation Board, as
well as various state agencies that have jurisdiction over the Company, have
broad powers, generally governing such matters as authority to engage in motor
carrier operations, rates and charges, accounting systems, certain mergers,
consolidations and acquisitions, and periodic financial reporting.
The federal Motor Carrier Act of 1980 commenced a program to increase
competition among motor carriers and to diminish the level of regulation in the
industry. Following this deregulation, applicants have more easily been able to
obtain operating authority, and interstate motor carriers such as the Company
have been able to implement certain rate changes without federal approval. The
Motor Carrier Act also removed many route and commodity restrictions on
transportation of freight. In 1995, the Interstate Commerce Commission (the
"ICC") was eliminated
4
<PAGE> 7
and the Intermodal Surface Transportation Board (the "ISTB") was established
within the Department of Transportation (the "DOT"). The ISTB performs all
functions previously performed by the ICC. Since 1981, the Company has held
authority to carry general commodities throughout the 48 contiguous states, as
both a common and contract carrier.
Interstate motor carrier operations are subject to safety requirements
prescribed by the DOT. Such matters as weight and dimensions of equipment are
also subject to federal and state regulation. All of the Company's drivers were
required to obtain national commercial driver's licenses by April 1, 1992
pursuant to the regulations promulgated by the DOT. Also, effective in 1989, DOT
regulations imposed mandatory drug testing of drivers. In addition, the Company
has completed the implementation of its own ongoing drug-testing program. The
DOT's national commercial driver's license and drug testing requirements have
not to date adversely affected the availability to the Company of qualified
drivers. DOT alcohol testing rules require certain tests, random and otherwise,
for alcohol levels in drivers and other safety personnel. See " -- Safety and
Insurance."
ENVIRONMENTAL MATTERS
The Company's operations are subject to federal, state and local laws
and regulations concerning the environment. Certain of the Company's facilities
are located in historically industrial areas and, therefore, there is the
possibility of environmental liability as a result of operations by prior owners
as well as the Company's use of fuels and underground storage tanks at its
regional service centers.
During 1994, the Company retained an environmental consulting firm to
conduct an audit of its compliance with applicable federal, state and local laws
and regulations concerning the environment. The environmental consulting firm
detected the presence of soil contamination and potential groundwater
contamination related primarily to the use of underground storage tanks,
including tanks used by a prior owner of the property, at the Company's terminal
in Birmingham, Alabama. The Company notified the Alabama Department of
Environmental Management of this contamination and subsequently removed and
replaced all currently known underground storage tanks at the Birmingham
terminal. The Company also replaced all underground storage tanks at the
Clayton, Alabama terminal. Based upon cost estimates provided by its
environmental consulting firm and contractors in 1994, the Company recorded an
$800,000 charge to establish a reserve for the removal and replacement of
underground storage tanks at the Company's service centers. Based on subsequent
reviews of this project by management and its independent consultants, the
Company reduced this reserve during 1995 to $293,652, reflecting a decline in
the current estimated costs of remediating the sites. The environmental
remediation liability in the accompanying balance sheet at December 31, 1996 is
$145,122. There can be no assurance that material liabilities or expenditures
will not arise from these or additional environmental matters that may be
discovered, or from future requirements of law. The Company does not believe
these expenditures will have a material adverse effect on the Company's
financial condition.
FORWARD LOOKING STATEMENTS
Certain statements incorporated by reference from the information under the
caption "Management's Discussion and Analysis of Financial Conditions and
Results of Operations" in the Company's Annual Report to Stockholders for the
year ended December 31, 1996 contained herein constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance,
or achievements of the Company to be materially different from any future
results, performance, or achievements expressed or implied by such
forward-looking statements. Such factors include, among other things, business
conditions and growth in the economy, including the transportation and
construction sectors in particular, competitive factors, including price
pressures and the ability to recruit and retain qualified drivers, the ability
to control internal costs as well as fuel costs, that are not passed on to the
Company's customers, and other factors referenced elsewhere herein.
5
<PAGE> 8
ITEM 2. Properties
The Company's corporate headquarters and principal service center are
located on a 17.9 acre tract in Clayton, Alabama, which the Company purchased
during 1993. Such facilities consist of approximately 22,000 square feet of
office space, 12,000 square feet of equipment repair facilities and
approximately 3 acres of parking space. The following table sets forth
information regarding each of the Company's service center and shuttle
locations:
<TABLE>
<S> <C>
Clayton, AL ................................ Owned
Atlanta, GA ................................ Owned
Birmingham, AL ............................. Owned
Greenville, MS ............................. Owned
Gary, IN ................................... Leased
Calvert City, KY ........................... Leased
Danville, VA ............................... Leased
Lisbon Falls, ME ........................... Leased
Pittsburgh, PA ............................. Leased
Baltimore, MD .............................. Leased
Walworth, WI ............................... Leased
</TABLE>
ITEM 3. Legal Proceedings
The Company is routinely a party to litigation incidental to its
business, primarily involving claims for personal injury and property damage
incurred in the transportation of freight. The Company maintains insurance that
it believes is adequate to cover its liability risks. See "Item 1 Business --
Safety and Insurance."
ITEM 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the
fourth quarter of the year ended December 31, 1996, either through the
solicitation of proxies or otherwise.
Executive Officers of the Registrant
Set forth below is information concerning the Executive Officers of the
Company as of March 15, 1997.
Dempsey Boyd, age 70, founded the Company in 1956, and has been
Chairman of the Board since April 1980. Mr. Boyd served as President of the
Company from December 1962 until April 1980. Mr. Boyd is the father of Gail B.
Cooper and Ginger B. Tibbs.
Donald G. Johnston, age 60, has served as President and Chief Executive
Officer of the Company since April 1980, and as a Director since December 1979.
Prior to that time, he served as Vice President and General Manager since
joining the Company in 1979. Mr. Johnston has a background in industrial
management and sales, and is active in, and has previously served as chairman
of, the Alabama Trucking Association and the University of Georgia Trucking
Profitability Strategies Conference. Mr. Johnston received a B.S. in industrial
management from Auburn University.
Richard C. Bailey, age 46, has served as Chief Financial Officer since
joining the Company in August 1992, and has served as a Director since February
1995. He served as president and director of Eastern Inter-Trans Services, Inc.,
a dry van truckload carrier based in Columbus, Georgia, from December 1989 to
August 1992. Mr. Bailey is a certified public accountant with a B.S. in
accounting from Georgia State University. He was previously employed in various
financial positions by Ernst & Young, Intermet Corporation and Snapper Products
(a division of The Actava Group Inc.). Mr. Bailey has served on the Advisory
Board of the University of Georgia Trucking Profitability Strategies Conference.
Gail B. Cooper, age 46, has been the Secretary of the Company since
December 1969, and served as a Director of the Company from December 1969 until
March 1994. Ms. Cooper received a B.S. in business administration from Troy
State University. She has served the Company in numerous administrative and
accounting positions since joining the Company full-time in June 1972. Ms.
Cooper is the daughter of Mr. Boyd and the sister of Ms. Tibbs.
6
<PAGE> 9
Ginger B. Tibbs, age 43, has been the Treasurer of the Company since
December 1979, and served as a Director from December 1978 until March 1994. Ms.
Tibbs is primarily responsible for collection of the Company's accounts
receivable and has served as Credit Manager since September 1980. Ms. Tibbs
received a degree in elementary education from Auburn University. She is the
daughter of Mr. Boyd and the sister of Ms. Cooper.
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters
The Common Stock of the Company is listed on the Nasdaq National Market
under the symbol "BOYD." As of March 15, 1997, the Common Stock was held by
approximately 80 holders of record. The table below sets forth the reported high
and low sales price per share for the Common Stock as reported by the Nasdaq
National Market for each fiscal quarter during 1996.
<TABLE>
<CAPTION>
Price Range
---------------------------
1996 High Low
---- ---------------------------
<S> <C> <C>
First Quarter ................................. $ 8 1/2 $7
Second Quarter ................................ 9 7
Third Quarter ................................. 9 1/2 7 1/2
Fourth Quarter ................................ 9 1/4 7
</TABLE>
<TABLE>
<CAPTION>
Price Range
---------------------------
1995 High Low
---- ---------------------------
<S> <C> <C>
First Quarter ................................. $12 1/4 $9 1/2
Second Quarter (since May 10, 1994) ........... 12 1/4 8 1/2(1/8)
Third Quarter ................................. 10 8
Fourth Quarter ................................ 9 1/2 6
</TABLE>
The Company currently anticipates that all of its earnings will be
retained for development of the Company's business, and does not anticipate
paying any cash dividends in the foreseeable future. Furthermore, certain of the
Company's financing arrangements contain covenants that may restrict the payment
of cash dividends for the foreseeable future. Future cash dividends, if any,
will be at the discretion of the Company's Board of Directors and will depend
upon, among other things, the Company's future operations and earnings, capital
requirements and surplus, general financial condition, contractual restrictions,
and other factors as the Board of Directors may deem relevant.
ITEM 6. Selected Financial Data
The information required by this item is incorporated by reference from
the information under the caption "Selected Financial Data" in the Company's
Annual Report to Stockholders for the year ended December 31, 1996.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The information required by this item is incorporated by reference from
the information under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's Annual Report to
Stockholders for the year ended December 31, 1996.
ITEM 8. Financial Statements and Supplementary Data
The information required by this item is incorporated by reference from
the Financial Statements contained in the Company's Annual Report to
Stockholders for the year ended December 31, 1996.
ITEM 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
PART III
With the exception of information relating to the executive officers of
the Company, which is provided in Part I hereof, all information required by
Part III (Items 10, 11, 12 and 13) is incorporated by reference to the Company's
definitive Proxy Statement relating to the 1997 Annual Meeting of Stockholders,
which is scheduled to be filed on or before April 30, 1997.
7
<PAGE> 10
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(a) Exhibits, Financial Statements and Schedules.
1. Financial Statements. The following financial statements for the
Company and Independent Auditors' Report are incorporated by reference
from the Company's Annual Report to Stockholders for the year ended
December 31, 1996:
Independent Auditors' Report
Balance Sheets at December 31, 1996 and 1995
Statements of Operations for the years ended December 31,
1996, 1995 and 1994
Statements of Stockholders' Equity for the years ended December 31,
1996, 1995 and 1994
Statements of Cash Flows for the years ended December 31, 1996, 1995
and 1994
Notes to Financial Statements
2. Financial Statement Schedules. None.
Financial Statement Schedules are omitted because of the absence of
conditions under which they are required or because the information is included
in the financial statements or notes thereto.
3. Exhibits required by Item 601 of Regulation S-K.
The following exhibits are included in this Form 10-K:
EXHIBIT
NO. DESCRIPTION
13 Those portions of the Company's Annual Report to
Stockholders for the year ended December 31, 1996
that are specifically incorporated herein by
reference.
23 Consent of Deloitte & Touche LLP
27 Financial Data Schedule
8
<PAGE> 11
The following exhibits are incorporated by reference to the Company's
Registration Statement on Form S-1 (File No. 33-76756), declared effective on
May 9, 1994:
EXHIBIT
NO. DESCRIPTION
3.1 Certificate of Incorporation of the Company
3.2 By-laws of the Company
10.1* Boyd Bros. Transportation Inc. 1994 Stock Option Plan
10.2* Form of the Company's Nonstatutory Stock Option Agreement
10.3* Form of the Company's Nonstatutory Stock Option Agreement for
Nonemployee Directors
10.4* Description of Senior Management Bonus Plan
10.5* Description of Key Employee Bonus Program
10.11 Master Note for Business and Commercial Loans dated July 22,
1992 providing for a $1,500,000 line of credit from AmSouth
Bank N.A. to the Company
10.12 Note for Business and Commercial Loans dated November 1, 1992
by the Company in favor of AmSouth Bank N.A. in the principal
amount of $5,317,120.95
10.13 Note for Business and Commercial Loans dated August 2, 1993 by
the Company in favor of AmSouth Bank N.A. in the principal
amount of $5,122,702.70
10.14 Security Agreement for Tangible Personal Property dated
February 15, 1994 by the Company in favor of AmSouth Bank N.A.
10.15 Note for Business and Commercial Loans dated February 15, 1994
for a $5,000,000 non-revolving draw note by the Company in
favor of AmSouth Bank N.A.
10.22 Modification of the Continuation of Credit and Security
Agreement and Loan Modification Agreement dated March 4, 1994
by and between the Company and Compass Bank
10.26 Credit and Security Agreement dated February 1, 1994 by and
between the Company and Compass Bank
10.27 Security Agreement dated February 1994 by the Company in favor
of Compass Bank
10.31 OMNITRACS Contract dated February 1, 1990 by and between the
Company and QUALCOMM, Inc.
10.33 Stock Option Exercise and Cancellation Agreement dated as of
March 22, 1994 by and between the Company and Donald G.
Johnston
10.34 Indemnification Agreement dated as of March 22, 1994 by and
between the Company and Donald G. Johnston
10.35 Form of Tax Indemnification Agreement by and between the
Company and certain stockholders of the Company
10.37 Credit Agreement dated April 1, 1994 by and between the
Company and AmSouth Bank N.A.
10.38 Trucking Contract dated May 2, 1988 by and between the Company
and USG Interiors, Inc.
- ----------------------
* Identifies each exhibit that is a "management contract or compensatory
plan or arrangement" required to be filed as an exhibit to this Annual
Report on Form 10-K pursuant to Item 14(c) of Form 10-K.
9
<PAGE> 12
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.
BOYD BROS. TRANSPORTATION INC.
By: /s/ DONALD G. JOHNSTON
-------------------------------------
Donald G. Johnston
President and Chief Executive
Officer
Date: March 20, 1997
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 and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ DONALD G. JOHNSTON President, Chief Executive March 20, 1997
- ------------------------------ Officer and Director (Principal
Donald G. Johnston Executive Officer)
/s/ RICHARD C. BAILEY Chief Financial Officer and March 20, 1997
- ------------------------------ Director (Principal Financial
Richard C. Bailey and Accounting Officer)
/s/ DEMPSEY BOYD Chairman and Director March 20, 1997
- ------------------------------
Dempsey Boyd
/s/ GLYN E. NEWTON Director March 24, 1997
- ------------------------------
Glyn E. Newton
/s/ W. WYATT SHORTER Director March 24, 1997
- ------------------------------
W. Wyatt Shorter
/s/ PAUL G. TAYLOR Director March 20, 1997
- ------------------------------
Paul G. Taylor
/s/ BOYD WHIGHAM Director March 20, 1997
- ------------------------------
Boyd Whigham
</TABLE>
<PAGE> 13
Exhibit Index
<TABLE>
<CAPTION>
Exhibit Sequential
No. Description Page No.
- ------- ----------- ----------
<S> <C> <C>
13 Those portions of the Company's Annual Report to
Stockholders for the year ended December 31, 1996
that are specifically incorporated herein by
reference . . . . . . . . . . . . . . . . . . . . . .
23 Consent of Deloitte & Touche LLP . . . . . . . . . .
27 Financial Data Schedule (for SEC use only) . . . . .
</TABLE>
<PAGE> 1
EXHIBIT 13
SELECTED FINANCIAL DATA
The following tables set forth selected financial data and selected pro forma
financial data of the Company. The selected financial data presented below for
the five year period ended December 31, 1996, are derived from the Company's
audited financial statements. The data presented below should be read in
conjunction with "Management's Discussion and Analysis," the Financial
Statements and Notes thereto.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------
(in thousands, except per share data) 1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
OPERATING REVENUES $ 65,523 $ 61,866 $ 59,132 $ 50,340 $ 42,403
Operating expenses:
Salaries, wages and employee benefits 28,420 27,573 24,800 20,610 17,152
Non-cash compensation expense(1) 947 806
Operating supplies 19,550 17,156 15,042 13,180 11,551
Taxes and licenses 2,222 1,823 1,922 1,934 1,664
Insurance and claims 3,379 3,210 3,669 3,065 2,396
Communications and utilities 1,186 1,022 927 776 706
Depreciation and amortization 8,261 7,296 6,451 5,516 4,792
Rent 202 154 136 136 94
Gain on disposition of property
and equipment, net (805) (648) (410) (272) (347)
Environmental remediation(2) 19 (294) 800 -- --
Other 439 474 523 544 485
-------- -------- -------- -------- --------
Total operating expenses 62,873 57,765 53,860 46,436 39,299
-------- -------- -------- -------- --------
Operating income 2,650 4,101 5,272 3,904 3,104
Interest income 164 82 54 106 135
Interest expense (1,408) (781) (806) (901) (871)
Other -- -- 70 -- (223)
-------- -------- -------- -------- --------
Income before income taxes 1,406 3,402 4,590 3,109 2,145
Income taxes 579 1,227 6,544 47 31
-------- -------- -------- -------- --------
Income (loss) before cumulative
effect of accounting change 828 2,125 (1,954) 3,062 2,114
Cumulative effect of accounting change -- -- -- 157 --
-------- -------- -------- -------- --------
Net income (loss) $ 828 $ 2,125 $ (1,954) $ 3,219 $ 2,114
======== ======== ======== ======== ========
Net income (loss) per share $ .22 $ .56 $ (.55) $ 1.07 $ .70
======== ======== ======== ======== ========
Dividends paid(3) $ -- $ -- $ 2,525 $ 1,253 $ 502
======== ======== ======== ======== ========
PRO FORMA INCOME DATA (Unaudited)(4):
Income before income taxes $ 4,590 $ 3,109 $ 2,145
Pro forma income taxes 1,762 1,313 965
-------- -------- --------
Pro forma net income $ 2,828 $ 1,796 $ 1,180
======== ======== ========
Pro forma net income per share $ .80 $ .60 $ .39
======== ======== ========
</TABLE>
<PAGE> 2
SELECTED FINANCIAL DATA
(1) Reflects non-cash compensation expense attributable to stock options
previously granted to the Chairman of the Board and the President of
the Company.
(2) Reflects an operating expense (credit) accrued for environmental
remediation during 1995. See Note 6 to Financial Statements.
(3) Distributions primarily to fund tax liabilities resulting from the
Company's S Corporation status were made to the Company's stockholders
in each year between 1990 and 1994, prior to the termination of the
Company's S Corporation status on March 30, 1994. See Note 8 to
Financial Statements.
(4) Between January 1, 1987 and March 30, 1994, the Company was treated as
an S Corporation for federal and certain state income tax purposes. As
a result, the Company's taxable earnings for 1989 through 1993, and the
first quarter of 1994, were taxed for federal and certain state income
tax purposes directly to the Company's then-existing stockholders. On
March 30, 1994, the Company terminated its S Corporation status and
became subject to federal and certain additional state income taxes.
For informational purposes, unaudited pro forma net income data is
provided to reflect an adjustment for a provision for federal and state
income taxes as if the Company had not been treated as an S Corporation
during those periods. The pro forma net income data do not give effect
to the non-cash charge of approximately $5.5 million in recognition of
deferred income taxes that resulted from the termination of the
Company's S Corporation status. See Note 8 to Financial Statements.
<TABLE>
<CAPTION>
December 31,
---------------------------------------------
(in thousands) 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit) $ 2,495 $ 2,676 $ 768 $ (107) $(2,557)
Net property and equipment 44,593 37,188 33,184 30,452 26,308
Total assets 57,262 48,892 41,480 38,888 32,365
Long-term debt, less
current maturities 15,198 9,228 6,143 11,875 9,639
Total liabilities 33,374 24,903 19,616 20,403 16,872
Stockholders' equity 23,888 23,989 21,864 18,405 15,493
</TABLE>
SELECTED OPERATING DATA:
The following table sets forth certain operating data regarding the
Company.
<TABLE>
<CAPTION>
December 31,
------------------------------------------
1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating ratio 95.95% 93.37% 91.08% 92.24% 92.68%
Average length of haul in miles 677 694 687 671 681
Average number of truckloads per week 1,607 1,470 1,457 1,252 1,055
Average revenues per total mile $ 1.14 $ 1.14 $ 1,15 $ 1.13 $ 1.11
Equipment at period end:
Tractors 575 522 480 415 370
Trailers 916 875 830 723 540
</TABLE>
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following is a discussion of the financial condition and results of
operations of the Company for each of the years in the three year period ended
December 31, 1996. This discussion should be read in conjunction with the
Financial Statements and Notes thereto included elsewhere herein.
GENERAL
The Company was founded in 1956 by Dempsey Boyd and his brothers as a small
regional flatbed trucking operation with three tractors. Since that time, the
Company has grown to one that operates over 575 tractors and 916 trailers in the
eastern two-thirds of the United States. The Company's historical strategy has
been to own all of its revenue equipment and to operate through employee
drivers. The Company's expansion, therefore, has required significant capital
expenditures which have been funded through secured borrowings.
The Company operated as an S Corporation from January 1, 1987 through March 30,
1994. As a result, the net taxable income of the Company during such period was
taxed directly to the Company's stockholders rather than to the Company.
The termination of the Company's S Corporation status on March 30, 1994,
resulted in a one-time non-cash charge of approximately $5.5 million in
recognition of deferred income taxes and a corresponding reduction in
stockholders' equity.
The pro forma income data of the Company has been prepared to reflect the
termination of S Corporation status. See Note 8 to Financial Statements.
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship of the expense items
to operating revenues for the periods indicated.
<TABLE>
<CAPTION>
PERCENTAGE OF OPERATING REVENUES
YEARS ENDED DECEMBER 31,
------------------------------------
1996 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating revenues 100.00% 100.00% 100.00%
------ ------ ------
Operating expenses
Salaries, wages, and employee benefits 43.37 44.58 41.94
Operating supplies 29.84 27.73 25.44
Taxes and licenses 3.39 2.95 3.25
Insurance and claims 5.16 5.19 6.20
Depreciation and amortization 12.61 11.79 10.91
Gain on disposition of property and equipment, net (1.23) (1.05) (.69)
Other 2.81 2.18 4.03
------ ------ ------
Total operating expenses 95.95 93.37 91.08
Operating income 4.04 6.63 8.92
Interest expense, net (1.90) (1.13) (1.27)
Other -- -- .12
------ ------ ------
Income before income taxes 2.14 5.50 7.76
Income taxes* .88 2.06 2.98
------ ------ ------
Net income* 1.26% 3.43% 4.78%
------ ------ ------
</TABLE>
* Amounts for 1994 are pro forma.
<PAGE> 4
MANAGEMENT'S DISCUSSION AND ANALYSIS
COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995
Operating revenues for 1996 increased $3.7 million or 5.91% to $65.5 million as
compared to $61.9 million for 1995. The increase resulted primarily from
additional tractors in use. The Company's operating ratio increased from 93.37%
in 1995 to 95.95% in 1996. The increased operating ratio was due primarily to
increases in fuel costs, maintenance and lower utilization of equipment.
Operating supplies expense for 1996 increased $2.4 million or 14.0% due
primarily to higher fuel costs. Additionally, maintenance and related costs were
higher. Salaries, wages and employee benefit expenses for 1996 increased by
$847,268 or 3.1%, to $28.4 million as compared to $27.6 million for 1995. The
increase was less than the percentage increase in revenue due to a reduction in
non-driver personnel costs and headcount.
Insurance and claims expense for 1996 increased $169,115 or 5.3% to $3.4 million
as compared to $3.2 million in 1995. The increase was less than the percentage
increase in revenue due primarily to a reduction in insurance premiums.
Taxes and licenses increased $398,429 or 21.9% due to having a newer fleet of
tractors. Depreciation and amortization expense increased $965,582 or 13.2% due
primarily to lower utilization and the increase in tractor prices.
Environmental remediation expense was $19,408 in 1996 compared with a credit of
$293,652 in 1995. The initial estimate of remediation expense in 1994 was
substantially reduced in 1995.
Gain on sale of equipment increased $157,739 or 24.3% in 1996 over 1995 due to
the sale of more equipment in 1996 as opposed to 1995.
Interest expense, net increased $545,290 or 78.0% in 1996 over 1995. Long-term
debt increased substantially due to the purchase and trade-in of an increased
number of tractors.
Net income for 1996 was $827,617 compared with $2,124,658 for 1995.
COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO YEAR ENDED DECEMBER 31, 1994
Operating revenues for 1995 increased $2.73 million or 4.62% to $61.9 million as
compared to $59.1 million for 1994. The increase resulted primarily from
additional tractors in use. The Company's operating ratio increased from 91.08%
in 1994 to 93.37% in 1995. The increased operating ratio was due primarily to
increases in driver wages, fuel costs, and maintenance expenses, which were
partially offset by a $294,000 credit against environmental expenses previously
accrued.
Salaries, wages and employee benefit expenses for 1995 increased by $2.8 million
or 11.2%, to $27.6 million as compared to $24.8 million for 1994, and also
increased as a percentage of operating revenues. The increase in salaries,
wages, and employee benefit expenses as a percentage of operating revenues is
due primarily to increases in the number of employees and increases in overall
compensation for drivers in order to enhance driver recruitment and retention.
Operating supplies expense for 1995 increased $2.1 million or 14.1% to $17.2
million as compared to $15.0 million for 1994, and also increased as a
percentage of revenues due to increased maintenance and fuel costs. Insurance
and claims expenses for 1995 decreased by $459,047 or 12.5% to $3.2 million as
compared to $3.7 million for 1994. The decrease was due to reduced reserves for
pending claims and a reduction in liability premiums.
Depreciation and amortization expense for 1995 increased $844,000 or 13.1%, to
$7.3 million as compared to $6.5 million for 1994. This increase was a result of
the net increase in fleet size, lower utilization and the purchase of higher
priced new tractors. Management believes that the additional cost of owning
better equipped tractors can be offset by lower driver turnover and maintenance
expenses.
Environmental remediation expenses produced a credit of $294,000 in 1995
compared to an expense of $800,000 in 1994. The initial estimate of remediation
expense in 1994 was substantially reduced in 1995 due to a reduced estimate of
anticipated remediation expenses.
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS
Gain on sale of equipment increased $238,404 or 58.2%, to $648,061 in 1995
compared to $409,657 in 1994. The gain on sale of equipment was due to the sale
of more equipment in 1995 compared to 1994.
Net income for 1995 was $2.1 million compared with pro forma net income of $2.8
million for 1994.
LIQUIDITY AND CAPITAL RESOURCES
The growth of the Company's business and maintenance of its modern fleet have
required significant investments in new tractors and trailers, and has been
financed largely through long-term debt. Capital expenditures, net of proceeds
from disposals of property and equipment, were approximately $14.9 million in
1996, compared to $10.7 million in 1995. At December 31, 1996, the Company had
long-term debt (including current portions) of $19.8 million, primarily incurred
to purchase revenue equipment. Management anticipates increasing the Company's
fleet by approximately 50 tractors in 1997, net of replacements, at an
anticipated cost of approximately $10.1 million. Management expects to finance
such equipment purchases through equipment financing arrangements with various
lenders.
Historically, the Company has relied on cash generated from operations to fund
its working capital requirements. However, the Company has a bank line of credit
permitting short term borrowings of up to $1.5 million. The revolving line of
credit is collateralized by accounts receivable and inventory. Interest on the
borrowings is at the prime rate less .125%.
In May 1994 the Company completed an initial public offering of 823,000 shares
of Common Stock. Net proceeds from the offering totaled $7,937,332, all of which
were used to repay indebtedness incurred by the Company to purchase revenue
equipment. In addition, in May 1994 the Company received approximately $600,000
upon repayment of a note from the Company's principal stockholder, all of which
proceeds were also applied to repayment of outstanding indebtedness.
In January 1996, the Company implemented a stock repurchase program based on
management's belief that, at then current market prices, the common stock
represented a sound investment for the Company's corporate funds. Pursuant to
the repurchase program, the Company purchased 122,300 shares of the common stock
in open market and negotiated transactions, for an aggregate purchase price of
$928,500. The Company funded such purchases using working capital and borrowings
under its line of credit.
The Company currently has outstanding letters of credit, totaling $1,607,000 at
December 31, 1996, to cover liability insurance claims and self-insured workers'
compensation programs. Annual commitment fees relating to those letters of
credit do not exceed 1.5% of the face amounts thereof.
In connection with the termination of its S Corporation status and the initial
public offering of Common Stock, the Company distributed approximately
$2,525,000 to its stockholders of record on March 30, 1994. The distributions
represented the previously undistributed taxable earnings of the Company
included in the taxable income of such stockholders as a result of the Company's
S Corporation status.
Management believes that cash flow from future operations and borrowings
available under its line of credit will be sufficient to meet its needs for
working capital for the foreseeable future. Over the long term, the Company will
continue to have significant capital requirements which may require the Company
to seek additional borrowings or equity capital. The availability of debt
financing or equity capital will depend upon prevailing market conditions, the
market price of the Common Stock and other factors over which the Company has no
control, as well as the Company's financial condition and results of operations.
SEASONALITY
In the trucking industry, results of operations show a seasonal pattern because
customers generally reduce shipments during the winter season, and the Company
does experience some seasonality due to the open, flatbed nature of its
trailers. The Company has at times experienced delays in meeting its shipping
schedules as a result of severe weather conditions, particularly during the
winter months. In addition, the Company's operating expenses have historically
been higher in the winter months due to decreased fuel efficiency and increased
maintenance costs in colder weather.
<PAGE> 6
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1995
- ----------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENTS ASSETS:
Cash and cash equivalents (Note 1) $ 3,593,206 $ 1,481,910
Short-term investments 100,000 100,000
Accounts receivable (less allowance for doubtful accounts
of $125,000 in 1996
and 1995):
Trade and interline 5,541,471 5,779,409
Other 274,876 842,508
Refundable income taxes 579,573 1,161,311
Inventories (Note 1) 230,920 397,062
Prepaid tire expense (Note 1) 711,208 558,750
Other prepaid expenses 761,324 737,690
Deferred income taxes (Note 8) 530,623 328,678
----------- -----------
Total current assets 12,323,201 11,387,318
----------- -----------
PROPERTY AND EQUIPMENT (Notes 1 and 5):
Land and land improvements 1,082,510 1,055,606
Buildings 3,240,496 3,174,363
Revenue equipment 51,513,665 46,139,369
Other equipment 8,111,012 7,481,290
Leasehold improvements 406,577 373,561
----------- -----------
Total 64,354,260 58,224,189
Less accumulated depreciation and amortization 19,761,532 21,035,800
----------- -----------
Property and equipment, net 44,592,728 37,188,389
----------- -----------
DEPOSITS AND OTHER ASSETS 346,050 316,012
----------- -----------
TOTAL $57,261,979 $48,891,719
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 5) $ 4,625,204 $ 4,090,561
Accounts payable - trade and interline 2,122,561 932,524
Accrued liabilities:
Self-insurance claims (Note 6) 2,203,999 1,664,465
Salaries and wages 465,665 1,297,116
Other 411,206 726,416
----------- -----------
Total current liabilities 9,828,635 8,711,082
LONG-TERM DEBT (Note 5) 15,197,840 9,227,851
DEFERRED INCOME TAXES (Note 8) 8,347,757 6,964,156
----------- -----------
Total liabilities 33,374,232 24,903,089
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDERS' EQUITY (Notes 5 and 7):
Preferred stock, $.001 par value - 1,000,000 shares
authorized; no shares issued and outstanding
Common stock, $.001 par value - 10,000,000 shares
authorized; 3,700,688 and 3,823,000 shares issued
and outstanding in 1996 and 1995, respectively 3,701 3,823
Additional paid-in capital 13,780,616 14,708,994
Retained earnings 10,103,430 9,275,813
----------- -----------
Total stockholders' equity 23,887,747 23,988,630
----------- -----------
TOTAL $57,261,979 $48,891,719
=========== ===========
</TABLE>
See notes to financial statements.
<PAGE> 7
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------
1996 1995 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING REVENUES (Note 9) $ 65,523,412 $ 61,865,851 $ 59,132,066
------------ ------------ ------------
OPERATING EXPENSES:
Salaries, wages and employee benefits (Note 3) 28,419,881 27,572,613 24,799,963
Operating supplies 19,549,827 17,155,929 15,042,198
Taxes and licenses 2,221,710 1,823,281 1,922,172
Insurance and claims 3,378,815 3,209,700 3,668,747
Communications and utilities 1,186,131 1,021,927 926,816
Depreciation and amortization 8,261,253 7,295,671 6,451,402
Rent (Note 4) 202,489 153,944 135,771
Gain on disposition of property and equipment, net (805,800) (648,061) (409,657)
Environmental remediation (Note 6) 19,408 (293,652) 800,000
Other 439,213 473,723 522,226
------------ ------------ ------------
Total operating expenses 62,872,927 57,765,075 53,859,638
------------ ------------ ------------
OPERATING INCOME 2,650,485 4,100,776 5,272,428
------------ ------------ ------------
OTHER INCOME (EXPENSES):
Interest income 164,363 82,018 53,613
Interest expense (1,408,489) (780,854) (805,580)
Other -- -- 70,066
------------ ------------ ------------
Other expenses, net (1,244,126) (698,836) (681,901)
------------ ------------ ------------
INCOME BEFORE PROVISION FOR INCOME TAXES 1,406,359 3,401,940 4,590,527
------------ ------------ ------------
PROVISION (BENEFIT) FOR INCOME TAXES
(Note 8):
Current (602,915) 145,529 1,300,612
Deferred 1,181,657 1,131,753 5,243,687
------------ ------------ ------------
Total provision for income taxes 578,742 1,277,282 6,544,299
------------ ------------ ------------
NET INCOME (LOSS) $ 827,617 $ 2,124,658 $ (1,953,772)
============ ============ ============
NET INCOME (LOSS) PER SHARE $ 0.22 $ 0.56 $ (0.55)
============ ============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 3,726,496 3,823,000 3,523,677
============ ============ ============
PRO FORMA INCOME DATA (UNAUDITED), (Note 2):
HISTORICAL INCOME BEFORE INCOME TAXES $ 4,590,527
============
PRO FORMA INCOME TAXES (Note 8) 1,762,600
------------
PRO FORMA NET INCOME $ 2,827,927
============
PRO FORMA NET INCOME PER SHARE $ 0.80
============
WEIGHTED AVERAGE SHARES OUTSTANDING 3,523,677
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 8
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
--------------------------------------------------------------
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994 $ 3,000 $ 6,772,485 $ 11,629,927 $ 18,405,412
Proceeds from public offering of
common stock, net of offering costs 823 7,936,509 -- 7,937,332
Dividends paid (Note 7) (2,525,000) (2,525,000)
Net loss -- -- (1,953,772) (1,953,772)
----------- ------------ ------------ ------------
BALANCE, DECEMBER 31, 1994 3,823 14,708,994 7,151,155 21,863,972
Net income -- -- 2,124,658 2,124,658
----------- ------------ ------------ ------------
BALANCE, DECEMBER 31, 1995 3,823 14,708,994 9,275,813 23,988,630
Purchase and retirement of
common stock (122) (928,378) -- (928,500)
Net income -- -- 827,617 827,617
----------- ------------ ------------ ------------
BALANCE, DECEMBER 31, 1996 $ 3,701 $ 13,780,616 $ 10,103,430 $ 23,887,747
=========== ============ ============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 9
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 827,617 $ 2,124,658 $ (1,953,772)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 8,261,253 7,295,671 6,451,402
Provision for bad debts -- (28,000) --
Gain on disposal of property and equipment, net (805,800) (648,061) (409,657)
Provision for deferred income taxes 1,181,657 1,131,753 5,243,687
Changes in assets and liabilities provided
(used) cash:
Accounts receivable 805,570 (2,184,454) (212,331)
Refundable income taxes 581,738 (860,543) --
Other current assets (9,950) (156,920) (175,130)
Deposits and other assets (30,038) (54,012) --
Accounts payable - trade and interline 1,190,036 165,309 64,614
Accrued liabilities (607,128) (643,341) 1,532,666
------------ ------------ ------------
Net cash provided by operating activities 11,394,955 6,142,060 10,541,479
------------ ------------ ------------
INVESTING ACTIVITIES:
Capital expenditures:
Revenue equipment (20,981,024) (11,452,497) (8,084,406)
Other property and equipment (838,881) (1,882,879) (2,434,448)
Proceeds from disposals of property and equipment 6,959,399 2,663,850 1,745,300
Collections on note receivable from stockholder -- -- 1,000,000
------------ ------------ ------------
Net cash used in investing activities (14,860,506) (10,671,526) (7,773,554)
------------ ------------ ------------
FINANCING ACTIVITIES:
Purchase of common stock (928,500)
Net proceeds from initial public offering of
common stock 7,937,332
Net payments under line of credit (400,000)
Proceeds from long-term debt 18,411,485 10,457,052 6,730,712
Principal payments on long-term debt (11,906,138) (5,731,221) (14,740,629)
Dividends paid -- -- (2,525,000)
------------ ------------ ------------
Net cash provided by (used in)
financing activities 5,576,847 4,725,831 (2,997,585)
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 2,111,296 196,365 (229,660)
CASH AND CASH EQUIVALENTS:
BEGINNING OF YEAR 1,481,910 1,285,545 1,515,205
------------ ------------ ------------
END OF YEAR $ 3,593,206 $ 1,481,910 $ 1,285,545
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid (received) during the year for:
Interest $ 1,350,568 $ 775,495 $ 825,580
============ ============ ============
Income taxes, net of refunds $ (943,351) $ 1,043,207 $ 1,664,976
============ ============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS - Boyd Bros. Transportation Inc. (the "Company") is a
flatbed carrier,transporting a variety of products, primarily steel and building
materials. The Company has authority to operate in the continental United
States; however, its market generally encompasses the eastern two-thirds of the
United States. The Company is headquartered in Clayton, Alabama, and operates
regional and satellite terminals in locations near interstate highways or
customer facilities.
ACCOUNTING ESTIMATES - The preparation of financial statements in conformity
with 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 could differ from those estimates.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents include cash on hand, cash
on deposit and highly liquid investments with a maturity of three months or less
at purchase date.
SHORT-TERM INVESTMENTS - Short-term investments, which consist of certificates
of deposit with maturities of three to twelve months, are stated at cost, which
approximates market.
TIRES IN SERVICE - Tires placed in service on newly purchased revenue equipment
are carried at cost and depreciated over their useful lives, estimated to be
eighteen months. The undepreciated cost of tires is included in prepaid tire
expense.
INVENTORIES - Parts and supplies are stated at the lower of cost or market.
PROPERTY AND EQUIPMENT - Property and equipment is stated at cost. Depreciation
is computed using the straight-line method at rates intended to distribute the
cost of the assets over their estimated service lives as follows:
Land improvements 15 years
Buildings 5-25 years
Revenue equipment 5-7 years
Other equipment 3-10 years
Leasehold improvements 5-20 years
Expenditures which significantly increase values or extend useful lives of
property and equipment are capitalized, whereas those for normal maintenance and
repairs are expensed. Gains and losses on disposal of property and equipment are
reflected in operations in the year of disposal.
CLAIMS - The Company accrues estimates for the uninsured portion of claims
relating to the Company's insurance programs (see Note 6).
REVENUE RECOGNITION - Operating revenue and related costs are recognized on the
date shipments are delivered by the Company.
NET INCOME (LOSS) PER SHARE - Net income (loss) per share is based on the
weighted average number of shares of common stock outstanding during the year,
adjusted to reflect the reincorporation described in Note 7.
RECLASSIFICATIONS - Certain reclassifications have been made to the 1995 and
1994 financial statements to conform to the 1996 presentation.
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
2. PRO FORMA INFORMATION (UNAUDITED)
PRO FORMA INCOME TAXES - As described in Note 8, through March 30, 1994, the
Company was treated as an S Corporation pursuant to the Internal Revenue Code.
As such, for all periods prior to March 30, 1994, the Company was not subject to
federal income taxes and certain state income taxes. For informational purposes,
the statements of operations include an unaudited pro forma adjustment for
income taxes which would have been recorded if the Company had not been an S
Corporation, computed in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 109.
PRO FORMA NET INCOME PER SHARE - Pro forma net income per share is based on the
weighted average number of shares of common stock outstanding during the year,
adjusted to reflect the reincorporation described in Note 7.
3. EMPLOYEE BENEFIT PLAN
The Company has a contributory 401(k) retirement plan, which covers employees
who elect to participate and meet certain eligibility requirements. The amounts
charged to operations related to this plan for the years ended December 31,
1996, 1995, and 1994 were $233,444, $218,496, and $226,501, respectively.
There are no significant post-retirement benefits provided for retired employees
of the Company.
4. LEASES
The Company leases certain terminal buildings, land and equipment under various
agreements, which expire at various dates through 1999. The lease agreements
generally include renewal options and the Company is required to pay taxes,
insurance and normal maintenance for the facilities.
Future minimum lease payments under all operating leases with an initial or
remaining noncancellable lease term of more than one year are as follows:
<TABLE>
<CAPTION>
YEAR
------------------------------------------------------------------
<S> <C>
1997 $27,048
1998 27,048
1999 6,762
-------
Total $60,858
=======
</TABLE>
Total rental expense for all operating leases totaled $98,648, $96,300, and
$97,686 for the years ended December 31, 1996, 1995 and 1994, respectively.
5. LONG-TERM DEBT
Long-term debt at December 31, 1996 and 1995 is summarized as follows:
<TABLE>
<CAPTION>
1996 1995
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Revenue equipment obligations repaid in 1996 $ -- $ 3,650,715
Revenue equipment obligations at LIBOR plus 1.25%
(6.81% - 1996 and 7.31% - 1995) payable in monthly
installments through August 2001 19,823,044 9,667,697
----------- -----------
Total 19,823,044 13,318,412
Less current maturities 4,625,204 4,090,561
----------- -----------
Long-term debt, exclusive of current maturities $15,197,840 $ 9,227,851
=========== ===========
</TABLE>
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
Revenue equipment obligations are collateralized by revenue equipment.
Long-term debt is scheduled to mature as follows:
<TABLE>
<CAPTION>
Year
------------------------------------------------------------------------
<S> <C>
1997 $ 4,625,204
1998 4,625,204
1999 4,625,204
2000 4,330,309
2001 1,617,123
-----------
Total $19,823,044
===========
</TABLE>
The Company has a $1,500,000 line of credit agreement with a bank which was
not utilized at December31, 1996 and December 31, 1995. The interest rate
available on borrowings under the line of credit is prime less .125%.
The covenants of loan agreements require the Company, among other things, to
maintain a tangible net worth of $14,800,000, as defined, and to maintain
certain financial ratios. The Company was in compliance with these financial
covenants at December 31, 1996.
The fair value of long-term debt was estimated using a discounted cash flow
analysis, based on the borrowing rate currently available to the Company for
bank loans with similar terms and average maturities and approximates its
carrying value.
6. COMMITMENTS AND CONTINGENCIES
The Company is currently self-insured as follows:
<TABLE>
<CAPTION>
RETENTION AMOUNT
PER OCCURRENCE
-----------------------------------------------------------------------------
<S> <C>
Workers' compensation $300,000
Liability - bodily injury and property damage 100,000
Employee medical and hospitalization 90,000
Cargo loss and damage 10,000
Collision and environmental losses No limit
</TABLE>
The Company has excess primary coverage on a per claim and aggregate basis
beyond the deductible levels and also maintains umbrella policies to supplement
the primary liability coverage.
The liabilities for self-insurance are accrued based on claims incurred, with
liabilities for unsettled claims and claims incurred but not yet reported being
estimated based on management's evaluation of the nature and severity of
individual claims and the Company's past claims experience.
The Company has outstanding letters of credit at December 31, 1996, totaling
$1,607,000 to cover liability insurance claims and self-insured workers'
compensation programs, and to purchase revenue equipment.
There are sundry claims and suits pending against the Company in the ordinary
course of business. In the opinion of the Company's management, any ultimate
liability in these matters will have no material adverse effect on the
operations or financial position of the Company.
During 1994, the Company retained an environmental consulting firm to conduct an
audit of its compliance with applicable federal, state and local laws and
regulations concerning the environment. The environmental consulting firm
detected the presence of soil contamination and potential groundwater
contamination related primarily to the use of underground storage tanks,
including tanks used by a prior owner of the property, at the Company's terminal
in Birmingham, Alabama. The Company notified the Alabama Department of
Environmental Management of this contamination. The Company completed the
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
process of removing and replacing all currently known underground storage tanks
at the Birmingham terminal. The Company also replaced all underground storage
tanks at the Clayton, Alabama, terminal. Based upon cost estimates provided by
its environmental consulting firm and contractors in 1994, the Company recorded
an $800,000 charge to establish a reserve for the removal and replacement of
underground storage tanks at the Company's terminals. Based on subsequent
reviews of this project by management and its independent consultants, the
Company reduced this reserve during 1995 by $293,652 and again during 1996 by
$54,878, reflecting a decline in the current estimated costs of remediating the
sites. The environmental remediation liability included in the accompanying
balance sheet at December31, 1996 is $145,122. There can be no assurance that
material liabilities or expenditures will not arise from these or additional
environmental matters that may be discovered, or from future requirements of
law. The Company does not believe that these expenditures will have a material
adverse effect on the Company's financial condition.
7. STOCKHOLDERS' EQUITY
REINCORPORATION - Originally incorporated in Alabama in 1956 under the name of
Boyd Brothers Transportation Company, Incorporated, the Company reincorporated
as a Delaware corporation on March 23, 1994, and changed its name to Boyd Bros.
Transportation Inc. As a result of the merger that effected the reincorporation,
each share of common stock outstanding in the Alabama corporation was converted
into 12,000 shares of common stock, resulting in a total of 3,000,000 shares of
common stock outstanding prior to the offering. All common shares and per share
amounts in the accompanying financial statements have been adjusted
retroactively to give effect to the reincorporation.
PREFERRED STOCK - The Board of Directors is authorized to issue, at its
discretion, up to 1,000,000 shares of preferred stock at par value of $.001. The
terms and conditions of the preferred stock are to be determined by the Board of
Directors.
STOCK OPTION PLAN - The Company has a stock option plan ("the Plan") that
provides for the granting of stock options to key employees, executive officers
and directors. The options are exercisable in increments over a five-year period
beginning on the first anniversary of the grant and will expire ten years after
the date of the grant. No options were exercised in 1994, 1995, or 1996.
Information regarding the Plan is summarized below:
<TABLE>
<CAPTION>
Option
Shares Price
----------------------------------------------------------------------------------
<S> <C> <C>
Shares under option:
Options granted in 1994 260,000 $ 11.00
Options terminated (16,100)
-------
Outstanding at December 31, 1994 243,900
Options granted in 1995 73,000 $ 11.00
Options terminated (25,950)
-------
Outstanding at December 31, 1995 290,950
Options granted in 1996 64,500 $7.75-11.00
Options terminated (97,050)
-------
Outstanding at December 31, 1996 258,400
=======
</TABLE>
Stock options exercisable and shares available for future grants at December 31,
1996, were 77,960 and 75,650, respectively, under the Plan.
SFAS No. 123, Accounting for Stock-Based Compensation, encourages, but does not
require companies to record compensation cost for stock-based employee
compensation plans at fair value. The Company has chosen to continue to account
for stock-based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, and related Interpretations. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted market price of the
Company's stock at the date of the grant over the amount an employee must pay to
acquire the stock. The option price of all the Company's stock options is equal
to the fair value of the stock at the grant date. As such, no compensation
expense is recorded in the accompanying financial statements.
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
Had compensation cost for the Company's stock option plans been determined based
upon the fair value at the grant date for options awarded in 1996 and 1995 under
these plans consistent with the methodology prescribed under SFAS No. 123, the
Company's pro forma net income and net income per share would have differed from
the amounts reported as follows:
<TABLE>
<CAPTION>
As Reported Pro Forma
----------------------- ----------------------
1996 1995 1996 1995
- ------------------------------------------------------- ----------------------
<S> <C> <C> <C> <C>
Net income $827,617 $2,124,658 $696,085 $2,079,365
Net income per share $ 0.22 $ 0.56 $ 0.19 $ 0.54
</TABLE>
The weighted average fair value of the options granted during 1996 and 1995 is
estimated as $6.24 and $8.63, respectively, on the date of grant using the
Black-Scholes option-pricing model with the following assumptions: dividend
yield 0%, volatility of 82.6%, risk-free interest rate of 6.5% and an expected
life of 7 years.
PUBLIC OFFERING - The Company completed the initial public offering of its
common stock in May 1994, under which 823,000 shares of stock were sold. Net
proceeds from the offering totaled $7,937,332.
DISTRIBUTIONS TO S CORPORATION STOCKHOLDERS - In connection with the termination
of its S Corporation status and its initial public offering of common stock, the
Company distributed $2,525,000 to the S Corporation stockholders. The
distributions represented the previously undistributed taxable earnings of the
Company included in the taxable income of the S Corporation stockholders as a
result of the Company's S Corporation status.
8. INCOME TAXES
The Company terminated its S Corporation status on March 30, 1994, and became
subject to corporate income taxes on that date. Upon termination of the S
Corporation election, deferred income taxes became a liability of the Company
and were recorded in the balance sheet with a corresponding charge to the income
statement. The liability as of March 30, 1994, computed under the provisions of
SFAS No. 109, was approximately $5,478,000 and is included in the 1994 provision
for deferred income taxes.
The provision (credit) for income taxes for the years ended December 31, 1996,
1995 and 1994 consisted of the following
(in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ (545) $ 125 $ 1,029
State (58) 20 272
------- ------ -------
Total current (603) 145 1,301
------- ------ -------
Deferred:
Federal 1,019 979 5,322
State 163 153 (79)
------- ------ -------
Total deferred 1,182 1,132 5,243
------- ------ -------
Total provision for income taxes $ 579 $1,277 $ 6,544
======= ====== =======
</TABLE>
Income tax expense for the years ended December 31, 1996, 1995 and 1994 differs
from the amounts computed by applying the federal statutory rate of 34% to
income before income taxes as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax expense at the statutory rate $ 478 $1,157 $ 1,561
Deferred taxes recorded upon termination of
S Corporation status -- -- 5,478
Tax benefit of pro-rata allocation of items between
C Corporation and S Corporation -- -- (737)
State income taxes, net of federal benefit 69 94 184
Other 32 26 58
------ ------ -------
$ 579 $1,277 $ 6,544
====== ====== =======
</TABLE>
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
The Company has approximately $2,400,000 of state net operating loss
carryforwards for tax purposes available to offset future state taxable income
through 2011. The Company also has approximately $244,000 of alternative minimum
tax credit carryforwards available to offset future federal income tax.
PRO FORMA INCOME TAXES - The following unaudited pro forma information reflects
income tax expense that the Company would have incurred if it had been subject
to federal and state income taxes for all of 1994, computed in accordance with
SFAS No. 109 (in thousands).
<TABLE>
<CAPTION>
1994
---------------------------------------------------------------------------
<S> <C>
Pro forma income tax expense:
Current:
Federal $1,424
State 296
Deferred federal and state 43
------
$1,763
======
</TABLE>
The unaudited pro forma income tax expense differs from the amounts
computed by applying the federal statutory rate of 34% to income before income
taxes as follows (in thousands):
<TABLE>
<CAPTION>
1994
-----------------------------------------------------------------
<S> <C>
Tax expense at the statutory rate $1,561
State income taxes, net of federal benefit 184
Meals and entertainment 7
Other 11
------
$1,763
======
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets as of December 31, 1996 and
1995 are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
---------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Tax over book depreciation $8,746 $6,907
Prepaid expenses deductible when paid 247 273
Capitalized tires 265 206
Cash basis to accrual basis adjustment -- 84
Other 31 58
------ ------
Total deferred tax liabilities 9,289 7,528
------ ------
Deferred tax assets:
Environmental remediation reserve 55 74
Accrued self insurance claims 865 639
Other accrued expenses not deductible until paid 87 86
Allowance for doubtful accounts 47 46
State NOL carryforward 118 --
Alternative minimum tax credit carryforward 234 --
Other 66 48
------ ------
Total deferred tax assets 1,472 893
------ ------
Net deferred tax liabilities $7,817 $6,635
====== ======
</TABLE>
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
The above amounts are reflected in the accompanying balance sheets as:
<TABLE>
<CAPTION>
1996 1995
---------------------------------------------------------------------------
<S> <C> <C>
Current assets $ 531 $ 329
Noncurrent liabilities 8,348 6,964
------ ------
$7,817 $6,635
====== ======
</TABLE>
9. MAJOR CUSTOMERS
The Company does not believe that it is dependent upon any single customer.
Sales to the Company's largest customer amounted to 13%, 14% and 14% of
operating revenues during 1996, 1995 and 1994, respectively.
10. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the quarterly results of operations for the years
ended December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996
-----------------------------------------------
(In Thousands, except per share data) March 31 June 30 September 30 December 31
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenues $ 14,929 $16,350 $17,529 $16,715
Operating income (loss) (101) 890 1,243 618
Net income (loss) (234) 307 507 248
Net income (loss) per share (.06) .08 .14 .07
</TABLE>
<TABLE>
<CAPTION>
1995
-----------------------------------------------
(In Thousands, except per share data) March 31 June 30 September 30 December 31
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenues $ 14,638 $15,987 $15,827 $15,414
Operating income 1,429 1,241 761 670
Net income 778 680 312 355
Net income per share .20 .18 .08 .09
</TABLE>
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Boyd Bros. Transportation Inc.:
We have audited the accompanying balance sheets of Boyd Bros. Transportation
Inc. as of December 31, 1996 and 1995, and the related statements of operations,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 1996 and 1995,
and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1996 in conformity with generally accepted
accounting principles.
As discussed in Note 8 to the financial statements, the Company terminated its S
Corporation status on March 30, 1994 and became subject to corporate income
taxes on that date.
/s/ Deloitte & Touche LLP
Birmingham, Alabama
February 13, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 3,593,206
<SECURITIES> 100,000
<RECEIVABLES> 5,541,471
<ALLOWANCES> 0
<INVENTORY> 230,920
<CURRENT-ASSETS> 12,323,201
<PP&E> 64,354,260
<DEPRECIATION> 19,671,532
<TOTAL-ASSETS> 57,261,979
<CURRENT-LIABILITIES> 9,828,635
<BONDS> 0
0
0
<COMMON> 3,701
<OTHER-SE> 23,884,046
<TOTAL-LIABILITY-AND-EQUITY> 57,261,979
<SALES> 0
<TOTAL-REVENUES> 65,523,412
<CGS> 0
<TOTAL-COSTS> 62,872,927
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,244,126
<INCOME-PRETAX> 1,406,359
<INCOME-TAX> 578,742
<INCOME-CONTINUING> 827,617
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 827,617
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
</TABLE>
