-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QDbw/XQxrf2tecoPJ7ESlOSbThWuyM3njDMcdukHvl4N6gN1QiTuuZjGOmfMGCB3 A9kUJIuATr9m5JoyK9mENA== 0000950144-00-004305.txt : 20000331 0000950144-00-004305.hdr.sgml : 20000331 ACCESSION NUMBER: 0000950144-00-004305 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOYD BROS TRANSPORTATION INC CENTRAL INDEX KEY: 0000920907 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 636006515 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-23948 FILM NUMBER: 588806 BUSINESS ADDRESS: STREET 1: 3275 HIGHWAY 30 CITY: CLAYTON STATE: AL ZIP: 36016 BUSINESS PHONE: 3347753261 MAIL ADDRESS: STREET 1: 3275 HWY 30 CITY: CLAYTON STATE: AL ZIP: 36016 10-K 1 BOYD BROS. TRANSPORTATION, INC. 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 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. [ ] ================================================================================ 2 TABLE OF CONTENTS
PAGE ---- 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
3 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. 4 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 2 5 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. 3 6 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. 4 7 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, 5 8 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. 6 9 The following table sets forth information regarding the location and ownership of each of Boyd's service centers and shuttle facilities: 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
Additionally, Welborn owns its corporate offices in Tuscaloosa, Alabama and leases service centers located as follows: Birmingham, AL........................................ Leased Memphis, TN........................................... Leased* Decatur, AL........................................... Leased* Columbia, SC.......................................... Leased* Atlanta, GA........................................... Leased*
*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.
Price Range ------------------- 1999 High Low - ---- ------------------- 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 Price Range ------------------- 1998 High High - ---- ------------------- 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
7 10 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 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.
SCHEDULE NUMBER DESCRIPTION ------ ----------- II Valuation and Qualifying Accounts and Reserves for the Three Fiscal Years Ended December 31, 1999
9 12 3. Exhibits required by Item 601 of Regulation S-K. The following exhibits are included in this Form 10-K:
EXHIBIT NO. 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 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
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 NO. 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 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
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 13
EXHIBIT NO. DESCRIPTION - ------- ----------- 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
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 NO. DESCRIPTION ------- ----------- 4 Boyd Bros. Transportation Inc. 1999 Employee Stock Purchase Plan
The following exhibits are incorporated by reference to the Company's Registration Statement on Form S-1 (File No. 33-76756), declared effective on May 9, 1994:
EXHIBIT NO. DESCRIPTION - ------- ----------- 3.1 Certificate of Incorporation of the Company 3.2 By-laws of the Company 10.1* Boyd Bros. Transportation Inc. 1994 Stock Option Plan 10.2* Form of the Company's Nonstatutory Stock Option Agreement 10.3* Form of the Company's Nonstatutory Stock Option Agreement for Nonemployee Directors 10.13 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.
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 14
EXHIBIT NO. DESCRIPTION - ------ ----------- 10.33 OMNITRACS contract dated February 5, 1997, between the Company and QUALCOMM, Inc.
The following exhibit is incorporated by reference to the Company's Report on Form 8-K filed on December 19, 1997:
EXHIBIT NO. DESCRIPTION - ------ ----------- 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
(b) Reports on Form 8-K None. 12 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:
SIGNATURES TITLE DATE ---------- ----- ---- /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
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 17 SCHEDULE II BOYD BROS. TRANSPORTATION INC. VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE THREE YEARS ENDED DECEMBER 31, 1999
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 - ----------- ------------ ------------ ------------ ------------- -------------- 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 ========= ========== ========= ========== ========
ADDITIONS BALANCE AT CHARGED TO BEGINNING OF COSTS AND BALANCE AT DESCRIPTION YEAR EXPENSES DEDUCTIONS(A) END OF YEAR - ----------- ------------ ------------ -------------- ------------- 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 ========== =========== ========== ===========
(a) Uncollectible accounts written off (b) Addition of Welborn Transport, acquired on December 8, 1997 EX-10.1 2 CREDIT AND SECURITY AGREEMENT 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: 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 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 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 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 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 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 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 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 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 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 11 12 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. 12 13 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 13 14 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, 14 15 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 15 16 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. 16 17 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 17 18 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. 18 19 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 19 20 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 20 21 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. 21 22 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 22 23 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 23 24 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 24 25 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. 25 26 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 26 27 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 27 28 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. 28 29 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. 29 30 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. 30 31 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 ------------------------------- 31 EX-10.2 3 SECURITY AGREEMENT DATED MARCH 16, 1999 1 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. 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. 2 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. 3 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 4 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. 5 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 6 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 7 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. 8 9 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 9 10 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 EX-10.3 4 MASTER NOTE IN THE AMOUNT OF $2,500,000 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. 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] EX-10.4 5 MASTER NOTE IN THE AMOUNT OF $1,750,000 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. 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] EX-13 6 PORTIONS OF THE ANNUAL REPORT 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.
Year Ended December 31, 1999 1998 1997 1996 1995 (in thousands, except per share data) - --------------------------------------------------------------------------------------------------------------------------------- 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 ====================================================================================================================================
(1) Reflects an operating expense (credit) accrued for environmental remediation during 1995. Boyd Bros. Transportation Inc. and Subsidiary Selected Financial Data
December 31, 1999 1998 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------- (in thousands) 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
2 Selected Operating Data: The following table sets forth certain operating data regarding the Company.
Year Ended December 31, 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------- 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
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. 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.
Percentage of Operating Revenues Year Ended December 31, 1999 1998 1997 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% ===============================================================================================
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. 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. 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. 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. 8 BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1999 AND 1998 - --------------------------------------------------------------------------------
1999 1998 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 =========== ===========
9 BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1999 AND 1998 - --------------------------------------------------------------------------------
1999 1998 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.
10 BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 - --------------------------------------------------------------------------------
1999 1998 1997 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 ============= ============= ============
See notes to consolidated financial statements. 11 BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 - --------------------------------------------------------------------------------
ADDITIONAL COMMON PAID-IN RETAINED TREASURY STOCK CAPITAL EARNINGS STOCK TOTAL 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 =========== ============ ============ ============ ===========
See notes to consolidated financial statements. 12 BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 - --------------------------------------------------------------------------------
1999 1998 1997 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 ------------ ------------ ------------
13 BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 - --------------------------------------------------------------------------------
1999 1998 1997 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 =========== =========== ===========
See notes to consolidated financial statements. 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 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 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:
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 ===========
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. 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:
YEAR 2000 $ 72,200 2001 22,615 -------- Total $ 94,815 ========
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:
1999 1998 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 ============ ===========
Future minimum lease rentals for sales-type leases are as follows:
YEAR 2000 $ 5,171,648 2001 5,140,545 2002 4,518,729 2003 1,381,563 ----------- Total $16,212,485 ===========
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 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:
YEAR 2000 $ 663,000 2001 649,230 2002 309,570 ---------- Total $1,621,800 ==========
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:
1999 1998 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 =========== ===========
Revenue equipment obligations are collateralized by revenue equipment. 19 Long-term debt is scheduled to mature as follows:
YEAR 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 ===========
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:
RETENTION AMOUNT PER OCCURRENCE 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
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. 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:
WEIGHTED WEIGHTED AVERAGE AVERAGE EXERCISE FAIR VALUE SHARES PRICE AT GRANT DATE 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 ========
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. 21 The following table summarizes information about fixed stock options as of December 31, 1999:
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 $6.00 - $11.00 456,100 6.9 years $ 9.53 228,830 $ 10.04
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:
AS REPORTED PRO FORMA ------------------------------------------ -------------------------------------------- 1999 1998 1997 1999 1998 1997 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
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:
1999 1998 1997 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
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):
1999 1998 1997 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 ====== ====== ======
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):
1999 1998 1997 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 ====== ====== ======
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):
1999 1998 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 ------- --------
23
1999 1998 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 ======= =======
The above amounts are reflected in the accompanying consolidated balance sheets as:
1999 1998 Current assets $ 282 $ 645 Noncurrent liabilities 10,955 10,678 ------- -------- Net deferred tax liabilities $10,673 $10,033 ======= =======
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):
1999 ----------------------------------------------------------- MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 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 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
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 EX-21 7 SUBSIDIARIES OF THE REGISTRANT 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 EX-23 8 CONSENT OF DELOITTE & TOUCHE LLP 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 EX-27 9 FINANCIAL DATA SCHEDULE
5 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. YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 1,006,826 250,000 12,475,739 (347,000) 326,202 22,369,559 90,562,678 (28,680,556) 99,455,768 23,418,931 34,688,582 0 0 4,082 30,389,209 99,455,768 133,137,272 0 0 124,919,580 0 0 2,330,170 5,887,522 2,430,152 3,457,370 0 0 0 3,457,370 .99 .99
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