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'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.
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.
On December 8, 1997, Boyd acquired WTI Transport, Inc., ("WTI"), (f/k/a Welborn Transport, Inc.) located in Tuscaloosa, Alabama. 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. WTI is operated by Boyd as a stand-alone subsidiary. References to the "Company" contained herein refer to the combined operations of Boyd and WTI. References hereinafter to "Boyd" or "WTI" describe the distinct operations of the parent and subsidiary, respectively.
WTI provides transportation services over shorter routes than those traditionally provided by Boyd. WTI operates primarily in the southeastern United States, with an average length of haul of less than 400 miles. Management believes this enhances WTI's ability to retain quality drivers, as drivers' time away from home is minimized. WTI operated approximately 212 tractors and 296 flatbed trailers as of December 31, 2001. Owner-operators own 172 of the 212 tractors utilized by WTI. The owner-operators of these units are compensated by WTI based upon a percentage of revenue. WTI utilizes agents in some areas to solicit and book freight. During 2000, the Company closed its WTI logistics unit (this unit was reorganized and later reopened at the Boyd division) and WTI closed its specialized over-dimensional transport unit due to a slowdown in freight and a reduction in overall profitability.
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.
Technology. Boyd's strategy has been to utilize technology to provide better service to its customers and to improve operating efficiency. Boyd utilizes satellite-tracking systems that enable Boyd to monitor equipment locations and schedules more effectively and to communicate with both drivers and customers. Customers are also able to track their loads by utilizing Boyd's technology. Boyd has also installed computers on board each of its tractors to monitor fuel efficiency and other operational data. Boyd will continue to monitor and implement technological developments that will enable it to improve customer service and operating efficiency.
Premium Quality Tractors. Boyd continuously upgrades its fleet of tractors. Boyd'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 WTI 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 WTI 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 include, among other things, the pricing arrangements, the products that will be shipped and the specific destination points applicable to the contract. 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 41%, 24% and 16% respectively, of the Company's revenues during the year ended December 31, 2001. 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 years ended December 31, 2001, 2000 and 1999. Customers in the steel industry accounted for 42%, 42% and 45% of the Company's operating revenues for the years ended December 31, 2001, 2000 and 1999, respectively.
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
ITEM 2. PROPERTIES
The Company's corporate headquarters and principal service center are located on a 17.9-acre tract in Clayton, Alabama. These 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. During 2000, the Company completed the construction of an 80,000 sq. ft. terminal in Birmingham, Alabama, which contains several maintenance and safety bays.
The following table sets forth information regarding the location and ownership of each of Boyd's service centers and shuttle facilities:
Additionally, WTI leases its corporate offices in Tuscaloosa, Alabama and also uses the Birmingham Terminal. Additionally WTI leases service centers located as follows:
Atlanta, GA................................Leased
ITEM 3.
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.
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, 2001, either through the solicitation of proxies or otherwise.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock of the Company is listed on The Nasdaq SmallCap Market under the symbol "BOYD". In May 2000, Nasdaq notified the Company that its Common Stock no longer met certain requirements necessary for continued listing on the Nasdaq National Market. In response to this development, the Company elected to voluntarily transfer its Common Stock from the Nasdaq National Market to the Nasdaq SmallCap Market. This transfer became effective, and the Company's Common Stock began trading on the Nasdaq SmallCap Market, on August 30, 2000. As of March 29, 2002, the Common Stock was held by approximately 500 beneficial owners including 71 holders of record. The table below sets forth the reported high and low sales price per share for the Common Stock as reported by the Nasdaq National Market or the Nasdaq SmallCap Market, as applicable, for each fiscal quarter during 2001 and 2000.
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 244,463 and 263,940 shares of the Common Stock in open market or negotiated transactions during 2000 and 1999, for aggregate purchase prices of $1,432,941 and $2,342,746. Under this program the Company still has the authority to purchase approximately 90,000 more shares of its Common Stock. The Company purchased in negotiated transactions 223,239 and 126,000 shares of Common Stock from the former vice-chairman of the Company and the CEO of WTI during 2001 and 2000, respectively, at a price per share of $6.50. 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.
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, 2001.
ITEM 7.
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, 2001.
ITEM 7A.
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, 2001, bore interest at rates ranging from 1.25% to 2.25% 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 $407,000. Management believes that current working capital funds are sufficient to offset any adverse effects caused by changes in these interest rates.
ITEM 8.
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, 2001.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
The Company has filed a Current Report on Form 8-K dated September 21, 2001 reporting, under "Item 4. Changes in Registrant's Certifying Accountant" thereunder, the engagement of BDO Seidman, LLP as the Company's independent accountant in substitution for Deloitte & Touche LLP.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is information concerning the Executive Officers of the Company as of March 29, 2002. Additional information required by Part III, Item 10 is incorporated herein by reference to the Company's definitive Proxy Statement relating to the 2002 Annual Meeting of Stockholders.
Gail B. Cooper, age 51, has served as President and 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 sister of Ms. Tibbs.
Richard C. Bailey, age 51, has served as Chief Operating Officer 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 48, has been the Secretary/Treasurer of Boyd since February 2000, and served as a Director from December 1978 until March 1994. 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 sister of Ms. Cooper.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
All information required by Item 11 is incorporated by reference to the Company's definitive Proxy Statement relating to the 2002 Annual Meeting of Stockholders.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
All information required by Item 12 is incorporated by reference to the Company's definitive Proxy Statement relating to the 2002 Annual Meeting of Stockholders.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
All information required by Item 13 is incorporated by reference to the Company's definitive Proxy Statement relating to the 2002 Annual Meeting of Stockholders.
PART IV
ITEM 14.
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, 2001:
Report of Independent Certified Public Accountants
Consolidated Balance Sheets at December 31, 2001 and
Consolidated Statements of Operations for the years ended December 31, 2001, 2000 and 1999
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2001, 2000 and 1999
Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999
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.
3. Exhibits required by Item 601 of Regulation S-K.
The following exhibits are included in this Form 10-K:
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The following exhibits are incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2001 (File No. 000-23948):
- ------------------ * 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.
10.6 Consulting Agreement dated June 1, 2000 between the Company and Miller Welborn
10.7 Debt Covenant Waiver dated March 27, 2001 from Compass Bank relating to Credit and Security Agreement dated April 11, 2000.
10.8 Waiver and Consent Agreement dated March 28, 2001 by and between the Company and AmSouth Bank N.A. relating to Credit Agreement dated April 1, 1994.
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The following exhibits are incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 000-23948):
Exhibit Number Description
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
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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):
Exhibit Number Description
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
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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):
Exhibit Number Description
* 10.1 First Amendment to Boyd Bros. Transportation Inc. 1994 Stock Option Plan
* 10.3 Employment Agreement between the Company and Steven Rumsey dated December 8, 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.
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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:
Exhibit Number Description
4 Boyd Bros. Transportation Inc. 1999 Employee Stock Purchase Plan
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The following exhibits are incorporated by reference to the Company's Registration Statement on Form S-1 (File No. 33-76756), declared effective on May 9, 1994:
Exhibit Number Description
3.1 Certificate of Incorporation of the Company
3.2 By-laws of the Company
* 10.1 Boyd Bros. Transportation Inc. 1994 Stock Option Plan
* 10.2 Form of the Company's Nonstatutory Stock Option Agreement
10.3 Form of the Company's Nonstatutory Stock Option Agreement for Nonemployee Directors
- ------------- * 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.
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The following exhibit is incorporated by reference to the Company's Amendment to Report on Form 10-Q filed on August 5, 1997:
Exhibit Number Description
10.33 OMNITRACS contract dated February 5, 1997, between the Company and QUALCOMM, Inc.
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The following exhibit is incorporated by reference to the Company's Report on Form 8-K filed on December 19, 1997:
Exhibit Number Description
2.1 Acquisition Agreement dated December 8, 1997, by and among the Company, W-T Acquisition Company, WTI, Miller Welborn and Steven Rumsey
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(b) Reports on Form 8-K
None.
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 29, 2002
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:
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Stockholders of Boyd Bros. Transportation Inc.:
The audit referred to in our report dated January 31, 2002 (except for Note 4, which is as of March 22, 2002), relating to the consolidated financial statements of Boyd Bros. Transportation Inc. and subsidiary, which is incorporated in Item 8 of the Form 10-K by reference to the annual report to stockholders for the year ended December 31, 2001 included the audit of the financial statement schedule for the year ended December 31, 2001, listed in Item 14 of the Form 10-K. This consolidated financial schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audit.
In our opinion such consolidated financial statement schedule for the year ended December 31, 2001, presents fairly, in all material respects, the information set forth therein.
BDO Seidman, LLP
Atlanta, Georgia January 31, 2002
SCHEDULE II
BOYD BROS. TRANSPORTATION INC. VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
For the Three Fiscal Years Ended December 31, 2001 (in Thousands)