<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________
to _____________________
Commission File Number 0-23948
----------------
Boyd Bros. Transportation Inc.
(Exact name of Registrant as specified in its charter)
Delaware 63-6006515
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
3275 Highway 30, Clayton, Alabama 36016
---------------------------------------
(Address of principal executive offices)
(Zip Code)
(334) 775-1400
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by checkmark 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) Yes X No __, and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of April 30, 1998.
Common Stock, $.001 Par Value 4,094,628
- ----------------------------- ---------
(Class) (Number of Shares)
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Page Number
<S> <C>
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1998 and December 31, 1997 3
Condensed Consolidated Statements of Income
Three-months Ended March 31, 1998 and 1997 5
Condensed Consolidated Statements of Cash Flows
Three-months Ended March 31, 1998 and 1997 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 10
</TABLE>
2
<PAGE> 3
BOYD BROS. TRANSPORTATION INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- -----------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 659,896 $ 3,417,174
Marketable securities -- 250,000
Accounts receivable
Trade and interline 10,912,000 9,415,737
Other 145,988 117,034
Current portion of net investment in sales-type lease 834,245 508,829
Inventories 201,852 263,352
Prepaid tire expense 418,048 904,381
Other prepaid expenses 2,224,771 1,387,587
Deferred income tax 549,776 174,587
----------- -----------
Total current assets 15,946,576 16,438,681
----------- -----------
PROPERTY AND EQUIPMENT:
Land and land improvements 1,059,570 1,046,245
Buildings 3,278,527 3,278,527
Revenue equipment 57,195,443 58,668,742
Other equipment 9,653,998 9,435,642
Leasehold improvements 339,944 339,944
----------- -----------
Total 71,527,482 72,769,100
Less accumulated depreciation and
amortization 25,744,482 23,910,352
----------- -----------
Property and equipment, net 45,783,000 48,858,748
----------- -----------
OTHER ASSETS
Net investment in sales-type lease 2,578,817 1,656,490
Goodwill 4,427,971 4,459,222
Deposits and other assets 243,999 112,861
----------- -----------
Total other assets 7,250,787 6,228,573
TOTAL $68,980,363 $71,526,002
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
BOYD BROS. TRANSPORTATION INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- -----------
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 5,034,840 $ 5,914,785
Revolving line of credit 1,480,457 1,021,849
Accounts payable - trade and interline 1,935,250 1,517,218
Income taxes 100,000 230,327
Accrued liabilities:
Self-insurance claims 2,058,789 2,122,182
Salaries and wages 1,174,056 1,069,515
Other 795,880 778,148
----------- -----------
Total current liabilities 12,579,272 12,654,024
LONG-TERM DEBT 15,837,994 19,251,702
DEFERRED INCOME TAXES 10,649,829 10,165,682
----------- -----------
Total liabilities 39,067,095 42,071,408
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
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;
4094628 shares issued and outstanding 4,095 4,095
Additional paid-in capital 17,030,222 17,030,222
Retained earnings 12,878,951 12,420,277
----------- -----------
Total stockholders' equity 29,913,268 29,454,594
----------- -----------
TOTAL $68,980,363 $71,526,002
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
BOYD BROS. TRANSPORTATION INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------------
1998 1997
------------ ------------
(unaudited)
<S> <C> <C>
OPERATING REVENUES $ 27,888,355 $ 17,196,909
OPERATING EXPENSES:
Salaries, wages and employee benefits 8,911,527 7,528,459
Cost of independent contractors 7,469,886 --
Fuel 2,664,533 2,732,408
Operating supplies 2,938,987 2,188,312
Taxes and licenses 551,829 466,570
Insurance and claims 1,351,890 863,706
Communications and utilities 429,802 306,787
Depreciation and amortization 2,457,880 2,172,095
(Gain) loss on disposition of property
and equipment, net (260,532) 50,000
Other 235,266 143,310
------------ ------------
Total operating expenses 26,751,068 16,451,647
------------ ------------
OPERATING INCOME 1,137,287 745,262
------------ ------------
OTHER INCOME (EXPENSES):
Interest income 27,830 19,779
Interest expense (386,443) (314,925)
------------ ------------
Other expenses, net (358,613) (295,146)
------------ ------------
INCOME BEFORE PROVISION FOR
INCOME TAXES 778,674 450,116
PROVISION FOR INCOME TAXES 320,000 180,025
------------ ------------
NET INCOME $ 458,674 $ 270,091
============ ============
NET INCOME PER SHARE (Basic and Diluted) $ 0.11 $ 0.07
============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING 4,094,628 3,700,888
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
BOYD BROS. TRANSPORTATION INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31,
--------------------------------
1998 1997
----------- -----------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 458,674 $ 270,088
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,421,418 2,172,095
Amortization of goodwill 36,462 --
Provision for bad debt sales-type leases 324,600 --
(Gain) loss on disposal of property and equipment, net (590,650) 50,000
Provision for deferred income taxes 320,000 180,025
Changes in assets and liabilities provided (used) cash:
Accounts receivable (1,525,217) (1,101,261)
Deferred income taxes (341,369) (162,023)
Deposits and other assets (420,489) (210,435)
Accounts payable- trade and interline 418,032 (773,784)
Accrued liabilities and other current liabilities 58,880 393,982
----------- -----------
Net cash provided by operating activities 1,160,341 818,687
----------- -----------
INVESTING ACTIVITIES:
Purchase of short- term investments 250,000 --
Net investment in sales type leases (255,641) --
Payments received on lease payments 154,746 --
Capital expenditures - revenue equipment (231,679) (255,810)
Proceeds from disposals of property and equipment -- 8,751
----------- -----------
Net cash used in investing activities (82,574) (247,059)
----------- -----------
FINANCING ACTIVITIES:
Proceeds under line of credit 1,094,608 --
Payments under line of credit (636,000) --
Principal payments on long-term debt (4,293,653) (2,862,651)
----------- -----------
Net cash used in financing activities (3,835,045) (2,862,651)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,757,278) (2,291,023)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,417,174 3,593,206
----------- -----------
BALANCE AT END OF PERIOD $ 659,896 $ 1,302,183
=========== ===========
SUPPLEMENTAL NON-CASH INVESTING ACTIVITIES:
Net investment in sales-type leases $ 3,413,062 --
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE> 7
BOYD BROS. TRANSPORTATION INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements include all normal adjustments considered
necessary to present fairly the financial position as of March 31, 1998, and the
results of operations for the three months ended March 31, 1998 and 1997, and
cash flows for the three months ended March 31, 1998 and 1997. Interim results
are not necessarily indicative of results for a full year.
The condensed consolidated financial statements and notes are presented
as permitted by Form 10-Q, and do not contain certain information included in
the Company's audited consolidated financial statements and notes for the fiscal
year ended December 31, 1997.
The condensed consolidated financial statements and notes should be
read in conjunction with the summary of accounting policies and notes to the
financial statements included in the Company's Form 10-K for the year ended
December 31, 1997.
2. FINANCIAL STATEMENTS
The condensed consolidated financial statements include the accounts of
Boyd Bros. Transportation, Inc. and its wholly owned subsidiary, Welborn
Transport, Inc. All significant intercompany balances, transactions and
stockholdings have been eliminated. FASB Statement No. 130, Reporting
Comprehensive Income, became effective for the Company's consolidated financial
statements for the quarter ended March 31, 1998. This Statement had no impact
on such financial statements.
3. ENVIRONMENTAL MATTERS
The Company's operations are subject to certain 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.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Boyd Bros. Transportation, Inc., headquartered in Clayton, Alabama, is
a flatbed truckload carrier that operates primarily throughout the eastern
two-thirds of the United States, hauling primarily steel products and building
materials. In these markets, Boyd Bros. serves high-volume, time sensitive
shippers that demand time-definite delivery.
Historically, the Company has owned its revenue equipment and operated
through employee operators. The Company's expansion in the past, therefore, has
required significant capital expenditures which have been funded through secured
borrowings. During 1997, as a strategy to expand the Company's potential for
growth without the concomitant increase in capital expenditures typically
related to owned equipment, the Company began adding owner/operators to its
fleet. The Company then accelerated the implementation of this strategy in
December 1997 with the acquisition of Welborn Transport, which specializes in
short-haul routes using a largely owner/operator fleet.
RESULTS OF OPERATIONS
The quarter ended March 31, 1998 represented the first full quarter of
operations for the consolidated Company. Boyd Bros. acquired Welborn Transport
in December 1997. Because the acquisition was treated as a purchase, only
Welborn's December 1997 revenues and expenses were included in the 1997 audited
financial statements.
Operating revenues increased $10,691,446 or 62.2% for the three-month
period ended March 31, 1998 compared to the same period in 1997. Welborn
Transport accounted for 75% of the increase in operating revenues. The fleet
size for Boyd Bros. Transportation, Inc. (parent only) increased 10% compared to
the same period in 1997. Additionally, revenue per truck increased due to better
utilization and reduced deadhead.
Total operating expenses increased $10,299,421 or 62.6% during the
three-month period ended March 31, 1998 compared to the three months ended March
31, 1997, a rate that corresponds to the increase in revenue for the period. The
operating ratio for the first quarter of 1998 was 95.9% compared to 95.6% for
the same period in 1997.
Salaries, wages and benefits increased $1,363,068 or 18.4% compared to
the first quarter of 1997 from $7,528,459 to $8,911,527. The increase was at a
slower rate than revenue growth due to Welborn Transport's fleet being
predominantly owner-operated. Fuel costs declined $67,875 or 2.5% compared to
the first quarter of 1997 from $2,732,408 to $2,664,533. Decreasing fuel costs
per gallon and the increase in owner-operator units contributed to the decline
in fuel costs for the first quarter of 1998. Operating supplies increased
$750,675 or 34.3% compared to the first quarter of 1997 from $2,188,312 to
$2,938,987. As a percentage of operating revenues, operating supplies declined
from 12.7% to 10.5% due to the increase of the owner-operator fleet. Taxes and
licenses increased $85,259 or 18.3% compared to the first quarter of 1997 from
$466,570 to $551,829. As a percentage of operating revenues, taxes and licenses
declined from 2.7% to 2.0% due to the impact of the increasing owner-operator
fleet. Insurance and claims increased $488,184 or 56.5% compared to the first
quarter of 1997 from $863,706 to $1,351,890. As a percentage of operating
revenues, insurance and claims declined from 5.0% to 4.8%. Communication and
utilities increased $123,015 or 40.1% compared to the first quarter of 1997 from
$306,787 to $429,802. As a percentage of operating revenues, communication and
utilities declined from 1.8% to 1.5% due to the increase in the owner-operator
program. Depreciation and amortization expense increased $285,785 or 13.2%
compared to the first quarter of 1997 from $2,172,095 to $2,457,880. As a
percentage of operating revenues, depreciation and amortization declined from
12.6% to 8.8% due to the increase in the owner-operator program and the increase
in the sales-leaseback transactions. Gain and disposition of property and
equipment increased $310,532 due to the increase in sales-type leases (related
to the sale of equipment to owner/operators). Cost of independent contractors
was $7,469,886 for the three months ended March 31, 1998 compared to $0 for the
three months ended March 31, 1997, since the Company had no owner operators
until June 1997. Cost of independent contractors comprises the net payments
made to the owner-operators after certain operating expenses are deducted.
Interest expense increased $71,518 or 22.7% compared to the first quarter of
1997 from $314,925 to $386,443. As a percentage of operating revenues, interest
expense declined from 1.8% to 1.4% due to the increase in the owner-operator
fleet and to reduced debt.
8
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary cash requirements are for capital expenditures
and operating expenses, including labor costs, fuel costs and operating
supplies. Historically, the Company's primary sources of cash have been from
operations, bank borrowings and sales of common stock of the Company.
Accounts receivable at March 31, 1998 increased 64% or $4,269,268
compared to the amount at March 31, 1997. This represents 15.8% of total assets
at March 31, 1998 versus 12.2% of total assets at March 31, 1997. The days of
revenue in accounts receivable for the period ended March 31, 1998 were 35.2
compared to 34.8 for the same period in 1997. The increase in accounts
receivable was due to the increase in sales volume and does not represent a
change in uncollectible accounts. The Company has not recognized any significant
bad debt expense in any of the periods represented relating to trade
receivables. The Company reserves for bad debts that are related to the
sales-type leases. Bad debt expense on such leases for the quarter ended March
31, 1998 was $324,600 compared to $0 for the same period in 1997.
Net cash flow provided by operating activities was $1,160,341 during
the first three months of 1998, compared to $818,687 during the same period for
1997. The Company had a working capital surplus of $3,041,188 at March 31, 1998.
The Company's bank debt bears interest ranging from LIBOR plus 1.00 %
to LIBOR plus 2.00 % and 7.16% to 7.35 % per annum, all payable in monthly
installments with maturities through October 2003. The bank debt is
collateralized by revenue equipment. The Company also has two lines of credit
with limits of $1,750,000 and $1,500,000 bearing interest at the banks 30-day
LIBOR rate plus 2.25% and prime less .125%, respectively. The amounts borrowed
under these lines of credit as of March 31, 1998 were $1,021,149 and $458,608,
respectively.
Management anticipates increasing the Company's fleet in 1998 by an
aggregate of 75 tractors and 150 trailers net of replacements, at an anticipated
cost of approximately $12,000,000. Management expects to continue financing such
equipment purchases through equipment financing arrangements with various
lenders.
As of March 31, 1998 the Company believes that the availability of
credit under both lines of credit and internally generated cash will be adequate
to finance its operations and anticipated capital expenditures through fiscal
1998.
9
<PAGE> 10
Part II. Other Information.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial data schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the
quarter ended March 31, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized.
Boyd Bros. Transportation Inc.
(Registrant)
Date: May 13, 1998 /s/ Richard C. Bailey
---------------------------
Richard C. Bailey, Chief Financial Officer
(Principal Accounting Officer)
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 659,896
<SECURITIES> 0
<RECEIVABLES> 11,892,233
<ALLOWANCES> 0
<INVENTORY> 201,852
<CURRENT-ASSETS> 15,946,576
<PP&E> 71,527,482
<DEPRECIATION> 25,744,482
<TOTAL-ASSETS> 68,980,363
<CURRENT-LIABILITIES> 12,579,272
<BONDS> 0
0
0
<COMMON> 4,095
<OTHER-SE> 29,909,173
<TOTAL-LIABILITY-AND-EQUITY> 68,980,363
<SALES> 0
<TOTAL-REVENUES> 27,888,355
<CGS> 0
<TOTAL-COSTS> 26,751,068
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 386,443
<INCOME-PRETAX> 778,674
<INCOME-TAX> 320,000
<INCOME-CONTINUING> 458,674
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 458,674
<EPS-PRIMARY> .112
<EPS-DILUTED> .112
</TABLE>
