<PAGE> 1
FORM 10-Q
UNITED STATES
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 June 30, 2000
-------------
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 August 11, 2000.
<TABLE>
<CAPTION>
Common Stock, $.001 Par Value 2,995,340
----------------------------- ---------
<S> <C>
(Class) (Number of Shares)
</TABLE>
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Page Number
<S> <C>
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets
June 30, 2000 and December 31, 1999 3
Condensed Consolidated Statements of Income
Three - and six-month Periods Ended June
30, 2000 and 1999 5
Condensed Consolidated Statements of Cash Flows
Six-month Periods Ended June 30, 2000 and 1999 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk 11
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
</TABLE>
2
<PAGE> 3
BOYD BROS. TRANSPORTATION INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
---- ----
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 983,437 $ 1,006,826
Marketable securities 250,000 250,000
Accounts receivable:
Trade and interline 13,631,081 12,475,739
Other 655,774 1,082,615
Current portion of net investment in
sales-type lease 2,803,777 3,620,723
Inventories 324,324 326,202
Prepaid tire expense 438,679 837,136
Other prepaid expenses 1,890,199 2,488,484
Deferred income taxes 281,834 281,834
----------- -----------
Total current assets 21,259,105 22,369,559
----------- -----------
PROPERTY AND EQUIPMENT:
Land and land improvements 2,263,326 2,263,326
Buildings 2,927,611 2,927,611
Revenue equipment 69,166,200 69,944,259
Other equipment 11,560,523 11,510,214
Leasehold improvements 377,831 377,831
Construction in process 4,047,432 3,539,437
----------- -----------
Total 90,342,923 90,562,678
Less accumulated depreciation and
amortization 28,849,893 28,680,556
----------- -----------
Property and equipment, net 61,493,030 61,882,122
----------- -----------
OTHER ASSETS
Net investment in sales-type lease 6,638,458 8,522,614
Goodwill 3,843,934 3,955,834
Deposits and other assets 426,568 438,372
Revenue equipment available for lease 5,363,654 2,287,267
----------- -----------
Total other assets 16,272,614 15,204,087
TOTAL $99,024,749 $99,455,768
=========== ===========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
3
<PAGE> 4
BOYD BROS. TRANSPORTATION INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
---- ----
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 15,656,835 $ 14,245,584
Accounts payable - trade and interline 4,969,753 4,070,946
Income taxes 139,017 802,395
Accrued liabilities:
Self-insurance claims 1,858,751 1,768,114
Salaries and wages 1,007,226 746,805
Other 1,862,394 1,785,087
------------ ------------
Total current liabilities 25,493,976 23,418,931
LONG-TERM DEBT 33,524,671 34,688,582
DEFERRED INCOME TAXES 10,954,964 10,954,964
------------ ------------
Total liabilities 69,973,611 69,062,477
------------ ------------
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; 4,081,910
shares issued and
outstanding 4,082 4,082
Treasury Stock at cost, 1,056,870 shares (2000)
and 751,670 (1999) (7,682,610) (5,900,746)
Additional paid-in capital 16,839,570 16,839,570
Retained earnings 19,890,096 19,450,385
------------ ------------
Total stockholders' equity 29,051,138 30,393,291
------------ ------------
TOTAL $ 99,024,749 $ 99,455,768
============ ============
</TABLE>
See notes to unaudited condensed consolidated financial statements.
4
<PAGE> 5
BOYD BROS. TRANSPORTATION INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2000 1999 2000 1999
---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING REVENUES $ 32,601,049 $ 33,247,123 $ 66,426,674 $ 63,285,123
OPERATING EXPENSES:
Salaries, wages and
employee benefits 9,846,075 8,809,651 19,284,597 17,586,451
Cost of independent contractors 9,149,146 11,546,117 19,890,374 20,697,866
Fuel 3,505,883 2,631,914 6,778,557 5,186,589
Operating supplies 2,714,228 2,662,974 5,326,971 5,247,579
Taxes and licenses 825,102 662,214 1,578,705 1,311,912
Insurance and claims 1,732,812 1,489,174 3,565,688 3,028,290
Communications and utilities 380,357 358,691 777,893 724,741
Depreciation and amortization 2,883,297 2,727,119 5,787,615 5,352,869
Gain on disposition of
property and equipment, net (417,661) (928,027) (417,661) (1,095,903)
Other 589,290 387,251 1,055,170 781,935
------------ ------------ ------------ ------------
Total operating expenses 31,208,529 30,347,078 63,627,909 58,822,329
------------ ------------ ------------ ------------
OPERATING INCOME 1,392,520 2,900,045 2,798,765 4,462,794
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSES):
Interest income 18,563 27,605 40,734 47,638
Interest expense (985,131) (535,464) (1,961,404) (974,668)
Other income -- (16,635) -- (16,635)
------------ ------------ ------------ ------------
Other expenses, net (966,568) (524,494) (1,920,670) (943,665)
------------ ------------ ------------ ------------
INCOME BEFORE PROVISION FOR
INCOME TAXES 425,952 2,375,551 878,095 3,519,129
PROVISION FOR INCOME TAXES 217,018 960,888 438,380 1,442,259
------------ ------------ ------------ ------------
NET INCOME $ 208,934 $ 1,414,663 $ 439,715 $ 2,076,870
============ ============ ============ ============
NET INCOME PER SHARE
(Basic and Diluted) $ 0.07 $ 0.40 $ 0.14 $ 0.58
============ ============ ============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING 3,078,515 3,533,274 3,193,931 3,568,197
============ ============ ============ ============
</TABLE>
See notes to unaudited condensed consolidated financial statements.
5
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BOYD BROS. TRANSPORTATION INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
2000 1999
---- ----
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 439,715 $ 2,076,870
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,787,615 5,352,869
Net effect of sale - type leases on cost of independent
contractors (623,526) (655,129)
Gain on disposal of property and equipment, net (417,661) (1,095,903)
Changes in assets and liabilities provided (used) cash:
Accounts receivable (728,501) (1,522,379)
Other current assets 998,620 3,241,091
Deposits and other assets 11,804 (895,446)
Accounts payable- trade and interline 898,807 376,956
Accrued liabilities and other current liabilities (235,013) (297,426)
----------- ------------
Net cash provided by operating activities 6,131,860 6,581,503
----------- ------------
INVESTING ACTIVITIES:
Payments received on sales type leases 2,598,275 1,330,938
Capital expenditures:
Revenue equipment (9,799,233) (16,461,883)
Other equipment (18,227) (777,455)
Construction in process (507,994) --
Proceeds from disposals of property and equipment 3,106,454 2,782,069
----------- ------------
Net cash used in operating activities (4,620,725) (13,126,331)
----------- ------------
FINANCING ACTIVITIES:
Purchase of treasury stock (1,781,864) (4,030,222)
Proceeds from long-term debt 6,672,515 15,496,146
Principal payments on long-term debt (6,425,175) (6,042,417)
----------- ------------
Net cash provided by (used) in financing activities (1,534,524) 5,423,507
----------- ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (23,389) (1,121,321)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,006,826 1,361,664
----------- ------------
BALANCE AT END OF PERIOD $ 983,437 $ 240,343
=========== ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Income taxes, net of refunds $ 1,101,758 $ 2,662,230
=========== ============
Interest $ 985,131 $ 927,030
=========== ============
SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES:
Net investment in sales-type leases $ 264,948 $ 1,321,954
=========== ============
</TABLE>
See notes to unaudited condensed consolidated financial statements.
6
<PAGE> 7
BOYD BROS. TRANSPORTATION INC.
NOTES TO UNAUDITED 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 of Boyd Bros. Transportation,
Inc. ("Boyd Bros." or the "Company") as of June 30, 2000, and the results of
operations for the three and six-month periods ended June 30, 2000 and 1999, and
cash flows for the six-month periods ended June 30, 2000 and 1999. Interim
results are not necessarily indicative of results for a full year.
The unaudited 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 year ended December 31,1999.
The unaudited 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 31,1999.
2. PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements include the accounts of
Boyd Bros. and its wholly owned subsidiary, Welborn Transport, Inc. ("Welborn
Transport"). Boyd Bros. and Welborn Transport are referred to herein
collectively as the "Company". All significant intercompany balances,
transactions and stockholdings have been eliminated.
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.
4. CAPITAL TRANSACTIONS
In February 1999, the Company's Board of Directors authorized a program
under which the Company may purchase up to 600,000 shares of its common stock in
open market or negotiated transactions. During the first six months of 2000, the
Company repurchased 302,200 shares for $1,781,864 under this program. As of June
30, 2000, the Company is authorized to buy an additional 33,860 shares of its
common stock under this program.
5. ACCOUNTING STANDARDS NOT YET ADOPTED
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for
Derivative Instruments and Hedging Activities, which is effective for fiscal
years beginning after June 15, 2000. It requires that an entity recognize all
derivative financial instruments as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. The
Company is currently evaluating this statement and has not yet determined its
impact on the Company's financial statements.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company, headquartered in Clayton, Alabama, is a flatbed truckload
carrier that operates throughout most of the continental United States, hauling
steel products and building materials. In these markets, the Company 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 that have been funded through secured
borrowings. During 1997, as a strategy to expand the Company's potential for
growth, 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
Results for the second quarter and first six months of 2000 reflected,
among other things, continued pressure from high fuel prices, increased
insurance costs, higher interest expense and other company-fleet operating
costs affected net income for the period. Aside from the direct impact on the
Company's profits, higher fuel costs have significantly diminished the profits
available to owner/operators, causing attrition in the Company's owner/
operator fleet, particularly in its Welborn division where the number of owner/
operators declined to 252 at June 30, 2000, from 300 at June 30, 1999. In the
Boyd Bros. division, the departure of some owner/operators also has required
the Company to assimilate power units into its Company-owned operations. At
June 30, 2000, the Boyd Bros. division had 165 owner/operators compared to 224
at the end of the second quarter of 1999. In total, 417, or 40%, of the
Company's 1,042 power units were owner/operated at June 30, 2000, compared with
524, or 50%, of the Company's 1,040 power units at the same time last year.
Thus, even though the Company has seen an increase in load counts in the Boyd
Bros. division, the overall increase in Company trucks, without a commensurate
increase in the number of Company drivers, has resulted in additional empty
trucks and decreased fleet utilization.
Quarterly Review
Operating revenues declined $646,074 or 1.9% to $32,601,049 for the
quarter ended June 30, 2000, compared with $33,247,123 for the same period in
1999. This decline primarily reflected the closing of the Welborn logistics and
specialized operations, a general decline in the number of owner/operators, and
a continued shortage of drivers for Company-owned trucks.
Total operating expenses increased $861,451 or 2.8% to $31,208,529 for
the three-month period ended June 30, 2000, compared with $30,347,078 for the
three months ended June 30, 1999. The operating ratio for the second quarter of
2000 was 95.7% compared with 91.3% for the same period in 1999.
Salaries, wages and benefits increased $1,036,424 or 11.8% compared to
the second quarter of 1999 to $9,846,075. As a percentage of operating revenues,
salaries, wages and benefits increased to 30.2% from 26.5% due to an increase in
the number of Company drivers and non-driver associates. Cost of independent
contractors, or owner/operators, declined $2,396,971 or 20.8% compared to the
second quarter of 1999 to $9,149,146 from $11,546,117. As a percentage of
operating revenues, cost of independent contractors declined to 28.1% from 34.7%
as the number of owner/operators declined. Aggregate fuel costs increased
$873,969 or 33.2% compared to the second quarter of 1999 to $3,505,883 from
$2,631,914. As a percentage of operating revenues, fuel costs increased to 10.8%
from 7.9% due to a decline in the number of owner/operator units and an increase
in fuel cost per gallon. Operating supplies increased $51,254 or 1.9% compared
to the second quarter of 1999 to $2,714,228 from $2,662,974. As a percentage of
operating revenues, operating supplies increased to 8.3% from 8.0%. Taxes and
licenses increased $162,888 or 24.6% compared to the second quarter of 1999 to
$825,102 from $662,214 due to an increase in the Company's fleet size. As a
percentage of operating revenues, taxes and licenses increased to 2.5% from
2.0%. Insurance and claims increased $243,638 or 16.4% compared to the second
quarter of 1999 to
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<PAGE> 9
$1,732,812 from $1,489,174. As a percentage of operating revenues, insurance and
claims increased to 5.3% from 4.5%, reflecting an increase in cargo claims and
accident frequency as well as an increase in insurance premiums. Communications
and utilities increased $21,666 or 6.0% compared to the second quarter of 1999
to $380,357 from $358,691. As a percentage of operating revenues, communication
and utilities increased to 1.2% from 1.1%. Depreciation and amortization
increased $156,178 or 5.7% compared to the second quarter of 1999 to $2,883,297
from $2,727,119. As a percentage of operating revenues, depreciation and
amortization increased to 8.8% from 8.2% because of the purchase of new revenue
equipment and also the return of owner/operated tractors to the Company's fleet
that were subject to lease/purchase arrangements in previous periods. Gain on
disposition of property and equipment, net declined $510,366 or 55.0% compared
to the second quarter of 1999 to $417,661 from $928,027. As a percentage of
operating revenues, gain on disposition of property and equipment, net declined
to 1.3% from 2.8%, reflecting the Company's completion of a major capital
equipment replacement program last year. Other expense increased $202,039 or
52.2% compared to the second quarter of 1999 to $589,290 from $387,251. As a
percentage of operating revenues, other expense increased to 1.8% from 1.2%.
Interest expense increased $449,667 or 84.0% compared to the second quarter of
1999 to $985,131 from $535,464. As a percentage of operating revenues, interest
expense increased to 3.0% from 1.6% primarily due to an increase in debt
incurred to finance revenue equipment, much of which was subsequently leased to
owner/operators, and also due to an increase in the base LIBOR rate on the
Company's outstanding debt during the second quarter compared to rates that
prevailed during the same period last year. The Company continues to replenish
its fleet of tractors and trailers on an as needed basis.
Year-to-date Review
Operating revenues increased $3,141,551 or 5.0% to $66,426,674 in the
six-month period ended June 30, 2000, compared with $63,285,123 in the same
period in 1999. The increase for the first half of 2000 was due primarily to an
increase in the Company's fleet size and reduced deadhead.
Total operating expenses increased $4,805,580 or 8.2% to $63,627,909
for the year-to-date period ended June 30, 2000, compared with $58,822,329 for
the first half of 1999. The operating ratio for the first six months of 2000 was
95.8% compared with 92.9% for the same period last year.
Salaries, wages and employee benefits increased $1,698,146 or 9.7%
compared to the first half of 1999 to $19,284,597 from $17,586,451. As a
percentage of operating revenues, salaries, wages and benefits increased to
29.0% from 27.8% due to an increase in the number of Company drivers and
non-driver associates. Cost of independent contractors declined $807,492 or 3.9%
compared to the first half of 1999 to $19,890,374 from $20,697,866. As a
percentage of operating revenues, cost of independent contractors declined 29.9%
from 32.7%, reflecting a lower number of owner/operators. Aggregate fuel costs
increased $1,591,968 or 30.7% compared to the first half of 1999 to $6,778,557
from $5,186,589. As a percentage of operating revenues, fuel costs increased to
10.2% from 8.2% because of higher fuel cost per gallon and a decline in the
Company's owner/operator fleet. Operating supplies increased $79,392 or 1.5%
compared to the first half of 1999 to $5,326,971 from $5,247,579. As a
percentage of operating revenues, operating supplies declined to 8.0% from 8.3%.
Taxes and licenses increased $537,398 or 17.7% compared to the first half of
1999 to $1,578,705 from $1,311,912. As a percentage of operating revenues, taxes
and licenses increased to 2.4% from 2.1% due to an increase in the Company's
fleet size. Insurance and claims increased $537,398 or 17.7% compared to the
first half of 1999 to $3,565,688 from $3,028,290. As a percentage of operating
revenues, insurance and claims increased to 5.4% from 4.8%, reflecting an
increase in cargo claims and accident frequency, as well as an increase in
insurance premiums. Communications and utilities increased $53,152 or 7.3%
compared to the first half of 1999 to $777,893 from $724,741. As a percentage of
operating revenues, communication and utilities increased to 1.2% from 1.1%.
Depreciation and amortization increased $434,746 or 8.1% compared to the first
half of 1999 to $5,787,615 from $5,352,869. As a percentage of operating
revenues, depreciation and amortization increased to 8.7% from 8.5% because of
the purchase of new revenue equipment and also the return of owner/operated
tractors to the Company's fleet that were subject to lease/purchase arrangements
in previous periods. Gain on disposition of property and equipment, net declined
$678,242 or 61.9% compared to the first half of 1999 to $417,661 from
$1,095,903. As a percentage of operating revenues, gain of disposition of
property and equipment, net declined to 0.6% from 1.7%, reflecting the Company's
completion of a significant capital equipment replacement program last year.
Other expense increased $273,235 or 34.9% compared to the first half of 1999 to
$1,055,170 from $781,935. As a percentage of operating revenues,
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<PAGE> 10
other expense increased to 1.6% from 1.2%. Interest expense increased $986,736
or 101.2% compared to the first half of 1999 to $1,961,404 from $974,668. As a
percentage of operating revenues, interest expense increased to 3.0% from 1.5%
primarily due to an increase in debt incurred to finance revenue equipment, much
of which was subsequently leased to owner/operators, and also due to an increase
in the base LIBOR rate on the Company's outstanding debt during the first half
of 2000 compared to rates that prevailed in the same period last year.
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 the sale of common stock.
Accounts receivable (trade and interline) increased $1,155,342 or 9.3%
to $13,631,081 at June 30, 2000, from $12,475,739 at December 31, 1999. Accounts
receivable represented 13.8% of total assets compared to 12.5% of total assets
at December 31, 1999; this increase was due an increase in sales volume during
the period and does not represent a change in uncollectible accounts. The number
of days of revenues in accounts receivable for the period ended June 30, 2000
was 36.9 compared with 36.2 for the year ended December 31, 1999. The Company
has not recognized any significant bad debt expense in any of the periods
presented relating to trade receivables. The Company reserves for bad debts that
are related to the sale-leaseback transactions with its owner/operators. Bad
debt expense on such leases for the quarter ended June 30, 2000 was $427,185
compared with $518,247 for the same period in 1999.
Net cash flow provided by operating activities was $6,131,860 during
the first six months of 2000 compared with $6,581,503 during the same period in
1999. The Company's bank debt bears interest ranging from LIBOR plus 1.00% to
LIBOR plus 1.75%, all payable in monthly installments with maturities through
May 2004. 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, respectively,
bearing interest at the bank's 30-day LIBOR rate plus 1.25%. As of June 30,
2000, the Company had no outstanding borrowings on its line of credit.
Management anticipates increasing the size of the Company's fleet in
2000 by an aggregate of 35 tractors and 50 trailers, net of replacements, at an
anticipated cost of approximately $7,500,000. Management expects to continue
financing such equipment purchases through equipment financing arrangements with
various lenders.
As of June 30, 2000, the Company believes that the availability of
credit under both lines of credit, together with internally generated cash, will
be adequate to finance its operations and anticipated capital expenditures
through fiscal year 2000.
YEAR 2000 COMPLIANCE
In June 1999, the Company developed and began implementing a plan to
review its overall Year 2000 compliance. The plan encompassed the Company's
critical information technology ("IT") and its critical non-IT systems that are
necessary to execute the Company's basic functions of hauling freight via the
Company's flatbed trucks
The Company did not experience any significant malfunctions or errors
in its operating or business systems when the date changed from 1999 to 2000.
Based on operations since January 1, 2000, the Company does not expect any
significant impact on its ongoing business as a result of the "Year 2000 issue."
However, it is possible that the full impact of the date change, which was of
concern due to computer programs that use two digits instead of four digits to
define years, has not been fully recognized. For example, it is possible that
Year 2000 or similar issues such as leap year-related problems may occur with
billing, payroll, or financial closings at month, quarter or year ends. The
Company believes that any such problems are likely to be minor and correctable.
In addition, the Company could still be negatively impacted if its customers or
suppliers are adversely affected by Year 2000 or similar issues. The Company
currently is not aware of any significant Year 2000 or similar problems that
have arisen for its customers and suppliers.
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<PAGE> 11
The Company expended $105,000 on Year 2000 readiness efforts from 1998
to 1999. These efforts included replacing some outdated, noncompliant hardware
and noncompliant software as well as identifying and remediating Year 2000
problems.
FUEL PRICE TREND
Diesel fuel prices increased materially during the first half of 2000
compared with prevailing prices in the same period last year. The average price
per gallon of diesel fuel increased from about $.96 per gallon at the beginning
of 1999 to nearly $1.40 at the end of the second quarter of 2000. If fuel prices
continue to increase or remain at these higher levels for a continued period of
time, higher fuel costs may have a material adverse effect on the financial
condition and business operations of the Company. Additionally, the increased
fuel costs may also have a material adverse effect on the Company's efforts to
build a base of owner/operators, expand its pool of available trucks and
diversify its operations. Higher fuel costs dilute the financial incentive for
owner/operators, who are typically paid a flat rate per mile; therefore, as a
result of higher fuel prices, about 50 drivers left the Company's owner/operator
program in 1999 and a similar number of drivers have departed in the first half
of 2000. The diminishing number of owner/operators further affects the Company's
financial condition - and therefore compounds the direct impact of higher fuel
costs - because each owner/operator that leaves the Company's Boyd Bros.
division also leaves behind a power unit that must then be absorbed into the
Company's fleet. As a result, each of these trucks can no longer be recorded as
a variable expense that is related to a contractual rate per mile, incurred only
if freight is moved, but must instead be recorded as a Company-owned truck with
indirect costs of ownership, such as depreciation, maintenance and capital
expenses. As a result, the continuing higher fuel costs may lead to empty
trucks, diminished fleet efficiency, and reduced revenue potential.
FORWARD-LOOKING STATEMENTS
Certain of the above statements contained herein under the caption
"Management's Discussion and Analysis Financial Conditions and Result of
Operations" 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, particularly fuel costs which
have continued to rise materially during the first half of 2000, that are not
passed on to the Company's customers, and other factors referenced elsewhere
herein.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to interest rate risk due to its long-term debt
which, at June 30, 2000, bore interest at rates ranging from 1.00% to 1.75%
above the bank's LIBOR rate. Under the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 107, Disclosures about Fair Value of Financial
Instruments, the Company has estimated the fair value of its long-term debt
approximates its carrying value, using a discounted cash flow analysis based on
borrowing rates available to the Company. The effect of a hypothetical 10%
increase in interest rates would increase the estimated fair value of the
Company's long-term debt by approximately $687,000. Management believes that
current working capital funds are sufficient to offset any adverse effects
caused by changes in the interest rates.
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<PAGE> 12
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 16, 2000, the Company held its 2000 annual meeting of
stockholders. A total of 2,978,285 shares, or 91% of the Company's outstanding
shares, were represented at the meeting either in person or by proxy.
Four directors were nominated by the Company's Board of Directors to
serve new two-year or three-year terms. These nominees, and the voting results
for each, are listed below:
<TABLE>
<CAPTION>
Term Expires For Withheld
------------ --- --------
<S> <C> <C> <C>
J. Mark Dunning 2002 2,939,835 38,450
J. Larry Baxter 2003 2,917,721 60,564
Gail B. Cooper 2003 2,939,835 38,450
Miller Welborn 2003 2,863,035 115,250
</TABLE>
Incumbent directors not standing for election at the 2000 annual
meeting of stockholders and whose terms continued after the meeting were:
<TABLE>
<CAPTION>
Term Expires
------------
<S> <C>
Dempsey Boyd 2001
Boyd Whigham 2001
Richard C. Bailey 2002
Stephen J. Silverman 2002
</TABLE>
Also at the annual meeting, stockholders ratified the appointment of
Deloitte & Touche LLP as the Company's independent auditors for the year ending
December 31, 2000. A total of 2,978,085 shares were voted in favor of this
proposal, no shares were voted against, and 200 shares abstained.
ITEM 5. OTHER INFORMATION
Proposals by stockholders intended to be presented at the 2001 annual
meeting must be forwarded in writing and received at the principal executive
office of the Company no later than December 8, 2000, directed to the attention
of the Secretary, for consideration for inclusion in the Company's proxy
statement for the annual meeting of stockholders to be held in 2001. Moreover,
with regard to any proposal by a stockholder not seeking to have such proposal
included in the proxy statement but seeking to have such proposal considered at
the 2001 annual meeting, if such stockholder fails to notify the Company in the
manner set forth above of such proposal on or before February 21, 2001, then the
persons appointed as proxies may exercise their discretionary voting authority
if the proposal is considered at the 2001 annual meeting notwithstanding that
the stockholders have not been advised of the proposal in the proxy statement
for the 2001 annual meeting. Any proposals submitted by stockholders must comply
in all respects with the rules and regulations of the Securities and Exchange
Commission, the provisions of the Company's Bylaws and the General Corporation
Law of Delaware.
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 June 30, 2000.
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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 thereunto duly authorized.
Boyd Bros. Transportation Inc.
(Registrant)
Date: August 11, 2000 /s/ Richard C. Bailey
---------------------
Richard C. Bailey, Chief Financial Officer
(Principal Accounting Officer)
13
