-----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, QbJNu8K9M9DwhVGaC2xkf7uJst86tx21UEb6hLXGUoIDXJuzO8il4vGvmKG6/dSf huVH8lsXJ6Wr1PlKdVvqCA== 0000950144-02-003356.txt : 20020415 0000950144-02-003356.hdr.sgml : 20020415 ACCESSION NUMBER: 0000950144-02-003356 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020402 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: 1934 Act SEC FILE NUMBER: 000-23948 FILM NUMBER: 02598782 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 g75017e10-k.txt BOYD BROS. TRANSPORTATION INC. UNITED STATES 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, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-23948 ---------- BOYD BROS. TRANSPORTATION INC. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 63-6006515 - --------------------------------- ----------------------------------- (State or other jurisdiction of) (I.R.S. Employer Identification No.) incorporation or organization 3275 HIGHWAY 30, CLAYTON, ALABAMA 36016 - ---------------------------------------- ------------------------------------- (Address of principal executive offices) (Zip Code) 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, $.001 PAR VALUE 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 VOTING AND NON-VOTING COMMON EQUITY HELD BY NON-AFFILIATES AS OF MARCH 29, 2002 $1,966,888 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. COMMON STOCK, $.001 PAR VALUE, AS OF MARCH 29, 2002: 2,708,099 SHARES 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. [ ] DOCUMENTS INCORPORATED BY REFERENCE List hereunder the following documents if incorporated by reference and the part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). Portions of the Definitive Proxy Statement related to the 2002 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, 2001 in Parts II and IV. 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's strategy is to offer high-quality flatbed transportation services to high-volume, time-sensitive shippers. Because much of the freight hauled by the Company consists of steel products and building materials, time-definite delivery is required. A late delivery can result in a shutdown of a production line at a plant or a delay in a construction project. Management focuses its marketing efforts on those shippers who require time-definite delivery because it believes that service, rather than price, generally will be the primary factor that will dictate their choice of carrier. Management believes that its ability to recruit and retain drivers has been critical to its success, and Boyd has sought to attract and retain drivers by using only high quality, late-model tractors equipped with its two-way satellite communication equipment, and offering financial and other incentives to drivers. Management recognizes that getting drivers home frequently is critical to driver retention. Accordingly, Boyd makes load assignments to drivers that enable each driver to attain his or her goals with respect to both miles driven as well as time at home. In June 1997, Boyd began contracting with independent owner-operators to provide service to its customers. Boyd has also implemented a lease-purchase program, providing Boyd's drivers with both career opportunities at Boyd and the opportunity to own their own tractor. Under the program, the driver leases the tractor from Boyd, along with an option to purchase the tractor. In turn, the driver leases the use of the tractor and the driver's services back to Boyd. In 1998, Boyd added another option under the owner-operator program. Owner-operators are able to lease a new tractor for three and one-half years. Boyd will retain ownership of the tractor at the end of the lease, but this will enable the owner-operator to operate a new tractor and maintain his or her status as an independent contractor. On December 8, 1997, Boyd acquired WTI Transport, Inc., ("WTI"), (f/k/a Welborn Transport, Inc.) located in Tuscaloosa, Alabama. The acquisition was accounted for using the purchase method of accounting and, accordingly, the purchase price was allocated to the assets acquired and liabilities assumed, based upon their estimated fair market values at the acquisition date. WTI is operated by Boyd as a stand-alone subsidiary. References to the "Company" contained herein refer to the combined operations of Boyd and WTI. References hereinafter to "Boyd" or "WTI" describe the distinct operations of the parent and subsidiary, respectively. WTI provides transportation services over shorter routes than those traditionally provided by Boyd. WTI operates primarily in the southeastern United States, with an average length of haul of less than 400 miles. Management believes this enhances WTI's ability to retain quality drivers, as drivers' time away from home is minimized. WTI operated approximately 212 tractors and 296 flatbed trailers as of December 31, 2001. Owner-operators own 172 of the 212 tractors utilized by WTI. The owner-operators of these units are compensated by WTI based upon a percentage of revenue. WTI utilizes agents in some areas to solicit and book freight. During 2000, the Company closed its WTI logistics unit (this unit was reorganized and later reopened at the Boyd division) and WTI closed its specialized over-dimensional transport unit due to a slowdown in freight and a reduction in overall profitability. STRATEGY As discussed above, the Company's business strategy is to offer high-quality flatbed transportation services in the truckload carrier market primarily to high-volume, time-sensitive customers. The key components of the Company's strategy are as follows: 2 Time-Sensitive Shippers. The Company focuses its marketing efforts on high-volume, time-sensitive shippers that are involved primarily in the steel and building materials businesses and require time-definite delivery. Management believes that many large volume shippers in this segment of the industry have reduced the number of carriers they use to only those "core carriers" that offer consistently superior service. The Company intends to continue its focus on developing relationships as a core-carrier for high-volume, time-sensitive shippers. Technology. Boyd's strategy has been to utilize technology to provide better service to its customers and to improve operating efficiency. Boyd utilizes satellite-tracking systems that enable Boyd to monitor equipment locations and schedules more effectively and to communicate with both drivers and customers. Customers are also able to track their loads by utilizing Boyd's technology. Boyd has also installed computers on board each of its tractors to monitor fuel efficiency and other operational data. Boyd will continue to monitor and implement technological developments that will enable it to improve customer service and operating efficiency. Premium Quality Tractors. Boyd continuously upgrades its fleet of tractors. Boyd's management believes that maintaining a young, high-quality fleet of tractors facilitates Boyd's ability to recruit and retain drivers, achieve maximum on-time reliability, maximize fuel economy and convey an image of quality to existing and potential customers. While WTI maintains a fleet of high-quality tractors, the shorter routes over which its vehicles are dispatched enables these units to be serviced more frequently. Accordingly, it has not been necessary for WTI to replace its fleet as frequently as Boyd. CUSTOMERS AND MARKETING The Company markets itself on the basis of quality service and employees, its satellite communication system, the capabilities of its information system to interface with the information systems of its customers, its record of on-time deliveries, and its efficient and well-maintained tractors and trailers. The Company's marketing efforts concentrate on attracting customers that require time-definite delivery and ship multiple loads to and from locations that complement the Company's existing traffic flows. Boyd has written contracts with most of its customers. The contracts include, among other things, the pricing arrangements, the products that will be shipped and the specific destination points applicable to the contract. The contracts generally require the customer to use Boyd for a specified minimum amount of shipments each year and may be terminated by either party upon 30 to 60 days' written notice. The Company's largest 25, 10 and 5 customers accounted for approximately 41%, 24% and 16% respectively, of the Company's revenues during the year ended December 31, 2001. Many of the Company's largest 25 customers are publicly held companies. No single customer accounted for more than 10% of the Company's revenues during the years ended December 31, 2001, 2000 and 1999. Customers in the steel industry accounted for 42%, 42% and 45% of the Company's operating revenues for the years ended December 31, 2001, 2000 and 1999, respectively. OPERATIONS The Company's operations are designed to maximize efficiency and provide quality service to customers. All of Boyd's fleet operations, routing and scheduling are centrally coordinated through a satellite tracking system from its corporate headquarters in Clayton, Alabama. Through the use of Boyd's satellite-based communication system, which is complemented by its fully integrated mainframe computer system, dispatchers monitor the location and delivery schedules of all shipments and equipment to coordinate routes and maximize utilization of Boyd's drivers and equipment. See "Transportation Technology." Boyd conducts its operations through a network of 10 regional and satellite service centers in strategic locations in the eastern two-thirds of the United States. See "Item 2 - 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; Conley, Georgia; Walworth, Wisconsin; and Cofield, North Carolina. 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. 3 WTI's corporate offices are located in Tuscaloosa, Alabama. WTI utilizes independent agents to book freight. These agents are located in Houston, Texas; Knoxville, Tennessee; Weirton, West Virginia; Fort Myers, Florida; Clanton, Alabama; Milford, Ohio; and Dothan, Alabama. 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 emphasizes continuous driver and owner-operator recruitment and training. Drivers are recruited at all of the Company's regional terminal locations and primarily at the Company's corporate headquarters. Drivers attend orientation at the Birmingham terminal. 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 believes that experienced drivers have better safety records than new driver-school graduates, and management believes that their skills will help Boyd improve overall fleet efficiency as a result of higher utilization and historically lower maintenance costs on tractors operated by experienced drivers. As a result, beginning in February 2001, Boyd began hiring only experienced drivers and has discontinued hiring drivers directly from drivers schools. All drivers are required to participate in annual safety training and defensive driving courses for re-certification 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 actively pursues the services of independent owner-operators to complement its fleet. At December 31, 2001, the Company had 835 employees; of these, approximately 610 were Company drivers, 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 362 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, 2001, the Company directly owned or leased through independent contractors (owner-operators) 972 tractors and 1,395 flatbed trailers. The tractors are manufactured by Freightliner and International, and the trailers are manufactured by Utility, Dorsey, 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 its satellite systems as well as its tracking and load tendering ability. 4 Boyd's satellite system 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 planner assigns a load, 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 display unit in each of Boyd's vehicles. The driver can respond to the dispatcher 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. Boyd can electronically record a load assignment, report the load to the billing department and generate customer invoices. In addition, Boyd uses the satellite system 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. Customers are able to access and track their loads through Boyd's Internet web site. Boyd has also equipped its entire fleet of tractors with the SENSORTRACS(C) on-board computer system ("Sensortracs"). 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. Boyd has 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 duplicate the same paperwork again. Additionally, Boyd utilizes a 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. 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 orientation 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 increased its retention, per occurrence, effective July 1, 2001, for auto liability, general liability and cargo coverage. These coverages are included in one occurrence to determine if the retention has been met. The retention amounts effective July 1, 2001 are $500,000 for auto liability, general liability and cargo damage. The Company has been involved in two accidents in the first quarter of 2002 that resulted in third party fatalities. Each of these accidents, taken separately, has the potential to cause the Company to reach its total per occurrence retention amount for insurance purposes. Although no claims have been made against the Company with respect to these accidents, in the event claims are made and the Company ultimately is found to have some liability for these accidents, the Company believes that its operating cash flows and unused lines of credit would be sufficient to cover any amounts payable. The Company currently purchases excess primary and umbrella insurance coverage in amounts that management believes are adequate to supplement its retained liabilities. The Company currently has outstanding letters of credit, totaling approximately $4.5 million at December 31, 2001, to cover liability insurance claims and outstanding claims related to its previously self- insured worker's compensation program. Annual commitment fees relating to these letters of credit do not exceed 1.5% of the face amounts thereof. The Company's auto and insurance rates decreased approximately 5 50.0% during the second half of 2001 due to the Company increasing its retention per occurrence for auto liability, general liability and cargo damage. FUEL Motor carrier service is dependent upon the availability of diesel fuel. The Company's fuel expense comprised 11.4%, 11.2% and 8.7% of revenues in 2001, 2000 and 1999, 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 rationing of petroleum products can have a materially adverse effect on the operations and profitability of the Company. Beginning in the second half of 1999 and continuing throughout 2000, the Company experienced significant increases in the cost of diesel fuel. Diesel fuel prices began to decrease in the fourth quarter of 2001. The Company's customer fuel surcharge reimbursement programs have historically enabled the Company to recover most of the higher fuel prices from its customers compared to normalized average fuel prices. These fuel surcharges, which automatically adjust from week to week depending on the cost of fuel, enable the Company to rapidly recoup the higher cost of fuel when prices increase. Conversely, when fuel prices decrease, fuel surcharges decrease. The Company cannot predict whether fuel prices will continue to decrease or will increase in the future or the extent to which fuel surcharges will be collected to offset such increases. As of December 31, 2001, the Company had no derivative financial instruments to reduce its exposure to fuel price fluctuations. The Company maintains aboveground and underground fuel storage tanks at most of its terminals. Leakage or damage to these facilities could expose the Company to environmental clean-up costs. The tanks are routinely inspected to help prevent and detect such problems. 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 hiring and retaining 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, 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 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 and also legal number of hours of driver operation are 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 6 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. Leakage or damage to these facilities could expose the Company to environmental clean-up costs. The tanks are routinely inspected to help prevent and detect such problems. Currently, management does not know of any 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 of the statements contained in this report constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, identified by the words "believe," "expect," "would," "may," "might," "predict," "outlook," "typically," and words of similar import, 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 risk 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 that may or may not be passed on to the Company's customers, departures and defaults by owner-operators, the cost of complying with governmental regulations that are applicable to the Company, 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. These facilities consist of approximately 22,000 square feet of office space, 12,000 square feet of equipment repair facilities and approximately 3 acres of parking space. During 2000, the Company completed the construction of an 80,000 sq. ft. terminal in Birmingham, Alabama, which contains several maintenance and safety bays. The following table sets forth information regarding the location and ownership of each of Boyd's service centers and shuttle facilities: Clayton, AL.................................Owned, 34,000 sq. ft. Springfield, OH.............................Owned, 21,520 sq. ft. Birmingham, AL..............................Owned, 45,200 sq. ft. Greenville, MS..............................Owned, 1,440 sq. ft. Cofield, North Carolina.....................Owned, 150 sq. ft. Calvert City, KY............................Leased month- to-month Danville, VA................................Leased month- to-month Lisbon Falls, ME............................Leased month- to-month Conley, GA..................................Leased month- to-month Walworth, WI................................Leased month -to-month
7 Additionally, WTI leases its corporate offices in Tuscaloosa, Alabama and also uses the Birmingham Terminal. Additionally WTI leases service centers located as follows: Atlanta, GA................................Leased ITEM 3. 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, 2001, 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 SmallCap Market under the symbol "BOYD". In May 2000, Nasdaq notified the Company that its Common Stock no longer met certain requirements necessary for continued listing on the Nasdaq National Market. In response to this development, the Company elected to voluntarily transfer its Common Stock from the Nasdaq National Market to the Nasdaq SmallCap Market. This transfer became effective, and the Company's Common Stock began trading on the Nasdaq SmallCap Market, on August 30, 2000. As of March 29, 2002, the Common Stock was held by approximately 500 beneficial owners including 71 holders of record. The table below sets forth the reported high and low sales price per share for the Common Stock as reported by the Nasdaq National Market or the Nasdaq SmallCap Market, as applicable, for each fiscal quarter during 2001 and 2000.
Price Range ----------------------------- High Low ----------- ----------- 2001 First Quarter............................$ 3.06 $2.03 Second Quarter.............................2.68 1.88 Third Quarter..............................3.05 2.12 Fourth Quarter.............................3.94 2.15 Price Range ----------------------------- High Low ----------- ----------- 2000 First Quarter ...........................$ 7.38 $5.00 Second Quarter.............................6.00 4.13 Third Quarter..............................4.75 3.56 Fourth Quarter.............................4.25 2.38
8 Management currently anticipates that all of its earnings will be retained for development of the Company's business and does not anticipate paying any cash dividends in the foreseeable future. Future cash dividends, if any, will be at the discretion of the Company's Board of Directors and will depend upon, among other things, the Company's future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, and other factors as the Board of Directors may deem relevant. Pursuant to the Company's stock repurchase program, the Company purchased 244,463 and 263,940 shares of the Common Stock in open market or negotiated transactions during 2000 and 1999, for aggregate purchase prices of $1,432,941 and $2,342,746. Under this program the Company still has the authority to purchase approximately 90,000 more shares of its Common Stock. The Company purchased in negotiated transactions 223,239 and 126,000 shares of Common Stock from the former vice-chairman of the Company and the CEO of WTI during 2001 and 2000, respectively, at a price per share of $6.50. The Company funded these purchases using working capital. On January 8, 1999 the Company purchased 500,000 shares of its outstanding Common Stock from a former Chief Executive Officer of the Company for $3,660,000. The stock purchase was funded by available cash and a bank line of credit. ITEM 6. SELECTED FINANCIAL DATA The information required by this item is incorporated by reference from the information under the caption "Selected Financial Data" in the Company's Annual Report to Stockholders for the year ended December 31, 2001. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information required by this item is incorporated by reference from the information under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report to Stockholders for the year ended December 31, 2001. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK INTEREST RATE RISK The Company is exposed to interest rate risk due to its long-term debt, which at December 31, 2001, bore interest at rates ranging from 1.25% to 2.25% above the applicable bank's LIBOR rate. Under the provisions of Statement of Financial Accounting Standards ("SFAS") No. 107, Disclosures about Fair Value of Financial Instruments, the Company has estimated the fair value of its long-term debt approximates its carrying value, using a discounted cash flow analysis based on borrowing rates available to the Company. The effect of a hypothetical ten percent increase in interest rates would increase the estimated fair value of the Company's long-term debt by approximately $407,000. Management believes that current working capital funds are sufficient to offset any adverse effects caused by changes in these interest rates. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is incorporated by reference from the Consolidated Financial Statements contained in the Company's Annual Report to Stockholders for the year ended December 31, 2001. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE The Company has filed a Current Report on Form 8-K dated September 21, 2001 reporting, under "Item 4. Changes in Registrant's Certifying Accountant" thereunder, the engagement of BDO Seidman, LLP as the Company's independent accountant in substitution for Deloitte & Touche LLP. 9 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Set forth below is information concerning the Executive Officers of the Company as of March 29, 2002. Additional information required by Part III, Item 10 is incorporated herein by reference to the Company's definitive Proxy Statement relating to the 2002 Annual Meeting of Stockholders. Gail B. Cooper, age 51, has served as President and Chief Executive Officer and as a Director of the Company since February 17, 2000. Ms. Cooper served as Secretary of Boyd from December 1969 until February 2000. Ms. Cooper received a B.S. in business administration from Troy State University. She has served Boyd in numerous administrative and accounting positions since joining Boyd full-time in June 1972. Ms. Cooper is the sister of Ms. Tibbs. Richard C. Bailey, age 51, has served as Chief Operating Officer and Chief Financial Officer of the Company since joining Boyd in August 1992, and has served as a Director since February 1995. He served as President and Director of Eastern Inter-Trans Services, Inc., a dry van truckload carrier based in Columbus, Georgia, from December 1989 to August 1992. Mr. Bailey is a certified public accountant with a B.S. in accounting from Georgia State University. He was previously employed in various financial positions by Ernst & Young, Intermet Corporation and Snapper Products (a division of The Actava Group Inc.). Mr. Bailey has served on the Advisory Board of the University of Georgia Trucking Profitability Strategies Conference. Ginger B. Tibbs, age 48, has been the Secretary/Treasurer of Boyd since February 2000, and served as a Director from December 1978 until March 1994. Ms. Tibbs is primarily responsible for collection of Boyd's accounts receivable and has served as Credit Manager since September 1980. Ms. Tibbs received a degree in elementary education from Auburn University. She is the sister of Ms. Cooper. ITEM 11. EXECUTIVE COMPENSATION All information required by Item 11 is incorporated by reference to the Company's definitive Proxy Statement relating to the 2002 Annual Meeting of Stockholders. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT All information required by Item 12 is incorporated by reference to the Company's definitive Proxy Statement relating to the 2002 Annual Meeting of Stockholders. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS All information required by Item 13 is incorporated by reference to the Company's definitive Proxy Statement relating to the 2002 Annual Meeting of Stockholders. 10 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, 2001: Report of Independent Certified Public Accountants Consolidated Balance Sheets at December 31, 2001 and 2000 Consolidated Statements of Operations for the years ended December 31, 2001, 2000 and 1999 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2001, 2000 and 1999 Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999 Notes to Consolidated Financial Statements 2. Financial Statement Schedules. The schedule listed below is included herein immediately after the signature pages hereto. Schedules not listed below have been omitted because of the absence of conditions under which they are required or because the information is included in the financial statements or notes thereto.
Schedule Number Description ------ ----------- II Valuation and Qualifying Accounts and Reserves for the Three Fiscal Years Ended December 31, 2001
3. Exhibits required by Item 601 of Regulation S-K. The following exhibits are included in this Form 10-K:
Exhibit Number Description - ------ ----------- 10.1 March 2002 Waiver between Compass Bank and Boyd Bros. Transportation Inc. 10.2 March 2002 Waiver between Amsouth Bank and Boyd Bros. Transportation Inc. 10.3 Note by and between the Company and Navistar Financial Corp. and Boyd Bros. Transportation Inc. dated November 27, 2001 for $615,564. 10.4 Note by and between the Company and Navistar Financial Corp. and Boyd Bros. Transportation Inc. dated December 19, 2001 in the amount of $4,442,820.
11 13 These portions of the Company's Annual Report to Stockholders for the year ended December 31, 2001 that are specifically incorporated herein by reference. 21 Subsidiaries of the Registrant 23.1 Consent of BDO Seidman, LLP 23.2 Independent Auditors' Report of Deloitte & Touche LLP 23.3 Consent of Deloitte & Touche LLP
- ------------------------------------------------------------------------------- The following exhibits are incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2001 (File No. 000-23948):
Exhibit Number Description - ------ ----------- 10.1 Restated Credit and Security Agreement by and between the Company and Amsouth Bank dated May 1, 2001 10.2 Security Agreement dated May 1, 2001 by and between WTI Transport, Inc. and Amsouth Bank 10.3 Security Agreement dated May 1, 2001 by and between Boyd Bros. Transportation Inc. and Amsouth Bank 10.4 August 2001 Waiver between Compass Bank and Boyd Bros. Transportation Inc. 10.4 November 2001 Waiver between Amsouth Bank and Boyd Bros. Transportation Inc. - ------------------------------------------------------------------------------- The following exhibits are incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2000 (File No. 000-23948): Exhibit Number Description 10.1 Credit and Security Agreement dated April 11, 2000 between the Company and Compass Bank in the amount of $3,267,160 for truck equipment 10.2 Security Agreement dated April 11, 2000 between the Company and Compass Bank in the amount of $3,267,160 for truck equipment *10.3 First Amendment to Acquisition Agreement, Employment Agreement and Covenant Not To Compete dated March 17, 2000 between the Company, Miller Welborn and Steven Rumsey 10.4 Second Amendment to Acquisition Agreement dated May 30, 2000 between the Company, Miller Welborn and Steven Rumsey *10.5 Second Amendment to Employment Agreement dated May 22, 2000 between the Company and Steven Rumsey
- ------------------ * 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. 12 10.6 Consulting Agreement dated June 1, 2000 between the Company and Miller Welborn 10.7 Debt Covenant Waiver dated March 27, 2001 from Compass Bank relating to Credit and Security Agreement dated April 11, 2000. 10.8 Waiver and Consent Agreement dated March 28, 2001 by and between the Company and AmSouth Bank N.A. relating to Credit Agreement dated April 1, 1994. - ------------------------------------------------------------------------------- The following exhibits are incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 000-23948): Exhibit Number Description 10.1 Credit and Security Agreement dated March 16, 1999 between the Company and Compass Bank in the amount of $10,000,000 for truck equipment 10.2 Security Agreement dated March 16, 1999 between the Company and Compass Bank in the amount of $10,000,000 for truck equipment - ----------------------------------------------------------------------------- The following exhibits are incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 000-23948): Exhibit Number Description 10.1 Credit and Security Agreement dated February 28, 1996 between the Company and Compass Bank in the amount of $5,000,000 for truck equipment 10.2 Credit and Security Agreement dated May 29, 1998 between the Company and Compass Bank in the amount of $4,500,000 for truck equipment - ------------------------------------------------------------------------------ The following exhibits are incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1997 (File no. 000-23948): Exhibit Number Description * 10.1 First Amendment to Boyd Bros. Transportation Inc. 1994 Stock Option Plan * 10.3 Employment Agreement between the Company and Steven Rumsey dated December 8, 1997 - ------- * Identifies each exhibit that is a "management contract or compensatory plan or arrangement" required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 14(c) of Form 10-K. - ------------------------------------------------------------------------------ 13 The following exhibit is incorporated by reference to the Company's Registration Statement on Form S-8 (File No. 333-78925), declared effective on May 20, 1999: Exhibit Number Description 4 Boyd Bros. Transportation Inc. 1999 Employee Stock Purchase Plan - ------------------------------------------------------------------------------- The following exhibits are incorporated by reference to the Company's Registration Statement on Form S-1 (File No. 33-76756), declared effective on May 9, 1994: Exhibit Number Description 3.1 Certificate of Incorporation of the Company 3.2 By-laws of the Company * 10.1 Boyd Bros. Transportation Inc. 1994 Stock Option Plan * 10.2 Form of the Company's Nonstatutory Stock Option Agreement 10.3 Form of the Company's Nonstatutory Stock Option Agreement for Nonemployee Directors - ------------- * Identifies each exhibit that is a "management contract or compensatory plan or arrangement" required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 14(c) of Form 10-K. - ------------------------------------------------------------------------------ The following exhibit is incorporated by reference to the Company's Amendment to Report on Form 10-Q filed on August 5, 1997: Exhibit Number Description 10.33 OMNITRACS contract dated February 5, 1997, between the Company and QUALCOMM, Inc. - ------------------------------------------------------------------------------ The following exhibit is incorporated by reference to the Company's Report on Form 8-K filed on December 19, 1997: Exhibit Number Description 2.1 Acquisition Agreement dated December 8, 1997, by and among the Company, W-T Acquisition Company, WTI, Miller Welborn and Steven Rumsey - ------------------------------------------------------------------------------- (b) Reports on Form 8-K None. 14 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BOYD BROS. TRANSPORTATION INC. By /s/ GAIL B. COOPER -------------------------------------------- Gail B. Cooper President and Chief Executive Officer Date: March 29, 2002 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Signature Title Date --------- ----- ---- /s/ GAIL B. COOPER Chief Executive Officer, President March 29, 2002 - -------------------------------------------- and Director Gail B. Cooper (Principal Executive Officer) /s/ RICHARD C. BAILEY Chief Operating Officer, Chief March 29, 2002 - -------------------------------------------- Financial Officer and Director Richard C. Bailey (Principal Financial and Accounting Officer) /s/BOYD WHIGHAM Chairman and Director March 29, 2002 - -------------------------------------------- Boyd Whigham /s/J. MARK DUNNING Director March 29, 2002 - -------------------------------------------- J. Mark Dunning /s/STEPHEN J. SILVERMAN Director March 29, 2002 - -------------------------------------------- Stephen J. Silverman /s/J. LARRY BAXTER Director March 29, 2002 - -------------------------------------------- J. Larry Baxter
15 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors and Stockholders of Boyd Bros. Transportation Inc.: The audit referred to in our report dated January 31, 2002 (except for Note 4, which is as of March 22, 2002), relating to the consolidated financial statements of Boyd Bros. Transportation Inc. and subsidiary, which is incorporated in Item 8 of the Form 10-K by reference to the annual report to stockholders for the year ended December 31, 2001 included the audit of the financial statement schedule for the year ended December 31, 2001, listed in Item 14 of the Form 10-K. This consolidated financial schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audit. In our opinion such consolidated financial statement schedule for the year ended December 31, 2001, presents fairly, in all material respects, the information set forth therein. BDO Seidman, LLP Atlanta, Georgia January 31, 2002 SCHEDULE II BOYD BROS. TRANSPORTATION INC. VALUATION AND QUALIFYING ACCOUNTS AND RESERVES For the Three Fiscal Years Ended December 31, 2001 (in Thousands)
Additions Additions Balance Charged to Charged to Balance at Beginning Costs and Other Description Of Year Expenses Accounts Deduction(a) End of Year - ----------- ------------ ------------ ------------ --------------- ----------- Allowance for doubtful accounts- deducted from trade receivables in the balance sheet Year ended December 31, 2001 $ 276 $ 625 $ $ 582 $ 319 =============================================================================== Year ended December 31, 2000 $ 347 $ 84 $ $ 155 $ 276 =============================================================================== Year ended December 31, 1999 $ 272 $ 220 $ $ 145 $ 347 ===============================================================================
Additions Balance at Charged to Balance at Beginning Costs and Description Of 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, 2001 $ 678 $ 2,738 $ 1,826 $ 1,590 ============================================================ Year ended December 31, 2000 $ 910 $ 651 $ 883 $ 678 ============================================================ Year ended December 31, 1999 $ 1,201 $ 1,259 $ 1,550 $ 910 ============================================================ (a) Uncollectible accounts written off.
EX-10.1 3 g75017ex10-1.txt MARCH 2002 WAIVER/COMPASS BANK EXHIBIT 10.1 (COMPASS BANK LOGO) Compass Bank P.O. Box 2006 Dothan, Alabama 36302 334-712-7030 March 22, 2002 Mr. Richard Bailey Boyd Bros. Transportation, Inc. 3275 Highway 30 Clayton, AL 36016 RE: CREDIT AND SECURITY AGREEMENT BETWEEN COMPASS BANK ("BANK") AND BOYD BROS. TRANSPORTATION, INC. ("BORROWER") DATED APRIL 11, 2000 Dear Richard: For the period ending December 31, 2001, Boyd Bros. Transportation, Inc. was in violation of Section 6.01 of the above referenced Credit and Security Agreement (as amended, the "Agreement"). This is the Cash Flows-to-Current Maturity of Long Term Debt covenant. You have requested and Bank has agreed to waive the default of the covenant under the Loan Agreement existing as of December 31, 2001 solely by virtue of the violation of Section 6.01 of the Agreement, as outlined above. This one-time limited waiver is effective only in the specific instance and for the purpose for which given and nothing contained or provided herein shall be construed as granting a waiver of any default except as specifically set forth herein or as allowing Borrower to violate or fail to perform fully (i) Section 6.01 after December 31, 2001 or (ii) any other provisions of the Loan Documents at any time. If the terms of this letter are acceptable to you, please execute this letter below and return the original hereof to the Bank. Sincerely, /s/ Jim Tate Jim Tate Vice President AGREED AND ACCEPTED BY: BOYD BROTHERS TRANSPORTATION, INC. /s/ Richard Bailey - --------------------------- its COO ----------------------- EX-10.2 4 g75017ex10-2.txt MARCH 2002 WAIVER/AMSOUTH BANK EXHIBIT 10.2 WAIVER AND CONSENT AGREEMENT THIS WAIVER AND CONSENT AGREEMENT ("this Agreement"), effective as of December 31, 2001, but executed on March 22, 2002, is entered into by BOYD BROTHERS TRANSPORTATION, INC, a Delaware corporation (the "Borrower"), and AMSOUTH BANK, an Alabama banking corporation (the "Lender"). RECITALS A. The Borrower and the Lender have entered into a Credit Agreement dated as of May 1, 2001, as amended (the "Credit Agreement"). B. The Borrower has requested that the lender enter into this Agreement in order to grant certain consents and waivers with respect to the Credit Agreement as hereinafter described. AGREEMENT NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual agreements of the parties hereto: 1. The parties agree that capitalized terms used in this Agreement and not otherwise defined herein have the respective meanings attributed thereto in the Credit Agreement. 2. The Lender consents to and waives the failure of the Borrower to: (a) Not permit its ratio of EBITDA plus the Net Gain from the sale of rolling stock to Interest Expense and Principal Maturities measured as of the end of each June 30 and December 31 of each year for the previous four fiscal quarters to be less than 1.25 to 1.0. 3. This agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument, but only one of which need to be produced. 4. The Borrower hereby represents and warrants that all representations and warranties contained in the Credit Agreement are true and correct as of the date hereof (except representations and warranties that are expressly limited to an earlier date); and the borrower certifies that except for those matters waived or consented to herein, no Event of Default nor any event that, upon notice or lapse of time or both, would constitute and Event of Default, has occurred and its continuing. 5. Nothing contained herein shall be construed as a waiver, acknowledgment or consent to any breach or Event of Default of the Credit Agreement and the Credit Documents not specifically mentioned herein, and the consents granted herein are effective only in the specific instance and for the purposes which given. 6. This Agreement shall be governed by the laws of the State of Alabama. IN WITNESS WHEREOF, each of the Borrower and the Lender has caused this Agreement to be executed by its duly authorized officer as of the day and year first above written. BOYD BROTHERS TRANSPORTATION, INC. AMSOUTH BANK BY: /s/ Aubrey Baugh III BY: /s/ Paul Walker ----------------------------- ---------------------------- ITS: /s/ Vice President ITS: /s/ Vice President ---------------------------- --------------------------- EX-10.3 5 g75017ex10-3.txt NOTE BY AND BETWEEN THE COMPANY/NAVISTAR FINANCIAL EXHIBIT 10.3 (LOGO) Navistar Financial COMMERCIAL LOAN AND SECURITY AGREEMENT Corporation (FOR NEW OR USED MOTOR VEHICLES AND EQUIPMENT) Agreement Date: 11/27/2001
The undersigned Borrower hereby applies to Navistar Financial Corporation ("Lender") for a loan of the Unpaid Balance shown below, on the following terms and conditions, in connection with the purchase from seller of the equipment described below (the "Goods"). Borrower hereby acknowledges delivery, inspection and acceptance of the Goods, represents that the Goods are being purchased for a business or commercial purpose and authorizes disbursement of loan proceeds to seller in payment for Goods or other obligations of Borrower.
Lender Information Borrower Information: Lender Number 001479-000 Boyd Bros. Transportation, Inc. 937-525-0341 Navistar Financial Corp. 825 West Laffels Lane SSN#/TAX-ID Rolling Meadows, IL Springfield, OH 45506 CUSTOMER# APPROVAL NUMBER: 01292276 COUNTY: 4706016
DESCRIPTION OF EQUIPMENT
VEHICLE NEW YEAR USED MANUFACTURER MODEL SERIAL NUMBER OTHER EQUIPMENT UNIT NUMBER - ------- ---- ------------ ----- ------------- --------------- ----------- SEE ADDENDUM - SCHEDULE A
DESCRIPTION OF TRADE-IN
GROSS LESS AMOUNT TRADE-IN YEAR MANUFACTURER MODEL SERIAL NUMBER BODY TYPE ALLOWANCE OWING (NET ALLOWANCE) - ---- ------------ ----- ------------- --------- --------- ----------- ---------------
INSURANCE COVERAGE NO LIABILITY INSURANCE INCLUDED PHYSICAL DAMAGE: Physical damage insurance satisfactory to Lender is required. The Borrower may choose the person through which the insurance is to be obtained or provide such insurance through an existing policy subject to Lender's right to refuse to accept any such insurer for any reasonable cause. If physical damage insurance is included in this Agreement, the cost of insurance shall be ___________ as set forth in item 6a and the following coverages are provided for a term of ______ months from the date of delivery. Deductible Other Than Collision (Specified Perils, Comprehensive or Fire, Theft and Combined Additional Coverage, as per attached insurance application.) Deductible Collision - -------------------------------------------------------------------------------- Name of Physical Damage Insurance Company Agent Name/Phone Texas Residents Only: If physical damage insurance is obtained through the Lender and placed with a county mutual insurance company, the premium or rate of charge is not fixed or approved by the Texas State Board of Insurance. CREDIT LIFE INSURANCE IS NOT REQUIRED. If a charge is include in 6b it is understood credit life insurance is requested in this Agreement and the Borrower signing below is the insured. Borrower hereby acknowledges receipt of a certificate containing the terms of such insurance through Agent: - -------------------------------------------------------------------------------- Name of Credit Life Insurance Company Agent Name/Phone SALE ANALYSIS 1. CASH PRICE $555,408.00 2. SALES AND OTHER TAXES $ 60,156.00 3. CASH PRICE + TAX (1 + 2) $615,564.00 4. a. CASH DOWN PAYMENT b. TRADE-IN (NET ALLOWANCE) TOTAL DOWN PAYMENT (4a + 4b) 5. UNPAID BALANCE OF CASH PRICE (3 LESS 4) $615,564.00 6. a. PHYSICAL DAMAGE b. CREDIT LIFE INSURANCE c. CERTIFICATE OF TITLE FEE d. OFFICIAL FEES e. OPTIONAL SERVICE/EXTENDED WARRANTY f. OTHER TOTAL OTHER CHARGES (Total of 6a. to 6f.) 7. TOTAL CHARGES INCURRED (5 + 6) $615,564.00
8. PROMISSORY NOTE: If this Agreement is accepted by Lender, Borrower promises to pay to Lender or to its order the Unpaid Balance (Amount Financed) set forth in Line 7 above, together with interest from the date of this Agreement, in installments as set forth below: Borrower agrees to pay Lender the "UNPAID BALANCE" plus interest in the amount of $94,185.00 computed at a rate equivalent to 5.75% per annum in installments as set forth below.
# of Amount of # of Amount of # of Amount of Payments Payment Beginning Payments Payment Beginning Payments Payment Beginning - -------- ---------- ---------- -------- --------- --------- -------- --------- --------- 60 $11,829.15 12/27/2001
FOR USE IN SOUTH CAROLINA ONLY: WAIVER OF HEARING PRIOR TO IMMEDIATE POSSESSION: BORROWER HEREBY EXPRESSLY AGREES THAT, SHOULD THE LENDER BE ENTITLED TO POSSESSION OF THE GOODS DESCRIBED ABOVE OR ITS PROCEEDS UNDER THE TERMS OF THIS AGREEMENT OR ANY DOCUMENT EXECUTED IN CONNECTION HEREWITH (INCLUDING ANY FURTHER EXTENSIONS, RENEWALS, ETC.) BORROWER WAIVES ITS RIGHT TO NOTICE AND AN OPPORTUNITY TO BE HEARD PRIOR TO REPOSSESSION OF THE GOODS BY LENDER. NOTICE TO BORROWER: 1. Do not sign this Agreement before you read it or if it contains blank spaces. 2. You are entitled to a completely filled-in copy of the Agreement when you sign it. 3. Under the law, you have the following rights, among others: (a) to pay off in advance the full amount due and to obtain a partial refund of the interest charges based on the actuarial method unless another method is required by law; (b) to redeem the Goods if repossessed for default; (c) to require, under certain conditions, a resale of the Goods if repossessed. 4. If you desire to pay off in advance the full amount due, the amount of refund you are entitled to, if any, will be furnished upon request. 5. In Texas, this Agreement may be subject in whole or in part to Texas law which is enforced by the Consumer Credit Commissioner, 2601 North Lamar, Austin, Texas 78705-4207. Telephone (512) 479-1285, (214) 263-2016, (713) 461-4074. - -------------------------------------------------------------------------------- Page 1 of 3 COMMERCIAL LOAN AND SECURITY AGREEMENT FOR: Boyd Bros. Transportation, Inc. - Agreement Number 38 FH1796P - FIL (v2.0 Jun 26, 2000) ADDITIONAL PROVISIONS LATE PAYMENTS: In addition to promising to pay the total payments as set forth above. Borrower promises to pay past due interest accrued from maturity on each installment in default more than 10 days at the highest rate permitted by law. Borrower also agrees to pay all expenses actually incurred, including attorney fees, in collecting any amount payable under this Agreement, all to the extent allowed by law. PARTIES: As used herein, "Borrower" shall include all persons who sign as "Borrower(s)." "Lender" shall mean Navistar Financial Corporation, its successors and assigns. "Affiliates" shall include all entities directly or indirectly controlling or controlled by or under common control with Lender including but not limited to Harco Leasing Company, Inc and Navistar Leasing Company. Upon notice of assignment, Borrower agrees to make payments hereunder directly to assignee. Assignee shall be entitled to all rights of Lender free from any defense, set-off or counterclaim by the Borrower against the Lender, except as required by law. Seller shall not be the agent of Lender for transmission of payments or otherwise. NO WARRANTIES BY LENDER: Borrower agrees that Lender is neither the seller nor the manufacturer of the Goods, and has not made and does not make any representation, warranty or covenant with respect to the Goods, either express or implied, written or oral, including but not limited to any representation, warranty or covenant with respect to condition, quality, safety, durability, merchantability, or fitness for a particular purpose. Borrower selected the Goods and hereby agrees that any and all claims that Borrower has or may in the future have against the seller and/or manufacturer shall not be asserted as an offset against Lender, including but not limited to any claims in product liability. USE OF PROPERTY: Borrower shall hold and use the Goods at its risk and expense with respect to loss or damages, and taxes and charges of every kind; shall take proper care of the Goods and shall not abuse or misuse the same; shall not sell, assign or transfer its interest in the Goods or remove the Goods from the jurisdiction in which they now reside without the prior written consent of Lender; shall not use the Goods for any illegal purpose and shall not attach any of the Goods to any real estate or to any other property in such a manner as to become a part thereof. If Borrower fails to pay said taxes and said charges, Lender may, at its election, either do so and charge same to Borrower or treat such failure as a breach of condition of this agreement. Any amount so paid by the Lender shall become a part of the indebtedness secured hereunder. PHYSICAL DAMAGE INSURANCE: If a cost for physical damage insurance is included in the Agreement, Borrower hereby assigns to Lender the right to cancel such insurance, If any insurance included in this Agreement is cancelled, whether by request of the Borrower or the Lender, or action of the Insurance Company, Lender is hereby authorized on behalf of Borrower to receive any unearned premium refund. If no cost of physical damage insurance is included in this Agreement, Borrower agrees to promptly insure the goods at its own expense with a company acceptable to the Lender against loss by fire, theft and collision for the period of the term of this Agreement and in such amounts and upon such terms as are acceptable to Lender. Borrower specifically covenants to name Lender as loss payee as its interest may appear. Lender may, in its sole discretion, apply any proceeds of insurance received by it to any indebtedness owed by Borrower to Lender or its Affiliates. PLACEMENT OF PHYSICAL DAMAGE INSURANCE: Unless Borrower provides Lender with evidence of the insurance coverage required by this Agreement, Lender may, but will not be obligated to, purchase insurance at Borrowers expense to protect Lenders interest in the Goods. This insurance may, but need not, protect Borrower's interests. The coverage that Lender purchases may not pay any claim that Borrower makes or any claim that is made against Borrower in connection with the Goods. Borrower may later cancel any insurance purchased by lender, but only after providing Lender with evidence that Borrower has obtained other insurance as required by the Agreement. If Lender purchases insurance for the Goods, Borrower will be responsible for the costs of such insurance including interest and any other charge Lender may impose in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance. The cost of the insurance may be added to Borrower's outstanding balance due and owing Lender under the Agreement. The cost of the insurance may be more than the cost of insurance Borrower may be able to obtain on its own. SECURITY INTEREST: In order to secure performance and payment of the loans made be Lender to Borrower and all of Borrowers obligations and indebtedness hereunder and of all other amounts due or to become due hereunder and to secure each and every other obligation or indebtedness of every kind and description and howsoever arising, now or hereafter owing by Borrower to Lender or its Affiliates, Lender hereby retains, and Borrower hereby grants, a purchase money security interest under the Uniform Commercial Code in and to the Goods described above, together with all replacements, repairs and accessions thereto and cash and the non-cash proceeds (including insurance proceeds) thereof. The security interest hereby granted is a separate, independent security interest that is in addition to, and not in substitution for, any and all security interests heretofore or hereafter granted by Borrower to Lender. This Agreement is not an amendment to or modification of, or a waiver or release by Lender of, any term, provision or condition of any other agreement between Borrower and Lender. Further, Lender hereby retains and Borrower hereby grants a security interest in the proceeds of any physical damage, credit life and or disability insurance for which a charge is stated above or which is supplied by Borrower, and ii a charge for any such insurance has been included in this Agreement, a security interest in the refund of any unearned premiums in the event suds insurance is terminated or canceled for any reason. Borrower will not grant any other security interest in and to the Goods described above, without the prior written consent of Lender. Borrower shall cause or cooperate with Lender in causing Lender's security interest in the Goods to become properly perfected under state law through filing of a financing statement or notation on appropriate perfection documents. DEFAULT: For Use In All States Except Louisiana. Time is of the essence hereof and if Borrower defaults in anyone of the payment on the loan or other payment provided for herein when due or breaches any other covenant or condition of this Agreement, or any other contract or agreement between Borrower and Lender or its affiliates or if the Goods are levied upon, or Borrower becomes bankrupt or insolvent or a petition in bankruptcy is filed by or against the Borrower, then Lender may, in its sole option and discretion in any such event declare the total amount unpaid hereunder, including accrued delinquency charges, and excluding unearned interest immediately due and payable and may take possession of the Goods in a lawful manner wherever found without notice, demand or legal process, or may require the Borrower to assemble the Goods and make it available to the Lender at a place to be designated by the Lender, and where not prohibited by law, may sell the same at public or private sale, with or without notice, at which sale Lender may become the purchaser, may deduct from the proceeds of any such sale all taxes and charges due on the Goods and all expenses of taking, removing, holding, repairing and selling the Goods, and may apply the net proceeds to any indebtedness of Borrower, returning to Borrower any surplus or holding Borrower liable for any deficiency; and in consideration of the use of the Goods and for diminution in saleable value thereof, Lender may retain all payments made; or Lender may pursue any other remedy provided by law. Lender may accept partial payments of any sum due without waiving or otherwise modifying the terms of this Agreement and the Waiver by Lender of a breach of any condition of this Agreement shall not constit0e a waiver of any subsequent breach whether or not of a like character. In the event of bankruptcy or other insolvency proceedings, in addition to the above remedies, the Lender shall be entitled to any rental or other income produced by the Goods prior to its release to Lender. Page 2 of 3 COMMERCIAL LOAN AND SECURITY AGREEMENT FOR: BOYD BROS. TRANSPORTATION, INC - AGREEMENT NUMBER: 38 FH1796P - FIL (v2.0 Jun 26, 2000) ADDITIONAL PROVISIONS-(Continued) DEFAULT: For Use In Louisiana Only. Borrower does hereby confess judgement in favor of the Lender or any subsequent holder of this agreement for principal, interest, attorney's fees, and costs; and does hereby declare that if anyone of the payments on the loan or other payment provided for herein is not fully paid when due, if default be made in compliance with any condition or covenant herein, or proceedings in bankruptcy, insolvency or receivership be instituted by or against the Borrower, or if any action is taken looking toward the appointment of a receiver, syndic or curate of Borrower or if the property be used in violation of any state or Federal law, such violation shall constitute a breach of this Agreement which shall ipso facto be immediately due and exigible in its entirety and the Lender may cause all and singular the Goods herein described to be seized and sold under executory or other legal process in any court, without appraisement, to the highest bidder, payable in cash. Borrower hereby specifically waives the three (3) day notice of demand provided by Article 2639 of the Louisiana Code of Civil Procedure and Notice of Appraisement set forth under Article 2723 of the Louisiana Code of Civil Procedure and all pleas of division and discussion and the benefit of appraisement or the said Lender may and is hereby authorized to take immediate possession of the Goods wherever found without process of law and hold same until the amount due and either at public or private sale without demand for performance of without notice to the Borrower, with or without having the Goods at the place of sale. The Lender, or future holder of this Agreement, shall have the right to bid at any public sale. From the proceeds of such sale, the Lender, or future holder of this Agreement, shall deduct all expenses for retaking, repairing and selling the Goods, including a reasonable attorney's fee. CO-BORROWER: The obligation of any co-borrower hereunder shall be primary and the co-borrower shall be jointly and severally liable with the Borrower for payment in full of all amounts due or to become due pursuant to the terms and conditions of this Agreement. GENERAL: Borrower hereby covenants that all facts and information contained herein and in the credit application are true and correct as of the date hereof and specifically warrants that there are no other amounts owing on the trade-in equipment except as may be indicated herein. Renewal, extension, or assignment of this Agreement shall not release Borrower or Co-Borrower from any obligations hereunder. POWER OF ATTORNEY: Borrower hereby irrevocably authorizes and empowers Lender to execute, sign, and file on Borrowers) behalf any financing statement, continuation statement or any other document related to the perfection or protection of the security interest hereby created, if allowed by law. APPLICATION OF PAYMENTS: Each payment received on the loan shall be applied first to accrued interest and delinquency charges and then to the balance of any amount financed then outstanding. SAVINGS CLAUSE: Should any provision of this Agreement be or become invalid, illegal, prohibited or unenforceable by law or otherwise, then such provision shall be void; however, such impairment shall not in any way invalidate or impair the remainder of this Agreement or any other of its provisions. If the rate of interest or other charges set forth hereunder shall exceed the applicable maximum, then such rate shall be reduced to such maximum and any excess interest or charge that may have been collected shall, at the option of the Borrower, either be refunded in cash or applied as a credit to unpaid principal. In no event shall Borrower be obligated to pay such excess charges. ACCEPTANCE BY LENDER, CHOICE OF LAW: This Agreement is not binding until accepted by Lender in Illinois. Except as prohibited bylaw, the construction and validity of this Agreement shall be controlled by the law of Illinois, where this Agreement is entered into, and applicable federal law. This Agreement is entered into in Illinois and all loans made by the Lender will be extended from Illinois. The validity and enforcement of the security interest granted hereunder shall be controlled by the law of jurisdiction where the Goods are to be kept and used. QUARTERLY PRIME RATE: As used in this Agreement the "Quarterly Prime Rate" shall mean for each calendar quarter, the Prime Rate as published in the Wall Street Journal on the last business day of the month immediately preceding the first day of each calendar quarter. QUARTERLY LIBOR RATE: Shall mean, for each calendar quarter, the 90-day London Interbank Offered Rate as published in the Wall Sheet Journal on the last business day of the month immediately preceding the first day of each calendar quart. WAIVER OF JURY TRIAL: BORROWER WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION RELATING TO THIS AGREEMENT. - -------------------------------------------------------------------------------- THIS SPACE INTENTIONALLY LEFT BLANK - -------------------------------------------------------------------------------- All payments shall be paid to Lender at P.O. Box 96070, Chicago, IL 60693-6070 or as otherwise directed by Lender to Borrower in writing. Telephone inquiries should be directed to Navistar Financial Corporation (847) 734-4000. All other correspondence should be sent to Lender at P.O. Box 4024, Attn; FSC, Schamburg, IL 10168-4024 ==================================================================================================================================== BORROWER HAS READ AND AGREES TO ALL TERMS, PROVISIONS AND CONDITIONS CONTAINED IN THIS THREE PAGE AGREEMENT, AGREES THAT THIS AGREEMENT CONTAINS THE ENTIRE AGREEMENT BETWEEN BORROWER AND LENDER RELATING TO THIS LOAN FOR THE PURCHASE OF THE GOODS, AND SUPERSEDES ALL PREVIOUS AGREEMENTS, EXCEPT AS TO AGREEMENTS BETWEEN BORROWER AND LENDER. - ----------------------------------------------------------------------------------------------------------------------------------- THIS AGREEMENT IS SUBJECT TO THE TERMS OF THE RETAIL BORROWER ACKNOWLEDGES RECEIPT OF AN EXACT COPY FINANCING ARRANGEMENT BETWEEN BORROWER AND SELLER. --------------------------------------------------------------- INITIAL FOR. NAME OF BORROWER: Boyd Bros. Transportation, Inc. NON-RECOURSE GUARANTY ---------------- ---------------- AUTHORIZED SIGNATURE FOR SELLER (NAME OF INDIVIDUAL(S), CORPORATION OR PARTNERSHIP. GIVE STYLE IF ANY AFTER NAME.) BY ------------------------------------------------------------- (SIGNATURE OF OWNER, OFFICER, OR AUTHORIZED REP.) (TITLE) BY /s/ Richard Bailey TITLE C.0.0. ===================================================================== -------------------------- ------------- LENDERS ACCEPTANCE (IF CORPORATION, AUTHORIZED PARTY MUST SIGN AND SHOW CORPORATE ===================================================================== TITLE. IF PARTNERSHIP, A GENERAL PARTNER MUST SIGN. IF Lender. Navistar Financial Corporation Accepted by Lender at: OWNER(S) OR PARTNER, SHOW WHICH.) 2850 West Golf-Road, Rolling Meadows, IL, 60008 BY DATE BY TITLE ------------------------------------------ ------------ -------------------------- ------------- AUTHORIZED REPRESENTATIVE (IF CO-BORROWER, CO-PARTNER OR CO-OFFICER, SIGN HERE AND SHOW WHICH.) ====================================================================================================================================
Page 3 of 3 COMMERCIAL LOAN AND SECURITY AGREEMENT FOR: BOYD BROS. TRANSPORTATION, INC - AGREEMENT NUMBER: 38 FH1796P - FIL (v2.0 Jun 26, 2000) COMMERCIAL LOAN AND SECURITY AGREEMENT - SCHEDULE A AGREEMENT DATE: 11/27/2001 (NAVISTAR FINANCIAL CORPORATION LOGO) SELLER INFORMATION BORROWER INFORMATION - ----------------------------------------------------------------------------------------------------------------------------------- International Truck & Engine Corp. Boyd Bros. Transportation, Inc. 937-525-0341 Chicago, IL 825 West Laffels Lane SELLER NUMBER: 001479-000 Springfield, OH 45506 APPROVAL NUMBER: 01292276 SSN#/TAX-ID: COUNTY: CUSTOMER#: 4706016 - -----------------------------------------------------------------------------------------------------------------------------------
EQUIPMENT DESCRIPTION - ----------------------------------------------------------------------------------------------------------------------------------- VEHICLE NEW UNIT YEAR USED MANUFACTURER MODEL SERIAL NUMBER EQUIPMENT TYPE UNIT PRICE NUMBER - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820022008881 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820222008882 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820422008883 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820622008884 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820822008885 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820822008885 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820X22008869 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820822008860 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820522008844 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820522008861 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820722008859 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820622008867 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820822008868 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820622008870 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820822008871 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820X22008872 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820122008873 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820322008874 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820522008875 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820722008876 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820922008877 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820022008878 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820222008879 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820922008880 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820X22008886 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820122008887 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820322008888 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820522008889 Trailer $15,428.00 - -----------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL LOAN AND SECURITY AGREEMENT FOR BOYD BROS. TRANSPORTATION, INC - AGREEMENT NUMBER: 38 Page 1 Schedule A-Generated By FIL EQUIPMENT DESCRIPTION - ----------------------------------------------------------------------------------------------------------------------------------- VEHICLE NEW UNIT YEAR USED MANUFACTURER MODEL SERIAL NUMBER EQUIPMENT TYPE UNIT PRICE NUMBER - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820122008890 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820322008891 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820522008892 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820722008893 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820922008894 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820022008895 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820222008896 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820422008897 Trailer $15,428.00 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New TRANSCRAFT 48' Flatbed 1TTF4820622008898 Trailer $15,428.00 - -----------------------------------------------------------------------------------------------------------------------------------
BOYD BROS. TRANSPORTATION, INC. /s/ Richard Bailey - --------------------------------- ----------------------------------------- SIGNATURE SELLER SIGNATURE C.O.O. - --------------------------------- Title COMMERCIAL LOAN AND SECURITY AGREEMENT FOR BOYD BROS. TRANSPORTATION, INC - AGREEMENT NUMBER. 38 Page 2 Schedule A-Generated By FIL EX-10.4 6 g75017ex10-4.txt NOTE BY AND BETWEEN THE COMPANY/NAVISTAR FINANCIAL EXHIBIT 10.4 (LOGO) Navistar Financial COMMERCIAL LOAN AND SECURITY AGREEMENT Corporation (FOR NEW OR USED MOTOR VEHICLES AND EQUIPMENT) Agreement Date: 12/19/2001
The undersigned Borrower hereby applies to Navistar Financial Corporation ("Lender") for a loan of the Unpaid Balance shown below, on the following terms and conditions, in connection with the purchase from seller of the equipment described below (the "Goods"). Borrower hereby acknowledges delivery, inspection and acceptance of the Goods, represents that the Goods are being purchased for a business or commercial purpose and authorizes disbursement of loan proceeds to seller in payment for Goods or other obligations of Borrower.
Seller Information Borrower Information: Seller Number 001479-000 Boyd Bros. Transportation, Inc. 937-525-0341 International Truck & Engine Corp. 825 West Laffels Lane SSN#/TAX-ID Chicago, IL Springfield, OH 45506 CUSTOMER# APPROVAL NUMBER: 01292208 COUNTY: 4706016
DESCRIPTION OF EQUIPMENT
VEHICLE NEW YEAR USED MANUFACTURER MODEL SERIAL NUMBER OTHER EQUIPMENT UNIT NUMBER - ------- ---- ------------ ----- ------------- --------------- ----------- SEE ADDENDUM - SCHEDULE A
DESCRIPTION OF TRADE-IN
GROSS LESS AMOUNT TRADE-IN YEAR MANUFACTURER MODEL SERIAL NUMBER BODY TYPE ALLOWANCE OWING (NET ALLOWANCE) - ---- ------------ ----- ------------- --------- --------- ----------- --------------- SEE ADDENDUM - SCHEDULE B
INSURANCE COVERAGE NO LIABILITY INSURANCE INCLUDED PHYSICAL DAMAGE: Physical damage insurance satisfactory to Lender is required. The Borrower may choose the person through which the insurance is to be obtained or provide such insurance through an existing policy subject to Lender's right to refuse to accept any such insurer for any reasonable cause. If physical damage insurance is included in this Agreement, the cost of insurance shall be ___________ as set forth in item 6a and the following coverages are provided for a term of ______ months from the date of delivery. Deductible Other Than Collision (Specified Perils, Comprehensive or Fire, Theft and Combined Additional Coverage, as per attached insurance application.) Deductible Collision - -------------------------------------------------------------------------------- Name of Physical Damage Insurance Company Agent Name/Phone Texas Residents Only: If physical damage insurance is obtained through the Lender and placed with a county mutual insurance company, the premium or rate of charge is not fixed or approved by the Texas State Board of Insurance. CREDIT LIFE INSURANCE IS NOT REQUIRED. If a charge is include in 6b it is understood credit life insurance is requested in this Agreement and the Borrower signing below is the insured. Borrower hereby acknowledges receipt of a certificate containing the terms of such insurance through Agent: - -------------------------------------------------------------------------------- Name of Credit Life Insurance Company Agent Name/Phone SALE ANALYSIS 1. CASH PRICE $5,058,284.22 2. SALES AND OTHER TAXES $ 592,535.78 3. CASH PRICE + TAX (1 + 2) $5,650,820.00 4. a. CASH DOWN PAYMENT b. TRADE-IN (NET ALLOWANCE) $1,208,000.00 TOTAL DOWN PAYMENT (4a + 4b) $1,208,000.00 5. UNPAID BALANCE OF CASH PRICE (3 LESS 4) $4,442,820.00 6. a. PHYSICAL DAMAGE b. CREDIT LIFE INSURANCE c. CERTIFICATE OF TITLE FEE d. OFFICIAL FEES e. OPTIONAL SERVICE/EXTENDED WARRANTY f. OTHER TOTAL OTHER CHARGES (Total of 6a. to 6f.) 7. TOTAL CHARGES INCURRED (5 + 6) $4,442,820.00
8. PROMISSORY NOTE: If this Agreement is accepted by Lender, Borrower promises to pay to Lender or to its order the Unpaid Balance (Amount Financed) set forth in Line 7 above, together with interest from the date of this Agreement, in installments as set forth below: Borrower agrees to pay Lender the "UNPAID BALANCE" plus interest in the amount of $678,963.60 computed at a rate equivalent to 5.75% per annum in installments as set forth below.
# of Amount of # of Amount of # of Amount of Payments Payment Beginning Payments Payment Beginning Payments Payment Beginning - -------- ---------- --------- -------- --------- --------- -------- --------- --------- 60 $85,363.06 1/18/2002
FOR USE IN SOUTH CAROLINA ONLY: WAIVER OF HEARING PRIOR TO IMMEDIATE POSSESSION: BORROWER HEREBY EXPRESSLY AGREES THAT, SHOULD THE LENDER BE ENTITLED TO POSSESSION OF THE GOODS DESCRIBED ABOVE OR ITS PROCEEDS UNDER THE TERMS OF THIS AGREEMENT OR ANY DOCUMENT EXECUTED IN CONNECTION HEREWITH (INCLUDING ANY FURTHER EXTENSIONS, RENEWALS, ETC.) BORROWER WAIVES ITS RIGHT TO NOTICE AND AN OPPORTUNITY TO BE HEARD PRIOR TO REPOSSESSION OF THE GOODS BY LENDER. NOTICE TO BORROWER: 1. Do not sign this Agreement before you read it or if it contains blank spaces. 2. You are entitled to a completely filled-in copy of the Agreement when you sign it. 3. Under the law, you have the following rights, among others: (a) to pay off in advance the full amount due and to obtain a partial refund of the interest charges based on the actuarial method unless another method is required by law; (b) to redeem the Goods if repossessed for default; (c) to require, under certain conditions, a resale of the Goods if repossessed. 4. If you desire to pay off in advance the full amount due, the amount of refund you are entitled to, if any, will be furnished upon request. 5. In Texas, this Agreement may be subject in whole or in part to Texas law which is enforced by the Consumer Credit Commissioner, 2601 North Lamar, Austin, Texas 78705-4207. Telephone (512) 479-1285, (214) 263-2016, (713) 461-4074. - -------------------------------------------------------------------------------- Page 1 of 3 COMMERCIAL LOAN AND SECURITY AGREEMENT FOR: Boyd Bros. Transportation, Inc. - Agreement Number 54 FH1796P - FIL (v2.0 Jun 26, 2000) ADDITIONAL PROVISIONS LATE PAYMENTS: In addition to promising to pay the total payments as set forth above. Borrower promises to pay past due interest accrued from maturity on each installment in default more than 10 days at the highest rate permitted by law. Borrower also agrees to pay all expenses actually incurred, including attorney fees, in collecting any amount payable under this Agreement, all to the extent allowed by law. PARTIES: As used herein, "Borrower" shall include all persons who sign as "Borrower(s)." "Lender" shall mean Navistar Financial Corporation, its successors and assigns. "Affiliates" shall include all entities directly or indirectly controlling or controlled by or under common control with Lender including but not limited to Harco Leasing Company, Inc and Navistar Leasing Company. Upon notice of assignment, Borrower agrees to make payments hereunder directly to assignee. Assignee shall be entitled to all rights of Lender free from any defense, set-off or counterclaim by the Borrower against the Lender, except as required by law. Seller shall not be the agent of Lender for transmission of payments or otherwise. NO WARRANTIES BY LENDER: Borrower agrees that Lender is neither the seller nor the manufacturer of the Goods, and has not made and does not make any representation, warranty or covenant with respect to the Goods, either express or implied, written or oral, including but not limited to any representation, warranty or covenant with respect to condition, quality, safety, durability, merchantability, or fitness for a particular purpose. Borrower selected the Goods and hereby agrees that any and all claims that Borrower has or may in the future have against the seller and/or manufacturer shall not be asserted as an offset against Lender, including but not limited to any claims in product liability. USE OF PROPERTY: Borrower shall hold and use the Goods at its risk and expense with respect to loss or damages, and taxes and charges of every kind; shall take proper care of the Goods and shall not abuse or misuse the same; shall not sell, assign or transfer its interest in the Goods or remove the Goods from the jurisdiction in which they now reside without the prior written consent of Lender, shall not use the Goods for any illegal purpose and shall not attach any of the Goods to any real estate or to any other property in such a manner as to become a part thereof. If Borrower fails to pay said taxes and said charges, Lender may, at its election, either do so and charge same to Borrower or treat such failure as a breach of condition of this agreement. Any amount so paid by the Lender shall become a part of the indebtedness secured hereunder. PHYSICAL DAMAGE INSURANCE: If a cost for physical damage insurance is included in the Agreement, Borrower hereby assigns to Lender the right to cancel such insurance, If any insurance included in this Agreement is cancelled, whether by request of the Borrower or the Lender, or action of the Insurance Company, Lender is hereby authorized on behalf of Borrower to receive any unearned premium refund. If no cost of physical damage insurance is included in this Agreement, Borrower agrees to promptly insure the goods at its own expense with a company acceptable to the Lender against loss by fire, theft and collision for the period of the term of this Agreement and in such amounts and upon such terms as are acceptable to Lender. Borrower specifically covenants to name Lender as loss payee as its interest may appear. Lender may, in its sole discretion, apply any proceeds of insurance received by it to any indebtedness owed by Borrower to Lender or its Affiliates. PLACEMENT OF PHYSICAL DAMAGE INSURANCE: Unless Borrower provides Lender with evidence of the insurance coverage required by this Agreement, Lender may, but will not be obligated to, purchase insurance at Borrower's expense to protect Lender's interest in the Goods. This insurance may, but need not, protect Borrower's interests. The coverage that Lender purchases may not pay any claim that Borrower makes or any claim that is made against Borrower in connection with the Goods. Borrower may later cancel any insurance purchased by lender, but only after providing Lender with evidence that Borrower has obtained other insurance as required by the Agreement. If Lender purchases insurance for the Goods, Borrower will be responsible for the casts of such insurance including interest and any other charge Lender may impose in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance. The cost of the insurance may be added to Borrowers outstanding balance due and owing Lender under the Agreement. The cost of the insurance may be more than the cost of insurance Borrower may be able to obtain on its own. SECURITY INTEREST: In order to secure performance and payment of the loans made be Lender to Borrower and all of Borrowers obligations and indebtedness hereunder and of all other amounts due or to become due hereunder and to secure each and every other obligation or indebtedness of every kind and description and howsoever arising, now or hereafter owing by Borrower to Lender or its Affiliates, Lender hereby retains, and Borrower hereby grants, a purchase money security interest under the Uniform Commercial Code in and to the Goods described above, together with all replacements, repairs and accessions thereto and cash and the non-cash proceeds (including insurance proceeds) thereof. The security interest hereby granted is a separate, independent security interest that is in addition to, and not in substitution for, any and all security interests heretofore or hereafter granted by Borrower to Lender. This Agreement is not an amendment to or modification of, or a waiver or release by Lender of, any term, provision or condition of any other agreement between Borrower and Lender. Further, Lender hereby mains and Borrower hereby grants a security interest in the proceeds of any physical damage, credit fife and or disability insurance for which a charge is stated above or which is supplied by Borrower, and if a charge for any such insurance has been included in this Agreement, a security interest in the refund of any unearned premiums in the event suds insurance is terminated or canceled for any reason. Borrower will not grant any other security interest in and to the Goods described above, without the prior written consent of Lender. Borrower shall cause or cooperate with Lender in causing Lender's security interest in the Goods to become properly perfected under state law through filing of a financing statement or notation on appropriate perfection documents. DEFAULT: For Use In All States Except Louisiana. Time is of the essence hereof and if Borrower defaults in anyone of the payment on the loan or other payment provided for herein when due or breaches any other covenant a condition of this Agreement, or any other contract or agreement between Borrower and Lender or its affiliates or if the Goods are levied upon, or Borrower becomes bankrupt or insolvent or a petition in bankruptcy is filed by or against the Borrower, then Lender may, in its sole option and discretion in any such event declare the total amount unpaid hereunder, including accrued delinquency charges, and excluding unearned interest immediately due and payable and may take possession of the Goods in a lawful manner wherever found without notice, demand or legal process, or may require the Borrower to assemble the Goods and make it available to the Lender at a place to be designated by the Lender, and where not prohibited by law, may sell the same at public or private sale, with or without notice, at which sale Lender may become the purchaser, may deduct from the proceeds of any such sale all taxes and charges due on the Goods and all expenses of taking, removing, holding, repairing and selling the Goods, and may apply the net proceeds to any indebtedness of Borrower, returning to Borrower any surplus or holding Borrower liable for any deficiency; and in consideration of the use of the Goods and for diminution in saleable value thereof, Lender may retain all payments made or Lender may pursue any other remedy provided by law. Lender may accept partial payments of any sum due without waiving or otherwise modifying the terms of this Agreement and the waiver by Lender of a breach of any condition of this Agreement shall not constitute a waiver of any subsequent breach whether or not of a like character. In the event of bankruptcy or other insolvency proceedings, in addition to the above remedies, the Lender shall be entitled to any rental or other income produced by the Goods prior to its release to Lender. Page 2 of 3 COMMERCIAL LOAN AND SECURITY AGREEMENT FOR: BOYD BROS. TRANSPORTATION, INC - AGREEMENT NUMBER: 38 FH1796P - FIL (V2.0 Jun 26, 2000) ADDITIONAL PROVISIONS-(CONTINUED) DEFAULT: For Use In Louisiana Only- Borrower does hereby confess judgement in favor of the Lender or any subsequent holder of this agreement for principal, interest, attorney's fees, and costs; and does hereby declare that if anyone of the payments on the loan or other payment provided for herein is not fully paid when due, if default be made in compliance with any condition or covenant herein, or proceedings in bankruptcy, insolvency or receivership be instituted by or against the Borrower, or if any action is taken looking toward the appointment of a receiver, syndic or curata of Borrower or if the property be used in violation of any state or Federal law, such violation shall constitute a breach of this Agreement which shall ipso facto be immediately due and exigible in its entirety and the Lender may cause all and singular the Goods herein described to be seized and sold under executory or other legal process in any court, without appraisement, to the highest bidder, payable in cash. Borrower hereby specifically waives the three (3) day notice of demand provided by Article 2639 of the Louisiana Code of Civil Procedure and Notice of Appraisement set forth under Article 2723 of the Louisiana Code of Civil Procedure and all pleas of division and discussion and the benefit of appraisement or the said Lender may and is hereby authorized to take immediate possession of the Goods wherever found without process of law and hold same until the amount due and either at public or private sale without demand for performance of without notice to the Borrower, with or without having the Goods at the place of sale. The Lender, or future holder of this Agreement, shall have the right to bid at any public sale. From the proceeds of such sale, the Lender, or future holder of this Agreement, shall deduct all expenses for retaking, repairing and selling the Goods, including a reasonable attorney's fee. CO-BORROWER: The obligation of any co-borrower hereunder shall be primary and the co-borrower shall be jointly and severally liable with the Borrower for payment in full of all amounts due or to become due pursuant to the terms and conditions of this Agreement. GENERAL: Borrower hereby covenants that all facts and information contained herein and in the credit application are true and correct as of the date hereof and specifically warrants that there are no other amounts owing on the trade-in equipment except as may be indicated herein. Renewal, extension, or assignment of this Agreement shall not release Borrower or Co-Borrower from any obligations hereunder. POWER OF ATTORNEY: Borrower hereby irrevocably authorizes and empowers Lender to execute, sign, and file on Borrowers) behalf any financing statement, continuation statement or any other document related to the perfection or protection of the security interest hereby created, if allowed by law. APPLICATION OF PAYMENTS: Each payment received on the loan shall be applied first to accrued interest and delinquency charges and then to the balance of any amount financed then outstanding. SAVINGS CLAUSE: Should any provision of this Agreement be or become invalid, illegal, prohibited or unenforceable bylaw or otherwise, then such provision shall be void; however, such impairment shall not in any way invalidate or impair the remainder of this Agreement or any other of its provisions. If the rate of interest or other charges set forth hereunder shall exceed the applicable maximum, then such rate shall be reduced to such maximum and any excess interest or charge that may have been collected shall, at the option of the Borrower, either be refunded in rash or applied as a credit to unpaid principal. In no event shall Borrower be obligated to pay such excess charges. ACCEPTANCE BY LENDER, CHOICE OF LAW: This Agreement is not binding until accepted by Lender in Illinois. Except as prohibited bylaw, the construction and validity of this Agreement shall be controlled by the law of Illinois, where this Agreement is entered into, and applicable federal law. This Agreement is entered into in Illinois and all loans made by the Lender will be extended from Illinois. The validity and enforcement of the security interest granted hereunder shall be controlled by the law of jurisdiction where the Goods are to be kept and used. QUARTERLY PRIME RATE: As used in this Agreement the "Quarterly Prime Rate" shall mean for each calendar quarter, the Prime Rate as published in the Wall Street Journal on the last business day of the month immediately preceding the first day of each calendar quarter. QUARTERLY LIBOR RATE: Shall mean, for each calendar quarter, the 90-day London Interbank Offered Rate as published in the Wall Street Journal on the last business day of the month immediately preceding the first day of each calendar quarter. WAIVER OF JURY TRIAL: BORROWER WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION RELATING TO THIS AGREEMENT. - -------------------------------------------------------------------------------- THIS SPACE INTENTIONALLY LEFT BLANK - -------------------------------------------------------------------------------- All payments shall be paid to Lender at P.O. Box 96070, Chicago, IL 60693-6070 or as otherwise directed by Lender to Borrower in writing. Telephone inquiries should be directed to Navistar Financial Corporation (847) 734-4000. All other correspondence should be sent to Lender at P.O. Box 4024, Attn: FSC, Schamburg, IL 10168-4024 ==================================================================================================================================== BORROWER HAS READ AND AGREES TO ALL TERMS, PROVISIONS AND CONDITIONS CONTAINED IN THIS THREE PAGE AGREEMENT, AGREES THAT THIS AGREEMENT CONTAINS THE ENTIRE AGREEMENT BETWEEN BORROWER AND LENDER RELATING TO THIS LOAN FOR THE PURCHASE OF THE GOODS, AND SUPERSEDES ALL PREVIOUS AGREEMENTS, EXCEPT AS TO AGREEMENTS BETWEEN BORROWER AND LENDER. - ----------------------------------------------------------------------------------------------------------------------------------- THIS AGREEMENT IS SUBJECT TO THE TERMS OF THE RETAIL BORROWER ACKNOWLEDGES RECEIPT OF AN EXACT COPY FINANCING ARRANGEMENT BETWEEN BORROWER AND SELLER. --------------------------------------------------------------- INITIAL FOR. NAME OF BORROWER: Boyd Bros. Transportation, Inc. NON-RECOURSE GUARANTY ---------------- ---------------- AUTHORIZED SIGNATURE FOR SELLER (NAME OF INDIVIDUAL(S), CORPORATION OR PARTNERSHIP. GIVE STYLE IF ANY AFTER NAME.) BY ------------------------------------------------------------- (SIGNATURE OF OWNER, OFFICER, OR AUTHORIZED REP.) (TITLE) BY /s/ Richard Bailey TITLE C.0.0. ===================================================================== -------------------------- ------------- LENDERS ACCEPTANCE (IF CORPORATION, AUTHORIZED PARTY MUST SIGN AND SHOW CORPORATE ===================================================================== TITLE. IF PARTNERSHIP, A GENERAL PARTNER MUST SIGN. IF Lender. Navistar Financial Corporation Accepted by Lender at: OWNER(S) OR PARTNER, SHOW WHICH.) 2850 West Golf-Road, Rolling Meadows, IL, 60008 BY DATE BY TITLE ------------------------------------------ ------------ -------------------------- ------------- AUTHORIZED REPRESENTATIVE (IF CO-BORROWER, CO-PARTNER OR CO-OFFICER, SIGN HERE AND SHOW WHICH.) ====================================================================================================================================
Page 3 of 3 COMMERCIAL LOAN AND SECURITY AGREEMENT FOR: BOYD BROS. TRANSPORTATION, INC - AGREEMENT NUMBER: 38 FH1796P - FIL (v2.0 Jun 26, 2000) COMMERCIAL LOAN AND SECURITY AGREEMENT - SCHEDULE A AGREEMENT DATE: 12/19/2001 (NAVISTAR FINANCIAL CORPORATION LOGO) SELLER INFORMATION BORROWER INFORMATION - ----------------------------------------------------------------------------------------------------------------------------------- International Truck & Engine Corp. Boyd Bros. Transportation, Inc. 937-525-0341 Chicago, IL 825 West Laffels Lane SELLER NUMBER: 001479-000 Springfield, OH 45506 APPROVAL NUMBER: 01292208 SSN#/TAX-ID: COUNTY: CUSTOMER#: 4706016 - -----------------------------------------------------------------------------------------------------------------------------------
EQUIPMENT DESCRIPTION - ----------------------------------------------------------------------------------------------------------------------------------- VEHICLE NEW UNIT YEAR USED MANUFACTURER MODEL SERIAL NUMBER EQUIPMENT TYPE UNIT PRICE NUMBER - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR62C036804 Tractor $74,033.53 6410 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR82C036965 Tractor $72,091.86 6411 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR42C036994 Tractor $72,091.86 6440 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR22C036993 Tractor $72,091.86 6439 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR02C036992 Tractor $72,091.86 6438 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR92C036991 Tractor $72,091.86 6437 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR72C036990 Tractor $72,091.86 6436 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR02C036989 Tractor $72,091.86 6435 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR92C036988 Tractor $72,091.86 6434 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR72C036987 Tractor $72,091.86 6433 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR52C036986 Tractor $72,091.86 6432 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR62C036995 Tractor $72,091.86 6441 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR82C036996 Tractor $72,091.86 6442 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASRX2C036997 Tractor $72,091.86 6443 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR12C036998 Tractor $72,091.86 6444 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR42C037000 Tractor $73,978.06 6446 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i 5FA 6 2HSCHASR62C037001 Tractor $73,978.06 6447 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR82C037002 Tractor $73,978.06 6448 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i 5FA 6 2HSCHASRX2C037003 Tractor $73,978.06 6449 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR12C037004 Tractor $72,091.86 6450 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR32C037005 Tractor $72,091.86 6451 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i 5FA 6 2HSCHASR52C037006 Tractor $72,091.86 6452 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i 5FA 6 2HSCHASR72C037007 Tractor $72,091.86 6453 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR92C037008 Tractor $72,091.86 6454 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR02C037009 Tractor $72,091.86 6455 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR72C037010 Tractor $72,091.86 6456 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 99DOi SFA 6 2HSCHASR92C037011 Tractor $72,091.86 6457 - -----------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL LOAN AND SECURITY AGREEMENT FOR 8OYD BROS. TRANSPORTATION, INC - AGREEMENT NUMBER. 54 Page 1 Schedule A-Generated By FIL EQUIPMENT DESCRIPTION - ----------------------------------------------------------------------------------------------------------------------------------- VEHICLE NEW UNIT YEAR USED MANUFACTURER MODEL SERIAL NUMBER EQUIPMENT TYPE UNIT PRICE NUMBER - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR02C037012 Tractor $72,091.86 6458 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR22C037013 Tractor $72,091.86 6459 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR42C037014 Tractor $72,091.86 6460 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR62C037015 Tractor $72,091.86 6461 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR82C037016 Tractor $72,091.86 6462 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASRX2C037017 Tractor $72,091.86 6463 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR12C037018 Tractor $72,091.86 6464 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR32C037019 Tractor $72,123.95 6465 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASRX2C037020 Tractor $72,123.95 6466 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR12C037021 Tractor $72,123.95 6467 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR32C037022 Tractor $72,123.95 6468 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR52C037023 Tractor $72,123.95 6469 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR72C037024 Tractor $72,123.95 6470 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR92C037025 Tractor $72,123.95 6471 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR02C037026 Tractor $72,123.95 6472 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR22C037027 Tractor $72,123.95 6473 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR42C037028 Tractor $72,123.95 6474 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR62C037029 Tractor $72,123.95 6475 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i 5FA 6 2HSCHASR22C037030 Tractor $72,123.95 6476 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR42C037031 Tractor $72,123.95 6477 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR62C037032 Tractor $72,123.95 6478 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR82C037033 Tractor $72,123.95 6479 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR32C036985 Tractor $72,091.86 6431 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR12C036984 Tractor $72,091.86 6430 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASRX2C036983 Tractor $72,091.86 6429 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR82C036982 Tractor $72,091.86 6428 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR62C036981 Tractor $72,091.86 6427 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR42C036980 Tractor $72,091.86 6426 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR82C036979 Tractor $72,091.86 6425 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR62C036978 Tractor $72,091.86 6424 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR42C036977 Tractor $72,091.86 6423 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR22C036976 Tractor $72,091.86 6422 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR02C036975 Tractor $72,091.86 6421 - -----------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL LOAN AND SECURITY AGREEMENT FOR BOYD BROS. TRANSPORTATION, INC -AGREEMENT NUMBER: 54 Page 2 Schedule A-Generated By FIL EQUIPMENT DESCRIPTION - ----------------------------------------------------------------------------------------------------------------------------------- VEHICLE NEW UNIT YEAR USED MANUFACTURER MODEL SERIAL NUMBER EQUIPMENT TYPE UNIT PRICE NUMBER - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR92C036974 Tractor $72,091.86 6420 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR72C036973 Tractor $72,091.86 6419 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR52C036972 Tractor $72,091.86 6418 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR32C036971 Tractor $72,091.86 6417 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR12C036970 Tractor $72,091.86 6416 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR52C036969 Tractor $72,091.86 6415 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR32C036968 Tractor $72,091.86 6414 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR12C036967 Tractor $72,091.86 6413 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASRX2C036966 Tractor $72,091.86 6412 - ----------------------------------------------------------------------------------------------------------------------------------- 2002 New INTL 9900i SFA 6 2HSCHASR32C036999 Tractor $73,978.06 6445 - -----------------------------------------------------------------------------------------------------------------------------------
BOYD BROS. TRANSPORTATION, INC. /s/ Richard Bailey - --------------------------------- ----------------------------------------- SIGNATURE SELLER SIGNATURE C.O.O. - --------------------------------- Title COMMERCIAL LOAN AND SECURITY AGREEMENT FOR BOYD BROS. TRANSPORTATION, INC - AGREEMENT NUMBER. 54 Page 3 Schedule A-Generated By FIL EX-13 7 g75017ex13.txt PORTIONS OF THE COMPANY'S ANNUAL REPORT SELECTED FINANCIAL DATA EXHIBIT 13 The following tables set forth selected financial data with respect to the Company's last five fiscal years. Data relating to the five fiscal years ended December 31, 2001 are derived from the Consolidated Financial Statements incorporated by reference elsewhere in this report or in previous reports. BDO Seidman, LLP, certified independent accountants, audited the financial statements for the year ended December 31, 2001. Deloitte & Touche LLP audited the financial statements for the four-year period ended December 31, 2000. The selected consolidated financial data should be read in conjunction with, and is qualified in its entirety by reference to, the consolidated financial statements of the Company, the notes thereto and the report thereon included elsewhere in this report.
Year Ended December 31, --------------------------------------------------------------- 2001 2000 1999 1998 1997 - ------------------------------------------------------------------------------------------------------------------ (in thousands, except per share data) Statement of Operations Data: Operating revenues $ 123,856 $ 126,725 $ 133,137 $ 118,123 $ 77,215 Operating expenses: Salaries, wages and employee benefits 39,561 39,263 35,461 36,608 32,427 Cost of independent contractors 31,779 35,173 45,132 31,818 2,500 Operating supplies 26,513 25,404 22,934 21,429 20,832 Taxes and licenses 2,241 2,965 2,847 2,566 2,306 Insurance and claims 6,458 7,060 6,111 5,393 3,439 Communications and utilities 1,371 1,520 1,480 1,554 1,305 Depreciation and amortization 12,290 11,611 10,720 10,320 9,181 Gain on disposition of property and equipment, net (526) (1,113) (1,627) (433) (577) Other 1,950 2,008 1,862 1,541 711 - ------------------------------------------------------------------------------------------------------------------ Total operating expenses 121,637 123,891 124,920 110,796 72,124 - ------------------------------------------------------------------------------------------------------------------ Operating income (loss) 2,219 2,834 8,217 7,327 5,091 Interest income 63 80 92 97 136 Interest expense (2,684) (3,904) (2,422) (1,608) (1,391) Other -- -- -- 82 -- - ------------------------------------------------------------------------------------------------------------------ Income (loss) before income taxes (402) (990) 5,887 5,898 3,836 Income taxes (benefit) 5 (15) 2,430 2,326 1,519 - ------------------------------------------------------------------------------------------------------------------ Net income (loss) $ (407) $ (975) $ 3,457 $ 3,572 $ 2,317 ================================================================================================================== Basic and diluted net income (loss) per share $ (0.14) $ (0.32) $ 0.99 $ 0.87 $ 0.62 ==================================================================================================================
As of December 31, --------------------------------------------------------------- 2001 2000 1999 1998 1997 - ------------------------------------------------------------------------------------------------------------------ (in thousands) Balance Sheet Data: Working capital (deficit) $ (2,089) $ (1,481) $ (1,049) $ 4,360 $ 3,785 Net property and equipment 58,513 66,737 61,882 48,691 48,859 Total assets 86,084 95,052 99,456 77,047 71,526 Long-term debt, less current maturities 25,606 33,322 34,689 18,049 19,252 Total liabilities 60,795 67,870 69,062 44,186 42,071 Stockholders' equity 25,288 27,182 30,393 32,862 29,455
Selected Operating Data: The following table sets forth certain unaudited operating data regarding the Company.
For the Year (or as of) December 31, --------------------------------------------------------------- 2001 2000 1999 1998 1997 - ------------------------------------------------------------------------------------------------------------------ Operating ratio 98.2% 97.8% 93.8% 93.8% 93.4% Average length of haul in miles 688 661 634 576 663 Average number of truckloads per week 2,872 3,145 3,368 3,330 1,908 Average revenues per total mile $ 1.17 $ 1.19 $ 1.18 $ 1.17 $ 1.17 Equipment at period end: Tractors 972 1,017 1,112 1,032 950 Trailers 1,395 1,398 1,451 1,337 1,227
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, 2001. This discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included elsewhere herein. GENERAL The Company was founded in 1956 as a small regional flatbed trucking operation. Since that time, the Company has grown to one with 972 tractors and 1,395 trailers operating in the eastern two-thirds of the United States. The Company became publicly held in 1994. 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 independent contractors (owner-operators) to its fleet. The Company then accelerated the implementation of this strategy in December 1997 with the acquisition of WTI Transport, Inc., ("WTI") (f/k/a Welborn Transport), which specializes in short-haul routes using largely an owner-operated fleet. References to the "Company" contained herein refer to the combined operations of Boyd and WTI. References hereinafter to "Boyd" or "WTI" describe the distinct operations of the parent and subsidiary, respectively. Boyd provides transportation services in the contiguous United States and into some parts of Canada. During 2001, Boyd had an average length of haul of 749 miles and had 760 tractors and 1,099 trailers as of December 31, 2001. Pay for owner-operators at Boyd is based on a per mile rate. Boyd utilizes agents in some areas to solicit and book freight. Boyd also operates a separate logistics department that provides logistical support to the Company. WTI provides transportation services over shorter routes than those traditionally provided by Boyd. WTI operates primarily in the southeastern United States, with an average length of haul of less than 400 miles. Management believes this enhances WTI's ability to retain quality drivers, as drivers' time away from home is minimized. WTI operates 212 tractors and 296 flatbed trailers. The WTI fleet consisted of 172 owner-operators and 40 company tractors at December 31, 2001. The owner-operators are paid by WTI based upon a percentage of revenue. WTI utilizes agents in some areas to solicit and book freight. The Company's success depends on its ability to efficiently manage its resources in the delivery of truckload transportation services to its customers. Resource requirements vary with customer demand, which may be subject to seasonal or general economic conditions. The Company's ability to adapt to changes in customer transportation requirements is a key element in efficiently deploying resources and in making capital investments in tractors and trailers and technology. The Company may also be affected by the financial failure of its customers or a loss of a customer's business from time-to-time. The Company's greatest resource requirements include qualified drivers, tractors, trailers, and related costs of operating its equipment (such as fuel, driver pay, insurance, and supplies and maintenance). The Company has historically been successful mitigating its risk to increases in fuel prices by recovering additional fuel surcharges from its customers. The Company's financial results are also affected by the availability of qualified drivers and the market for new and used tractors. Because the Company is self-insured for cargo, personal injury, and property damage claims on its tractors and for workers' compensation benefits for its drivers (supplemented by premium-based coverage above certain dollar levels), financial results may also be affected by driver safety, medical costs, the weather, the legal and regulatory environment, and the costs of insurance coverage to protect against catastrophic losses. CRITICAL ACCOUNTING POLICIES The most significant accounting policies and estimates that affect the Company's financial statements include the following: - - The Company reviews the adequacy of the lease receivable allowance for doubtful accounts in the independent contractor (owner-operator) program. This allowance represents an estimate of the notes receivable of the lease purchase program that will become uncollectible and possibly prevent the Company from maintaining its investment value in the tractor. - - The Company reviews long-lived assets for impairment as described in Note 1 to the Consolidated Financial Statements. In analyzing potential impairments, the Company uses projections of future cash flows from the asset. These projections are based on management's view of growth rates for the related business, anticipated future economic conditions, the assignment of discount rates relative to risk and estimates of terminal values. - - The Company reviews the estimates of accrued liabilities for insurance and claims for liability and both physical and property damage and workers' compensation. The insurance and claims accruals are recorded at the estimated payment amounts and are based upon individual case estimates. - - The Company reviews the selections of estimated useful lives and salvage values for purposes of depreciating tractors and trailers. Depreciable lives of tractors and trailers range from three to seven years. Estimates of salvage value at the expected date of trade-in or sale are based on the expected values of equipment at the time of disposal. - - The Company reviews the valuation of accounts receivable on a monthly basis. The allowance for doubtful accounts is estimated based on historical experience of write-offs and current economic conditions that might impact the collectibility of customer accounts. The Company's review of these accounting items and the resulting accounting positions taken by the Company are based upon certain assumptions and conditions and reflect management's best assumptions and estimates, but estimates of these types of accounting items, particularly impairment and accrued liabilities, involve inherent uncertainties as described above, which may or may not be controllable by management. As a result, the accounting for such items could result in different amounts if management used different assumptions or if different conditions occur in future periods. RESULTS OF OPERATIONS COMPARISON OF YEAR ENDED DECEMBER 31, 2001 TO YEAR ENDED DECEMBER 31, 2000 The following tables set forth, by segment, the percentage relationship of expense items to operating revenues and certain other operating statistics for the periods indicated:
COMPANY BOYD WTI ------------------- -------------------- -------------------- YEARS ENDED DECEMBER 31, 2001 2000 2001 2000 2001 2000 - ------------------------------------------------------------------------------------------------------------------- Operating revenues 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Operating expenses Salaries, wages, and employee benefits 31.9 31.0 35.1 35.7 14.3 11.4 Cost of independent contractors 25.7 27.8 18.5 17.5 65.5 70.4 Operating supplies 21.4 20.1 23.7 11.1 9.1 5.5 Taxes and licenses 1.8 2.3 1.9 2.3 1.2 2.3 Insurance and claims 5.2 5.6 5.2 5.4 5.1 6.3 Communications and utilities 1.1 1.2 1.1 1.2 1.1 1.2 Depreciation and amortization 9.9 9.2 10.5 10.3 6.7 4.4 Gain on disposition of property and equipment, net (0.4) (0.9) (0.5) (0.8) 0.0 (1.0) Other 1.6 1.6 1.4 1.0 2.8 3.9 - ------------------------------------------------------------------------------------------------------------------- Total operating expenses 98.2 97.8 96.8 96.1 105.9 104.4 - ------------------------------------------------------------------------------------------------------------------- Operating income 1.8 2.2 3.2 3.9 (5.9) (4.4) Interest expense, net (2.1) (3.0) (2.4) (3.6) (1.0) (1.0) Other income -- -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes (0.3) (0.8) 0.9 0.4 (6.8) (5.6) Income taxes (benefit) (0.0) (0.0) 0.4 0.3 (2.1) (1.4) - ------------------------------------------------------------------------------------------------------------------- Net income (loss) (0.3)% (0.8)% 0.5% 0.1% (4.7)% (4.2)% ===================================================================================================================
COMPANY BOYD WTI - ------------------------------------------------------------------------------------------------------------------- YEARS ENDED DECEMBER 31, 2001 2000 2001 2000 2001 2000 - ------------------------------------------------------------------------------------------------------------------- Company operated tractors 610 686 570 656 40 30 Owner-operated tractors 362 331 190 111 172 220 ----------------------------------------------------------------------------- Total tractors 972 1,017 760 767 212 250 Total trailers 1,395 1,398 1,099 1,104 296 294 Average length of haul in miles (1) 688 661 749 737 380 347 Average number of tractor loads per week (2) 2,872 3,145 2,290 2,294 672 851 Average revenues per total mile (3) $ 1.17 $ 1.19 $ 1.16 $ 1.17 $ 1.17 $ 1.23
(1)The average length of haul in miles is calculated by dividing the total line-haul miles for the year by the total number of loads for the year. (2)The average number of tractor loads per week is calculated by dividing the total number of loads by the number of working weeks in the year. (3)The average revenue per total mile is calculated by dividing the total line-haul revenue for the year by the total line- haul miles driven. Operating revenues for 2001 decreased $2.9 million, or 2.3%, to $123.9 million compared to $126.7 million for 2000. The average loads shipped per week for 2001 decreased 273 loads, or 9.0%, to 2,872 compared to 3,145 in 2000. Freight demand during 2001, primarily in the first six months, was soft due to a weaker U.S. economy as compared to 2000. Steel comprised 42% of the Company's freight that was shipped in both 2001 and 2000, during which time the U.S. steel industry was severely impacted by the sluggish economy. Salaries, wages and employee benefits for 2001 increased $0.3 million, or 0.8%, to $39.6 million compared to $39.3 million in 2000. Salaries increased at Boyd due to an increase in the number of non-driver associates, primarily in the logistics and health claims department. Workers' compensation and health insurance expense increased due to rising medical costs and to the Company's change to becoming self-insured for workers' compensation as of July 1, 2001. The market for attracting experienced drivers improved during 2001; however, the Company anticipates that the competition for qualified drivers will continue to be intense, and cannot predict whether it will experience shortages in the future. If such a shortage was to occur and increases in driver pay rates became necessary to attract and retain drivers, the Company's results of operations would be negatively impacted to the extent that the corresponding freight increases are not obtained. Cost of independent contractors (owner-operators) for 2001 decreased $3.4 million, or 9.6%, to $31.8 million from $35.2 million in 2000. Independent contractors are owner-operators that either supply their own tractor or lease-purchase one from the Company. Owner-operators are responsible for their operating expenses including fuel, supplies and maintenance, and fuel taxes. As of December 31, 2001, Boyd had an owner-operator fleet of 190 operators compared to 111 operators as of December 31, 2000. The increase in the number of owner-operators at Boyd occurred during the last five months of the year. WTI had 172 owner-operators as of December 31, 2001 compared to 220 operators in 2000. The decrease was primarily attributable to owner-operators leaving the industry altogether and, to a lesser extent, WTI closing its specialized freight business during 2000. During the fourth quarter of 2001, WTI increased reserves on its receivables associated with owner-operator leases in the amount of $0.3 million. The retention of independent contractors could remain difficult in the foreseeable future due to the uncertainty of global fuel prices and continuing weaknesses in certain sectors of the U.S. economy. Operating supplies expense for 2001 increased $1.1 million, or 4.3%, to $26.5 million compared with $25.4 million for 2000. The increase in operating supplies, which includes fuel costs, net of fuel surcharges, is partly due to the decrease in the owner-operator fleet at WTI, which has resulted in an increase of Company-operated units. The increase in operating supplies expense also is attributable to the Company fleet aging and requiring more repairs. The average age of the Company's fleet at December 31, 2001 was 27.1 months compared to 16.3 months in 2000. The fuel surcharge is a function of the cost of fuel that the Company has negotiated with its vendors. These fuel surcharges, which automatically adjust from week to week depending on the cost of fuel, enable the Company to recoup the higher cost of fuel when prices increase. Conversely, when fuel prices decrease, fuel surcharges decrease. The Company passes through any fuel surcharge collected to the owner-operator that hauled the related load. Shortage of fuel, increases in fuel prices, or rationing of petroleum products can have materially adverse effects on the operations and profitability of the Company. The Company is unable to accurately predict whether fuel prices will decrease or will increase in the future or to the extent to which fuel surcharges will be collected from customers. As of December 31, 2001, the Company had no derivative financial instruments to reduce its exposure to fuel price fluctuations. Taxes and licenses expense for 2001 decreased $0.7 million, or 24.4%, to $2.2 million compared to $2.9 million in 2000. Taxes and licenses decreased due to the decrease in the overall Company fleet as well as a net increase in the owner-operator fleet during the last quarter of the year. Taxes and licenses also decreased due to cost savings initiatives implemented by the Company during the end of 2000. Insurance and claims expense for 2001 decreased $0.6 million, or 8.5%, to $6.4 million compared to $7.0 million in 2000. The decrease was primarily due to a decrease in accident claims and insurance rates. Insurance rates were reduced as the Company increased its retention rate per accident occurrence during 2001. Communications and utilities expense for 2001 decreased $0.1 million, or 9.8%, to $1.4 million from $1.5 million in 2000. The decrease was primarily due to an increase in the overall owner-operator fleet, which has resulted in an increase in the fees the Company charges for the use of the Company's satellite units. Also, the Company changed to a lower rate long-distance service provider in 2001. The Company also continually monitors monthly usage and costs and makes changes accordingly. Depreciation and amortization expense for 2001 increased $0.7 million, or 5.8%, to $12.3 million from $11.6 million in 2000. During the first quarter of 2001, Boyd placed into service the new $5.0 million Birmingham, Alabama terminal. During the fourth quarter of 2001, WTI reduced the carrying value of certain revenue equipment by $0.4 million due to expected reductions in trade-in values. Gain on disposition of property and equipment decreased $0.6 million or 52.8%, to $0.5 million from $1.1 million. The Company traded fewer units during 2001 and the trade values were depressed during the year. Record levels of tractors manufactured during 1999 and 2000, an increased supply of used tractors caused in part by trucking company business failures, and slower fleet growth by many carriers have all contributed to a decline in the market value of used tractors. Other expenses for 2001 decreased approximately $0.1 million, or 2.9%, to $1.9 million in 2001 from $2.0 million in 2000. Other expenses include, but are not limited to, consulting fees, legal fees, advertising costs, bank charges, rent and bad debts. During the second half of 2001, the Company experienced an increase in bad debt write-offs. Due to the difficult economic conditions facing the steel industry in particular, additional bad debt reserves may be required if industry conditions continue to deteriorate. Rent expense decreased due to the Company canceling leases on trailers. Rent expense will be insignificant going forward as the Company owns a large majority of its revenue equipment and facilities. Interest expense (net of interest income) decreased $1.2 million, or 31.5%, to $2.6 million from $3.8 million in 2000. Interest expense decreased due to an approximate 400 basis points decrease in the LIBOR rate, which is the interest rate charged on a large majority of the Company's debt. The Company also reduced debt levels, which contributed to the reduction in interest expense. The effective tax rates for 2001 and 2000 are different from the federal statutory rate due to the permanent non-deductibility of goodwill amortization and other expenses for tax purposes. As a result of the foregoing, the Company's net loss in 2001 decreased approximately $0.6 million, or 58.3%, to $(0.4) million compared to $(1.0) million in 2000. COMPARISON OF YEAR ENDED DECEMBER 31, 2000 TO YEAR ENDED DECEMBER 31, 1999 The following tables set forth, by segment, the percentage relationship of expense items to operating revenues and certain other operating statistics for the periods indicated:
COMPANY BOYD WTI -------------------- ---------------------- ---------------------- Years Ended December 31, 2000 1999 2000 1999 2000 1999 - ------------------------------------------------------------------------------------------------------------------- Operating revenues 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Operating expenses Salaries, wages, and employee benefits 31.0 26.6 35.7 33.4 11.4 8.1 Cost of independent contractors 27.8 33.9 17.5 20.2 70.4 71.6 Operating supplies 20.1 17.2 23.5 21.7 5.5 5.0 Taxes and licenses 2.3 2.1 2.3 2.2 2.3 1.9 Insurance and claims 5.6 4.6 5.4 4.7 6.3 4.3 Communications and utilities 1.2 1.1 1.2 1.2 1.2 1.0 Depreciation and amortization 9.2 8.1 10.3 9.9 4.4 3.0 Gain on disposition of property and equipment, net (0.9) (1.2) (0.8) (1.7) (1.0) 0.0 Other 1.6 1.4 1.0 1.0 3.9 2.6 Total operating expenses 97.8 93.8 96.1 92.5 104.4 97.4 - ------------------------------------------------------------------------------------------------------------------- Operating income 2.2 6.2 3.9 7.5 (4.4) 2.6 Interest expense, net (3.0) (1.8) (3.5) (2.1) (1.2) (0.9) Other income -- -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes (0.8) 4.4 0.4 5.4 (5.6) 1.7 Income taxes (benefit) (0.0) 1.8 0.3 2.1 (1.4) 1.0 - ------------------------------------------------------------------------------------------------------------------- Net income (loss) (0.8)% 2.6% 0.1% 3.3% (4.2)% 0.7% =================================================================================================================== COMPANY BOYD WTI Years Ended December 31, ----------------------------------------------------------------------------------- 2000 1999 2000 1999 2000 1999 - ------------------------------------------------------------------------------------------------------------------- Company operated tractors 686 529 656 501 30 28 Owner-operated tractors 331 533 111 209 220 324 ----------------------------------------------------------------------------- Total tractors 1,017 1,112 767 710 250 352 Total trailers 1,398 1,451 1,104 1,022 294 429 Average length of haul in miles (1) 661 634 737 733 347 320 Average number of tractor loads per week (2) 3,145 3,368 2,294 2,267 851 1,108 Average revenues per total mile (3) $ 1.19 $ 1.18 $ 1.17 $ 1.16 $ 1.23 $ 1.18
(1)The average length of haul in miles is calculated by dividing the total line-haul miles for the year by the total number of loads for the year. (2)The average number of tractor loads per week is calculated by dividing the total number of loads by the number of working weeks in the year. (3)The average revenue per total mile is calculated by dividing the total line-haul revenue for the year by the total line- haul miles driven. Operating revenues for 2000 decreased $6.4 million, or 4.8%, to $126.7 million compared to $133.1 million for 1999. The decrease was due in part to the closing of the brokerage company at WTI, which was replaced by a new freight brokerage company at Boyd, and also the closing of the specialized division at WTI. This interruption in brokerage services and the closing of the specialized division at WTI accounted for $4.0 million of the decrease in revenues. The remainder of the decrease in revenues was attributable to a reduction in freight volume, especially in the steel industry. Salaries, wages and employee benefits for 2000 increased $3.8 million, or 10.7%, to $39.2 million compared to $35.5 million in 1999. Salaries increased due to the decrease in the owner-operator fleet at both segments and, therefore, an increase in employee drivers. Owner-operators left the business due to reduced freight volume and increased fuel costs during 2000. Salaries made up 31.0% of operating revenue in 2000 compared to 26.6% in 1999. Cost of independent contractors for 2000 decreased $10.0 million, or 22.1%, to $35.1 million from $45.1 million in 1999. As of December 31, 2000, Boyd had an owner-operator fleet of 111 operators compared to 209 owner-operators as of December 31, 1999. Additionally, WTI had 220 owner-operators as of December 31, 2000 compared to 324 operators in 1999. Operating supplies expense for 2000 increased $2.5 million, or 10.8%, to $25.4 million compared with $22.9 million for 1999. The increase in operating supplies expense, which includes fuel costs, net of fuel surcharges, is due partly to the decrease in the owner-operator fleet at both segments, which has resulted in an increase of Company-operated units. The Company absorbs all of the variable costs for the Company-operated units. The increase in fuel cost per gallon also impacted overall fuel costs. Taxes and licenses expense for 2000 increased $0.1 million, or 4.2%, to $2.9 million compared to $2.8 million in 1999. Taxes and licenses increased due to the decrease in the owner-operator leased fleet at both segments, which has resulted in an increase of company-operated tractors for which the Company bears all of the licensing and permitting expenses. Insurance and claims expense for 2000 increased $0.9 million, or 15.5%, to $7.0 million compared to $6.1 million in 1999. The increase was primarily due to an increase in accident claims and insurance rates. Communications and utilities expense for 2000 was relatively flat, $1.5 million, as compared to 1999. Depreciation and amortization expense for 2000 increased $0.9 million, or 8.3%, to $11.6 million from $10.7 million in 1999. Depreciation expense increased primarily due to the Company's absorption of leased owner-operator tractors back into the Company fleet. Other expenses for 2000 increased approximately $0.1 million, or 10.6%, to $1.5 million in 2000 from $1.4 million in 1999. Other expenses include, but are not limited to, consulting fees, legal fees, advertising costs, bank charges, rent and bad debts. The Company incurred higher bad debt expense in 2000, which resulted primarily from the weakened U.S. economy, especially in the steel industry sector. Rent expense for 2000 decreased $0.1 million, 9.3%, to $0.4 million from $0.5 million in 1999. Rent expense includes operating leases for both trailers and terminals. Rent expense decreased due to the Company's cancellation of leases at some of its outlying facilities. Interest expense (net of interest income) increased $1.4 million, or 64.1%, to $3.8 million from $2.4 million in 1999. Interest expense increased due to an approximate 125 basis point increase in the LIBOR rate, on which the interest rate charged on all of the Company's debt is based. Based on the foregoing, net income in 2000 decreased approximately $4.5 million, or 128.2%, to $(1.0) million compared to $3.5 million for 1999. LIQUIDITY AND CAPITAL RESOURCES The Company's primary cash requirements are for capital expenditures and operating expenses, including labor costs, fuel costs and operating supplies, and the payment of current debt maturities. Historically, the Company's primary sources of cash have been continuing operations and bank borrowings. The following table summarizes sources and uses of cash for the following periods indicated:
2001 2000 1999 ------------------------------------------------------- Operating activities $ 13,418,514 $ 10,108,834 $ 11,571,965 Investing activities 1,969,285 (6,578,204) (29,063,198) Financing activities (14,439,625) (3,264,175) 17,136,395
NET CASH PROVIDED BY OPERATING ACTIVITIES Cash generated by operations increased $3.3 million dollars during 2001 and decreased $1.5 million dollars during 2000. The increase is due to improved operating results over 2000, a reduction in income tax receivable of $1,615,566 and an increase of $764,297 in trade payables and accrued liabilities. Trade accounts payable increased due in part to required increases in maintenance supplies at the new Birmingham, Alabama terminal. The decrease in cash generated by operations in 2000 was driven by the decrease in accrued liabilities and other current liabilities and also the decrease in accounts payable. These amounts were somewhat offset by the increase in other current assets and also the increase in accounts receivable. The increase in accounts receivable was related to an increase in load volume and not due to inefficiency in collecting. The cash flow from operations enabled the Company to make capital expenditures and repay debt as discussed below. During the second quarter of 2001, the Company learned that a significant customer had filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Company derived approximately 9% of its fiscal 2001 operating revenues from this customer. Through the fourth quarter of 2001, the Company collected approximately $850,000 of the approximately $900,000 of pre-petition debt from this customer. If the Company is unable to retain the customer, or if the revenue the Company derives from its business with this customer decline materially, such events could have a material adverse effect on the Company's results of operations and financial condition. NET CASH USED IN (PROVIDED BY) INVESTING ACTIVITIES The growth of the Company's business and maintenance of its modern fleet has required significant investments in new tractors and trailers, which has been financed largely through long-term debt. Historically, the Company has financed its major capital equipment purchases consisting of revenue equipment and construction of terminals through banks. During 2001, the Company acquired $1.6 million in revenue equipment using cash flow from operations. All other equipment purchases consisting of service vehicles, computer and office equipment are purchased through its cash flow from operations. The amount of revenue equipment purchased decreased from prior years due to the Company increasing the length of its trade cycle. The Company currently has a 42-month trade cycle and will be increasing it to 45 months with the new trades anticipated in 2002. The Company plans to trade approximately 125 tractors during the first six months of 2002. NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES During 2001, the Company paid $13.1 million towards the reduction of its long-term debt. At December 31, 2001, the Company had debt (including current portions) of $39.2 million, which was primarily incurred to purchase revenue equipment and to construct the new terminal located in Birmingham, Alabama. Pursuant to the Company's stock repurchase program, the Company purchased 244,463 and 263,940 shares of the Common Stock in open market or negotiated transactions during 2000 and 1999, for aggregate purchase prices of $1,432,941 and $2,342,746. Under this program the Company still has the authority to purchase approximately 90,000 more shares of its Common Stock. The Company purchased in negotiated transactions 234,009 and 125,538 shares of Common Stock from the former vice-chairman of the Company and the CEO of WTI during 2001 and 2000, respectively, at a price per share of $6.50. The Company funded these purchases using working capital. On January 8, 1999, the Company purchased 500,000 shares of its outstanding Common Stock from a former Chief Executive Officer of the Company for $3,660,000. The stock purchase was funded by available cash and a bank line of credit. ANTICIPATED SOURCES AND USES OF FUNDS The Company's primary cash requirements are for capital expenditures and operating expenses, including labor costs, fuel costs and operating supplies, and the payment of current debt maturities. Historically, the Company's primary sources of cash have been continuing operations and bank borrowings. The Company anticipates generating more than sufficient cash from operations in 2002 to cover planned capital expenditures of approximately $5.0 million, and servicing current maturities of long-term debt. Historically, the Company has relied on cash generated from operations to fund its working capital requirements. The Company has a bank line of credit permitting short-term borrowings of up to $2.5 million. The revolving line of credit is collateralized by accounts receivable and inventory. As of December 31, 2001, the Company had $0.2 million outstanding on its line of credit, which the Company expects to renew on March 31, 2002. The Company's loan agreements with its major lenders require the Company, among other things, to maintain a tangible net worth of $13.0 million, as defined in the agreements, and to maintain certain financial ratios. On March 22, 2002, the Company received waivers executed by two of its lenders relating to certain financial covenant ratio requirements with respect to which the Company was not in compliance as of December 31, 2001. There can be no assurance that the Company will be able to comply with these covenants in the future. If the Company is unable to comply with these covenants in the future, there can be no assurance that the Company's lenders will provide any additional waivers with respect to any such noncompliance; however, the Company is pursuing changes to such financial ratios in its loan agreements, and believes that these new financial ratios will increase the likelihood that the Company will be able to comply with these covenants in the future. Effective July 1, 2001, the Company increased its retention, per occurrence, for auto liability, general liability and cargo coverage. These coverages are included in one occurrence to determine if the retention has been met. The Company has been involved in two accidents in the first quarter of 2002 that resulted in third party fatalities. Each of these accidents, taken separately, has the potential to cause the Company to reach its total per occurrence retention amount for insurance purposes. Although no claims have been made against the Company with respect to these accidents, in the event claims are made and the Company ultimately is found to have some liability for these accidents, the Company believes that its operating cash flows and unused lines of credit would be sufficient to cover any amounts payable. The Company currently purchases excess primary and umbrella insurance coverage in amounts that management believes are adequate to supplement its retained liabilities. The Company currently has outstanding letters of credit, totaling approximately $4.5 million at December 31, 2001, to cover liability insurance claims and outstanding claims related to its previously self- insured worker's compensation. Annual commitment fees relating to these letters of credit do not exceed 1.5% of the face amounts thereof. 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 Company's Common Stock and other factors over which the Company has little or no control, as well as the Company's financial condition and results of operations. The following tables set forth information regarding the Company's contractual obligations and commercial commitments. These disclosures are also included in the Notes to the Consolidated Financial Statements and such Notes are cross-referenced in the tables below. CONTRACTUAL OBLIGATIONS
YEARS FOOTNOTE ------------------------------------------------------------------------------------- TOTAL 1 2 3 4 5 >5 REF. -------------------------------------------------------------------------------------- Long-term debt $ 39,186 $ 13,580 $ 12,923 $ 6,473 $ 2,217 $ 1,344 $ 2,649 4 Operating leases 26 26 -- -- --- -- -- 3 -------------------------------------------------------------------------------------- Total contractual obligations $ 39,212 $ 13,606 $ 12,923 $ 6,473 $ 2,217 $ 1,344 $ 2,649 ======================================================================================
The Company has decreased its operating lease commitments through increased Company owned facilities and revenue equipment. The remaining operating lease commitments in effect at December 31, 2001 are on a month-to-month basis. OTHER COMMERCIAL COMMITMENTS
YEARS FOOTNOTE ------------------------------------------------------------------------------------- TOTAL 1 2 3 4 5 >5 REF. -------------------------------------------------------------------------------------- Unused lines of credit $ 2,290 $ 2,290 -- --- -- -- -- 4 Letters of credit 4,587 4,587 -- -- -- -- -- 5 -------------------------------------------------------------------------------------- Total contractual obligations $ 6,877 $ 6,877 -- -- -- -- -- ======================================================================================
The unused lines of credit are available to the Company in the event the Company needs financing for the growth of its fleet. With the Company's strong financial position, the Company expects it could obtain additional financing, if necessary, on favorable terms. The letters of credit are primarily required for insurance policies. INTEREST RATE RISK The Company is exposed to interest rate risk due to its long-term debt, which at December 31, 2001, bore interest at rates ranging from 1.25% to 2.25% above the bank's LIBOR rate. Under the provisions of Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments," the Company has estimated the fair value of its long-term debt approximates its carrying value, using a discounted cash flow analysis based on borrowing rates available to the Company. The effect of a hypothetical ten percent increase in interest rates would increase the estimated fair value of the Company's long-term debt by approximately $407,000. Management believes that current working capital funds are sufficient to offset any adverse effects caused by changes in the interest rates. 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 and the type commodity that is being shipped. 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. ECONOMY The Company is sensitive to changes in overall economic conditions that impact customer-shipping volumes. The general slowdown in the economy during 2000 and 2001 had a negative effect on freight volumes for truckload carriers, including the Company. As the unemployment rate increased, driver availability improved for the Company and the industry. Fuel prices increased beginning in the fourth quarter 1999 and remained high through 2000 and 2001 before decreasing in the latter part of 2001. Shortages of fuel, increases in fuel prices, or rationing of petroleum products can have a materially adverse impact on the operations and profitability of the Company. To the extent that the Company cannot recover the higher cost of fuel through customer fuel surcharges, the Company's results would be negatively impacted. Future economic conditions that may affect the Company include employment levels, business conditions, fuel and energy costs, interest rates, and tax rates. SAFETY AND INSURANCE 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, general liability, personal liability, property damage and workers' compensation. The Company has grouped auto liability, general liability and cargo coverage into one "basket," and this basket limits the total retention per occurrence to $500,000. The Company is self insured for workers' compensation claims as well as physical damage claims for its own tractors. The Company currently purchases excess primary and umbrella insurance coverage in amounts that management believes are adequate to supplement its retained liabilities. The Company cannot guarantee that the current retention amounts will not change or that insurance premiums will not increase dramatically during its next insurance renewal, which is scheduled for June 30,2002. The retention amounts and insurance premiums are reflective of the Company's accident occurrence frequency and severity. The Company has adequate working capital and unused lines of credit to offset any increase in retention amounts or premiums. RECENTLY ISSUED ACCOUNTING STANDARDS In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS 141, "Business Combinations," and No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 supersedes Accounting Principles Board Opinion ("APB") No. 16, "Business Combinations," and eliminates the pooling-of-interest method of accounting for business combinations. SFAS No. 141 also changes the criteria for recognizing intangible assets apart from goodwill and states the following criteria should be considered in determining the recognition of intangible assets: (1) whether the intangible asset arises from contractual or other rights, or (2) whether the intangible asset is separable or divisible from the acquired entity and capable of being sold, transferred, licensed, returned or exchanged. SFAS No. 142, generally effective January 1, 2002, supersedes APB No. 17, "Intangible Assets," and requires goodwill and other acquired intangible assets that have an indefinite useful life to no longer be amortized; however, these assets must be reviewed at least annually for impairment. The Company currently amortizes goodwill over its estimated useful life of twenty years. The Company does not anticipate that the adoption of this statement will have a material impact on the financial statements. The Company recorded $223,800, or $0.08 per share on a pre-tax basis, of goodwill amortization in 2001. In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated retirement costs. SFAS No. 143 is effective for fiscal years beginning after June 30, 2002. The Company does not anticipate the adoption of this statement will have a material impact on the financial statements. In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." SFAS No. 144 addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of. However, SFAS No. 144 retains the fundamental provisions of SFAS No. 121 for: (1) recognition and measurement of the impairment of long-lived assets to be held and used and (2) measurement of long-lived assets to be disposed of by sale. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. The Company does not anticipate the adoption of this standard will have a material impact on the financial statements. CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2001 2000 - ---------------------------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,221,455 $ 1,273,281 Short-term investments 278,000 250,000 Accounts receivable, less allowance for doubtful accounts of $318,981 (2001) and $276,070 (2000): Trade and interline 10,055,894 10,907,099 Other 956,576 690,212 Income tax receivable 339,220 1,954,786 Current portion of net investment in sales-type leases 1,200,175 1,562,329 Parts and supplies inventory 497,637 431,967 Tires on revenue equipment 152,300 282,915 Prepaid licenses and permits 946,054 557,368 Other prepaid expenses 1,157,370 1,049,446 Deferred income taxes 1,497,047 919,811 ------------ ------------ Total current assets 19,301,728 19,879,214 ------------ ------------ PROPERTY AND EQUIPMENT: Land and land improvements 2,800,523 2,263,326 Buildings 7,635,280 2,927,611 Revenue equipment 70,927,529 76,637,858 Other equipment 12,090,626 11,781,884 Leasehold improvements 384,884 384,884 Construction in progress -- 5,090,631 ------------ ------------ Total 93,838,842 99,086,194 Less accumulated depreciation and amortization 35,325,568 32,348,826 ------------ ------------ Property and equipment, net 58,513,274 66,737,368 ------------ ------------ OTHER ASSETS: Net investment in sales-type leases 3,850,821 2,908,691 Goodwill, net of accumulated amortization of $912,077 (2001) and $688,277 (2000) 3,452,446 3,676,246 Revenue equipment held for lease 500,125 1,395,865 Deposits and other assets 465,112 454,739 ------------ ------------ Total other assets 8,268,504 8,435,541 ------------ ------------ TOTAL $ 86,083,506 $ 95,052,123 ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Line of credit $ 210,540 $ 1,049,831 Accounts payable - trade and interline 3,339,973 2,575,676 Current maturities of long-term debt 13,580,359 13,534,198 Accrued liabilities: Self-insurance claims 2,820,773 2,510,396 Salaries and wages 485,599 505,181 Other 953,694 1,184,493 ------------ ------------ Total current liabilities 21,390,938 21,359,775 LONG-TERM DEBT 25,606,297 33,322,377 DEFERRED INCOME TAXES 13,798,144 13,187,549 ------------ ------------ Total liabilities 60,795,379 67,869,701 ------------ ------------ COMMITMENTS AND CONTINGENCIES (NOTE 5) 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; 4,069,640 shares issued and outstanding 4,070 4,070 Additional paid-in capital 16,884,622 16,864,622 Retained earnings 18,008,625 18,451,689 Treasury stock, at cost; 1,355,041 shares (2001) and 1,118,746 shares (2000) (9,609,190) (8,137,959) ------------ ------------ Total stockholders' equity 25,288,127 27,182,422 ------------ ------------ TOTAL $ 86,083,506 $ 95,052,123 ============ ============
See accompanying notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2001 2000 1999 ------------------------------------------------------------------------------------------------------------------------- OPERATING REVENUES $ 123,856,279 $ 126,724,786 $ 133,137,272 ------------- ------------- ------------- OPERATING EXPENSES Salaries, wages and employee benefits 39,560,825 39,262,650 35,461,400 Cost of independent contractors 31,779,119 35,172,619 45,132,153 Operating supplies 26,513,199 25,403,579 22,934,366 Operating taxes and licenses 2,241,198 2,965,480 2,846,677 Insurance and claims 6,457,919 7,060,347 6,110,604 Communications and utilities 1,370,598 1,520,342 1,479,546 Depreciation and amortization 12,289,710 11,611,081 10,719,647 Gain on disposal of property and equipment, net (525,808) (1,113,574) (1,626,983) Other 1,950,109 2,008,131 1,862,170 ------------- ------------- ------------- Total operating expenses 121,636,869 123,890,655 124,919,580 ------------- ------------- ------------- OPERATING INCOME 2,219,410 2,834,131 8,217,692 ------------- ------------- ------------- OTHER INCOME (EXPENSES): Interest income 63,357 80,338 91,740 Interest expense (2,684,429) (3,904,241) (2,421,910) ------------- ------------- ------------- Other expenses, net (2,621,072) (3,823,903) (2,330,170) ------------- ------------- ------------- INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES (401,662) (989,772) 5,887,522 PROVISION (BENEFIT) FOR INCOME TAXES 5,038 (15,318) 2,430,152 ------------- ------------- ------------- NET INCOME (LOSS) $ (406,700) $ (974,454) $ 3,457,370 ============= ============= ============= BASIC AND DILUTED NET INCOME (LOSS) PER SHARE $ (0.14) $ (0.32) $ 0.99 ============= ============= ============= BASIC AND DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 2,829,614 3,090,292 3,507,311 ============= ============= =============
See accompanying notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED ADDITIONAL DECEMBER 31, COMMON PAID-IN RETAINED TREASURY 2001, 2000, 1999 AND 1998 STOCK CAPITAL EARNINGS STOCK TOTAL - ------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1998 $ 4,070 $ 16,864,622 $ 15,993,015 $ - $ 32,861,707 Exercise of stock options -- -- (4,932) 43,620 38,688 Sale of common stock under employee stock purchase plan -- -- (7,311) 45,583 38,272 Purchase of treasury stock -- -- -- (6,002,746) (6,002,746) Net income -- -- 3,457,370 -- 3,457,370 ------------------------------------------------------------------------------------ Balance, December 31, 1999 4,070 16,864,622 19,438,142 (5,913,543) 30,393,291 Sale of common stock under employee stock purchase plan -- -- (11,999) 24,525 12,526 Purchase of treasury stock -- -- -- (2,248,941) (2,248,941) Net loss -- -- (974,454) -- (974,454) ------------------------------------------------------------------------------------ Balance, December 31, 2000 4,070 16,864,622 18,451,689 (8,137,959) 27,182,422 Sale of common stock under employee stock purchase plan -- -- (36,364) 49,825 13,461 Capital contribution -- 20,000 -- -- 20,000 Purchase of treasury stock -- -- -- (1,521,056) (1,521,056) Net loss -- -- (406,700) -- (406,700) ------------------------------------------------------------------------------------ Balance, December 31, 2001 $ 4,070 $ 16,884,622 $ 18,008,625 $ (9,609,190) $ 25,288,127 ====================================================================================
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2001 2000 1999 - ------------------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES: Net income (loss) $ (406,700) $ (974,454) $ 3,457,370 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 12,289,710 11,611,081 10,719,647 Provision for bad debts 625,000 84,000 220,000 Gain on disposal of property and equipment, net (525,808) (1,113,574) (1,626,983) Net effect of sales-type leases on cost of independent contractors (526,708) 253,990 (1,741,454) Provision for deferred income taxes 33,358 1,590,614 640,331 Changes in assets and liabilities provided (used) cash: Accounts receivable (40,159) 1,818,149 (713,392) Other current assets 1,155,901 1,158,104 (666,292) Deposits and other assets (10,373) (16,367) (257,291) Accounts payable - trade and interline 764,297 (1,436,371) 2,414,894 Accrued liabilities and other current liabilities 59,996 (2,866,338) (874,865) ------------------------------------------------------- Net cash provided by operating activities 13,418,514 10,108,834 11,571,965 ------------------------------------------------------- INVESTING ACTIVITIES: Payments received on sales-type leases 2,288,643 3,407,859 3,939,430 Capital expenditures: Revenue equipment (1,642,936) (14,459,770) (36,950,717) Other property and equipment (1,234,350) (1,617,129) (4,650,303) Proceeds from disposals of property and equipment 2,557,928 6,090,836 8,542,604 Receipt of acquisition escrow -- -- 55,788 ------------------------------------------------------- Net cash provided by (used in) investing activities 1,969,285 (6,578,204) (29,063,198) ------------------------------------------------------- FINANCING ACTIVITIES: Proceeds from sales of common stock 13,461 12,526 38,272 Proceeds from capital contribution 20,000 -- -- Proceeds from exercise of stock options -- -- 38,688 Purchase of treasury stock (1,521,056) (2,248,941) (6,002,746) Proceeds (payments) on line of credit (839,291) 1,049,831 -- Proceeds from long-term debt 1,012,949 9,949,052 36,785,635 Principal payments on long-term debt (13,125,688) (12,026,643) (13,723,454) ------------------------------------------------------- Net cash (used in) provided by financing activities (14,439,625) (3,264,175) 17,136,395 ------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 948,174 266,455 (354,838) CASH AND CASH EQUIVALENTS: BEGINNING OF YEAR 1,273,281 1,006,826 1,361,664 ------------------------------------------------------- END OF YEAR $ 2,221,455 $ 1,273,281 $ 1,006,826 ======================================================= Supplemental disclosures of cash flow information Cash paid during the year for: Interest $ 2,684,429 $ 3,904,593 $ 2,358,576 ======================================================= Income taxes, net of refunds $ (1,508,026) $ 1,138,562 $ 2,727,399 ======================================================= Supplemental non-cash investing and financing activities Net investment in sales-type of leases $ 1,065,389 $ (3,160,246) $ 1,817,598 ======================================================= Dealer financed purchases of revenue equipment $ 5,545,820 $ -- $ -- =======================================================
See accompanying notes to consolidated financial statements. 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. PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, WTI Transport, Inc. ("WTI"). All significant intercompany items have been eliminated in consolidation. USE OF ACCOUNTING ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. REVENUE RECOGNITION - Operating revenue and related costs are recognized upon delivery 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. 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. Depreciation expense is suspended while the asset is in revenue equipment held for lease. TIRES ON REVENUE EQUIPMENT - 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 tires on revenue equipment. Cost of replacement tires are expensed when put into service. PROPERTY AND EQUIPMENT - Property and equipment are stated at the lower of fair value or 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 5-30 years Revenue equipment 4-7 years Other equipment 3-10 years Leasehold improvements 3-20 years
Depreciation is computed using accelerated methods for income tax purposes. 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 represents the excess purchase price of the net assets acquired in the WTI business combination over their estimated fair value. Goodwill is amortized on a straight-line basis over a 20 year estimated useful life. Goodwill amortization amounted to $223,800 for each of the three years ended December 31, 2001, 2000 and 1999. IMPAIRMENT OF LONG-LIVED ASSETS -The Company periodically evaluates the carrying value of long-lived assets to be held and used, including goodwill and other intangible assets, when events and circumstances warrant such a review. The carrying value of long-lived assets is considered impaired when the anticipated undiscounted cash flow NOTES TO CONSOLIDATED FINANCIAL STATEMENTS from such assets is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived assets. STOCK BASED COMPENSATION PLANS - The Company accounts for its stock-based compensation plans under the provisions of APB No. 25, "Accounting for Stock Issued to Employees." In Note 6, the Company presents the disclosure requirements of SFAS No. 123, "Accounting for Stock-based Compensation." SFAS 123 requires companies that elect not to account for stock-based compensation as prescribed by that statement to disclose, among other things, the pro forma effects on operations as if SFAS 123 had been adopted. INCOME TAXES - The Company accounts for income taxes under the asset and liability method which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than possible enactments of changes in the tax laws or rates. CLAIMS ACCRUALS - The Company accrues estimates for the uninsured portion of claims relating to the Company's insurance programs (see Note 5). NET (LOSS) INCOME PER SHARE - In accordance with SFAS No. 128, "Earnings per Share", the Company reports two separate net income (loss) per share numbers, basic and diluted, for all periods presented. These per share amounts have been computed using the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share amounts are to be presented to include the effect of potentially dilutive securities. Options that could potentially dilute basic net income (loss) per share in the future were not included in the computation of diluted net income (loss) per share because to do so would have been antidilutive. Antidilutive options were 85,200; 408,300; and 456,100 for the years ended December 31, 2001, 2000 and 1999, respectively. FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying value of the Company's cash equivalents, short-term investments, trade receivables, trade payables and accrued expenses approximates fair value because of the short-term nature of these instruments. Additional fair value disclosure for the Company's interest-bearing debt is presented in Note 4. RECENT ACCOUNTING PRONOUNCEMENTS - Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging Activities" was adopted effective January 1, 2001. SFAS 133, as amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. Under SFAS 133, certain contracts that were not formerly considered derivatives may now meet the definition of a derivative. The Company does not enter into derivative contracts either to hedge existing risks or for speculative purposes. Accordingly, the adoption of SFAS 133 has not had an impact on the financial position, results of operations, or cash flows of the Company. In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS 141, "Business Combinations," and No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 supercedes Accounting Principles Board Opinion ("APB") No. 16, "Business Combinations," and eliminates the pooling-of-interest method of accounting for business combinations. SFAS No. 141 also changes the criteria for recognizing intangible assets apart form goodwill and states the following criteria should be considered in determining the recognition of intangible assets: (1) whether the intangible asset arises from contractual or other rights, or (2) whether the intangible asset is separable or divisible from the acquired entity and capable of being sold, transferred, licensed, returned or exchanged. SFAS No. 142, generally effective January 1, 2002, supercedes APB No. 17, "Intangible Assets," and requires goodwill and other acquired intangible assets that have an indefinite useful life to no longer be amortized; however, these assets must be reviewed at least annually for impairment. The Company currently amortizes goodwill over its estimated useful life of twenty years. The Company recorded $223,800, or $0.08 per share on a pre-tax basis, of goodwill amortization in 2001. In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated retirement costs. SFAS No. 143 is effective for fiscal years beginning after June 30, 2002. The Company does not anticipate the adoption of this statement will have a material impact on the financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In October 2001, the FASB issued SFAS No. 144, "accounting for the Impairment or Disposal of Long-Lived Assets," which supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." SFAS No. 144 addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of. However, SFAS No. 144 retains the fundamental provisions of SFAS No. 121 for: (1) recognition and measurement of the impairment of long-lived assets to be held and used and (2) measurement of long-lived assets to be disposed of by sale. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. The Company does not anticipate the adoption of this standard will have a material impact on the financial statements. RECLASSIFICATIONS - Certain reclassifications have been made to the 2000 and 1999 consolidated financial statements to conform to the 2001 presentation. 2. 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, 2001, 2000 and 1999 were $226,731, $165,562, and $280,890, respectively. 3. LEASES LESSEE OPERATING LEASES - The Company leases certain terminal buildings, land and equipment under agreements which expire at various dates through 2002. The lease agreements generally include renewal options and the Company is required to pay taxes, insurance and normal maintenance for the facilities. Future minimum lease payments under all operating leases are insignificant. Total rental expense for all operating leases was $170,741, $356,791, and $384,723, for the years ended December 31, 2001, 2000 and 1999, 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, 2001 and 2000 are as follows:
2001 2000 ------------------------------- Minimum lease receivable $ 7,929,530 $ 6,120,316 Allowance for uncollectible receivables (1,590,153) (677,910) ------------------------------- Net minimum lease receivable 6,339,377 5,442,406 Unearned interest income (1,288,381) (971,386) ------------------------------- Net investment in sales-type leases 5,050,996 4,471,020 Less current portion (1,200,175) (1,562,329) ------------------------------- Net amount due after one year $ 3,850,821 $ 2,908,691 ===============================
Future minimum lease rentals for sales-type leases are as follows: YEAR 2002 $ 2,965,423 2003 2,511,297 2004 1,693,332 2005 759,478 -------------- Total $ 7,929,530 ==============
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Gains on disposition of revenue equipment leased to owner-operators, interest income on these leases, rental income on operating leases, and provisions for bad debts related to sales-type leases are included as components of cost of independent contractors in the accompanying consolidated statements of operations. 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 and one-half years. The revenue equipment under these leases had a cost of $1,423,174 and $550,751, and accumulated depreciation of $414,076 and $197,223 at December 31, 2001 and 2000, respectively. Future minimum lease rentals for operating leases are as follows: YEAR 2002 $ 380,856 2003 249,074 2004 59,776 -------------- Total $ 689,706 ==============
Total rental income from operating leases was $328,331, $273,360, and $713,030 for the years ended December 31, 2001, 2000 and 1999, respectively. 4. BORROWING ARRANGEMENTS Long-term debt at December 31, 2001 and 2000 is summarized as follows:
Revenue equipment obligations: 2001 2000 ------------------------------- LIBOR plus 1.25% subject to 5.0% minimum (5.00% - 2001 and 7.65% - 2000) Notes payable to banks in monthly installments through December 2005 $ 11,478,728 $ 39,513,292 LIBOR plus 1.50% (3.38% - 2001 and 7.90% - 2000) Notes payable to banks in monthly installments through February 2006 3,876,631 3,621,086 LIBOR plus 2.00% (3.83% - 2001 and 8.15% - 2000) Notes payable to banks in monthly installments through November 2006 2,054,475 3,722,197 LIBOR plus 2.25% (4.13%-2001) Notes payable to banks in monthly installments through May 2004 16,718,438 -- Fixed rate of 5.75% Notes payable to finance company in monthly installments through December 2006 5,058,384 -- ------------------------------- Total 39,186,656 46,856,575 Less current maturities 13,580,359 13,534,198 ------------------------------- Long-term debt $ 25,606,297 $ 33,322,377 ===============================
Revenue equipment obligations are collateralized by revenue equipment. The notes payable to banks bear interest ranging from LIBOR plus 1.25% to LIBOR plus 2.25% based on the Company's level of cash flows as defined in their loan agreements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Long-term debt is scheduled to mature as follows: YEAR 2002 $ 13,580,359 2003 12,923,034 2004 6,473,252 2005 2,217,770 2006 1,344,253 Thereafter 2,647,988 -------------- Total $ 39,186,656 ==============
The Company also has a $2,500,000 line of credit under a commercial revolving note expiring March 31, 2002, bearing interest at LIBOR plus 1.75%. There were borrowings of $210,540 and $1,049,831 outstanding at December 31, 2001 and 2000, respectively. The Company renewed this line of credit during the first quarter of 2002. Covenants under these loan agreements require the Company, among other things, to maintain a tangible net worth of $13,000,000, as defined, and to maintain certain financial ratios. On March 22, 2002, the Company received waivers from certain lenders due to non-compliance with financial ratios at December 31, 2001. After giving effect to the waivers, the Company was in compliance with all debt covenants at December 31, 2001. 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. 5. COMMITMENTS AND CONTINGENCIES Self Insurance Accruals At December 31, 2001, the Company is self-insured as follows:
RETENTION AMOUNT PER OCCURRENCE -------------- Workers' compensation $ 250,000 Liability - body injury $ 500,000* Liability - property damage $ 500,000* Employee medical and hospitalization Cargo loss and damage $ 500,000* General liability $ 500,000* Environmental losses No limit
* These coverages are all included in one retention amount per occurrence. Maximum retention is $500,000 per occurrence. The above retention amounts represent rates which were negotiated with the Company's insurance carriers at June 30, 2001. Retention amounts under other previous insurance programs may vary from those stated above. At December 31, 2001, the Company has recorded liabilities for retention amounts related to claims under previous insurance coverage. For claims prior to June 30, 1997, the Company had a retention amount per occurrence under workers' compensation of $300,000. For the period from July 1, 1997 to June 30, 2000, workers' compensation insurance was provided under fully insured policies. Effective July 1, 2000, the Company has a retention amount per occurrence under workers' compensation of $250,000. 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. Effective January 2001, the Company became fully self-insured for liability - physical damage, except for claims related to catastrophic physical damage. The Company has a retention amount per occurrence under liability - catastrophic physical damage of $10,000. 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. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Letters of Credit The Company has outstanding letters of credit at December 31, 2001 totaling approximately $4,587,109 to cover liability insurance claims and claims related to its previous self-insured workers' compensation program, and to purchase revenue equipment. Litigation 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. 6. 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 85% 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 2001 and 2000 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 2001 or 2000. Information regarding the Plan is summarized below:
WEIGHTED AVERAGE EXERCISE SHARES PRICE ------------------------------- Outstanding at December 31, 1998 444,810 $ 9.36 Granted 65,250 10.25 Exercised (6,000) 6.00 Terminated (47,960) 9.40 ------------------------------- Outstanding at December 31, 1999 456,100 9.53 Terminated (47,800) 8.58 ------------------------------- Outstanding at December 31, 2000 408,300 9.62 Granted 20,000 2.55 Terminated (343,100) 9.54 ------------------------------- Outstanding at December 31, 2001 85,200 $ 8.28 =============================== Options exercisable at December 31, 2001 65,650 $ 7.75 Options exercisable at December 31, 2000 262,380 $ 9.88 Options exercisable at December 31, 1999 228,830 $ 10.04
At December 31, 2001, 414,800 shares were available for future grant under the Plan. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes information concerning stock options outstanding and options exercisable at December 31, 2001:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE ------------------------------------------------ ------------------------------- WEIGHTED AVERAGE WEIGHTED WEIGHTED RANGE OF NUMBER OF REMAINING AVERAGE NUMBER OF AVERAGE EXERCISE SHARES CONTRACTUAL EXERCISE SHARES EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE - ------------------------------------------------------------------------------------------------------------------- $2.50 - $11.00 85,200 6.2 $8.28 65,650 $7.75
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 under the Plan consistent with the methodology prescribed under SFAS No. 123, the Company's pro forma net (loss) income and net (loss) income per share would have differed from the amounts reported as follows:
AS REPORTED PRO FORMA 2001 2000 1999 2001 2000 1999 - ------------------------------------------------------------------------------------------------------------------- Net (loss) income $ (406,700) $ (974,454) $ 3,457,370 $ (728,767) $ (1,506,993) $ 2,652,128 Basic and diluted net (loss) income per share $ (0.14) $ (0.32) $ 0.99 $ (.26) $ (0.49) $ 0.76
The fair value per share for options granted was $1.98 for the year ended December 31, 2001 and $7.93 for the year ended December 31, 1999. The fair value was estimated at the date of the grant using the Black-Scholes option pricing model with the following weighted-average assumptions:
2001 2000 1999 - ------------------------------------------------------------------------------------------------------------------- Risk-free interest rate 4.6% -- 6.5% Dividend yield 0.0% -- 0.0% Expected volatility 82.4% -- 81.2% Weighted average expected life (in years) 6 -- 7
7. INCOME TAXES (BENEFIT) The provision (benefit) for income taxes for the years ended December 31, 2001, 2000 and 1999 consisted of the following:
2001 2000 1999 - ------------------------------------------------------------------------------------------------------------------- Current: Federal $(24,428) $(1,603,762) $1,554,759 State (3,893) (2,170) 235,062 -------- ----------- ---------- Total current provision (benefit) (28,321) (1,605,932) 1,789,821 Deferred: Federal 21,990 1,625,520 549,962 State 11,369 (34,906) 90,369 -------- ----------- ---------- Total deferred provision 33,359 1,590,614 640,331 -------- ----------- ---------- Total provision (benefit) for income taxes $ 5,038 $ (15,318) $2,430,152 ======== =========== ==========
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Total income tax provision (benefit) for 2001, 2000 and 1999 is different from the amount that would be computed by applying the statutory federal income tax rate of 34% to income before income taxes. The reasons for this difference are as follows:
2001 2000 1999 - ------------------------------------------------------------------------------------------------------------------- Income tax (benefit) at expected federal income tax rate $ (136,565) $ (336,522) $ 2,001,757 State income taxes, net of federal tax effect 4,934 (24,470) 214,785 Nondeductible operating expenses 72,381 58,254 37,659 Nondeductible goodwill amortization 76,592 76,592 76,592 Adjustment to estimated income tax accruals -- 191,956 -- Other (12,304) 18,872 99,359 ------------------------------------------------- $ 5,038 $ (15,318) $ 2,430,152 =================================================
At December 31, 2001, the Company had state net operating loss carryforwards of approximately $5,808,000, which will expire in 2021. 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. The sources of the Company's deferred tax liabilities and assets as of December 31, 2001 and 2000 are as follows:
2001 2000 - ------------------------------------------------------------------------------------------------------------------- Deferred tax liabilities: Tax over book depreciation $ 13,837,035 $ 13,496,705 Prepaid expenses deductible when paid 695,592 500,803 Capitalized tires 59,934 110,900 ------------------------------- Total deferred tax liabilities 14,592,561 14,108,408 =============================== Deferred tax assets: Accrued self insurance claims $ 995,612 $ 710,342 Other accrued expenses not deductible until paid 179,247 416,007 Allowance for losses on receivables 751,296 375,915 State NOL carryforward 296,904 268,779 Other 68,405 69,627 ------------------------------- Total deferred tax assets 2,291,464 1,840,670 ------------------------------- Net deferred tax liabilities $ 12,301,097 $ 12,267,738 ===============================
The above amounts are reflected in the accompanying consolidated balance sheets as: Current assets $ 1,497,047 $ 919,811 Noncurrent liabilities (13,798,144) (13,187,549) ------------------------------- Net deferred tax liabilities $ 12,301,097 $ 12,267,738 ===============================
8. MAJOR CUSTOMERS The Company's largest 25, 10 and 5 customers accounted for approximately 41%, 24% and 16%, respectively, of the Company's revenues during the year ended December 31, 2001. Many of the Company's largest 25 customers are publicly held companies. No single customer accounted for more than 10% of the Company's revenues during the years ended December 31, 2001, 2000 and 1999. The Company does not believe that it is dependent upon any single customer. Sales to the Company's largest customer amounted to 10%, 9% and 8% of operating revenues during 2001, 2000 and 1999, respectively. Customers in the steel industry accounted for 42%, 42% and 45% of the Company's operating revenues for the years ended December 31, 2001, 2000 and 1999. 9. SEGMENT INFORMATION SFAS No. 131 establishes standards for the way in which public companies are to disclose certain information about operating segments in their financial reports. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. The Company has identified two reportable segments based on the criteria of SFAS No. 131: Boyd and WTI. The Boyd segment is a flatbed carrier that hauls primarily steel and building products, throughout most of the continental United States, and operates 760 tractors. Boyd had 570 company drivers and 190 owner-operators as of December 31, 2001. The WTI segment is a flatbed carrier that hauls steel and roofing products, primarily in the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS eastern two-thirds of the United States, and operates 212 tractors. WTI had 40 company drivers and 172 owner-operators as of December 31, 2001. Management of the Company evaluates segment performance based on measures of revenues, operating ratio, depreciation, interest and capital expenditures. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Summary information by segment follows:
BOYD WTI ELIMINATIONS TOTAL --------------------------------------------------------------------------- RESULTS OF OPERATIONS Year Ended December 31, 2001 Operating revenues $ 104,848,692 $ 19,154,927 $ (147,340) $ 123,856,279 Operating expenses 101,491,640 20,292,569 (147,340) 121,636,869 Operating income 3,357,052 (1,137,642) --- 2,219,410 Operating ratio 96.8% 105.9% 98.2% Year Ended December 31, 2000 Operating revenues $ 102,009,220 $ 25,068,143 $ (352,577) $ 126,724,786 Operating expenses 98,066,670 26,176,562 (352,577) 123,890,655 Operating income 3,942,550 (1,108,419) -- 2,834,131 Operating ratio 96.1% 104.4% 97.8% Year Ended December 31, 1999 Operating revenues $ 97,538,284 $ 35,820,537 $ (221,549) $ 133,137,272 Operating expenses 90,263,060 34,878,069 (221,549) 124,919,580 Operating income 7,275,224 942,468 -- 8,217,692 Operating ratio 92.5% 97.4% 93.8% IDENTIFIABLE ASSETS As of December 31, 2001 Cash and cash equivalents $ 943,574 $ 1,277,881 $ 2,221,455 Property and equipment 54,740,848 3,772,426 58,513,274 Goodwill, net -- 3,452,446 3,452,446 Long-term debt 37,587,257 1,599,399 39,186,656 As of December 31, 2000 Cash and cash equivalents $ (44,234) $ 1,317,515 $ 1,273,281 Property and equipment 62,137,993 4,599,375 66,737,368 Goodwill, net -- 3,676,246 3,676,246 Long-term debt 43,451,096 3,405,479 46,856,575
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The following is a summary of the quarterly results of operations for the years ended December 31, 2001 and 2000 (in thousands, except per share data). The summation of quarterly earnings per share may not agree with annual earnings per share.
2001 ------------------------------------------------------------------------------------ MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,(a) ------------------------------------------------------------------------------------ OPERATING REVENUES $ 30,259 $ 31,670 $ 32,457 $ 29,470 OPERATING INCOME (LOSS) 453 1,172 980 (386) NET INCOME (LOSS) (293) 283 230 (627) BASIC AND DILUTED NET INCOME (LOSS) PER SHARE (0.10) 0.10 0.08 (0.22) 2000 ------------------------------------------------------------------------------------ March 31, June 30, September 30, December 31,(b) ------------------------------------------------------------------------------------ Operating revenues $ 33,826 $ 32,601 $ 31,202 $ 29,096 Operating income (loss) 1,406 1,393 896 (861) Net income (loss) 231 208 (65) (1,349) Basic and diluted net income (loss) per share 0.07 0.07 (0.02) (0.44)
(a) The fourth quarter of 2001 included a reduction in the carrying value of revenue equipment and charges to increase reserves for receivables associated with owner-operator leases at WTI of approximately $725,000. (b) The fourth quarter of 2000 included charges to increase reserves for owner-operator leases at Boyd of approximately $434,000. REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Directors and Stockholders of Boyd Bros. Transportation Inc. Clayton, Alabama We have audited the consolidated balance sheet of Boyd Bros. Transportation Inc. and subsidiary as of December 31, 2001, and the related statements of operations, stockholders' equity and cash flows for the year then ended. 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 audit. The financial statements of Boyd Bros. Transportation Inc. as of December 31, 2000 and for each of the two years in the period ended December 31, 2000, were audited by other auditors whose report dated February 9, 2001 (March 28, 2001 as to the waiver letters described in Note 4), expressed an unqualified opinion on those statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Boyd Bros. Transportation Inc. and subsidiary as of December 31, 2001, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. /s/ BDO Seidman, LLP Atlanta, Georgia January 31, 2002, except for Note 4, which is as of March 22, 2002 EX-21 8 g75017ex21.txt SUBSIDIARIES OF THE REGISTRANT EXHIBIT 21 Subsidiaries of Boyd Bros. Transportation, Inc. The following companies are subsidiaries of the Registrant: Subsidiary State of Incorporation - ---------- ---------------------- WTI Transport, Inc. Alabama EX-23.1 9 g75017ex23-1.txt CONSENT OF BDO SEIDMAN,LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Boyd Bros. Transportation Inc. Clayton, Alabama We hereby consent to the incorporation by reference in the Registration Statements Nos. 33-83768 and 33-78925 on Form S-8 of our reports dated January 31, 2002, except for Note 4, which is as of March 22, 2002, relating to the 2001 consolidated financial statements and schedule of Boyd Bros. Transportation Inc. and subsidiary appearing in and incorporated by reference in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. BDO Seidman, LLP Atlanta, Georgia March 29, 2002 EX-23.2 10 g75017ex23-2.txt INDEPENDENT AUDITORS REPORT OF DELOITTE & TOUCHE EXHIBIT 23.2 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, 2000, and the related consolidated statements of operations, stockholders' equity, and cash flows for the years ended December 31, 2000 and 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 auditing standards generally accepted in the United States of America. 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, 2000, and the results of their operations and their cash flows for the years ended December 31, 2000 and 1999 in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Birmingham, Alabama February 9, 2001 (March 28, 2001 as to the waiver letters described in Note 4) EX-23.3 11 g75017ex23-3.txt CONSENT OF DELOITTE & TOUCHE LLP EXHIBIT 23.3 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in Registration Statement Nos. 33-83768 and 33-78925 of Boyd Bros. Transportation Inc. and subsidiary on Form S-8 of our report dated February 9, 2001 (March 28 as to the waiver letters described in Note 4), appearing in this Annual Report on Form 10-K of Boyd Bros. Transportation Inc. and subsidiary for the year ended December 31, 2001. Our audits of the consolidated financial statements referred to in our aforementioned report also included the financial statement schedule of Boyd Bros. Transportation Inc. and subsidiary, listed in Item 14 (a) for the years ended December 31, 2000 and 1999. This 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 financial statement schedule, when considered in relation to the basic consolidated financial statements as a whole, presents fairly in all material respects the information set forth therein. Deloitte & Touche LLP Birmingham, Alabama March 27, 2002 -----END PRIVACY-ENHANCED MESSAGE-----