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FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

(Mark One)

For the quarterly period ended September 30, 2002

OR

    [  ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________________________ to ________________________________

Commission File Number                                     0-23948                                                    

Boyd Bros. Transportation Inc.
(Exact name of Registrant as specified in its charter)

Delaware	63-6006515
(State or other jurisdiction of	(IRS Employer Identification
incorporation or organization)	Number)

3275 Highway 30, Clayton, Alabama 36016

(334) 775-1400

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) Yes [X] No [  ], and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of November 13, 2002.

Common Stock, $.001 Par Value	2,708,105
(Class)	(Number of Shares)

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INDEX

			Page Number
Part I.	Financial Information
	Item 1.	Consolidated Financial Statements
		Consolidated Balance Sheets September 30, 2002 (unaudited) and December 31, 2001	3
		Consolidated Statements of Income (unaudited) Three- and Nine-month Periods Ended September 30, 2002 and 2001	5
		Consolidated Statements of Cash Flows (unaudited) Nine-month Periods Ended September 30, 2002 and 2001	6
		Notes to Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19
	Item 4.	Disclosure Controls and Procedures	19
Part II.	Other Information

	Item 1.	Legal Proceedings	20
	Item 2.	Changes in Securities and Use of Proceeds	20
	Item 3.	Defaults Upon Senior Securities	20
	Item 4.	Submission of Matters to a Vote of Security Holders	20
	Item 5.	Other Information	20
	Item 6.	Exhibits and Reports on Form 8-K	20
Signatures			21

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BOYD BROS. TRANSPORTATION INC.

CONSOLIDATED BALANCE SHEETS

		SEPTEMBER 30,				DECEMBER 31,
		2002				2001
		(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	570,542			$	2,221,455
Short-term investments			278,000				278,000
Accounts receivable:
Trade and interline			11,296,855				10,055,894
Other			823,054				956,576
Current portion of net investment in sales-type leases			1,309,841				1,200,175
Income tax receivable			797,687				339,220
Parts and supplies inventory			598,244				497,637
Tires on revenue equipment			71,700				152,300
Prepaid licenses and permits			705,534				946,054
Other prepaid expenses			948,602				1,157,370
Deferred income taxes			1,618,437				1,497,047
Total current assets			19,018,496				19,301,728
PROPERTY AND EQUIPMENT:
Land and land improvements			2,948,297				2,800,523
Buildings			7,764,285				7,635,280
Revenue equipment			65,873,518				70,927,529
Other equipment			12,382,664				12,090,626
Leasehold improvements			386,384				384,884
Total			89,355,148				93,838,842
Less accumulated depreciation and amortization			33,310,977				35,325,568
Property and equipment, net			56,044,171				58,513,274
OTHER ASSETS:
Net investment in sales-type leases			5,072,783				3,850,821
Goodwill			3,452,446				3,452,446
Revenue equipment held for lease			1,455,406				500,125
Deposits and other assets			407,208				465,112
Total other assets			10,387,843				8,268,504
TOTAL		$	85,450,510			$	86,083,506

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		SEPTEMBER 30,				DECEMBER 31,
		2002				2001
		(UNAUDITED)
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
	Line of credit	$	—			$	210,540
	Accounts payable – trade and interline		2,141,643				3,339,973
	Current maturities of long-term debt		13,682,298				13,580,359
	Accrued liabilities:
	Self-insurance claims		4,705,332				2,820,773
	Salaries and wages		821,746				485,599
	Other		1,401,882				953,694
	Total current liabilities		22,752,901				21,390,938
LONG-TERM DEBT			22,360,460				25,606,297
DEFERRED INCOME TAXES			14,272,229				13,798,144
	Total liabilities		59,385,590				60,795,379
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
	Preferred stock, $.001 par value – 1,000,000 shares authorized; no shares issued and outstanding
	Common stock, $.001 par value – 10,000,000 shares authorized; 4,069,640 shares issued and outstanding		4,070				4,070
	Treasury stock at cost; 1,361,535 shares (2002) and 1,355,041 shares (2001)		(9,638,274	)			(9,609,190	)
	Additional paid-in capital		16,884,622				16,884,622
	Retained earnings		18,814,502				18,008,625
	Total stockholders’ equity		26,064,920				25,288,127
TOTAL		$	85,450,510			$	86,083,506
See notes to unaudited consolidated financial statements.

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BOYD BROS. TRANSPORTATION INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2002				2001				2002				2001
OPERATING REVENUES		$	33,180,688			$	32,457,010			$	96,520,586			$	94,386,035
OPERATING EXPENSES:
Salaries, wages and employee benefits			9,400,322				9,743,527				28,052,461				30,207,523
Cost of independent contractors			10,447,009				8,490,937				29,526,224				22,655,407
Fuel			3,443,561				3,632,761				10,343,389				11,586,663
Operating supplies			2,761,513				3,196,604				8,039,782				9,151,838
Operating taxes and licenses			637,648				639,862				1,984,758				1,617,997
Insurance and claims			1,774,103				1,769,989				5,230,345				5,295,495
Communications and utilities			297,074				304,700				947,294				1,069,706
Depreciation and amortization			2,849,606				3,043,832				8,685,443				9,326,184
Gain on disposition of property and equipment, net			(160,916	)			(10,024	)			(247,312	)			(591,792	)
Other			388,948				664,390				1,140,766				1,461,463
Total operating expenses			31,838,868				31,476,578				93,703,150				91,780,484
OPERATING INCOME			1,341,820				980,432				2,817,436				2,605,551
OTHER INCOME (EXPENSES):
Interest income			2,696				14,946				11,472				47,845
Interest expense			(518,190	)			(581,439	)			(1,430,114	)			(2,128,021	)
Other expenses			—				(11,923	)			(1,000	)			(11,432	)
Other expenses, net			(515,494	)			(578,416	)			(1,419,642	)			(2,091,608	)
INCOME BEFORE PROVISION FOR INCOME TAXES			826,326				402,016				1,397,794				513,943
PROVISION FOR INCOME TAXES			331,252				171,806				583,301				293,925
NET INCOME		$	495,074			$	230,210			$	814,493			$	220,018
BASIC NET INCOME PER SHARE		$	0.18			$	0.08			$	0.30			$	0.08
DILUTED NET INCOME PER SHARE		$	0.18			$	0.08			$	0.29			$	0.08
AVERAGE SHARES OUTSTANDING			2,706,781				2,794,140				2,709,122				2,855,465
AVERAGE SHARES OUTSTANDING ASSUMING DILUTION			2,825,674				2,794,140				2,767,228				2,855,465

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BOYD BROS. TRANSPORTATION INC.

CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)

		Nine Months Ended September 30,
		2002				2001
OPERATING ACTIVITIES:
Net income		$	814,493			$	220,018
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			8,685,443				9,326,184
Net effect of sales-type leases on cost of independent contractors			(1,147,441	)			(340,497	)
Gain on disposal of property and equipment, net			(247,312	)			(591,792	)
Provision for deferred income taxes			352,695				—
Changes in assets and liabilities provided (used) cash:
Accounts receivable			(1,107,439	)			(2,162,111	)
Refundable income taxes			(458,467	)			1,623,928
Other current assets			429,281				(929,260	)
Deposits and other assets			49,288				(33,389	)
Accounts payable- trade and interline			(1,198,330	)			1,861,999
Accrued liabilities and other current liabilities			2,668,894				501,973
Net cash provided by operating activities			8,841,105				9,477,053
INVESTING ACTIVITIES:
Payments received on sales-type leases			2,056,031				2,155,271
Capital expenditures:
Revenue equipment			(4,048,047	)			(1,400,293	)
Other equipment			(822,351	)			(244,478	)
Construction in process			—				(107,040	)
Proceeds from disposals of property and equipment			1,060,105				1,152,432
Net cash (used in) provided by investing activities			(1,754,262	)			1,555,892
FINANCING ACTIVITIES:
Purchase of treasury stock			(29,084	)			(1,082,166	)
Payments on line of credit – net			(210,540	)			(871,893	)
Proceeds from long-term debt			3,286,003				391,047
Principal payments on long-term debt			(11,784,135	)			(9,705,034	)
Net cash used in financing activities			(8,737,756	)			(11,268,046	)
NET DECREASE IN CASH AND CASH EQUIVALENTS			(1,650,913	)			(235,101	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			2,221,455				1,273,281
BALANCE AT END OF PERIOD		$	570,542			$	1,038,180
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (received) during the period for :
Income taxes, net of refunds		$	747,483			$	(43,484	)
Interest		$	1,430,114			$	2,128,021
SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES:
Net investment in sales-type leases		$	(2,865,402	)		$	828,091
Dealer financed purchases of revenue equipment		$	5,354,235			$	—

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BOYD BROS. TRANSPORTATION INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The accompanying consolidated financial statements have been prepared in compliance with Form 10-Q instructions and, thus, do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, the statements reflect all adjustments, including those of normal recurring nature, necessary to present fairly the results of the reported interim periods. Interim results are not necessarily indicative of results for a full year. The statements should be read in conjunction with the summary of accounting policies and notes to financial statements included in the Company ’s latest annual report on Form 10-K.

2. Principles of Consolidation

The consolidated financial statements include the accounts of Boyd Bros. and its wholly owned subsidiary, WTI Transport, Inc. (“WTI”). Boyd Bros. and WTI are referred to herein collectively as the “Company”. All significant inter-company balances, transactions and stockholdings have been eliminated. Certain reclassifications have been made to the consolidated statement of cash flows for the nine-month period ending September 30, 2001, to conform to the current period presented.

3. Tires on Revenue Equipment

April 3, 2002, the Internal Revenue Service issued Revenue Procedure 2002-27, effective for assets placed in service after December 31, 2001, which outlines an “original tire capitalization method” of accounting for the cost of original and replacement tires on trucks used in business activities. The rule provides for the capitalization of the cost of original tires and depreciation using the same depreciation method, recovery period, and convention that apply to the vehicle on which the tires were first installed. These original tires are considered to be part of the vehicle and are to be “disposed of” at the same time as the vehicle those tires were first installed on. For tires acquired on or prior to December 31, 2001, tires placed in service on newly purchased revenue equipment were carried at cost and depreciated over their useful lives, estimated to be eighteen months. Under the new method, replacement tires are to be expensed in the year installed, which is consistent with the Company’s past practice.

The original tire capitalization method was adopted for all tires placed into service after December 31, 2001. The tires applicable to tractor units and trailers are depreciated according to the asset they are considered a part of. There is no adjustment to the accounting for those tires already in service. A depreciation method being adopted for newly acquired assets that differs from the method(s) used for previously recorded assets of a similar class does not constitute a change in accounting principle but, rather, a change in accounting estimate.

The Company believes the new method will more appropriately reflect its financial results by better allocating costs of new tires over the useful lives of the vehicles they are considered to be part of. In addition, the new method more closely conforms to that prevalent in the industry in which the Company operates. The adoption of this method does not cause a lack of comparability of financial statements. The Company recognized approximately $66,000 less in operating expenses during the first nine months of 2002 by applying the new method of depreciation.

4. Environmental Matters

The Company’s operations are subject to certain federal, state, and local laws and regulations concerning the environment. Certain of the Company’s facilities are located in historically industrial areas, and, therefore, there is the possibility of environmental liability as a result of operations by prior owners, as well as the Company’s use of fuels and underground storage tanks at its regional service centers.

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5. Stockholders’ Equity

Earnings Per Share – For 2002, stock options of 118,998 and 58,782 were included in the computation of diluted net income for the three and nine-month periods, respectively. The inclusion of the options in the dilutive earnings per share calculation had an effect of ($.01) on basic earnings per share for the nine- month period ended September 30, 2002. No options were included in the diluted net income calculation for the comparative periods in 2001 because to do so would have been anti-dilutive as the exercise prices of all stock options were above the average market price of the Company’s common stock for the periods presented.

Stock Purchase Plan – In February 1999, the Company’s Board of Directors authorized a program under which the Company may purchase up to 600,000 shares of its common stock in open market or negotiated transactions. During the first quarter of 2002, the Company purchased 6,500 shares of its common stock from related parties for $42,250, in accordance with the terms of the acquisition agreement pursuant to which the Company acquired WTI Transport in 1997. During the third quarter of 2002, the Company did not purchase any shares under this program. However, during the third quarter of 2002, the Company issued shares from treasury stock to the Employee Stock Purchase Plan for $13,170.

6. Related Party Transactions

The Company entered into a consulting agreement with its Chairman Emeritus, Dempsey Boyd, effective January 1, 2002 through December 31, 2003. Mr. Boyd will be paid $145,000 annually under this consulting agreement. Mr. Boyd provides advice and expertise, and performs such duties and services from time to time, during the term of the agreement, as the Company reasonably requests. The services provided include, without limitation, negotiating equipment and tire agreements, reviewing equipment requirements, researching and investigating equipment, advising the Company regarding certain ongoing litigation matters, advising the Company regarding construction projects and providing the Company with an experienced perspective on the trucking industry.

7. Goodwill

In June 2001, the Financial Accounting Standards Board (the “FASB”) issued SFAS No. 141, “Business Combinations,” and SFAS No.142, “Goodwill and Other Intangible Assets.” SFAS No. 141 requires the use of the purchase method of accounting and prohibits the use of the pooling-of-interests method of accounting for business combinations initiated after June 30, 2001. This statement also requires that the Company recognize acquired intangible assets apart from goodwill if the acquired intangible assets meet certain criteria. SFAS No.142 requires, among other things, that companies no longer amortize goodwill, but instead test goodwill for impairment at least annually.

In addition, SFAS No. 142 requires that the Company identify reporting units for purposes of assessing potential future impairments of goodwill, reassess the useful lives of other existing recognized finite-lived intangible assets, and cease amortization of intangible assets with an indefinite useful life. An intangible asset with an indefinite useful life should be tested for impairment in accordance with the guidance in SFAS No. 142. This statement is required to be applied in fiscal years beginning after December 15, 2001, to all goodwill and other intangible assets recognized at that date, regardless of when those assets were initially recognized. SFAS No. 142 requires the Company to complete a transitional goodwill impairment test within six months from the date of adoption and reassess the useful lives of other intangible assets within the first interim quarter after adoption.

The Company adopted SFAS Nos. 141 and 142 on January 1, 2002 and, accordingly, ceased amortization of goodwill at that time. Goodwill amortization expense of $55,950 and $167,850 were included in the consolidated financial statements for the three and nine-month periods ended September 30, 2001, respectively. Had goodwill amortization expense not been recognized in 2001, earnings per share would have increased from $0.08 per share to $0.09 per share for the three months ended September 30, 2001 and from $0.08 per share to $0.11 per share for the nine months ended September 30, 2001.

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As of June 30, 2002, the Company completed the first phase of transitional testing for the potential impairment of goodwill relating to its WTI subsidiary. This goodwill impairment test is to be completed annually unless events or evidence exist that would significantly alter amounts used in the annual calculation. The Company used a multiple of EBITDA (earnings before interest, tax, depreciation and amortization expenses) in evaluating the fair value of WTI. This was consistent with the valuation method used in calculating the original purchase price of WTI in 1997. As a result of such testing, the Company determined there was no impairment of goodwill that should be included in the accompanying financial statements. At June 30, 2002, the net book value recorded for goodwill was $3,452,446. No events have occurred since this assessment to cause a significant change in the values used for computation. Thus, another impairment test was not performed during the third quarter of 2002.

8. Segment Information

The Company has two reportable segments: Boyd and WTI. The Boyd division is a flatbed carrier that hauls primarily steel and building products throughout most of the continental United States, and operates 740 trucks. Boyd had 545 company drivers and 195 owner-operators as of September 30, 2002. The WTI division is a flatbed carrier that hauls steel and roofing products, primarily in the eastern two-thirds of the United States, and operates 219 trucks. WTI had 33 company drivers and 186 owner-operators as of September 30, 2002. Unaudited segment reporting information for the three and nine-month periods ended September 30, 2002 and 2001 is as follows:

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Results of Operations
	Three Months Ended Sept. 30, 2002
			Boyd				WTI				Eliminations				Total
		Operating revenues	$	27,756,409			$	5,424,279			$	—			$	33,180,688
		Operating expenses		26,633,626				5,205,242				—				31,838,868
		Operating income		1,122,783				219,037				—				1,341,820
		Operating ratio		96.0	%			96.0	%							96.0	%
	Three Months Ended Sept. 30, 2001
			Boyd				WTI				Eliminations				Total
		Operating revenues	$	27,267,248			$	5,189,762			$	—			$	32,457,010
		Operating expenses		26,371,833				5,104,745				—				31,476,578
		Operating income		895,415				85,017				—				980,432
		Operating ratio		96.7	%			98.4	%							97.0	%
	Nine Months Ended Sept. 30, 2002
			Boyd				WTI				Eliminations				Total
		Operating revenues	$	80,796,627			$	15,723,959							$	96,520,586
		Operating expenses		78,542,132				15,161,018				—				93,703,150
		Operating income		2,254,495				562,941				—				2,817,436
		Operating ratio		97.2	%			96.4	%							97.1	%
	Nine Months Ended Sept. 30, 2001
			Boyd				WTI				Eliminations				Total
		Operating revenue	$	79,725,127			$	14,772,544			$	(111,636	)		$	94,386,035
		Operating expenses		77,039,633				14,852,487				(111,636	)			91,780,484
		Operating income		2,685,494				(79,943	)			—				2,605,551
		Operating ratio		96.6	%			100.5	%							97.2	%
Identifiable Assets
	As of September 30, 2002
			Boyd				WTI								Total
		Cash and cash equivalents	$	533,582			$	36,960							$	570,542
		Property and equipment		51,377,626				4,666,545								56,044,171
		Long-term debt (excluding current maturities)		20,774,496				1,585,964								22,360,460
	As of December 31, 2001
			Boyd				WTI								Total
		Cash and cash equivalents	$	943,574				$1,277,881							$	2,221,455
		Property and equipment		54,740,848				3,772,426								58,513,274
		Long-term debt (excluding current maturities)		25,364,623				241,674								25,606,297

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the attached interim consolidated financial statements and with the Company’s 2001 Annual Report to Stockholders, which included audited financial statements and notes thereto for the fiscal year ended December 31, 2001, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

The Company, headquartered in Clayton, Alabama, is a flatbed truckload carrier that has two reportable segments: Boyd Bros. and WTI Transport (“WTI”). The Boyd Bros. division operates throughout most of the continental United States, hauling primarily steel and building products. The WTI division hauls steel and roofing products, primarily in the eastern two-thirds of the United States. The Company typically serves high-volume, time-sensitive shippers that demand time definite delivery.

Historically, the Company has owned its revenue equipment and operated through employee-operators. The Company’s expansion in the past, therefore, required significant capital expenditures that have been funded through secured borrowings. In the last five years, the Company began adding owner-operators to its fleet as a strategy to expand its potential for growth without the concomitant increase in capital expenditures typically related to owned equipment. The Company accelerated the implementation of this strategy in December 1997 with the acquisition of WTI, which specializes in short-haul routes using a largely owner-operator fleet.

The Company continues to focus on marketing efforts and is broadening its customer base outside of the steel and building products industries, as well as stressing best-in-business service to its customers. The Company remains committed to its emphasis on safety while working to reduce insurance claims and costs. The Company believes these efforts are beginning to yield results in the form of profitable operations in the second and third quarters of 2002, however, results to date are not necessarily indicative of the Company’s performance for the year. See “Factors That May Affect Future Results”, below.

Critical Accounting Policies

The methods, estimates and judgments the Company’s management uses in applying Company accounting policies may have a significant effect on the results the Company reports in its financial statements. The estimates and judgments in applying those accounting policies which may have the most significant effect on the Company’s financial statements and operating results include: allowance for doubtful accounts for tractors leased to owner-operators; determinations of impairment of long-lived assets; estimates of accrued liabilities for claims and workers’ compensation; estimates of useful lives and salvage values for the depreciation of tractors and trailers; and allowance for doubtful accounts receivable. Please refer to “Management’s Discussion and Analysis of Financial Condition – Critical Accounting Policies” in the Company ’s Annual Report on Form 10-K for the year ended December 31, 2001 for a more complete description of the Company’s critical accounting policies.

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Quarterly Review:

The following tables set forth, by segment, the percentage relationship of expense items to operating revenues and certain other operating statistics for the periods indicated:

		Company						Boyd						WTI
		Quarter Ended September 30,
		2002			2001			2002			2001			2002			2001
Operating revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Operating expenses
	Salaries, wages, and employee benefits	28.3			30.0			31.4			32.9			12.8			15.0
	Cost of independent contractors	31.5			26.2			25.4			20.4			62.8			56.3
	Fuel	10.4			11.2			11.7			12.5			3.8			4.4
Operating supplies		8.3			9.8			8.9			10.4			5.5			7.1
	Operating taxes and licenses	1.9			2.0			2.0			2.1			1.3			1.5
	Insurance and claims	5.3			5.5			6.1			5.6			1.4			4.6
	Communications and utilities	1.0			0.9			0.9			0.8			0.8			1.2
	Depreciation and amortization	8.6			9.4			9.4			10.1			4.3			5.7
	Gain on disposition of property and equipment, net	(0.5	)		(0.0	)		(0.6	)		(0.0	)		0.0			(0.2	)
	Other	1.2			2.0			0.8			1.9			3.3			2.8
Total operating expenses		96.0			97.0			96.0			96.7			96.0			98.4
Operating income		4.1			3.0			4.0			3.2			4.0			1.7
Interest expense, net		(1.6	)		(1.8	)		(1.9	)		(2.0	)		0.0			(0.4	)
Income before income taxes		2.5			1.2			2.1			1.2			4.0			1.3
	Income taxes	1.0			0.5			0.8			0.4			1.8			1.1
Net income		1.5	%		0.7	%		1.3	%		0.8	%		2.2	%		0.2	%

		Company						Boyd						WTI
		Quarter Ended September 30,
		2002			2001			2002			2001			2002			2001
Company operated tractors		578			605			545			564			33			41
Owner-operated tractors		381			371			195			185			186			186
Total tractors		959			976			740			749			219			227
Company operated tractor %		58	%		62	%		74	%		75	%		13	%		18	%
Owner-operated tractor %		42	%		38	%		26	%		25	%		87	%		82	%
Total %		100	%		100	%		100	%		100	%		100	%		100	%

Quarterly Results of Operations

The Company’s total operating revenues increased $723,678, or 2.2%, to $33,180,688 for the quarter ended September 30, 2002, compared with $32,457,010 for the same period in 2001. This change reflected an increase of $489,161, or 1.8%, in the Boyd division and an increase of $234,517, or 4.5%, in the WTI division. These changes are reflective of diversification outside of the steel and building materials industries and are also reflective of an increase in revenue resulting from the Company’s brokerage of freight onto outside carriers.

Total operating expenses increased $362,290, or 1.2%, to $31,838,868 for the third quarter ended September 30, 2002, compared to $31,476,578 for the same three months last year. Of this increase, $261,793 was attributable to the Boyd division. The WTI division accounted for $100,497 of the total increase. These increases are directly

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proportional to the increases in operating revenues. Owner-operators are responsible for payment of the expenses they incur including fuel, operating supplies, and taxes and licenses, while the Company incurs these expenses related to Company drivers. Consequently, the amount paid per mile (shown as salaries and wages for Company drivers and within cost of independent contractors for owner-operators) for owner-operators is greater than that of Company drivers.

As a percentage of revenues, the following operating expense accounts decreased for the total Company: salaries, wages and employee benefits, fuel, operating supplies, and taxes and licenses. Expenses related to Company drivers are primarily in these accounts. As a percentage of revenues, the sum of the aforementioned accounts decreased by 4.1% for the quarter ended September 30, 2002 compared to the same period last year. As a percentage of revenues, cost of independent contractors increased by 5.3% for the quarter ended September 30, 2002 compared to the same period last year, and the changes are primarily attributable to the Boyd division’s increase in owner-operators. The total Company’s decrease in these accounts for the third quarter of 2002 over the same period of 2001 was $969,710. The Boyd division accounted for $788,915 of the change. In the Boyd division, the number of miles hauled by Company drivers decreased while the number of owner-operators miles increased, causing shifts in expenses. Boyd division Company drivers accounted for 70.2% of total miles hauled for the third quarter of 2002 and 73.3% in 2001. Boyd division owner-operators accounted for 29.8% of total miles hauled for the third quarter of 2002 and 26.7% in 2001.

Depreciation and amortization decreased $194,226, or 6.4%, to $2,849,606 from $3,043,832 in the third quarter of 2001. The decrease in depreciation and amortization for the quarter was primarily due to the conversion of some company tractors to owner-operated tractors subject to lease/purchase arrangements. Effective January 1, 2002, the Company discontinued amortization of goodwill at its WTI division in accordance with SFAS No. 142 and changed its depreciation method of tires on revenue equipment. Because of these changes, the Company recognized approximately $78,000 less expense during the quarter ended September 30, 2002 as compared to the same period in 2001.

Other operating expenses decreased by $275,442 for the quarter ended September 30, 2002 over the comparative period of 2001. The decrease is due to a decrease in uncollectible revenue. During 2001, certain of the Company’s customers, primarily in the steel industry, filed bankruptcy causing an increase in uncollectible revenue. The Boyd division incurred an additional $300,000 in bad debt expense during the third quarter of 2001 to account for the lack of collectibility from bankrupt customers.

Income tax expense for the three-month period ended September 30, 2002 was $331,252 resulting in an effective tax rate of 40.1%. This rate is greater than the Federal statutory rate primarily due to the effect of state taxes and the permanent non-deductibility of certain expenses for tax purposes.

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Year-to-date Review:

		Company						Boyd						WTI
		Nine Months Ended September 30,
		2002			2001			2002			2001			2002			2001
Operating revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Operating expenses
	Salaries, wages, and employee benefits	29.1			32.0			32.2			35.3			13.1			13.8
	Cost of independent contractors	30.6			24.0			24.5			17.1			61.9			61.9
	Fuel	10.7			12.3			12.0			14.0			4.1			2.9
Operating supplies		8.3			9.7			9.0			10.3			5.0			6.4
	Operating taxes and licenses	2.1			1.7			2.1			1.8			1.6			1.2
	Insurance and claims	5.4			5.6			5.9			5.7			2.8			5.1
	Communications and utilities	1.0			1.1			1.0			1.1			0.8			1.1
	Depreciation and amortization	9.0			9.9			9.9			10.6			4.3			6.0
	Gain on disposition of property and equipment, net	(0.3	)		(0.6	)		(0.3	)		(0.7	)		0.0			(0.4	)
	Other	1.2			1.5			0.9			1.4			2.8			2.5
Total operating expenses		97.1			97.2			97.2			96.6			96.4			100.5
Operating income		2.9			2.8			2.8			3.4			3.6			(0.5	)
Interest expense, net		(1.5	)		(2.2	)		(1.6	)		(2.5	)		(0.6	)		(0.8	)
Other income		—			—			—			—			—			—
Income (loss) before income taxes		1.4			0.6			1.2			0.9			3.0			(1.3	)
	Income taxes (benefit)	0.6			0.3			0.5			0.4			1.4			(0.1	)
Net income (loss)		0.8	%		0.3	%		0.7	%		0.5	%		1.6	%		(1.4	)%