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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
For the fiscal year ended December 31, 1999
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Act
of 1934
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 AND NON-VOTING COMMON EQUITY HELD
BY NON-AFFILIATES OF THE REGISTRANT:
$4,995,403 AS OF MARCH 17, 2000
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
3,275,970 SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE,
OUTSTANDING AS OF MARCH 17, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENTS INCORPORATED BY REFERENCE IN THIS ANNUAL REPORT ON FORM 10-K
ARE AS FOLLOWS: PORTIONS OF THE DEFINITIVE PROXY STATEMENT RELATING TO THE 2000
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, 1999 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. [ ]
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TABLE OF CONTENTS
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PAGE
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PART I.........................................................................1
ITEM 1. BUSINESS........................................................1
ITEM 2. PROPERTIES......................................................6
ITEM 3. LEGAL PROCEEDINGS...............................................7
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............7
PART II........................................................................7
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.............................................7
ITEM 6. SELECTED FINANCIAL DATA.........................................8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.............................8
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK......8
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.....................8
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE........................................8
PART III.......................................................................8
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT..................8
ITEM 11 EXECUTIVE COMPENSATION .........................................9
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT...........................................9
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................9
PART IV........................................................................9
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K...............................9
</TABLE>
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PART I
ITEM 1. BUSINESS
THE COMPANY
Boyd Bros. Transportation Inc. ("Boyd" or 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, Boyd has grown into what management believes is one of the largest
exclusively flatbed carriers in the United States. The Company owns and operates
a total of over 1,112 tractors and 1,451 flatbed trailers.
On December 8, 1997, Boyd acquired Welborn Transport, Inc. ("Welborn")
located in Tuscaloosa, Alabama (the "Welborn Acquisition"). The acquisition was
accounted for using the purchase method of accounting and, accordingly, the
purchase price was allocated to the assets acquired, and liabilities assumed,
based upon their estimated fair market values at the acquisition date. Welborn
is operated by Boyd as a stand-alone subsidiary. References to the "Company"
contained herein refer to the combined operations of Boyd and Welborn.
References hereinafter to "Boyd" or "Welborn" describe the distinct operations
of the parent and subsidiary, respectively.
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 result in a shutdown of
a production line at a plant or a delay in a construction project. Management
focuses its marketing efforts on those shippers who require time-definite
delivery because it 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 Boyd has sought to attract and retain drivers
by using only high-quality, late-model tractors equipped with 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, Boyd makes load assignments to
drivers that enable each driver to attain his or her goals with respect to both
miles driven as well as time at home.
Additionally, in June 1997, Boyd began contracting with independent
owner-operators to provide service to its customers. Boyd has also implemented a
lease-purchase program, providing Boyd's drivers with both career opportunities
at Boyd and the opportunity to own their own tractor. Under the program, the
driver leases the tractor from Boyd, along with an option to purchase the
tractor. In turn, the driver leases the use of the tractor and the driver's
services back to Boyd.
In 1998, Boyd added another option under the owner-operator program.
Owner-operators are able to lease a new tractor for three and one-half years.
Boyd will retain ownership of the tractor at the end of the lease, but this will
enable the owner-operator to operate a new tractor and maintain his or her
status as an independent contractor. Management believes that Boyd's
owner-operator program, along with the owner-operator program already in place
at Welborn, will aid in reducing driver turnover and better enable the Company
to meet its growth projections.
Welborn provides transportation services over shorter routes than
traditionally provided by Boyd. Welborn operates primarily in the southeastern
United States, with an average length of haul of less than 400 miles. Management
believes this enhances Welborn's ability to retain quality drivers, as drivers'
time away from home is thereby minimized. Welborn operates approximately 352
tractors and over 490 flatbed trailers. Owner-operators own 323 of the 352
tractors utilized by Welborn, while Welborn owns the rest. The owner-operators
of these units are compensated by Welborn based upon a percentage of revenue.
Over 50% of Welborn's loads are booked through commissioned agents, whereas Boyd
has traditionally developed direct relationships with its customers.
STRATEGY
As discussed above, 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:
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 to 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.
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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 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. Boyd continuously upgrades its fleet of
tractors. The Company's management believes that maintaining a young,
high-quality fleet of tractors facilitates Boyd'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. While Welborn maintains
a fleet of high-quality tractors, the shorter routes over which its vehicles are
dispatched enables these units to be serviced more frequently. Accordingly, it
has not been necessary for Welborn to replace its fleet as frequently as Boyd.
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 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.
Boyd has written contracts with most of its customers. The contracts
generally require the customer to use Boyd for a specified minimum amount of
shipments each year and may be terminated by either party upon 30 to 60 days'
written notice.
The Company's largest 25, 10 and 5 customers accounted for
approximately 53.9%, 37.4% and 24.9%, respectively, of the Company's revenues
during the year ended December 31,1999. Many of the Company's largest 25
customers are publicly-held companies. No single customer accounted for more
than 10% of the Company's revenues during the year ended December 31,1999.
OPERATIONS
The Company's operations are designed to maximize efficiency and
provide quality service to customers. All of Boyd'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 Boyd'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 Boyd's drivers and equipment. See "Transportation
Technology."
Boyd conducts its operations through a network of 10 regional and
satellite service centers in strategic locations in the eastern two-thirds of
the United States. See "Item 2 - Properties." Boyd operates regional service
centers in Clayton and Birmingham, Alabama; Springfield, Ohio; and Greenville,
Mississippi. These regional service centers are supported by smaller satellite
service centers, each having between one to three employees, located in Calvert
City, Kentucky; Danville, Virginia; Lisbon Falls, Maine; Blytheville, Arkansas;
Baltimore, Maryland; and Walworth, Wisconsin. These service centers allow Boyd
to re-dispatch equipment terminating in a given area, enhance driver recruitment
and return drivers to their homes more regularly. Boyd also has arrangements to
deposit trailers near various major customers or shipping locations to
facilitate pre-loading of shipments and thereby increase efficiency.
Welborn's corporate offices are located in Tuscaloosa, Alabama. Welborn
utilizes independent agents located in Atlanta, GA.
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 records, driving experiences and
personal evaluations, including drug testing.
To maintain high-equipment utilization, particularly during periods of
growth, the Company strongly
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emphasizes continuous driver and owner-operator recruitment and training.
Drivers are recruited at all of the Company's regional terminal locations and at
the Company's corporate headquarters.
Drivers are trained in Company policies and operations, safety
techniques and fuel efficient operation of equipment. In addition, each driver
must pass a rigorous road test prior to his or her 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 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.
Competition for qualified drivers is intense. The short- to medium-haul
truckload segment of the trucking industry, including the Company, experiences
significant driver and owner-operator turnover, and the Company anticipates that
the intense competition for qualified drivers in the trucking industry will
continue. In order to attract quality drivers, management is actively pursuing
the services of independent owner/operators to complement its fleet.
At December 31, 1999, the Company had 815 employees; of these,
approximately 598 were drivers and driver-trainees, and the balance were
mechanics, other equipment maintenance personnel and support personnel,
including management and administration. In addition, owner-operators accounted
for the operation of approximately 507 tractors. None of the Company's employees
is subject to a collective bargaining agreement, and the Company has never
experienced a work stoppage. Management believes that its relationship with its
employees is good.
REVENUE EQUIPMENT
The Company's philosophy is to purchase premium quality tractors to
help attract and retain drivers and to promote safe operations, and management
believes the higher initial cost of such equipment is recovered through better
resale marketability. Each of the Company's tractors are 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, 1999, the Company owned and operated 1,112 tractors and
1,451 flatbed trailers. The tractors are manufactured by Freightliner, Kenworth
and International, and the trailers are manufactured by Utility, Dorsey,
Fruehauf, Fontaines, Wabash and Great Dane.
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 Boyd has enhanced its strong reputation for customer satisfaction
through the early and fleet-wide implementation of two computer systems.
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Boyd was the first major flatbed carrier to fully equip its vehicles with the
two-way satellite communication system produced by QUALCOMM. The satellite-based
OMNITRACS(C) system ("Omnitracs") was installed and operational in the entire
Boyd fleet by the end of 1990. Omnitracs has improved the quality and efficiency
of Boyd's operations by allowing drivers and dispatchers to have instant,
on-the-road communication ability and by enabling Boyd to provide its customers
with accurate information on the status and estimated delivery time of cargo
shipments.
Omnitracs permits more efficient transmission of load assignments to
drivers, and enhances the Company's ability 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 Boyd'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 Boyd'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, Boyd can electronically record a load
assignment, report the load to the billing department and generate customer
invoices.
In addition, Boyd 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 Boyd'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.
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Boyd has also equipped its entire fleet of tractors with the
SENSORTRACS(C) on-board computer system ("Sensortracs"), which is also produced
by QUALCOMM. This system monitors fuel efficiency and other operational data.
Information from Sensortracs is periodically processed by one of Boyd's
computers, which generates reports on vehicle efficiency and driver performance.
Reports generated by this system enhance Boyd'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.
During 1998, Boyd developed load tendering and tracking capabilities.
Customers are able to track the progress of their loads during transport using
their own personal computer. Additionally, customers are able to book loads over
the internet. Customers submit potential loads to the appropriate regional load
planner, and the load planner will then contact the customer via the internet
e-mail system to acknowledge acceptance of the load. This technological
advancement enables customers to book loads routinely without having to complete
the same paperwork again. Additionally, in 1998, Boyd implemented a new software
program by The LOGISTICS.COM Group that enables Boyd to review each shipping
lane to determine overall profitability and also to determine which customers
are the most profitable within the lane. The Company's management believes that
as a result of these enhanced capabilities, Boyd will be in a position to direct
the movement of the fleet in a way that will yield the most results to the
bottom line without affecting the quality of the 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. The emphasis on
safety begins in the hiring and training process, where prospective employees
and owner-operators are given physical examinations and drug tests, and newly
hired drivers and owner-operators, regardless of experience level, must
participate in an intensive training program. See "Drivers and Employees."
The directors of safety for the Company continuously monitor driver
performance and have 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, $100,000 for each claim for
employee medical and hospitalization, and $10,000 for each claim for cargo
damage. The Company also maintains full coverage for workers' compensation
claims. 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 8.7% and 9.0% of revenues in 1999 and
1998, respectively. Through 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.
There are other trucking companies, including truckload carriers that have
flatbed divisions, that have substantially greater financial resources, operate
more equipment or carry a larger volume of freight than the Company. The
existence of these other motor carriers has also resulted in increased
competition for qualified drivers.
REGULATION
The trucking industry is subject to regulatory oversight and
legislative changes that can affect the economics of the industry by requiring
certain operating practices or influencing the demand for, and the costs of
providing,
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services to shippers. The Intermodal Surface Transportation Board (the "ISTB"),
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, and 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 of qualified drivers to the
Company. 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.
The Company's consolidated balance sheets as of December 31, 1999 and
1998 include reserves for environmental remediation of $0 and $46,000,
respectively, to cover final costs related to contamination caused by
underground storage tanks. The tanks were replaced and clean-up was
substantially complete in 1995. Currently, management knows of no other
environmental remediation issues or liabilities. 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. Management 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, 1999 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, particularly fuel costs which have risen materially
during the fourth quarter of 1999, that are not passed on to the Company's
customers, and other factors referenced elsewhere herein.
ITEM 2. PROPERTIES
The Company's corporate headquarters and principal service center are
located on a 17.9 acre tract in Clayton, Alabama. 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
Company is in the process of constructing a new "super terminal", containing
several maintenance and safety bays in Birmingham, Alabama. The super terminal
is estimated to be completed by June 2000.
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The following table sets forth information regarding the location and
ownership of each of Boyd's service centers and shuttle facilities:
<TABLE>
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Clayton, AL........................................ Owned
Springfield, OH.................................... Owned
Birmingham, AL..................................... Owned
Greenville, MS..................................... Owned
Calvert City, KY................................... Leased
Danville, VA....................................... Leased
Lisbon Falls, ME................................... Leased
Baltimore, MD...................................... Leased
Walworth, WI....................................... Leased
Blytheville, AR.................................... Leased
</TABLE>
Additionally, Welborn owns its corporate offices in Tuscaloosa, Alabama and
leases service centers located as follows:
<TABLE>
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Birmingham, AL........................................ Leased
Memphis, TN........................................... Leased*
Decatur, AL........................................... Leased*
Columbia, SC.......................................... Leased*
Atlanta, GA........................................... Leased*
</TABLE>
*In March 2000, Welborn Transport closed three service centers in Memphis,
TN; Decatur, AL; and Columbia, SC. These service centers were closed in an
effort to increase driver utilization and dispatch through one central dispatch
location in Tuscaloosa, AL. Additionally, Welborn Transport opened a service
center in Atlanta, GA in March 2000. This service center will dispatch and
settle with drivers.
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, 1999, either through the
solicitation of proxies or otherwise.
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 17, 2000, the Company had approximately 600
stockholders, including beneficial owners holding shares in nominee or "street"
name. 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 1999 and 1998.
<TABLE>
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Price Range
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1999 High Low
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First Quarter....................................... $ 8-3/8 $6-1/8
Second Quarter...................................... 11-3/4 7-3/4
Third Quarter....................................... 11-5/8 8-3/4
Fourth Quarter...................................... 9-3/4 6-1/8
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Price Range
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1998 High High
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First Quarter....................................... $10-3/8 $8-9/16
Second Quarter...................................... 12 8-1/2
Third Quarter....................................... 10-1/8 5-7/8
Fourth Quarter...................................... 8 5-5/8
</TABLE>
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Management 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. 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.
Pursuant to the Company's stock repurchase program, the Company
purchased 25,000 and 263,940 shares of the common stock in open market or
negotiated transactions during 1998 and 1999, for aggregate purchase prices
of $165,625 and $2,342,746, respectively. The Company funded these purchases
using working capital. On January 8, 1999, the Company purchased 500,000 shares
of its outstanding common stock from a former Chief Executive Officer of the
Company for $3,660,000. The stock purchase was funded by available cash and a
bank line of credit.
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, 1999.
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, 1999.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK
The Company is exposed to interest rate risk due to its long-term debt,
which at December 31, 1999, bore interest at rates ranging from 1.00% to 1.50%
above the applicable 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
ten percent increase in interest rates would increase the estimated fair value
of the Company's long-term debt by approximately $600,000. Management believes
that current working capital funds are sufficient to offset any adverse effcts
caused by changes in these interest rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated by reference from
the Consolidated Financial Statements contained in the Company's Annual Report
to Stockholders for the year ended December 31, 1999.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is information concerning the Directors and Executive
Officers of the Company as of March 17, 2000.
Dempsey Boyd, age 72, founded Boyd in 1956, and has been Chairman of
the Board since April 1980. Mr. Boyd served as President of Boyd from December
1962 until April 1980. Mr. Boyd is the father of Gail B. Cooper and Ginger B.
Tibbs.
8
<PAGE> 11
Miller Welborn, age 41, has served as Vice-Chairman since February 17,
2000. Mr. Welborn served as President and Chief Executive Officer of the Company
from July 1998 until February 2000. Mr. Welborn co-founded Welborn Transport in
1989.
Gail B. Cooper, age 49, has served as President, Chief Executive
Officer and as a Director of the Company since February 17, 2000. Ms. Cooper
served as Secretary of Boyd from December 1969 until February 2000. Ms. Cooper
received a B.S. in business administration from Troy State University. She has
served Boyd in numerous administrative and accounting positions since joining
Boyd full-time in June 1972. Ms. Cooper is the daughter of Mr. Boyd and the
sister of Ms. Tibbs.
Richard C. Bailey, age 49, has served as Executive Vice President and
Chief Financial Officer of the Company since joining Boyd 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.
Ginger B. Tibbs, age 46, has been the Secretary/ Treasurer of Boyd
since February 2000. Ms. Tibbs is primarily responsible for collection of Boyd'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.
With the exception of information relating to the executive officers of
the Company, which is provided in Item 10 hereof, all information required by
Part III (Items 11, 12 and 13) is incorporated by reference to the Company's
definitive Proxy Statement relating to the 2000 Annual Meeting of Stockholders,
which is scheduled to be filed on or about April 7, 2000.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT
SCHEDULES AND CURRENT 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, 1999:
Independent Auditors' Report
Consolidated Balance Sheets at December 31, 1999 and 1998
Consolidated Statements of Income for the years ended December 31,
1999, 1998 and 1997
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the years ended December
31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
2. Financial Statement Schedules.
The schedule listed below is included herein immediately after the
signature pages hereto. Schedules not listed below have been 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.
<TABLE>
<CAPTION>
SCHEDULE
NUMBER DESCRIPTION
------ -----------
<S> <C>
II Valuation and Qualifying Accounts and Reserves
for the Three Fiscal Years Ended December 31, 1999
</TABLE>
9
<PAGE> 12
3. Exhibits required by Item 601 of Regulation S-K.
The following exhibits are included in this Form 10-K:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
10.1 Credit and Security Agreement dated March 16, 1999 between the
Company and Compass Bank in the amount of $10,000,000 for truck
equipment
10.2 Security Agreement dated March 16, 1999 between the Company and
Compass Bank in the amount of $10,000,000 for truck equipment
10.3 Master Note for Business and Commercial Loans dated April 9, 1999
between the Company and Amsouth Bank in the amount of $2,500,000.
10.4 Master Note for Business and Commercial Loans dated April 9, 1999
between the Company and Amsouth Bank in the amount of $1,750,000.
13 Those portions of the Company's Annual Report to Stockholders for
the year ended December 31, 1999 that are specifically incorporated
herein by reference
21 Subsidiaries of the Registrant
23 Consent of Deloitte & Touche LLP
27 Financial Data Schedule
</TABLE>
The following exhibits are incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31, 1998 (File No.
000-23948):
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
10.1 Credit and Security Agreement dated February 28, 1996 between the
Company and Compass Bank in the amount of $5,000,000 for truck
equipment
10.2 Credit and Security Agreement dated May 29, 1998 between the
Company and Compass Bank in the amount of $4,500,000 for truck
equipment
10.3* Agreement and General Release between the Company and Donald
Johnston dated July 16, 1998
10.4 Consulting Agreement between the Company and Donald Johnston
dated July 16, 1998
10.5 Stock Repurchase Agreement between the Company and Donald Johnston
dated January 7, 1999
</TABLE>
The following exhibits are incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31, 1997 (File no.
000-23948):
10
<PAGE> 13
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
10.1* First Amendment to Boyd Bros. Transportation Inc. 1994 Stock
Option Plan
10.2* Employment Agreement between the Company and Miller Welborn dated
December 8, 1997
10.3* Employment Agreement between the Company and Steven Rumsey dated
December 8, 1997
</TABLE>
The following exhibit is incorporated by reference to the Company's
Registration Statement on Form S-8 (File No. 333-78925), declared effective on
May 20, 1999:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
4 Boyd Bros. Transportation Inc. 1999 Employee Stock Purchase Plan
</TABLE>
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:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
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
10.13 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.
10.26 Credit and Security Agreement dated February 1, 1994 by and between
the Company and Compass Bank
10.27 Security Agreement dated February 1, 1994 by the Company in favor
of Compass Bank
10.37 Credit Agreement dated April 1, 1994 by and between the Company and
AmSouth Bank N.A.
</TABLE>
The following exhibit is incorporated by reference to the Company's
Amendment to Report on Form 10-Q filed on August 5, 1997:
- -----------------
* 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.
11
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------ -----------
<S> <C>
10.33 OMNITRACS contract dated February 5, 1997, between the Company
and QUALCOMM, Inc.
</TABLE>
The following exhibit is incorporated by reference to the Company's
Report on Form 8-K filed on December 19, 1997:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------ -----------
<S> <C>
2.1 Acquisition Agreement dated December 8, 1997, by and among the
Company, W-T Acquisition Company, Welborn Transport, Inc., Miller
Welborn and Steven Rumsey
</TABLE>
(b) Reports on Form 8-K
None.
12
<PAGE> 15
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/ GAIL B. COOPER
--------------------------------------
Gail B. Cooper
President and Chief Executive Officer
Date: March 30, 2000
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/ GAIL B. COOPER
- -----------------------------------
Gail B. Cooper President, Chief Executive March 30, 2000
Officer, and Director (Principal
Executive Officer)
/s/ RICHARD C. BAILEY Executive Vice President,
- ----------------------------------- Chief Financial Officer and March 30, 2000
Richard C. Bailey Director (Principal Financial
and Accounting Officer)
/s/ DEMPSEY BOYD Chairman and Director March 30, 2000
- -----------------------------------
Dempsey Boyd
/s/ W. MILLER WELBORN Vice-Chairman and Director March 30, 2000
- -----------------------------------
W. Miller Welborn
/s/ W. WYATT SHORTER Director March 30, 2000
- ------------------------------------
W. Wyatt Shorter
/s/ BOYD WHIGHAM Director March 30, 2000
- -----------------------------------
Boyd Whigham
/s/ STEPHEN J. SILVERMAN Director March 30, 2000
- -----------------------------------
Stephen J. Silverman
</TABLE>
<PAGE> 16
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Boyd Bros.
Transportation Inc.:
We have audited the consolidated financial statements of Boyd Bros.
Transportation Inc. and subsidiary as of December 31, 1999 and 1998, and the
related consolidated statements of income, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 1999, and have
issued our report thereon dated February 4, 2000; such consolidated financial
statements and report are included in your 1999 Annual Report to Shareholders
and are incorporated herein by reference. Our audits also included the
consolidated financial statement schedule of Boyd Bros. Transportation Inc. and
subsidiary, listed in Item 14. This consolidated financial statement schedule is
the responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, such consolidated financial
statement schedule, when considered in relation to the basic consolidated
financial statements as a whole, presents fairly in all material reflects the
information shown therein.
Deloitte & Touche LLP
Birmingham, Alabama
February 4, 2000
<PAGE> 17
SCHEDULE II
BOYD BROS. TRANSPORTATION INC.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE THREE YEARS ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
ADDITIONS ADDITIONS
BALANCE AT CHARGED TO CHARGED TO
BEGINNING OF COSTS AND OTHER BALANCE AT
DESCRIPTION YEAR EXPENSES ACCOUNTS(B) DEDUCTIONS(A) END OF YEAR
- ----------- ------------ ------------ ------------ ------------- --------------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts--
deducted from trade receivables in
the balance sheet
Year ended December 31, 1997 $ 125,000 $ -- $ 112,000 $ -- $237,000
========= ========== ========= ========== ========
Year ended December 31, 1998 $ 237,000 $ 150,400 $ -- $ 115,400 $272,000
========= ========== ========= ========== ========
Year ended December 31, 1999 $ 272,000 $ 220,000 $ -- $ 145,000 $347,000
========= ========== ========= ========== ========
</TABLE>
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO
BEGINNING OF COSTS AND BALANCE AT
DESCRIPTION YEAR EXPENSES DEDUCTIONS(A) END OF YEAR
- ----------- ------------ ------------ -------------- -------------
<S> <C> <C> <C> <C>
Allowance for uncollectible receivables
related to sales-type leases--
deducted from investment in sales-type
leases in the balance sheet
Year ended December 31, 1997 $ -- $ 380,000 $ -- $ 380,000
========== =========== ========== ===========
Year ended December 31, 1998 $ 380,000 $ 1,627,506 $ 806,261 $ 1,201,245
========== =========== ========== ===========
Year ended December 31, 1999 $1,201,245 $ 1,259,144 $1,549,635 $ 910,754
========== =========== ========== ===========
</TABLE>
(a) Uncollectible accounts written off
(b) Addition of Welborn Transport, acquired on December 8, 1997
<PAGE> 1
EXHIBIT 10.1
CREDIT AND SECURITY AGREEMENT
THIS CREDIT AND SECURITY AGREEMENT is being executed and entered into
as of the 16th day of March, 1999, by and among BOYD BROTHERS TRANSPORTATION
COMPANY, INC., an Alabama corporation, which conducts its business at Route 1,
Box 40, Clayton, Alabama 36016 ("BORROWER", whether one or more) and COMPASS
BANK, an Alabama state banking corporation, 223 E. Broad Street, Eufaula,
Alabama 36027 ("BANK").
PREAMBLE
BORROWER has applied to BANK for, and BANK has agreed, upon the terms
and subject to the conditions herein set forth, to extend to BORROWER, a loan in
the amount of up to TEN MILLION AND NO/100 DOLLARS ($10,000,000.00) (THE "LOAN")
the proceeds of which are to be made available to Borrower for use between the
date hereof and March 16, 2000 (the "ADVANCE PERIOD") for BORROWER to finance
the purchase of tractors and flatbed trailers to be used in BORROWER'S trucking
business (collectively, the "TRUCK EQUIPMENT").
AGREEMENT
NOW, THEREFORE, in consideration of the premises, the mutual
obligations of the parties as contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound hereby, agree as follows:
<PAGE> 2
ARTICLE I
DEFINITIONS
Section 1.01 "BORROWER'S LOAN ACCOUNT" means the account on the books
of BANK in which will be recorded loans and advances made by BANK to BORROWER
pursuant to this Agreement, payments made on such loans and other appropriate
debits and credits as provided by this Agreement.
Section 1.02 "COLLATERAL" means any and all property of BORROWER in
which BANK now has, by this Agreement, or by any other Loan Document acquires,
or hereafter acquires, a security interest.
Section 1.03 "EQUIPMENT" means all tangible personal property
including, without limitation, machinery, furniture and furnishings now owned or
hereafter acquired for use primarily in the business of BORROWER.
Section 1.04 "INDEBTEDNESS" means all indebtedness, liabilities and
obligations, matured or unmatured, liquidated or unliquidated, direct or
indirect, primary, secondary, absolute or contingent, and whether arising by
contract, operation of law or otherwise, including without limitation,
obligations to creditors (including without limitation BANK), for borrowed money
or the deferred purchase price of property or services, and all obligations
under real property leases and under leases of personal property.
Section 1.05 "INSOLVENCY" of BORROWER or any other person means that
there shall have occurred with respect to that person one or more of the
following events: dissolution, termination of existence, insolvency, business
failure,
2
<PAGE> 3
appointment of a receiver of any part of the property of, assignment for the
benefit of creditors by, or the filing of a petition in bankruptcy or the
commencement of any proceedings under any bankruptcy or insolvency laws, or any
laws relating to the relief of debtors, readjustment of indebtedness,
reorganization, composition or extension, by or against such person, or if any
action shall be taken for the purpose of effecting any of the foregoing.
Section 1.06 "LIABILITIES" means any and all liabilities of BORROWER to
BANK of every kind and description, direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, regardless of how they
arise or by what agreement or instrument they may be evidenced or whether
evidenced by any agreement or instrument. "Liabilities" includes obligations to
perform acts and refrain from taking action as well as obligations to pay money.
Section 1.07 "LOAN DOCUMENTS" means this Agreement, the Note (as
defined in Section 2.04 hereof), the Security Agreement from BORROWER to BANK
dated as of the date hereof, and all other documents and instruments evidencing,
securing, guaranteeing, relating to, or executed or delivered in connection with
the Loan.
Section 1.08 UNDEFINED TERMS. Except as otherwise defined in this
Agreement, whether in this Article 1, or in a parenthetical or other reference
in this Agreement, accounting terms used herein shall have the meanings given to
them under generally accepted accounting principles, and terms defined in the
Alabama Uniform
3
<PAGE> 4
Commercial Code, as the same may be amended from time to time, shall have the
meanings given them in the Code.
ARTICLE 11
THE LOAN
Section 2.01 Loan. Subject to the terms and conditions hereof, during
the Advance Period provided that BANK has not demanded payment in full under the
Note and BORROWER shall not be in default hereunder or with respect to any other
Liability to BANK, the BANK will make advances under the Loan to BORROWER, or
directly to BORROWER'S suppliers, up to a maximum aggregate principal amount of
$10,000,000 to pay for BORROWER'S purchase of the Truck Equipment to be used as
Equipment in BORROWER'S business ("Advances"). BANK may, but shall not have any
obligation to, make any Advances hereunder at any time after or during which an
Event of Default (as defined herein) shall have occurred or exists.
Section 2.02 BORROWER'S LOAN ACCOUNT. All such Advances shall be
entered as debits in the BORROWER'S Loan Account. BANK may, if it so elects,
require each request for any Advance pursuant to this Agreement to be
accompanied by certification of the number, identity and continued use of Truck
Equipment purchased with the proceeds of the Loan, in form and substance
satisfactory to BANK. BANK shall also record in the BORROWER'S Loan Account, in
accordance with customary accounting practice, all other charges, expenses and
other items properly chargeable to BORROWER; all payments made by BORROWER on
account of
4
<PAGE> 5
Indebtedness evidenced by BORROWER'S Loan Account; and other appropriate debits
and credits. The debit balance of BORROWER'S Loan Account shall reflect the
amount of BORROWER'S Indebtedness to BANK from time to time by reason of
Advances and other appropriate charges hereunder.
Section 2.03 USE OF LOAN PROCEEDS. The Loan proceeds shall be used by
BORROWER to finance its purchase of the Truck Equipment.
Section 2.04 NOTE. Each Advance under the Loan shall be evidenced by a
separate promissory note (collectively, the "NOTE"), in form and substance
acceptable to BANK. Each Note shall bear interest from the date of the Advance
thereunder at the rate and calculated in the manner provided therein, and shall
be otherwise payable as set forth therein. Dates and amounts of Advances, and
payments received by BANK, shall be evidenced by entries upon the books and
records of BANK, and shall be reflected in monthly statements, which shall be
conclusive evidence of such dates and amounts of Advances, and payments.
Section 2.05 DURATION; EXTENSION. Availability of funds under the Loan
shall terminate on the last day of the Advance Period; provided, however, that
the parties recognize that they may wish to extend the expiration date by mutual
agreement to be negotiated prior to such expiration date. It is understood that
any extension may require a revision of certain provisions of this Agreement.
5
<PAGE> 6
ARTICLE III
SECURITY FOR LOAN
Section 3.01 SECURITY INTEREST OF BANK IN COLLATERAL. As security for
the payment and performance of all Liabilities, BANK shall have, and is hereby
granted a continuing security interest in the following Collateral, whether now
owned or existing or hereafter created, acquired or arising and wheresoever
located:
(a) (i) The Truck Equipment described on Exhibit "A" hereto
and (ii) all Truck Equipment or other Equipment and other personal property of
BORROWER purchased with the proceeds of the Loan;
(b) All goods, instruments, certificates or other documents of
title, policies and certificates of insurance, securities, chattel paper,
deposits, cash or other property owned by BORROWER or in which BORROWER has an
interest which are now or may hereafter be in the possession of BANK or as to
which BANK may now or hereafter control possession by documents of title or
otherwise;
(c) Proceeds and products (including tort and insurance
claims) of all of the foregoing.
Section 3.02 AFTER-ACQUIRED PROPERTY. No submission by BORROWER is
necessary to vest in BANK a security interest in hereafter created or acquired
Collateral, but, rather such title and security interest shall vest in BANK
immediately upon the creation or acquisition of any item of Collateral, without
the necessity for any other or further action by BORROWER or BANK.
Section 3.03 OTHER APPLICABLE LAW. If, by reason of location of
Collateral or otherwise, the creation, validity or perfection of security
interests provided for herein are governed by the law of a jurisdiction other
than Alabama, BORROWER shall
6
<PAGE> 7
take such steps and execute and deliver such papers as BANK may from time to
time request to comply with the Uniform Commercial Code, the Uniform Trust
Receipts Act, the Factors Lien Act or other laws of another state or states.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce BANK to enter into this Agreement, BORROWER represents
warrants as follows:
Section 4.01 ORGANIZATION AND AUTHORITY. Each BORROWER (a) is an
Alabama corporation which is duly organized, validly existing and in good
standing under the laws of the State of Alabama; (b) has all necessary corporate
power and authority, and possesses all licenses and permits as are required for
BORROWER to own its assets and conduct its business as now conducted or
presently proposed to be conducted; (c) has no subsidiaries other than Boyd
Brothers Truck and Tractor; and (d) is duly qualified and in good standing in
the State of Alabama and in every other jurisdiction wherein its ownership or
leasing of assets or conduct of its business makes such qualification necessary.
Section 4.02 BORROWER'S AUTHORIZATION. The execution, delivery and
performance of this Agreement, the Note, the Security Agreement, and the other
Loan Documents, the granting of the power of attorney under Section 8.03 hereof,
and the borrowing hereunder and under the Note, are within BORROWER'S corporate
powers and authority, have been duly and validly authorized by all necessary
corporate and
7
<PAGE> 8
other action including, without limitation, any necessary shareholder action,
are not in contravention of law or the terms of BORROWER'S Articles of
Incorporation, By-Laws or other incorporation documents, or of any indenture,
agreement or undertaking or any law, regulation, or order to which BORROWER is a
party or by which it is bound.
Section 4.03 ENFORCEABILITY. Upon execution and delivery hereof and
thereof, this Agreement, the Note, the Security Agreement, and the other Loan
Documents will constitute valid and binding obligations of the respective
parties thereto, enforceable in accordance with their respective terms.
Section 4.04 OWNERSHIP OF COLLATERAL. Except for the security interests
granted in connection herewith, or heretofore granted to BANK, BORROWER is, and
as to assets to be acquired after the date hereof, shall be, the owner of all
Collateral with respect to which it grants a security interest hereunder, free
from any lien, security interest or encumbrance, and BORROWER shall defend its
assets against all claims and demands of all persons at any time claiming the
same or any interest therein.
Section 4.05 OTHER COLLATERAL. At the time BORROWER pledges, sells,
assigns, or transfers to BANK any instrument, document of title, security,
chattel paper or other property or any interest therein, BORROWER shall be the
lawful owner thereof and shall have good right to pledge, sell, assign or
transfer the same; none of such property shall have been pledged, sold, assigned
or transferred to any person other than BANK or in any way encumbered; and
BORROWER shall defend the same against the lawful claims and demands of all
persons.
8
<PAGE> 9
Section 4.06 FINANCIAL INFORMATION. Subject to any limitations stated
therein or in connection therewith, all financial statements which have been or
may hereafter be furnished to BANK to induce it to enter into this Agreement, to
extend credit from time to time hereunder, or otherwise in connection herewith,
do or shall fairly represent the financial condition of BORROWER or other person
or entity reported on therein, as of the dates and, in the case of BORROWER, the
results of its operations for the periods for which the same are furnished, in
accordance with ,generally accepted accounting principles consistently applied,
and all other information, reports and other papers and dates furnished to BANK
are or shall be, at the time the same are so furnished, accurate and correct in
all material respects and complete insofar as completeness may be necessary to
give BANK a true and accurate knowledge of the subject matter. There has been no
material adverse change in the business, properties, prospects, or condition
(financial or otherwise) of the BORROWER since the dates of the most recent
financial statements provided to the BANK. BORROWER has good and marketable
title to all the properties and assets reflected on its balance sheet furnished
to BANK, free and clear of mortgages, pledges, liens, charges and other
encumbrances, other than encumbrances in favor of BANK and encumbrances securing
indebtedness reflected on such balance sheet.
Section 4.07 NO VIOLATIONS. BORROWER is not now in default under any
agreement evidencing an obligation for the payment of money, performance of a
service or delivery of goods, the demand for performance under which, or
acceleration which, or acceleration
9
<PAGE> 10
of the maturity of which, would render BORROWER insolvent or unable to meet its
other debts as they become due or conduct its business as usual.
Section 4.08 LITIGATION. There is no action, suit, or proceeding at law
or in equity or by or before any governmental instrumentality or other agency
now pending, or, to the knowledge of the BORROWER, threatened or in prospect
against or affecting the BORROWER or any properties or rights of the BORROWER,
which, if adversely determined, would (i) materially impair the right of the
BORROWER to carry on business substantially as now conducted or (ii) materially
and adversely affect the financial condition of the BORROWER. BORROWER is not
currently affected by any strike or other labor disturbance nor is BORROWER in
default in any material respect under any judgment, order, injunction, rule,
ruling, of any court or governmental commission, agency, or instrumentality.
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.01 FINANCIAL STATEMENTS. BORROWER shall furnish or cause to
be furnished to BANK, (a) on a quarterly basis, within sixty (60) days after the
end of each quarter, internally prepared profit and loss statements for
BORROWER; and (b) on an annual basis, audited year-end financial statements
prepared by a certified public accountant acceptable to BANK. Statements
required under Section 5.01 (b) immediately preceding shall be provided as soon
as available after the end of the fiscal period reported on therein, but no
later than ninety (90) days after the end of such
10
<PAGE> 11
period. In addition, BORROWER shall furnish BANK, on an annual basis, year-end
financial statements on any guarantor of the Loan in a form acceptable to BANK,
as soon as available, but no later than 60 days after the end of each year.
Section 5.02 CERTIFICATIONS. All statements and reports required by
this Article V shall be certified as true and correct by the President or a
Vice-President of BORROWER, or in the case of Guarantor, by or on behalf of the
Guarantor.
Section 5.03 EXPENSES. BORROWER shall pay any and all taxes, charges
and expenses of every kind or description paid or incurred by BANK under or with
respect to the Loan or any Collateral therefor or the collection of or
realization upon the same. BORROWER hereby authorizes BANK to charge interest,
charges, taxes and expenses provided for herein to BORROWER'S Loan Account.
Section 5.04 INSURANCE. BORROWER shall have and maintain at all
times liability insurance and, with respect to the Collateral and other assets
of BORROWER, insurance against risks of fire, so-called extended coverage, and
other risks customarily insured against by companies engaged in similar business
to that of BORROWER, in amounts, containing such terms, in such form, for such
periods and written by such companies as may be satisfactory to BANK. Where
insurance covers Collateral for loans to BORROWER from BANK, such insurance
shall be payable to BANK and to BORROWER as their interests may appear, pursuant
to a long-form New York standard non-contributory mortgagee clause or
endorsement. All policies of insurance shall provide for ten (10) days' written
minimum cancellation notice to BANK. In the event of BORROWER'S failure to
provide and maintain insurance as herein provided, BANK
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may, at its option, provide such insurance and charge the amount thereof to the
BORROWER'S Loan Account or add the same to the principal balance of the Loan.
BORROWER shall furnish to BANK certificates or other evidence satisfactory to
BANK of compliance with the foregoing insurance provisions. Notwithstanding
anything to the contrary contained or implied herein, BORROWER may self-insure
its fleet of vehicles (including the Collateral) as to physical damage, but
shall obtain insurance against catastrophic loss (in excess of an aggregate of
$500,000) of Collateral and other assets. BORROWER shall provide BANK evidence
satisfactory to BANK the existence of such catastrophic insurance, which policy
of insurance shall name BANK as loss payee pursuant to a New York standard
non-contributory endorsement or clause. In the event of any loss with respect to
any item of Collateral, BORROWER will make an additional payment under the Loan
in an amount equal to the portion of the outstanding Loan balance representing
the purchase money advanced against the Collateral with respect to which such
loss has occurred.
Section 5.05 INFORMATION REGARDING COLLATERAL. BORROWER shall furnish
to BANK information adequate to identify and evaluate the Collateral at times
and in form and substance as may be requested by BANK.
Section 5.06 REGISTRATION AND TITLING. BORROWER shall cause all
Collateral that is required to be registered, to be properly registered in
BORROWER'S name, and will cause the title certificates for all Collateral to
reflect BORROWER'S ownership and BANK'S lien.
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Section 5.07 RECORDS REGARDING COLLATERAL. BORROWER shall give BANK
written notice of each location at which Collateral and records regarding
Collateral are or will be kept other than for temporary processing, storage or
like purposes. Except as such notice is given, and except as Collateral is moved
from place to place in the ordinary course of BORROWER'S trucking business, all
Collateral and records are and shall be kept at BORROWER'S address as it appears
in Section 10.04 of this Agreement.
Section 5.08 INSPECTION. BORROWER shall at all reasonable times and
from time to time allow BANK, by or through any of its officers, agents,
attorneys, or accountants, to examine, inspect or make extracts from BORROWER'S
books and records and to arrange for verification of Collateral, under
reasonable procedures and by reasonable methods, and shall do, make, execute and
deliver all such additional and further acts, things, deeds, assurances and
instruments as the BANK may require more completely to vest in and assure to the
BANK its rights hereunder or in any Collateral.
Section 5.09 TAXES. BORROWER will promptly pay or cause to be paid
all taxes, customs fees, and freight charges on the Collateral and will at all
times keep the Collateral free and clear of all liens and claims whatsoever,
other than the security interests granted hereby. BORROWER agrees to do and
cause to be done all things that the BANK may request to establish and maintain
a valid title and security interest in the Collateral, free of all other liens
and claims whatsoever, to secure the payment of the Liabilities. If such taxes
or other assessments remain unpaid after the date fixed for the payment of the
same, or if any lien shall be claimed which, in the opinion of the
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BANK, could create a valid obligation having priority over the rights of the
BANK in the Collateral, the BANK may, without notice to the BORROWER, pay such
taxes, assessments, charges or claims, and the BORROWER unconditionally promises
to reimburse BANK for any amounts so paid upon demand.
Section 5.10 CONTINUED EXISTENCE, PROTECTION OF PROPERTY, INSURANCE.
BORROWER shall do or cause to be done all that is necessary (a) to preserve its
existence and in keep in full force and effect all of its governmental permits,
licenses, charters, consents and franchises, and to comply with all applicable
laws; (b) to conduct and operate its business in a prudent and careful manner;
(c) to preserve its properties; and (d) subject to the limitation regarding
self-insurance in Section 6.04 hereof, to maintain adequate insurance with
insurance companies of recognized responsibility, including without limitation,
(i) insurance coverage to such extent and against such risks, including fire,
casualty, and theft, as is customary in BORROWER'S business, (ii) necessary
workmen's compensation insurance; (iii) such other insurance or bonds as may be
required by law or reasonably requested in writing by BANK; and (iv) pay all
taxes applicable to it or levied against any of its properties as and when the
same shall become due and payable.
Section 5.11 RECORDS. BORROWER shall keep or cause to be kept accurate
records concerning its business and shall maintain or cause to be maintained a
system of accounting and proper books of record and account in accordance with
general accepted accounting principles applicable to the particular entity, and
will set aside on its books all proper and adequate reserves for taxes,
depreciation, depletion,
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obsolescence, loan losses, amortization, contract cancellations, defaults, or
other breaches of contract, and otherwise as may be appropriate in accordance
with said principles.
Section 5.12 CERTIFICATES. On a quarterly basis, and at such other
times as BANK shall request, BORROWER shall supply to BANK a written certificate
as to the following:
(i) that there does not exist any default or Event of Default,
or any condition or event which, with the giving of notice or the
passage of time, or both, would constitute such an Event of Default,
under the Agreement, the Note, or any other Loan Documents;
(ii) that all representations, warranties and covenants
contained in this Agreement and the other Loan Documents remain true
and accurate through the date of such certificate, except as may be
noted and acceptable to BANK;
(iii) that all conditions precedent to BANK'S obligation to
make advances under the Loan have been and remain fully satisfied; and
(iv) that all of the Collateral is in good repair and useful
in BORROWER'S business.
Section 5.13 NOTICE OF ADVERSE EVENTS. BORROWER shall promptly notify
BANK of the filing of any notice, suit, claim, action, proceeding, or
investigation in or by any court or by any governmental authority in which an
adverse decision reasonably could be expected to have a material adverse effect
upon the BORROWER, and shall
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promptly notify BANK of the occurrence of any material adverse order, judgment,
settlement, determination, or other adverse event, or of any default or Event of
Default or any condition or event which, with the giving of notice or the
passage of time, or both, would constitute such an Event of Default, under this
Agreement or under any of the other Loan Documents. BORROWER also shall promptly
notify BANK of the occurrence of any other condition or event which could have a
material adverse effect upon it.
Section 5.14 YEAR 2000 COMPLIANCE. On or prior to the date hereof (the
"Compliance Date"), Borrower shall have taken all actions necessary to ensure
that the automated systems used by Borrower that are material to its operations
(collectively, "Mission-Critical Systems"), including, without limitation,
software, hardware and other data processing devices, shall not fail,
malfunction or produce incorrect results with respect to data, calculations and
other processing involving dates before, as of or after December 31, 1999,
regardless of the form the date data is received or processed (collectively
"Year 2000 Compliant" or "Year 2000 Compliance"). Without limiting the
generality of the foregoing, on or prior to the Compliance Date, Borrower shall
test and certify that its Mission-Critical Systems are Year 2000 Compliant in
accordance with commercially reasonable practices and industry standards.
Borrower agrees that upon the reasonable request of Bank, Borrower will make its
employees, consultants, premises, records and documentation available to Bank
with respect to Borrower's Year 2000 Compliance efforts.
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ARTICLE VI
NEGATIVE COVENANTS
BORROWER covenants and agrees that from the date hereof until payment
in full of the Loan, and any other indebtedness and Liabilities, and the
termination of this Agreement, unless BANK shall otherwise consent in writing,
BORROWER will not either directly or indirectly:
Section 6.01 CASH FLOWS-TO-CURRENT MATURITIES OF LONG-TERM DEBT. Cause
or allow the ratio of BORROWER'S cash flows-to-current maturities of long-term
debt to be less than 1.3:1. As used in this Section, "CASH FLOWS" means net
profits less dividends, plus lease expense and depreciation and any other
expenses which would be classified as non-cash expenses in accordance with
generally accepted accounting principles and "CURRENT MATURITIES OF LONG TERM
DEBT" means the outstanding principal balance of indebtedness and lease expense
due within twelve (12) months.
Section 6.02 CONSOLIDATED NET WORTH. Cause or allow BORROWER'S
Consolidated Tangible Net Worth to be less than $14,800,000. As used herein,
"CONSOLIDATED TANGIBLE NET WORTH" means an amount equal to the Shareholders'
equity of the BORROWER (including capital stock, capital surplus and retained
earnings, but excluding any unpaid amounts due for sale of stock) less (i) the
book value of any shares of common stock of the BORROWER held by the BORROWER
and treated as an asset in computing such stockholder's equity, (ii) all
unamortized debt costs, patents, tradenames, licenses, franchises, good will
and other intangible assets, (iii) the aggregate balance of loans, notes
receivable, accounts receivable and other
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advances to and or owing from BORROWER'S affiliates, subsidiaries, shareholders,
employees officers, directors or any other related entity, and (iv) taxes, the
payment of which has been deferred. All financial ratios in this Agreement shall
be determined on a combined basis in accordance with generally accepted
accounting principles applied on a consistent basis.
Section 6.03 NO ENCUMBRANCES ON COLLATERAL. BORROWER shall not pledge,
mortgage, sell, assign or create, or suffer to exist a security interest in
Collateral in favor of any person other than BANK.
Section 6.04 MANAGEMENT; OWNERSHIP. Cause or allow any material change
in the ownership or senior management of BORROWER, including without limitation
any change in the officers of the BORROWER at or above the level of its vice
president.
Section 6.05 DEBT-TO-TANGIBLE NET WORTH. Cause or allow the BORROWER'S
ratio of total debt (defined as all of BORROWER'S Indebtedness and Liabilities
to whomsoever the same may be owing, whether now or hereafter existing, created
or arising, absolute or contingent, direct or indirect, joint or several,
including without limitation, all indebtedness under the Loan)-to-Consolidated
Tangible Net Worth (as defined in Section 6.02 hereof) to be greater than 2:1.
Section 6.06 LOANS TO RELATED PARTIES. Cause or allow BORROWER'S loans
or other advances to BORROWER'S shareholders, officers, partnerships,
subsidiaries, affiliates, directors or other related entities to exceed
$2,000,000 at any time outstanding.
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ARTICLE VII
CONDITIONS
BANK'S obligation to make the Loan available to BORROWER, and to make
any advance thereunder, is subject to the full satisfaction of the following
conditions precedent:
Section 7.01 NO DEFAULT. There shall not exist any default or Event of
Default, or any condition or event which, after notice or lapse of time or both,
would constitute such an Event of Default hereunder or under any other Loan
Documents.
Section 7.02 OPINION OF COUNSEL. BANK shall have received from counsel
to BORROWER a favorable opinion in satisfactory scope and form as to all matters
reasonably requested by BANK.
Section 7.03 DELIVERY OF DOCUMENTS. Delivery to BANK of the purchase
orders and Certificates of Title for the Collateral to be purchased with the
proceeds of the requested advance, the duly-executed Note and Guaranty, and all
other documents or instruments which BANK shall require in connection with
making the Loan.
Section 7.04 TERMS AND CONDITIONS. Continued fulfillment and
satisfaction through the date hereof and as of the date of any requested advance
of all the terms, representations, warranties, conditions and covenants hereof.
Section 7.05 OFFICER'S CERTIFICATE. BANK shall have received a
certificate of the President or other officer authorized by resolution of
BORROWER stating that all representations and warranties contained in this
Agreement and all other Loan Documents are and remain true and accurate as of
the date of such advance and that
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there exists no default or Event of Default hereunder or under any other Loan
Document, or any condition or event which, with the giving of notice or the
passage of time, or both, would become an Event of Default hereunder or under
any other Loan Document.
ARTICLE VIII
DEFAULT AND REMEDIES ON DEFAULT
Section 8.01 EVENTS OF DEFAULT; Acceleration. At the option of BANK
and notwithstanding any time or credit allowed by any instrument evidencing any
of the Liabilities, any or all of the Liabilities of BORROWER or any other
person to BANK hereunder shall immediately become due and payable upon the
occurrence of any of the following events of default ("EVENTS OF DEFAULT"),
without notice or demand to BORROWER, Guarantor, or any other person: (a)
default in the payment or performance, when due or payable, of any of the
Liabilities of BORROWER or any other person or entity, or of any endorser or
Guarantor for any of the Liabilities of BORROWER or any other person or entity
to BANK or the occurrence of any Event of Default under any Loan Document; (b)
failure of BORROWER to pay any tax; (c) if any representation or warranty
contained herein is or becomes inaccurate or if BORROWER or Guarantor have made,
or hereafter make any misrepresentation to BANK for the purpose of obtaining
credit or an extension of credit; (d) failure of BORROWER to furnish or cause to
be furnished financial information or to permit or cause to be permitted the
inspection of books or records; (e) issuance of an injunction or
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attachment against property of BORROWER or any Guarantor; (f) calling of a
meeting of creditors, appointment of a committee of creditors or liquidating
agents, or offering of a composition or extension to creditors by, for or of
BORROWER or any endorser or Guarantor of any of the Liabilities of BORROWER to
BANK; (g) insolvency of BORROWER or any endorser or Guarantor of any of the
Liabilities of BORROWER to BANK; (h) such a material change in the condition or
affairs (financial or otherwise) of BORROWER or of any endorser or Guarantor of
any of the Liabilities of BORROWER to BANK as in the opinion of BANK impairs
BANK'S security or increases its risk; (i) failure by BORROWER or any Guarantor
to comply with any of the provisions of this Agreement; (j) failure to make any
payments required by this Agreement; (k) default shall be made with respect to
any Indebtedness (other than the Note) of the BORROWER or the Guarantor, when
due, or the performance of the other obligation incurred in connection with any
Indebtedness for borrowed money of the BORROWER, or the Guarantor, if the effect
of such default is to accelerate the maturity of such Indebtedness or to permit
the holder thereof to cause such Indebtedness to become due prior to its stated
maturity, or any such Indebtedness shall not be paid when due; or (1) if there
shall occur any default or Event of Default, or any condition or event which
with the giving of notice or the passage of time, or both, would become an Event
of Default, under, pursuant to or with respect to any Indebtedness or loan
transaction or any document or instrument evidencing, securing, guaranteeing, or
relating to any Indebtedness or loan transaction of BORROWER.
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Section 8.02 RIGHTS UPON DEFAULT. Upon the occurrence of any one or
more of the above Events of Default and at any time thereafter, such default not
having previously been cured, BANK shall have, in addition to all other rights
and remedies, the remedies of a secured party under the Alabama Uniform
Commercial Code, regardless whether the Code has been enacted in the
jurisdiction where rights or remedies are asserted, including without
limitation, the right to take possession of the Collateral, and for that purpose
BANK may, so far as BORROWER or Guarantor can give authority therefor, enter
upon any premises on which the Collateral may be situated and remove the same
therefrom or store the same on the premises pending disposition. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, BANK shall give to BORROWER at
least five (5) days' prior written notice of the time and place of any public
sale of Collateral or of the time after which any private sale or any other
intended disposition is to be made. Upon fifteen (15) days' prior written notice
to BORROWER, BANK may at any time in its discretion transfer any securities or
other property constituting Collateral into its own name or that of its nominee
and receive the income thereon and hold the same as security for Liabilities or
apply it on principal or interest due on Liabilities. Insofar as Collateral
shall consist of insurance policies, instruments, chattel paper, choices in
action or the like, BANK may demand, collect, receipt for,- settle, compromise,
adjust, sue for, foreclose or realize upon Collateral, as BANK may determine,
whether or not Liabilities or Collateral are then due, and for the purpose of
realizing BANK'S rights therein, BANK may receive, open and dispose of
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mail addressed to BORROWER and endorse notes, checks, drafts, money orders,
documents of title or other evidences of payment, shipment or storage or any
form of Collateral on behalf of and in the name of BORROWER. The enumeration of
the foregoing rights is not intended to be exhaustive, and the exercise of any
right shall not preclude the exercise of any other rights, all of which shall be
cumulative. As against the obligations secured hereby, BORROWER hereby expressly
waives all claims and all rights to claim any exemptions, both as to personal
and real property, allowed or allowable under the Constitution or laws of the
United States, the State of Alabama or any other jurisdiction. Any notice to
BORROWER of sale, disposition or other intended action by BANK, required by law
to be given to BORROWER, sent to BORROWER at the address of BORROWER shown
hereinabove or at such other address of BORROWER as may from time to time be
shown on BANK'S records, at least five days prior to such action, shall
constitute reasonable notice to BORROWER.
Section 8.03 POWER OF ATTORNEY. BORROWER hereby requests, authorizes and
empowers Billy V. Houston, or any other officer or employee of BANK who may be
designated by BANK for that purpose to make, execute and file, any financing
statements, documents or certificates of title, or other documents, and to take
any and all such other steps as BANK deems necessary or desirable to perfect and
continue the perfection of BANK'S security interest in the Collateral. No
failure by BANK to exercise for any period the powers herein granted shall
operate or be construed as a waiver of BANK'S rights thereafter to exercise such
authorizations and powers. The foregoing power of attorney is coupled with an
interest and shall be irrevocable so long
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as any Liabilities or Indebtedness hereunder, under the Note, or under the other
Loan Documents remain outstanding.
Section 8.04 SET OFF. BANK hereby is given a continuing lien as
security for BORROWER'S obligations hereunder upon any and all moneys,
securities and other property of BORROWER, and the proceeds thereof, now or
hereafter held or received by or in transit to BANK from or for BORROWER,
whether for safekeeping, custody, pledge, transmission, collection or otherwise,
and also upon any and all deposit balances, general or special, and credits of
BORROWER with, and any and all claims of BORROWER against BANK at any time
existing, and upon an Event of Default hereunder, BANK may apply or set off the
same against the Liabilities hereby secured.
ARTICLE IX
MISCELLANEOUS
Section 9.01 WAIVERS. BORROWER hereby waives demand, notice, protest,
notice of acceptance of this Agreement, notice of loans made, credit extended,
Collateral received or delivered or other action taken in reliance hereon and
all other demands and notices of any description. With respect both to
Liabilities and Collateral, BORROWER assents to any extension or postponement of
the time of payment or any other indulgence, to any substitution, exchange or
release of any Collateral which may now or hereafter secure Liabilities, to the
addition or release of any party or person primarily or secondarily liable, to
the acceptance of partial payments hereon and to the settlement, compromise or
adjustment of any thereof, all
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in such manner and at such time or times as BANK may in its sole discretion deem
advisable. BANK shall have no duty as to the collection or protection of any
Collateral or any income thereon, nor as to the preservation of rights against
prior parties, nor as to the preservation of any rights pertaining thereto
beyond the safe custody thereof. BANK may exercise its rights with respect to
any Collateral without resorting or regard to other Collateral or sources of
reimbursement for Liabilities. BANK shall not be deemed to have waived any of
its rights upon or under Liabilities or Collateral unless such waiver is in
writing and signed by BANK. No delay or omission on the part of BANK in
exercising any right shall operate as a waiver of such right or any other right.
A waiver on any one occasion shall not be construed as a bar to or waiver of any
right on any future occasion. All rights and remedies of BANK with respect to
Liabilities or Collateral, whether evidenced hereby or by any other instrument,
shall be cumulative and may be exercised separately or concurrently.
Section 9.02 EXPENSES; PROCEEDS OF COLLATERAL. BORROWER shall pay to
BANK on demand any and all expenses, including reasonable attorneys' fees,
incurred or paid by BANK in collecting or otherwise protecting or enforcing or
attempting to collect, protect or enforce its rights upon or under Liabilities
or Collateral. After deducting all of said expenses, the residue of any proceeds
of collection or sale of Liabilities or Collateral shall be applied to the
payment of principal or interest on Liabilities, in such order of preference as
BANK may determine with proper allowance for interest on Liabilities not then
due being made, and any excess shall be returned to BORROWER and BORROWER shall
remain liable for any deficiency.
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Section 9.03 AMENDMENT. No modification or amendment of this
Agreement shall be effective unless placed in writing and duly executed by the
BORROWER and the BANK. By guaranteeing the Liabilities described herein,
Guarantor expressly agrees that BORROWER and BANK may, without notice to or
consent by Guarantor, modify or amend this Agreement. Neither party shall be
obligated in any respect to extend the termination date hereof.
Section 9.04 GENERAL. Any demand upon or notice that BANK may elect
to give to BORROWER and any notice required to be given to BANK shall be
effective three (3) days after the same has been deposited in the United States
mail, first class with postage prepaid and addressed to such party at the
following addresses, as applicable, if such party has notified BANK in writing
of a change of address, to the last address so notified:
IF TO BORROWER: Boyd Brothers Transportation
Company, Inc.
Route 1, Box 40
Clayton, Alabama 36016
IF TO BANK: Compass Bank
223 E. Broad Street
Eufaula, Alabama 36027
Attention: City Executive
with a copy to: Don Owens
Vice President - Loan Administration
Compass Bank
P. 0. Box 10566
Birmingham, Alabama 35296
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Demands or notices addressed to BORROWER'S address at which BANK customarily
communicates with BORROWER, shall also be effective. If at any time or times by
assignment or otherwise BANK transfers any of the Liabilities or Collateral
therefor, such transfer shall include BANK'S power and rights under this
Agreement with respect to the Liabilities or Collateral transferred, and the
transferee shall become vested with said powers and rights whether or not they
are specifically referred to in the transfer. If and to the extent BANK retains
any of the Liabilities or Collateral, BANK will continue to have the rights and
powers herein set forth with respect thereto. This Agreement shall bind and
inure to the benefit of the parties hereto and their respective successors,
assigns, heirs, personal representatives, and estates; provided, however, that
BORROWER shall not assign or delegate any of its rights or obligations hereunder
without the express written consent of BANK. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but when
taken together shall constitute one agreement. This Agreement is being executed
under the seal of the parties hereto and is intended to constitute and have
effect as a sealed instrument according to law.
Section 9.05 Governing Law; Jurisdiction. This Agreement, the Note,
the Security Agreement and the other Loan Documents, and the rights and the
obligations of the parties hereunder and thereunder, shall be governed by and be
construed in accordance with the laws of the State of Alabama. BORROWER
acknowledges that the negotiation of the provisions of the Note, this Agreement,
the Security Agreement, and all other Loan Documents took place in the State of
Alabama; that all of such
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documents were executed in Jefferson County, Alabama, or if executed elsewhere,
will be or were delivered to BANK in said county and state subject to BANK'S
acceptance thereof in Birmingham, Jefferson County, Alabama, and that all of
such documents were or will be executed and delivered to BANK to induce BANK to
extend the Loan to BORROWER. BANK shall be under no obligation to give BORROWER
notice of acceptance of any Loan Documents for said documents and instruments to
become effective. BORROWER acknowledges further that the negotiation, execution
and delivery of this Agreement, the Note, the Security Agreement and the other
Loan Documents constitutes the transaction of business within the State of
Alabama and that any cause of action arising under any of said documents will be
a cause of action arising from such transaction of business. BORROWER hereby
submits itself to jurisdiction in the State of Alabama for any cause of action
or action arising out of or in connection with this Agreement, the Note, or any
of the other Loan Documents, and agrees that venue for any such action shall be
in Jefferson County, Alabama, and waives any and all rights under the laws of
any state to object to jurisdiction or venue within Jefferson County, Alabama.
Notwithstanding the foregoing, nothing contained in this Section 9.05 shall
prevent BANK from bringing any action or exercising any rights against BORROWER,
any security for the Loan or against any of BORROWER'S properties in any other
state or jurisdiction. Initiating any such action or proceeding or taking any
such action in any other state shall in no event constitute a waiver by BANK of
any of the foregoing.
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Section 9.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All
covenants, agreements, representations, and warranties made herein and in the
certificates delivered pursuant hereto shall survive the making by the BANK of
the Loan herein contemplated and the execution and delivery to the BANK of the
Note evidencing such Loan and shall continue in full force and effect so long as
the Note is outstanding and unpaid. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises, and
agreements by or on behalf of the BORROWER which are contained in this Agreement
shall bind the successors and assigns of BORROWER and inure to the benefit of
the successors and assigns of the BANK; provided, however, that BORROWER shall
not assign or delegate this Agreement, the Loan, or its rights, duties, or
obligations hereunder without the written consent of BANK.
Section 9.07 NO CONFLICT, ETC. No provision of this Agreement or of the
Note or the other Loan Documents shall be deemed in conflict with any other
provision thereof, and the BORROWER acknowledges that no such provisions or any
interpretation thereof shall be deemed to diminish the rights of the BANK, any
assignee, or the holder or holders of the Note under the terms and conditions or
any other provisions thereof. BANK may at its option exhaust its remedies
hereunder, under the Note, and under the other Loan Documents, either
concurrently or independently, and in such order as it may determine.
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Section 9.08 HEADINGS; UNDER SEAL; ENTIRE AGREEMENT; NO THIRD PARTY
BENEFICIARY. Article and section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement or be used to construe any provision hereof or for any other purpose.
This Agreement is intended to be under the seal of all parties hereto and to
have the effect of a sealed instrument in accordance with the law. This
Agreement, together with the other Loan Documents, embodies the entire agreement
and understanding between the parties, supersedes all prior agreements and
understandings related to the Loan, and may not be amended except by written
agreement between BORROWER and BANK. This Agreement shall not benefit, and may
not be relied upon by, any person other than the persons who sign this
Agreement. There are no third party beneficiaries to this Agreement or any
negotiations, statements, or representations related to this Agreement.
Section 9.09 NO PARTNERSHIP OR JOINT VENTURE. Notwithstanding anything
to the contrary herein contained or implied, BANK, by this Agreement, or by any
action pursuant thereto or hereto, shall not be deemed a partner, joint
venturer, or participant in the venture with BORROWER, and BORROWER hereby
indemnifies and agrees to defend and hold BANK harmless (including the payment
of reasonable attorneys' fees) from any and all damages resulting from such a
construction of the parties' relationship. The requirements herein, and the
restrictions imposed in this Agreement, are for the sole protection and benefit
of BANK.
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Section 9.10 INDEMNIFICATION. BORROWER shall indemnify and hold
harmless BANK from and against any and all claims, charges, losses, expenses and
costs, including reasonable attorneys' fees, resulting from any claims, actions
or proceedings in connection with the execution, delivery and performance of
this Agreement, the Note, and other Loan Documents. The indemnification provided
in this section shall survive the payment in full of the Loan.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be duly executed by their duly authorized officers as of the date
first set forth above.
BORROWER:
WITNESS: BOYD BROTHERS TRANSPORTATION
COMPANY, INC.
/s/ Gail Cooper By: /s/ Richard C. Bailey
- ----------------------------- ------------------------------------
Its: Richard C Bailey - CFO/Exec VP
BANK:
WITNESS: COMPASS BANK
/s/ By: /s/ Billy V. Houston
- ----------------------------- ----------------------------------
Its: Billy V. Houston-City President
-------------------------------
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EXHIBIT 10.2
COMPASS BANK
SECURITY AGREEMENT
KNOW ALL MEN BY THESE PRESENTS: That
WHEREAS, BOYD BROTHERS TRANSPORTATION COMPANY, INC., an Alabama
corporation ("DEBTOR") is, contemporaneously with the execution hereof, becoming
indebted to COMPASS BANK (the "BANK"), on loan in the principal amount of TEN
MILLION AND NO/100 DOLLARS ($10,000,000.00), or so much thereof as may be
advanced under the Note as hereafter defined (the "LOAN"), as evidenced by one
or more Promissory Notes of various dates, payable to Bank with interest thereon
and as provided therein (each a "NOTE" and collectively, the "NOTES"), and as
secured by a Credit and Security Agreement from Debtor to Bank (the "LOAN
AGREEMENT") and the other Loan Documents defined therein (the "LOAN
DOCUMENTS"); and
WHEREAS, Debtor may hereafter become indebted to Bank or a subsequent
holder of this Security Agreement on loans or otherwise (said Bank and any
subsequent holder of this Security Agreement being referred to herein as
"SECURED PARTY"); and
WHEREAS, Debtor agrees to make this Security Agreement (the
"AGREEMENT") to further secure said Notes and any and all other future or
additional Liabilities of Debtor to Secured Party (said Liabilities, as defined
in paragraph 5, being referred to herein as "LIABILITIES").
NOW, THEREFORE, the undersigned Debtor, in consideration of making the
Loan, and to secure the prompt payment of same, with the interest thereon, and
any extensions, modifications, or renewals of same, and any and all Liabilities
of Debtor to Secured Party, and further to secure the performance of the
covenants, conditions, and agreements hereinafter set forth and set forth in the
Note, and as may be set forth in the Loan Agreement and other Loan Documents or
other instruments evidencing or securing other Liabilities of Debtor to Secured
Party, and further to secure any and all charges incurred by Secured Party on
account of Debtor, including but not limited to attorney's fees, does hereby
agree as follows:
1. DEFINITIONS. All terms used herein which are defined in the Alabama
Uniform Commercial Code (the "CODE") shall have the same meaning herein as in
the Code unless otherwise indicated herein.
2. INCORPORATION BY REFERENCE. All of the terms and provisions of the
Note are hereby incorporated by reference as though set forth in full herein.
<PAGE> 2
3. SECURITY INTERESTS. Debtor hereby grants to Secured Party title to
and a security interest in the Collateral described in paragraph 4 hereof to
secure the performance and payment of the Liabilities described in paragraph 5
hereof.
4. COLLATERAL. As security for the payment and performance of all
Liabilities of the Debtor, Debtor grants Secured Party title to and a security
interest in the following described property of the Debtor (herein collectively
referred to as the "COLLATERAL"):
4.01 Equipment. The items of personal property described on Exhibit
"A" hereto and all equipment and other personal property of every nature
whatsoever now or hereafter owned by the Debtor and purchased with the proceeds
of the Loan, wheresoever the same may be located.
4.02 Proceeds. Proceeds (including insurance, contract and tort
claims) and products of all of the foregoing Collateral.
5. LIABILITIES. "LIABILITIES" of Debtor, as used herein, shall mean:
5.01 Notes. The Notes, with interest as therein provided, and all
extensions, modifications, or renewals thereof.
5.02 Other Indebtedness. Any and all other obligations,
indebtedness, and liabilities of the Debtor to the Secured Party, whether joint
or several, due or to become due, liquidated or unliquidated, now existing or
hereafter arising, absolute or contingent, direct or indirect, and all
extensions, modifications, and renewals thereof, and whether incurred or given
as maker, endorser, guarantor, surety, or otherwise.
6. REPRESENTATIONS, WARRANTIES, AND COVENANTS. The Debtor hereby
represents, warrants, and covenants as follows:
6.01 No Adverse Liens. Except for any security interest specifically
set forth on an addendum attached hereto, and except for the security interest
granted hereby, the Debtor is or (with respect to Collateral not presently owned
by Debtor will be) the lawful owner of all Collateral free from any adverse
lien, security interest, or encumbrance, and shall have full right to pledge,
sell, assign, or transfer the same to Secured Party. Debtor will defend the
Collateral against all claims and demands of all persons at any time claiming
the same or any interest therein.
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<PAGE> 3
6.02 Financing Statements. No financing statement covering any
Collateral or any proceeds thereof is on file in any public office, except for
financing statements specifically set forth on an addendum attached hereto, if
any, and except for the financing statements executed by Debtor and Secured
Party. At the Secured Party's request, the Debtor will join with Secured Party
in executing one or more financing statements pursuant to the Code in form
satisfactory to the Secured Party, and will pay the cost of filing the same in
all public offices wherever filing is deemed by the Secured Party to be
necessary or desirable. The Debtor authorizes the Secured Party to prepare and
to file financing statements covering the Collateral signed only by the Secured
Party and to sign the Debtor's signature to such financing statements in
jurisdictions where Debtor's signature is required. The Debtor promises to pay
the Secured Party the fees incurred in filing the financing statements, which
fees shall become part of the Liabilities secured by this Agreement.
6.03 Inspection of Collateral and Records. The Secured Party may
examine and inspect the Collateral and records and documents related to the
Collateral at any time, wherever located.
6.04 Assignment or Sale. Debtor, its agents, servants, or employees
will not sell, assign, or offer to sell or assign or otherwise transfer the
Collateral, either in whole or in part, or any interest therein without the
written consent of the Secured Party.
6.05 Payment of Taxes and Insurance. Debtor will pay promptly all taxes
and assessments upon or with respect to the Collateral. Debtor hereby authorizes
Secured Party to discharge taxes, assessments, liens, security interests, or
other encumbrances at any time levied or placed on the Collateral, to pay for
any insurance on the Collateral required to be maintained by Debtor hereunder,
and to pay for, make, or provide for any maintenance, repair, or preservation of
the Collateral as the Secured Party shall deem reasonably necessary to preserve
its interests; provided, however, that Secured Party shall be under no
obligation to do so. Debtor agrees to reimburse Secured Party on demand with
interest at the rate set forth in the Note for any payment made or any expense
incurred by Secured Party pursuant to the foregoing authorization. Payments made
or expenses incurred by Secured Party pursuant to the foregoing authorization
shall be included in the Liabilities secured hereunder.
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<PAGE> 4
6.06 Additional Representations of Debtor (Collateral). With respect to
all of the Collateral:
6.06(a) Such Collateral is used or bought primarily for
business purposes.
6.06(b) Such Collateral is being acquired with the proceeds of
the Note.
6.06(c) All such Collateral will be kept at the address of
Debtor shown below Debtor's signature. Debtor will promptly notify
Secured Party of any change in the location of the Collateral.
Except for transactions in the ordinary course of Debtor's trucking
business, Debtor, its agents or employees will not remove such
Collateral from said location without the prior written consent of
the Secured Party.
6.06(d) If certificates of title are issued or outstanding
with respect to such Collateral, the Debtor will cause the Secured
Party's interest to be properly noted thereon.
6.06(e) Debtor has and will maintain insurance on such
Collateral to the extent and against such hazards and liabilities as
is commonly done by companies of like nature, similarly situated,
including but not limited to public liability, theft, fire (with
extended coverage) insurance, and in the case of motor vehicles,
collision insurance, all containing such terms and for such periods
as may be reasonably satisfactory to the Secured Party; provided,
however, that Debtor may self-insure the Collateral against physical
damage up to an aggregate of $500,000 and provide insurance against
catastrophic loss thereof in excess of such self-insurance amount.
All such insurance will be maintained with insurance companies
reasonably acceptable to the Secured Party and will be payable to
the Secured Party and to the Debtor as their interests may appear.
All insurance policies shall provide for a minimum of ten (10) days'
written cancellation notice to the Secured Party and, at the Secured
Party's request, all policies shall be delivered to and held by the
Secured Party. If at any time the Secured Party is of the opinion
that the Debtor's insurance
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<PAGE> 5
coverage is inadequate, the Debtor will, within ten (10) days after
written request by the Secured Party, obtain such insurance as the
Secured Party shall reasonably request. Secured Party is hereby made
attorney-in-fact for Debtor to obtain, adjust, and settle, in its
sole discretion, such insurance and to endorse any drafts or checks
issued in connection with such insurance.
6.06(f) Debtor agrees to prevent and protect against any
waste, damage, or destruction of such Collateral, and Debtor will
maintain the same in as good condition as it now is in, ordinary and
reasonable wear and tear excepted.
6.07 Name of Debtor. Debtor's name has always been as set forth on
the first page of this Agreement, except as otherwise disclosed in writing
to the Secured Party. Debtor will promptly advise the Secured Party in
writing of any change in Debtor's name.
7. SET OFF. The Secured Party is hereby given a continuing lien as
additional security for the Liabilities hereunder upon any and all monies,
securities, and other property of Debtor, and the proceeds thereof, now or
hereafter held or received by or in transit to the Secured Party from or for
Debtor, whether for safekeeping, custody, pledge, transmission, collection, or
otherwise, and also upon any and all deposit balances (general or special) and
credits of Debtor with, and any and all claims of Debtor against, the Secured
Party at any time existing, and upon an event of default hereunder, the Secured
Party may apply or set off the same against the Liabilities hereby secured.
8. EVENTS OF DEFAULT. Debtor shall be in default under this Agreement
upon the happening of any of the following events or conditions which is not
completely cured within any specific time period provided in any Loan Document:
8.01 Any Event of Default or failure to perform any obligation,
covenant, or liability contained or referred to herein, in the Notes, the
Loan Agreement, or any other Loan Document.
8.02 Assignment, transfer, or encumbrance or any unreimbursed loss,
theft, damage or destruction to or of any part of the Collateral (except
for sales or encumbrances of Collateral expressly authorized by the terms
of this Agreement), or any levy, seizure, injunction, or attachment
thereon.
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<PAGE> 6
9. BIGHTS AND REMEDIES UPON DEFAULT. Upon occurrence of any of the
above events of default, the Secured Party shall have the following rights which
shall be cumulative with all other rights and remedies of Secured Party:
9.01 Acceleration and Other Rights. The right to declare all
Liabilities secured hereby to be immediately due and payable without
notice to or demand upon the Debtor or any other person. The Secured
Party, in addition to any remedies it may exercise under this Security
Agreement, the Note, under other documents executed in connection with the
Liabilities secured hereby, or under applicable law, may immediately and
without demand, exercise any and all of the rights of a secured party upon
default under the Alabama Uniform Commercial Code, all of which shall be
cumulative. Such rights shall include, without limitation:
9.01(a) The right to take possession of the Collateral
without judicial process and to enter upon any premises where the
Collateral may be located for the purposes of taking possession of,
securing, removing, and/or disposing of the Collateral without
interference from the Debtor and without any liability for rent,
storage, utilities or other sums.
9.01(b) The right to sell, lease, or otherwise dispose of any
or all of the Collateral, whether in its then condition or after
further processing or preparation, at public or private sale. Unless
the Collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market, the
Secured Party shall give the Debtor at least five (5) days' prior
notice of the time and place of any public sale of the Collateral or
of the time after which any private sale or other intended
disposition of the Collateral is to be made, all of which the Debtor
agrees shall be reasonable notice of any sale or disposition of the
Collateral.
9.01(c) Upon request of Secured Party, Debtor shall assemble
and make the Collateral available to Secured Party at a place
reasonably convenient to Debtor and Secured Party.
9.02 Attorney-in-Fact. To effectuate the rights and remedies of the
Secured Party upon default, Debtor does hereby irrevocably appoint Secured
Party attorney-in-fact for the Debtor, with full power of
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<PAGE> 7
substitution to, after default of Debtor, sign, execute, and deliver any and all
instruments and documents and do all acts and things to the same extent as
Debtor could do, and to sell, assign, and transfer any Collateral to Secured
Party or any other party.
9.03 Receiver. Secured Party shall have the right to apply for and have
a receiver appointed by a court of competent jurisdiction, in connection with
any action taken by the Secured Party to enforce its rights and remedies
hereunder, to manage, protect, and preserve the Collateral and continue the
business of the Debtor, to collect all revenues and profits thereof, and to
apply the same to the payment of all expenses and other charges of such
receivership, including but not limited to the compensation of the receiver, and
to the payment of Liabilities secured hereby, until a sale or other disposition
of such Collateral shall be finally made and consummated, or until all
Liabilities secured hereby shall have been paid.
9.04 Proceeds of Sale; Deficiency. The proceeds of any sale or other
disposition of Collateral by the Secured Party shall be applied first to the
expenses (including, but not limited to legal expenses and reasonable attorneys'
fees) of retaking, holding, storing, and processing the Collateral and preparing
the Collateral for sale, selling and the like and collecting or attempting to
collect the Liabilities secured by this Agreement; then to the satisfaction of
the Liabilities secured hereby with the application of such proceeds to
particular Liabilities or to interest or principal as the Secured Party, in its
sole discretion, shall determine; and the balance, if any, to be paid to Debtor
or to be paid as otherwise provided by Law. The enumeration of the foregoing
rights is not intended to be exhaustive, and the exercise of any right shall not
preclude the exercise of any other rights, all of which shall be cumulative.
Debtor agrees that any delay by the secured party in exercising any right or
remedy hereby granted shall not be construed as a waiver by the Secured Party of
any of its rights or remedies hereunder. Secured Party may permit the Debtor to
remedy any default, but such shall not be a waiver of the default so remedied,
and Secured Party's waiver of any default shall not be a waiver of any
subsequent or prior defaults.
10. WAIVERS. In addition to any other waivers, as set forth herein or
in the Note, against the Liabilities secured hereby, Debtor expressly waives, to
the extent allowed by law, all claims and rights to claim any exemptions allowed
or allowable under the Constitution or laws of the United States, the State of
Alabama, or any other jurisdiction. All rights and remedies of Secured Party
hereunder or with respect to Liabilities or Collateral shall be cumulative, and
in addition to any other right
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<PAGE> 8
available to Secured Party by statute or at law or in equity, and may be
exercised singularly or concurrently. In the event that any one or more of the
terms or provisions of this Agreement or of the Note shall be invalid, illegal,
or unenforceable in any respect, the validity of the remaining terms or
provisions shall in no way be affected, prejudiced or disturbed thereby.
11. ASSIGNMENT OF LIABILITIES. If at any time or times by sale,
assignment, negotiation, pledge, or otherwise, Secured Party transfers any or
all of the Liabilities, such transfer shall, unless otherwise specified in
writing, carry with it Secured Party's rights and remedies under this Agreement
with respect to such Liabilities transferred, and the transferee shall become
vested with such rights and remedies whether or not they are specifically
referred to in the transfer. If and to the extent Secured Party retains any of
the Liabilities, Secured Party shall continue to have the rights and remedies
herein set forth with respect thereto.
12. NOTICES. Any demand upon or notice to Debtor that the Secured
Party may elect to give shall be effective if hand delivered to Debtor,
deposited in the United States mail, postage prepaid, return receipt requested,
or delivered to a telegraph company addressed to Debtor at the address shown
below Debtor's signature, or if Debtor has notified the Secured Party in writing
of a change of address, to Debtor's last address so notified. Demands or notices
addressed to Debtor's address at which the Secured Party customarily
communicates with Debtor shall also be effective.
13. AGREEMENT UNDER SEAL. This Agreement is given under the seal of
all persons signing as and for the Debtor. It is intended by Debtor and all
persons signing for Debtor that this instrument is and shall constitute a sealed
instrument according to law.
14. HEADINGS. The headings of the sections, paragraphs, and
subdivisions of this Agreement are for convenience of reference only, are not to
be considered a part hereof, and shall not limit or otherwise affect any of the
terms hereof.
15. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
inure to and bind not only the parties hereto, but also their respective heirs,
executors, administrators, successors, and assigns.
16. APPLICABLE LAW. This Agreement, the Note, and the Loan Documents,
except as may otherwise be provided therein, shall be construed and governed,
and their validity determined, according to the laws of the State of Alabama.
State of Alabama.
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IN WITNESS WHEREOF, the undersigned Debtor and Secured Party have
caused this Agreement to be duly executed and delivered effective on the 16th
day of March, 1999.
ATTEST: DEBTOR:
BOYD BROTHERS TRANSPORTATION
COMPANY, INC.
By: /s/ Gail Cooper By: /s/ Richard C. Bailey
---------------------------- ----------------------------------
Its: Secretary Its: Richard C. Baily-CFO/Exec VP
------------ -----------------------------
Debtor's address: Route 1, Box 40
Clayton, Alabama 36016
WITNESS: SECURED PARTY:
COMPASS BANK
/s/ By: /s/ Billy V. Houston
- -------------------------------- --------------------------------
Its:Billy V. Houston-City
President
-----------------------------
Secured Party's address: 223 E. Broad Street
Eufaula, Alabama 36027
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STATE OF ALABAMA )
COUNTY OF Barbour )
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that Richard C. Bailey, whose name as CFO/Exec VP of BOYD
BROTHERS TRANSPORTATION COMPANY, INC., an Alabama corporation, is signed to the
foregoing instrument, and who is known to me, acknowledged before me on this day
that, being informed of the contents of the above and foregoing instrument, he,
as such officer and with full authority, executed the same voluntarily for and
as the act of said corporation.
Given under my hand and official seal of office this 16th day of March,
1999.
/s/ Pati K. Luciano
----------------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires: MY COMMISSION
EXPIRES JAN. 5,2002
STATE OF ALABAMA )
COUNTY OF Barbour )
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that Billy V. Houston, whose name as City President of
COMPASS BANK, an Alabama banking corporation, is signed to the foregoing
instrument, and who is known to me, acknowledged before me on this day that,
being informed of the contents of the above and foregoing instrument, he, as
such officer and with full authority, executed the same voluntarily for and as
the act of said corporation.
Given under my hand and official seal of office this 16th day of March,
1999.
/s/ Raybell Pethon
------------------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires:
10
<PAGE> 1
EXHIBIT 10.3
AMSOUTH BANK OF ALABAMA
MASTER NOTE FOR BUSINESS AND COMMERCIAL LOANS
$2,500,000.00 Montgomery, Alabama
April 9, 1999
FOR VALUE RECEIVED, the undersigned (hereinafter called, whether one or
more, the "Borrower"), jointly and severally (if more than one) promises to pay
to the order of AmSouth Bank of Alabama, its successors and assigns (hereinafter
sometimes called the "Bank" and sometimes, together with any other holder of
this note, called "Holder"), at any office of Holder or at such other place as
Holder may from time to time designate, the sum of ***Two Million Five Hundred
Thousand and 00/100*** Dollars ($2,500,000.00), or so much thereof as the
Bank has advanced to the Borrower hereunder (the "Loan"), plus interest from the
date hereof until maturity (whether by acceleration or otherwise) on the
outstanding unpaid principal balance of the Loan, at the rate of [check (1), (2)
or (3)]:
[ ] (1)_______ % per annum.
[ ] (2)_______ % per annum in excess of the prime rate of the Bank in
effect from time to time as designated by the Bank (the "Prime Rate"), with
changes in the interest rate on this note caused by changes in the Prime Rate to
take effect on the date the Prime Rate changes without notice to the Borrower or
any other action by Holder:
[X] (3) See Exhibit "A" attached hereto and by this reference becomes a
part hereto.
Interest will be computed on the basis of the actual number of days
elapsed over (check one) [X] an assumed 360-day year, [ ] a 365- (or 366-, if
leap year) day year.
If none of the foregoing provisions for a rate of interest is checked,
the rate of interest payable on the Loan until maturity (whether by acceleration
or otherwise) shall be the Prime Rate of the Bank in effect from time to time,
or such lesser rate as shall be the maximum permitted by law, computed on the
basis of the actual number of days elapsed over an assumed 360-day year.
Notwithstanding anything to the contrary contained in this note, the
amount paid or agreed to be paid as interest on the principal amount of the Loan
shall never exceed the highest lawful rate allowed under applicable law. If at
any time, interest is due to be paid in an amount that exceeds the highest
lawful rate, then the obligation to pay interest hereunder shall be reduced to
the highest lawful rate. If at any time, interest is paid in an amount that is
greater than the highest lawful rate, then the amount that exceeds the highest
lawful rate shall be deemed to have been a prepayment of principal of the Loan
and applied to principal in the manner hereinafter provided, or if the excessive
amount of interest exceeds the unpaid principal balance, the excess shall be
refunded to the Borrower.
The Borrower hereby agrees to repay principal and interest as follows:
The Borrower will pay the principal amount of the Loan (check one and
complete if applicable):
[ ] on demand, [X] 364 days after date, or
[ ]___________________________________________________________________
_______________________________________________________________________________
and will pay the interest on the Loan (check one and complete if applicable):
[ ] at maturity, [X] in monthly installments on the 9th day of each
month, and at maturity
[ ] in quarterly installments on the ___________ day of each ________,
_____________________, ___________________, and _____________________________
and at maturity, or
[ ] __________________________________________________________________
_______________________________________________________________________________
For purposes of sending periodic billing statements in advance of each
interest payment date, at the Holder's option, the Prime Rate in effect 15 days
prior to each interest payment date shall be deemed to be the Prime Rate that
continues in effect until the date prior to such interest payment date for
purposes of computing the amount of interest payable on such interest payment
date. If the Prime Rate changes during such 15-day period, the difference
between the amount of interest that in fact accrues during such period and the
amount of interest actually paid will be added to or subtracted from, as the
case may be, the interest otherwise payable in preparing the periodic billing
statement for the next succeeding interest payment date. In determining the
amount of interest payable at the final maturity or upon full prepayment of this
Master Note, all changes in the Prime Rate occurring on or prior to the day
before the final maturity date or the date of such full prepayment shall be
taken into account.
If none of the foregoing provisions for the repayment of principal
and/or interest is checked, the principal, if not checked, and interest, if not
checked, due hereunder shall be payable on demand of Holder.
If permitted under applicable law, the Borrower agrees to pay to
Holder, on demand, a late charge. This late charge will be 5% of any installment
that is not paid within 12 days after it is due and will be 5% of the interest
portion of the payment due upon the final maturity date of this note if that
payment is not paid within 12 days after it is due. This late charge will never
be less than $10 nor more than $250 on each payment. This provision shall not be
deemed to excuse a late payment or be deemed a waiver of any other right Holder
may have, including, without limitation, the right to declare the entire unpaid
principal and interest immediately due and payable.
All payments coming due on this Master Note shall be made in cash or
immediately available funds at the Holder's office at which the payment is made.
At its option, the Holder may elect to give the Borrower credit for any payment
made by check or other instrument in accordance with the Holder's availability
schedule in effect from time to time for such items and instruments, which the
Holder will make available to the Borrower on request. Each payment on the
indebtedness evidenced hereby will first reduce charges owed by the Borrower
that are neither principal nor interest. The remainder of each payment will be
applied first to accrued but unpaid interest and then to unpaid principal. Any
partial prepayments of principal will be applied to installments due in the
inverse order of their maturity and no such partial prepayment of principal will
have the effect of postponing, satisfying, reducing, or otherwise affecting any
scheduled installment before the principal of and interest on the Loan is, and
all other charges due hereunder are, paid in full.
This note is a master note, and it is contemplated that the proceeds of
the Loan evidenced hereby will be advanced from time to time to the Borrower by
Holder in installments, as requested by the Borrower and agreed to by Holder. It
is further contemplated that any amounts advanced under this note may be prepaid
from time to time by the Borrower and subsequently re-advanced by Holder, so
long as the principal amount outstanding does not exceed the face amount of this
note. By reason of prepayments hereon there may be times when no indebtedness is
owing hereunder, and notwithstanding any such occurrence, this note shall remain
valid and shall be in full force and effect as to each subsequent principal
advance made hereunder. The Holder shall maintain a record (by computer or
otherwise) of all principal advances and repayments under this Master Note and
that record shall be presumed to be correct in the absence of clear and
convincing evidence to the contrary.
Unless the Holder has otherwise agreed in writing, the Holder is not
obligated to make any advances or re-advances hereunder, and all advances and
re-advances shall be made at the option of Holder. This note shall be valid and
enforceable as to the aggregate amount advanced at any time hereunder, whether
or not the full face amount hereof is advanced.
If the Loan is payable on demand, this paragraph is inoperative and is
not applicable; otherwise, this paragraph is operative and applies to the Loan
in accordance with its terms. In the event of default in the payment of any one
or more installments of principal or interest which may become due hereunder,
when and as the same fall due, or in the payment of all of principal and
interest due hereunder at maturity, or the failure of any maker, endorser,
surety or guarantor hereof (hereinafter called the "Obligors") to pay when due
or perform any of the Obligations (meaning thereby this note and any and all
renewals and extensions thereof and all other liabilities and indebtedness of
the Borrower to Holder, now existing or hereafter incurred or arising, direct or
indirect, and however incurred) or any part thereof or the failure of any
Obligor to pay when due any other liability to Holder, in the event a default
occurs under the terms of any loan agreement or other instrument (other than
this note), document or paper evidencing, securing, guaranteeing, or executed in
connection with all or any part of the Obligations (hereinafter, together with
this note, collectively called the "Loan Documents"), or in the event Holder
shall in good faith deem itself insecure for any reason, or on the happening of
any one or more of said events, Holder shall have the right at its election and
without notice to any Obligor to declare the Obligations immediately due and
payable with interest to date. No delay in making such election shall be
construed to waive the right to make such election. Holder may note the fact of
acceleration hereon without stating the ground therefor, and whether or not
noted hereon such election to accelerate shall be effective.
<PAGE> 2
In the event of death or, insolvency of, general assignment by,
judgment against, filing of a petition in bankruptcy by or against, filing a
petition for the reorganization of, filing of application in any court for
receiver for, or issuance of a writ of garnishment or attachment in a suit or
action against any Obligor or against any of the assets of any Obligor, or on
the happening of any one or more of said events, the Obligations shall, without
notice to or demand upon any Obligor, immediately become due and payable with
interest to date unless Holder shall on notice of such event elect to waive such
acceleration by written notation hereon.
Each of the Obligors hereby severally (a) waives as to this debt or
any renewal or extension thereof all rights of exemption under the Constitution
or laws of Alabama or any other state as to personal property; (b) waives
demand (unless this note is payable on demand), presentment, protest, notice of
protest, notice of dishonor, suit against any party and all other requirements
necessary to hold any Obligor liable; (c) agrees that time of payment may be
extended one or more times for any period of time (whether such period is
shorter or longer than the initial term of this note) or renewal notes taken or
other indulgence granted without notice of or consent to such action and
without release of liability as to any Obligor; (d) as to all or any part of
the Obligations, consents to Holder's releasing, agreeing not to sue,
suspending the right to enforce this instrument against or otherwise discharging
or compromising any Obligation of any Obligor or other person against whom any
Obligor has to the knowledge of Holder a right of recourse, all without notice
to or further reservations of rights against any Obligor, and all without in
any way affecting or releasing the liability of any Obligor; (e) consents to
Holder's releasing, exchanging or otherwise dealing in any manner with all or
any portion of any collateral, lien, or right of set-off which may now or
hereafter secure this note, all without notice to or further reservations of
rights against any Obligor, and all without in any way affecting or releasing
the liability of any Obligor, even though such release, exchange or other
dealing may in any manner and to any extent impair any such collateral, lien or
right of set-off; (f) agrees to pay all costs of collecting or securing or
attempting to collect or secure this note or defending any unsuccessful claim
asserted against the Holder in connection with this note, including reasonable
attorneys' fees; and (g) warrants that this Loan is for business, commercial or
agricultural purposes.
In addition to all liens upon, and rights of set-off against, any
monies, securities, or other property of any of the Obligors given to Holder by
law, Holder shall have a lien upon and a right of set-off against all monies,
securities, and other property of any of the Obligors now or hereafter in the
possession of, or on deposit with, Holder, whether held in a general or special
account or deposit, for safekeeping, or otherwise; and every such lien and
right of set-off may be exercised without demand upon or notice to any Obligor,
and the Bank shall have no liability with respect to any of Obligor's checks or
other items which may be returned or other funds transfers which may not be made
due to insufficient funds thereafter.
The Borrower understands that the Bank may from time to time enter
into a participation agreement or agreements with one or more participants
pursuant to which such participant or participants shall be given
participations in the Loan and that such participants may from time to time
similarly grant to other participants sub-participations in the Loan. The
Borrower agrees that any participant may exercise any and all rights of
banker's lien or set-off, whether arising by operation of law or given to
Holder by the provisions of this note, with respect to the Borrower as fully as
if such participant had made the Loan directly to the Borrower. For the
purposes of this Paragraph only, the Borrower shall be deemed to be directly
obligated to each participant or subparticipant in the amount of its
participating interest in the principal of, and interest on, the Loan.
Neither any failure nor any delay on the part of Holder in exercising
any right, power or privilege under this note shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any other or
further exercise or the exercise of any other right, power or privilege. No
modification, amendment or waiver of any provisions of this note shall be
effective unless in writing and signed by a duly authorized officer of Holder,
and then the same shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on any Obligor in any case
shall entitle any Obligor to any other or further notice or demand in the same,
similar or other circumstances.
Any provision of this note which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
The provisions of this note shall inure to the benefit of the Holder,
its successors and assigns and shall be binding upon the heirs, successors and
assigns of each Obligor, except that no Obligor may assign or transfer his, her
or its obligation hereunder without the written consent of Holder.
All rights, powers and remedies of Holder under this note and now or
hereafter existing at law, in equity or otherwise shall be cumulative and may
be exercised successively or concurrently.
The Loan Documents contain the entire understanding and agreement
between the Borrower and the Holder with respect to the Loan and supersede any
and all prior agreements, understandings, promises, and statements with respect
to the Loan. This Master Note may not be modified, amended, or supplemented in
any manner except by a written agreement executed by both the Borrower and the
Holder.
This note shall be construed in accordance with and governed by the
laws of the State of Alabama.
This agreement is executed under seal by the Borrower or each of them.
CAUTION--IT IS IMPORTANT THAT YOU THOROUGHLY READ THIS CONTRACT
BEFORE YOU SIGN IT
No. 468156 702159 Boyd Brothers Transportation, Inc.
---------------------------------- ----------------------------------[SEAL]
Due April 7, 2000 By: /s/ Richard C. Bailey
---------------------------------- ----------------------------------[SEAL]
Its: CFO
----------------------------------[SEAL]
----------------------------------[SEAL]
----------------------------------[SEAL]
<PAGE> 1
EXHIBIT 10.4
AMSOUTH BANK OF ALABAMA
MASTER NOTE FOR BUSINESS AND COMMERCIAL LOANS
$1,750,000.00 Montgomery, Alabama
April 9, 1999
FOR VALUE RECEIVED, the undersigned (hereinafter called, whether one or
more, the "Borrower"), jointly and severally (if more than one) promises to pay
to the order of AmSouth Bank of Alabama, its successors and assigns (hereinafter
sometimes called the "Bank" and sometimes, together with any other holder of
this note, called "Holder"), at any office of Holder or at such other place as
Holder may from time to time designate, the sum of One Million Seven Hundred
Fifty Thousand and 00/100 Dollars ($1,750,000.00), or so much thereof as the
Bank has advanced to the Borrower hereunder (the "Loan"), plus interest from the
date hereof until maturity (whether by acceleration or otherwise) on the
outstanding unpaid principal balance of the Loan, at the rate of [check (1), (2)
or (3)]:
[ ] (1)_______ % per annum.
[ ] (2)_______ % per annum in excess of the prime rate of the Bank in
effect from time to time as designated by the Bank (the "Prime Rate"), with
changes in the interest rate on this note caused by changes in the Prime Rate to
take effect on the date the Prime Rate changes without notice to the Borrower or
any other action by Holder:
[X] (3) See Exhibit "A" attached hereto and by this reference becomes a
part hereto.
Interest will be computed on the basis of the actual number of days
elapsed over (check one) [X] an assumed 360-day year, [ ] a 365- (or 366-, if
leap year) day year.
If none of the foregoing provisions for a rate of interest is checked,
the rate of interest payable on the Loan until maturity (whether by acceleration
or otherwise) shall be the Prime Rate of the Bank in effect from time to time,
or such lesser rate as shall be the maximum permitted by law, computed on the
basis of the actual number of days elapsed over an assumed 360-day year.
Notwithstanding anything to the contrary contained in this note, the
amount paid or agreed to be paid as interest on the principal amount of the Loan
shall never exceed the highest lawful rate allowed under applicable law. If at
any time, interest is due to be paid in an amount that exceeds the highest
lawful rate, then the obligation to pay interest hereunder shall be reduced to
the highest lawful rate. If at any time, interest is paid in an amount that is
greater than the highest lawful rate, then the amount that exceeds the highest
lawful rate shall be deemed to have been a prepayment of principal of the Loan
and applied to principal in the manner hereinafter provided, or if the excessive
amount of interest exceeds the unpaid principal balance, the excess shall be
refunded to the Borrower.
The Borrower hereby agrees to repay principal and interest as follows:
The Borrower will pay the principal amount of the Loan (check one and
complete if applicable):
[ ] on demand, [ ] ___________ days after date, or
[ ]___________________________________________________________________
_______________________________________________________________________________
and will pay the interest on the Loan (check one and complete if applicable):
[ ] at maturity, [ ] in monthly installments on the ___ day of each
month, and at maturity
[ ] in quarterly installments on the ___________ day of each ________,
_____________________, ___________________, and _____________________________
and at maturity, or
[ ] __________________________________________________________________
_______________________________________________________________________________
For purposes of sending periodic billing statements in advance of each
interest payment date, at the Holder's option, the Prime Rate in effect 15 days
prior to each interest payment date shall be deemed to be the Prime Rate that
continues in effect until the date prior to such interest payment date for
purposes of computing the amount of interest payable on such interest payment
date. If the Prime Rate changes during such 15-day period, the difference
between the amount of interest that in fact accrues during such period and the
amount of interest actually paid will be added to or subtracted from, as the
case may be, the interest otherwise payable in preparing the periodic billing
statement for the next succeeding interest payment date. In determining the
amount of interest payable at the final maturity or upon full prepayment of this
Master Note, all changes in the Prime Rate occurring on or prior to the day
before the final maturity date or the date of such full prepayment shall be
taken into account.
If none of the foregoing provisions for the repayment of principal
and/or interest is checked, the principal, if not checked, and interest, if not
checked, due hereunder shall be payable on demand of Holder.
If permitted under applicable law, the Borrower agrees to pay to
Holder, on demand, a late charge. This late charge will be 5% of any installment
that is not paid within 12 days after it is due and will be 5% of the interest
portion of the payment due upon the final maturity date of this note if that
payment is not paid within 12 days after it is due. This late charge will never
be less than $10 nor more than $250 on each payment. This provision shall not be
deemed to excuse a late payment or be deemed a waiver of any other right Holder
may have, including, without limitation, the right to declare the entire unpaid
principal and interest immediately due and payable.
All payments coming due on this Master Note shall be made in cash or
immediately available funds at the Holder's office at which the payment is made.
At its option, the Holder may elect to give the Borrower credit for any payment
made by check or other instrument in accordance with the Holder's availability
schedule in effect from time to time for such items and instruments, which the
Holder will make available to the Borrower on request. Each payment on the
indebtedness evidenced hereby will first reduce charges owed by the Borrower
that are neither principal nor interest. The remainder of each payment will be
applied first to accrued but unpaid interest and then to unpaid principal. Any
partial prepayments of principal will be applied to installments due in the
inverse order of their maturity and no such partial prepayment of principal will
have the effect of postponing, satisfying, reducing, or otherwise affecting any
scheduled installment before the principal of and interest on the Loan is, and
all other charges due hereunder are, paid in full.
This note is a master note, and it is contemplated that the proceeds of
the Loan evidenced hereby will be advanced from time to time to the Borrower by
Holder in installments, as requested by the Borrower and agreed to by Holder. It
is further contemplated that any amounts advanced under this note may be prepaid
from time to time by the Borrower and subsequently re-advanced by Holder, so
long as the principal amount outstanding does not exceed the face amount of this
note. By reason of prepayments hereon there may be times when no indebtedness is
owing hereunder, and notwithstanding any such occurrence, this note shall remain
valid and shall be in full force and effect as to each subsequent principal
advance made hereunder. The Holder shall maintain a record (by computer or
otherwise) of all principal advances and repayments under this Master Note and
that record shall be presumed to be correct in the absence of clear and
convincing evidence to the contrary.
Unless the Holder has otherwise agreed in writing, the Holder is not
obligated to make any advances or re-advances hereunder, and all advances and
re-advances shall be made at the option of Holder. This note shall be valid and
enforceable as to the aggregate amount advanced at any time hereunder, whether
or not the full face amount hereof is advanced.
If the Loan is payable on demand, this paragraph is inoperative and is
not applicable; otherwise, this paragraph is operative and applies to the Loan
in accordance with its terms. In the event of default in the payment of any one
or more installments of principal or interest which may become due hereunder,
when and as the same fall due, or in the payment of all of principal and
interest due hereunder at maturity, or the failure of any maker, endorser,
surety or guarantor hereof (hereinafter called the "Obligors") to pay when due
or perform any of the Obligations (meaning thereby this note and any and all
renewals and extensions thereof and all other liabilities and indebtedness of
the Borrower to Holder, now existing or hereafter incurred or arising, direct or
indirect, and however incurred) or any part thereof or the failure of any
Obligor to pay when due any other liability to Holder, in the event a default
occurs under the terms of any loan agreement or other instrument (other than
this note), document or paper evidencing, securing, guaranteeing, or executed in
connection with all or any part of the Obligations (hereinafter, together with
this note, collectively called the "Loan Documents"), or in the event Holder
shall in good faith deem itself insecure for any reason, or on the happening of
any one or more of said events, Holder shall have the right at its election and
without notice to any Obligor to declare the Obligations immediately due and
payable with interest to date. No delay in making such election shall be
construed to waive the right to make such election. Holder may note the fact of
acceleration hereon without stating the ground therefor, and whether or not
noted hereon such election to accelerate shall be effective.
<PAGE> 2
In the event of death or, insolvency of, general assignment by,
judgment against, filing of a petition in bankruptcy by or against, filing a
petition for the reorganization of, filing of application in any court for
receiver for, or issuance of a writ of garnishment or attachment in a suit or
action against any Obligor or against any of the assets of any Obligor, or on
the happening of any one or more of said events, the Obligations shall, without
notice to or demand upon any Obligor, immediately become due and payable with
interest to date unless Holder shall on notice of such event elect to waive such
acceleration by written notation hereon.
Each of the Obligors hereby severally (a) waives as to this debt or
any renewal or extension thereof all rights of exemption under the Constitution
or laws of Alabama or any other state as to personal property; (b) waives
demand (unless this note is payable on demand), presentment, protest, notice of
protest, notice of dishonor, suit against any party and all other requirements
necessary to hold any Obligor liable; (c) agrees that time of payment may be
extended one or more times for any period of time (whether such period is
shorter or longer than the initial term of this note) or renewal notes taken or
other indulgence granted without notice of or consent to such action and
without release of liability as to any Obligor; (d) as to all or any part of
the Obligations, consents to Holder's releasing, agreeing not to sue,
suspending the right to enforce this instrument against or otherwise discharging
or compromising any Obligation of any Obligor or other person against whom any
Obligor has to the knowledge of Holder a right of recourse, all without notice
to or further reservations of rights against any Obligor, and all without in
any way affecting or releasing the liability of any Obligor; (e) consents to
Holder's releasing, exchanging or otherwise dealing in any manner with all or
any portion of any collateral, lien, or right of set-off which may now or
hereafter secure this note, all without notice to or further reservations of
rights against any Obligor, and all without in any way affecting or releasing
the liability of any Obligor, even though such release, exchange or other
dealing may in any manner and to any extent impair any such collateral, lien or
right of set-off; (f) agrees to pay all costs of collecting or securing or
attempting to collect or secure this note or defending any unsuccessful claim
asserted against the Holder in connection with this note, including reasonable
attorneys' fees; and (g) warrants that this Loan is for business, commercial or
agricultural purposes.
In addition to all liens upon, and rights of set-off against, any
monies, securities, or other property of any of the Obligors given to Holder by
law, Holder shall have a lien upon and a right of set-off against all monies,
securities, and other property of any of the Obligors now or hereafter in the
possession of, or on deposit with, Holder, whether held in a general or special
account or deposit, for safekeeping, or otherwise; and every such lien and
right of set-off may be exercised without demand upon or notice to any Obligor,
and the Bank shall have no liability with respect to any of Obligor's checks or
other items which may be returned or other funds transfers which may not be made
due to insufficient funds thereafter.
The Borrower understands that the Bank may from time to time enter
into a participation agreement or agreements with one or more participants
pursuant to which such participant or participants shall be given
participations in the Loan and that such participants may from time to time
similarly grant to other participants sub-participations in the Loan. The
Borrower agrees that any participant may exercise any and all rights of
banker's lien or set-off, whether arising by operation of law or given to
Holder by the provisions of this note, with respect to the Borrower as fully as
if such participant had made the Loan directly to the Borrower. For the
purposes of this Paragraph only, the Borrower shall be deemed to be directly
obligated to each participant or subparticipant in the amount of its
participating interest in the principal of, and interest on, the Loan.
Neither any failure nor any delay on the part of Holder in exercising
any right, power or privilege under this note shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any other or
further exercise or the exercise of any other right, power or privilege. No
modification, amendment or waiver of any provisions of this note shall be
effective unless in writing and signed by a duly authorized officer of Holder,
and then the same shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on any Obligor in any case
shall entitle any Obligor to any other or further notice or demand in the same,
similar or other circumstances.
Any provision of this note which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
The provisions of this note shall inure to the benefit of the Holder,
its successors and assigns and shall be binding upon the heirs, successors and
assigns of each Obligor, except that no Obligor may assign or transfer his, her
or its obligation hereunder without the written consent of Holder.
All rights, powers and remedies of Holder under this note and now or
hereafter existing at law, in equity or otherwise shall be cumulative and may
be exercised successively or concurrently.
The Loan Documents contain the entire understanding and agreement
between the Borrower and the Holder with respect to the Loan and supersede any
and all prior agreements, understandings, promises, and statements with respect
to the Loan. This Master Note may not be modified, amended, or supplemented in
any manner except by a written agreement executed by both the Borrower and the
Holder.
This note shall be construed in accordance with and governed by the
laws of the State of Alabama.
This agreement is executed under seal by the Borrower or each of them.
CAUTION--IT IS IMPORTANT THAT YOU THOROUGHLY READ THIS CONTRACT
BEFORE YOU SIGN IT
No. 415181 594556 594531 Welborn Transport, Inc.
---------------------------------- -------------------------------[SEAL]
Due April 7, 2000 By: /s/ Richard C. Bailey
---------------------------------- -------------------------------[SEAL]
Its: CFO
-------------------------------[SEAL]
-------------------------------[SEAL]
-------------------------------[SEAL]
<PAGE> 1
EXHIBIT 13
Boyd Bros. Transportation Inc. and Subsidiary
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, 1999, are derived from the Company's
audited financial statements. The data presented below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the Consolidated Financial Statements and Notes
thereto.
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
(in thousands, except per share data)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Statement of Operations Data:
Operating revenues $ 133,137 $ 118,123 $ 77,215 $ 65,523 $ 61,866
Operating expenses:
Salaries, wages and employee benefits 35,461 36,608 32,427 28,420 27,573
Cost of independent contractors 45,132 31,818 2,500 -- --
Operating supplies 22,934 21,429 20,832 19,550 17,156
Taxes and licenses 2,847 2,566 2,306 2,222 1,823
Insurance and claims 6,111 5,393 3,439 3,379 3,210
Communications and utilities 1,480 1,554 1,305 1,186 1,022
Depreciation and amortization 10,720 10,320 9,181 8,261 7,296
Gain on disposition of property and equipment, net (1,627) (433) (577) (805) (648)
Other 1,862 1,541 711 660 333
Total operating expenses 124,920 110,796 72,124 62,873 57,765
- ------------------------------------------------------------------------------------------------------------------------------------
Operating income 8,217 7,327 5,091 2,650 4,101
Interest income 92 97 136 164 82
Interest expense (2,422) (1,608) (1,391) (1,408) (781)
Other 0 82 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 5,887 5,898 3,836 1,406 3,402
Income taxes 2,430 2,326 1,519 578 1,277
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 3,457 $ 3,572 $ 2,317 $ 828 $ 2,125
Basic and diluted net income per share $ .99 $ .87 $ .62 $ .22 $ .56
====================================================================================================================================
</TABLE>
(1) Reflects an operating expense (credit) accrued for environmental remediation
during 1995.
Boyd Bros. Transportation Inc. and Subsidiary
Selected Financial Data
<TABLE>
<CAPTION>
December 31,
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital $ 1,049 $ 4,360 $ 3,785 $ 2,495 $ 2,676
Net property and equipment 61,882 48,691 48,859 44,593 37,188
Total assets 99,456 77,047 71,526 57,262 48,892
Long-term debt, less current maturities 34,689 18,049 19,252 15,198 9,228
Total liabilities 69,062 44,186 42,071 33,374 24,903
Stockholders' equity 30,393 32,862 29,455 23,888 23,989
</TABLE>
<PAGE> 2
Selected Operating Data:
The following table sets forth certain operating data regarding the Company.
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating ratio 93.83% 93.80% 93.41% 95.95% 93.37%
Average length of haul in miles 634 576 663 677 694
Average number of truckloads per week 3,368 3,330 1,908 1,607 1,470
Average revenues per total mile $ 1.18 $ 1.17 $ 1.17 $ 1.14 $ 1.14
Equipment at period end:
Tractors 1,112 1,032 950 575 522
Trailers 1,451 1,337 1,227 916 875
</TABLE>
Boyd Bros. Transportation Inc. and Subsidiary
Management's Discussion and Analysis of Financial Condition and Results of
Operations
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, 1999. This discussion should be read in conjunction with the
Consolidated Financial Statements and Notes thereto included elsewhere herein.
<PAGE> 3
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 with 1,112 tractors and 1,451 trailers operating in the
eastern two-thirds of the United States. Historically, the Company owned its
revenue equipment and operated through employee drivers. 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 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, Inc. ("Welborn"),
which specializes in short-haul routes using largely an owner/operated fleet.
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
Year Ended December 31,
1999 1998 1997
<S> <C> <C> <C>
Operating revenues 100.00% 100.00% 100.00%
-----------------------------------------------------------------------------------------------
Operating expenses
Salaries, wages, and employee benefits 26.64 31.00 42.00
Cost of independent contractors 33.89 26.94 3.16O
Operating supplies 17.23 18.14 26.98
Taxes and licenses 2.14 2.17 2.99
Insurance and claims 4.59 4.57 4.45
Communication and utilities 1.11 1.31 1.69
Depreciation and amortization 8.05 8.74 11.89
Gain on disposition of property and equipment, net (1.22) (.37) (.47)
Other 1.40 1.30 .72
Total operating expenses 93.83 93.80 93.41
-----------------------------------------------------------------------------------------------
Operating income 6.17 6.20 6.59
Interest expense, net (1.75) (1.28) (1.62)
Other income -- .07 --
-----------------------------------------------------------------------------------------------
Income before income taxes 4.42 4.99 4.97
Income taxes 1.83 1.97 1.97
-----------------------------------------------------------------------------------------------
Net income 2.59% 3.02% 3.00%
===============================================================================================
</TABLE>
<PAGE> 4
COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO YEAR ENDED DECEMBER 31, 1998
Operating revenues for 1999 increased $15.0 million, or 12.7%, to $133.1 million
compared to $118.1 million for 1998. Revenues increased due to better equipment
utilization and the addition of 80 tractors.
Salaries, wages and employee benefits decreased $1.1 million, or 3.1%, to $35.5
million compared to $36.6 million in 1998. Salaries decreased due to the
increase in the owner/operator fleet, and therefore, a decrease in employee
drivers. Salaries made up 26.6% of operating revenue in 1999 compared to 31.0%
in 1998.
Cost of independent contractors for 1999 increased $13.3 million, or 41.8%, to
$45.1 million from $31.8 million in 1998. As of December 31, 1999 Boyd Bros. had
an owner/operator fleet of 209 operators compared to 150 owner/operators in
1998. Additionally, Welborn, had 298 owner/operators as of December 31, 1999
compared to 281 operators in 1998.
Operating supplies expense for 1999 increased $1.5 million, or 7.0%, to $22.9
million compared with $21.4 million for 1998, despite the fact that a large
portion of the fleet is comprised of owner/operators. This increase is almost
entirely due to increased fuel prices.
Taxes and licenses expense for 1999 increased $.2 million, or 7.7%, to $2.8
million compared to $2.6 million in 1998. Taxes and licenses increased at a
slower rate than revenue due to the greater percentage of owner/operators.
Insurance and claims expense increased $.7 million, or 13.0%, to $6.1 million
compared to $5.4 million in 1998. The increase was primarily due to an increase
in accident claims.
Communications and utilities expense decreased $.1 million, or 6.3%, to $1.5
million from $1.6 million in 1998. Improved cost management contributed to the
decrease in communications costs.
Depreciation and amortization expense increased $.4 million, or 3.9%, to $10.7
million from $10.3 million in 1998. Depreciation expense increased due to the
addition of newer and more expensive tractors in order to reduce the age of the
Company's tractor fleet and due to the replenishing of the Company's trailer
fleet with longer and more expensive trailers.
Rent expense increased $.2 million, or 67.0%, to $.5 million from $.3 million in
1998. Rent expense includes operating leases for both trailers and terminals.
Rent expense increased due to the Company entering into several lease agreements
for new trailers during 1999.
Other expenses increased approximately $.4 million, or 26.7%, to $1.9 million in
1999 from $1.5 million in 1998. Other expenses include, but are not limited to,
consulting fees, legal fees, advertising costs and bank charges.
Interest expense (net of interest income) increased $.8 million, or 50%, to $2.4
million from $1.6 million in 1998. During 1999 the Company incurred additional
indebtedness for the purpose of financing an increase in its tractor and trailer
fleets.
Net income for 1999 decreased approximately $.1 million, or 2.8%, to $3.5
million compared to $3.6 million for 1998.
<PAGE> 5
COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997
Operating revenues for 1998 increased $40.9 million, or 52.9%, to $118.1 million
compared to $77.2 million for 1997. The inclusion of Welborn revenues for the
entire year accounted for 78.5% of this increase. Revenues also increased due to
better equipment utilization and the addition of 70 tractors.
Salaries, wages and employee benefits increased $4.2 million, or 12.9%, to $36.6
million compared to $32.4 million in 1997. Salaries increased at a slower rate
than revenues, making up 31.0% of operating revenue in 1998 compared to 42.0% in
1997, due to the expansion of the owner/ operator program.
Cost of independent contractors for 1998 increased $29.4 million to $31.8
million from $2.4 million in 1997, due to a full year of the owner/operator
program and the inclusion of Welborn. As of December 31, 1998 Boyd Bros. had an
owner/operator fleet of 150 operators compared to 50 operators in 1997.
Additionally, Welborn, had 310 owner/operators as of December 31, 1998, which
constitutes substantially all of its fleet.
Operating supplies expense for 1998 increased $.6 million, or 2.9%, to $21.4
million compared to $20.8 million for 1997. Operating supplies expense increased
at a slower rate than revenue because of lower fuel prices and the increase in
the owner/operator fleet. Maintenance costs on a per mile basis decreased $.06,
or 16.7%, due to a decrease in the average age of the Company's fleet.
Taxes and licenses expense for 1998 increased $.3 million, or 11.3%, to $2.6
million compared to $2.3 million in 1997. Taxes and licenses increased at a
slower rate than revenue due to the greater percentage of owner/operators.
Insurance and claims expense increased $2.0 million, or 56.8%, to $5.4 million
compared to $3.4 million in 1997. The increase was primarily due to an increase
in the accident frequency and the inclusion of Welborn for the entire year.
Communications and utilities expense increased $.3 million, or 19.1%, to $1.6
million from $1.3 million in 1997. Improved cost management contributed to the
slower rate of increase compared to revenue growth.
Depreciation and amortization expense increased $1.1 million, or 12.4%, to $10.3
million from $9.2 million in 1997. The slower rate of growth compared to revenue
was due to higher utilization of equipment, a full year of Boyd's owner/operator
program, and Welborn's high percentage of owner/operators.
Rent expense increased $.2 million, or 113.0%, to $.3 million from $.1 million
in 1997 largely due to the inclusion of Welborn . Rent expense includes
operating leases for both trailers and terminals.
Other expenses increased approximately $1.0 million, or 176.7%, to $1.5 million
in 1998 from $.6 million in 1997 due largely to Welborn being included for the
entire year. Other expenses include, but are not limited to, consulting fees,
legal fees, advertising costs and bank charges.
Interest expense (net of interest income) increased $.2 million, or 20.4%, to
$1.5 million from $1.3 million in 1997. During 1998, the Company incurred
additional indebtedness to finance the addition of 70 new tractors to its fleet.
Net income for 1998 increased approximately $1.25 million, or 53.9%, to $3.57
million compared to $2.32 million for 1997.
<PAGE> 6
Liquidity and Capital Resources
The growth of the Company's business and maintenance of its modern fleet has
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 related to company tractors, was
approximately $23.1 million in 1999, compared to $12.1 million in 1998. At
December 31, 1999, the Company had long-term debt (including current portions)
of $48.9 million, which was primarily incurred to purchase revenue equipment.
Management anticipates increasing the Company's fleet by approximately 50
tractors in 2000, net of replacements, at an anticipated cost of approximately
$6.9 million. Management expects to finance such equipment purchases through
equipment financing arrangements with various lenders. Net cash flow provided by
operating activities was approximately $11.6 million during 1999 compared to
approximately $9.2 million in 1998. The Company had working capital of $1.0
million at December 31, 1999.
Historically, the Company has relied on cash generated from operations to fund
its working capital requirements. However, the Company has two bank lines of
credit permitting short-term borrowings of up to $4.25 million. The revolving
lines of credit are collateralized by accounts receivable and inventory.
Pursuant to the Company's stock repurchase program, the Company purchased 25,000
and 263,940 shares of the common stock in open market or negotiated transactions
during 1998 and 1999, for aggregate purchase prices of $165,625 and $2,342,746,
respectively. The Company funded these purchases using working capital. On
January 8, 1999, the Company purchased 500,000 shares of its outstanding common
stock from a former Chief Executive Officer of the Company for $3,660,000. The
stock purchase was funded by available cash and a bank line of credit.
The Company currently has outstanding letters of credit, totaling approximately
$3.6 million at December 31, 1999, to cover liability insurance claims and
outstanding claims related to its previous self-insured workers' compensation
program. Annual commitment fees relating to these letters of credit do not
exceed 1.5% of the face amounts thereof.
Management believes that cash flow from future operations and borrowings
available under its lines 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.
Interest Rate Risk
The Company is exposed to interest rate risk due to its long-term debt, which at
December 31, 1999, bore interest at rates ranging from 1.00% to 1.50% 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 ten
percent increase in interest rates would increase the estimated fair value of
the Company's long-term debt by approximately $600,000. Management believes that
current working capital funds are sufficient to offset any adverse effects
caused by changes in the interest rates.
Year 2000 Compliance
In June 1998, 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
flat-bed trucks.
<PAGE> 7
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 to its on-going 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, quarterly or year end. 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 the 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.
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.
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.
Fuel Price Trend
Diesel fuel prices have increased materially during the first quarter of 2000.
The average price per gallon of diesel fuel has increased from about $.96 per
gallon at the beginning of 1999 to nearly $1.50 at the end of the first quarter
of 2000. If fuel prices continue to increase or are sustained at these higher
levels for a continuing period of time, the higher fuel costs may have a
materially adverse effect on the financial condition and business operations of
the Company. Additionally, the increased fuel costs may also have a materially
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 the fourth quarter of 1999,
and additional drivers have departed in the first quarter of 2000. The
diminishing number of owner/operators compounds the direct impact of higher fuel
costs because each owner/operator who leaves the Company's program 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
related to a contractual rate per mile, 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 have an adverse impact on the Company's results of operations due to empty
trucks, diminished fleet efficiency, and reduced revenue potential.
Recently Issued Accounting Standard
In June, 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities, which is effective (as amended) 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.
<PAGE> 8
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,006,826 $ 1,361,664
Short-term investments 250,000 250,000
Accounts receivable, less allowance for doubtful
accounts of $347,000 (1999) and $272,000 (1998):
Trade and interline 12,475,739 12,735,168
Other 1,082,615 170,094
Current portion of net investment in sales-type leases 3,620,723 1,495,510
Parts and supplies inventory 326,202 263,943
Prepaid tire expense 837,136 838,900
Other prepaid expenses 2,488,484 2,059,490
Deferred income taxes 281,834 644,712
----------- -----------
Total current assets 22,369,559 19,819,481
----------- -----------
PROPERTY AND EQUIPMENT:
Land and land improvements 2,263,326 2,262,486
Buildings 2,927,611 2,927,611
Revenue equipment 69,944,259 60,619,648
Other equipment 11,510,214 10,375,893
Leasehold improvements 377,831 339,994
Construction in progress 3,539,437 430,884
----------- -----------
Total 90,562,678 76,956,516
Less accumulated depreciation and amortization 28,680,556 28,265,861
----------- -----------
Property and equipment, net 61,882,122 48,690,655
----------- -----------
OTHER ASSETS:
Net investment in sales-type leases 8,522,614 4,120,787
Goodwill, net of accumulated amortization of $464,378 (1999)
and $240,578 (1998) 3,955,834 4,235,422
Revenue equipment held for lease 2,287,267
Deposits and other assets 438,372 181,081
----------- -----------
Total other assets 15,204,087 8,537,290
----------- -----------
TOTAL $99,455,768 $77,047,426
=========== ===========
</TABLE>
<PAGE> 9
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 14,245,584 $ 7,833,286
Accounts payable - trade and interline 4,070,946 1,648,537
Income taxes 802,395 1,686,502
Accrued liabilities:
Self-insurance claims 1,768,114 2,132,042
Salaries and wages 746,805 957,710
Other 1,785,087 1,200,642
------------ -----------
Total current liabilities 23,418,931 15,458,719
LONG-TERM DEBT 34,688,582 18,049,490
DEFERRED INCOME TAXES 10,954,964 10,677,510
------------ -----------
Total liabilities 69,062,477 44,185,719
------------ -----------
COMMITMENTS AND CONTINGENCIES (Note 6)
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 (1999) and 4,069,640 (1998) shares
issued and outstanding 4,082 4,070
Additional paid-in capital 16,839,570 16,864,622
Retained earnings 19,450,385 15,993,015
Treasury stock, at cost; 751,670 shares (5,900,746)
------------ -----------
Total stockholders' equity 30,393,291 32,861,707
------------ -----------
TOTAL $ 99,455,768 $77,047,426
============ ===========
See notes to consolidated financial statements.
</TABLE>
<PAGE> 10
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
OPERATING REVENUES $ 133,137,272 $ 118,123,424 $ 77,214,629
------------- ------------- ------------
OPERATING EXPENSES:
Salaries, wages and employee benefits 35,461,400 36,607,732 32,427,094
Cost of independent contractors 45,132,153 31,817,649 2,440,687
Operating supplies 22,934,366 21,429,224 20,831,643
Taxes and licenses 2,846,677 2,565,842 2,305,506
Insurance and claims 6,110,604 5,392,526 3,438,761
Communications and utilities 1,479,546 1,553,511 1,305,448
Depreciation and amortization 10,719,647 10,320,379 9,181,399
Gain on disposition of property and equipment, net (1,626,983) (433,023) (363,970)
Other 1,862,170 1,542,703 557,508
------------- ------------- ------------
Total operating expenses 124,919,580 110,796,543 72,124,076
------------- ------------- ------------
OPERATING INCOME 8,217,692 7,326,881 5,090,553
------------- ------------- ------------
OTHER INCOME (EXPENSES):
Interest income 91,740 97,052 135,819
Interest expense (2,421,910) (1,607,482) (1,390,455)
Other income 82,308
------------- ------------- ------------
Other expenses, net (2,330,170) (1,428,122) (1,254,636)
------------- ------------- ------------
INCOME BEFORE PROVISION FOR
INCOME TAXES 5,887,522 5,898,759 3,835,917
------------- ------------- ------------
PROVISION FOR INCOME TAXES:
Current 1,789,821 2,284,318 995,000
Deferred 640,331 41,703 524,070
------------- ------------- ------------
Total provision for income taxes 2,430,152 2,326,021 1,519,070
------------- ------------- ------------
NET INCOME $ 3,457,370 $ 3,572,738 $ 2,316,847
============= ============= ============
BASIC AND DILUTED NET INCOME
PER SHARE $ 0.99 $ 0.87 $ 0.62
============= ============= ============
BASIC AND DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING 3,507,311 4,090,175 3,726,591
============= ============= ============
</TABLE>
See notes to consolidated financial statements.
<PAGE> 11
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED TREASURY
STOCK CAPITAL EARNINGS STOCK TOTAL
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1997 $ 3,701 $ 13,780,616 $ 10,103,430 $23,887,747
Issuance of common stock in
connection with acquisition 394 3,249,606 3,250,000
Net income 2,316,847 2,316,847
----------- ------------ ------------ -----------
BALANCE, DECEMBER 31, 1997 4,095 17,030,222 12,420,277 29,454,594
Purchase and retirement of
common stock (25) (165,600) (165,625)
Net income 3,572,738 3,572,738
----------- ------------ ------------ -----------
BALANCE, DECEMBER 31, 1998 4,070 16,864,622 15,993,015 32,861,707
Exercise of stock options 6 (12,318) $ 51,000 38,688
Sale of common stock under
employee stock purchase plan 6 (12,734) 51,000 38,272
Purchase of treasury stock (6,002,746) (6,002,746)
Net income 3,457,370 3,457,370
----------- ------------ ------------ ------------ -----------
BALANCE, DECEMBER 31, 1999 $ 4,082 $ 16,839,570 $ 19,450,385 $ (5,900,746) $30,393,291
=========== ============ ============ ============ ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 12
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 3,457,370 $ 3,572,738 $ 2,316,847
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 10,719,647 10,320,379 9,181,399
Gain on disposal of property and equipment, net (1,626,983) (433,023) (363,970)
Net effect of sales-type leases on cost of
independent contractors (1,741,454) (1,800,538) (212,780)
Provision for deferred income taxes 640,332 41,703 524,070
Changes in assets and liabilities provided
(used) cash:
Accounts receivable (493,392) (3,372,491) (3,716,424)
Refundable income taxes 579,573
Other current assets (666,293) (1,001,836) (851,868)
Deposits and other assets (257,291) (68,220) 233,189
Accounts payable - trade and interline 2,414,894 131,319 (605,343)
Accrued liabilities and other current liabilities (874,865) 1,776,724 1,119,302
------------ ------------ ------------
Net cash provided by operating activities 11,571,965 9,166,755 8,203,995
------------ ------------ ------------
INVESTING ACTIVITIES:
Purchase of short-term investments (150,000)
Payments received on sales-type leases 3,939,430 1,750,705 43,374
Capital expenditures:
Revenue equipment (36,950,717) (12,117,225) (15,341,667)
Other property and equipment (4,650,303) (2,360,188) (1,995,791)
Proceeds from disposals of property
and equipment 8,542,604 1,975,628 5,948,765
Receipt of acquisition escrow 55,788
------------ ------------ ------------
Net cash used in investing activities (29,063,198) (10,751,080) (11,495,319)
------------ ------------ ------------
FINANCING ACTIVITIES:
Purchase of common stock (165,625)
Proceeds from sales of common stock 38,272
Proceeds from exercise of stock options 38,688
Purchase of treasury stock (6,002,746)
Proceeds from line of credit 1,021,849
Proceeds from long-term debt 36,785,635 12,572,123 17,830,191
Principal payments on long-term debt (13,723,454) (12,877,683) (15,736,748)
------------ ------------ ------------
Net cash provided by (used in)
financing activities 17,136,395 (471,185) 3,115,292
------------ ------------ ------------
</TABLE>
<PAGE> 13
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
NET DECREASE IN CASH
AND CASH EQUIVALENTS $ (354,838) $(2,055,510) $ (176,032)
CASH AND CASH EQUIVALENTS:
BEGINNING OF YEAR 1,361,664 3,417,174 3,593,206
----------- ----------- -----------
END OF YEAR $ 1,006,826 $ 1,361,664 $ 3,417,174
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the year for:
Interest $ 2,358,576 $ 1,612,715 $ 1,254,636
=========== =========== ===========
Income taxes, net of refunds $ 2,727,399 $ 816,729 $ 30,469
=========== =========== ===========
SUPPLEMENTAL NONCASH INVESTING AND
FINANCING ACTIVITIES:
Acquisition of Welborn Transport, Inc.
in December 1997 (see Note 2)
Net investment in sales-type leases $ 1,817,598 $ 2,177,249 $ 2,165,319
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 14
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS - Boyd Bros. Transportation Inc. and its subsidiary
(the "Company") are flatbed carriers, 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.
All of the Company's operations (flatbed trucking) constitute only one
segment under the requirements of Statement of Financial Accounting
Standards ("SFAS") No. 131, Disclosures about Segments of an Enterprise
and Related Information.
PRINCIPLES OF CONSOLIDATION - The accompanying financial statements
include the accounts of the Company and its wholly owned subsidiary,
Welborn Transport, Inc. since its acquisition on December 8, 1997 (Note
2). All significant intercompany items have been eliminated in
consolidation.
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.
REVENUE EQUIPMENT HELD FOR LEASE - Revenue equipment held for lease and
not in use is stated at cost, less accumulated depreciation, which
approximates net realizable value.
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.
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 4 - 7 years
Other equipment 3 - 10 years
Leasehold improvements 3 - 20 years
<PAGE> 15
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.
GOODWILL - Goodwill is amortized over 20 years using the straight-line
method. The Company evaluates goodwill for impairment by comparing
projected future cash flows to carrying amounts of goodwill using a
discount rate based on the cost of capital of that business. If such
evaluation indicates impairment, the Company would record a change to
operations in the period such impairment is determined.
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 recorded
upon shipment of products to customers provided that pervasive evidence of
an arrangement exists, the selling price is fixed and determinable, and
collectibility of the resulting receivables is probable.
NET INCOME PER SHARE - In accordance with SFAS No. 128, Earnings per
Share, the Company reports two separate earnings per share numbers, basic
and diluted, on the face of its statements of income.
For the years ended December 31, 1999, 1998 and 1997, all of the Company's
outstanding options, totaling 456,100, 444,810, and 323,350 shares,
respectively, were excluded from the computation of weighted average
shares as such options would have been anti-dilutive.
FAIR VALUE OF FINANCIAL INSTRUMENTS - SFAS No. 107, Disclosures about Fair
Value of Financial Instruments (as amended by SFAS No. 119), requires
certain disclosures for financial instruments for which it is practicable
to estimate the fair value. The Company's financial instruments consist of
cash equivalents, short-term investments, trade receivables, trade
payables, accrued expenses, and interest-bearing debt. The fair value of
the Company's financial instruments, excluding interest-bearing debt,
approximates the carrying value reflected in the accompanying consolidated
balance sheets at December 31, 1999 and 1998, primarily because of the
short-term nature of these instruments. Fair value disclosure for the
Company's interest-bearing debt is presented in Note 5.
ACCOUNTING STANDARD NOT YET ADOPTED - In June 1998, the Financial
Accounting Standards Board issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, which is effective (as amended) 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.
RECLASSIFICATIONS - Certain reclassifications have been made to the 1998
and 1997 consolidated financial statements to conform to the 1999
presentation.
2. ACQUISITION
On December 8, 1997, the Company acquired Welborn Transport, Inc.
("Welborn") for a total purchase price of $6,631,000, including direct
acquisition costs. The acquisition was accounted for using the purchase
method of accounting and, accordingly, the purchase price was allocated to
the
<PAGE> 16
assets acquired and liabilities assumed based on their estimated fair
values at the acquisition date. Goodwill totaling $4,476,000 was
recognized on the acquisition equal to the excess of the purchase price
over the estimated fair value of the net assets acquired. The consolidated
statements of income include the results of Welborn's operations from its
acquisition date forward.
The estimated fair value of assets acquired and liabilities assumed in
this acquisition is summarized as follows:
<TABLE>
<CAPTION>
<S> <C>
Fair value of assets acquired $11,985,000
Less liabilities assumed 5,354,000
-----------
$ 6,631,000
===========
Consideration consisted of:
Fair value of common stock issued $ 3,250,000
Issuance of notes payable to stockholders (Note 5) 3,250,000
Amounts paid or accrued for acquisition costs 131,000
-----------
Total purchase price $ 6,631,000
===========
</TABLE>
The following unaudited pro forma consolidated results of operations for
the year ended December 31, 1997 have been prepared as though the
acquisition occurred as of January 1, 1997:
Operating revenues $ 105,551,554
Net income 2,119,420
Basic and diluted net income per share .52
The unaudited proforma consolidated results of operations have been
prepared for comparative purposes only and do not purport to be indicative
of the actual results that would have been achieved had the acquisition
taken place as of January 1, 1997 or in the future.
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, 1999, 1998, and 1997 were $280,890, $246,943,
and $151,527, respectively.
4. LEASES
LESSEE:
OPERATING LEASES - The Company leases certain terminal buildings, land and
equipment under agreements which expire at various dates through 2001. The
lease agreements generally include renewal options and the Company is
required to pay taxes, insurance and normal maintenance for the
facilities.
<PAGE> 17
Future minimum lease payments under all operating leases with an initial
or remaining noncancelable lease term of more than one year are as
follows:
<TABLE>
<CAPTION>
YEAR
<S> <C>
2000 $ 72,200
2001 22,615
--------
Total $ 94,815
========
</TABLE>
Total rental expense for all operating leases was $384,723, $378,961, and
$112,243 for the years ended December 31, 1999, 1998 and 1997,
respectively.
LESSOR:
SALES-TYPE LEASES - The Company leases revenue equipment to certain of its
owner/operators and accounts for these transactions as sales-type leases.
These receivables have terms of three and one-half to four years and are
collateralized by a security interest in the related revenue equipment.
Certain revenue equipment under these leases have a guaranteed residual
value from the vendor which will be redeemed by the Company at the end of
the lease term.
The components of the net investment in sales-type leases at December 31,
1999 and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Minimum lease receivable $ 16,212,485 $ 8,731,437
Allowance for uncollectible receivables (910,754) (1,201,245)
------------ -----------
Net minimum lease receivable 15,301,731 7,530,192
Unearned interest income (3,158,394) (1,913,895)
------------ -----------
Net investment in sales-type leases 12,143,337 5,616,297
Less current portion (3,620,723) (1,495,510)
------------ -----------
Net amount due after one year $ 8,522,614 $ 4,120,787
============ ===========
</TABLE>
Future minimum lease rentals for sales-type leases are as follows:
<TABLE>
<CAPTION>
YEAR
<S> <C>
2000 $ 5,171,648
2001 5,140,545
2002 4,518,729
2003 1,381,563
-----------
Total $16,212,485
===========
</TABLE>
Gains on disposition of revenue equipment leased to owner operators,
interest income on these leases, and provisions for bad debts related to
sales-type leases have been included as components of cost of independent
contractors in the accompanying consolidated statements of income.
OPERATING LEASES - The Company also leases revenue equipment to certain of
its owner/operators and accounts for these transactions as operating
leases. These leases have terms of three to three
<PAGE> 18
and one-half years. The revenue equipment under these leases had a cost of
$2,517,591 and $2,596,261 net of accumulated depreciation of $477,298 and
$75,532 at December 31, 1999 and 1998, respectively.
Future minimum lease rentals for operating leases are as follows:
<TABLE>
<CAPTION>
YEAR
<S> <C>
2000 $ 663,000
2001 649,230
2002 309,570
----------
Total $1,621,800
==========
</TABLE>
Total rental income from operating leases was $353,630, $13,770, and $0
for the years ended December 31, 1999, 1998 and 1997, respectively.
5. LONG-TERM DEBT
Long-term debt at December 31, 1999 and 1998 is summarized as follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Revenue equipment obligations:
LIBOR plus 1.00% (7.00% - 1999 and 6.06% - 1998) note
payable in monthly installments through November 2005 $22,934,205 $13,380,676
LIBOR plus 1.25% (7.25% - 1999 and 6.31% - 1998) note
payable in monthly installments through December 2005 25,386,865 9,926,560
LIBOR plus 1.50% (7.50% - 1999 and 6.56% - 1998) note
payable in yearly installments through January 2001 571,429 1,500,000
Note repaid in 1999 763,444
Other 41,667 312,096
----------- -----------
Total 48,934,166 25,882,776
Less current maturities 14,245,584 7,833,286
----------- -----------
Long-term debt $34,688,582 $18,049,490
=========== ===========
</TABLE>
Revenue equipment obligations are collateralized by revenue equipment.
<PAGE> 19
Long-term debt is scheduled to mature as follows:
<TABLE>
<CAPTION>
YEAR
<S> <C>
2000 $14,245,584
2001 10,960,436
2002 10,239,622
2003 8,434,027
2004 4,813,354
Thereafter 241,143
-----------
Total $48,934,166
===========
</TABLE>
The Company also has two lines of credit totaling $4,250,000 under a
commercial revolving note, expiring April 7, 2000, bearing interest at
LIBOR plus 1.75%. These lines of credit were not utilized at December 31,
1999 and 1998.
Covenants under these 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 received waivers from
certain creditors at December 31, 1999 due to non-compliance with
financial ratios related to the increase in the current portion of
long-term debt.
The fair value of long-term debt approximates its carrying value and 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.
6. COMMITMENTS AND CONTINGENCIES
The Company is currently self-insured as follows:
<TABLE>
<CAPTION>
RETENTION AMOUNT
PER OCCURRENCE
<S> <C>
Liability - bodily injury and property damage $100,000
Employee medical and hospitalization 100,000
Cargo loss and damage 10,000
Collision 10,000
Environmental losses No Limit
</TABLE>
The above retention amounts represent rates which were negotiated with the
Company's insurance carriers at December 31, 1999. Retention amounts under
other previous insurance programs may vary from those stated above. At
December 31, 1999, the Company has recorded liabilities for retention
amounts related to claims under previous insurance coverage. For claims
prior to 1997, the Company had a retention amount per occurrence under
workers' compensation of $300,000.
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.
<PAGE> 20
The Company has outstanding letters of credit at December 31, 1999
totaling $3,588,565 to cover liability insurance claims and claims related
to its previous self-insured workers' compensation program, 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 financial position, operations or cash flows of the Company.
7. STOCKHOLDERS' EQUITY
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.
EMPLOYEE STOCK PURCHASE PLAN - During 1999, the Company established an
Employee Stock Purchase Plan under which 175,000 shares of the Company's
common stock may be issued to eligible employees at a price equal to the
lesser of 90% of the market price of the stock as of the first or last day
of the offering periods (as defined). Employees may elect to have a
portion of their compensation withheld, subject to certain limits, to
purchase the Company's common stock. The expense associated with this plan
in 1999 was insignificant.
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. An aggregate of 500,000 shares of the Company's
common stock are reserved for this Plan. 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 1997 or 1998.
Information regarding the Plan is summarized below:
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE FAIR VALUE
SHARES PRICE AT GRANT DATE
<S> <C> <C> <C>
Outstanding at January 31, 1997 258,400 10.22
Granted 92,500 7.94 6.12
Terminated (27,550) 9.61
--------
Outstanding at December 31, 1998 323,350 9.62
Granted 174,900 8.84 7.05
Terminated (53,440) 9.22
--------
Outstanding at December 31, 1999 444,810 9.36
Granted 65,250 10.25 7.93
Exercised (6,000) 6.00
Terminated (47,960) 9.40
--------
Outstanding at December 31, 1999 456,100 9.53
========
</TABLE>
The number of stock options exercisable was 228,830, 171,420 and 117,310
at December 31, 1999, 1998 and 1997 respectively. At December 31, 1999,
37,900 shares were available for future grant under the Plan.
<PAGE> 21
The following table summarizes information about fixed stock options as of
December 31, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------------- ---------------------------
WEIGHTED
AVERAGE WEIGHTED
NUMBER REMAINING WEIGHTED NUMBER AVERAGE
RANGE OF OF SHARES CONTRACTUAL AVERAGE OF SHARES EXERCISE
EXERCISE PRICES OUTSTANDING LIFE EXERCISE PRICE EXERCISABLE PRICE
<S> <C> <C> <C> <C> <C>
$6.00 - $11.00 456,100 6.9 years $ 9.53 228,830 $ 10.04
</TABLE>
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
market value of the stock at the grant date. As such, no compensation
expense is recorded in the accompanying consolidated financial statements.
Had compensation cost been determined based upon the fair value at the
grant date for options awarded in 1999, 1998 and 1997 under the Plan
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
------------------------------------------ --------------------------------------------
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C>
Net income $ 3,457,370 $ 3,572,738 $ 2,316,847 $ 3,310,578 $ 3,285,544 $ 2,208,410
Basic and diluted net
income per share $ .99 $ .87 $ .62 $ .94 $ .80 $ .59
</TABLE>
The fair value for options was estimated at the date of the grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Risk-free interest rate 6.5 % 6.5 % 6.5 %
Dividend yield 0 % 0 % 0 %
Expected volatility 81.2 % 82.8 % 81.4 %
Weighted average expected life 7 years 7 years 7 years
</TABLE>
<PAGE> 22
8. INCOME TAXES
The provision for income taxes for the years ended December 31, 1999, 1998
and 1997 consisted of the following (in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Current:
Federal $1,555 $1,944 $ 957
State 235 340 38
------ ------ ------
Total current 1,790 2,284 995
------ ------ ------
Deferred:
Federal 550 31 371
State 90 11 153
------ ------ ------
Total deferred 640 42 524
------ ------ ------
Total provision for income taxes $2,430 $2,326 $1,519
====== ====== ======
</TABLE>
Total income tax expense for 1999, 1998, and 1997 is different from the
amount that would be computed by applying the statutory federal income tax
rate of 35% to income before income taxes. The reasons for this difference
are as follows (in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Income tax at expected federal income tax rate $2,005 $2,006 $1,304
State income taxes, net of federal tax effect 214 214 130
Non-deductible operating expenses 38 29 25
Non-deductible goodwill amortization 77 77
Other 96 60
------ ------ ------
$2,430 $2,326 $1,519
====== ====== ======
</TABLE>
At December 31, 1997, the Company had approximately $1,920,000 of state
net operating loss carryforwards for tax purposes available to offset
future state taxable income through 2011. The Company also had
approximately $630,000 of alternative minimum tax credit carryforwards
available to offset future federal income tax. These were utilized during
1998.
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, 1999 and 1998 are as follows (in thousands):
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Deferred tax liabilities:
Tax over book depreciation $10,722 $10,180
Prepaid expenses deductible when paid 797 590
Capitalized tires 327 292
Cash basis to accrual basis adjustment 271 542
Other 8 16
-------- --------
Total deferred tax liabilities 12,125 11,620
------- --------
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Deferred tax assets:
Accrued self insurance claims $ 389 $ 500
Other accrued expenses not deductible until paid 496 437
Allowance for losses on receivables 496 577
Other 71 73
-------- --------
Total deferred tax assets 1,452 1,587
-------- --------
Net deferred tax liabilities $10,673 $10,033
======= =======
</TABLE>
The above amounts are reflected in the accompanying consolidated balance
sheets as:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Current assets $ 282 $ 645
Noncurrent liabilities 10,955 10,678
------- --------
Net deferred tax liabilities $10,673 $10,033
======= =======
</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 8%, 8% and
12% of operating revenues during 1999, 1998 and 1997, respectively.
10. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the quarterly results of operations for the
years ended December 31, 1999 and 1998 (in thousands, except per share
data):
<TABLE>
<CAPTION>
1999
-----------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
<S> <S> <C> <C> <C>
Operating revenues $30,038 $33,247 $35,475 $34,777
Operating income 1,563 2,900 2,242 1,513
Net income 662 1,415 982 398
Basic and diluted net income per share 0.18 0.40 0.28 0.12
1998
----------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
<S> <C> <C> <C> <C>
Operating revenues $27,888 $30,370 $30,221 $29,644
Operating income 1,157 2,360 2,227 1,583
Net income 459 1,203 1,106 805
Basic and diluted net income per share 0.11 0.29 0.27 0.20
</TABLE>
<PAGE> 24
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Boyd Bros. Transportation Inc.:
We have audited the accompanying consolidated balance sheets of Boyd Bros.
Transportation Inc. and subsidiary as of December 31, 1999 and 1998, and the
related consolidated statements of income, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 1999. 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 consolidated financial statements present fairly, in all
material respects, the financial position of Boyd Bros. Transportation Inc. and
subsidiary as of December 31, 1999 and 1998, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1999 in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Birmingham, Alabama
February 4, 2000
<PAGE> 1
EXHIBIT 21
Subsidiaries of Boyd Bros. Transportation, Inc.
The following companies are subsidiaries of the Registrant:
Subsidiary State of Incorporation
- ---------- ----------------------
Welborn Transport, Inc. Alabama
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements Nos.
33-83768 and 333-78925 of Boyd Bros. Transportation Inc. and subsidiary on Form
S-8 of our reports dated February 4, 2000, appearing in and incorporated by
reference in this Annual Report on Form 10-K of Boyd Bros. Transportation Inc.
and subsidiary for the year ended December 31, 1999.
Birmingham, Alabama
March 27, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BOYD BROS TRANSPORTATION FOR THE YEAR ENDED DECEMBER 31,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,006,826
<SECURITIES> 250,000
<RECEIVABLES> 12,475,739
<ALLOWANCES> (347,000)
<INVENTORY> 326,202
<CURRENT-ASSETS> 22,369,559
<PP&E> 90,562,678
<DEPRECIATION> (28,680,556)
<TOTAL-ASSETS> 99,455,768
<CURRENT-LIABILITIES> 23,418,931
<BONDS> 34,688,582
0
0
<COMMON> 4,082
<OTHER-SE> 30,389,209
<TOTAL-LIABILITY-AND-EQUITY> 99,455,768
<SALES> 133,137,272
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 124,919,580
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,330,170
<INCOME-PRETAX> 5,887,522
<INCOME-TAX> 2,430,152
<INCOME-CONTINUING> 3,457,370
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,457,370
<EPS-BASIC> .99
<EPS-DILUTED> .99
</TABLE>
