-----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, VojhtG1fZdmkzAoHn+N02F0L5VjdOkzZ3+B5vdaEa91bEgqZbHiDH3VXmc8XyrTq vTYroR0VXx+sYtr9Y8dpgA== 0000950144-04-005914.txt : 20040528 0000950144-04-005914.hdr.sgml : 20040528 20040528165917 ACCESSION NUMBER: 0000950144-04-005914 CONFORMED SUBMISSION TYPE: SC 13E3/A PUBLIC DOCUMENT COUNT: 30 FILED AS OF DATE: 20040528 GROUP MEMBERS: BBT ACQUISITION CORPORATION GROUP MEMBERS: DEMPSEY BOYD GROUP MEMBERS: FRANCES S. BOYD GROUP MEMBERS: GAIL B. COOPER GROUP MEMBERS: GINGER B. TIBBS SUBJECT COMPANY: 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: SC 13E3/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-48349 FILM NUMBER: 04839021 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 FILED BY: 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: SC 13E3/A 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 SC 13E3/A 1 g86864a2sc13e3za.htm BOYD BROS. TRANSPORTATION INC. BOYD BROS. TRANSPORTATION INC.
 

SCHEDULE 13E-3

(Rule 13e-100)

Transaction Statement Under Section 13(e) of the Securities
Exchange Act of 1934 and Rule 13e-3 Thereunder

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

Rule 13e-3 Transaction Statement
Under Section 13(e) of the Securities Exchange Act of 1934

(Amendment No. 2)*

BOYD BROS. TRANSPORTATION INC.


(Name of Issuer)

Boyd Bros. Transportation Inc.
BBT Acquisition Corporation
Dempsey Boyd
Frances S. Boyd
Gail B. Cooper
Ginger B. Tibbs


(Names of Persons Filing Statement)


Common Stock, par value $.001 per share


(Title of Class of Securities)

103255 10 5


(CUSIP Number of Class of Securities)
     
DENSON N. FRANKLIN III
Bradley Arant Rose & White LLP
1819 Fifth Avenue North
Birmingham, Alabama 35203
(205) 521-8000
  PAMELA K. PHILLIPS
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
50 North Laura, Suite 2800
Jacksonville, Florida 32202
(904) 354-8000


(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of the Persons Filing Statement)

This statement is filed in connection with (check the appropriate box):

     a.          x      The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities Exchange Act of 1934.

     b.          o      A tender offer.

     c.          o      None of the above

     d.          o      Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: x

     e.          o      Check the following box if the filing fee is a final amendment reporting the results of the transaction: o

CALCULATION OF FILING FEE

         
Transaction        
Valuation* Amount of Filing Fee**
$6,854,623
  $ 869  

     •       For purposes of calculating the filing fee only. Determined by (i) multiplying 777,442 shares of common stock of Boyd Bros. Transportation Inc. (the “Company”) by $7.00 per share and (ii) multiplying the difference between $7.00 and the exercise price of each outstanding in-the-money option to purchase an aggregate of 325,450 shares of common stock.

     •       The amount of the filing fee calculated in accordance with Exchange Act Rule 0-11, as amended.


 

     x Check the box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

Amount Previously Paid: $869

Form or Registration No.: Schedule 14A

Filing Party: Boyd Bros. Transportation Inc.

Date Filed: February 3, 2004


 

TABLE OF CONTENTS

         
Item 1.
  Summary Term Sheet    
         
Item 2.
  Subject Company Information    
         
Item 3.
  Identity and Background of Filing Person    
         
Item 4.
  Terms of the Transaction    
         
Item 5.
  Past Contacts, Transactions, Negotiations and Agreements    
         
Item 6.
  Purposes of the Transaction and Plans or Proposals    
         
Item 7.
  Purposes, Alternatives, Reasons and Effects    
         
Item 8.
  Fairness of the Transaction    
         
Item 9.
  Reports, Opinions, Appraisals and Negotiations    
         
Item 10.
  Source and Amounts of Funds or Other Consideration    
         
Item 11.
  Interest in Securities of the Subject Company    
         
Item 12.
  The Solicitation or Recommendation    
         
Item 13.
  Financial Statements    
         
Item 14.
  Persons/Assets, Retained, Employed, Compensated or Used    
         
Item 15.
  Additional Information    
         
Item 16.
  Exhibits    
         
SIGNATURE
       

1


 

INTRODUCTION

     This Amendment No. 2 to the Rule 13e-3 Transaction Statement on Schedule 13E-3 (this “Transaction Statement”) is being filed by Dempsey Boyd (“Mr. Boyd”), Frances S. Boyd, Gail B. Cooper, Ginger B. Tibbs, BBT Acquisition Corporation, a Delaware corporation (“Mergerco”), and Boyd Bros. Transportation Inc., a Delaware corporation (“Boyd” or the “Company”), and the issuer of the equity securities that are the subject of the Rule 13e-3 transaction. Pursuant to an Agreement and Plan of Merger, dated as of December 31, 2003, as amended by Amendment No. 1 to Agreement and Plan of Merger dated April 27, 2004 (the merger agreement as amended, the “merger agreement”), Mergerco, which is controlled by Mr. Boyd and certain of his family members (the “Affiliated Stockholders”), will merge with and into the Company, and the Company will be the surviving corporation.

     Upon completion of the merger, each issued and outstanding share of the Company’s common stock will be converted into the right to receive $7.00 in cash, without interest, except that: (1) treasury shares and shares of the Company’s common stock held by Mergerco or the Affiliated Stockholders immediately prior to the effective time will be cancelled without any payment therefor; and (2) shares held by stockholders who properly exercise appraisal rights will be subject to appraisal in accordance with Delaware law, if applicable. Upon completion of the merger, the Affiliated Stockholders are expected to own all of the Company’s post-merger common stock.

     Concurrently with the filing of this Transaction Statement, the Company is filing Amendment No. 2 to the preliminary proxy statement on Schedule 14A (the “Proxy Statement”) pursuant to which the stockholders of the Company will be asked to vote on the merger. The information set forth in the Proxy Statement, including all exhibits and appendices thereto, is hereby expressly incorporated by reference in this Transaction Statement. The information required to be disclosed in this Transaction Statement, including under the applicable sections of Regulation M-A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is disclosed in the Proxy Statement and the exhibits and appendices thereto. The Proxy Statement is in preliminary form and is subject to completion and amendment.

     All information contained in this Transaction Statement concerning the Company and its subsidiaries has been supplied by the Company, and all information concerning Mergerco and the Affiliated Stockholders has been supplied by Mergerco and the Affiliated Stockholders and their representatives and agents.

     
Item 1. Summary Term Sheet.
 
   
Item 1001 of Regulation M-A
 
   
  The information set forth in the Proxy Statement under the captions “SUMMARY” and “QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING” is incorporated herein by reference.
 
   
Item 2. Subject Company Information.
 
   
Item 1002 of Regulation M-A
 
   
(a)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Parties to the Proposed Merger” and “PRICE RANGE OF COMMON STOCK AND DIVIDENDS” is incorporated herein by reference. The Company is the issuer of the class of equity securities which is the subject of the Rule 13e-3 transaction.
 
   
(b)
  The information set forth in the Proxy Statement under the caption “THE SPECIAL MEETING — Record Date and Voting Information” is incorporated herein by reference.
 
   
(c)
  The information set forth in the Proxy Statement under the caption “PRICE RANGE OF COMMON STOCK AND DIVIDENDS” is incorporated herein by reference.
 
   
(d)
  The information set forth in the Proxy Statement under the caption “PRICE RANGE OF COMMON STOCK AND DIVIDENDS” is incorporated herein by reference.

2


 

     
(e)
  Not applicable.
 
   
(f)
  The information set forth in the Proxy Statement under the caption “COMMON STOCK PURCHASE INFORMATION” is incorporated herein by reference.
 
   
Item 3. Identity and Background of Filing Persons.
 
   
(a)-(c)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Parties to the Proposed Merger” and “DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY” is incorporated herein by reference.
 
   
  Dempsey Boyd has his principal business address at 3275 Highway 30, Clayton, Alabama 36016. Mr. Boyd has been actively involved in the Company since he co-founded the Company with his brothers in 1956. Mr. Boyd stepped down as Chairman of the Company in 2001. The information set forth in the Proxy Statement under the caption “SPECIAL FACTORS — Related Party Transactions” is incorporated herein by reference.
 
   
  Frances S. Boyd has her principal business address at 3275 Highway 30, Clayton, Alabama 36016. Mrs. Boyd is married to Mr. Boyd, and is not actively involved in the business of the Company. Mrs. Boyd is not engaged in any other business activities.
 
   
  All of the filing persons are citizens of the United States. During the last five years, none of the filing persons and none of the directors and executive officers of the Company have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or were party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.
 
   
Item 4. Terms of the Transaction.
 
   
Item 1004 of Regulation M-A
 
   
(a)(1)
  Not applicable.
 
   
(a)(2)(i)
  The information set forth in the Proxy Statement under the captions “SUMMARY,” “QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING” and “THE SPECIAL MEETING — Purpose of the Special Meeting” is incorporated herein by reference.
 
   
(a)(2)(ii)
  The information set forth in the Proxy Statement under the captions “SUMMARY — The Merger,” “QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING,” “THE SPECIAL MEETING — Purpose of the Special Meeting,” “SPECIAL FACTORS —Effects of the Merger,” “THE MERGER AGREEMENT — Payment for Shares” and “THE MERGER AGREEMENT — Treatment of Stock Options, Stock Awards and Warrants” is incorporated herein by reference.
 
   
(a)(2)(iii)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Our Purpose and Reasons for the Merger,” “SPECIAL FACTORS — Reasons for the Special Committee’s Determination; Fairness of the Merger,” “SPECIAL FACTORS — Reasons for the Board of Directors’ Determination; Fairness of the Merger,” “SPECIAL FACTORS — Purpose and Reasons of Mergerco and the Affiliated Stockholders for the Merger” and “SPECIAL FACTORS — Mergerco and Affiliated Stockholders’ Position as to the Fairness of the Merger” is incorporated herein by reference.

3


 

     
(a)(2)(iv)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Vote Required,” “QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING” and “THE SPECIAL MEETING — Record Date and Voting Information” is incorporated herein by reference.
 
   
(a)(2)(v)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Effects of the Merger,” “QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING,” “SPECIAL FACTORS — Effects of the Merger,” “THE MERGER AGREEMENT — Payment for Shares” and “THE MERGER AGREEMENT — Treatment of Stock Options, Stock Awards and Warrants” is incorporated herein by reference.
 
   
(a)(2)(vi)
  The information set forth in the Proxy Statement under the caption “SPECIAL FACTORS — Accounting Treatment” is incorporated herein by reference.
 
   
(a)(2)(vii)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Material U.S. Federal Income Tax Consequences,” “QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING” and “SPECIAL FACTORS — Material U.S. Federal Income Tax Consequences” is incorporated herein by reference.
 
(c)
  The information set forth in the Proxy Statement under the captions “SUMMARY — The Merger,” “SUMMARY — Effects of the Merger,” “QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING,” “SPECIAL FACTORS — Effects of the Merger” and “THE MERGER AGREEMENT — Conversion of Common Stock” is incorporated herein by reference.
 
   
(d)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Appraisal Rights,” “QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING” and “SPECIAL FACTORS — Appraisal Rights” is incorporated herein by reference.
 
   
(e)
  None.
 
   
(f)
  Not applicable.
 
   
Item 5. Past Contacts, Transactions, Negotiations and Agreements.
 
   
Item 1005 of Regulation M-A
 
   
(a)
  The information set forth in the Proxy Statement under the captions “SPECIAL FACTORS — Related Party Transactions” and “INFORMATION RELATING TO BOYD BROS. TRANSPORTATION INC. AND BBT ACQUISITION CORPORATION — Mergerco” is incorporated herein by reference.
 
   
(b)
  The information set forth in the Proxy Statement under the caption “SPECIAL FACTORS — Background of the Merger” is incorporated herein by reference.
 
   
(c)
  The information set forth in the Proxy Statement under the captions “SUMMARY” and “SPECIAL FACTORS — Background of the Merger” is incorporated herein by reference.
 
   
(e)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Interests of the Company’s Directors and Officers in the Merger,” “SPECIAL FACTORS — Interests of Certain Persons in the Merger; Potential Conflicts of Interest” and “INFORMATION RELATING TO BOYD BROS. TRANSPORTATION INC. AND BBT ACQUISITION CORPORATION — Mergerco” is incorporated herein by reference.

4


 

     
Item 6. Purposes of the Transaction and Plans or Proposals.
 
   
Item 1006 of Regulation M-A
 
   
(b)
  The information set forth in the Proxy Statement under the captions “SPECIAL FACTORS — Structure of the Merger,” “SPECIAL FACTORS — Effects of the Merger” and “THE MERGER AGREEMENT — Conversion of Common Stock” is incorporated herein by reference.
 
   
(c)(1)-(8)
  The information set forth in the Proxy Statement under the captions “SUMMARY — The Merger,” “SPECIAL FACTORS — Background of the Merger,” “SPECIAL FACTORS — Effects of the Merger,” “THE MERGER AGREEMENT — Payment for Shares” and “THE MERGER AGREEMENT — Transfer of Shares” is incorporated herein by reference.
 
   
Item 7. Purposes, Alternatives, Reasons and Effects.
 
   
Item 1013 of Regulation M-A
 
   
(a)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Our Purpose and Reasons for the Merger,” “SUMMARY — Affiliated Stockholders’ Purposes and Reasons for the Merger,” “SPECIAL FACTORS — Background of the Merger,” “SPECIAL FACTORS — Our Purpose and Reasons for the Merger” and “SPECIAL FACTORS — Purpose and Reasons of Mergerco and the Affiliated Stockholders for the Merger” is incorporated herein by reference.
 
   
(b)
  The information set forth in the Proxy Statement under the caption “SPECIAL FACTORS — Background of the Merger” is incorporated herein by reference.
 
   
(c)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Our Purpose and Reasons for the Merger,” “SPECIAL FACTORS — Background of the Merger,” “SPECIAL FACTORS — Our Purpose and Reasons for the Merger,” “SPECIAL FACTORS — Reasons for the Special Committee’s Determination; Fairness of the Merger,” “SPECIAL FACTORS — Reasons for the Board of Directors’ Determination; Fairness of the Merger,” “SPECIAL FACTORS — Purpose and Reasons of Mergerco and the Affiliated Stockholders for the Merger” and “SPECIAL FACTORS — Mergerco and Affiliated Stockholders’ Position as to the Fairness of the Merger” is incorporated herein by reference.
 
   
(d)
  The information set forth in the Proxy Statement under the captions “SUMMARY — The Merger,” “SUMMARY — Effects of the Merger,” “SUMMARY — Material U.S. Federal Income Tax Consequences,” “QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING,” “SPECIAL FACTORS — Material U.S. Federal Income Tax Consequences,” “SPECIAL FACTORS — Effects of the Merger,” “THE MERGER AGREEMENT — Effective Time of the Merger,” “THE MERGER AGREEMENT — Conversion of Common Stock,” “THE MERGER AGREEMENT — Payment for Shares,” “THE MERGER AGREEMENT — Transfer of Shares” and “THE MERGER AGREEMENT — Treatment of Stock Options, Stock Awards and Warrants” is incorporated herein by reference.
 
   
Item 8. Fairness of the Transaction.
 
   
Item 1014 of Regulation M-A
 
   
(a)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Recommendation of the Special Committee and the Company’s Board of Directors; Fairness of the Merger,” “SUMMARY — Opinion of Financial Advisor to the Special Committee,” “SPECIAL FACTORS — Reasons for the Special Committee’s Determination; Fairness of the Merger,” “SPECIAL FACTORS — Reasons for the Board of Director’s Determination; Fairness of the Merger,” “SPECIAL FACTORS — Opinion of Financial Advisor to the Special

5


 

     
  Committee” and “SPECIAL FACTORS — Purpose and Reasons of Mergerco and the Affiliated Stockholders for the Merger” is incorporated herein by reference.
 
   
(b)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Recommendations of the Special Committee and the Company’s Board of Directors; Fairness of the Merger,” “SUMMARY — Opinion of Financial Advisor to the Special Committee,” “SPECIAL FACTORS — Reasons for the Special Committee’s Determination; Fairness of the Merger,” “SPECIAL FACTORS — Reasons for the Board of Director’s Determination; Fairness of the Merger,” “SPECIAL FACTORS — Opinion of Financial Advisor to the Special Committee” and “SPECIAL FACTORS — Purpose and Reasons of Mergerco and the Affiliated Stockholders for the Merger” is incorporated herein by reference.
 
   
(c)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Vote Required,” “QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING” and “THE SPECIAL MEETING — Record Date and Voting Information” is incorporated herein by reference.
 
   
(d)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Special Committee,” “SUMMARY — Recommendations of the Special Committee and the Company’s Board of Directors; Fairness of the Merger,” “SUMMARY — Opinion of Financial Advisor to the Special Committee,” “SPECIAL FACTORS — Background of the Merger,” “SPECIAL FACTORS — Reasons for the Special Committee’s Determination; Fairness of the Merger,” “SPECIAL FACTORS — Reasons for the Board of Director’s Determination; Fairness of the Merger,” “SPECIAL FACTORS — Opinion of Financial Advisor to the Special Committee” and “SPECIAL FACTORS — Mergerco and Affiliated Stockholders’ Position as to the Fairness of the Merger” is incorporated herein by reference.
 
   
(e)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Recommendations of the Special Committee and the Company’s Board of Directors; Fairness of the Merger,” “QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING,” “SPECIAL FACTORS — Background of the Merger” and “SPECIAL FACTORS — Reasons for the Special Committee’s Determination; Fairness of the Merger” is incorporated herein by reference.
 
   
(f)
  The information set forth in the Proxy Statement under the caption “SPECIAL FACTORS — Background of the Merger” is incorporated herein by reference.
 
   
Item 9. Reports, Opinions, Appraisals and Negotiations.
 
   
Item 1015 of Regulation M-A
 
   
(a)-(c)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Opinion of Financial Advisor to the Special Committee,” “SPECIAL FACTORS — Background of the Merger,” “SPECIAL FACTORS — Reasons for the Special Committee’s Determination; Fairness of the Merger,” “SPECIAL FACTORS — Opinion of Financial Advisor to the Special Committee” and “Opinion of Legg Mason Wood Walker, Incorporated” attached as appendix C to the Proxy Statement is incorporated herein by reference.
 
   
Item 10. Source and Amounts of Funds or Other Consideration.
 
   
Item 1007 of Regulation M-A
 
   
(a)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Merger Financing,” “SPECIAL FACTORS — Background of the Merger” and “SPECIAL FACTORS — Merger Financing” is incorporated herein by reference.

6


 

     
(b)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Merger Financing,” “SPECIAL FACTORS — Background of the Merger” and “SPECIAL FACTORS — Merger Financing” is incorporated herein by reference.
 
   
(c)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Fee and Expense Reimbursement Upon Termination,” “SPECIAL FACTORS — Estimated Fees and Expenses of the Merger” and “THE MERGER AGREEMENT — Fee and Expense Reimbursement Upon Termination” is incorporated herein by reference.
 
   
(d)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Merger Financing,” “SPECIAL FACTORS — Background of the Merger” and “SPECIAL FACTORS — Merger Financing” is incorporated herein by reference.
 
   
Item 11. Interest in Securities of the Subject Company.
 
   
Item 1008 of Regulation M-A
 
   
(a)
  The information set forth in the Proxy Statement under the caption “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT” is incorporated herein by reference.
 
   
(b)
  The information set forth in the Proxy Statement under the caption “COMMON STOCK PURCHASE INFORMATION” is incorporated herein by reference.
 
   
Item 12. The Solicitation or Recommendation.
 
   
Item 1012 of Regulation M-A
 
   
(d)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Position of Mergerco and the Affiliated Stockholders as to Fairness of the Merger,” “SUMMARY — Interests of the Company’s Directors and Officers in the Merger,” “SPECIAL FACTORS — Background of the Merger” and “SPECIAL FACTORS — Purpose and Reasons of Mergerco and the Affiliated Stockholders for the Merger” is incorporated herein by reference.
 
   
(e)
  Not applicable.
 
   
Item 13. Financial Statements.
 
   
Item 1010 of Regulation M-A
 
   
(a)
  The information set forth in the Proxy Statement under the captions “SELECTED HISTORICAL FINANCIAL DATA,” “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,” “WHERE STOCKHOLDERS CAN FIND MORE INFORMATION” and “FINANCIALS” is incorporated herein by reference.
 
   
Item 14. Persons/Assets, Retained, Employed, Compensated or Used.
 
   
Item 1009 of Regulation M-A
 
   
(a)-(b)
  The information set forth in the Proxy Statement under the captions “SUMMARY — Opinion of Financial Advisor to the Special Committee,” “SPECIAL FACTORS — Background of the Merger,” “SPECIAL FACTORS — Merger Financing” and “SPECIAL FACTORS — Interests of Certain Persons in the Merger; Potential Conflicts of Interest” is incorporated herein by reference.

7


 

     
Item 15. Additional Information.
 
   
Item 1011 of Regulation M-A
 
   
(b)
  The information set forth in the Proxy Statement and the appendices thereto is incorporated herein by reference.
 
   
Item 16. Exhibits.
 
   
Item 1016 of Regulation M-A
     
Exhibit    
Number
  Description
(a)(1)
  Preliminary Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on May 28, 2004 and related Notice of Special Meeting of Stockholders (incorporated herein by reference to the Proxy Statement).
 
   
(a)(2)
  Form of proxy card (incorporated herein by reference to the Proxy Statement).
 
   
(a)(5)(1)
  Press release issued by the Company on December 31, 2003 (incorporated herein by reference to the Company’s filing with the Securities and Exchange Commission under cover of Schedule 14A on December 31, 2003).
 
   
(a)(5)(2)
  Press release issued by the Company on May 5, 2004 (incorporated herein by reference to the Company’s filing with the Securities and Exchange Commission under cover of Schedule 14A on May 5, 2004).
 
   
(b)(1)
  Commitment Letter from General Electric Capital Corporation dated May 26, 2004.
 
   
(c)(1)
  Fairness Opinion of Legg Mason Wood Walker, Incorporated, dated December 30, 2003 (incorporated herein by reference to Appendix C of the Proxy Statement).
 
   
(c)(2)
  Presentation by Legg Mason Wood Walker, Incorporated to the Company’s special committee of the board of directors, dated December 30, 2003. *
 
   
(c)(3)
  Presentation by Legg Mason Wood Walker, Incorporated to the Company’s special committee of the board of directors, dated December 16, 2003.
 
   
(c)(4)
  Presentation by Legg Mason Wood Walker, Incorporated to the Company’s special committee of the board of directors, dated September 25, 2003.
 
   
(c)(5)
  Draft Fairness Opinion of Legg Mason Wood Walker, Incorporated, dated December 15, 2003.
 
   
(c)(6)
  Data Table prepared by Morgan Keegan & Co., Inc., provided to Affiliated Stockholders prior to November 11, 2003 meeting of the special committee of the board of directors.
 
   
(d)(1)
  Agreement and Plan of Merger, dated December 31, 2003, by and between BBT Acquisition Corporation and the Company (incorporated herein by reference to Appendix A to the Proxy Statement).
 
   
(d)(2)
  Amendment No. 1 to Agreement and Plan of Merger, dated April 27, 2004, by and between BBT Acquisition Corporation and the Company (incorporated herein by reference to Appendix A-1 to the Proxy Statement).
 
   
(d)(3)
  Contribution Agreement, dated December 31, 2003, by and among Dempsey Boyd, Frances S. Boyd, Gail B. Cooper, Ginger B. Tibbs and BBT Acquisition Corporation (incorporated herein by reference to Appendix D to the Proxy Statement).
 
   
(d)(4)
  Amendment No. 1 to Contribution Agreement, dated April 27, 2004, by and among Dempsey Boyd, Frances S. Boyd, Gail B. Cooper, Ginger B. Tibbs and BBT Acquisition Corporation (incorporated herein by reference to Appendix D-1 to the Proxy Statement).
 
   
(f)(1)
  Dissenter’s rights of appraisal are described under the caption “SPECIAL FACTORS — Appraisal Rights” in Exhibit (a)(1) and set forth in Appendix B to the Proxy Statement.


*   Previously filed.

8


 

SIGNATURE

     After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
             
      BOYD BROS. TRANSPORTATION INC.
 
 
Date: May 28, 2004   By:   /s/ Richard C. Bailey  
        Name:   Richard C. Bailey   
        Title:   Chief Financial Officer and Chief Operating Officer  
   
             
      BBT ACQUISITION CORPORATION  
             
Date: May 28, 2004   By:   /s/ Gail B. Cooper    
        Name:   Gail B. Cooper   
        Title:   President   
 
             
         
Date: May 28, 2004   /s/ Dempsey Boyd  
      Dempsey Boyd  
         
 
             
     
Date: May 28, 2004   /s/ Frances S. Boyd  
      Frances S. Boyd   
 
             
         
Date: May 28, 2004   /s/ Gail B. Cooper  
      Gail B. Cooper   
 
             
         
Date: May 28, 2004   /s/ Ginger B. Tibbs  
      Ginger B. Tibbs   
 

9


 

EXHIBIT INDEX

     
Exhibit    
Number
  Description
(a)(1)
  Preliminary Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on May 28, 2004 and related Notice of Special Meeting of Stockholders (incorporated herein by reference to the Proxy Statement).
 
   
(a)(2)
  Form of proxy card (incorporated herein by reference to the Proxy Statement).
 
   
(a)(5)(1)
  Press release issued by the Company on December 31, 2003 (incorporated herein by reference to the Company’s filing with the Securities and Exchange Commission under cover of Schedule 14A on December 31, 2003).
 
   
(a)(5)(2)
  Press release issued by the Company on May 5, 2004 (incorporated herein by reference to the Company’s filing with the Securities and Exchange Commission under cover of Schedule 14A on May 5, 2004).
 
   
(b)(1)
  Commitment Letter from General Electric Capital Corporation dated May 26, 2004.
 
   
(c)(1)
  Fairness Opinion of Legg Mason Wood Walker, Incorporated, dated December 30, 2003 (incorporated herein by reference to Appendix C of the Proxy Statement).
 
   
(c)(2)
  Presentation by Legg Mason Wood Walker, Incorporated to the Company’s special committee of the board of directors, dated December 30, 2003. *
 
   
(c)(3)
  Presentation by Legg Mason Wood Walker, Incorporated to the Company’s special committee of the board of directors, dated December 16, 2003.
 
   
(c)(4)
  Presentation by Legg Mason Wood Walker, Incorporated to the Company’s special committee of the board of directors, dated September 25, 2003.
 
   
(c)(5)
  Draft Fairness Opinion of Legg Mason Wood Walker, Incorporated, dated December 15, 2003.
 
   
(c)(6)
  Data Table prepared by Morgan Keegan & Co., Inc., provided to Affiliated Stockholders prior to November 11, 2003 meeting of the special committee of the board of directors.
 
   
(d)(1)
  Agreement and Plan of Merger, dated December 31, 2003, by and between BBT Acquisition Corporation and the Company (incorporated herein by reference to Appendix A to the Proxy Statement).
 
   
(d)(2)
  Amendment No. 1 to Agreement and Plan of Merger, dated April 27, 2004, by and between BBT Acquisition Corporation and the Company (incorporated herein by reference to Appendix A-1 to the Proxy Statement).
 
   
(d)(3)
  Contribution Agreement, dated December 31, 2003, by and among Dempsey Boyd, Frances S. Boyd, Gail B. Cooper, Ginger B. Tibbs and BBT Acquisition Corporation (incorporated herein by reference to Appendix D to the Proxy Statement).
 
   
(d)(4)
  Amendment No. 1 to Contribution Agreement, dated April 27, 2004, by and among Dempsey Boyd, Frances S. Boyd, Gail B. Cooper, Ginger B. Tibbs and BBT Acquisition Corporation (incorporated herein by reference to Appendix D-1 to the Proxy Statement).
 
   
(f)(1)
  Dissenter’s rights of appraisal are described under the caption “SPECIAL FACTORS — Appraisal Rights” in Exhibit (a)(1) and set forth in Appendix B to the Proxy Statement.


*   Previously filed.

 

EX-99.(B)(1) 2 g86864a2exv99wxbyx1y.txt EX-99.(B)(1) COMMITMENT LETTER EXHIBIT 99.(b)(1) May 26, 2004 CONFIDENTIAL Boyd Bros. Transportation Inc. 3275 Highway 30 Clayton, Alabama 36016 Attn: Richard Bailey, Chief Financial Officer Re: Commitment Letter Ladies and Gentlemen: Reference is made to that certain letter agreement, dated as of April 28, 2004 (the "Existing Commitment Letter"), between General Electric Capital Corporation (the "Agent") and Boyd Bros. Transportation Inc. ("Boyd"), WTI Transport, Inc. ("WTI") and Boyd Logistics, Inc. ("Logistics") (Boyd, WTI and Logistics are collectively referred to as the "Borrowers" and individually as a "Borrower"). The Borrowers and the Agent desire to amend certain terms and conditions contained in the Existing Commitment Letter in accordance with the terms and conditions contained herein. As such, the Borrowers and the Agent, intending to be legally bound, agree that the Existing Commitment Letter is hereby amended and restated in its entirety as follows: Borrowers have advised Agent that the Borrowers are seeking up to $50,000,000 of financing (the "Financing") in support of financing the redemption of certain publicly-held capital stock of Boyd in a "going private" transaction (the "Transaction") and to refinance certain outstanding indebtedness of the Borrowers. We anticipate that each Borrower is a domestic operating company that directly owns substantially all of the assets used in its business, WTI and Logistics are wholly-owned subsidiaries of Boyd and that the Borrowers have no other subsidiaries. You have asked that the Financing consist of a $13,000,000 Senior Secured Revolving Credit Facility ("Revolver") and a $37,000,000 Senior Secured Term Loan ("Term Loan"). Based on our understanding of the Transaction as described above and the information which you have provided to us to date, GE Capital is pleased to offer its commitment to provide the Financing described in this Commitment Letter in the amount of $50,000,000, subject to the following terms and conditions. Boyd Bros. Transportation Inc. May 26, 2004 AGENT: GE Capital. LENDERS: GE Capital and other persons who take assignment of its interest after the Closing Date. SUMMARY OF PROPOSED TERMS FOR REVOLVER BORROWERS: Boyd, WTI and Logistics MAXIMUM REVOLVER AMOUNT: $13,000,000 (including a Letter of Credit Subfacility of up to $7,000,000). Letters of Credit will be issued either by a bank and/or by GE Capital and/or one of its affiliates, on terms acceptable to Agent, and will be guaranteed or otherwise backed by the Revolver Lenders. TERM: 60 months. AVAILABILITY: Borrowing Availability on a combined basis will be limited to the sum of (i) up to 85% of the Borrowers' eligible accounts receivable and (ii) up to 50% of the Borrowers' eligible inventory valued at the lower of cost (FIFO) or market, in each of clauses (i) and (ii) less reserves (the "Revolving Borrowing Base"), but not to exceed the Maximum Revolver Amount. Availability from inventory shall not exceed $1,000,000. Availability for each Borrower will be limited to its separate Revolving Borrowing Base. Agent will retain the right from time to time to establish or modify advance rates, standards of eligibility and reserves against availability. The face amount of all letters of credit outstanding under the Letter of Credit Subfacility will be reserved in full against availability. SUMMARY OF PROPOSED TERMS FOR TERM LOAN FACILITY BORROWERS: Boyd, WTI and Logistics 2 Boyd Bros. Transportation Inc. May 26, 2004 MAXIMUM TERM LOAN AMOUNT: $37,000,000 available in multiple draws under conditions to be defined in the definitive Financing documentation. AVAILABILITY: Borrowing Availability on a combined basis will be limited to the sum of (i) up to 85% of the appraised net orderly liquidation value of Borrowers' existing equipment, (ii) up to 80% of the "hard" costs of purchased equipment (until such equipment is appraised, then it shall be valued on a net orderly liquidation value basis) and (iii) up to 50% of the appraised fair market value of real estate, in each of clauses (i), (ii) and (iii) less reserves (the "Term Borrowing Base"), but not to exceed the Maximum Term Loan Amount. Appraised values for equipment and real estate to be based on appraisals in form and substance satisfactory to Agent. Availability for each Borrower will be limited to its separate Term Borrowing Base. Agent will retain the right from time to time to establish or modify advance rates, standards of eligibility and reserves against availability. TERM: 60 months. If the Revolver is terminated, this Term Loan will immediately be due and payable in full. AMORTIZATION: Level monthly principal payments utilizing a 5-year amortization period for term loan advances made on the closing date. Any term loan advances made after the closing date will have level monthly principal payments utilizing a 7-year amortization and a balloon payment at maturity. Amortization will be allocated among the Borrowers based upon their respective allocations of the Term Loan. TERMS OF GENERAL APPLICABILITY USE OF PROCEEDS: Loans made on the date the Financing is consummated (the "Closing Date") will be used to finance the Transaction in an amount not to exceed $7,000,000, to refinance certain indebtedness of Borrowers and to fund certain fees and expenses associated with the Transaction and the Financing. Loans made after the Closing Date will be used for Borrowers' working capital purposes and permitted capital expenditures. 3 Boyd Bros. Transportation Inc. May 26, 2004 BORROWER REPRESENTATIVE: Each Borrower will appoint one of the Borrowers as its agent for administrative purposes of the Financing (the "Borrower Representative"). INTEREST: Rates: At Borrower Representative's option, all loans will bear interest at either (a) a floating rate equal to the Index Rate plus the Applicable Margin(s) or (b) absent a default, a fixed rate for periods of one, two or three months equal to the reserve adjusted London Interbank Offered Rate ("LIBOR Rate") plus the Applicable Margin(s). Payment Dates: Interest will be payable monthly in arrears for Index Rate loans and at the expiration of each LIBOR period for LIBOR loans. Other Terms: All interest will be calculated based on a 360 day year and actual days elapsed. The Financing documentation will contain (a) LIBOR breakage provisions and LIBOR borrowing mechanics, (b) LIBOR Rate definitions, and (c) the Index Rate definition will equal the higher of the prime rate as reported by The Wall Street Journal or the overnight Federal funds rate plus 50 basis points. APPLICABLE MARGINS: The following Applicable Margins (consisting of per annum rate margins) shall apply until the Applicable Margins are adjusted as described below: Applicable Revolver Index Margin 1.25% Applicable Revolver LIBOR Margin 3.00% Applicable Term Loan Index Margin 1.25% Applicable Term Loan LIBOR Margin 3.00% Applicable L/C Margin 1.50% Starting with the delivery to the Agent of Borrowers' consolidated quarterly financial statements for the fiscal quarter ending June 30, 2005, the Applicable Margins shall be subject to adjustment (up or down) prospectively, based on Borrowers' consolidated financial performance for the trailing four quarters most recently ended in accordance with the grid attached as Schedule I. 4 Boyd Bros. Transportation Inc. May 26, 2004 The definitive Financing documentation will contain provisions regarding the delivery of financial statements, and the timing and mechanics of subsequent prospective adjustments in Applicable Margins. If a default is continuing at the time that a reduction in Applicable Margins is to be implemented, that reduction will be deferred until the first month commencing after the cure or waiver thereof. FEES: In addition to the fees payable to GE Capital as specified in the fee letter among Borrowers and GE Capital of even date herewith (the "Fee Letter"), the following fees will be payable to Agent under the Financing documentation: Letter of Credit Fee: Equal to the Applicable L/C Margin per annum (calculated on the basis of a 360-day year and actual days elapsed) on the face amount of the letters of credit under the Revolver, payable monthly in arrears, plus any costs and expenses incurred by Agent in arranging for the issuance or guaranty of Letters of Credit and any charges assessed by the issuing financial institution. Unused Facility Fee: Equal to 0.50% per annum (calculated on the basis of a 360-day year and actual days elapsed) on the average unused daily balance of the Revolver, payable monthly in arrears. 5 Boyd Bros. Transportation Inc. May 26, 2004 Prepayment Premium: Payable in the event that the Revolver Commitment is reduced or terminated or if the Borrowers prepay all or any portion of the Term Loan other than as a result of Mandatory Prepayments (as hereinafter defined) prior to the third anniversary of the Closing Date, in an amount equal to the Revolver Maximum Amount plus the amount being prepaid on the Term Loan, multiplied by 3% upon a prepayment during the first year following the Closing Date, 2% upon a prepayment during the second year following the Closing Date and 1% upon a prepayment during the third year following the Closing Date. Wire Transfer Fee: A wire transfer fee of $25 per wire transfer made by Agent in connection with the forwarding by a Borrower or any other person on behalf of a Borrower of the proceeds of any loan. DEFAULT RATES: From and after the occurrence of a default, the interest rates applicable to all Loans and the Letter of Credit Fee will be increased by 2.00% per annum over the interest rate or Letter of Credit Fee otherwise applicable and such interest and fees will be payable on demand. SECURITY: To secure all obligations of Borrowers to Agent and Lenders, Agent, for itself and the ratable benefit of Lenders, will receive a fully perfected first priority security interest in all of the existing and after acquired real and personal, tangible and intangible assets of each Borrower and their respective subsidiaries, if any, including, without limitation, all cash, cash equivalents, bank accounts, accounts, other receivables, chattel paper, contract rights, inventory (wherever located), instruments, documents, securities (whether or not marketable), equipment, fixtures, real property interests (excluding real estate located in Cofield, North Carolina that has a fair market value of less than $500,000), franchise rights, patents, trade names, trademarks, copyrights, intellectual property, general intangibles, investment property, supporting obligations, letter of credit rights, commercial tort claims, causes of action and all substitutions, accessions and proceeds of the foregoing (including insurance proceeds) (collectively, the "Collateral"). 6 Boyd Bros. Transportation Inc. May 26, 2004 All Collateral will be free and clear of other liens, claims and encumbrances, except permitted liens and encumbrances acceptable to Agent. In addition, Agent shall receive a pledge of all of the issued and outstanding stock of all subsidiaries of each Borrower. Each Borrower will cross-guarantee the obligations of each other Borrower under the Financing documents. All such obligations will be cross-defaulted to each other and to all other material indebtedness of any Borrower and any of its subsidiaries. All such obligations shall be cross-collateralized with each other and cross-collateralized and guaranteed by any and all subsidiaries of any Borrower. Agent is authorized to pre-file financing statements and other evidences of liens with respect to all of the Collateral, including "all-assets" filings, if applicable, naming Agent as secured party. MANDATORY PREPAYMENTS: Borrowers shall make prepayments against principal in the following amounts: (a) all net proceeds of any sale or other disposition of assets of any Borrower and any of their respective subsidiaries, if any, (other than proceeds from the sale of rolling stock that are reinvested within 90 days of receipt or proceeds from the sale of other assets that are reinvested within 180 days of receipt), (b) subject to exceptions for repairs and replacements, all net insurance proceeds or other awards payable in connection with the loss, destruction or condemnation of any assets of any Borrower or their respective subsidiaries, if any, and (c) 100% of the net cash proceeds from the sale or issuance of equity or debt securities. These payments generally will be applied against principal installments due, in the inverse order of maturity, on the Term Loan until such loan is paid in full and thereafter against the Revolver. Prepayments by any Borrower will be applied first to the obligations of that Borrower and thereafter to the obligations owing by the other Borrowers, pro rata. 7 Boyd Bros. Transportation Inc. May 26, 2004 VOLUNTARY PREPAYMENTS: Borrowers may voluntarily prepay all or any portion of the Term Loan in minimum amounts of $500,000 at any time, upon at least 5 days' prior written notice. All voluntary prepayments will be accompanied by the prepayment premium described above and LIBOR breakage costs, if any. FINANCIAL REPORTING: The Financing documentation will require the Borrowers, on a monthly basis, to provide to Agent and Lenders internally prepared financial statements. Annually, Borrowers will be required to provide audited financial statements, a board approved operating plan for the subsequent year, and a communications letter from Borrowers' auditors. Borrowers will provide Borrowing Base Certificates on a monthly basis (or as requested by Agent), quarterly and annual appraisals of equipment, audits and other information reasonably requested by the Agent, all costs to be at Borrowers' expense. All financial statements shall be prepared on a consolidated and consolidating basis. DOCUMENTATION: The Financing documentation will contain representations and warranties; conditions precedent; affirmative, negative and financial covenants; indemnities; events of default and remedies as required by Agent. Relevant documents, such as Transaction documents, equity or stockholder agreements, incentive and employment agreements, tax agreements, and other material agreements, to be acceptable to Agent. 8 Boyd Bros. Transportation Inc. May 26, 2004 FINANCIAL COVENANTS: Borrowers shall comply with the following financial covenants, each of which shall be calculated in accordance with GAAP consistently applied: Maximum Capital Expenditures: Borrowers and their subsidiaries, on a consolidated basis, shall not make gross capital expenditures that exceed (i) $18,100,000 during the 12-month period ending December 31, 2004, (ii) $18,200,000 during the 12-month period ending December 31, 2005 or (iii) $13,300,000 during any 12-month period ending on December 31 thereafter. Minimum Fixed Charge Coverage Ratio. Borrowers and their subsidiaries shall have on a consolidated basis at the end of each fiscal quarter following the Closing Date, a fixed charge coverage ratio for the 12-month period then ended of not less than 1.20:1.00. Minimum Borrowing Availability. Borrowers shall maintain availability under the Revolver Borrowing Base of not less than $1,500,000 at all times. Maximum Leverage Ratio. Borrowers and their subsidiaries on a consolidated basis shall have, at the end of each fiscal quarter, a leverage ratio as of the last day of such fiscal quarter and for the 12-month period then ended of not more than 3.50:1.00. OTHER TERMS: GE Capital's commitment with respect to the Financing is conditioned upon satisfaction of the following conditions as of the Closing Date, and the Financing documents will require, among other things, compliance with covenants pertaining to the following (all in form and substance satisfactory to Agent): - Cash management systems for each Borrower acceptable to Agent. Agent will have full cash dominion by means of lock boxes and blocked account agreements executed at or prior to closing of the Financing. 9 Boyd Bros. Transportation Inc. May 26, 2004 - Commercially reasonable insurance protection for the Borrowers' industry, size and risk and the Agent's collateral protection (terms, underwriter, scope, and coverage to be acceptable to Agent); Agent named as loss payee (property/casualty) and additional insured (liability); and non-renewal/cancellation/amendment riders to provide 30 days advance notice to Agent. - Compliance with applicable laws, decrees, and material agreements or obtaining of applicable consents and waivers. - General and collateral releases from prior lenders, customary corporate and estoppel certificates, landlord/mortgagee/bailee waivers and consignment or similar filings. - Limitations on commercial transactions, management agreements, service agreements, and borrowing transactions between any Borrower and its officers, directors, employees and affiliates and intercompany loans among Borrowers. - Limitations on, or prohibitions of, cash dividends, other distributions to equity holders, payment of management fees to affiliates and redemption of common or preferred stock. - Prohibitions of mergers, acquisitions, sale of any Borrower, its stock or a material portion of its assets. - Prohibitions of a direct or indirect change in control of Borrowers. - Agent's and Lenders' rights of inspection, access to facilities, management and auditors. - Customary yield protection provisions, including, without limitation, provisions as to capital adequacy, illegality, changes in circumstances and withholding taxes. 10 Boyd Bros. Transportation Inc. May 26, 2004 - To the extent requested by Agent, environmental surveys or reviews in scope and form, by firms, and with results acceptable to Agent. - Real estate and equipment appraisals in form and substance acceptable to Agent reflecting asset values at levels acceptable to Agent. The appraisals will be performed by appraisers retained by Agent (or retained by the Borrowers provided that such appraisers provide reliance letters to Agent in form and substance acceptable to Agent). - Governing law: New York. OTHER CONDITIONS: GE Capital's commitment with respect to the Financing will be further conditioned upon the following (all to Agent's satisfaction): - Delivery of Transaction documents to Agent in a timely manner. The Transaction shall have been consummated on terms satisfactory to Agent. - Completion by Agent of all business, environmental and legal due diligence with results satisfactory to Agent. Without limiting the foregoing, the corporate structure, capital structure, other debt instruments, material contracts, and governing documents of each Borrower and its affiliates, and tax and legal effects resulting from Transaction, must be acceptable to Agent. - Background and reference checks with results satisfactory to Agent on: (i) each Borrower and any of its affiliates and (ii) its CEO, CFO and shareholders; in each case, as determined by Agent in its sole discretion. - Minimum excess availability for Borrowers in the aggregate at closing (on a pro forma basis, with trade payables being paid currently, expenses and liabilities being paid in the ordinary course of business and without acceleration of sales and without deterioration of working capital) of $7,000,000 (excluding the effect of the Transaction). 11 Boyd Bros. Transportation Inc. May 26, 2004 - EBITDA for the 12 month period ending April 30, 2004 shall be greater than $13,000,000. - Agent shall have received Borrowers' audited financial statements for the periods ending December 31, 2002 and 2003 (together with the opinion letter and any management letters delivered in connection therewith) and unaudited financial statements for the period ending April 30, 2004. - With respect to all collateral requiring motor vehicle titles, delivery of completed and signed title applications and/or powers of attorney, necessary to record Agent's first priority lien position and/or ownership rights, along with (i) any agreements necessary to ensure release of existing liens upon funding the Transaction and payment of the prior lien holder, (ii) delivery of actual titles or manufacturer's statements of origin and (iii) completion and delivery of any other documentation that Agent's and/or its counsel deem necessary to ensure its first priority lien position and/or its ownership rights. - With respect to any real estate collateral, receipt of real property surveys, title commitments and title insurance policies in amount, form and from, as applicable, an issuer satisfactory to Agent. - Receipt of all necessary or appropriate third party and governmental waivers and consents. - Satisfactory opinions of counsel from Borrowers' counsel (including local counsel as requested) reasonably acceptable to Agent. - As of the Closing Date, there will have been (i) since Borrowers' last audited financial statements, no material adverse change, individually or in the aggregate, in the business, financial or other condition of any Borrower or the Borrowers taken as a whole, the industry in which any Borrower operates, or the collateral which will be subject to the security interest granted to Agent and Lenders or in the prospects or projections of any Borrower or the Borrowers taken as a whole, (ii) no litigation 12 Boyd Bros. Transportation Inc. May 26, 2004 commenced which, if successful, would have a material adverse impact on any Borrower or the Borrowers taken as a whole, its or their business, or its or their ability to repay the loans, or which would challenge the transactions under consideration and (iii) since Borrowers' last audited financial statements, no material increase in the liabilities, liquidated or contingent, of any Borrower or the Borrowers taken as a whole, or a material decrease in the assets of any Borrower or the Borrowers taken as a whole, or a material decrease in the assets of any Borrower or the Borrowers taken as a whole. GE Capital's commitment hereunder is subject to the execution and delivery of final legal documentation acceptable to GE Capital and its counsel incorporating, without limitation, the terms set forth in this Commitment Letter. By signing this Commitment Letter, each party acknowledges that this Commitment Letter supersedes any and all discussions and understandings, written or oral, between or among GE Capital and any other person as to the subject matter hereof, including, without limitation, any prior commitment letters and the letter of interest dated February 11, 2004 between GE Capital Commercial Finance, Inc. and Boyd (collectively, the "Prior Letter"). No amendments, waivers or modifications of this Commitment Letter or any of its contents shall be effective unless expressly set forth in writing and executed by the parties hereto. This Commitment Letter is being provided to you on the condition that, except as required by law, neither it, the Fee Letter, the Prior Letter, nor their contents will be disclosed publicly or privately except to those individuals who are your officers, employees or advisors who have a need to know of them as a result of their being specifically involved in the Transaction under consideration and then only on the condition that such matters may not, except as required by law, be further disclosed; provided, however, the Borrowers may disclose the contents of this Commitment Letter to the United States Securities and Exchange Commission ("SEC"), on a private and confidential basis, to the extent required by the SEC in connection with the SEC's approval of the proxy materials for the Transaction. No person, other than the parties signatory hereto, is entitled to rely upon this Commitment Letter or any of its contents. No person shall, except as required by law, use the name of, or refer to, GE Capital, or any of its affiliates, in any correspondence, discussions, press release, advertisement or disclosure made in connection with the Transaction without the prior written consent of GE Capital. Regardless of whether the commitment herein is terminated or the Transaction or the Financing closes, Borrowers, jointly and severally, agree to pay upon demand to GE Capital all out-of-pocket expenses ("Transaction Expenses") which may be incurred by GE Capital in connection with the Financing or the Transaction (including all reasonable legal, environmental, and other consultant costs and fees incurred in the preparation of this Commitment Letter, the Fee Letter, the Prior Letter, and evaluation of and documenting of the Financing and the Transaction). 13 Boyd Bros. Transportation Inc. May 26, 2004 Regardless of whether the commitment herein is terminated or the Transaction or the Financing closes, Borrowers, jointly and severally, shall indemnify and hold harmless each of GE Capital, the Lenders, their respective affiliates, and the directors, officers, employees, agents, attorneys and representatives of any of them (each, an "Indemnified Person"), from and against all suits, actions, proceedings, claims, damages, losses, liabilities and expenses (including, but not limited to, attorneys' fees and disbursements and other costs of investigation or defense, including those incurred upon any appeal), which may be instituted or asserted against or incurred by any such Indemnified Person in connection with, or arising out of, this Commitment Letter, the Fee Letter, the Prior Letter, the Financing or the Transaction under consideration, the documentation related thereto, any other financing related thereto, any actions or failures to act in connection therewith, and any and all environmental liabilities and legal costs and expenses arising out of or incurred in connection with any disputes between or among any parties to any of the foregoing, and any investigation, litigation, or proceeding related to any such matters. Notwithstanding the preceding sentence, indemnitors shall not be liable for any indemnification to an Indemnified Person to the extent that any such suit, action, proceeding, claim, damage, loss, liability or expense results solely from that Indemnified Person's gross negligence or willful misconduct, as finally determined by a court of competent jurisdiction. Under no circumstances shall GE Capital or any of its affiliates be liable to you or any other person for any punitive, exemplary, consequential or indirect damages which may be alleged in connection with this Commitment Letter, the Fee Letter, the Prior Letter, the Transaction, the Financing, the documentation related thereto or any other financing, regardless of whether the commitment herein is terminated or the Transaction or the Financing closes. EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS COMMITMENT LETTER, THE FEE LETTER, THE PRIOR LETTER, ANY TRANSACTION RELATING HERETO OR THERETO, OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. EACH PARTY HERETO CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG ANY OF THE PARTIES HERETO PERTAINING TO THIS COMMITMENT LETTER, THE FEE LETTER, THE PRIOR LETTER, THE FINANCING OR THE TRANSACTION UNDER CONSIDERATION, ANY OTHER FINANCING RELATED THERETO, AND ANY INVESTIGATION, LITIGATION, OR PROCEEDING RELATED TO OR ARISING OUT OF ANY SUCH MATTERS, PROVIDED, THAT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT (INCLUDING AN APPELLATE COURT) LOCATED OUTSIDE OF SUCH JURISDICTION. EACH PARTY HERETO EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND HEREBY WAIVES ANY OBJECTION WHICH SUCH PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR INCONVENIENT FORUM. THIS COMMITMENT LETTER IS SOLELY FOR THE BENEFIT OF BORROWERS AND GE CAPITAL; NO PROVISION HEREOF SHALL BE DEEMED TO CONFER ANY RIGHTS WHATSOEVER ON ANY OTHER PERSON OR ENTITY AND MAY NOT BE RELIED UPON FOR ANY OTHER PURPOSE. This Commitment Letter is governed by and shall be construed in accordance with the laws of the State of New York applicable to contracts made and performed in that state. GE Capital shall have access to all relevant facilities, personnel and accountants, and copies of all documents which GE Capital may request, including business plans, financial statements 14 Boyd Bros. Transportation Inc. May 26, 2004 (actual and pro forma), books, records, and other documents of each Borrower. This Commitment Letter shall be of no force and effect unless and until this Commitment Letter is executed and delivered to the undersigned GE Capital on or before 5:00 p.m. Atlanta, Georgia time on May 28, 2004 at 1100 Abernathy Road, Suite 900 Atlanta, Georgia 30328. Once effective, GE Capital's commitment to provide financing in accordance with the terms of this Commitment Letter shall cease if the Transaction does not close, or the Financing is not funded for any reason, on or before June 30, 2004 and, notwithstanding any further discussions, negotiations or other actions taken after such date, neither GE Capital nor any of its affiliates shall have any liability to any person in connection with its refusal to fund the Financing or any portion thereof after such date. 15 Boyd Bros. Transportation Inc. May 26, 2004 We look forward to continuing to work with you toward completing this transaction. Our business is helping yours. Sincerely, GENERAL ELECTRIC CAPITAL CORPORATION By: /S/ WILLIAM DOOLITTLE ------------------------------------ William Doolittle Its Duly Authorized Signatory AGREED AND ACCEPTED THIS 26th DAY OF MAY 2004 BOYD BROS. TRANSPORTATION INC. By: /S/ RICHARD BAILEY ---------------------------------- Its: Chief Financial Officer --------------------------------- WTI TRANSPORT, INC. By: /S/ RICHARD BAILEY ---------------------------------- Its: Chief Financial Officer --------------------------------- BOYD LOGISTICS, INC. By: /S/ RICHARD BAILEY ---------------------------------- Its: Chief Financial Officer --------------------------------- 16 Boyd Bros. Transportation Inc. May 26, 2004 SCHEDULE I APPLICABLE MARGINS The Applicable Margins may be adjusted by reference to the following grids:
LEVEL OF IF LEVERAGE RATIO IS: APPLICABLE MARGINS: --------------------- ------------------- > 3.00....................................................... Level I - - < 3.00, but >2.50............................................ Level II - < 2.50, but >2.00............................................ Level III - < 2.00....................................................... Level IV
APPLICABLE MARGINS
LEVEL I LEVEL II LEVEL III LEVEL IV ------- -------- --------- -------- Applicable Revolver Index Margin..................... 1.25% 1.00% 0.75% 0.50% Applicable Revolver LIBOR Margin..................... 3.00% 2.75% 2.50% 2.25% Applicable Term Loan Index Margin.................... 1.25% 1.00% 0.75% 0.50% Applicable Term Loan LIBOR Margin.................... 3.00% 2.75% 2.50% 2.25% Applicable L/C Margin................................ 1.50% 1.50% 1.50% 1.50%
17
EX-99.(C)(3) 3 g86864a2exv99wxcyx3y.htm EX-99.(C)(3) PRESENTATION: LEGG MASON WOOD WALKER EX-99.(C)(3) PRESENTATION: LEGG MASON WOOD WALKER
 

-DRAFT-

Exhibit 99(c)(3)

I. INTRODUCTION

      

(LEGG MASON LOGO)   Confidential – not for duplication.

1


 

A. LEGG MASON’S ENGAGEMENT

o   Legg Mason Wood Walker, Incorporated (“Legg Mason”) has been engaged by the Independent Committee of the Board of Directors (“Board”) of Project Tigers (the “Company”) to provide valuation analysis and its opinion as to the fairness, from a financial point of view, to the holders of the Company’s common stock (other than holders who are participants in the transaction, the “Rollover Shareholders”) of the amount of consideration to be received by such holders in a proposal presented by the investor group (the “Investor Group”).
 
o   This summary presentation is intended as an overview of our analysis of Project Tigers. It is comprised of the following sections:

    Valuation Analysis:

    Comparable public company analysis
 
    Comparable M&A transactions analysis
 
    Discounted cash flow analysis
 
    Leveraged buyout analysis
 
    Comparable going private transactions analysis

      

(LEGG MASON LOGO)   Confidential — not for duplication.

2


 

A. LEGG MASON’S ENGAGEMENT

In connection with our review of the proposed Transaction, we have assumed and relied upon the accuracy and completeness of all financial information supplied to us by or on behalf of the management of the Company, and all publicly available information, and management’s assurance that they are unaware of any facts that would make the information provided to us misleading. We have not independently verified such information. We have also relied upon the management of the Company as to the reasonableness and achievability of the financial projections (and the assumptions and bases thereof) provided to us, and we have assumed that such projections have been reasonably prepared on bases reflecting the best currently available estimates and judgments as to the future operating performance of Project Tigers.

Our work is necessarily based upon information made available to us by Company management and economic and other conditions and circumstances as of September 30, 2003 and upon public information released on or after that date. The analysis which Legg Mason performed was based on the most recent financial information provided by the management of the Company. It is understood that subsequent developments may affect our analysis, and that we have no obligation to update, reissue or reaffirm our analysis.

This summary of information does not constitute an opinion and is provided for informational purposes only. We believe that our analysis should be considered as a whole, and that selecting portions of our analysis and of the factors considered by us, without considering all factors and analyses, could create a misleading view of the processes underlying our opinion. In our analysis, we made numerous assumptions with respect to industry performance, general business and economic conditions, and other matters, many of which are beyond the control of the Company.

Further, we are not making a recommendation to the shareholders as to whether or not they should vote for or against the Transaction or seek their statutory dissenters’ rights in respect of the Transaction. Also, this analysis does not constitute a recommendation of the Transaction over any other alternative transaction (including the alternative not to effect the Transaction) that may be available to Project Tigers.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

3


 

B. OVERVIEW OF PROJECT TIGERS

o   The investment community’s view of Project Tigers:

    Inconsistent financial performer

    Driver availability, insurance and diesel fuel prices affect flat bed carriers to a greater degree than dry van and temperature sensitive carriers

    Market has not validated business model

    Flat bed carriers at a disadvantage to dry van and temperature sensitive carriers

    Market capitalization limits institutional involvement

      

(LEGG MASON LOGO)   Confidential — not for duplication.

4


 

B. OVERVIEW OF PROJECT TIGERS

Project Tigers’ Closing Stock Price
(Trailing 12 Months as of December 10, 2003)

(CLOSING STOCK PRICE BAR AND LINE GRAPH)


    Note:
Source: Bloomberg LP.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

5


 

B. OVERVIEW OF PROJECT TIGERS

o   Based on a 12 month trading volume analysis, 93.1% of Project Tigers shares have traded below $6.00.

     
(12 MONTH TRADING VOLUME ANALYSIS BAR GRAPH)   (3 MONTH TRADING VOLUME ANALYSIS BAR GRAPH)


    Note:
Source: Bloomberg LP.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

6


 

B. OVERVIEW OF PROJECT TIGERS

Historical and Projected Income Statements
($ in millions)

                                                                         
    Historical
  Projected
    Years Ended December 31,
  LTM
  Years Ended December 31,
    2000
  2001
  2002
  9/30/03
  2003
  2004
  2005
  2006
  2007
Revenue
  $ 131.6     $ 127.6     $ 127.8     $ 131.7     $ 131.4     $ 135.3     $ 140.7     $ 147.8     $ 155.2  
% Growth
    -1.1 %     -3.1 %     0.2 %     3.1 %     2.8 %     3.0 %     4.0 %     5.0 %     5.0 %
Operating Expenses
    128.8       125.3       125.1       130.5       129.4       131.7       136.9       143.1       149.6  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total Operating Income
    2.8       2.2       2.7       1.2       2.0       3.7       3.8       4.7       5.6  
Operating Ratio
    97.8 %     98.3 %     97.9 %     99.1 %     98.5 %     97.3 %     97.3 %     96.8 %     96.4 %
Net Interest Expense
    3.9       2.7       1.8       1.2       1.2       1.4       1.5       1.5       1.5  
Other Income
    0.1       0.1       (0.1 )     (0.1 )     (0.1 )     (0.0 )     (0.0 )     (0.0 )     (0.0 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Income Before Income Taxes
    (1.0 )     (0.4 )     0.9       (0.1 )     0.7       2.2       2.3       3.2       4.1  
Provision (Benefit) for Income Taxes
    (0.0 )     0.0       0.5       0.0       0.3       1.0       0.9       1.2       1.6  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Net Income
    ($1.0 )     ($0.4 )   $ 0.5       ($0.1 )   $ 0.4     $ 1.3     $ 1.4     $ 1.9     $ 2.5  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Additional Operating Data:
                                                                       
Depreciation & Amortization
  $ 11.6     $ 12.3     $ 11.6     $ 10.9     $ 10.9     $ 11.8     $ 12.2     $ 12.6     $ 13.0  
EBITDA
  $ 14.4     $ 14.5     $ 14.3     $ 12.2     $ 12.9     $ 15.4     $ 16.1     $ 17.3     $ 18.6  


    Note:
2003-2007 projected income statements provided by Company management.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

7


 

B. OVERVIEW OF PROJECT TIGERS

Historical Income Statements
($ in thousands, except per share data)

                                                         
    Historical
    Years Ended December 31,
    1989
  1990
  1991
  1992
  1993
  1994
  1995
Revenue
  $ 30,808     $ 34,729     $ 35,860     $ 42,402     $ 50,340     $ 59,132     $ 61,866  
% Growth
  NA     12.7 %     3.3 %     18.2 %     18.7 %     17.5 %     4.6 %
Operating Expenses
    28,752       31,906       33,096       38,957       46,044       53,860       57,765  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Operating Income
  $ 2,056     $ 2,823     $ 2,764     $ 3,445     $ 4,296     $ 5,272     $ 4,101  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Operating Ratio
    93.3 %     91.9 %     92.3 %     91.9 %     91.5 %     91.1 %     93.4 %
Depreciation & Amortization (1)
  $ 3,412     $ 3,689     $ 4,101     $ 4,792     $ 5,516     $ 6,451     $ 7,296  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
EBITDA
  $ 5,468     $ 6,512     $ 6,865     $ 8,237     $ 9,812     $ 11,724     $ 11,396  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Enterprise Value Calculation:
                                                       
Number of Fully Diluted Shares (2)
    3,040,000       3,011,429       3,013,333       3,025,641       3,000,000       3,523,677       3,823,000  
Share Price on 12/31 (3)
  $ 5.42     $ 5.42     $ 5.42     $ 5.42     $ 5.42     $ 9.75     $ 7.25  
Equity Value
  $ 16,467     $ 16,312     $ 16,322     $ 16,389     $ 16,250     $ 34,356     $ 27,717  
Plus: Net Debt (4)
  $ 15,087     $ 15,087     $ 15,087     $ 15,087     $ 15,087     $ 7,307     $ 11,837  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Enterprise Value
  $ 31,554     $ 31,399     $ 31,410     $ 31,476     $ 31,337     $ 41,663     $ 39,553  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
                                                                 
    Historical
   
    Years Ended December 31,
  LTM
    1996
  1997
  1998
  1999
  2000
  2001
  2002
  9/30/03
Revenue
  $ 65,523     $ 77,215     $ 118,123     $ 133,137     $ 131,630     $ 127,560     $ 127,792     $ 131,717  
% Growth
    5.9 %     17.8 %     53.0 %     12.7 %     -1.1 %     -3.1 %     0.2 %     3.1 %
Operating Expenses
    62,873       72,124       110,797       124,920       128,796       125,340       125,054       130,472  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Operating Income
  $ 2,650     $ 5,091     $ 7,327     $ 8,218     $ 2,834     $ 2,219     $ 2,738     $ 1,245  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Operating Ratio
    96.0 %     93.4 %     93.8 %     93.8 %     97.8 %     98.3 %     97.9 %     99.1 %
Depreciation & Amortization (1)
  $ 8,261     $ 9,181     $ 10,320     $ 10,720     $ 11,611     $ 12,290     $ 11,605     $ 10,938  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
EBITDA
  $ 10,912     $ 14,272     $ 17,647     $ 18,937     $ 14,445     $ 14,509     $ 14,343     $ 12,183  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Enterprise Value Calculation:
                                                               
Number of Fully Diluted Shares(2)
    3,726,496       3,726,591       4,090,175       3,507,311       3,090,292       2,829,614       2,788,234       2,951,079  
Share Price on 12/31 (3)
  $ 7.00     $ 8.38     $ 6.25     $ 6.50     $ 2.38     $ 3.00     $ 3.75     $ 4.25  
Equity Value
  $ 26,085     $ 31,210     $ 25,564     $ 22,798     $ 7,339     $ 8,489     $ 10,456     $ 12,542  
Plus: Net Debt (4)
  $ 16,230     $ 21,749     $ 24,521     $ 47,927     $ 45,583     $ 36,965     $ 33,332     $ 31,072  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Enterprise Value
  $ 42,315     $ 52,960     $ 50,085     $ 70,725     $ 52,923     $ 45,454     $ 43,788     $ 43,614  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 


Note:    
 
(1)   Depreciation and Amortization in FY 1989-1993 are from the Income Statement. For all subsequent periods, Depreciation and Amortization are from the Statement of Cash Flows.
 
(2)   Fully Diluted Shares in FY 1989-1992 are calculated by dividing Pro Forma Net Income by Pro Forma Net Income per Share.
 
(3)   Assumes Share Price on 12/31 in FY 1989-1993 is equal to average Share Price for all subsequent periods.
 
(4)   Assumes Net Debt in FY 1989-1992 is equal to Net Debt in FY 1993. Assumes Cash balance in FY 1989-1993 is equal to Cash balance in FY 1993.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

8


 

B. OVERVIEW OF PROJECT TIGERS

Project Tigers’ Closing Stock Price
(Since IPO)

(CLOSING STOCK PRICE (SINCE IPO) BAR AND LINE GRAPH)


    Note: Source: Bloomberg LP.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

9


 

II. VALUATION ANALYSIS

      

(LEGG MASON LOGO)   Confidential — not for duplication.

10


 

A. SUMMARY ANALYSIS

We utilized four approaches to estimate the value of Project Tigers, including: (i) Comparable Public Company Analysis; (ii) Comparable M&A Transactions Analysis; (iii) Discounted Cash Flow (“DCF”) Analysis; (iv) Leveraged Buyout (“LBO”) Analysis and (v) Comparable Going Private Transaction Premium Paid Analysis. In addition, we analyzed comparable going private transactions from May 2000 to the present.

In this section, we discuss each analysis individually and derive implied share prices for Project Tigers based on each analysis.

Summary Valuation Analysis
($ in millions, except per share data)

                 
Implied Enterprise Value
Analysis   Mean   Median
Comparable Public Company
  $ 55.8     $ 56.1  
Comparable M&A Transactions
  $ 62.0     $ 65.8  
Discounted Cash Flow
  $ 50.3     $ 57.6  
Leveraged Buyout
  $ 52.9     $ 50.7  
Premium Paid
  $ 56.4     $ 56.1  
                 
Implied Equity Value
Analysis   Mean   Median
Comparable Public Company
  $ 22.8     $ 23.2  
Comparable M&A Transactions
  $ 29.0     $ 32.8  
Discounted Cash Flow
  $ 17.3     $ 24.6  
Leveraged Buyout
  $ 19.9     $ 17.7  
Premium Paid
  $ 23.4     $ 23.1  
                 
Implied Share Price Value
Analysis   Mean   Median
Comparable Public Company
  $ 7.74     $ 7.85  
Comparable M&A Transactions
  $ 9.82     $ 11.13  
Discounted Cash Flow
  $ 5.86     $ 8.34  
Leveraged Buyout
  $ 6.75     $ 6.00  
Premium Paid
  $ 7.94     $ 7.82  



    Note:
 
    In each valuation analysis we assumed that the number of diluted shares outstanding equals 2,951,079.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

11


 

C. COMPARABLE PUBLIC COMPANY ANALYSIS

     
o
  A comparable public company analysis reviews, analyzes and compares publicly available financial data and stock market performance data of publicly traded companies in the same or similar business as the Company. We compared the performance of these selected public companies and their implied multiples to Project Tigers’ financial results. This analysis illustrates how financial markets may value businesses in the same economic and market environment based on varying financial performance.
 
   
o
  Typically, we review enterprise value as a multiple of EBITDA and EBIT and equity value as a multiple of 2004(E) earnings per share and book value. Results of these analyses led us to select EBITDA analysis and 2004(E) earnings per share analysis as most comparable to Project Tigers.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

12


 

C. COMPARABLE PUBLIC COMPANY ANALYSIS

     
o
  We selected nine publicly traded truckload companies that we considered most comparable to Project Tigers.

    We eliminated three potential comparable public companies — (1) Landstar System, Inc. (Nasdaq: LSTR); (2) Swift Transportation Co., Inc. (Nasdaq: SWFT); and (3) Werner Enterprises, Inc. (Nasdaq: WERN) — because of market capitalization and scope differences. All three excluded companies have a market capitalization greater than $1 billion. The rest of the comparable companies have equity market capitalizations under $300 million, creating an illiquidity discount in trading multiples. Since Landstar, Swift and Werner are actively traded, no discount is applied to their multiples. The three excluded companies also have a dense nationwide scope that does not fit Project Tigers’ scope.
 
    While we determined that Celadon Group, Inc. (Nasdaq: CLDN), Covenant Transport, Inc. (Nasdaq: CVTI), Frozen Food Express Industries, Inc. (Nasdaq: FFEX), Marten Transport, Ltd. (Nasdaq: MRTN), P.A.M. Transportation Services, Inc. (Nasdaq: PTSI), Smithway Motor Xpress, Inc. (Nasdaq: SMXC), Transport Corporation of America, Inc. (Nasdaq: TCAM), USA Truck, Inc. (Nasdaq: USAK) and U.S. Xpress Enterprises, Inc. (Nasdaq: XPRSA) were the most appropriate comparable public companies, there is no direct public comparable company for Project Tigers.

     
o
  The closest public comparable companies are Frozen Food Express Industries, Inc. (Nasdaq: FFEX), Smithway Motor Xpress, Inc. (Nasdaq: SMXC) and Transport Corporation of America, Inc. (Nasdaq: TCAM). These companies, like Project Tigers, are characterized by:

    Lack of research analyst coverage
 
    Low trading volume
 
    Small market capitalization

      

(LEGG MASON LOGO)   Confidential — not for duplication.

13


 

C. COMPARABLE PUBLIC COMPANY ANALYSIS

Summary Comparison of Operating and Valuation Data for Selected Companies within the Trucking Industry
($ in millions, except per share data)

                                                                                                         
                                                            Equity value as a multiple of
            Price   Diluted   Market   Total   Cash &           CY EPS
  Book
Company name (Ticker)
  Rating
  12/10/03
  S/O
  cap.
  Debt
  equiv.
  TEV (a)
  2000A
  2001A
  2002A
  2003E(b)
  2004E(b)
  value
Celadon Group (CLDN)
  NR     14.28       8.1       115.2       67.5       0.9       181.9     NM   NM     38.6x       25.8x       16.5x       2.2x  
Covenant Transport (CVTI)
  NR     18.81       14.8       278.1       44.7       1.8       320.9       22.9x     NM     24.4x       22.7x       15.9x       1.5x  
Frozen Food Express Industries (FFEX)
  NR     6.01       17.0       102.1       8.0       2.3       107.9     NM   NM     31.6x     NA   NA     1.3x  
Marten Transport (MRTN)
    B/2       16.15       9.6       155.1       31.4       30.7       155.8       12.9x       15.7x       17.7x       11.1x       10.8x       1.1x  
P.A.M. Transportation Svcs. (PTSI)
  NR     20.47       11.3       231.2       25.0       10.3       245.9       20.1x       17.3x       13.2x       18.0x       15.5x       1.5x  
Smithway Motor Xpress (SMXC)
  NR     1.48       3.8       5.7       41.1       30.4       16.4     NM   NM   NM   NA   NA     0.3x  
Transport Corp. of America (TCAM)
  NR     7.22       7.2       52.3       68.1       0.1       120.3       15.7x     NM   NM   NM     18.1x       0.9x  
USA Truck (USAK)
  NR     10.45       9.4       98.1       72.4       1.8       168.7     NM   NM     37.3x       26.8x       12.9x       1.3x  
U.S. Xpress Enterprises (XPRSA)
  NR     12.28       14.2       174.0       150.7       6.1       318.6     NM   NM     51.2x       22.7x       15.5x       1.1x  
Min
                            5.7       8.0       0.1       16.4       12.9x       15.7x       13.2x       11.1x       10.8x       0.3x  
Mean
                            134.6       56.5       9.4       181.8       17.9x       16.5x       30.6x       21.2x       15.0x       1.2x  
Median
                            115.2       44.7       2.3       168.7       17.9x       16.5x       31.6x       22.7x       15.5x       1.3x  
Max
                            278.1       150.7       30.7       320.9       22.9x       17.3x       51.2x       26.8x       18.1x       2.2x  
Boyd Bros. Transportation (BOYD)
  NR     5.71       3.0       16.85       33.7       0.7       49.8     NM   NM     33.6x     NA   NA     0.6x  
                                                         
    Enterprise value as a multiple of
               
    TTM   TTM   TTM   TTM   TTM   TTM   PEG
Company name (Ticker)
  Revenue
  EBITDA
  EBIT
  ROA
  ROE
  ROIC
  ratio(c)
Celadon Group (CLDN)
    0.5x       6.8x       14.3x       2.3 %     7.6 %     5.0 %     1.27  
Covenant Transport (CVTI)
    0.6x       4.5x       11.5x       3.4 %     6.5 %     5.4 %     1.33  
Frozen Food Express Industries (FFEX)
    0.3x       6.2x       39.3x       4.2 %     7.5 %     6.8 %   NA
Marten Transport (MRTN)
    0.5x       3.4x       9.8x       3.9 %     8.2 %     6.4 %     0.98  
P.A.M. Transportation Svcs. (PTSI)
    0.9x       4.9x       10.1x       5.7 %     9.4 %     8.6 %     0.91  
Smithway Motor Xpress (SMXC)
    0.1x       1.8x       -1.6x       -8.0 %     -30.1 %     -20.3 %   NA
Transport Corp. of America (TCAM)
    0.5x       4.6x     NM     -1.2 %     -3.8 %     0.3 %   NA
USA Truck (USAK)
    0.6x       4.3x       18.5x       1.4 %     3.7 %     2.6 %     0.86  
U.S. Xpress Enterprises (XPRSA)
    0.3x       5.2x       13.3x       1.5 %     4.1 %     3.7 %     0.71  
Min
    0.1x       1.8x       -1.6x       -8.0 %     -30.1 %     -20.3 %     0.86  
Mean
    0.5x       4.6x       14.4x       1.5 %     1.4 %     2.0 %     1.01  
Median
    0.5x       4.6x       12.4x       2.3 %     6.5 %     5.0 %     0.95  
Max
    0.9x       6.8x       39.3x       5.7 %     9.4 %     8.6 %     1.33  
Boyd Bros. Transportation (BOYD)
    0.4x       4.1x       40.0x       -0.1 %     -0.4 %     1.0 %   NA


Note:
 
Source: Company data , First Call, and Legg Mason Research estimates.
 
(a)   Total Debt does not include capital leases.
 
(b)   Total Enterprise Value = Market Capitalization of Equity + Total Debt - Cash + Market Value of Minority Interest. Total debt does not included leases.
 
(c)   Legg Mason estimates for those rated and First Call mean estimates for unrated securities.
 
(d)   2004E P/E divided by First Call mean 3-5 year growth rate.
 
Excludes non-recurring items.
 
Calculations may vary due to rounding.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

14


 

C. COMPARABLE PUBLIC COMPANY ANALYSIS

Comparable Public Company Analysis Summary – EBITDA
($ in millions, except per share data)

                 
    Mean
  Median
Implied Enterprise Value
  $ 59.4     $ 59.4  
Implied Equity Value
  $ 26.4     $ 26.4  
Implied Share Price
  $ 8.94     $ 8.94  

Comparable Public Company Analysis Summary – 04’ Estimated Net Income
($ in millions, except per share data)

                 
    Mean
  Median
Implied Enterprise Value
  $ 52.3     $ 52.9  
Implied Equity Value
  $ 19.3     $ 19.9  
Implied Share Price
  $ 6.54     $ 6.75  


    Note:
 
    Comparable Public Company Analysis based on: (a.) a range of EBITDA multiples between 4.6x to 4.6x and (b.) 04’ Estimated Net Income multiples between 15.0x to 15.5x.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

15


 

D. COMPARABLE M&A TRANSACTIONS ANALYSIS

     
o
  A comparable M&A transactions analysis reviews and analyzes similar transactions, and the resulting implied enterprise value multiples, involving companies in the same or similar business as the Company. We utilized this analysis for Project Tigers, and we analyzed the acquisitions of publicly traded and privately held targets and applied the range of multiples of these transactions to the financial results of Project Tigers.
 
   
o
  In this analysis, we identified 20 M&A transactions. However, each of the transactions identified has characteristics that differentiate it from Project Tigers. We selected nine transactions that were most comparable to Project Tigers.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

16


 

 
D. COMPARABLE M&A TRANSACTIONS ANALYSIS

Comparison Multiples for Selected Transactions within the Trucking Industry
($ in millions, January 1, 1998 — August 31, 2003)

                                                                 
                    Valuation
  Target Company Parameters
Date   Target   Type of   Target   Equity   Enterprise   LTM   LTM   LTM   Book
Effective
  Acquiror
  Consideration
  Status
  Value
  Value
  Revenue
  EBITDA
  EBIT
  Value
NA
  Roadway Corp.   Cash &   Public   $ 956.4     $ 1,101.0     $ 3,251.4     $ 189.1     $ 111.1     $ 418.1  
 
  acq. by Yellow Corp.   Stock                                                        
8/21/03
  Highway Express, Inc.   NA   Private   NA   NA   $ 27.0     NA   NA   NA
 
  acq. by Celadon Group, Inc.                                                            
8/15/03
  Ground Operations of Airborne, Inc.   Cash   Subsidiary   $ 1,005.0     NA   NA   NA   NA   NA
 
  acq. by DHL                                                            
7/30/03
  Roadrunner Freight Systems Inc.   Cash   Private   NA   NA   NA   NA   NA   NA
 
  acq. by American Capital Strategies                                                            
1/24/03
  Arnold Transportation Services   Cash   Subsidiary   $ 55.0     $ 55.0     $ 171.0     NA   NA   NA
 
  acq. by A Consortium of Investors                                                            
1/6/03
  Service Transport, Inc.   Cash   Private   $ 28.0     $ 28.0     NA   NA   NA   NA
 
  acq. by American Capital Strategies Ltd.                                                            
11/30/01
  Arnold Industries   Cash   Public   $ 548.0     $ 510.5     $ 450.7     $ 82.6     $ 49.8     $ 291.3  
 
  acq. by Roadway Corporation                                                            
11/28/01
  Motor Cargo Industries, Inc.   Cash &   Public   $ 83.1     $ 78.6     $ 138.6     $ 19.4     $ 10.7     $ 62.2  
 
  acq. by Union Pacific Corporation   Stock                                                        
8/1/01
  G.I. Trucking Company   Cash   Public   $ 40.0     $ 40.0     $ 139.4     $ 5.0     $ 0.8     $ 0.0  
 
  acq. by A Consortium of Investors                                                            
7/2/01
  MS Carriers, Inc.   Cash &   Public   $ 367.8     $ 615.5     $ 712.6     $ 106.6     $ 37.6     $ 218.6  
 
  acq. by Swift Transportation   Stock                                                        
2/12/01
  American Freightways Corporation   Cash &   Public   $ 935.4     $ 1,197.5     $ 1,352.6     $ 189.3     $ 126.9     $ 365.2  
 
  acq. by FedEx Corp.   Stock                                                        
8/31/00
  Trans-Consolidated, Inc.   Cash   Private   NA   NA   NA   NA   NA   NA
 
  acq. by C.H. Robinson Worldwide Inc.                                                            
7/6/00
  KLLM Transport Services, Inc.   Cash   Public   $ 33.0     $ 80.0     $ 236.9     $ 20.1     $ 1.3     $ 50.0  
 
  acq. by High Road Acquisition, Inc.                                                            
11/1/99
  CARCO Carrier Corp.   Cash   Private   $ 8.1     $ 35.3     $ 66.7     $ 9.3     $ 1.0     $ 0.3  
 
  acq. by USA Truck, Inc.                                                            
8/27/99
  Mark VII, Inc.   Cash &   Public   $ 206.1     $ 206.0     $ 760.0     $ 20.5     $ 18.2     $ 47.1  
 
  acq. by Ocean Group plc / MSAS Global   Stock                                                        
 
  Logistics Inc.                                                            
8/11/99
  Zipp Express, Inc.   Cash   Private   $ 25.7     $ 34.6     $ 39.7     $ 6.6     $ 4.4     $ 8.3  
 
  acq. by Celadon Group, Inc.                                                            
8/2/99
  R&M Enterprises / MDR Cartage, Inc.   Cash &   Private   $ 26.1     $ 41.9     $ 45.1     $ 7.4     $ 2.6     $ 9.3  
 
  / BF Transportation, Inc.   Stock                                                        
 
  acq. by Transit Group, Inc.                                                            
8/2/99
  Bestway Trucking, Inc.   Cash &   Private   $ 14.7     $ 45.8     $ 42.7     $ 9.0     $ 3.6     $ 4.7  
 
  acq. by Transit Group, Inc.   Stock                                                        
7/8/99
  Jevic Transportation, Inc.   Cash &   Public   $ 147.7     $ 187.0     $ 237.1     $ 33.4     $ 17.8     $ 77.9  
 
  acq. by Yellow Corporation   Stock                                                        
1/27/98
  Caliber System Inc.   Cash &   Public   $ 2,452.9     $ 2,174.2     $ 2,736.0     $ 191.8     $ 51.9     $ 490.9  
 
  acq. by FedEx Corp.   Stock                                                        
                                                         
            Equity Val. Mult. of:
  Enterprise Value Multiple of:
Date   Target       Net   Book   LTM   LTM   LTM   Total
Effective
  Acquiror
      Income
  Value
  Revenues
  EBITDA
  EBIT
  Assets
NA
  Roadway Corp.         18.9x       2.3x       0.3x       5.8x       9.9x       0.9x  
 
  acq. by Yellow Corp.                                                    
8/21/03
  Highway Express, Inc.       NA   NA   NA   NA   NA   NA
 
  acq. by Celadon Group, Inc.                                                    
8/15/03
  Ground Operations of Airborne, Inc.       NA   NA   NA   NA   NA   NA
 
  acq. by DHL                                                    
7/30/03
  Roadrunner Freight Systems Inc.       NA   NA   NA   NA   NA   NA
 
  acq. by American Capital Strategies                                                    
1/24/03
  Arnold Transportation Services       NA   NA     0.3x     NA   NA   NA
 
  acq. by A Consortium of Investors                                                    
1/6/03
  Service Transport, Inc.       NA   NA   NA   NA   NA   NA
 
  acq. by American Capital Strategies Ltd.                                                    
11/30/01
  Arnold Industries         15.5x       1.9x       1.1x       6.2x       10.2x       1.4x  
 
  acq. by Roadway Corporation                                                    
11/28/01
  Motor Cargo Industries, Inc.         12.0x       1.3x       0.6x       4.0x       7.4x       0.9x  
 
  acq. by Union Pacific Corporation                                                    
8/1/01
  G.I. Trucking Company       NA   NA     0.3x       8.0x       48.8x       0.8x  
 
  acq. by A Consortium of Investors                                                    
7/2/01
  MS Carriers, Inc.         30.5x       1.7x       0.9x       5.8x       16.4x       1.0x  
 
  acq. by Swift Transportation                                                    
2/12/01
  American Freightways Corporation         14.1x       2.6x       0.9x       6.3x       9.4x       1.4x  
 
  acq. by FedEx Corp.                                                    
8/31/00
  Trans-Consolidated, Inc.       NA   NA   NA   NA   NA   NA
 
  acq. by C.H. Robinson Worldwide Inc.                                                    
7/6/00
  KLLM Transport Services, Inc.       NMF     0.7x       0.3x       4.0x       60.7x       0.6x  
 
  acq. by High Road Acquisition, Inc.                                                    
11/1/99
  CARCO Carrier Corp.       NMF     26.5x       0.5x       3.8x       34.8x       0.8x  
 
  acq. by USA Truck, Inc.                                                    
8/27/99
  Mark VII, Inc.         19.1x       4.4x       0.3x       10.0x       11.3x       1.7x  
 
  acq. by Ocean Group plc / MSAS Global Logistics Inc.                                                    
8/11/99
  Zipp Express, Inc.         7.1x       3.1x       0.9x       5.3x       7.8x       1.6x  
 
  acq. by Celadon Group, Inc.                                                    
8/2/99
  R&M Enterprises / MDR Cartage, Inc. /         18.5x       2.8x       0.9x       5.7x       15.9x       1.3x  
 
  BF Transportation, Inc.                                                    
 
  acq. by Transit Group, Inc.                                                    
8/2/99
  Bestway Trucking, Inc.         15.1x       3.1x       1.1x       5.1x       12.8x       1.1x  
 
  acq. by Transit Group, Inc.                                                    
7/8/99
  Jevic Transportation, Inc.         15.3x       1.9x       0.8x       5.6x       10.5x       1.1x  
 
  acq. by Yellow Corporation                                                    
1/27/98
  Caliber System Inc.       NMF     5.0x       0.8x       11.3x       41.9x       1.6x  
 
  acq. by FedEx Corp.                                                    
 
      Min     7.1x       0.7x       0.3x       3.8x       7.8x       0.6x  
 
      Mean     13.6x       7.2x       0.7x       4.8x       26.4x       1.1x  
 
      Median     15.1x       3.1x       0.7x       5.1x       15.9x       1.1x  
 
      Max     18.5x       26.5x       1.1x       5.7x       60.7x       1.6x  

Note:

Non-shaded transactions excluded from min, mean, median and max calculations.

     
(LEGG MASON LOGO)
  Confidential — not for duplication.

17


 

 
D. COMPARABLE M&A TRANSACTIONS ANALYSIS

Project Tigers

Summary Business Descriptions for Selected M&A Transactions within the Trucking Industry

                 
Date        
Effective
  Acquiror
  Target
NA   Yellow Corp.   Roadway Corp.
      Yellow Corp. a holding company that, through wholly owned operating subsidiaries, offers its customers a wide range of asset and nonasset-based transportation services integrated by technology. The Company’s largest operating unit, Yellow Transportation, offers a full range of services for the movement of industrial, commercial, and retail goods. Yellow Transportation provides services by moving shipments through its regional, national and international networks of terminals, utilizing primarily ground transportation equipment that the Company owns or leases.       Roadway Corp. is a holding company with two primary operating entities, Roadway Express, Inc. (REX) and Roadway Next Day Corporation. REX is the primary operating subsidiary of the Company. REX and its subsidiaries provide long-haul less-than- truckload freight services on city-to-city routes (lanes) in North America, and on international lanes to and from North America.
 
               
8/21/03   Celadon Group, Inc.   Highway Express, Inc.
      Celadon Group, Inc. is a truckload carrier in North America. The Company provides and arranges for long-haul, point-to-point, time-sensitive and full-truckload transport of goods between the United States, Canada and Mexico. The principal types of freight transported include automotive parts, paper products, manufacturing parts, semi-finished products, textiles, appliances, retail and toys. Celadon delivers its services through a network of owned and leased tractors, and, to a lesser extent, independent owner-operators.       Highway Express is a truckload carrier based in Richmond, Virginia.
     
(LEGG MASON LOGO)
  Confidential — not for duplication.

18


 

 
D. COMPARABLE M&A TRANSACTIONS ANALYSIS

Project Tigers

Summary Business Descriptions for Selected M&A Transactions within the Trucking
Industry

                 
Date        
Effective
  Acquiror
  Target
8/15/03   DHL   Airborne, Inc. — Ground Operations
      DHL is the world’s leading express and logistics company offering customers innovative and customized solutions from a single source. With global expertise in solutions, express, air and ocean freight and overland transport, DHL combines worldwide coverage with an in-depth understanding of local markets. DHL’s international network links over 120,000 destinations in more than 220 countries and territories, and employs 71,000 people, over 10,000 of which are based in the U.S. Total revenues in 2002 accounted for $1,046 million in the U.S., and approximately $5.8 billion worldwide. DHL is majority owned by Deutsche Post World Net.       Airborne, Inc. is the holding company for Airborne Express. Airborne offers total distribution solutions by providing customers time-sensitive delivery of documents, letters, small packages, and freight to virtually every U.S. ZIP code and more than 200 countries. Customers can select from a variety of services including same-day, next-morning, next-afternoon or second-day delivery, air freight, ocean service, and logistics management. Airborne employs over 22,000 people worldwide and achieved total revenues of $3,348 million in 2002.
 
               
7/30/03   American Capital Strategies   Roadrunner Freight Systems Inc.
      American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $1.8 billion. American Capital is an equity partner in management and employee buyouts; invests in private equity sponsored buyouts, and provides capital directly to private and small public companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions and recapitalizations.       Roadrunner Freight Systems Inc. is an inter-regional freight services company that consolidates less-than-truckload shipments into full truckloads, minimizing the need for intermediate handling. The company operates a network of nine terminals in Milwaukee, Chicago, Dallas, Atlanta, Nashville, Charlotte, Los Angeles, Cincinnati and Cleveland, employs approximately 400 and has annual sales of over $125 million.
 
               
1/24/03   A Consortium of Investors   Arnold Transportation Services
      Group includes a management group led by Michael S. Walters, the unit’s president and chief executive officer and private equity firm, Jefferies Capital Partners.       Arnold Transportation Services is an irregular route and dedicated truckload motor carrier headquartered in Jacksonville, FL, specializing in short-haul regional operations. The Company utilizes over 800 company-owned tractors, 500 owner-operators and 4,200 trailers to provide service in the Northeast, Southeast, Midwest and Southwest regions of the United States.
     
(LEGG MASON LOGO)
  Confidential — not for duplication.

19


 

 
D. COMPARABLE M&A TRANSACTIONS ANALYSIS

Project Tigers

Summary Business Descriptions for Selected M&A Transactions within the Trucking Industry

                 
Date        
Effective
  Acquiror
  Target
1/6/03   American Capital Strategies Ltd.   Service Transport, Inc.
      American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $1.5 billion. American Capital is an equity partner in management and employee buyouts; invests in private equity sponsored buyouts, and provides capital directly to private middle-market and small public companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions and recapitalizations.       Headquartered in Cookeville, TN, Service Transport is one of the 50 largest regional LTL carriers in the United States. A family-owned company founded in 1979, Service Transport grew to encompass a network including 10 contiguous Midwest and Southeastern states plus service to Southern California. The Company has built a highly diversified customer base in a wide array of industries.
 
               
11/30/01   Roadway Corporation   Arnold Industries
      The Company is a holding company with two primary operating entities, Roadway Express, Inc. (REX) and Roadway Next Day Corporation. REX is the primary operating subsidiary of the Company. REX and its subsidiaries provide long-haul less-than-truckload freight services on city-to-city routes (lanes) in North America, and on international lanes to and from North America.       The Company assembles and delivers truckload and less than truckload shipments for contract customers.
 
               
11/28/01   Union Pacific Corporation   Motor Cargo Industries, Inc.
      The Company is comprised of three operating companies including the railroad, Overnite Transportation, a nationwide less-than-truckload carrier, and Fenix, a group of affiliated technology companies.       A less-than-truckload carrier that provides transportation and logistics services to shippers primarily in the western region of the United States.
 
               
8/1/01   A Consortium of Investors   G.I. Trucking Company
      Senior Management from G.I. and Estes Express Lines.       G.I. Trucking is one of the five largest Western states-based non-union regional LTL motor carrier. G.I. Trucking offers one to three-day regional service through a network of 33 terminals and 37 agent partners in 15 Western and Southwestern states including Hawaii and Alaska.
     
(LEGG MASON LOGO)
  Confidential — not for duplication.

20


 

 
D. COMPARABLE M&A TRANSACTIONS ANALYSIS

Project Tigers

Summary Business Descriptions for Selected M&A Transactions within the Trucking Industry

                 
Date        
Effective
  Acquiror
  Target
7/2/01   Swift Transportation   MS Carriers, Inc.
      The largest publicly-held, truckload carrier in the United States. Swift operates primarily throughout the continental United States, combining strong regional operations with a transcontinental van operation. The principal types of freight transported by Swift include retail and discount department store merchandise, manufactured goods, paper products, non-perishable food, beverages and beverage containers and building materials.       A transportation company primarily engaged in the hauling of truckload shipments of general commodities throughout the United States and the provinces of Quebec and Ontario in Canada.
 
               
2/12/01   FedEx Corp.   American Freightways Corporation
      Comprised of a family of companies, providing transportation and logistics solutions for customers. The company provides express transportation, ground small-package delivery, surface expedited carrying service, contract logistics, and regional freight cars.       A scheduled for hire carrier of less-than-truckload shipments of general commodities.
 
               
8/30/00   C.H. Robinson Worldwide Inc.   Trans-Consolidated, Inc.
      C.H. Robinson Worldwide, Inc. (Robinson) is a third-party logistics company in North America. The Company is a global provider of multimodal transportation services and logistics solutions through a network of 139 offices in 40 states, as well as in Canada, Mexico, Europe and South America.       The firm is a third party logistics company specializing in refrigerated less than truckload services for perishable food manufacturers.
 
               
7/6/00   High Road Acquisition, Inc.   KLLM Transport Services, Inc.
      A company formed by the heads of KLLM Transport Services and Worldcom Inc.       Holding company with subsidiaries which transport truckload quantities of various commodities, specialize in temperature controlled shipments.
     
(LEGG MASON LOGO)
  Confidential — not for duplication.

21


 

 
D. COMPARABLE M&A TRANSACTIONS ANALYSIS

Project Tigers

Summary Business Descriptions for Selected M&A Transactions within the Trucking Industry

                 
Date        
Effective
  Acquiror
  Target
11/1/99   USA Truck, Inc.   CARCO Carrier Corp.
      Medium-haul, common, and contract carrier.       Medium-haul, common, and contract carrier.
 
               
8/27/99   Ocean Group plc / MSAS Global Logistics Inc.   Mark VII, Inc.
      Engaged in the provision of transportation services.       Transporter of general products.
 
               
8/11/99   Celadon Group, Inc.   Zipp Express, Inc.
      Provides long-haul and truckload transportation and international freight services.       A major carrier to and from Mexico as well as strong business in the Midwest; operates roughly 270 tractors and 800 trailers.
 
               
8/2/99   Transit Group, Inc.   R&M Enterprises / MDR Cartage, Inc. / BF Transportation, Inc.
      Holding company that acquires and consolidates short, medium, and long haul trucking companies, principally truck carriers.       Three small carriers with a combined total of 467 tractors and 1088 trailers.
 
               
8/2/99   Transit Group, Inc.   Bestway Trucking, Inc.
      Holding company that acquires and consolidates short, medium, and long haul trucking companies, principally truck carriers.       A truckload common carrier operating a fleet consisting of 300 power units and 775 trailers. Concentrates on short hauls in the South, Northeast and Central U.S.
 
               
7/8/99   Yellow Corporation   Jevic Transportation, Inc.
      Operates through its subsidiaries which provide national, regional, and international less-than-truckload transportation.       Provides truck-load and less than truck-load shipping services.
 
               
1/27/98   FedEx Corp.   Caliber System Inc.
      Comprised of a family of companies, providing transportation and logistics solutions for customers. The company provides express transportation, ground small-package delivery, surface expedited carrying service, contract logistics, and regional freight cars.       Holding company with subsidiaries which provide common carrier interstate transportation services; provide contract logistics services; and operate terminals and hub facilities.
     
(LEGG MASON LOGO)
  Confidential — not for duplication.

22


 

D. COMPARABLE M&A TRANSACTIONS ANALYSIS

Comparable M&A Transaction Analysis Summary – EBITDA
($ in millions, except per share data)

                 
    Mean
  Median
Implied Enterprise Value
  $ 62.0     $ 65.8  
Implied Equity Value
  $ 29.0     $ 32.8  
Implied Share Price
  $ 9.82     $ 11.13  


    Note:
Comparable M&A Transactions Analysis based on a range of EBITDA multiples between 4.8x to 5.1x.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

23


 

E. DISCOUNTED CASH FLOW ANALYSIS

     
o
  A discounted cash flow analysis (“DCF”) derives the value for a company that is equal to the present value of its future free cash flows plus the present value of the terminal value. A DCF valuation focuses on the future effects of existing business strategies on cash flows and deals specifically with a number of key factors, including revenue growth, profitability, reinvestment in fixed assets and working capital and the payment of all debt.
   
o
  In order to derive the discount rate used in the DCF, we calculated the Company’s weighted average cost of capital (“WACC”). WACC is the calculation of a firm’s cost of capital that is determined by weighting each category of capital proportionately then adding them together. Included in the WACC calculation are all capital sources including: common stock, preferred stock, bonds, and any other long term debt.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

24


 

E. DISCOUNTED CASH FLOW ANALYSIS

A. Weighted Average Cost of Capital (“WACC”) Assumptions

                                                                                         
Capital Asset Pricing Model
  Cost of Equity
  Cost of Debt
  WACC
                                                                            Weighted    
                    Small and                                                   Average    
                    Specific                                   After-Tax           Cost of    
Risk-Free           Market Risk   Company   Cost of           Cost of   Tax   Cost of           Capital   Rounded
Rate(1)           Premium(3)   Premium(4)   Equity(5)   Equity   Debt(6)   Rate(7)   Debt   Debt   (WACC)   WACC
(Rf)
  Beta(2)
  (Rm-Rf)
  (Rs)
  (Re)
  Weighting
  (Rd)
  (T)
  (Rd+Pr)
  Weighting
  (Rc)
  (Rc)
4.32%
    1.19       8.20 %     5.33 %     19.41 %     50.00 %     9.55 %     40.00 %     5.73 %     50.00 %     12.57 %     13.00 %


(1)   Represents the U.S. Govt 10-year Treasury bond as of December 10, 2003.
 
(2)   Represents 30 day average Beta as of December 10, 2003.
 
(3)   Source: Ibbotson Associates: Stocks, Bonds, Bills and Inflation: Yearbook 2002.
 
(4)   Source: Ibbotson Associates: Micro capitalization size premium (10th decile).
 
(5)   Derived through calculation of CAPM. Rf + Beta*(Rm — Rf) + Rs.
 
(6)   Represents the U.S. Govt 10-Year Treasury bond plus U.S. Industrial BB 10-Year as of December 10, 2003.
 
(7)   Assumes a 40% tax rate.

B. WACC Calculation

         
Cost of Equity
    19.41 %
Weight
    50.00 %
After-Tax Cost of Debt
    5.73 %
Weight
    50.00 %
 
   
 
 
Weighted Average Cost of Capital (WACC)
    12.57 %
WACC – Rounded
    13.00 %

      

(LEGG MASON LOGO)   Confidential — not for duplication.

25


 

E. DISCOUNTED CASH FLOW ANALYSIS

($ in millions)

A. Firm Value Assumption:

         
EBITDA
    4.00 x
Terminal Multiples:
    4.50 x
 
    5.00 x
Discount Rates:
    12.0 %
 
    13.0 %
 
    14.0 %

B. Capitalization (Year 0):

         
Short-term Debt
  $ 12.96  
Long-term Debt
    20.74  
Preferred Stock
     
Minority Interest
     
 
   
 
 
Total Debt
    33.70  
Less Cash & Equivalents
    0.72  
 
   
 
 
Net Debt:
  $ 32.99  
 
   
 
 

C. Other Assumptions:

         
Tax Rate:
    40.00 %
Initial Year
    2003  
Fiscal Year-Ended:
  December 31


($ in millions)

                                         
    Year 1   Year 2   Year 3   Year 4   Year 5
CASH PROVIDED BY OPERATIONS:
  2003
  2004
  2005
  2006
  2007
Adjusted Operating Income Before Amortization (EBITA)
  $ 7.3     $ 4.4     $ 5.1     $ 6.3     $ 7.5  
Cash Taxes @ 40.0%
    (2.2 )     (1.0 )     (1.3 )     (1.8 )     (2.3 )
 
   
 
     
 
     
 
     
 
     
 
 
Unlevered Net Income
    5.2       3.4       3.8       4.5       5.2  
+ Depreciation
    5.6       11.1       11.0       11.0       11.1  
+ Change in Deferred Taxes
    0.0       0.0       0.0       0.0       (0.0 )
- Net Additions to Property, Plant and Equipment
    (7.5 )     (16.7 )     (10.6 )     (11.1 )     (11.6 )
- Net Change in Non-cash Working Capital
    (0.1 )     (0.2 )     (0.2 )     (0.3 )     (0.3 )
 
   
 
     
 
     
 
     
 
     
 
 
Total Cash Flow Provided By Operations
  $ 3.1       ($2.4 )   $ 4.0     $ 4.1     $ 4.3  
 
   
 
     
 
     
 
     
 
     
 
 

      

(LEGG MASON LOGO)   Confidential — not for duplication.

26


 

E. DISCOUNTED CASH FLOW ANALYSIS

Net Present Value Analysis Summary
($ in millions)

A. Five Year Net Present Value Analysis

(TABLE GRAPHIC)

      

(LEGG MASON LOGO)   Confidential — not for duplication.

27


 

E. DISCOUNTED CASH FLOW ANALYSIS

Sensitivity Analysis Summary
($ in millions)

A. Five Year Sensitivity Analysis

Enterprise Value

Terminal Value Multiples of EBITDA

                                                 
 
            4.00 x       4.25 x       4.50 x       4.75 x       5.00 x  
 
    12.0 %   $ 50.9     $ 53.6     $ 56.2     $ 58.9     $ 61.5  
 
    12.5 %   $ 49.9     $ 52.5     $ 55.0     $ 57.6     $ 60.2  
Discount
    13.0 %   $ 48.8     $ 51.4     $ 53.9     $ 56.4     $ 58.9  
Rate
    13.5 %   $ 47.8     $ 50.3     $ 52.8     $ 55.2     $ 57.7  
 
    14.0 %   $ 46.9     $ 49.3     $ 51.7     $ 54.1     $ 56.5  

Implied Equity Value

Terminal Value Multiples of EBITDA

                                                 
 
            4.00 x       4.25 x       4.50 x       4.75 x       5.00 x  
 
    12.0 %   $ 18.0     $ 20.6     $ 23.2     $ 25.9     $ 28.5  
 
    12.5 %   $ 16.9     $ 19.5     $ 22.1     $ 24.6     $ 27.2  
Discount
    13.0 %   $ 15.9     $ 18.4     $ 20.9     $ 23.4     $ 25.9  
Rate
    13.5 %   $ 14.9     $ 17.3     $ 19.8     $ 22.3     $ 24.7  
 
    14.0 %   $ 13.9     $ 16.3     $ 18.7     $ 21.1     $ 23.5  

      

(LEGG MASON LOGO)   Confidential — not for duplication.

28


 

E. DISCOUNTED CASH FLOW ANALYSIS

Discounted Cash Flow Analysis Summary
($ in millions, except per share data)

                 
    Low
  High
Implied Enterprise Value
  $ 50.3     $ 57.6  
Implied Equity Value
  $ 17.3     $ 24.6  
Implied Share Price
  $ 5.86     $ 8.34  


    Note:
 
    Data relies on Company projections.
 
    Discounted Cash Flow Analysis included, but were not limited to the following assumptions: (a.) range of discount rates from 12.0% to 14.0% and (b.) range of EBITDA multiples of 4.0x to 5.0x.

      

(LEGG MASON LOGO)   Confidential – not for duplication.

29


 

F. LEVERAGED BUYOUT ANALYSIS

         
 
  o   A leveraged buyout analysis (“LBO”) is a means of establishing the value of a company assuming that it was purchased by a financial buyer. An LBO analysis involves the acquisition or recapitalization of a company financed primarily by incurring debt that is serviced by the post-LBO operating cash flow of the company. We utilized the LBO analysis to value Project Tigers.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

30


 

F. LEVERAGED BUYOUT ANALYSIS

Sources and Uses and Transaction Multiples Summaries
($ in millions)

A. Sources and Uses of Funds

Sources of Funds

                         
    Amount
  % Capitaliz.
  Rate
Target Cash Available
  $ 0.7                  
Minimum Cash to Be Held
    0.5                  
 
   
 
                 
Excess Cash Available
  $ 0.2                  
 
                       
Assumed Target Debt
  $ 33.7       62.6 %     3.60 %
Senior Notes
    7.2       13.4 %     9.40 %
Common Equity: Sponsor A
    1.0       1.9 %        
Roll-over of Existing Equity
    12.0       22.2 %        
 
   
 
     
 
         
Total Capitalization
  $ 53.9       100.0 %        
 
   
 
     
 
         
Total Sources
  $ 54.1                  
 
   
 
                 

Uses of Funds

         
New Equity Financed Purchase
  $ 1.0  
Company Financed Purchase
    7.0  
Roll-over of Existing Equity
    12.0  
Assumed Target Debt
    33.7  
Transaction Expenses @ 2.5%
    0.5  
 
   
 
 
Total Uses
  $ 54.1  
 
   
 
 

B. Leveraged Buyout Assumptions

         
Total Value of Equity
  $ 19.9  
% Shares Repurchased
    40.0 %
 
   
 
 
Total Value of Repurchase
  $ 8.0  
New Equity Financed
    1.0  
 
   
 
 
Company Financed
  $ 7.0  
Value of Options & Warrants
     
Total Company Financed
  $ 7.0  

C. Transaction Multiples (including fees)

                 
    2002
  2003
Revenue
    0.42 x       0.41 x  
EBITDA
    3.8 x       4.2 x  
EBIT
    19.7 x       7.5 x  


    Note:
 
    Leveraged Buyout Analysis assumes: (a.) $6.75 per share purchase price and (b.) acquires 40% of the fully diluted shares outstanding which are not already held by the Investor Group.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

31


 

F. LEVERAGED BUYOUT ANALYSIS

Financial and Leverage Assumptions and Return Summaries
($ in millions)

A. Summary Financial and Leverage Assumptions

                                                                         
                                    Net Working                           Total Debt /
    Revenues
  % Growth
  EBITDA
  % Margin
  Capital
  % Sales
  CapEx
  % Sales
  EBITDA
Year 0 - 2002
  $ 127.8       0.2 %   $ 14.3       11.2 %   $ 5.0       3.9 %   $ 8.0       6.2 %     2.9x  

 
Year 1 - 2003
    131.4       2.8 %     12.9       9.8 %     5.2       3.9 %     7.5       5.7 %     3.1x  
Year 2 - 2004
    135.3       3.0 %     15.4       11.4 %     5.3       3.9 %     16.7       12.3 %     2.8x  
Year 3 - 2005
    140.7       4.0 %     16.1       11.4 %     5.5       3.9 %     10.6       7.5 %     2.6x  

 
Year 4 - 2006
    147.8       5.0 %     17.3       11.7 %     5.8       3.9 %     11.1       7.5 %     2.3x  
Year 5 - 2007
    155.2       5.0 %     18.6       12.0 %     6.1       3.9 %     11.6       7.5 %     2.0x  

 
Year 6 - 2008
    162.9       5.0 %     22.0       13.5 %     6.4       3.9 %     12.7       7.8 %     1.5x  
Year 7 - 2009
    171.1       5.0 %     23.1       13.5 %     6.7       3.9 %     13.3       7.8 %     1.2x  

 
Year 8 - 2010
    179.6       5.0 %     24.2       13.5 %     7.0       3.9 %     14.0       7.8 %     1.0x  
Year 9 - 2011
    188.6       5.0 %     25.5       13.5 %     7.4       3.9 %     15.1       8.0 %     0.8x  
Year 10 - 2012
    198.0       5.0 %     26.7       13.5 %     7.8       3.9 %     15.8       8.0 %     0.5x  

 

B. Summary Returns

                                                                         
    Year 3 Exit
  Year 5 Exit
  Year 7 Exit
Terminal Multiple of EBITDA
    4.00 x     4.50 x     5.00 x     4.00 x     4.50 x     5.00 x     4.00 x     4.50 x     5.00 x
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
Implied Forward EBITDA
    3.71 x     4.18 x     4.64 x     3.38 x     3.80 x     4.22 x     3.81 x     4.29 x     4.76 x
Sponsor A IRR
    21.4 %     34.0 %     44.7 %     24.3 %     29.8 %     34.5 %     25.8 %     28.8 %     31.4 %
 

C. Summary Share Price Year 5 Exit at 4.50x

                 
Sponsor A IRR
    30%       35%  
 
   
 
     
 
 
Implied Share Price
  $ 6.75     $ 6.00  

      

(LEGG MASON LOGO)   Confidential — not for duplication.

32


 

F. LEVERAGED BUYOUT ANALYSIS

Leveraged Buyout Analysis Summary
($ in millions, except per share data)

                 
    30% IRR
  35% IRR
Implied Enterprise Value
  $ 52.9     $ 50.7  
Implied Equity Value
  $ 19.9     $ 17.7  
Implied Share Price
  $ 6.75     $ 6.00  


    Note:
 
    Data relies on Company projections.
 
    Leveraged Buyout Analysis included, but were not limited to the following assumptions (a.) minimum return to financial sponsor of 20.0%; (b.) range of EBITDA multiples of 4.0x to 5.0x; and (c.) total debt to EBITDA not to exceed 2.9x.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

33


 

G. COMPARABLE GOING PRIVATE TRANSACTIONS ANALYSIS

         
 
  o   A comparable going private transactions analysis is a means of estimating the appropriate range of premiums to Project Tigers’ common stock price that shareholders should receive in a going private transaction. We utilized the comparable going private transactions analysis to value Project Tigers’ equity.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

34


 

G. COMPARABLE GOING PRIVATE TRANSACTIONS ANALYSIS

Comparable Going Private Premiums Paid Implied Valuation
(Includes Completed Going Private transactions, January 2001 to Current with Premia between 0% — 100%)
($ in millions)

                                                             
                Parameters
  Premium Paid
Announcement   Completion           Market   Enterprise   LTM            
Date
  Date
  Acquiror
  Target
  Value
  Value
  Revenue
  1 Day
  1 Week
  1 Month
05/12/03
  10/31/03   Investor Group   Dwyer Group Inc   $ 52.3     $ 53.4     $ 25.5       54.1 %     52.3 %     41.2 %
06/05/03
  08/08/03   Battery Ventures VI LP   Made2Manage Systems Inc     30.4       13.9       30.1       31.9 %     38.5 %     33.5 %
05/28/03
  08/19/03   Randeep Grewal   GREKA Energy Corp     32.4       90.7       32.3       44.4 %     41.0 %     51.9 %
05/13/03
  08/15/03   Investor Group   Packaged Ice Inc     75.6       440.4       235.4       50.0 %     50.7 %     82.6 %
04/16/03
  07/03/03   Investor Group   Lillian Vernon Corp     60.9       37.0       238.0       69.0 %     71.1 %     68.6 %
03/24/03
  06/18/03   Management Group   The Judge Group Inc     14.2       15.3       80.8       50.0 %     41.9 %     50.0 %
03/13/03
  07/18/03   CIVCO Holding Inc   Colorado MEDtech Inc     64.6       56.9       54.9       48.9 %     56.7 %     53.3 %
03/03/03
  05/01/03   Kinkos Inc   ImageX Inc     16.1       3.9       34.9       15.0 %     21.1 %     21.1 %
02/21/03
  05/05/03   Oaktree Capital Management LLC   Acorn Products Inc     16.7       38.5       91.2       20.7 %     6.3 %     21.2 %
02/18/03
  07/23/03   CB Richard Ellis Inc   Insignia Financial Group Inc     280.3       315.3       735.6       16.1 %     18.0 %     24.5 %
01/31/03
  03/18/03   BayCorp Holdings Ltd   BayCorp Holdings Ltd     125.6     NA     48.8       12.1 %     12.1 %     18.6 %
01/22/03
  03/31/03   GTG Acquisition Corp   Resonate Inc     53.5     NA     12.5       5.0 %     3.8 %     8.0 %
12/24/02
  03/26/03   Phillips Edison Ltd   Aegis Realty Inc     93.0       159.1       26.3       7.2 %     6.4 %     7.2 %
12/09/02
  03/27/03   Amy Acquisition Corp   AmeriPath Inc     667.6       751.1       466.2       29.2 %     26.3 %     44.5 %
11/12/02
  12/19/02   Berwind Co LLC   Hunt Corp     115.2       112.8       132.3       32.3 %     31.2 %     37.4 %
11/11/02
  03/18/03   Investor Group   CoorsTek Inc     305.3       356.0       334.4       68.6 %     60.4 %     86.4 %
10/11/02
  02/28/03   Investor Group   Landair Corp     96.2       99.4       102.5       25.0 %     31.0 %     26.2 %
10/01/02
  02/07/03   Kelso & Co   BWAY Corp     186.0       266.5       527.6       43.9 %     44.9 %     38.9 %
09/26/02
  01/15/03   CHL Holdings Corp   Interstate Natl Dealer Svcs     25.0       0.4       60.9       9.7 %     8.1 %     9.1 %
09/24/02
  04/23/03   Prometheus Assisted Living LLC   ARV Assisted Living Inc     68.8       161.0       158.4       23.5 %     26.0 %     28.0 %


    Note:
Source: SDC, Bloomberg LP and company filings.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

35


 

G. COMPARABLE GOING PRIVATE TRANSACTIONS ANALYSIS

Comparable Going Private Premiums Paid Implied Valuation
(Includes Completed Going Private transactions, January 2001 to Current with Premia between 0% — 100%)
($ in millions)

                                                             
                Parameters
  Premium Paid
Announcement   Completion           Market   Enterprise   LTM            
Date
  Date
  Acquiror
  Target
  Value
  Value
  Revenue
  1 Day
  1 Week
  1 Month
09/23/02
  03/28/03   David H Murdock   Dole Food Co Inc   $ 1,920.4     $ 2,375.3     $ 4,211.6       36.8 %     32.7 %     18.0 %
09/19/02
  03/17/03   MASB Inc   Viador Inc     3.9       2.4       5.3       50.0 %     50.0 %     7.1 %
09/06/02
  01/02/03   Investor Group   Disc Graphics Inc     10.1       21.6       49.5       73.3 %     65.5 %     51.7 %
09/03/02
  05/30/03   Sandata Acquisition Corp   Sandata Technologies Inc     4.9       6.5       17.2       21.6 %     21.6 %     39.0 %
08/07/02
  07/29/03   Douglas H Miller   Exco Resources Inc     238.2       418.5       55.9       10.7 %     12.6 %     11.8 %
07/26/02
  02/28/03   Samuel J Heyman   International Specialty Prods     674.9       1,074.1       834.3       4.3 %     1.7 %     33.8 %
06/12/02
  11/15/02   Cornerstone Equity Investors   Vestcom International Inc     58.7       76.1       153.8       50.6 %     64.5 %     78.6 %
06/11/02
  07/23/02   Intellimark Holdings Inc   Technisource Inc     42.8       30.0       134.8       43.4 %     48.1 %     73.9 %
04/18/02
  02/21/03   Investor Group   Partsbase Inc     21.1     NA     6.8       36.4 %     44.2 %     94.8 %
04/13/02
  01/09/03   Investor Group   Nortek Inc     563.6       1,547.0       1,959.8       23.0 %     28.9 %     21.4 %
04/11/02
  07/31/02   Investor Group   Herbalife International Inc     726.7       529.7       1,040.2       26.8 %     30.6 %     37.5 %
02/20/02
  03/22/02   SCC Contracting Inc   Sevenson Environmental Svcs     169.9       166.5       124.9       18.9 %     18.9 %     18.9 %
02/14/02
  07/26/02   Investor Group   dick clark productions inc     150.4       132.2       61.5       30.8 %     47.4 %     47.4 %
02/13/02
  05/15/02   Investor Group   Deltek Systems Inc     111.5       92.6       92.8       18.4 %     28.6 %     41.9 %
02/01/02
  04/13/02   Ironbridge Acquisition Corp   Pitt-Des Moines Inc     272.2       79.9       143.5       7.6 %     8.8 %     10.9 %
01/22/02
  03/06/02   Rottlund Co Inc   Rottlund Co Inc     53.6       96.9       261.4       18.1 %     27.1 %     32.8 %
12/18/01
  02/28/02   Preserver Group Inc   Preserver Group Inc     16.5       23.6       99.2       36.0 %     45.7 %     29.2 %
11/16/01
  03/04/02   Ernest C Garcia II   Ugly Duckling Corp     43.4       464.2       448.6       41.8 %     42.9 %     38.4 %
11/06/01
  02/11/02   Investor Group   Leapnet Inc     10.9       10.5       35.6       5.7 %     5.7 %     33.1 %


    Note:
Source: SDC, Bloomberg LP and company filings.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

36


 

G. COMPARABLE GOING PRIVATE TRANSACTIONS ANALYSIS

Comparable Going Private Premiums Paid Implied Valuation
(Includes Completed Going Private transactions, January 2001 to Current with Premia between 0% — 100%)
($ in millions)

                                                             
                Parameters
  Premium Paid
Announcement   Completion           Market   Enterprise   LTM            
Date
  Date
  Acquiror
  Target
  Value
  Value
  Revenue
  1 Day
  1 Week
  1 Month
10/29/01
  12/07/01   CalWest Industrial Ppty   Cabot Industrial Trust   $ 993.9     $ 1,896.6     $ 231.9       20.3 %     18.5 %     15.7 %
10/25/01
  05/31/02   SG Merger Corp   Ecometry Corp     33.7     NA     28.9       93.3 %     81.3 %     93.3 %
10/08/01
  01/24/02   Investor Group   Blimpie International Inc     27.1       18.3       30.1       86.7 %     90.5 %     62.8 %
10/01/01
  02/13/02   Investor Group   NCH Corp     280.4       262.5       672.8       34.0 %     33.6 %     18.8 %
09/10/01
  02/11/02   Investor Group   American Coin Merchandising     59.0       106.0       136.7       42.6 %     45.5 %     39.3 %
08/09/01
  01/03/02   Ameris Acquisition Inc   Children’s Comprehensive Svcs     44.2       63.1       131.7       39.9 %     31.9 %     36.4 %
08/01/01
  01/18/02   Dwain Neumann   National Home Centers Inc     10.0       25.2       100.6       62.2 %     55.2 %     71.4 %
07/24/01
  11/04/01   Investor Group   EA Engineering Science Tech     10.3       12.3       44.3       50.9 %     44.1 %     44.1 %
07/03/01
  12/31/01   Investor Group   Electronic Retailing Sys Intl     5.6       21.8       5.1       85.7 %     85.7 %     52.9 %
06/11/01
  02/22/02   Gameco Inc   Colonial Holdings Inc     36.1       36.3       30.9       75.0 %     55.6 %     49.3 %
06/06/01
  12/13/01   Liberty Mutual Insurance Co   Liberty Financial Cos Inc     1,669.1       421.1       1,005.0       24.8 %     40.1 %     40.4 %
05/30/01
  09/06/01   Bacou SA   Bacou USA Inc     515.5       571.9       322.3       21.8 %     17.3 %     11.3 %
05/22/01
  12/21/01   Investor Group   Quizno’s Corp     26.0       53.4       48.7       28.4 %     30.1 %     28.7 %
05/17/01
  09/28/01   SIRSI Corp   Data Research Associates Inc     50.0       40.9       27.7       86.1 %     86.1 %     87.4 %
04/27/01
  02/22/02   Gameco Inc   Black Hawk Gaming & Dvlp Co     53.2       106.5       95.0       16.7 %     22.1 %     34.3 %
03/23/01
  08/31/01   Investor Group   PJ America Inc     37.8       37.8       115.2       32.1 %     52.2 %     34.6 %
03/13/01
  06/04/01   Investor Group   Roy F Weston Inc     59.2       58.3       270.3       7.1 %     11.6 %     13.1 %
02/20/01
  09/06/01   Investor Group   Springs Industries Inc     841.6       1,221.2       2,252.3       27.4 %     22.7 %     33.3 %
02/15/01
  05/14/01   Investor Group   VICORP Restaurants Inc     178.5       178.0       372.0       35.9 %     34.6 %     50.9 %


    Note:
Source: SDC, Bloomberg LP and company filings.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

37


 

G. COMPARABLE GOING PRIVATE TRANSACTIONS ANALYSIS

Comparable Going Private Premiums Paid Implied Valuation
(Includes Completed Going Private transactions, January 2001 to Current with Premia between 0% — 100%)
($ in millions)

                                                             
                Parameters
  Premium Paid
Announcement   Completion           Market   Enterprise   LTM            
Date
  Date
  Acquiror
  Target
  Value
  Value
  Revenue
  1 Day
  1 Week
  1 Month
01/24/01
  03/25/02   Investor Group   NextHealth Inc   $ 73.2     $ 67.9     $ 42.9       31.6 %     33.8 %     68.2 %
12/22/00
  04/10/01   Investor Group   Michael Foods Inc     569.3       767.9       1,067.1       10.2 %     11.5 %     10.7 %
12/16/00
  03/07/01   Rosemore Inc   Crown Central Petroleum Corp     106.0       231.4       1,785.2       33.3 %     25.4 %     23.5 %
11/16/00
  07/17/01   Bruckmann Rosser Sherrill & Co   Il Fornaio America Corp     77.5       72.0       125.8       28.9 %     23.9 %     44.4 %
11/13/00
  07/20/01   Investor Group   CB Richard Ellis Services     331.5       624.8       1,323.6       21.9 %     15.3 %     30.6 %
11/10/00
  01/31/01   HCH Acquisition Corp   Holt’s Cigar Holding Inc     34.8       28.1       34.3       57.1 %     44.3 %     54.4 %
10/25/00
  01/02/01   KC Holding Corp(ValueAct)   Kenetech Corp     33.3       10.8       2.1       46.5 %     46.5 %     42.5 %
10/25/00
  07/31/01   Investor Group   Uno Restaurant Corp     113.1       168.9       238.4       33.3 %     60.8 %     43.1 %
05/10/00
  01/05/01   Investor Group   GZA GeoEnvironmental Tech     24.5       17.5       44.8       2.4 %     0.4 %     13.8 %
 
          Min   $ 3.9     $ 0.4     $ 2.1       2.4 %     0.4 %     7.1 %
          Mean     207.8       277.2       359.5       34.7 %     35.5 %     39.1 %
          Median     601       91.7       108.9       31.8 %     32.3 %     36.9 %
          Max     1,920.4       2,375.3       4,211.6       93.3 %     90.5 %     94.8 %


    Note:
Source: SDC, Bloomberg LP and company filings.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

38


 

G. COMPARABLE GOING PRIVATE TRANSACTIONS ANALYSIS

Comparable Going Private Premiums Paid Implied Valuation
(Includes Completed Going Private transactions, January 2001 to Current in which a minority interest was acquired)
($ in millions)

                                                                     
                Parameters
  Premium Paid
Announcement   Completion           Market   Enterprise   LTM   % Interest            
Date
  Date
  Acquiror
  Target
  Value
  Value
  Revenue
  Acquired
  1 Day
  1 Week
  1 Month
03/24/03
  06/18/03   Management Group   The Judge Group Inc   $ 14.2     $ 15.3     $ 80.8       40.0 %     50.0 %     41.9 %     50.0 %
10/11/02
  02/28/03   Investor Group   Landair Corp     96.2       99.4       102.5       29.0 %     25.0 %     31.0 %     26.2 %
09/03/02
  05/30/03   Sandata Acquisition
Corp
  Sandata Technologies Inc     4.9       6.5       17.2       30.0 %     21.6 %     21.6 %     39.0 %
07/26/02
  02/28/03   Samuel J Heyman   International Specialty
Prods
    674.9       1,074.1       834.3       20.0 %     4.3 %     1.7 %     33.8 %
05/16/02
  08/19/02   IPC Advisors SARL   Balanced Care Corp     8.5       118.7       56.3       46.7 %     150.0 %     177.8 %     150.0 %
04/18/02
  06/21/02   Westminster Capital
Inc
  Westminster Capital Inc     22.8       17.2       25.3       19.6 %     38.5 %     48.9 %     49.7 %
12/18/01
  02/28/02   Preserver Group Inc   Preserver Group Inc     16.5       23.6       99.2       47.1 %     36.0 %     45.7 %     29.2 %
11/16/01
  03/04/02   Ernest C Garcia II   Ugly Duckling Corp     43.4       464.2       448.6       39.2 %     41.8 %     42.9 %     38.4 %
10/01/01
  02/13/02   Investor Group   NCH Corp     280.4       262.5       672.8       45.7 %     34.0 %     33.6 %     18.8 %
09/18/01
  01/14/02   Seneca Investments
LLC
  Organic Inc     29.4       13.7       90.4       19.3 %     13.8 %     17.9 %     -17.5 %
08/01/01
  01/18/02   Dwain Neumann   National Home Centers Inc     10.0       25.2       100.6       36.5 %     62.2 %     55.2 %     71.4 %
07/03/01
  12/31/01   Investor Group   Electronic Retailing Sys
Intl
    5.6       21.8       5.1       48.3 %     85.7 %     85.7 %     52.9 %
06/06/01
  12/13/01   Liberty Mutual
Insurance Co
  Liberty Financial Cos Inc     1,669.1       421.1       1,005.0       30.0 %     24.8 %     40.1 %     40.4 %
05/22/01
  12/21/01   Investor Group   Quizno’s Corp     26.0       53.4       48.7       32.0 %     28.4 %     30.1 %     28.7 %
05/09/01
  07/26/02   Investor Group   Pierre Foods Inc     14.5       125.0       232.1       37.0 %     53.8 %     158.1 %     150.0 %
11/10/00
  01/31/01   HCH Acquisition Corp   Holt’s Cigar Holding Inc     34.8       28.1       34.3       26.0 %     57.1 %     44.3 %     54.4 %
 
          Min   $ 4.9     $ 6.5     $ 5.1       19.3 %     4.3 %     1.7 %     -17.5 %
          Mean     184.4       173.1       240.8       34.1 %     45.4 %     54.8 %     51.0 %
          Median     24.4       40.8       94.8       34.3 %     37.2 %     42.4 %     39.7 %
          Max     1,669.1       1,074.1       1,005.0       48.3 %     150.0 %     177.8 %     150.0 %


    Note:
Source: SDC, Bloomberg LP and company filings.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

39


 

G. COMPARABLE GOING PRIVATE TRANSACTIONS ANALYSIS

Comparable Going Private Premiums Paid Implied Valuation
(Includes Completed Going Private transactions, January 2001 to Current with Revenue less than $250 million in
which a minority interest was acquired)
($ in millions)

                                                                     
                Parameters
  Premium Paid
Announcement   Completion           Market   Enterprise   LTM   % Interest            
Date
  Date
  Acquiror
  Target
  Value
  Value
  Revenue
  Acquired
  1 Day
  1 Week
  1 Month
03/24/03
  06/18/03   Management Group   The Judge Group Inc   $ 14.2     $ 15.3     $ 80.8       40.0 %     50.0 %     41.9 %     50.0 %
10/11/02
  02/28/03   Investor Group   Landair Corp     96.2       99.4       102.5       29.0 %     25.0 %     31.0 %     26.2 %
09/03/02
  05/30/03   Sandata Acquisition Corp   Sandata Technologies Inc     4.9       6.5       17.2       30.0 %     21.6 %     21.6 %     39.0 %
05/16/02
  08/19/02   IPC Advisors SARL   Balanced Care Corp     8.5       118.7       56.3       46.7 %     150.0 %     177.8 %     150.0 %
04/18/02
  06/21/02   Westminster Capital Inc   Westminster Capital Inc     22.8       17.2       25.3       19.6 %     38.5 %     48.9 %     49.7 %
12/18/01
  02/28/02   Preserver Group Inc   Preserver Group Inc     16.5       23.6       99.2       47.1 %     36.0 %     45.7 %     29.2 %
09/18/01
  01/14/02   Seneca Investments LLC   Organic Inc     29.4       13.7       90.4       19.3 %     13.8 %     17.9 %     -17.5 %
08/01/01
  01/18/02   Dwain Neumann   National Home Centers Inc     10.0       25.2       100.6       36.5 %     62.2 %     55.2 %     71.4 %
07/03/01
  12/31/01   Investor Group   Electronic Retailing Sys Intl     5.6       21.8       5.1       48.3 %     85.7 %     85.7 %     52.9 %
05/22/01
  12/21/01   Investor Group   Quizno’s Corp     26.0       53.4       48.7       32.0 %     28.4 %     30.1 %     28.7 %
05/09/01
  07/26/02   Investor Group   Pierre Foods Inc     14.5       125.0       232.1       37.0 %     53.8 %     158.1 %     150.0 %
11/10/00
  01/31/01   HCH Acquisition Corp   Holt’s Cigar Holding Inc     34.8       28.1       34.3       26.0 %     57.1 %     44.3 %     54.4 %
 
          Min   $ 4.9     $ 6.5     $ 5.1       19.3 %     13.8 %     17.9 %     -17.5 %
          Mean     23.6       45.7       74.4       34.3 %     51.8 %     63.2 %     57.0 %
          Median     15.5       24.4       68.6       34.3 %     44.3 %     45.0 %     49.9 %
          Max     96.2       125.0       232.1       48.3 %     150.0 %     177.8 %     150.0 %


    Note:
Source: SDC, Bloomberg LP and company filings.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

40


 

G. COMPARABLE GOING PRIVATE TRANSACTIONS ANALYSIS

Comparable Going Private Premiums Paid Implied Valuation
(Includes Completed Going Private transactions, January 2001 to Current with Premia between 0% — 100%
in which a minority interest was acquired)
($ in millions)

                                                                     
                Parameters
  Premium Paid
Announcement   Completion           Market   Enterprise   LTM   % Interest            
Date
  Date
  Acquiror
  Target
  Value
  Value
  Revenue
  Acquired
  1 Day
  1 Week
  1 Month
03/24/03
  06/18/03   Management Group   The Judge Group Inc   $ 14.2     $ 15.3     $ 80.8       40.0 %     50.0 %     41.9 %     50.0 %
10/11/02
  02/28/03   Investor Group   Landair Corp     96.2       99.4       102.5       29.0 %     25.0 %     31.0 %     26.2 %
09/03/02
  05/30/03   Sandata Acquisition Corp   Sandata Technologies Inc     4.9       6.5       17.2       30.0 %     21.6 %     21.6 %     39.0 %
07/26/02
  02/28/03   Samuel J Heyman   International Specialty Prods     674.9       1,074.1       834.3       20.0 %     4.3 %     1.7 %     33.8 %
04/18/02
  06/21/02   Westminster Capital Inc   Westminster Capital Inc     22.8       17.2       25.3       19.6 %     38.5 %     48.9 %     49.7 %
12/18/01
  02/28/02   Preserver Group Inc   Preserver Group Inc     16.5       23.6       99.2       47.1 %     36.0 %     45.7 %     29.2 %
11/16/01
  03/04/02   Ernest C Garcia II   Ugly Duckling Corp     43.4       464.2       448.6       39.2 %     41.8 %     42.9 %     38.4 %
10/01/01
  02/13/02   Investor Group   NCH Corp     280.4       262.5       672.8       45.7 %     34.0 %     33.6 %     18.8 %
08/01/01
  01/18/02   Dwain Neumann   National Home Centers Inc     10.0       25.2       100.6       36.5 %     62.2 %     55.2 %     71.4 %
07/03/01
  12/31/01   Investor Group   Electronic Retailing Sys Intl     5.6       21.8       5.1       48.3 %     85.7 %     85.7 %     52.9 %
06/06/01
  12/13/01   Liberty Mutual Insurance Co   Liberty Financial Cos Inc     1,669.1       421.1       1,005.0       30.0 %     24.8 %     40.1 %     40.4 %
05/22/01
  12/21/01   Investor Group   Quizno’s Corp     26.0       53.4       48.7       32.0 %     28.4 %     30.1 %     28.7 %
11/10/00
  01/31/01   HCH Acquisition Corp   Holt’s Cigar Holding Inc     34.8       28.1       34.3       26.0 %     57.1 %     44.3 %     54.4 %
 
          Min   $ 4.9     $ 6.5     $ 5.1       19.6 %     4.3 %     1.7 %     18.8 %
          Mean     223.0       193.3       267.3       34.1 %     39.2 %     40.2 %     41.0 %
          Median     26.0       28.1       99.2       32.0 %     36.0 %     41.9 %     39.0 %
          Max     1,669.1       1,074.1       1,005.0       48.3 %     85.7 %     85.7 %     71.4 %


    Note:
Source: SDC, Bloomberg LP and company filings.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

41


 

G. COMPARABLE GOING PRIVATE TRANSACTIONS ANALYSIS

Premium Paid Analysis Summary
($ in millions, except per share data)

                 
    Premium to $5.71
    39.1%
  36.9%
Implied Enterprise Value
  $ 56.4     $ 56.1  
Implied Equity Value
  $ 23.4     $ 23.1  
Implied Share Price
  $ 7.94     $ 7.82  


    Note:
Premium Paid Analysis based on: (a.) a one month range of premiums paid between 39.1% to 36.9% and (b.) December 10, 2003 closing share price of $5.71.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

42


 

ADDENDA A – Analysis of Project Tigers’ Relative Stock Performance

One Week Relative Stock Performance

(ONE WEEK RELATIVE STOCK PERFORMANCE LINE GRAPH)


    Note:
Source: FactSet.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

 


 

ADDENDA A – Analysis of Project Tigers’ Relative Stock Performance

One Month Relative Stock Performance

(ONE MONTH RELATIVE STOCK PERFORMANCE LINE GRAPH)


    Note:
Source: FactSet.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

 


 

ADDENDA A – Analysis of Project Tigers’ Relative Stock Performance

Three Months Relative Stock Performance

(THREE MONTHS RELATIVE STOCK PERFORMANCE LINE GRAPH)


    Note:
Source: FactSet.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

 


 

ADDENDA A – Analysis of Project Tigers’ Relative Stock Performance

Six Months Relative Stock Performance

(SIX MONTHS RELATIVE STOCK PERFORMANCE LINE GRAPH)


    Note:
Source: FactSet.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

 


 

ADDENDA A – Analysis of Project Tigers’ Relative Stock Performance

One Year Relative Stock Performance

(ONE YEAR RELATIVE STOCK PERFORMANCE LINE GRAPH)


    Note:
Source: FactSet.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

 


 

ADDENDA B – Analysis of Risk Free Rate

Risk Free Rate Analysis

(RISK FREE RATE ANALYSIS LINE GRAPH)


    Note:
Source: Bloomberg LP.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

 


 

ADDENDA C – Analysis of Project Tigers’ Beta and Trading Volume

Project Tigers’ Historical Average Beta and Daily Trading Volume
(Average data as of December 10, 2003)

                                         
    1 Week
  1 Month
  3 Months
  6 Months
  1 Year
Average Beta
    1.28       1.19       0.49       0.80       0.62  
 
Average Daily
                                       
Trading Volume
    4,197       4,664       3,486       2,521       2,045  


    Note:
Source: Bloomberg LP.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

 


 

ADDENDA D – Legg Mason Transportation Comparable Companies

Legg Mason
Transportation Equity Comps

December 10, 2003

Comparative Valuation Matrix

(figures in $US millions, except per share amounts)

                                                                                                         
                                                            Equity value as a multiple of
                                                            CY EPS    
            Price   Diluted   Market   Total   Cash &          
  Book
Company name (Ticker)
  Rating
  12/10/03
  S/O
  cap.
  Debt
  equiv.
  TEV (a)
  2000A
  2001A
  2002A
  2003E(b)
  2004E(b)
  value
Truckload
                                                                                                       
Celadon Group (CLDN)
  NR     14.28       8.1       115.2       67.5       0.9       181.9     NM   NM     38.6x       25.8x       16.5x       2.2x  
Covenant Transport (CVTI)
  NR     18.81       14.8       278.1       44.7       1.8       320.9       22.9x     NM     24.4x       22.7x       15.9x       1.5x  
Forward Air Corp. (FWRD)
    H/1       26.83       21.6       578.3       1.0       76.7       502.7       29.0x       30.1x       29.2x       23.7x       21.1x       4.2x  
Heartland Express (HTLD)
    H/1       24.36       50.0       1,218.0       0.0       186.5       1,031.5       35.8x       32.5x       28.3x       23.9x       21.6x       3.9x  
J.B. Hunt Transport Svcs. (JBHT)
    H/2       26.01       85.1       2,214.5       204.7       93.2       2,313.1       51.0x       56.5x       39.4x       22.2x       17.3x       3.3x  
Knight Transportation (KNGT)
    H/2       24.30       38.2       929.1       12.2       44.8       896.5       45.8x       38.0x       33.3x       26.1x       22.5x       4.1x  
Landstar System (LSTR)
    H/2       38.00       31.3       1,189.7       104.6       63.7       1,230.6       29.9x       30.4x       25.9x       23.5x       20.4x       9.7x  
Marten Transport (MRTN)
    B/2       16.15       9.6       155.1       31.4       30.7       155.8       12.9x       15.7x       17.7x       11.1x       10.8x       1.1x  
P.A.M. Transportation Svcs. (PTSI)
  NR     20.47       11.3       231.2       25.0       10.3       245.9       20.1x       17.3x       13.2x       18.0x       15.5x       1.5x  
Swift Transportation (SWFT)
    H/2       20.20       86.5       1,747.6       406.1       15.3       2,138.4       24.6x       39.6x       25.9x       21.7x       16.6x       2.2x  
Transport Corp. of America (TCAM)
  NR     7.22       7.2       52.3       68.1       0.1       120.3       15.7x     NM   NM   NM     18.1x       0.9x  
USA Truck (USAK)
  NR     10.45       9.4       98.1       72.4       1.8       168.7     NM   NM     37.3x       26.8x       12.9x       1.3x  
Werner Enterprises (WERN)
    H/1       19.10       81.6       1,558.9       20.0       125.8       1,453.1       31.0x       32.3x       25.4x       21.5x       18.2x       2.2x  
U.S. Xpress Enterprises (XPRSA)
  NR     12.28       14.2       174.0       150.7       6.1       318.6     NM   NM     51.2x       22.7x       15.5x       1.1x  
 
                                                                                                       
 
                           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Min
                            52.3       0.0       0.1       120.3       12.9x       15.7x       13.2x       11.1x       10.8x       0.9x  
Mean
                            752.9       86.3       47.0       791.3       29.0x       32.5x       30.0x       22.3x       17.4x       2.8x  
Median
                            428.2       56.1       23.0       411.8       29.0x       32.3x       28.3x       22.7x       16.9x       2.2x  
Max
                            2,214.5       406.1       186.5       2,313.1       51.0x       56.5x       51.2x       26.8x       22.5x       9.7x  
 
                           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
                                                                                 
            Enterprise value as a multiple of
                       
            TTM   TTM   TTM   TTM   TTM   TTM   PEG   Div.   FCF
Company name (Ticker)
          Revenue
  EBITDA
  EBIT
  ROA
  ROE
  ROIC
  ratio(c)
  Yield
  Yield
Truckload
                                                                               
Celadon Group (CLDN)
            0.5x       6.8x       14.3x       2.3 %     7.6 %     5.0 %     1.27       0.0 %     32.9 %
Covenant Transport (CVTI)
            0.6x       4.5x       11.5x       3.4 %     6.5 %     5.4 %     1.33       0.0 %     9.6 %
Forward Air Corp. (FWRD)
            2.1x       11.4x       13.7x       15.1 %     18.6 %     18.2 %     1.41       0.0 %     4.6 %
Heartland Express (HTLD)
            2.6x       10.5x       14.2x       12.4 %     17.0 %     17.0 %     1.66       0.3 %     2.5 %
J.B. Hunt Transport Svcs. (JBHT)
            1.0x       7.5x       14.6x       6.4 %     13.4 %     10.6 %     1.24       0.0 %     7.4 %
Knight Transportation (KNGT)
            2.8x       10.6x       15.9x       11.4 %     16.1 %     15.2 %     1.13       0.0 %     0.1 %
Landstar System (LSTR)
            0.8x       12.2x       14.0x       13.0 %     38.2 %     23.3 %     1.36       0.0 %     7.6 %
Marten Transport (MRTN)
            0.5x       3.4x       9.8x       3.9 %     8.2 %     6.4 %     0.98       0.0 %     1.5 %
P.A.M. Transportation Svcs. (PTSI)
            0.9x       4.9x       10.1x       5.7 %     9.4 %     8.6 %     0.91       0.0 %     -1.6 %
Swift Transportation (SWFT)
            0.9x       7.6x       16.3x       4.2 %     9.4 %     6.9 %     1.10       0.0 %     5.0 %
Transport Corp. of America (TCAM)
            0.5x       4.6x     NM     -1.2 %     -3.8 %     0.3 %   NA     0.0 %     41.8 %
USA Truck (USAK)
            0.6x       4.3x       18.5x       1.4 %     3.7 %     2.6 %     0.86       0.0 %     13.9 %
Werner Enterprises (WERN)
            1.0x       6.0x       13.1x       6.4 %     10.5 %     10.0 %     1.30       0.6 %     4.7 %
U.S. Xpress Enterprises (XPRSA)
            0.3x       5.2x       13.3x       1.5 %     4.1 %     3.7 %     0.71       0.0 %     31.0 %
 
                                                                               
 
           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Min
            0.3x       3.4x       9.8x       -1.2 %     -3.8 %     0.3 %     0.71       0.0 %     -1.6 %
Mean
            1.1x       7.1x       13.8x       6.1 %     11.4 %     9.5 %     1.17       0.1 %     11.5 %
Median
            0.8x       6.4x       14.0x       5.0 %     9.4 %     7.7 %     1.24       0.0 %     6.2 %
Max
            2.8x       12.2x       18.5x       15.1 %     38.2 %     23.3 %     1.66       0.6 %     41.8 %
 
           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 

      


Notes:

Source: Company data , First Call, and Legg Mason Research estimates.

(a) Total Enterprise Value = Market Capitalization of Equity + Total Debt - Cash + Market Value of Minority Interest.

(b) Legg Mason estimates for those rated and First Call mean estimates for unrated securities.

(c) 2004E P/E divided by First Call mean 3-5 year growth rate.

Excludes non-recurring items.

Calculations may vary due to rounding.

(LEFF MASON LOGO)   Confidential — not for duplication.

 


 

ADDENDA D – Legg Mason Transportation Comparable Companies

Legg Mason
Transportation Equity Comps

December 10, 2003

Comparative Valuation Matrix

(figures in $US millions, except per share amounts)

                                                                                                         
                                                            Equity value as a multiple of
                                                            CY EPS    
            Price   Diluted   Market   Total   Cash &          
  Book
Company name (Ticker)
  Rating
  12/10/03
  S/O
  cap.
  Debt
  equiv.
  TEV (a)
  2000A
  2001A
  2002A
  2003E(b)
  2004E(b)
  value
Less-Than-Truckload
                                                                                                       
Arkansas Best Corp. (ABFS)
    H/2       30.73       25.6       786.1       30.5       3.0       813.6       9.7x       20.9x       19.1x       17.5x       15.0x       2.1x  
CNF Inc. (CNF)
  NR     32.65       50.8       1,657.5       556.5       326.3       1,887.8       12.3x     NM     23.7x       20.5x       15.2x       2.1x  
Old Dominion Freight Line (ODFL)
    B/2       33.65       16.1       542.6       99.3       8.6       633.3       30.6x       35.3x       23.7x       19.8x       15.7x       2.4x  
Roadway Corp. (ROAD)
  NR     52.53       19.9       1,045.9       248.9       132.9       1,161.9       17.6x       32.0x       25.6x       20.8x       16.8x       2.4x  
SCS Transportation (SCST)
  NR     17.04       15.5       264.7       116.5       31.3       349.9       142.0x       43.7x       20.8x       17.8x       13.5x       1.4x  
USF Corp. (USFC)
  NR     32.80       27.3       897.0       250.2       83.4       1,063.8       9.1x       22.9x       21.0x       22.3x       15.8x       1.4x  
Yellow Corp. (YELL)
  NR     32.80       30.2       990.0       319.0       226.5       1,082.5       13.6x       52.1x       31.8x       14.7x       11.8x       2.5x  
 
                                                                                                       
 
                           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Min
                            264.7       30.5       3.0       349.9       9.1x       20.9x       19.1x       14.7x       11.8x       1.4x  
Mean
                            883.4       231.6       116.0       999.0       33.6x       34.5x       23.7x       19.1x       14.8x       2.0x  
Median
                            897.0       248.9       83.4       1,063.8       13.6x       33.7x       23.7x       19.8x       15.2x       2.1x  
Max
                            1,657.5       556.5       326.3       1,887.8       142.0x       52.1x       31.8x       22.3x       16.8x       2.5x  
 
                           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
                                                                                 
            Enterprise value as a multiple of
                       
            TTM   TTM   TTM   TTM   TTM   TTM   PEG   Div.   FCF
Company name (Ticker)
          Revenue
  EBITDA
  EBIT
  ROA
  ROE
  ROIC
  ratio(c)
  Yield
  Yield
Less-Than-Truckload
                                                                               
Arkansas Best Corp. (ABFS)
            0.5x       6.3x       10.4x       6.7 %     13.4 %     11.8 %     1.67       1.0 %     2.2 %
CNF Inc. (CNF)
            0.4x       7.0x       16.0x       4.1 %     15.8 %     10.2 %     1.27       1.2 %     2.4 %
Old Dominion Freight Line (ODFL)
            1.0x       7.5x       13.2x       6.4 %     13.5 %     10.1 %     0.98       0.0 %     -6.6 %
Roadway Corp. (ROAD)
            0.3x       5.8x       9.5x       4.5 %     14.3 %     10.5 %     1.68       0.4 %     6.7 %
SCS Transportation (SCST)
            0.4x       4.6x       10.9x       2.9 %     7.5 %     6.3 %     0.75       0.0 %     16.7 %
USF Corp. (USFC)
            0.5x       5.5x       11.9x       3.3 %     7.1 %     6.5 %     1.75       1.1 %     3.2 %
Yellow Corp. (YELL)
            0.4x       5.7x       10.2x       5.0 %     14.3 %     11.4 %     1.07       0.0 %     2.6 %
 
                                                                               
 
           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Min
            0.3x       4.6x       9.5x       2.9 %     7.1 %     6.3 %     0.75       0.0 %     -6.6 %
Mean
            0.5x       6.1x       11.7x       4.7 %     12.3 %     9.5 %     1.31       0.5 %     3.9 %
Median
            0.4x       5.8x       10.9x       4.5 %     13.5 %     10.2 %     1.27       0.4 %     2.6 %
Max
            1.0x       7.5x       16.0x       6.7 %     15.8 %     11.8 %     1.75       1.2 %     16.7 %
 
           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 

      


Notes:

Source: Company data , First Call, and Legg Mason Research estimates.

(a) Total Enterprise Value = Market Capitalization of Equity + Total Debt - Cash + Market Value of Minority Interest.

(b) Legg Mason estimates for those rated and First Call mean estimates for unrated securities.

(c) 2004E P/E divided by First Call mean 3-5 year growth rate.

Excludes non-recurring items.

Calculations may vary due to rounding.

(LEFF MASON LOGO)   Confidential — not for duplication.

 


 

ADDENDA D – Legg Mason Transportation Comparable Companies

Legg Mason
Transportation Equity Comps

December 10, 2003

Comparative Valuation Matrix

(figures in $US millions, except per share amounts)

                                                                                                         
                                                            Equity value as a multiple of
                                                            CY EPS    
            Price   Diluted   Market   Total   Cash &          
  Book
Company name (Ticker)
  Rating
  12/10/03
  S/O
  cap.
  Debt
  equiv.
  TEV (a)
  2000A
  2001A
  2002A
  2003E(b)
  2004E(b)
  value
Asset-Based Logistics
                                                                                                       
The Brinks Company (BCO)
  NR     21.42       54.3       1,162.1       407.5       138.0       1,328.7       428.4x       24.3x       13.7x       34.5x       18.6x       2.8x  
CNF Inc. (CNF)
  NR     32.65       50.8       1,657.5       556.5       326.3       1,887.8     NM   NM     23.7x       20.5x       15.2x       2.1x  
FedEx Corp. (FDX)
    H/2       72.04       307.7       22,166.5       2,095.0       706.0       23,555.5       29.0x       32.7x       28.6x       24.6x       20.6x       3.0x  
Ryder System (R)
    B/2       31.31       64.2       2,011.0       1,776.0       102.8       3,684.2       16.2x       21.2x       17.0x       15.1x       12.9x       1.6x  
United Parcel Service (UPS)
    H/1       72.83       1,136.9       82,797.5       4,070.0       4,146.0       82,721.5       29.1x       34.7x       34.0x       30.1x       26.2x       6.1x  
 
                                                                                                       
 
                           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Min
                            1,162.1       407.5       102.8       1,328.7       16.2x       21.2x       13.7x       15.1x       12.9x       1.6x  
Mean
                            21,958.9       1,781.0       1,083.8       22,635.5       125.7x       28.2x       23.4x       25.0x       18.7x       3.1x  
Median
                            2,011.0       1,776.0       326.3       3,684.2       29.1x       28.5x       23.7x       24.6x       18.6x       2.8x  
Max
                            82,797.5       4,070.0       4,146.0       82,721.5       428.4x       34.7x       34.0x       34.5x       26.2x       6.1x  
 
                           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Non-Asset-Based Logistics
                                                                                                       
C.H. Robinson Worldwide (CHRW)
    S/1       38.99       86.3       3,364.3       0.0       224.5       3,139.8       47.0x       39.8x       33.9x       29.3x       26.3x       6.9x  
EGL, Inc. (EAGL)
  NR     18.51       47.1       871.0       118.4       132.6       856.8       16.1x       74.9x       74.0x       36.3x       16.7x       2.2x  
Expeditors International (EXPD)
  NR     38.00       110.7       4,206.4       0.1       293.1       3,913.4       50.0x       42.9x       36.9x       34.5x       29.0x       6.9x  
Forward Air Corp. (FWRD)
    H/1       26.83       21.6       578.3       1.0       76.7       502.7       29.0x       30.1x       29.2x       23.7x       21.1x       4.2x  
Hub Group (HUBGE)
  NR     21.70       7.9       170.9       82.0       0.0       252.9       62.0x       361.7x       114.2x     NM   NM     1.2x  
Landstar System (LSTR)
    H/2       38.00       31.3       1,189.7       104.6       63.7       1,230.6       29.9x       30.4x       25.9x       23.5x       20.4x       9.7x  
Pacer International (PACR)
  NR     21.45       38.1       816.7       232.1       4.5       1,044.3       35.8x       79.4x       29.0x       21.0x       17.9x       4.0x  
UTI Worldwide (UTIW)
  NR     37.62       25.8       969.7       44.3       149.6       818.9     NM     49.4x       34.8x       29.8x       24.9x       2.8x  
 
                                                                                                       
 
                           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Min
                            170.9       0.0       0.0       252.9       16.1x       30.1x       25.9x       21.0x       16.7x       1.2x  
Mean
                            1,520.9       72.8       118.1       1,469.9       38.5x       88.6x       47.2x       28.3x       22.3x       4.7x  
Median
                            920.3       63.2       104.6       950.6       35.8x       46.2x       34.4x       29.3x       21.1x       4.1x  
Max
                            4,206.4       232.1       293.1       3,913.4       62.0x       361.7x       114.2x       36.3x       29.0x       9.7x  
 
                           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
                                                                                 
            Enterprise value as a multiple of
                       
            TTM   TTM   TTM   TTM   TTM   TTM   PEG   Div.   FCF
Company name (Ticker)
          Revenue
  EBITDA
  EBIT
  ROA
  ROE
  ROIC
  ratio(c)
  Yield
  Yield
Asset-Based Logistics
                                                                               
The Brinks Company (BCO)
            0.3x       4.4x       12.5x       2.0 %     10.7 %     7.5 %     0.78       0.5 %     8.9 %
CNF Inc. (CNF)
            0.4x       7.0x       16.0x       4.1 %     15.8 %     10.2 %     1.27       1.2 %     2.4 %
FedEx Corp. (FDX)
            1.0x       8.6x       17.1x       5.8 %     12.2 %     10.6 %     1.72       0.3 %     3.1 %
Ryder System (R)
            1.0x       4.1x       12.7x       2.6 %     10.4 %     6.4 %     1.18       2.0 %     13.5 %
United Parcel Service (UPS)
            2.5x       14.3x       19.5x       9.7 %     21.4 %     16.1 %     2.02       1.4 %     3.4 %
 
                                                                               
 
           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Min
            0.3x       4.1x       12.5x       2.0 %     10.4 %     6.4 %     0.78       0.3 %     2.4 %
Mean
            1.1x       7.7x       15.5x       4.8 %     14.1 %     10.1 %     1.39       1.1 %     6.2 %
Median
            1.0x       7.0x       16.0x       4.1 %     12.2 %     10.2 %     1.27       1.2 %     3.4 %
Max
            2.5x       14.3x       19.5x       9.7 %     21.4 %     16.1 %     2.02       2.0 %     13.5 %
 
           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Non-Asset-Based Logistics
                                                                               
C.H. Robinson Worldwide (CHRW)
            5.9x       16.4x       17.4x       13.8 %     24.9 %     24.9 %     1.76       0.8 %     3.3 %
EGL, Inc. (EAGL)
            1.2x       12.0x       21.4x       3.0 %     6.8 %     6.6 %     0.98       0.0 %     1.4 %
Expeditors International (EXPD)
            5.2x       18.9x       21.4x       13.0 %     22.0 %     21.9 %     1.81       0.3 %     0.3 %
Forward Air Corp. (FWRD)
            2.1x       11.4x       13.7x       15.1 %     18.6 %     18.2 %     1.41       0.0 %     4.6 %
Hub Group (HUBGE)
            1.5x       7.6x       11.6x       1.8 %     5.3 %     4.9 %   NA     0.0 %     16.2 %
Landstar System (LSTR)
            0.8x       12.2x       14.0x       13.0 %     38.2 %     23.3 %     1.36       0.0 %     7.6 %
Pacer International (PACR)
            2.8x       11.9x       13.3x       5.7 %     19.1 %     11.3 %     1.19       0.0 %     5.8 %
UTI Worldwide (UTIW)
            1.6x       12.3x       15.7x       6.6 %     13.3 %     11.5 %     1.66       1.1 %     3.4 %
 
                                                                               
 
           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Min
            0.8x       7.6x       11.6x       1.8 %     5.3 %     4.9 %     0.98       0.0 %     0.3 %
Mean
            2.6x       12.9x       16.0x       9.0 %     18.5 %     15.3 %     1.45       0.3 %     5.3 %
Median
            1.9x       12.1x       14.8x       9.8 %     18.9 %     14.9 %     1.41       0.0 %     4.0 %
Max
            5.9x       18.9x       21.4x       15.1 %     38.2 %     24.9 %     1.81       1.1 %     16.2 %
 
           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 

      


Notes:

Source: Company data , First Call, and Legg Mason Research estimates.

(a) Total Enterprise Value = Market Capitalization of Equity + Total Debt - Cash + Market Value of Minority Interest.

(b) Legg Mason estimates for those rated and First Call mean estimates for unrated securities.

(c) 2004E P/E divided by First Call mean 3-5 year growth rate.

Excludes non-recurring items.

Calculations may vary due to rounding.

(LEFF MASON LOGO)   Confidential — not for duplication.

 


 

ADDENDA D – Legg Mason Transportation Comparable Companies

Legg Mason
Transportation Equity Comps

December 10, 2003

Financial Statistics Matrix

(figures in $US millions, except per share amounts)

                                                                         
                    EBITDA   EBIT   PBT    
            TTM  
 
 
  Effective
Company name (Ticker)
  Rating
  Revenue
  TTM
  % margin
  TTM
  % margin
  TTM
  % margin
  tax rate
Truckload
                                                                       
Celadon Group (CLDN)
    NR       369.2       26.8       7.3 %     12.7       3.4 %     7.7       2.1 %     47.7 %
Covenant Transport (CVTI)
    NR       577.0       71.2       12.3 %     28.0       4.8 %     25.5       4.4 %     54.2 %
Forward Air Corp. (FWRD)
    H/1       235.7       44.1       18.7 %     36.8       15.6 %     37.4       15.9 %     36.6 %
Heartland Express (HTLD)
    H/1       394.1       98.4       25.0 %     72.6       18.4 %     74.8       19.0 %     34.0 %
J.B. Hunt Transport Svcs. (JBHT)
    H/2       2,390.4       309.2       12.9 %     158.7       6.6 %     137.5       5.8 %     39.1 %
Knight Transportation (KNGT)
    H/2       316.2       84.6       26.7 %     56.5       17.9 %     56.6       17.9 %     40.4 %
Landstar System (LSTR)
    H/2       1,557.9       100.5       6.5 %     88.0       5.6 %     84.8       5.4 %     37.8 %
Marten Transport (MRTN)
    B/2       325.8       45.4       13.9 %     16.0       4.9 %     14.4       4.4 %     38.0 %
P.A.M. Transportation Svcs. (PTSI)
    NR       284.1       50.5       17.8 %     24.3       8.5 %     22.9       8.1 %     39.7 %
Swift Transportation (SWFT)
    H/2       2,320.2       280.7       12.1 %     131.5       5.7 %     116.5       5.0 %     37.3 %
Transport Corp. of America (TCAM)
    NR       266.0       26.3       9.9 %     0.7       0.3 %     (3.7 )     -1.4 %     38.6 %
USA Truck (USAK)
    NR       291.2       39.2       13.5 %     9.1       3.1 %     7.1       2.4 %     61.5 %
Werner Enterprises (WERN)
    H/1       1,429.9       242.9       17.0 %     111.2       7.8 %     111.8       7.8 %     37.5 %
U.S. Xpress Enterprises (XPRSA)
    NR       920.3       61.5       6.7 %     24.0       2.6 %     13.0       1.4 %     49.8 %
 
                                                                       
 
           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Min
            235.7       26.3       6.5 %     0.7       0.3 %     (3.7 )     -1.4 %     34.0 %
Mean
            834.1       105.8       14.3 %     55.0       7.5 %     50.5       7.0 %     42.3 %
Median
            381.6       66.3       13.2 %     32.4       5.7 %     31.5       5.2 %     38.9 %
Max
            2,390.4       309.2       26.7 %     158.7       18.4 %     137.5       19.0 %     61.5 %
 
           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
                                                                                                 
    CY EPS                            
   
  Growth   Total   Tangible   Total   TTM   TTM   Total
Company name (Ticker)
  2000A
  2001A
  2002A
  2003E(a)
  2004E(a)
  Rate(b)
  Equity
  Equity
  Debt
  CapEx(c)
  FCF(d)
  Assets
Truckload
                                                                                               
Celadon Group (CLDN)
    (0.01 )     (0.05 )     0.37       0.55       0.87       13.0 %     51.6       34.9       67.5       1.7       32.9       168.8  
Covenant Transport (CVTI)
    0.82       0.21       0.77       0.83       1.18       12.0 %     186.8       175.3       44.7       34.3       26.9       339.6  
Forward Air Corp. (FWRD)
    0.92       0.89       0.92       1.13       1.27       15.0 %     138.4       122.3       1.0       2.7       26.7       166.6  
Heartland Express (HTLD)
    0.68       0.75       0.86       1.02       1.13       13.0 %     314.4       314.4       0.0       66.0       30.5       434.4  
J.B. Hunt Transport Svcs. (JBHT)
    0.51       0.46       0.66       1.17       1.50       14.0 %     675.7       675.7       204.7       146.6       156.3       1,297.3  
Knight Transportation (KNGT)
    0.53       0.64       0.73       0.93       1.08       20.0 %     228.7       221.2       12.2       71.6       0.9       323.1  
Landstar System (LSTR)
    1.27       1.25       1.47       1.62       1.86       15.0 %     123.0       91.9       104.6       3.9       80.9       404.8  
Marten Transport (MRTN)
    1.25       1.03       0.91       1.46       1.50       11.0 %     140.4       140.4       31.4       36.6       3.7       250.3  
P.A.M. Transportation Svcs. (PTSI)
    1.02       1.18       1.55       1.14       1.32       17.0 %     154.9       138.4       25.0       35.2       (3.4 )     254.1  
Swift Transportation (SWFT)
    0.82       0.51       0.78       0.93       1.22       15.0 %     808.7       747.8       406.1       180.4       93.2       1,792.1  
Transport Corp. of America (TCAM)
    0.46       (0.05 )     (0.14 )     (0.06 )     0.40       15.0 %     58.4       58.4       68.1       10.9       21.7       179.9  
USA Truck (USAK)
    0.01       0.12       0.28       0.39       0.81       15.0 %     76.3       76.3       72.4       16.4       14.3       198.2  
Werner Enterprises (WERN)
    0.62       0.59       0.75       0.89       1.05       14.0 %     694.3       694.3       20.0       139.9       66.3       1,128.8  
U.S. Xpress Enterprises (XPRSA)
    0.15       (0.08 )     0.24       0.54       0.79       22.0 %     164.1       92.0       150.7       (3.0 )     56.5       434.9  
 
                                                                                               
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Min
    (0.01 )     (0.08 )     (0.14 )     (0.06 )     0.40       11.0 %     51.6       34.9       0.0       (3.0 )     (3.4 )     166.6  
Mean
    0.65       0.53       0.73       0.90       1.14       15.1 %     272.6       256.0       86.3       53.1       43.4       526.6  
Median
    0.65       0.55       0.76       0.93       1.16       15.0 %     159.5       139.4       56.1       34.8       28.7       331.4  
Max
    1.27       1.25       1.55       1.62       1.86       22.0 %     808.7       747.8       406.1       180.4       156.3       1,792.1  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 

      


Notes:

Source: Company data , First Call, and Legg Mason Research estimates.

TTM = “Trailing Twelve Months”.

Excludes non-recurring items.

(a) Legg Mason estimates for those rated and First Call mean estimates for unrated securities.

(b) First Call mean 3-5 year growth estimates.

(c) Capital Expenditures, net of sales.

(d) Free Cash Flow = Cash Flow from Operating Activities - Capital Expenditures, net of sales.

(LEFF MASON LOGO)   Confidential — not for duplication.

 


 

ADDENDA D – Legg Mason Transportation Comparable Companies

Legg Mason
Transportation Equity Comps

December 10, 2003

Financial Statistics Matrix

(figures in $US millions, except per share amounts)

                                                                         
                    EBITDA   EBIT   PBT    
            TTM  
 
 
  Effective
Company name (Ticker)
  Rating
  Revenue
  TTM
  % margin
  TTM
  % margin
  TTM
  % margin
  tax rate
Less-Than Truckload
                                                                       
Arkansas Best Corp. (ABFS)
    H/2       1,521.9       128.2       8.4 %     78.2       5.1 %     76.1       5.0 %     36.1 %
CNF Inc. (CNF)
    NR       5,028.1       268.6       5.3 %     117.7       2.3 %     185.4       3.7 %     37.0 %
Old Dominion Freight Line (ODFL)
    B/2       643.3       84.3       13.1 %     48.1       7.5 %     41.8       6.5 %     39.4 %
Roadway Corp. (ROAD)
    NR       3,321.3       199.2       6.0 %     122.6       3.7 %     94.0       2.8 %     38.7 %
SCS Transportation (SCST)
    NR       814.2       76.2       9.4 %     32.1       3.9 %     23.1       2.8 %     42.0 %
USF Corp. (USFC)
    NR       2,326.2       194.0       8.3 %     89.3       3.8 %     68.9       3.0 %     34.4 %
Yellow Corp. (YELL)
    NR       2,882.1       188.5       6.5 %     105.9       3.7 %     61.0       2.1 %     9.7 %
Min
            643.3       76.2       5.3 %     32.1       2.3 %     23.1       2.1 %     9.7 %
Mean
            2,362.4       162.7       8.2 %     84.8       4.3 %     78.6       3.7 %     33.9 %
Median
            2,326.2       188.5       8.3 %     89.3       3.8 %     68.9       3.0 %     37.0 %
Max
            5,028.1       268.6       13.1 %     122.6       7.5 %     185.4       6.5 %     42.0 %
                                                                                                 
    CY EPS                            
   
  Growth   Total   Tangible   Total   TTM   TTM   Total
Company name (Ticker)
  2000A
  2001A
  2002A
  2003E(a)
  2004E(a)
  Rate(b)
  Equity
  Equity
  Debt
  CapEx(c)
  FCF(d)
  Assets
Less-Than Truckload
                                                                                               
Arkansas Best Corp. (ABFS)
    3.17       1.47       1.61       1.76       2.05       9.0 %     383.4       319.6       30.5       67.7       18.7       720.2  
CNF Inc. (CNF)
    2.65       (0.56 )     1.38       1.59       2.15       12.0 %     771.5       530.9       556.5       92.1       40.2       2,728.4  
Old Dominion Freight Line (ODFL)
    1.10       0.95       1.42       1.70       2.15       16.0 %     224.5       213.8       99.3       95.6       (33.2 )     435.8  
Roadway Corp. (ROAD)
    2.98       1.64       2.05       2.52       3.12       10.0 %     443.6       157.7       248.9       45.8       67.6       1,283.4  
SCS Transportation (SCST)
    0.12       0.39       0.82       0.96       1.26       18.0 %     184.9       169.2       116.5       32.5       41.7       463.6  
USF Corp. (USFC)
    3.61       1.43       1.56       1.47       2.08       9.0 %     646.5       545.7       250.2       140.2       29.4       1,355.0  
Yellow Corp. (YELL)
    2.41       0.63       1.03       2.23       2.78       11.0 %     403.5       375.3       319.0       101.0       23.9       1,275.2  
Min
    0.12       (0.56 )     0.82       0.96       1.26       9.0 %     184.9       157.7       30.5       32.5       (33.2 )     435.8  
Mean
    2.29       0.85       1.41       1.75       2.23       12.1 %     436.8       330.3       231.6       82.1       26.9       1,180.2  
Median
    2.65       0.95       1.42       1.70       2.15       11.0 %     403.5       319.6       248.9       92.1       29.4       1,275.2  
Max
    3.61       1.64       2.05       2.52       3.12       18.0 %     771.5       545.7       556.5       140.2       67.6       2,728.4  

      


Notes:

Source: Company data , First Call, and Legg Mason Research estimates.

TTM = “Trailing Twelve Months”.

Excludes non-recurring items.

(a) Legg Mason estimates for those rated and First Call mean estimates for unrated securities.

(b) First Call mean 3-5 year growth estimates.

(c) Capital Expenditures, net of sales.

(d) Free Cash Flow = Cash Flow from Operating Activities - Capital Expenditures, net of sales.

(LEFF MASON LOGO)   Confidential — not for duplication.

 


 

ADDENDA D – Legg Mason Transportation Comparable Companies

Legg Mason
Transportation Equity Comps

December 10, 2003

Financial Statistics Matrix

(figures in $US millions, except per share amounts)

                                                                         
                    EBITDA   EBIT   PBT    
            TTM  
 
 
  Effective
Company name (Ticker)
  Rating
  Revenue
  TTM
  % margin
  TTM
  % margin
  TTM
  % margin
  tax rate
Asset-Based Logistics
                                                                       
The Brinks Company (BCO)
  NR     3,874.6       304.1       7.8 %     106.7       2.8 %     82.1       2.1 %     38.8 %
CNF Inc. (CNF)
  NR     5,028.1       268.6       5.3 %     117.7       2.3 %     185.4       3.7 %     37.0 %
FedEx Corp. (FDX)
    H/2       22,729.0       2,724.0       12.0 %     1,378.0       6.1 %     1,411.0       6.2 %     39.3 %
Ryder System (R)
    B/2       3,596.5       897.2       24.9 %     290.5       8.1 %     203.4       5.7 %     35.5 %
United Parcel Service (UPS)
    H/1       32,810.0       5,792.0       17.7 %     4,252.0       13.0 %     4,219.0       12.9 %     37.4 %
 
                                                                       
 
           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Min
            3,596.5       268.6       5.3 %     106.7       2.3 %     82.1       2.1 %     35.5 %
Mean
            13,607.6       1,997.2       13.6 %     1,229.0       6.4 %     1,220.2       6.1 %     37.6 %
Median
            5,028.1       897.2       12.0 %     290.5       6.1 %     203.4       5.7 %     37.4 %
Max
            32,810.0       5,792.0       24.9 %     4,252.0       13.0 %     4,219.0       12.9 %     39.3 %
 
           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Non-Asset-Based Logistics
                                                                       
C.H. Robinson Worldwide (CHRW)
    S/1       530.5       191.6       36.1 %     180.1       33.9 %     182.3       34.4 %     38.8 %
EGL, Inc. (EAGL)
  NR     720.4       71.1       9.9 %     40.0       5.6 %     35.0       4.9 %     25.7 %
Expeditors International (EXPD)
  NR     746.7       206.6       27.7 %     183.2       24.5 %     190.1       25.5 %     36.0 %
Forward Air Corp. (FWRD)
    H/1       235.7       44.1       18.7 %     36.8       15.6 %     37.4       15.9 %     36.6 %
Hub Group (HUBGE)
  NR     171.9       33.2       19.3 %     21.8       12.7 %     13.7       8.0 %     47.5 %
Landstar System (LSTR)
    H/2       1,557.9       100.5       6.5 %     88.0       5.6 %     84.8       5.4 %     37.8 %
Pacer International (PACR)
  NR     369.4       87.4       23.7 %     78.8       21.3 %     56.2       15.2 %     37.4 %
UTI Worldwide (UTIW)
  NR     516.6       66.3       12.8 %     52.3       10.1 %     51.6       10.0 %     29.9 %
 
                                                                       
 
           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Min
            171.9       33.2       5.3 %     21.8       2.3 %     13.7       2.1 %     25.7 %
Mean
            7,963.3       1,229.7       16.6 %     790.7       11.2 %     776.6       10.4 %     37.3 %
Median
            3,596.5       268.6       15.6 %     148.9       7.3 %     183.8       6.2 %     37.4 %
Max
            32,810.0       5,792.0       36.1 %     4,252.0       33.9 %     4,219.0       34.4 %     47.5 %
 
           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
                                                                                                 
    CY EPS                            
   
  Growth   Total   Tangible   Total   TTM   TTM   Total
Company name (Ticker)
  2000A
  2001A
  2002A
  2003E(a)
  2004E(a)
  Rate(b)
  Equity
  Equity
  Debt
  CapEx(c)
  FCF(d)
  Assets
Asset-Based Logistics
                                                                                               
The Brinks Company (BCO)
    0.05       0.88       1.56       0.62       1.15       24.0 %     420.8       185.8       407.5       236.1       100.0       2,556.4  
CNF Inc. (CNF)
    2.65       (0.56 )     1.38       1.59       2.15       12.0 %     771.5       530.9       556.5       92.1       40.2       2,728.4  
FedEx Corp. (FDX)
    2.48       2.20       2.52       2.93       3.49       12.0 %     7,327.0       6,264.0       2,095.0       1,249.0       714.0       15,465.0  
Ryder System (R)
    1.93       1.48       1.84       2.07       2.42       11.0 %     1,232.9       1,045.7       1,776.0       531.9       262.9       5,211.7  
United Parcel Service (UPS)
    2.50       2.10       2.14       2.42       2.78       13.0 %     13,678.0       12,483.0       4,070.0       1,740.0       2,760.0       28,332.0  
 
                                                                                               
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Min
    0.05       (0.56 )     1.38       0.62       1.15       11.0 %     420.8       185.8       407.5       92.1       40.2       2,556.4  
Mean
    1.92       1.22       1.89       1.93       2.40       14.4 %     4,686.0       4,101.9       1,781.0       769.8       775.4       10,858.7  
Median
    2.48       1.48       1.84       2.07       2.42       12.0 %     1,232.9       1,045.7       1,776.0       531.9       262.9       5,211.7  
Max
    2.65       2.20       2.52       2.93       3.49       24.0 %     13,678.0       12,483.0       4,070.0       1,740.0       2,760.0       28,332.0  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Non-Asset-Based Logistics
                                                                                               
C.H. Robinson Worldwide (CHRW)
    0.83       0.98       1.15       1.33       1.48       15.0 %     488.9       331.6       0.0       5.7       109.9       867.1  
EGL, Inc. (EAGL)
    1.15       0.25       0.25       0.51       1.11       17.0 %     402.0       307.8       118.4       32.7       11.5       911.9  
Expeditors International (EXPD)
    0.76       0.89       1.03       1.10       1.31       16.0 %     613.4       607.7       0.1       108.0       14.4       1,040.8  
Forward Air Corp. (FWRD)
    0.92       0.89       0.92       1.13       1.27       15.0 %     138.4       122.3       1.0       2.7       26.7       166.6  
Hub Group (HUBGE)
    0.35       0.06       0.19     NA   NA     17.0 %     140.2       (75.0 )     82.0       14.4       17.7       394.3  
Landstar System (LSTR)
    1.27       1.25       1.47       1.62       1.86       15.0 %     123.0       91.9       104.6       3.9       80.9       404.8  
Pacer International (PACR)
    0.60       0.27       0.74       1.02       1.20       15.0 %     204.7       (83.6 )     232.1       3.7       43.6       610.7  
UTI Worldwide (UTIW)
  NA     0.76       1.08       1.26       1.51       15.0 %     346.4       215.1       44.3       17.6       30.6       656.6  
 
                                                                                               
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Min
    0.05       (0.56 )     0.19       0.51       1.11       11.0 %     123.0       (83.6 )     0.0       2.7       11.5       166.6  
Mean
    1.41       0.94       1.43       1.59       1.98       15.2 %     2,847.4       2,476.8       1,092.4       447.1       501.3       6,603.0  
Median
    1.21       0.94       1.43       1.59       1.86       15.0 %     551.1       431.2       407.5       100.1       90.4       2,556.4  
Max
    2.65       2.20       2.52       2.93       3.49       24.0 %     13,678.0       12,483.0       4,070.0       1,740.0       2,760.0       28,332.0  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 

      


Notes:

Source: Company data , First Call, and Legg Mason Research estimates.

TTM = “Trailing Twelve Months”.

Excludes non-recurring items.

(a) Legg Mason estimates for those rated and First Call mean estimates for unrated securities.

(b) First Call mean 3-5 year growth estimates.

(c) Capital Expenditures, net of sales.

(d) Free Cash Flow=Cash Flow from Operating Activities - Capital Expenditures, net of sales.

(LEFF MASON LOGO)   Confidential — not for duplication.

 


 

ADDENDA D – Legg Mason Transportation Comparable Companies

Legg Mason
Transportation Equity Comps

December 10, 2003

Debt Ratios

                                                                         
                            Balance sheet debt
            Debt Rating  
           
  Total debt/   Net debt/   Total debt/   Total debt/   Total debt/   Total debt/
Company name (Ticker)
  Rating
  S&P
  Moody’s
  TTM EBITDA
  TTM EBITDA
  (EBITDA-CapEx)
  TTM EBIT
  Total book cap.
  Total market cap.
Truckload
                                                                       
Celadon Group (CLDN)
  NR   NA   NA     2.5x       2.5x       2.7x       5.3x       56.7 %     36.9 %
Covenant Transport (CVTI)
  NR   NA   NA     0.6x       0.6x       1.2x       1.6x       19.3 %     13.8 %
Forward Air Corp. (FWRD)
    H/1     NA   NA     0.0x     NM          0.0x       0.0x       0.7 %     0.2 %
Heartland Express (HTLD)
    H/1     NA   NA     0.0x     NM          0.0x       0.0x       0.0 %     0.0 %
J.B. Hunt Transport Svcs. (JBHT)
    H/2     BBB   Baa3     0.7x       0.4x       1.3x       1.3x       23.3 %     8.5 %
Knight Transportation (KNGT)
    H/2     NA   NA     0.1x     NM          0.9x       0.2x       5.1 %     1.3 %
Landstar System (LSTR)
    H/2     NA   NA     1.0x       0.4x       1.1x       1.2x       46.0 %     8.1 %
Marten Transport (MRTN)
    B/2     NA   NA     0.7x       0.0x       3.6x       2.0x       18.3 %     16.8 %
P.A.M. Transportation Svcs. (PTSI)
  NR   NA   NA     0.5x       0.3x       1.6x       1.0x       13.9 %     9.7 %
Swift Transportation (SWFT)
    H/2     NA   NA     1.4x       1.4x       4.0x       3.1x       33.4 %     18.9 %
Transport Corp. of America (TCAM)
  NR   NA   NA     2.6x       2.6x       4.4x       93.7x       53.9 %     56.6 %
USA Truck (USAK)
  NR   NA   NA     1.8x       1.8x       3.2x       7.9x       48.7 %     42.5 %
Werner Enterprises (WERN)
    H/1     NA   NA     0.1x     NM          0.2x       0.2x       2.8 %     1.3 %
U.S. Xpress Enterprises (XPRSA)
  NR   NA   NA     2.4x       2.4x       2.3x       6.3x       47.9 %     46.4 %
 
                                                                       
 
                           
 
     
 
     
 
     
 
     
 
     
 
 
Min
                            0.0x       0.0x       0.0x       0.0x       0.0 %     0.0 %
Mean
                            1.0x       1.2x       1.9x       8.8x       26.4 %     18.6 %
Median
                            0.7x       1.0x       1.4x       1.4x       21.3 %     11.8 %
Max
                            2.6x       2.6x       4.4x       93.7x       56.7 %     56.6 %
 
                           
 
     
 
     
 
     
 
     
 
     
 
 
                                                                 
    Total debt (including leases)
       
    Total debt/   Net debt/   Total debt/   Total debt/   Total debt/   Total debt/   TTM EBITDA/   TTM EBIT/
Company name (Ticker)
  TTM EBITDA
  TTM EBITDA
  (EBITDA-CapEx)
  TTM EBIT
  Total book cap.
  Total market cap.
  TTM Interest
  TTM Interest
Truckload
                                                               
Celadon Group (CLDN)
    5.9x       5.9x       6.3x       12.5x       75.5 %     58.0 %     5.5x       2.6x  
Covenant Transport (CVTI)
    1.3x       1.3x       2.5x       3.3x       33.3 %     25.1 %     26.8x       10.5x  
Forward Air Corp. (FWRD)
    0.6x     NM          0.6x       0.7x       15.8 %     4.3 %   NM        NM     
Heartland Express (HTLD)
    0.0x     NM          0.0x       0.0x       0.2 %     0.1 %   NM        NM     
J.B. Hunt Transport Svcs. (JBHT)
    1.4x       1.1x       2.6x       2.7x       38.5 %     16.0 %     15.0x       7.7x  
Knight Transportation (KNGT)
    0.3x     NM          1.9x       0.4x       9.7 %     2.6 %   NM        NM     
Landstar System (LSTR)
    1.2x       0.6x       1.2x       1.4x       49.3 %     9.1 %     31.7x       27.7x  
Marten Transport (MRTN)
    0.7x       0.0x       3.6x       2.0x       18.3 %     16.8 %     29.6x       10.4x  
P.A.M. Transportation Svcs. (PTSI)
    0.7x       0.5x       2.5x       1.5x       19.5 %     14.0 %     38.1x       18.3x  
Swift Transportation (SWFT)
    1.8x       1.8x       5.2x       3.9x       39.1 %     22.9 %     19.2x       9.0x  
Transport Corp. of America (TCAM)
    2.7x       2.7x       4.7x       99.0x       55.2 %     57.9 %     6.0x       0.2x  
USA Truck (USAK)
    1.9x       1.8x       3.2x       8.0x       49.0 %     42.8 %     14.8x       3.5x  
Werner Enterprises (WERN)
    0.1x     NM          0.2x       0.2x       2.8 %     1.3 %   NM        NM     
U.S. Xpress Enterprises (XPRSA)
    4.3x       4.2x       4.1x       11.0x       61.7 %     60.3 %     5.6x       2.2x  
 
                                                               
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Min
    0.0x       0.0x       0.0x       0.0x       0.2 %     0.1 %     5.5x       0.2x  
Mean
    1.6x       2.0x       2.8x       10.5x       33.4 %     23.7 %     19.2x       9.2x  
Median
    1.3x       1.5x       2.6x       2.3x       35.9 %     16.4 %     17.1x       8.4x  
Max
    5.9x       5.9x       6.3x       99.0x       75.5 %     60.3 %     38.1x       27.7x  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 

      


Notes:

Source: Company data , Bloomberg, and Legg Mason Research estimates.

Capitalization of off-balance sheet leases utilizes S&P methodology.

(LEFF MASON LOGO)   Confidential — not for duplication.

 


 

ADDENDA D – Legg Mason Transportation Comparable Companies

Legg Mason
Transportation Equity Comps

December 10, 2003

Debt Ratios

                                                                         
            Debt Rating   Balance sheet debt
           
  Total debt/   Net debt/   Total debt/   Total debt/   Total debt/   Total debt/
Company name (Ticker)
  Rating
  S&P
  Moody’s
  TTM EBITDA
  TTM EBITDA
  (EBITDA-CapEx)
  TTM EBIT
  Total book cap.
  Total market cap.
Less-Than-Truckload
                                                                       
Arkansas Best Corp. (ABFS)
    H/2     BBB   Baa3     0.2x       0.2x       0.5x       0.4x       7.4 %     3.7 %
CNF Inc. (CNF)
  NR   BBB-   Baa3     2.1x       0.9x       3.2x       4.7x       41.9 %     25.1 %
Old Dominion Freight Line (ODFL)
    B/2     NA   NA     1.2x       1.1x       -8.8x       2.1x       30.7 %     15.5 %
Roadway Corp. (ROAD)
  NR   BBB   Baa3     1.2x       0.6x       1.6x       2.0x       35.9 %     19.2 %
SCS Transportation (SCST)
  NR   NA   NA     1.5x       1.1x       2.7x       3.6x       38.7 %     30.6 %
USF Corp. (USFC)
  NR   BBB+   Baa1     1.3x       0.9x       4.6x       2.8x       27.9 %     21.8 %
Yellow Corp. [YELL]
  NR   BBB   Ba1     1.7x       0.5x       3.6x       3.0x       44.1 %     24.4 %
 
                                                                       
 
                           
 
     
 
     
 
     
 
     
 
     
 
 
Min
                            0.2x       0.2x       -8.8x       0.4x       7.4 %     3.7 %
Mean
                            1.3x       0.7x       1.1x       2.7x       32.4 %     20.0 %
Median
                            1.3x       0.9x       2.7x       2.8x       35.9 %     21.8 %
Max
                            2.1x       1.1x       4.6x       4.7x       44.1 %     30.6 %
 
                           
 
     
 
     
 
     
 
     
 
     
 
 
                                                                 
    Total debt (including leases)
    Total debt/   Net debt/   Total debt/   Total debt/   Total debt/   Total debt/   TTM EBITDA/   TTM EBIT/
Company name (Ticker)
  TTM EBITDA
  TTM EBITDA
  (EBITDA-CapEx)
  TTM EBIT
  Total book cap.
  Total market cap.
  TTM Interest
  TTM Interest
Less-Than-Truckload
                                                               
Arkansas Best Corp. (ABFS)
    0.5x       0.5x       1.0x       0.8x       14.0 %     7.4 %     26.0x       15.9x  
CNF Inc. (CNF)
    2.9x       1.7x       4.5x       6.7x       50.6 %     32.3 %     10.5x       4.6x  
Old Dominion Freight Line (ODFL)
    1.4x       1.3x       -10.3x       2.4x       34.1 %     17.6 %     14.1x       8.0x  
Roadway Corp. (ROAD)
    1.8x       1.1x       2.3x       2.9x       44.5 %     25.4 %     9.0x       5.5x  
SCS Transportation (SCST)
    1.8x       1.4x       3.1x       4.2x       42.4 %     33.9 %     8.2x       3.4x  
USF Corp. (USFC)
    1.6x       1.4x       5.6x       3.4x       31.9 %     25.2 %     10.1x       4.6x  
Yellow Corp. [YELL]
    2.0x       1.6x       4.3x       3.5x       48.2 %     27.5 %     14.4x       8.1x  
 
                                                               
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Min
    0.5x       0.5x       -10.3x       0.8x       14.0 %     7.4 %     8.2x       3.4x  
Mean
    1.7x       1.3x       1.5x       3.4x       37.9 %     24.2 %     13.2x       7.2x  
Median
    1.8x       1.4x       3.1x       3.4x       42.4 %     25.4 %     10.5x       5.5x  
Max
    2.9x       1.7x       5.6x       6.7x       50.6 %     33.9 %     26.0x       15.9x  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 

      


Notes:

Source: Company data , Bloomberg, and Legg Mason Research estimates.

Capitalization of off-balance sheet leases utilizes S&P methodology.

(LEFF MASON LOGO)   Confidential — not for duplication.

 


 

ADDENDA D – Legg Mason Transportation Comparable Companies

Legg Mason
Transportation Equity Comps

December 10, 2003

Debt Ratios

                                                                         
            Debt Rating   Balance sheet debt
           
  Total debt/   Net debt/   Total debt/   Total debt/   Total debt/   Total debt/
Company name (Ticker)
  Rating
  S&P
  Moody’s
  TTM EBITDA
  TTM EBITDA
  (EBITDA-CapEx)
  TTM EBIT
  Total book cap.
  Total market cap.
Asset-Based Logistics
                                                                       
The Brinks Company (BCO)
  NR   BBB   NA     1.3x       0.9x       6.0x       3.8x       49.2 %     26.0 %
CNF Inc. (CNF)
  NR   BBB-   Baa3     2.1x       0.9x       3.2x       4.7x       41.9 %     25.1 %
FedEx Corp. (FDX)
    H/2     BBB   Baa2     0.8x       0.5x       1.4x       1.5x       22.2 %     8.6 %
Ryder System (R)
    B/2     BBB   Baa1     2.0x       1.9x       4.9x       6.1x       59.0 %     46.9 %
United Parcel Service (UPS)
    H/1     AAA   Aaa     0.7x     NM          1.0x       1.0x       22.9 %     4.7 %
 
                                                                       
 
                           
 
     
 
     
 
     
 
     
 
     
 
 
Min
                            0.7x       0.5x       1.0x       1.0x       22.2 %     4.7 %
Mean
                            1.4x       1.0x       3.3x       3.4x       39.1 %     22.3 %
Median
                            1.3x       0.9x       3.2x       3.8x       41.9 %     25.1 %
Max
                            2.1x       1.9x       6.0x       6.1x       59.0 %     46.9 %
 
                           
 
     
 
     
 
     
 
     
 
     
 
 
Non-Asset-Based Logistics
                                                                       
C.H. Robinson Worldwide (CHRW)
    S/1     NA   NA     0.0x     NM     0.0x       0.0x       0.0 %     0.0 %
EGL, Inc. (EAGL)
  NR   NA   NA     1.7x     NM     3.1x       3.0x       22.8 %     12.0 %
Expeditors International (EXPD)
  NR   NA   NA     0.0x     NM     0.0x       0.0x       0.0 %     0.0 %
Forward Air Corp. (FWRD)
    H/1     NA   NA     0.0x     NM     0.0x       0.0x       0.7 %     0.2 %
Hub Group (HUBGE)
  NR   NA   NA     2.5x          2.5x       4.4x       3.8x       36.9 %     32.4 %
Landstar System (LSTR)
    H/2     NA   NA     1.0x          0.4x       1.1x       1.2x       46.0 %     8.1 %
Pacer International (PACR)
  NR   BB-     B2       2.7x          2.6x       2.8x       2.9x       53.1 %     22.1 %
UTI Worldwide (UTIW)
  NR   NA   NA     0.7x     NM     0.9x       0.8x       11.3 %     4.4 %
 
                                                                       
 
                           
 
     
 
     
 
     
 
     
 
     
 
 
Min
                            0.0x       0.4x       0.0x       0.0x       0.0 %     0.0 %
Mean
                            1.1x       1.8x       1.5x       1.5x       21.4 %     9.9 %
Median
                            0.9x       2.5x       1.0x       1.0x       17.0 %     6.2 %
Max
                            2.7x       2.6x       4.4x       3.8x       53.1 %     32.4 %
 
                           
 
     
 
     
 
     
 
     
 
     
 
 
                                                                 
    Total debt (including leases)
       
    Total debt/   Net debt/   Total debt/   Total debt/   Total debt/   Total debt/   TTM EBITDA/   TTM EBIT/
Company name (Ticker)
  TTM EBITDA
  TTM EBITDA
  (EBITDA-CapEx)
  TTM EBIT
  Total book cap.
  Total market cap.
  TTM Interest
  TTM Interest
Asset-Based Logistics
                                                               
The Brinks Company (BCO)
    2.5x       2.1x       11.4x       7.3x       64.8 %     40.0 %     14.4x       5.1x  
CNF Inc. (CNF)
    2.9x       1.7x       4.5x       6.7x       50.6 %     32.3 %     10.5x       4.6x  
FedEx Corp. (FDX)
    3.7x       3.5x       6.9x       7.4x       58.2 %     31.5 %     17.7x       8.9x  
Ryder System (R)
    2.6x       2.5x       6.3x       7.9x       65.1 %     53.4 %     10.3x       3.3x  
United Parcel Service (UPS)
    0.9x       0.2x       1.2x       1.2x       26.9 %     5.7 %     69.8x       51.2x  
 
                                                               
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Min
    0.9x       0.2x       1.2x       1.2x       26.9 %     5.7 %     10.3x       3.3x  
Mean
    2.5x       2.0x       6.1x       6.1x       53.1 %     32.6 %     24.5x       14.6x  
Median
    2.6x       2.1x       6.3x       7.3x       58.2 %     32.3 %     14.4x       5.1x  
Max
    3.7x       3.5x       11.4x       7.9x       65.1 %     53.4 %     69.8x       51.2x  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Non-Asset-Based Logistics
                                                               
C.H. Robinson Worldwide (CHRW)
    0.1x     NM     0.1x       0.2x       5.3 %     0.8 %   NM   NM
EGL, Inc. (EAGL)
    6.8x          4.9x       12.5x       12.0x       54.5 %     35.6 %        7.9x          4.5x  
Expeditors International (EXPD)
    0.3x     NM     0.7x       0.4x       9.8 %     1.6 %   NM   NM
Forward Air Corp. (FWRD)
    0.6x     NM     0.6x       0.7x       15.8 %     4.3 %   NM   NM
Hub Group (HUBGE)
    3.7x          3.7x       6.4x       5.6x       46.4 %     41.5 %        4.2x          2.7x  
Landstar System (LSTR)
    1.2x          0.6x       1.2x       1.4x       49.3 %     9.1 %      31.7x        27.7x  
Pacer International (PACR)
    5.3x          5.3x       5.6x       5.9x       69.5 %     36.3 %        3.9x          3.5x  
UTI Worldwide (UTIW)
    1.2x     NM     1.6x       1.5x       18.5 %     7.5 %   NM   NM
 
                                                               
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Min
    0.1x       0.6x       0.1x       0.2x       5.3 %     0.8 %     3.9x       2.7x  
Mean
    2.4x       3.6x       3.6x       3.4x       33.6 %     17.1 %     11.9x       9.6x  
Median
    1.2x       4.3x       1.4x       1.4x       32.4 %     8.3 %     6.0x       4.0x  
Max
    6.8x       5.3x       12.5x       12.0x       69.5 %     41.5 %     31.7x       27.7x  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 

      


Notes:

Source: Company data , Bloomberg, and Legg Mason Research estimates.

Capitalization of off-balance sheet leases utilizes S&P methodology.

 

(LEFF MASON LOGO)   Confidential — not for duplication.

 


 

-DRAFT-

(LEFF MASON LOGO)

Valuation Findings
as Presented to the

Special Committee of the
Board of Directors
of
Project Tigers

December 15, 2003

Legg Mason Wood Walker
Incorporated

Confidential — not for duplication.

 


 

TABLE OF CONTENTS

I.   Introduction

A.   Legg Mason’s Engagement
 
B.   Overview of Project Tigers

II.   Valuation Analysis

A.   Summary Analysis
 
B.   Purchase Price Ratio Matrix
 
C.   Comparable Public Company Analysis
 
D.   Comparable M&A Transactions Analysis
 
E.   Discounted Cash Flow Analysis
 
F.   Leveraged Buyout Analysis
 
G.   Comparable Going Private Transaction Analysis

     Addenda

A.   Analysis of Project Tigers’ Relative Stock Performance
 
B.   Analysis of Risk Free Rate
 
C.   Analysis of Project Tigers’ Beta and Trading Volume
 
D.   Legg Mason Transportation Comparable Companies
 
     

(LEFF MASON LOGO)   Confidential — not for duplication.

 

EX-99.(C)(4) 4 g86864a2exv99wxcyx4y.htm EX-99.(C)(4) PRESENTATION: LEGG MASON WOOD WALKER EX-99.(C)(4) PRESENTATION: LEGG MASON WOOD WALKER
 

-DRAFT-

Exhibit 99(c)(4)

I.  INTRODUCTION














(LEGG MASON LOGO)   Confidential – not for duplication.

1


 

-DRAFT-

A.  LEGG MASON’S ENGAGEMENT

     
o
  Legg Mason Wood Walker, Incorporated (“Legg Mason”) has been engaged by the Independent Committee of the Board of Directors (“Board”) of Project Tigers (the “Company”) to provide valuation analysis and its opinion as to the fairness, from a financial point of view, to the holders of the Company’s common stock (other than holders who are participants in the transaction, the “Rollover Shareholders”) of the amount of consideration to be received by such holders in a proposal presented by the investor group (the “Investor Group”).
 
   
o
  This summary presentation is intended as an overview of our analysis of Project Tigers. It is comprised of the following sections:

    Valuation Analysis:

      – Comparable public company analysis
 
      – Comparable M&A transactions analysis
 
      – Discounted cash flow analysis
 
      – Leveraged buyout analysis
 
      – Comparable going private transactions analysis

(LEGG MASON LOGO)   Confidential — not for duplication.

2


 

-DRAFT-

A.  LEGG MASON’S ENGAGEMENT

In connection with our review of the proposed Transaction, we have assumed and relied upon the accuracy and completeness of all financial information supplied to us by or on behalf of the management of the Company, and all publicly available information, and management’s assurance that they are unaware of any facts that would make the information provided to us misleading. We have not independently verified such information. We have also relied upon the management of the Company as to the reasonableness and achievability of the financial projections (and the assumptions and bases thereof) provided to us, and we have assumed that such projections have been reasonably prepared on bases reflecting the best currently available estimates and judgments as to the future operating performance of Project Tigers.

Our work is necessarily based upon information made available to us by Company management and economic and other conditions and circumstances as of September ___, 2003. The analysis which Legg Mason performed was based on the most recent financial information provided by the management of the Company. It is understood that subsequent developments may affect our analysis, and that we have no obligation to update, reissue or reaffirm our analysis.

This summary of information does not constitute an opinion and is provided for informational purposes only. We believe that our analysis should be considered as a whole, and that selecting portions of our analysis and of the factors considered by us, without considering all factors and analyses, could create a misleading view of the processes underlying our opinion. In our analysis, we made numerous assumptions with respect to industry performance, general business and economic conditions, and other matters, many of which are beyond the control of the Company.

Further, we are not making a recommendation to the shareholders as to whether or not they should vote for or against the Transaction or seek their statutory dissenters’ rights in respect of the Transaction. Also, this analysis does not constitute a recommendation of the Transaction over any other alternative transaction (including the alternative not to effect the Transaction) that may be available to Project Tigers.

(LEGG MASON LOGO)   Confidential — not for duplication.

3


 

-DRAFT-

B.  OVERVIEW OF PROJECT TIGERS

      o The investment community’s view of Project Tigers:

    Inconsistent financial performer
 
    Market has not validated business model
 
    Market capitalization limits institutional involvement
 
     

(LEGG MASON LOGO)   Confidential — not for duplication.

4


 

-DRAFT-

B.  OVERVIEW OF PROJECT TIGERS

Project Tigers’ Stock Price
(Trailing 12 Months)

(PIE CHART)



   
(LEGG MASON LOGO)   Confidential — not for duplication.

5


 

B.  OVERVIEW OF PROJECT TIGERS

o Based on a 12 month trading volume analysis, 90.6% of Project Tigers shares have traded below $5.00.

     
(12 MONTH TRADING VOLUME ANALYSIS)   (3 MONTH TRADING VOLUME ANALYSIS)


    Note:
Source: Bloomberg LP.


   
(LEGG MASON LOGO)   Confidential — not for duplication.

6


 

-DRAFT-

B.  OVERVIEW OF PROJECT TIGERS

Historical and Projected Income Statements
($ in millions)

                                                                         
    Historical
  Projected
    Years Ended December 31,
  LTM
  Years Ended December 31,
    2000   2001   2002   6/30/03   2003   2004   2005   2006   2007
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Revenue
  $ 131.6     $ 127.6     $ 127.8     $ 131.1     $ 133.1     $ 139.0     $ 145.9     $ 153.2     $ 160.9  
% Growth
    -1.1 %     -3.1 %     0.2 %     2.6 %     4.2 %     4.4 %     5.0 %     5.0 %     5.0 %
Operating Expenses
    128.8       125.3       125.1       128.1       130.3       133.8       140.0       146.3       152.9  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total Operating Income
    2.8       2.2       2.7       3.0       2.8       5.1       5.9       6.9       7.9  
Operating Ratio
    97.8 %     98.3 %     97.9 %     97.7 %     97.9 %     96.3 %     95.9 %     95.5 %     95.1 %
Net Interest Expense
    3.9       2.7       1.8       1.4       1.2       1.4       1.4       1.4       1.5  
Other Income
    0.1       0.1       (0.1 )     (0.1 )     (0.1 )     (0.0 )     (0.0 )     (0.0 )     (0.0 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Income Before Income Taxes
    (1.0 )     (0.4 )     0.9       1.5       1.6       3.7       4.5       5.4       6.5  
Provision (Benefit) for Income Taxes
    (0.0 )     0.0       0.5       0.7       0.7       1.4       1.7       2.1       2.5  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Net Income
  $ (1.0 )   $ (0.4 )   $ 0.5     $ 0.8     $ 0.9     $ 2.3     $ 2.7     $ 3.3     $ 4.0  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Additional Operating Data:
                                                                       
Depreciation & Amortization
  $ 11.6     $ 12.3     $ 11.6     $ 11.3     $ 11.4     $ 12.1     $ 12.6     $ 13.0     $ 13.4  
EBITDA
  $ 14.4     $ 14.5     $ 14.3     $ 14.3     $ 14.2     $ 17.3     $ 18.5     $ 19.9     $ 21.3  


    Note:
2002-2007 projected income statements provided by Company management.


   
(LEGG MASON LOGO)   Confidential — not for duplication.

7


 

-DRAFT-

B.  OVERVIEW OF PROJECT TIGERS

Historical Income Statements
($ in thousands, except per share data)

                                                                 
    Historical
    Years Ended December 31,
    1989
  1990
  1991
  1992
  1993
  1994
  1995
  1996
Revenue
  $ 30,808     $ 34,729     $ 35,860     $ 42,402     $ 50,340     $ 59,132     $ 61,866     $ 65,523  
% Growth
  NA     12.7 %     3.3 %     18.2 %     18.7 %     17.5 %     4.6 %     5.9 %
Operating Expenses
    28,752       31,906       33,096       38,957       46,044       53,860       57,765       62,873  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Operating Income
  $ 2,056     $ 2,823     $ 2,764     $ 3,445     $ 4,296     $ 5,272     $ 4,101     $ 2,650  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Operating Ratio
    93.3 %     91.9 %     92.3 %     91.9 %     91.5 %     91.1 %     93.4 %     96.0 %
Depreciation & Amortization (1)
  $ 3,412     $ 3,689     $ 4,101     $ 4,792     $ 5,516     $ 6,451     $ 7,296     $ 9,261  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
EBITDA
  $ 5,468     $ 6,512     $ 6,865     $ 8,237     $ 9,812     $ 11,724     $ 11,396     $ 11,912  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Enterprise Value Calculation:
                                                               
Number of Fully Diluted Shares (2)
    3,040,000       3,011,429       3,013,333       3,025,641       3,000,000       3,523,677       3,823,000       3,726,496  
Share Price on 12/31 (3)
  $ 5.42     $ 5.42     $ 5.42     $ 5.42     $ 5.42     $ 9.75     $ 7.25     $ 7.00  
Equity Value
  $ 16,467     $ 16,312     $ 16,322     $ 16,389     $ 16,250     $ 34,356     $ 27,717     $ 26,085  
Plus: Net Debt (4)
  $ 9,814     $ 9,814     $ 9,814     $ 9,814     $ 9,814     $ 7,307     $ 11,837     $ 16,230  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Enterprise Value
  $ 26,280     $ 26,125     $ 26,136     $ 26,202     $ 26,064     $ 41,663     $ 39,553     $ 42,315  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 

     

[Additional columns below]

[Continued from above table, first column(s) repeated]

                                                         
    Historical
                                                    LTM
    1997   1998   1999   2000   2001   2002   6/30/03
Revenue
  $ 77,215     $ 118,123     $ 133,137     $ 131,630     $ 127,560     $ 127,792     $ 131,149  
% Growth
    17.8 %     53.0 %     12.7 %     -1.1 %     -3.1 %     0.2 %     2.6 %
Operating Expenses
    72,124       110,797       124,920       128,796       125,340       125,054       128,134  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Operating Income
  $ 5,091     $ 7,327     $ 8,218     $ 2,834     $ 2,219     $ 2,738     $ 3,015  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Operating Ratio
    93.4 %     93.8 %     93.8 %     97.8 %     98.3 %     97.9 %     97.7 %
Depreciation & Amortization (1)
  $ 9,181     $ 10,320     $ 10,720     $ 11,611     $ 12,290     $ 11,605     $ 11,311  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
EBITDA
  $ 14,272     $ 17,647     $ 18,937     $ 14,445     $ 14,509     $ 14,343     $ 14,326  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Enterprise Value Calculation:
                                                       
Number of Fully Diluted Shares (2)
    3,726,591       4,090,175       3,507,311       3,096,292       2,829,614       2,788,234       2,837,684  
Share Price on 12/31 (3)
  $ 8.38     $ 6.25     $ 6.50     $ 2.38     $ 3.00     $ 3.75     $ 4.25  
Equity Value
  $ 31,210     $ 25,564     $ 22,798     $ 7,354     $ 8,489     $ 10,456     $ 12,060  
Plus: Net Debt (4)
  $ 21,749     $ 24,521     $ 47,927     $ 45,583     $ 36,965     $ 33,332     $ 29,975  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Enterprise Value
  $ 52,960     $ 50,085     $ 70,725     $ 52,937     $ 45,454     $ 43,788     $ 42,035  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 


Note:

(1)   Deprecation and Amortization in FY 1989-1993 are from the Income Statement. For all subsequent periods, Depreciation and Amortization are from the Statement of Cash Flows.
 
(2)   Fully Diluted Shares in FY 1989-1992 are calculated by dividing Pro Forma Net Income by Pro Form a Net Income per Share.
 
(3)   Assumes Share Price on 12/31 in FY 1989-1993 is equal to average Share Price for all subsequent periods.
 
(4)   Assumes Net Debt in FY 1989-1992 is equal to Net Debt in FY 1993. Assumes Cash balance in FY 1989-1993 is equal to Cash balance in FY 1994.



   
(LEGG MASON LOGO)   Confidential — not for duplication.

8


 

-DRAFT-

B.  OVERVIEW OF PROJECT TIGERS

Project Tigers’ Stock Price
(Since IPO)

(STOCK PRICE PIE CHART)



   
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9


 

-DRAFT-

II.  VALUATION ANALYSIS

     














   
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10


 

-DRAFT-

A.  SUMMARY ANALYSIS

We utilized four approaches to estimate the value of Project Tigers, including: (i) Comparable Public Company Analysis; (ii) Comparable M&A Transactions Analysis; (iii) Discounted Cash Flow (“DCF”) Analysis; and (iv) Leveraged Buyout (“LBO”) Analysis. In addition, we analyzed comparable going private transactions from May 2000 to the present.

In this section, we discuss each analysis individually and derive implied share prices for Project Tigers based on each analysis.

Summary Valuation Analysis
($ in millions, except per share data)

                 
Implied Enterprise Value
Analysis   Low   High
Comparable Public Company
  $ 42.3     $ 71.1  
Comparable M&A Transactions
  $ 54.0     $ 81.0  
Discounted Cash Flow
  $ 51.9     $ 57.0  
Leveraged Buyout
  $ 48.3     $ 51.2  
Median
  $ 48.2     $ 76.0  
                 
Implied Equity Value
Analysis   Low   High
Comparable Public Company
  $ 11.0     $ 39.8  
Comparable M&A Transactions
  $ 22.7     $ 49.7  
Discounted Cash Flow
  $ 20.7     $ 25.7  
Leveraged Buyout
  $ 17.0     $ 19.9  
Median
  $ 16.9     $ 44.7  
                 
Implied Share Price Value
Analysis   Low   High
Comparable Public Company
  $ 3.89     $ 14.02  
Comparable M&A Transactions
  $ 8.01     $ 17.52  
Discounted Cash Flow
  $ 7.29     $ 9.06  
Leveraged Buyout
  $ 5.99     $ 7.01  
Median
  $ 6.64     $ 11.54  



    Note:
In each valuation analysis we assumed that the number of diluted shares outstanding equals 2,837,684.


   
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11


 

-DRAFT-

B.  PURCHASE PRICE RATIO MATRIX

Enterprise Value Purchase Multiples Summary
($ in millions)

                                                                                 
Implied Total Enterprise Value:
                                                                               
Implied Equity Value
          $ 11.69     $ 15.27     $ 18.85     $ 22.43     $ 26.02     $ 29.60     $ 33.18     $ 36.76     $ 40.34  
Plus: Net Debt (as of 06/30/03)
            31.29       31.29       31.29       31.29       31.29       31.29       31.29       31.29       31.29  
 
           
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Implied Total Enterprise Value
          $ 42.98     $ 46.56     $ 50.14     $ 53.72     $ 57.30     $ 60.89     $ 64.47     $ 68.05     $ 71.63  
Enterprise Value as a Multiple of:
                                                                               
LTM 06/30/03 Revenues
  $ 131.1       0.33x       0.36x       0.38x       0.41x       0.44x       0.46x       0.49x       0.52x       0.55x  
FYE 2002A Revenues
  $ 127.8       0.34x       0.36x       0.39x       0.42x       0.45x       0.48x       0.50x       0.53x       0.56x  
FYE 2003E Revenues
  $ 133.1       0.32x       0.35x       0.38x       0.40x       0.43x       0.46x       0.48x       0.51x       0.54x  
FYE 2004E Revenues
  $ 139.0       0.31x       0.34x       0.36x       0.39x       0.41x       0.44x       0.46x       0.49x       0.52x  
LTM 06/30/03 EBITDA
  $ 14.3       3.00x       3.25x       3.50x       3.75x       4.00x       4.25x       4.50x       4.75x       5.00x  
FYE 2002A EBITDA
  $ 14.3       3.00x       3.25x       3.50x       3.75x       4.00x       4.25x       4.49x       4.74x       4.99x  
FYE 2003E EBITDA
  $ 14.2       3.02x       3.28x       3.53x       3.78x       4.03x       4.28x       4.54x       4.79x       5.04x  
FYE 2004E EBITDA
  $ 17.3       2.49x       2.70x       2.91x       3.11x       3.32x       3.53x       3.74x       3.94x       4.15x  
LTM 06/30/03 EBIT
  $ 3.0       14.26x       15.44x       16.63x       17.82x       19.01x       20.20x       21.38x       22.57x       23.76x  
FYE 2002A EBIT
  $ 2.7       15.70x       17.00x       18.31x       19.62x       20.93x       22.24x       23.54x       24.85x       26.16x  
FYE 2003E EBIT
  $ 2.8       15.23x       16.50x       17.77x       19.04x       20.31x       21.58x       22.85x       24.11x       25.38x  
FYE 2004E EBIT
  $ 5.1       8.37x       9.07x       9.77x       10.46x       11.16x       11.86x       12.56x       13.25x       13.95x  
LTM 06/30/03 Net Income
  $ 0.8       53.41x       57.86x       62.31x       66.77x       71.22x       75.67x       80.12x       84.57x       89.02x  
FYE 2002A Net Income
  $ 0.5       90.59x       98.14x       105.69x       113.24x       120.79x       128.34x       135.88x       143.43x       150.98x  
FYE 2003E Net Income
  $ 0.9       48.11x       52.11x       56.12x       60.13x       64.14x       68.15x       72.16x       76.17x       80.18x  
FYE 2004E Net Income
  $ 2.3       18.70x       20.25x       21.81x       23.37x       24.93x       26.49x       28.04x       29.60x       31.16x  


   
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12


 

-DRAFT-

C.  COMPARABLE PUBLIC COMPANY ANALYSIS

o  A comparable public company analysis reviews, analyzes and compares publicly available financial data and stock market performance data of publicly traded companies in the same or similar business as the Company. We compared the performance of these selected public companies and their implied multiples to Project Tigers’ financial results. This analysis illustrates how financial markets may value businesses in the same economic and market environment based on varying financial performance



   
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13


 

-DRAFT-

C.  COMPARABLE PUBLIC COMPANY ANALYSIS

      o We reviewed nine publicly traded truckload companies that we considered most comparable to Project Tigers.  

    We eliminated three potential comparable public companies — (1) Landstar System, Inc. (Nasdaq: LSTR); (2) Swift Transportation Co., Inc. (Nasdaq: SWFT); and (3) Werner Enterprises, Inc. (Nasdaq: WERN) — because of market capitalization and scope differences. All three excluded companies have a market capitalization greater than $1 billion. The rest of the comparable companies have market capitalizations under $110 million creating an illiquidity discount in trading multiples. Since Landstar, Swift and Werner are actively traded no discount is applied to their multiples. The three excluded companies also have a dense nationwide scope that does not fit Project Tigers’ scope.  

    While we determined that Boyd Bros. Transportation Inc. (Nasdaq: BOYD), Celadon Group, Inc. (Nasdaq: CLDN), Frozen Food Express Industries, Inc. (Nasdaq: FFEX), Smithway Motor Xpress, Inc. (Nasdaq: SMXC), Transport Corporation of America, Inc. (Nasdaq: TCAM) and USA Truck, Inc. (Nasdaq: USAK) were the most appropriate comparable public companies, there is no direct public comparable company for Project Tigers.  

  o   The closest public comparable company is Smithway Motor Xpress, Inc. (Nasdaq: SMXC). This company, like Project Tigers, is characterized by:  

    Lack of research analyst coverage

    Low trading volume

    Small market capitalization



   
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14


 

-DRAFT-

C. COMPARABLE PUBLIC COMPANY ANALYSIS

Summary Comparison of Operating and Valuation Data for Selected Companies within the Trucking Industry
($ in millions, except per share data)

                                                                                                         
                                                            Equity value as a multiple of
                                        CY EPS    
            Price   Diluted   Market   Total   Cash &          
  Book
Company name (Ticker)   Rating   09/08/03   S/O   cap.   Debt(a)   equiv.   TEV(b)   2000A   2001A   2002A   2003E(c)   2004E(c)   value

 
 
 
 
 
 
 
 
 
 
 
 
 
Boyd Bros. Transportation (BOYD)
  NR     5.58       2.7       15.1       31.5       0.2       46.4     NM   NM     32.8x     NA   NA     0.6x  
Celadon Group (CLDN)
  NR     11.55       7.9       91.7       69.6       0.7       160.6     NM   NM     31.2x       21.0x       12.0x       1.6x  
Frozen Food Express Industries (FFEX)
  NR     4.75       17.0       80.7       8.0       2.3       86.5     NM   NM     25.0x     NA   NA     1.0x  
Smithway Motor Xpress (SMXC)
  NR     1.21       3.8       4.7       41.1       30.4       15.3     NM   NM   NM   NA   NA     0.2x  
Transport Corp. of America (TCAM)
  NR     6.03       7.2       43.4       61.0       0.1       104.3       13.1x     NM   NM   NM     15.9x       0.7x  
USA Truck (USAK)
  NR     11.67       9.4       109.4       67.9       1.2       176.1     NM   NM     41.7x       28.5x       15.2x       1.5x  
Min
                            4.7       8.0       0.1       15.3       13.1x     NM     25.0x       21.0x       12.0x       0.2x  
Mean
                            57.5       46.5       5.8       98.2       13.1x     NM     32.7x       24.7x       14.3x       0.9x  
Median
                            62.1       51.0       1.0       95.4       13.1x     NM     32.0x       24.7x       15.2x       0.9x  
Max
                            109.4       69.6       30.4       176.1       13.1x     NM     41.7x       28.5x       15.9x       1.6x  

     

[Additional columns below]

[Continued from above table, first column(s) repeated]

                                                         
    Enterprise value as a multiple of
                               
    TTM   TTM   TTM   TTM   TTM   TTM   PEG
Company name (Ticker)   Revenue   EBITDA   EBIT   ROA   ROE   ROIC   ratio(d)

 
 
 
 
 
 
 
Boyd Bros. Transportation (BOYD)
    0.4x       3.2x       15.4x       1.0 %     3.1 %     2.9 %   NA
Celadon Group (CLDN)
    0.4x       5.9x       12.6x       2.0 %     6.3 %     5.6 %     1.00  
Frozen Food Express Industries (FFEX)
    0.2x       5.0x       31.5x       4.2 %     7.5 %     6.8 %   NA
Smithway Motor Xpress (SMXC)
    0.1x       1.7x     NM     -8.0 %     -30.1 %     -10.3 %   NA
Transport Corp. of America (TCAM)
    0.4x       3.9x     NM     -1.2 %     -3.8 %     0.4 %   NA
USA Truck (USAK)
    0.6x       4.6x       19.4x       1.3 %     3.4 %     2.5 %     1.01  
Min
    0.1x       1.7x       12.6x       -8.0 %     -30.1 %     -10.3 %     1.00  
Mean
    0.4x       4.1x       19.7x       -0.1 %     -2.3 %     1.3 %     1.00  
Median
    0.4x       4.2x       17.4x       1.1 %     3.3 %     2.7 %     1.00  
Max
    0.6x       5.9x       31.5x       4.2 %     7.5 %     6.8 %     1.01  


Note:

Source: Company data , First Call, and Legg Mason Research estimates.

(a)   Total Debt does not include capital leases.
 
(b)   Total Enterprise Value = Market Capitalization of Equity + Total Debt — Cash + Market Value of Minority Interest. Total debt does not included leases.
 
(c)   Legg Mason estimates for those rated and First Call mean estimates for unrated securities.
 
(d)   2004E P/E divided by First Call mean 3-5 year growth rate.

Excludes non-recurring items.

Calculations may vary due to rounding.



   
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15


 

-DRAFT-

C.  COMPARABLE PUBLIC COMPANY ANALYSIS

Comparable Public Company Analysis Summary – EBIT
($ in millions, except per share data)

                 
    Low
  High
Implied Enterprise Value
  $ 42.3     $ 56.4  
Implied Equity Value
  $ 11.0     $ 25.1  
Implied Share Price
  $ 3.89     $ 8.86  

Comparable Public Company Analysis Summary – EBITDA
($ in millions, except per share data)

                 
    Low
  High
Implied Enterprise Value
  $ 42.6     $ 71.1  
Implied Equity Value
  $ 11.3     $ 39.8  
Implied Share Price
  $ 4.00     $ 14.02  


    Note:
 
    Comparable Public Company Analysis based on a range of EBIT multiples between 15.0x to 20.0x and a range of EBITDA multiples between 3.0x to 5.0x.


   
(LEGG MASON LOGO)   Confidential — not for duplication.

16


 

-DRAFT-

D.  COMPARABLE M&A TRANSACTIONS ANALYSIS

     
o
  A comparable M&A transactions analysis reviews and analyzes similar transactions, and the resulting implied enterprise value multiples, involving companies in the same or similar business as the Company. We utilized this analysis for Project Tigers, and we analyzed the acquisitions of publicly traded and privately held targets and applied the range of multiples of these transactions to the financial results of Project Tigers.
 
   
o
  In this analysis, we identified 20 comparable transactions. However, each of the transactions identified has characteristics that differentiate it from Project Tigers.


   
(LEGG MASON LOGO)   Confidential — not for duplication.

17


 

-DRAFT-

 
D. COMPARABLE M&A TRANSACTIONS ANALYSIS
 

Comparison Multiples for Selected Transactions within the Trucking Industry
($ in millions, January 1, 1998 — August 31, 2003)

                                                                 
                    Valuation
  Target Company Parameters
Date   Target   Type of   Target   Equity   Enterprise   LTM   LTM   LTM   Book
Effective
  Acquiror
  Consideration
  Status
  Value
  Value
  Revenue
  EBITDA
  EBIT
  Value
NA
  Roadway Corp.   Cash &   Public   $ 956.4     $ 1,101.0     $ 3,251.4     $ 189.1     $ 111.1     $ 418.1  
 
  acq. by Yellow Corp.   Stock                                                        
8/21/03
  Highway Express, Inc.   NA   Private   NA   NA   $ 27.0     NA   NA   NA
 
  acq. by Celadon Group, Inc.                                                            
8/15/03
  Ground Operations of Airborne, Inc.   Cash   Subsidiary   $ 1,005.0     NA   NA   NA   NA   NA
 
  acq. by DHL                                                            
7/30/03
  Roadrunner Freight Systems Inc.   Cash   Private   NA   NA   NA   NA   NA   NA
 
  acq. by American Capital Strategies                                                            
1/24/03
  Arnold Transportation Services   Cash   Subsidiary   $ 55.0     $ 55.0     $ 171.0     NA   NA   NA
 
  acq. by A Consortium of Investors                                                            
1/6/03
  Service Transport, Inc.   Cash   Private   $ 28.0     $ 28.0     NA   NA   NA   NA
 
  acq. by American Capital Strategies Ltd.                                                            
11/30/01
  Arnold Industries   Cash   Public   $ 548.0     $ 510.5     $ 450.7     $ 82.6     $ 49.8     $ 291.3  
 
  acq. by Roadway Corporation                                                            
11/28/01
  Motor Cargo Industries, Inc.   Cash &   Public   $ 83.1     $ 78.6     $ 138.6     $ 19.4     $ 10.7     $ 62.2  
 
  acq. by Union Pacific Corporation   Stock                                                        
8/1/01
  G.I. Trucking Company   Cash   Public   $ 40.0     $ 40.0     $ 139.4     $ 5.0     $ 0.8     $ 0.0  
 
  acq. by A Consortium of Investors                                                            
7/2/01
  MS Carriers, Inc.   Cash &   Public   $ 367.8     $ 615.5     $ 712.6     $ 106.6     $ 37.6     $ 218.6  
 
  acq. by Swift Transportation   Stock                                                        
2/12/01
  American Freightways Corporation   Cash &   Public   $ 935.4     $ 1,197.5     $ 1,352.6     $ 189.3     $ 126.9     $ 365.2  
 
  acq. by FedEx Corp.   Stock                                                        
8/31/00
  Trans-Consolidated, Inc.   Cash   Private   NA   NA   NA   NA   NA   NA
 
  acq. by C.H. Robinson Worldwide Inc.                                                            
7/6/00
  KLLM Transport Services, Inc.   Cash   Public   $ 33.0     $ 80.0     $ 236.9     $ 20.1     $ 1.3     $ 50.0  
 
  acq. by High Road Acquisition, Inc.                                                            
11/1/99
  CARCO Carrier Corp.   Cash   Private   $ 8.1     $ 35.3     $ 66.7     $ 9.3     $ 1.0     $ 0.3  
 
  acq. by USA Truck, Inc.                                                            
8/27/99
  Mark VII, Inc.   Cash &   Public   $ 206.1     $ 206.0     $ 760.0     $ 20.5     $ 18.2     $ 47.1  
 
  acq. by Ocean Group plc / MSAS Global   Stock                                                        
 
  Logistics Inc.                                                            
8/11/99
  Zipp Express, Inc.   Cash   Private   $ 25.7     $ 34.6     $ 39.7     $ 6.6     $ 4.4     $ 8.3  
 
  acq. by Celadon Group, Inc.                                                            
8/2/99
  R&M Enterprises / MDR Cartage, Inc.   Cash &   Private   $ 26.1     $ 41.9     $ 45.1     $ 7.4     $ 2.6     $ 9.3  
 
  / BF Transportation, Inc.   Stock                                                        
 
  acq. by Transit Group, Inc.                                                            
8/2/99
  Bestway Trucking, Inc.   Cash &   Private   $ 14.7     $ 45.8     $ 42.7     $ 9.0     $ 3.6     $ 4.7  
 
  acq. by Transit Group, Inc.   Stock                                                        
7/8/99
  Jevic Transportation, Inc.   Cash &   Public   $ 147.7     $ 187.0     $ 237.1     $ 33.4     $ 17.8     $ 77.9  
 
  acq. by Yellow Corporation   Stock                                                        
1/27/98
  Caliber System Inc.   Cash &   Public   $ 2,452.9     $ 2,174.2     $ 2,736.0     $ 191.8     $ 51.9     $ 490.9  
 
  acq. by FedEx Corp.   Stock                                                        
                                                         
            Equity Val. Mult. of:
  Enterprise Value Multiple of:
Date   Target       Net   Book   LTM   LTM   LTM   Total
Effective
  Acquiror
      Income
  Value
  Revenues
  EBITDA
  EBIT
  Assets
NA
  Roadway Corp.         18.9x       2.3x       0.3x       5.8x       9.9x       0.9x  
 
  acq. by Yellow Corp.                                                    
8/21/03
  Highway Express, Inc.       NA   NA   NA   NA   NA   NA
 
  acq. by Celadon Group, Inc.                                                    
8/15/03
  Ground Operations of Airborne, Inc.       NA   NA   NA   NA   NA   NA
 
  acq. by DHL                                                    
7/30/03
  Roadrunner Freight Systems Inc.       NA   NA   NA   NA   NA   NA
 
  acq. by American Capital Strategies                                                    
1/24/03
  Arnold Transportation Services       NA   NA     0.3x     NA   NA   NA
 
  acq. by A Consortium of Investors                                                    
1/6/03
  Service Transport, Inc.       NA   NA   NA   NA   NA   NA
 
  acq. by American Capital Strategies Ltd.                                                    
11/30/01
  Arnold Industries         15.5x       1.9x       1.1x       6.2x       10.2x       1.4x  
 
  acq. by Roadway Corporation                                                    
11/28/01
  Motor Cargo Industries, Inc.         12.0x       1.3x       0.6x       4.0x       7.4x       0.9x  
 
  acq. by Union Pacific Corporation                                                    
8/1/01
  G.I. Trucking Company       NA   NA     0.3x       8.0x       48.8x       0.8x  
 
  acq. by A Consortium of Investors                                                    
7/2/01
  MS Carriers, Inc.         30.5x       1.7x       0.9x       5.8x       16.4x       1.0x  
 
  acq. by Swift Transportation                                                    
2/12/01
  American Freightways Corporation         14.1x       2.6x       0.9x       6.3x       9.4x       1.4x  
 
  acq. by FedEx Corp.                                                    
8/31/00
  Trans-Consolidated, Inc.       NA   NA   NA   NA   NA   NA
 
  acq. by C.H. Robinson Worldwide Inc.                                                    
7/6/00
  KLLM Transport Services, Inc.       NMF     0.7x       0.3x       4.0x       60.7x       0.6x  
 
  acq. by High Road Acquisition, Inc.                                                    
11/1/99
  CARCO Carrier Corp.       NMF     26.5x       0.5x       3.8x       34.8x       0.8x  
 
  acq. by USA Truck, Inc.                                                    
8/27/99
  Mark VII, Inc.         19.1x       4.4x       0.3x       10.0x       11.3x       1.7x  
 
  acq. by Ocean Group plc / MSAS Global Logistics Inc.                                                    
8/11/99
  Zipp Express, Inc.         7.1x       3.1x       0.9x       5.3x       7.8x       1.6x  
 
  acq. by Celadon Group, Inc.                                                    
8/2/99
  R&M Enterprises / MDR Cartage, Inc. /         18.5x       2.8x       0.9x       5.7x       15.9x       1.3x  
 
  BF Transportation, Inc.                                                    
 
  acq. by Transit Group, Inc.                                                    
8/2/99
  Bestway Trucking, Inc.         15.1x       3.1x       1.1x       5.1x       12.8x       1.1x  
 
  acq. by Transit Group, Inc.                                                    
7/8/99
  Jevic Transportation, Inc.         15.3x       1.9x       0.8x       5.6x       10.5x       1.1x  
 
  acq. by Yellow Corporation                                                    
1/27/98
  Caliber System Inc.       NMF     5.0x       0.8x       11.3x       41.9x       1.6x  
 
  acq. by FedEx Corp.                                                    
 
      Min     7.1x       0.7x       0.3x       3.8x       7.8x       0.6x  
 
      Mean     13.6x       7.2x       0.7x       4.8x       26.4x       1.1x  
 
      Median     15.1x       3.1x       0.7x       5.1x       15.9x       1.1x  
 
      Max     18.5x       26.5x       1.1x       5.7x       60.7x       1.6x  


Note:

Non-shaded transactions excluded from min, mean, median and max calculations.

     
(LEGG MASON LOGO)
  Confidential — not for duplication.

18


 

-DRAFT-

 
D. COMPARABLE M&A TRANSACTIONS ANALYSIS
 

Project Tigers

Summary Business Descriptions for Selected M&A Transactions within the Trucking Industry

                 
Date        
Effective
  Acquiror
  Target
NA   Yellow Corp.   Roadway Corp.
      Yellow Corp. a holding company that, through wholly owned operating subsidiaries, offers its customers a wide range of asset and nonasset-based transportation services integrated by technology. The Company’s largest operating unit, Yellow Transportation, offers a full range of services for the movement of industrial, commercial, and retail goods. Yellow Transportation provides services by moving shipments through its regional, national and international networks of terminals, utilizing primarily ground transportation equipment that the Company owns or leases.       Roadway Corp. is a holding company with two primary operating entities, Roadway Express, Inc. (REX) and Roadway Next Day Corporation. REX is the primary operating subsidiary of the Company. REX and its subsidiaries provide long-haul less-than- truckload freight services on city-to-city routes (lanes) in North America, and on international lanes to and from North America.
 
               
8/21/03   Celadon Group, Inc.   Highway Express, Inc.
      Celadon Group, Inc. is a truckload carrier in North America. The Company provides and arranges for long-haul, point-to-point, time-sensitive and full-truckload transport of goods between the United States, Canada and Mexico. The principal types of freight transported include automotive parts, paper products, manufacturing parts, semi-finished products, textiles, appliances, retail and toys. Celadon delivers its services through a network of owned and leased tractors, and, to a lesser extent, independent owner-operators.       Highway Express is a truckload carrier based in Richmond, Virginia.
     
(LEGG MASON LOGO)
  Confidential — not for duplication.

19


 

-DRAFT-

 
D. COMPARABLE M&A TRANSACTIONS ANALYSIS

Project Tigers

Summary Business Descriptions for Selected M&A Transactions within the Trucking
Industry

                 
Date        
Effective
  Acquiror
  Target
8/15/03   DHL   Airborne, Inc. — Ground Operations
      DHL is the world’s leading express and logistics company offering customers innovative and customized solutions from a single source. With global expertise in solutions, express, air and ocean freight and overland transport, DHL combines worldwide coverage with an in-depth understanding of local markets. DHL’s international network links over 120,000 destinations in more than 220 countries and territories, and employs 71,000 people, over 10,000 of which are based in the U.S. Total revenues in 2002 accounted for $1,046 million in the U.S., and approximately $5.8 billion worldwide. DHL is majority owned by Deutsche Post World Net.       Airborne, Inc. is the holding company for Airborne Express. Airborne offers total distribution solutions by providing customers time-sensitive delivery of documents, letters, small packages, and freight to virtually every U.S. ZIP code and more than 200 countries. Customers can select from a variety of services including same-day, next-morning, next-afternoon or second-day delivery, air freight, ocean service, and logistics management. Airborne employs over 22,000 people worldwide and achieved total revenues of $3,348 million in 2002.
 
               
7/30/03   American Capital Strategies   Roadrunner Freight Systems Inc.
      American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $1.8 billion. American Capital is an equity partner in management and employee buyouts; invests in private equity sponsored buyouts, and provides capital directly to private and small public companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions and recapitalizations.       Roadrunner Freight Systems Inc. is an inter-regional freight services company that consolidates less-than-truckload shipments into full truckloads, minimizing the need for intermediate handling. The company operates a network of nine terminals in Milwaukee, Chicago, Dallas, Atlanta, Nashville, Charlotte, Los Angeles, Cincinnati and Cleveland, employs approximately 400 and has annual sales of over $125 million.
 
               
1/24/03   A Consortium of Investors   Arnold Transportation Services
      Group includes a management group led by Michael S. Walters, the unit’s president and chief executive officer and private equity firm, Jefferies Capital Partners.       Arnold Transportation Services is an irregular route and dedicated truckload motor carrier headquartered in Jacksonville, FL, specializing in short-haul regional operations. The Company utilizes over 800 company-owned tractors, 500 owner-operators and 4,200 trailers to provide service in the Northeast, Southeast, Midwest and Southwest regions of the United States.
     
(LEGG MASON LOGO)
  Confidential — not for duplication.

20


 

-DRAFT-

 
D. COMPARABLE M&A TRANSACTIONS ANALYSIS

Project Tigers

Summary Business Descriptions for Selected M&A Transactions within the Trucking Industry

                 
Date        
Effective
  Acquiror
  Target
1/6/03   American Capital Strategies Ltd.   Service Transport, Inc.
      American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $1.5 billion. American Capital is an equity partner in management and employee buyouts; invests in private equity sponsored buyouts, and provides capital directly to private middle-market and small public companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions and recapitalizations.       Headquartered in Cookeville, TN, Service Transport is one of the 50 largest regional LTL carriers in the United States. A family-owned company founded in 1979, Service Transport grew to encompass a network including 10 contiguous Midwest and Southeastern states plus service to Southern California. The Company has built a highly diversified customer base in a wide array of industries.
 
               
11/30/01   Roadway Corporation   Arnold Industries
      The Company is a holding company with two primary operating entities, Roadway Express, Inc. (REX) and Roadway Next Day Corporation. REX is the primary operating subsidiary of the Company. REX and its subsidiaries provide long-haul less-than-truckload freight services on city-to-city routes (lanes) in North America, and on international lanes to and from North America.       The Company assembles and delivers truckload and less than truckload shipments for contract customers.
 
               
11/28/01   Union Pacific Corporation   Motor Cargo Industries, Inc.
      The Company is comprised of three operating companies including the railroad, Overnite Transportation, a nationwide less-than-truckload carrier, and Fenix, a group of affiliated technology companies.       A less-than-truckload carrier that provides transportation and logistics services to shippers primarily in the western region of the United States.
 
               
8/1/01   A Consortium of Investors   G.I. Trucking Company
      Senior Management from G.I. and Estes Express Lines.       G.I. Trucking is one of the five largest Western states-based non-union regional LTL motor carrier. G.I. Trucking offers one to three-day regional service through a network of 33 terminals and 37 agent partners in 15 Western and Southwestern states including Hawaii and Alaska.
     
(LEGG MASON LOGO)
  Confidential — not for duplication.

21


 

-DRAFT-

 
D. COMPARABLE M&A TRANSACTIONS ANALYSIS

Project Tigers

Summary Business Descriptions for Selected M&A Transactions within the Trucking Industry

                 
Date        
Effective
  Acquiror
  Target
7/2/01   Swift Transportation   MS Carriers, Inc.
      The largest publicly-held, truckload carrier in the United States. Swift operates primarily throughout the continental United States, combining strong regional operations with a transcontinental van operation. The principal types of freight transported by Swift include retail and discount department store merchandise, manufactured goods, paper products, non-perishable food, beverages and beverage containers and building materials.       A transportation company primarily engaged in the hauling of truckload shipments of general commodities throughout the United States and the provinces of Quebec and Ontario in Canada.
 
               
2/12/01   FedEx Corp.   American Freightways Corporation
      Comprised of a family of companies, providing transportation and logistics solutions for customers. The company provides express transportation, ground small-package delivery, surface expedited carrying service, contract logistics, and regional freight cars.       A scheduled for hire carrier of less-than-truckload shipments of general commodities.
 
               
8/30/00   C.H. Robinson Worldwide Inc.   Trans-Consolidated, Inc.
      C.H. Robinson Worldwide, Inc. (Robinson) is a third-party logistics company in North America. The Company is a global provider of multimodal transportation services and logistics solutions through a network of 139 offices in 40 states, as well as in Canada, Mexico, Europe and South America.       The firm is a third party logistics company specializing in refrigerated less than truckload services for perishable food manufacturers.
 
               
7/6/00   High Road Acquisition, Inc.   KLLM Transport Services, Inc.
      A company formed by the heads of KLLM Transport Services and Worldcom Inc.       Holding company with subsidiaries which transport truckload quantities of various commodities, specialize in temperature controlled shipments.
     
(LEGG MASON LOGO)
  Confidential — not for duplication.

22


 

-DRAFT-

 
D. COMPARABLE M&A TRANSACTIONS ANALYSIS

Project Tigers

Summary Business Descriptions for Selected M&A Transactions within the Trucking Industry

                 
Date        
Effective
  Acquiror
  Target
11/1/99   USA Truck, Inc.   CARCO Carrier Corp.
      Medium-haul, common, and contract carrier.       Medium-haul, common, and contract carrier.
 
               
8/27/99   Ocean Group plc / MSAS Global Logistics Inc.   Mark VII, Inc.
      Engaged in the provision of transportation services.       Transporter of general products.
 
               
8/11/99   Celadon Group, Inc.   Zipp Express, Inc.
      Provides long-haul and truckload transportation and international freight services.       A major carrier to and from Mexico as well as strong business in the Midwest; operates roughly 270 tractors and 800 trailers.
 
               
8/2/99   Transit Group, Inc.   R&M Enterprises / MDR Cartage, Inc. / BF Transportation, Inc.
      Holding company that acquires and consolidates short, medium, and long haul trucking companies, principally truck carriers.       Three small carriers with a combined total of 467 tractors and 1088 trailers.
 
               
8/2/99   Transit Group, Inc.   Bestway Trucking, Inc.
      Holding company that acquires and consolidates short, medium, and long haul trucking companies, principally truck carriers.       A truckload common carrier operating a fleet consisting of 300 power units and 775 trailers. Concentrates on short hauls in the South, Northeast and Central U.S.
 
               
7/8/99   Yellow Corporation   Jevic Transportation, Inc.
      Operates through its subsidiaries which provide national, regional, and international less-than-truckload transportation.       Provides truck-load and less than truck-load shipping services.
 
               
1/27/98   FedEx Corp.   Caliber System Inc.
      Comprised of a family of companies, providing transportation and logistics solutions for customers. The company provides express transportation, ground small-package delivery, surface expedited carrying service, contract logistics, and regional freight cars.       Holding company with subsidiaries which provide common carrier interstate transportation services; provide contract logistics services; and operate terminals and hub facilities.
     
(LEGG MASON LOGO)
  Confidential — not for duplication.

23


 

-DRAFT-

D. COMPARABLE M&A TRANSACTIONS ANALYSIS

Comparable M&A Transaction Analysis Summary – EBITDA
($ in millions, except per share data)

                 
    Low
  High
Implied Enterprise Value
  $ 54.0     $ 81.0  
Implied Equity Value
  $ 22.7     $ 49.7  
Implied Share Price
  $ 8.01     $ 17.52  


    Note:
Comparable M&A Transactions Analysis based on a range of EBITDA multiples between 3.8x to 5.7x.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

24


 

-DRAFT-

E. DISCOUNTED CASH FLOW ANALYSIS

     
o
  A discounted cash flow analysis (“DCF”) derives the value for a company that is equal to the present value of its future free cash flows plus the present value of the terminal value. A DCF valuation focuses on the future effects of existing business strategies on cash flows and deals specifically with a number of key factors, including revenue growth, profitability, reinvestment in fixed assets and working capital and the payment of all debt.
   
o
  In order to derive the discount rate used in the DCF, we calculated the Company’s weighted average cost of capital (“WACC”). WACC is the calculation of a firm’s cost of capital that is determined by weighting each category of capital proportionately then adding them together. Included in the WACC calculation are all capital sources including: common stock, preferred stock, bonds, and any other long term debt.

      

(LEGG MASON LOGO)   Confidential — not for duplication.

25


 

-DRAFT-

E. DISCOUNTED CASH FLOW ANALYSIS

A. Weighted Average Cost of Capital (“WACC”) Assumptions

                                                                                         
Capital Asset Pricing Model
  Cost of Equity
  Cost of Debt
  WACC
                    Small and
Specific
                      After-Tax           Weighted
Average
Cost of
   
Risk-Free           Market Risk   Company   Cost of           Cost of   Tax   Cost of           Capital   Rounded
Rate(1)           Premium(3)   Premium(4)   Equity(5)   Equity   Debt(6)   Rate(7)   Debt   Debt   (WACC)   WACC
(Rf)
  Beta(2)
  (Rm-Rf)
  (Rs)
  (Re)
  Weighting
  (Rd)
  (T)
  (Rd+Pr)
  Weighting
  (Rc)
  (Rc)
4.40%
    1.25       8.20 %     5.33 %     19.98 %     50.00 %     9.40 %     40.00 %     5.64 %     50.00 %     12.81 %     13.00 %


(1)   Represents the U.S. Govt 10-year Treasury bond as of September 8, 2003.
 
(2)   Assumes 1.25 Beta.
 
(3)   Source: Ibbotson Associates: Stocks, Bonds, Bills and Inflation: Yearbook 2002.
 
(4)   Source: Ibbotson Associates: Micro capitalization size premium (10th decile).
 
(5)   Derived through calculation of CAPM. Rf + Beta*(Rm — Rf) + Rs.
 
(6)   Represents the U.S Govt 10-Year Treasury bond plus average Industrial B3 and BB3 10-Year spread as of September 8, 2003.
 
(7)   Assumes a 40% tax rate.

B. WACC Calculation

         
Cost of Equity
    19.98 %
Weight
    50.00 %
 
After-Tax Cost of Debt
    5.64 %
Weight
    50.00 %
 
   
 
 
Weighted Average Cost of Capital (WACC)
    12.81 %
WACC — Rounded
    13.00 %
(LEGG MASON)   Confidential — not for duplication.

26


 

-DRAFT-

E. DISCOUNTED CASH FLOW ANALYSIS

($ in millions)

A. Firm Value Assumption:

         
EBITDA
    3.25 x
Terminal Multiples:
    3.50 x
 
    3.75 x
Discount Rates:
    12.0 %
 
    13.0 %
 
    14.0 %

B. Capitalization (Year 0):

         
Short-term Debt
  $ 15.95  
Long-term Debt
    15.58  
Preferred Stock
     
Minority Interest
     
 
   
 
Total Debt
    31.53  
Less Cash & Equivalents
    0.24  
 
   
 
Net Debt:
  $ 31.29  
 
   
 

C. Other Assumptions:

         
Tax Rate:
    40.00 %
Initial Year
    2003  
Fiscal Year-Ended:
  December 31


($ in millions)

                                                                                 
    Year 1   Year 2   Year 3   Year 4   Year 5   Year 6   Year 7   Year 8   Year 9   Year 10
CASH PROVIDED BY OPERATIONS:
  2003
  2004
  2005
  2006
  2007
  2008
  2009
  2010
  2011
  2012
Adjusted Operating Income Before Amortization (EBITA)
  $ 2.9     $ 6.1     $ 7.4     $ 8.7     $ 10.0     $ 11.2     $ 12.0     $ 12.7     $ 13.4     $ 14.2  
Cash Taxes @ 40.0%
    (0.3 )     (1.7 )     (2.3 )     (2.8 )     (3.4 )     (4.0 )     (4.4 )     (4.8 )     (5.2 )     (5.6 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Unlevered Net Income
    2.5       4.4       5.2       5.9       6.6       7.1       7.5       7.9       8.3       8.6  
+ Depreciation
    11.4       11.1       11.1       11.2       11.3       11.6       12.0       12.4       13.0       13.5  
+ Change in Deferred Taxes
    (0.0 )                 (0.0 )                 0.0       0.0       0.1       0.2  
- Net Additions to Property, Plant and Equipment
    (7.5 )     (16.7 )     (10.9 )     (11.5 )     (12.1 )     (13.2 )     (13.8 )     (14.5 )     (15.6 )     (16.4 )
- Net Change in Non-cash Working Capital
    (0.2 )     (0.3 )     (0.3 )     (0.3 )     (0.3 )     (0.4 )     (0.4 )     (0.4 )     (0.4 )     (0.4 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total Cash Flow Provided By Operations
  $ 6.1       ($1.4 )   $ 5.0     $ 5.2     $ 5.5     $ 5.2     $ 5.3     $ 5.4     $ 5.3     $ 5.5  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
(LEGG MASON)   Confidential — not for duplication.

27


 

-DRAFT-

E. DISCOUNTED CASH FLOW ANALYSIS

Net Present Value Analysis Summary
($ in millions)

                                                     
A. Five Year Net Present Value Analysis
  B. Ten Year Net Present Value Analysis
            Enterprise   Equity               Enterprise   Equity
            Value
  Value
              Value
  Value
       
Net Present Value @ 12.0%
  $ 53.6     $ 22.3             Net Present Value @ 12.0%   $ 54.2     $ 22.9  
3.25x   EBITDA  
Net Present Value @ 13.0%
  $ 51.5     $ 20.2     3.25x   EBITDA   Net Present Value @ 13.0%   $ 50.7     $ 19.4  
       
Net Present Value @ 14.0%
  $ 49.6     $ 18.3             Net Present Value @ 14.0%   $ 47.4     $ 16.1  
       
Net Present Value @ 12.0%
  $ 56.6     $ 25.3             Net Present Value @ 12.0%   $ 56.5     $ 25.2  
3.50x   EBITDA  
Net Present Value @ 13.0%
  $ 54.4     $ 23.1     3.50x   EBITDA   Net Present Value @ 13.0%   $ 52.7     $ 21.4  
       
Net Present Value @ 14.0%
  $ 52.3     $ 21.0             Net Present Value @ 14.0%   $ 49.3     $ 18.0  
       
Net Present Value @ 12.0%
  $ 59.7     $ 28.4             Net Present Value @ 12.0%   $ 58.7     $ 27.4  
3.75x   EBITDA  
Net Present Value @ 13.0%
  $ 57.3     $ 26.0     3.75x   EBITDA   Net Present Value @ 13.0%   $ 54.7     $ 23.4  
       
Net Present Value @ 14.0%
  $ 55.1     $ 23.8             Net Present Value @ 14.0%   $ 51.1     $ 19.8  
(LEGG MASON)   Confidential — not for duplication.

28


 

-DRAFT-

E. DISCOUNTED CASH FLOW ANALYSIS

Sensitivity Analysis Summary
($ in millions)

A. Five Year Sensitivity Analysis

Enterprise Value

Terminal Value Multiples of EBITDA

                                                 
 
            3.25x       3.38x       3.50x       3.63x       3.75x  
 
    12.0 %   $ 53.6     $ 55.1     $ 56.6     $ 58.1     $ 59.7  
 
    12.5 %   $ 52.6     $ 54.0     $ 55.5     $ 57.0     $ 58.5  
Discount
    13.0 %   $ 51.5     $ 53.0     $ 54.4     $ 55.9     $ 57.3  
Rate
    13.5 %   $ 50.5     $ 51.9     $ 53.4     $ 54.8     $ 56.2  
 
    14.0 %   $ 49.6     $ 50.9     $ 52.3     $ 53.7     $ 55.1  

Implied Equity Value

Terminal Value Multiples of EBITDA

                                                 
 
            3.25x       3.38x       3.50x       3.63x       3.75x  
 
    12.0 %   $ 22.3     $ 23.8     $ 25.3     $ 26.9     $ 28.4  
 
    12.5 %   $ 21.3     $ 22.7     $ 24.2     $ 25.7     $ 27.2  
Discount
    13.0 %   $ 20.2     $ 21.7     $ 23.1     $ 24.6     $ 26.0  
Rate
    13.5 %   $ 19.2     $ 20.7     $ 22.1     $ 23.5     $ 24.9  
 
    14.0 %   $ 18.3     $ 19.6     $ 21.0     $ 22.4     $ 23.8  

B. Ten Year Sensitivity Analysis

Enterprise Value

Terminal Value Multiples of EBITDA

                                                 
 
            3.25x       3.38x       3.50x       3.63x       3.75x  
 
    12.0 %   $ 54.2     $ 55.3     $ 56.5     $ 57.6     $ 58.7  
 
    12.5 %   $ 52.4     $ 53.5     $ 54.5     $ 55.6     $ 56.7  
Discount
    13.0 %   $ 50.7     $ 51.7     $ 52.7     $ 53.7     $ 54.7  
Rate
    13.5 %   $ 49.0     $ 50.0     $ 50.9     $ 51.9     $ 52.9  
 
    14.0 %   $ 47.4     $ 48.3     $ 49.3     $ 50.2     $ 51.1  

Implied Equity Value

Terminal Value Multiples of EBITDA

                                                 
 
          3.25x       3.38x       3.50x       3.63x       3.75x  
 
    12.0 %   $ 22.9     $ 24.1     $ 25.2     $ 26.3     $ 27.4  
 
    12.5 %   $ 21.1     $ 22.2     $ 23.2     $ 24.3     $ 25.4  
Discount
    13.0 %   $ 19.4     $ 20.4     $ 21.4     $ 22.4     $ 23.4  
Rate
    13.5 %   $ 17.7     $ 18.7     $ 19.6     $ 20.6     $ 21.6  
 
    14.0 %   $ 16.1     $ 17.0     $ 18.0     $ 18.9     $ 19.8  
(LEGG MASON)   Confidential — not for duplication.

29


 

-DRAFT-

E. DISCOUNTED CASH FLOW ANALYSIS

Discounted Cash Flow Analysis Summary
($ in millions, except per share data)

                 
    Low
  High
Implied Enterprise Value
  $ 51.9     $ 57.0  
Implied Equity Value
  $ 20.7     $ 25.7  
Implied Share Price
  $ 7.29     $ 9.06  


    Note:
 
    Data relies on Company projections.
 
    Discounted Cash Flow Analysis included, but were not limited to the following assumptions: (a.) range of discount rates from 12.0% to 14.0% and (b.) range of EBITDA multiples of 3.25x to 3.75x.
(LEGG MASON)   Confidential — not for duplication.

30


 

-DRAFT-

F. LEVERAGED BUYOUT ANALYSIS

    o A leveraged buyout analysis (“LBO”) is a means of establishing the value of a company assuming that it was purchased by a financial buyer. An LBO analysis involves the acquisition or recapitalization of a company financed primarily by incurring debt that is serviced by the post-LBO operating cash flow of the company. We utilized the LBO analysis to value Project Tigers.

(LEGG MASON)   Confidential — not for duplication.

31


 

-DRAFT-

F. LEVERAGED BUYOUT ANALYSIS

Sources and Uses and Transaction Multiples Summaries
($ in millions)

A. Sources and Uses of Funds

Sources of Funds

                         
    Amount
  % Capitaliz.
  Rate
Target Cash Available
  $ 0.2                  
Minimum Cash to Be Held
    0.1                  
 
   
 
                 
Excess Cash Available
  $ 0.1                  
Assumed Target Debt
  $ 31.5       60.9 %     4.56 %
Senior Notes
    7.0       13.5 %     9.40 %
Common Equity: Sponsor A
    1.3       2.5 %        
Roll-over of Existing Equity
    11.9       23.0 %        
 
   
 
     
 
         
Total Capitalization
  $ 51.7       100.0 %        
 
   
 
     
 
         
Total Sources
  $ 51.9                  
 
   
 
                 

Uses of Funds

         
New Equity Financed Purchase
  $ 1.3  
Company Financed Purchase
    6.6  
Roll-over of Existing Equity
    11.9  
Assumed Target Debt
    31.5  
Transaction Expenses @ 2.5%
    0.5  
 
   
 
 
Total Uses
  $ 51.9  
 
   
 
 

B. Leveraged Buyout Assumptions

         
Total Value of Equity
  $ 19.9  
% Shares Repurchased
    40.0 %
 
   
 
 
Total Value of Repurchase
  $ 7.9  
New Equity Financed
    1.3  
 
   
 
 
Company Financed
  $ 6.6  
Value of Options & Warrants
     
Total Company Financed
  $ 6.6  

C. Transaction Multiples (including fees)

                 
    2002
  2003
Revenue
    0.40x       0.39x  
EBITDA
    3.6x       3.6x  
EBIT
    18.9x       18.8x  
(LEGG MASON)   Confidential — not for duplication.

32


 

-DRAFT-

F. LEVERAGED BUYOUT ANALYSIS

Financial and Leverage Assumptions and Return Summaries
($ in millions)

A. Summary Financial and Leverage Assumptions

                                                                         
                                    Net Working                           Total Debt /
    Revenues
  % Growth
  EBITDA
  % Margin
  Capital
  % Sales
  CapEx
  % Sales
  EBITDA
Year 0 - 2002
  $ 127.8       0.2 %   $ 14.3       11.2 %   $ 5.7       4.5 %   $ 8.0       6.2 %     2.7x  

 
Year 1 - 2003
    133.1       4.2 %     14.2       10.7 %     6.0       4.5 %     7.5       5.7 %     2.4x  
Year 2 - 2004
    139.0       4.4 %     17.3       12.4 %     6.2       4.5 %     16.7       12.0 %     2.2x  
Year 3 - 2005
    145.9       5.0 %     18.5       12.7 %     6.6       4.5 %     10.9       7.5 %     1.8x  

 
Year 4 - 2006
    153.2       5.0 %     19.9       13.0 %     6.9       4.5 %     11.5       7.5 %     1.5x  
Year 5 - 2007
    160.9       5.0 %     21.3       13.3 %     7.2       4.5 %     12.1       7.5 %     1.2x  

 
Year 6 - 2008
    168.9       5.0 %     22.8       13.5 %     7.6       4.5 %     13.2       7.8 %     1.0x  
Year 7 - 2009
    177.4       5.0 %     23.9       13.5 %     8.0       4.5 %     13.8       7.8 %     0.7x  

 
Year 8 - 2010
    186.2       5.0 %     25.1       13.5 %     8.4       4.5 %     14.5       7.8 %     0.5x  
Year 9 - 2011
    195.6       5.0 %     26.4       13.5 %     8.8       4.5 %     15.6       8.0 %     0.3x  
Year 10 - 2012
    205.3       5.0 %     27.7       13.5 %     9.2       4.5 %     16.4       8.0 %     0.1x  

B. Summary Returns

                                                                         
    Year 3 Exit
  Year 5 Exit
  Year 7 Exit
Terminal Multiple of EBITDA   3.25x
  3.50x
  3.75x
  3.25x
  3.50x
  3.75x
  3.25x
  3.50x
  3.75x
Implied Forward EBITDA
    3.03 x     3.26 x     3.49 x     3.04 x     3.27 x     3.51 x     3.10 x     3.33 x     3.57 x
Sponsor A IRR
    25.5 %     32.5 %     38.9 %     26.7 %     29.7 %     32.4 %     24.2 %     25.9 %     27.4 %
(LEGG MASON)   Confidential — not for duplication.

33


 

-DRAFT-

F. LEVERAGED BUYOUT ANALYSIS

Leveraged Buyout Analysis Summary
($ in millions, except per share data)

                 
    Low
  High
Implied Enterprise Value
  $ 48.3     $ 51.2  
Implied Equity Value
  $ 17.0     $ 19.9  
Implied Share Price
  $ 5.99     $ 7.01  


    Note:
 
    Data relies on Company projections.
 
    Leveraged Buyout Analysis included, but were not limited to the following assumptions (a.) minimum return to financial sponsor of 30.0%; (b.) range of EBITDA multiples of 3.4x to 3.6x; and (c.) total debt to EBITDA not to exceed 2.70x.
(LEGG MASON)   Confidential — not for duplication.

34


 

-DRAFT-

G. COMPARABLE GOING PRIVATE TRANSACTIONS ANALYSIS

Comparable Going Private Premiums Paid Implied Valuation
(Includes Completed Going Private transactions, January 2001 to Current with Premia between 0% — 100%)

($ in millions)

                                                             
                Parameters
  Premium Paid
Announcement   Completion           Market   Enterprise   LTM            
Date
  Date
  Acquiror
  Target
  Value
  Value
  Revenue
  1 Day
  1 Week
  1 Month
06/05/03   08/08/03  
Battery Ventures VI LP
  Made2Manage Systems Inc   $ 30.4     $ 13.9     $ 30.1       31.9 %     38.5 %     33.5 %
05/28/03   08/19/03  
Randeep Grewal
  GREKA Energy Corp     32.4       90.7       32.3       44.4 %     41.0 %     51.9 %
05/13/03   08/15/03  
Investor Group
  Packaged Ice Inc     75.6       440.4       235.4       50.0 %     50.7 %     82.6 %
04/16/03   07/03/03  
Investor Group
  Lillian Vernon Corp     60.9       37.0       238.0       69.0 %     71.1 %     68.6 %
03/24/03   06/18/03  
Management Group
  The Judge Group Inc     14.2       15.3       80.8       50.0 %     41.9 %     50.0 %
03/13/03   07/18/03  
CIVCO Holding Inc
  Colorado MEDtech Inc     64.6       56.9       54.9       48.9 %     56.7 %     53.3 %
03/03/03   05/01/03  
Kinkos Inc
  ImageX Inc     16.1       3.9       34.9       15.0 %     21.1 %     21.1 %
02/21/03   05/05/03  
Oaktree Capital Management LLC
  Acorn Products Inc     16.7       38.5       91.2       20.7 %     6.3 %     21.2 %
02/18/03   07/23/03  
CB Richard Ellis Inc
  Insignia Financial Group Inc     280.3       315.3       735.6       16.1 %     18.0 %     24.5 %
01/31/03   03/18/03  
BayCorp Holdings Ltd
  BayCorp Holdings Ltd     125.6     NA     48.8       12.1 %     12.1 %     18.6 %
01/22/03   03/31/03  
GTG Acquisition Corp
  Resonate Inc     53.5     NA     12.5       5.0 %     3.8 %     8.0 %
12/24/02   03/26/03  
Phillips Edison Ltd
  Aegis Realty Inc     93.0       159.1       26.3       7.2 %     6.4 %     7.2 %
12/09/02   03/27/03  
Amy Acquisition Corp
  AmeriPath Inc     667.6       751.1       466.2       29.2 %     26.3 %     44.5 %
11/12/02   12/19/02  
Berwind Co LLC
  Hunt Corp     115.2       112.8       132.3       32.3 %     31.2 %     37.4 %
11/11/02   03/18/03  
Investor Group
  CoorsTek Inc     305.3       356.0       334.4       68.6 %     60.4 %     86.4 %
10/11/02   02/28/03  
Investor Group
  Landair Corp     96.2       99.4       102.5       25.0 %     31.0 %     26.2 %
10/01/02   02/07/03  
Kelso & Co
  BWAY Corp     186.0       266.5       527.6       43.9 %     44.9 %     38.9 %
09/26/02   01/15/03  
CHL Holdings Corp
  Interstate Natl Dealer Svcs     25.0       0.4       60.9       9.7 %     8.1 %     9.1 %
09/24/02   04/23/03  
Prometheus Assisted Living LLC
  ARV Assisted Living Inc     68.8       161.0       158.4       23.5 %     26.0 %     28.0 %


Note:
 
Source: SDC, Bloomberg LP and company filings.
(LEGG MASON)   Confidential — not for duplication.

35


 

-DRAFT-

G. COMPARABLE GOING PRIVATE TRANSACTIONS ANALYSIS

Comparable Going Private Premiums Paid Implied Valuation
(Includes Completed Going Private transactions, January 2001 to Current with Premia between 0% — 100%)
($ in millions)

                                                             
                Parameters
  Premium Paid
Announcement   Completion           Market   Enterprise   LTM            
Date
  Date
  Acquiror
  Target
  Value
  Value
  Revenue
  1 Day
  1 Week
  1 Month
09/23/02   03/28/03  
David H Murdock
  Dole Food Co Inc   $ 1,920.4     $ 2,375.3     $ 4,211.6       36.8 %     32.7 %     18.0 %
09/19/02   03/17/03  
MASB Inc
  Viador Inc     3.9       2.4       5.3       50.0 %     50.0 %     7.1 %
09/06/02   01/02/03  
Investor Group
  Disc Graphics Inc     10.1       21.6       49.5       73.3 %     65.5 %     51.7 %
09/03/02   05/30/03  
Sandata Acquisition Corp
  Sandata Technologies Inc     4.9       6.5       17.2       21.6 %     21.6 %     39.0 %
08/07/02   07/29/03  
Douglas H Miller
  Exco Resources Inc     238.2       418.5       55.9       10.7 %     12.6 %     11.8 %
07/26/02   02/28/03  
Samuel J Heyman
  International Specialty Prods     674.9       1,074.1       834.3       4.3 %     1.7 %     33.8 %
06/12/02   11/15/02  
Cornerstone Equity Investors
  Vestcom International Inc     58.7       76.1       153.8       50.6 %     64.5 %     78.6 %
06/11/02   07/23/02  
Intellimark Holdings Inc
  Technisource Inc     42.8       30.0       134.8       43.4 %     48.1 %     73.9 %
04/18/02   02/21/03  
Investor Group
  Partsbase Inc     21.1       NA       6.8       36.4 %     44.2 %     94.8 %
04/13/02   01/09/03  
Investor Group
  Nortek Inc     563.6       1,547.0       1,959.8       23.0 %     28.9 %     21.4 %
04/11/02   07/31/02  
Investor Group
  Herbalife International Inc     726.7       529.7       1,040.2       26.8 %     30.6 %     37.5 %
02/20/02   03/22/02  
SCC Contracting Inc
  Sevenson Environmental Svcs     169.9       166.5       124.9       18.9 %     18.9 %     18.9 %
02/14/02   07/26/02  
Investor Group
  dick clark productions inc     150.4       132.2       61.5       30.8 %     47.4 %     47.4 %
02/13/02   05/15/02  
Investor Group
  Deltek Systems Inc     111.5       92.6       92.8       18.4 %     28.6 %     41.9 %
02/01/02   04/13/02  
Ironbridge Acquisition Corp
  Pitt-Des Moines Inc     272.2       79.9       143.5       7.6 %     8.8 %     10.9 %
01/22/02   03/06/02  
Rottlund Co Inc
  Rottlund Co Inc     53.6       96.9       261.4       18.1 %     27.1 %     32.8 %
12/18/01   02/28/02  
Preserver Group Inc
  Preserver Group Inc     16.5       23.6       99.2       36.0 %     45.7 %     29.2 %
11/16/01   03/04/02  
Ernest C Garcia II
  Ugly Duckling Corp     43.4       464.2       448.6       41.8 %     42.9 %     38.4 %
11/06/01   02/11/02  
Investor Group
  Leapnet Inc     10.9       10.5       35.6       5.7 %     5.7 %     33.1 %


    Note:
 
    Source: SDC, Bloomberg LP and company filings.
(LEGG MASON)   Confidential — not for duplication.

36


 

-DRAFT-

G. COMPARABLE GOING PRIVATE TRANSACTIONS ANALYSIS

Comparable Going Private Premiums Paid Implied Valuation
(Includes Completed Going Private transactions, January 2001 to Current with Premia between 0% — 100%)
($ in millions)

                                                             
                Parameters
  Premium Paid
Announcement   Completion           Market   Enterprise   LTM            
Date
  Date
  Acquiror
  Target
  Value
  Value
  Revenue
  1 Day
  1 Week
  1 Month
10/29/01   12/07/01  
CalWest Industrial Ppty
  Cabot Industrial Trust   $ 993.9     $ 1,896.6     $ 231.9       20.3 %     18.5 %     15.7 %
10/25/01   05/31/02  
SG Merger Corp
  Ecometry Corp     33.7       NA       28.9       93.3 %     81.3 %     93.3 %
10/08/01   01/24/02  
Investor Group
  Blimpie International Inc     27.1       18.3       30.1       86.7 %     90.5 %     62.8 %
10/01/01   02/13/02  
Investor Group
  NCH Corp     280.4       262.5       672.8       34.0 %     33.6 %     18.8 %
09/10/01   02/11/02  
Investor Group
  American Coin Merchandising     59.0       106.0       136.7       42.6 %     45.5 %     39.3 %
08/09/01   01/03/02  
Ameris Acquisition Inc
  Children’s Comprehensive Svcs     44.2       63.1       131.7       39.9 %     31.9 %     36.4 %
08/01/01   01/18/02  
Dwain Neumann
  National Home Centers Inc     10.0       25.2       100.6       62.2 %     55.2 %     71.4 %
07/24/01   11/04/01  
Investor Group
  EA Engineering Science Tech     10.3       12.3       44.3       50.9 %     44.1 %     44.1 %
07/03/01   12/31/01  
Investor Group
  Electronic Retailing Sys Intl     5.6       21.8       5.1       85.7 %     85.7 %     52.9 %
06/11/01   02/22/02  
Gameco Inc
  Colonial Holdings Inc     36.1       36.3       30.9       75.0 %     55.6 %     49.3 %
06/06/01   12/13/01  
Liberty Mutual Insurance Co
  Liberty Financial Cos Inc     1,669.1       421.1       1,005.0       24.8 %     40.1 %     40.4 %
05/30/01   09/06/01  
Bacou SA
  Bacou USA Inc     515.5       571.9       322.3       21.8 %     17.3 %     11.3 %
05/22/01   12/21/01  
Investor Group
  Quizno’s Corp     26.0       53.4       48.7       28.4 %     30.1 %     28.7 %
05/17/01   09/28/01  
SIRSI Corp
  Data Research Associates Inc     50.0       40.9       27.7       86.1 %     86.1 %     87.4 %
04/27/01   02/22/02  
Gameco Inc
  Black Hawk Gaming & Dvlp Co     53.2       106.5       95.0       16.7 %     22.1 %     34.3 %
03/23/01   08/31/01  
Investor Group
  PJ America Inc     37.8       37.8       115.2       32.1 %     52.2 %     34.6 %
03/13/01   06/04/01  
Investor Group
  Roy F Weston Inc     59.2       58.3       270.3       7.1 %     11.6 %     13.1 %
02/20/01   09/06/01  
Investor Group
  Springs Industries Inc     841.6       1,221.2       2,252.3       27.4 %     22.7 %     33.3 %
02/15/01   05/14/01  
Investor Group
  VICORP Restaurants Inc     178.5       178.0       372.0       35.9 %     34.6 %     50.9 %


    Note:
 
    Source: SDC, Bloomberg LP and company filings.
(LEGG MASON)   Confidential — not for duplication.

37


 

-DRAFT-

G. COMPARABLE GOING PRIVATE TRANSACTIONS ANALYSIS

Comparable Going Private Premiums Paid Implied Valuation
(Includes Completed Going Private transactions, January 2001 to Current with Premia between 0% — 100%)
($ in millions)

                                                             
                Parameters
  Premium Paid
Announcement   Completion           Market   Enterprise   LTM            
Date
  Date
  Acquiror
  Target
  Value
  Value
  Revenue
  1 Day
  1 Week
  1 Month
01/24/01   03/25/02  
Investor Group
  NextHealth Inc   $ 73.2     $ 67.9     $ 42.9       31.6 %     33.8 %     68.2 %
12/22/00   04/10/01  
Investor Group
  Michael Foods Inc     569.3       767.9       1,067.1       10.2 %     11.5 %     10.7 %
12/16/00   03/07/01  
Rosemore Inc
  Crown Central Petroleum Corp     106.0       231.4       1,785.2       33.3 %     25.4 %     23.5 %
11/16/00   07/17/01  
Bruckmann Rosser Sherrill & Co
  Il Fornaio America Corp     77.5       72.0       125.8       28.9 %     23.9 %     44.4 %
11/13/00   07/20/01  
Investor Group
  CB Richard Ellis Services     331.5       624.8       1,323.6       21.9 %     15.3 %     30.6 %
11/10/00   01/31/01  
HCH Acquisition Corp
  Holt’s Cigar Holding Inc     34.8       28.1       34.3       57.1 %     44.3 %     54.4 %
10/25/00   01/02/01  
KC Holding Corp(ValueAct)
  Kenetech Corp     33.3       10.8       2.1       46.5 %     46.5 %     42.5 %
10/25/00   07/31/01  
Investor Group
  Uno Restaurant Corp     113.1       168.9       238.4       33.3 %     60.8 %     43.1 %
05/10/00   01/05/01  
Investor Group
  GZA GeoEnvironmental Tech     24.5       17.5       44.8       2.4 %     0.4 %     13.8 %
       
  Min   $ 3.9     $ 0.4     $ 2.1       2.4 %     0.4 %     7.1 %
       
  Mean     207.8       277.2       359.5       34.7 %     35.5 %     39.1 %
       
  Median     60.1       91.7       108.9       31.8 %     32.3 %     36.9 %
       
  Max     1,920.4       2,375.3       4,211.6       93.3 %     90.5 %     94.8 %


    Note:
 
    Source: SDC, Bloomberg LP and company filings.
(LEGG MASON)   Confidential — not for duplication.

38


 

-DRAFT-

G. COMPARABLE GOING PRIVATE TRANSACTIONS ANALYSIS

Comparable Going Private Premiums Paid Implied Valuation
(Includes Completed Going Private transactions, January 2001 to Current in which a minority interest was acquired)
($ in millions)

                                                                     
                Parameters
  Premium Paid
          Market   Enterprise   LTM   % Interest            
Announcement
Date

  Completion
Date

  Acquiror
  Target
  Value
  Value
  Revenue
  Acquired
  1 Day
  1 Week
  1 Month
03/24/03
  06/18/03   Management Group   The Judge Group Inc   $ 14.2     $ 15.3     $ 80.8       40.0 %     50.0 %     41.9 %     50.0 %
10/11/02
  02/28/03   Investor Group   Landair Corp     96.2       99.4       102.5       29.0 %     25.0 %     31.0 %     26.2 %
09/03/02
  05/30/03   Sandata Acquisition Corp   Sandata Technologies Inc     4.9       6.5       17.2       30.0 %     21.6 %     21.6 %     39.0 %
07/26/02
  02/28/03   Samuel J Heyman   International Specialty Prods     674.9       1,074.1       834.3       20.0 %     4.3 %     1.7 %     33.8 %
05/16/02
  08/19/02   IPC Advisors SARL   Balanced Care Corp     8.5       118.7       56.3       46.7 %     150.0 %     177.8 %     150.0 %
04/18/02
  06/21/02   Westminster Capital Inc   Westminster Capital Inc     22.8       17.2       25.3       19.6 %     38.5 %     48.9 %     49.7 %
12/18/01
  02/28/02   Preserver Group Inc   Preserver Group Inc     16.5       23.6       99.2       47.1 %     36.0 %     45.7 %     29.2 %
11/16/01
  03/04/02   Ernest C Garcia II   Ugly Duckling Corp     43.4       464.2       448.6       39.2 %     41.8 %     42.9 %     38.4 %
10/01/01
  02/13/02   Investor Group   NCH Corp     280.4       262.5       672.8       45.7 %     34.0 %     33.6 %     18.8 %
09/18/01
  01/14/02   Seneca Investments LLC   Organic Inc     29.4       13.7       90.4       19.3 %     13.8 %     17.9 %     -17.5 %
08/01/01
  01/18/02   Dwain Neumann   National Home Centers Inc     10.0       25.2       100.6       36.5 %     62.2 %     55.2 %     71.4 %
07/03/01
  12/31/01   Investor Group   Electronic Retailing Sys Intl     5.6       21.8       5.1       48.3 %     85.7 %     85.7 %     52.9 %
06/06/01
  12/13/01   Liberty Mutual Insurance Co   Liberty Financial Cos Inc     1,669.1       421.1       1,005.0       30.0 %     24.8 %     40.1 %     40.4 %
05/22/01
  12/21/01   Investor Group   Quizno’s Corp     26.0       53.4       48.7       32.0 %     28.4 %     30.1 %     28.7 %
05/09/01
  07/26/02   Investor Group   Pierre Foods Inc     14.5       125.0       232.1       37.0 %     53.8 %     158.1 %     150.0 %
11/10/00
  01/31/01   HCH Acquisition Corp   Holt’s Cigar Holding Inc     34.8       28.1       34.3       26.0 %     57.1 %     44.3 %     54.4 %
 
          Min   $ 4.9     $ 6.5     $ 5.1       19.3 %     4.3 %     1.7 %     -17.5 %
 
          Mean     184.4       173.1       240.8       34.1 %     45.4 %     54.8 %     51.0 %
 
          Median     24.4       40.8       94.8       34.3 %     37.2 %     42.4 %     39.7 %
 
          Max     1,669.1       1,074.1       1,005.0       48.3 %     150.0 %     177.8 %     150.0 %


    Note:
 
    Source: SDC, Bloomberg LP and company filings.
(LEGG MASON)   Confidential — not for duplication.

39


 

-DRAFT-

G. COMPARABLE GOING PRIVATE TRANSACTIONS ANALYSIS

Comparable Going Private Premiums Paid Implied Valuation
(Includes Completed Going Private transactions, January 2001 to
Current with Revenue less than $250 million in which a minority
interest was acquired)
($ in millions)

                                                                     
                Parameters
  Premium Paid
Announcement   Completion           Market   Enterprise   LTM   % Interest            
Date
  Date
  Acquiror
  Target
  Value
  Value
  Revenue
  Acquired
  1 Day
  1 Week
  1 Month
03/24/03   06/18/03  
Management Group
  The Judge Group Inc   $ 14.2     $ 15.3     $ 80.8       40.0 %     50.0 %     41.9 %     50.0 %
10/11/02   02/28/03  
Investor Group
  Landair Corp     96.2       99.4       102.5       29.0 %     25.0 %     31.0 %     26.2 %
09/03/02   05/30/03  
Sandata Acquisition Corp
  Sandata Technologies Inc     4.9       6.5       17.2       30.0 %     21.6 %     21.6 %     39.0 %
05/16/02   08/19/02  
IPC Advisors SARL
  Balanced Care Corp     8.5       118.7       56.3       46.7 %     150.0 %     177.8 %     150.0 %
04/18/02   06/21/02  
Westminster Capital Inc
  Westminster Capital Inc     22.8       17.2       25.3       19.6 %     38.5 %     48.9 %     49.7 %
12/18/01   02/28/02  
Preserver Group Inc
  Preserver Group Inc     16.5       23.6       99.2       47.1 %     36.0 %     45.7 %     29.2 %
09/18/01   01/14/02  
Seneca Investments LLC
  Organic Inc     29.4       13.7       90.4       19.3 %     13.8 %     17.9 %     -17.5 %
08/01/01   01/18/02  
Dwain Neumann
  National Home Centers Inc     10.0       25.2       100.6       36.5 %     62.2 %     55.2 %     71.4 %
07/03/01   12/31/01  
Investor Group
  Electronic Retailing Sys Intl     5.6       21.8       5.1       48.3 %     85.7 %     85.7 %     52.9 %
05/22/01   12/21/01  
Investor Group
  Quizno’s Corp     26.0       53.4       48.7       32.0 %     28.4 %     30.1 %     28.7 %
05/09/01   07/26/02  
Investor Group
  Pierre Foods Inc     14.5       125.0       232.1       37.0 %     53.8 %     158.1 %     150.0 %
11/10/00   01/31/01  
HCH Acquisition Corp
  Holt’s Cigar Holding Inc     34.8       28.1       34.3       26.0 %     57.1 %     44.3 %     54.4 %
       
  Min   $ 4.9     $ 6.5     $ 5.1       19.3 %     13.8 %     17.9 %     -17.5 %
       
  Mean     23.6       45.7       74.4       34.3 %     51.8 %     63.2 %     57.0 %
       
  Median     15.5       24.4       68.6       34.3 %     44.3 %     45.0 %     49.9 %
       
  Max     96.2       125.0       232.1       48.3 %     150.0 %     177.8 %     150.0 %


    Note:
 
    Source: SDC, Bloomberg LP and company filings.
(LEGG MASON)   Confidential — not for duplication.

40


 

-DRAFT-

G. COMPARABLE GOING PRIVATE TRANSACTIONS ANALYSIS

Comparable Going Private Premiums Paid Implied Valuation
(Includes Completed Going Private transactions, January 2001 to Current with Premia between 0% — 100% in which a minority interest was acquired)
($ in millions)

                                                                     
                Parameters
  Premium Paid
Announcement   Completion           Market   Enterprise   LTM   % Interest            
Date
  Date
  Acquiror
  Target
  Value
  Value
  Revenue
  Acquired
  1 Day
  1 Week
  1 Month
03/24/03   06/18/03  
Management Group
  The Judge Group Inc   $ 14.2     $ 15.3     $ 80.8       40.0 %     50.0 %     41.9 %     50.0 %
10/11/02   02/28/03  
Investor Group
  Landair Corp     96.2       99.4       102.5       29.0 %     25.0 %     31.0 %     26.2 %
09/03/02   05/30/03  
Sandata Acquisition Corp
  Sandata Technologies Inc     4.9       6.5       17.2       30.0 %     21.6 %     21.6 %     39.0 %
07/26/02   02/28/03  
Samuel J Heyman
  International Specialty Prods     674.9       1,074.1       834.3       20.0 %     4.3 %     1.7 %     33.8 %
04/18/02   06/21/02  
Westminster Capital Inc
  Westminster Capital Inc     22.8       17.2       25.3       19.6 %     38.5 %     48.9 %     49.7 %
12/18/01   02/28/02  
Preserver Group Inc
  Preserver Group Inc     16.5       23.6       99.2       47.1 %     36.0 %     45.7 %     29.2 %
11/16/01   03/04/02  
Ernest C Garcia II
  Ugly Duckling Corp     43.4       464.2       448.6       39.2 %     41.8 %     42.9 %     38.4 %
10/01/01   02/13/02  
Investor Group
  NCH Corp     280.4       262.5       672.8       45.7 %     34.0 %     33.6 %     18.8 %
08/01/01   01/18/02  
Dwain Neumann
  National Home Centers Inc     10.0       25.2       100.6       36.5 %     62.2 %     55.2 %     71.4 %
07/03/01   12/31/01  
Investor Group
  Electronic Retailing Sys Intl     5.6       21.8       5.1       48.3 %     85.7 %     85.7 %     52.9 %
06/06/01   12/13/01  
Liberty Mutual Insurance Co
  Liberty Financial Cos Inc     1,669.1       421.1       1,005.0       30.0 %     24.8 %     40.1 %     40.4 %
05/22/01   12/21/01  
Investor Group
  Quizno’s Corp     26.0       53.4       48.7       32.0 %     28.4 %     30.1 %     28.7 %
11/10/00   01/31/01  
HCH Acquisition Corp
  Holt’s Cigar Holding Inc     34.8       28.1       34.3       26.0 %     57.1 %     44.3 %     54.4 %
       
  Min   $ 4.9     $ 6.5     $ 5.1       19.6 %     4.3 %     1.7 %     18.8 %
       
  Mean     223.0       193.3       267.3       34.1 %     39.2 %     40.2 %     41.0 %
       
  Median     26.0       28.1       99.2       32.0 %     36.0 %     41.9 %     39.0 %
       
  Max     1,669.1       1,074.1       1,005.0       48.3 %     85.7 %     85.7 %     71.4 %


    Note:
 
    Source: SDC, Bloomberg LP and company filings.
(LEGG MASON)   Confidential — not for duplication.

41


 

-DRAFT-

ADDENDUM A — Analysis of Project Tigers’ Relative Stock Performance

(ONE WEEK RELATIVE STOCK PERFORMANCE)


    Note:
 
    Source: FactSet.
(LEGG MASON)   Confidential — not for duplication.


 

-DRAFT-

ADDENDUM A — Analysis of Project Tigers’ Relative Stock Performance

(ONE MONTH RELATIVE STOCK PERFORMANCE)

(LEGG MASON)   Confidential — not for duplication.


 

-DRAFT-

ADDENDUM A — Analysis of Project Tigers’ Relative Stock Performance

(THREE MONTHS RELATIVE STOCK PERFORMANCE)

(LEGG MASON)   Confidential — not for duplication.


 

-DRAFT-

ADDENDUM A — Analysis of Project Tigers’ Relative Stock Performance

(SIX MONTHS RELATIVE STOCK PERFORMANCE)

(LEGG MASON)   Confidential — not for duplication.


 

-DRAFT-

ADDENDUM A — Analysis of Project Tigers’ Relative Stock Performance

(ONE YEAR RELATIVE STOCK PERFORMANCE)

(LEGG MASON)   Confidential — not for duplication.


 

-DRAFT-

ADDENDUM B — Analysis of Risk Free Rate

(RISK FREE RATE ANALYSIS)

(LEGG MASON)   Confidential — not for duplication.


 

-DRAFT-

ADDENDUM C — Analysis of Project Tigers’ Beta and Trading Volume

Project Tigers’ Historical Average Beta and Daily Trading Volume
(Average data as of September 12, 2003)

                                         
    1 Week
  1 Month
  3 Months
  6 Months
  1 Year
Average Beta
    2.33       1.13       1.21       0.45       0.20  
Average Daily
    1,800       2,000       1,472       1,202       1,502  
Trading Volume
                                       
(LEGG MASON)   Confidential — not for duplication.


 

-DRAFT-

(LEGG MASON)

Valuation Findings as
Presented to the

Special Committee of the
Board of Directors
of
Project Tigers

September __, 2003

Legg Mason Wood Walker

Incorporated

Confidential- not for duplication.


 

-DRAFT-

Independence of Research

Legg Mason prohibits its employees from directly or indirectly offering a favorable research rating or specific price target, or offering to change a rating or price target, as consideration or inducement for the receipt of business or for compensation.


 

-DRAFT-

TABLE OF CONTENTS

I.   Introduction

  A.   Legg Mason’s Engagement
 
  B.   Overview of Project Tigers

II.   Valuation Analysis

  A.   Summary Analysis
 
  B.   Purchase Price Ratio Matrix
 
  C.   Comparable Public Company Analysis
 
  D.   Comparable M&A Transactions Analysis
 
  E.   Discounted Cash Flow Analysis
 
  F.   Leveraged Buyout Analysis
 
  G.   Comparable Going Private Transaction Analysis

    Addendum

  A.   Analysis of Project Tigers’ Relative Stock Performance
 
  B.   Analysis of Risk Free Rate
 
  C.   Analysis of Project Tigers’ Beta and Trading Volume

   
(LEGG MASON)
Confidential — not for duplication.

EX-99.(C)(5) 5 g86864a2exv99wxcyx5y.htm EX-99.(C)(5) DRAFT FAIRNESS OPINION EX-99.(C)(5) DRAFT FAIRNESS OPINION
 

DRAFT

EXHIBIT 99.(c)(5)

          December 15, 2003

Special Committee of the Board of Directors
Boyd Bros. Transportation Inc.
3275 Highway 30
Clayton, Alabama 36016

Members of the Special Committee:

We understand that an Investor Group including members of the management group of Boyd Bros. Transportation, Inc, a Delaware corporation (“Boyd Bros.” or the “Company”), have informed the Special Committee of the Board of Directors of the Company (the “Special Committee”) of their intention to acquire all of the Company’s outstanding stock (not already owned by the Investor Group (the “Investor Group”)) in order to take the Company private. According to a letter dated December    , 2003 from Dempsey Boyd representing the Investor Group and, pursuant to the terms and conditions set forth in a draft of the Offer to Purchase dated December    , 2003 (the “Offer to Purchase”), Boyd Bros. Acquisition Corporation, a Delaware corporation newly-formed by the Investor Group (the “Purchaser”) is prepared to make a tender offer at a price of $6.75 per share (the “Per Share Offer Price”) for all outstanding shares of common stock of the Company not owned by the Investor Group (the “Offer”). The Offer to Purchase further provides that the Purchaser intends, subject to the terms and conditions set forth in the Offer to Purchase, as soon as possible following consummation of the Offer, to effect a merger between the Company and the Purchaser (the “Merger”) pursuant to which all of the Company’s outstanding stock not then already owned by the Purchaser or transferred to the Purchaser by the Investor Group (other than stock held by the Company’s shareholders who dissent from the Merger and perfect their dissenters rights under the Delaware Business Corporation Law) would be converted into the right to receive in cash an amount per share equal to the Per share Offer Price (the “Merger Price,” and collectively with the Per Share Offer Price, the “Consideration”).

You have requested our opinion as investment bankers as to the fairness, from a financial point of view, to the holders of the Company’s common stock (other than the Investor Group) of the Consideration as of the date hereof.

 


 

Special Committee of the Board of Directors
Boyd Bros. Transportation Inc.
  December 15, 2003
Page 2

In arriving at our opinion set forth below, we have, among other things:

(i)   reviewed and analyzed the financial terms and conditions of the letters to the Special Committee from the Investor Group (or representatives thereof) dated December    , 2003;
 
(ii)   reviewed and analyzed certain publicly available audited and unaudited financial statements of Boyd Bros. and certain other publicly available information of Boyd Bros.;
 
(iii)   reviewed and discussed with representatives of the senior management of Boyd Bros. certain information of a business and financial nature furnished to us by them, including financial forecasts and related assumptions of Boyd Bros.;
 
(iv)   reviewed public information with respect to certain other companies in lines of business that we believe to be generally comparable to the business of Boyd Bros.;
 
(v)   reviewed the financial terms, to the extent publicly available, of certain business combinations that we believe to be generally comparable to the Offer;
 
(vi)   reviewed certain publicly available information concerning the historical stock price of Boyd Bros. common stock;
 
(vii)   reviewed a draft of the Offer to Purchase dated December    , 2003 and a draft of the Company’s Solicitation and Recommendation Statement on Schedule 14D-9 dated December    , 2003 with respect to the Offer (the “Schedule 14D-9”); and
 
(viii)   conducted such other financial studies, analyses and investigations and considered such other information as we deemed necessary or appropriate for purposes of our opinion.

In connection with our review, we have assumed and relied upon, without any responsibility for independent verification or liability therefore, the accuracy and completeness of the foregoing information, all financial and other information supplied to us by Boyd Bros., and all publicly available information. We have further relied upon the assurances of management of the Company that they are unaware of any facts that would make the information provided incomplete or misleading. We have assumed that there has been no material change in the assets, financial condition, business or prospects of Boyd Bros. since the date of the most recent financial statements made available to us. We have not performed any independent valuation or appraisal of any of the assets or liabilities of the Company. Nor have we been furnished with any appraisals or valuations of the assets or liabilities of the Company. We have also assumed that the Merger will be consummated immediately after the consummation of the Offer in the manner contemplated by the Offer to Purchase.

 


 

Special Committee of the Board of Directors
Boyd Bros. Transportation Inc.
  December 15, 2003
Page 3

With respect to financial forecasts, we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of the Company as to the future financial performance of the Company. We assume no responsibility for and express no view as to such forecasts or the assumptions on which they are based. The forecasts and projections were based on numerous variables and assumptions that are inherently uncertain, including, without limitation, facts related to general economic and market conditions. Accordingly, actual results could vary significantly from those set forth in such forecasts and projections. Our opinion is necessarily based on share prices, economic, monetary, market and other conditions and circumstances as in effect on, and the information made available to us up to and including, the date of this letter. In rendering our opinion, we did not address the relative merits of the Offer, the Merger or any alternative potential transaction. Our opinion is limited to the fairness, from a financial point of view, to the holders of the Company’s common stock (other than the Investor Group) of the Consideration and we express no opinion as to the underlying decision of the Special Committee to recommend the Offer or Merger. In arriving at our opinion, we were not authorized to solicit, and did not solicit, interest from any party with respect to a business combination or other extraordinary transaction involving the Company. We have acted as financial advisor to the Special Committee with respect to the Offer and will receive a fee from the Company for our services. In addition, the Company has agreed to indemnify us for certain liabilities arising out of our engagement. In the ordinary course of our business, we may actively trade securities of the Company for our own account and for the account of our customers and, accordingly, may at any time hold a long or short position in such securities.

We have undertaken no independent analysis of any pending or threatened litigation, possible unasserted claims or other contingent liabilities to which either the Company or their affiliates is a party or may be subject and our opinion makes to assumption concerning, and therefore does not consider, the possible assertion of claims, outcomes or damages arising out of such matters.

It is understood that this letter is directed to the Special Committee of the Board of Directors of Boyd Bros. and does not constitute a recommendation to any holder of the Company’s common stock as to how such stockholder should respond to the Offer or the Merger. This letter is not to be quoted or referred to, in whole or in part, in any tender offer document, registration statement, sale of securities, nor shall this letter be used for any other purposes, without our prior written consent, provided that this opinion (and references to this opinion) may be included in its entirety in the Schedule 14D-9 and related materials filed by Boyd Bros. with the Securities and Exchange Commission with respect to the Offer.

 


 

Special Committee of the Board of Directors
Boyd Bros. Transportation Inc.
  December 15, 2003
Page 4

Based upon and subject to the foregoing, we are of the opinion that, as of the date hereof, the Consideration to be received by the holders of the Company’s common stock (other than the Investor Group) in the Offer and Merger, considered as a single transaction, is fair from a financial point of view.

Very truly yours,

LEGG MASON WOOD WALKER, INCORPORATED

 

EX-99.(C)(6) 6 g86864a2exv99wxcyx6y.htm EX-99.(C)(6) DATA TABLE PREPARED BY MORGAN KEEGAN exv99wxcyx6y
 

EXHIBIT 99(c)(6)

BOYD BROS.
LTM Results as of 9/30/03, Balance Sheet as of 6/30/03
($ in thousands, except share price and earnings per share)

                                 
    Enterprise Value /
   
    Revenue
  EBITDA
  EBIT
  P/E
Current Share Price:
    0.3 x       3.4 x       35.1 x     NA
$6.00 offer:
    0.4 x       3.7 x       38.2 x     NA
Current Share Price (11/10/03):
          $ 4.59                  
$6 Offer Premium to Current Price:
            30.7 %                
LTM Revenue
          $ 131,717                  
LTM EBITDA
          $ 12,849                  
LTM EBIT
          $ 1,245                  
LTM EPS (Diluted)
          $ (0.04 )                
Market Capitalization
          $ 12,442                  
Net Debt (as of 6/30/03)
            31,289                  
 
           
 
                 
Enterprise Value
          $ 43,731                  
Equity Value at $6 Offer
          $ 16,264                  
Net Debt (as of 6/30/03)
            31,289                  
 
           
 
                 
Enterprise Value at $6 Offer
          $ 47,553                  

 


 

BOYD BROS.
CYE 2003 Projected Results, Balance Sheet as of 6/30/03
($ in thousands, except share price and earnings per share)

                                 
    Enterprise Value /
   
    Revenue
  EBITDA
  EBIT
  P/E
Current Share Price:
    0.3 x       3.2 x       19.2 x       22.9 x  
$6.00 offer:
    0.4 x       3.5 x       20.9 x       30.0 x  
Current Share Price 11/10/03:
          $ 4.59                  
$6 Offer Premium to Current Price:
            30.7 %                
CYE Revenue
          $ 133,244                  
CYE EBITDA
          $ 13,676                  
CYE EBIT
          $ 2,276                  
CYE EPS (Diluted)
          $ 0.20                  
Current Market Capitalization
          $ 12,442                  
Net Debt
            31,289                  
 
           
 
                 
Current Enterprise Value
          $ 43,731                  
Equity Value at $6 Offer
          $ 16,264                  
Net Debt
            31,289                  
 
           
 
                 
Enterprise Value at $6 Offer
          $ 47,553                  

 

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