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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1998
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Act
of 1934
For the transition period from _______ to _______
COMMISSION FILE NO. 0-23948
BOYD BROS. TRANSPORTATION INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 63-6006515
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
3275 HIGHWAY 30 36016
CLAYTON, ALABAMA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (334) 775-1400
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
NONE NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, PAR VALUE $.001 PER SHARE
(TITLE OF CLASS)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
---- ----
AGGREGATE MARKET VALUE OF THE VOTING AND NON-VOTING COMMON EQUITY HELD
BY NON-AFFILIATES OF THE REGISTRANT:
$9,997,184 AS OF MARCH 19, 1999
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
3,552,887 SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE,
OUTSTANDING AS OF MARCH 19, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENTS INCORPORATED BY REFERENCE IN THIS ANNUAL REPORT ON FORM 10-K
ARE AS FOLLOWS:
PORTIONS OF THE DEFINITIVE PROXY STATEMENT RELATING TO THE 1999 ANNUAL
MEETING OF STOCKHOLDERS IN PART III, ITEMS 10 (AS RELATED TO DIRECTORS), 11, 12
AND 13. PORTIONS OF THE ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED
DECEMBER 31, 1998 IN PARTS II AND IV.
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO
ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED,
TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. [ ]
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TABLE OF CONTENTS
PAGE
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PART I.............................................................................................................1
ITEM 1. BUSINESS........................................................................................1
ITEM 2. PROPERTIES......................................................................................6
ITEM 3. LEGAL PROCEEDINGS...............................................................................7
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............................................7
PART II............................................................................................................7
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...........................7
ITEM 6. SELECTED FINANCIAL DATA.........................................................................8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS...........................................................................8
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK......................................8
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.....................................................8
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE........................................................................8
PART III...........................................................................................................8
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT..................................................8
ITEM 11. EXECUTIVE COMPENSATION..........................................................................9
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..................................9
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................................................9
PART IV............................................................................................................9
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K.....................................................................................9
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PART I
ITEM 1. BUSINESS
THE COMPANY
Boyd Bros. Transportation Inc. ("Boyd" or the "Company") is a truckload
carrier that operates exclusively in the flatbed segment of the industry and
hauls primarily steel products and building materials. Since its founding in
1956, Boyd has grown into what management believes is one of the largest
exclusively flatbed carriers in the United States. The Company owns and operates
a total of over 1,032 tractors and 1,337 flatbed trailers.
On December 8, 1997, Boyd acquired Welborn Transport, Inc. ("Welborn")
located in Tuscaloosa, Alabama (the "Welborn Acquisition"). The acquisition was
accounted for using the purchase method of accounting and, accordingly, the
purchase price was allocated to the assets acquired, and liabilities assumed,
based upon their estimated fair market values at the acquisition date. Welborn
is operated by Boyd as a stand-alone subsidiary. References to the "Company"
contained herein refer to the combined operations of Boyd and Welborn.
References hereinafter to "Boyd" or "Welborn" describe the distinct operations
of the parent and subsidiary, respectively.
The Company's strategy is to offer high-quality flatbed transportation
services to high-volume, time-sensitive shippers. Because much of the freight
hauled by the Company consists of steel products and building materials,
time-definite delivery is required. A late delivery can result in a shutdown of
a production line at a plant or a delay in a construction project. Management
focuses its marketing efforts on those shippers who require time-definite
delivery because it believes that service, rather than price, generally will be
the primary factor that will dictate their choice of carrier.
Management believes that its ability to recruit and retain drivers has
been critical to its success, and Boyd has sought to attract and retain drivers
by using only high-quality, late-model tractors equipped with its two-way
satellite communication equipment, and offering financial and other incentives
to drivers. Management recognizes that getting drivers home frequently is
critical to driver retention. Accordingly, Boyd makes load assignments to
drivers that enable each driver to attain his or her goals with respect to both
miles driven as well as time at home.
Additionally, in June 1997, Boyd began contracting with independent
owner-operators to provide service to its customers. Boyd has also implemented a
lease-purchase program, providing Boyd's drivers with both career opportunities
at Boyd and the opportunity to own their own tractor. Under the program, the
driver leases the tractor from Boyd, along with an option to purchase the
tractor. In turn, the driver leases the use of the tractor and the driver's
services back to Boyd.
In 1998, Boyd added another option under the owner-operator program.
Owner-operators are able to lease a new tractor for three and one-half years.
Boyd will retain ownership of the tractor at the end of the lease, but this will
enable the owner-operator to operate a new tractor and maintain its status as
independent contractor. Management believes that Boyd's owner-operator program,
along with the owner-operator program already in place at Welborn, will aid in
reducing driver turnover and better enable the Company to meet its growth
projections.
Welborn provides transportation services over shorter routes than
traditionally provided by Boyd. Welborn operates primarily in the southeastern
United States, with an average length of haul of less than 400 miles. Management
believes this enhances Welborn's ability to retain quality drivers, as drivers'
time away from home is thereby minimized. Welborn operates approximately 342
tractors and 355 flatbed trailers. Owner-operators own 310 of the 342 tractors
utilized by Welborn, while Welborn owns the rest. The owner-operators of these
units are compensated by Welborn based upon a percentage of revenue. Over 50% of
Welborn's loads are booked through commissioned agents, whereas Boyd has
traditionally developed direct relationships with its customers.
STRATEGY
As discussed above, the Company's business strategy is to offer
high-quality flatbed transportation services in the truckload carrier market
primarily to high-volume, time-sensitive customers. The key components of the
Company's strategy are as follows:
Time-Sensitive Shippers. The Company focuses its marketing efforts on
high-volume, time-sensitive shippers that are involved primarily in the steel
and building materials businesses and require time-definite delivery. Management
believes that many large volume shippers in this segment of the industry have
reduced the number of carriers they use so as to use only those "core carriers"
that offer consistently superior service. The Company
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intends to continue its focus on developing relationships as a core-carrier for
high-volume, time-sensitive shippers.
Technology. Boyd's strategy has been to utilize technology to provide
better service to its customers and to improve operating efficiency. Boyd became
the first major flatbed carrier in the country to install a satellite tracking
system, manufactured by QUALCOMM, in its tractors. The tracking system enables
Boyd to monitor equipment locations and schedules more effectively and to
communicate with both drivers and customers. Currently, Welborn does not utilize
satellite tracking technology. Boyd has also installed computers on board each
of its tractors to monitor fuel efficiency and other operational data. Boyd will
continue to monitor and implement technological developments that will enable
Boyd to improve customer service and operating efficiency.
Premium Quality Tractors. Boyd continuously upgrades its fleet of
tractors. Maintaining a young, high-quality fleet of tractors facilitates Boyd's
ability to recruit and retain drivers, achieve maximum on-time reliability,
maximize fuel economy and convey an image of quality to existing and potential
customers. While Welborn maintains a fleet of high-quality tractors, the shorter
routes over which its vehicles are dispatched enables these units to be serviced
more frequently. Accordingly, it has not been necessary for Welborn to replace
its fleet as frequently as Boyd.
CUSTOMERS AND MARKETING
The Company markets itself on the basis of quality service and
employees, its satellite communication system, the capabilities of its
information system to interface with the information systems of its customers,
its record of on-time deliveries, and its efficient and well-maintained tractors
and trailers. The Company's marketing efforts concentrate on attracting
customers that require time-definite delivery and ship multiple loads to and
from locations that complement the Company's existing traffic flows.
Boyd has written contracts with most of its customers. The contracts
generally require the customer to use Boyd for a specified minimum amount of
shipments each year and may be terminated by either party upon 30 to 60 days'
written notice.
The Company's largest 20, 10 and 5 customers accounted for
approximately 57.7%, 43.4% and 31.1%, respectively, of the Company's revenues
during 1998. Many of the Company's largest 20 customers are publicly-held
companies. No single customer accounted for more than 10% of the Company's
revenues during 1998.
OPERATIONS
The Company's operations are designed to maximize efficiency and
provide quality service to customers. All of Boyd's fleet operations, routing
and scheduling are centrally coordinated through a satellite tracking system
from its corporate headquarters in Clayton, Alabama. Through the use of Boyd's
satellite-based communication system, which is complemented by its
fully-integrated mainframe computer system, dispatchers monitor the location and
delivery schedules of all shipments and equipment to coordinate routes and
maximize utilization of Boyd's drivers and equipment. See "Transportation
Technology."
Boyd conducts its operations through a network of 10 regional and
satellite service centers in strategic locations in the eastern two-thirds of
the United States. See "Item 2 - Properties." Boyd operates regional service
centers in Clayton and Birmingham, Alabama; Springfield, Ohio; and Greenville,
Mississippi. These regional service centers are supported by smaller satellite
service centers, each having between one to three employees, located in Calvert
City, Kentucky; Danville, Virginia; Lisbon Falls, Maine; Blytheville, Arkansas;
Baltimore, Maryland; and Walworth, Wisconsin. These service centers allow Boyd
to re-dispatch equipment terminating in a given area, enhance driver recruiting
and return drivers to their homes more regularly. Boyd also has arrangements to
deposit trailers near various major customers or shipping locations to
facilitate pre-loading of shipments and thereby increase efficiency.
Welborn's corporate offices are located in Tuscaloosa, Alabama.
Welborn's terminal locations include Memphis, TN; Decatur, AL; and Columbia, SC.
Welborn utilizes independent agents located in Atlanta, GA and Jackson, MS. All
of Welborn's terminal locations are utilized for dispatching purposes, including
the home office in Tuscaloosa. Welborn currently does not use satellite tracking
systems in its operations.
DRIVERS AND EMPLOYEES
Recruiting and retaining professional, well-trained drivers is critical
to the Company's success, and all of the Company's drivers must meet specific
guidelines relating primarily to safety record, driving experience and
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personal evaluation, including drug testing.
To maintain high-equipment utilization, particularly during periods of
growth, the Company strongly emphasizes continuous driver and owner-operator
recruiting and training. Drivers are recruited at all regional terminal
locations and at the Company's corporate headquarters.
Drivers are trained in Company policies and operations, safety
techniques and fuel efficient operation of equipment, and must pass a rigorous
road test prior to assignment to a vehicle. The Company's training programs
range from two to eight weeks of concentrated schooling, depending on a driver's
level of experience. In addition, all drivers are required to participate in
annual safety training and defensive driving courses for recertification by the
Company. Recognizing the importance of driver contact while drivers are on the
road for extended periods, the Company maintains toll-free telephone lines and
publishes a newsletter containing Company information, in addition to
maintaining daily contact between dispatchers and drivers.
Competition for qualified drivers is intense. The short- to medium-haul
truckload segment of the trucking industry, including the Company, experiences
significant driver and owner-operator turnover, and the Company anticipates that
the intense competition for qualified drivers in the trucking industry will
continue. In order to attract quality drivers, management is actively pursuing
the services of independent owner-operators to complement the fleet.
At December 31, 1998, the Company had 1,015 employees, of whom
approximately 793 were drivers and driver-trainees, and the balance of whom were
mechanics, other equipment maintenance personnel and support personnel,
including management and administration. In addition, owner-operators accounted
for the operation of approximately 460 tractors. None of the Company's employees
is subject to a collective bargaining agreement, and the Company has never
experienced a work stoppage. Management believes that its relationship with its
employees is good.
REVENUE EQUIPMENT
The Company's philosophy is to purchase premium quality tractors to
help attract and retain drivers and to promote safe operations, and management
believes the higher initial cost of such equipment is recovered through better
resale marketability. Each of the Company's tractors are equipped with a sleeper
cab to permit all drivers to comply conveniently and cost-effectively with the
United States Department of Transportation ("DOT") hours of service guidelines
and to facilitate team operations when necessary.
At December 31, 1998, the Company owned and operated 1,032 tractors and
1,337 flatbed trailers. The tractors are manufactured by Freightliner, Kenworth
and International, and the trailers are manufactured by Utility, Dorsey,
Fruehauf, Fontaines, Wabash and Great Dane.
TRANSPORTATION TECHNOLOGY
Management believes that the application of technology is an ongoing
part of providing high-quality service at competitive prices, and further
believes that Boyd has enhanced its strong reputation for customer satisfaction
through the early, fleet-wide implementation of two computer systems.
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Boyd was the first major flatbed carrier to be fully equipped with the
two-way satellite communication system produced by QUALCOMM. The satellite-based
OMNITRACS(C) system ("Omnitracs") was installed and operational in the entire
Boyd fleet by the end of 1990. Omnitracs has improved the quality and efficiency
of Boyd's operations by allowing drivers and dispatchers to have instant,
on-the-road communication ability and by enabling Boyd to provide its customers
with accurate information on the status and estimated delivery time of cargo
shipments.
Omnitracs permits more efficient transmission of load assignments to
drivers, as well as an enhanced capability to monitor loads in transit and
rapidly bill customers for completed deliveries. Once a load is assigned by a
load planner, the assignment is transmitted to Boyd's operations department
where it is reviewed by a dispatcher who then relays the assignment to the
appropriate driver through the Omnitracs display unit in each of Boyd's
vehicles. The driver can respond to the dispatcher through Omnitracs in a matter
of seconds, thereby eliminating waiting time and inefficient dependence on truck
stop telephones or other methods of communication between drivers and
dispatchers. Through Omnitracs, Boyd can electronically record a load
assignment, report the load to the billing department and generate customer
invoices.
In addition, Boyd uses Omnitracs to automatically transmit location and
equipment information and other data to the dispatcher, thereby reducing the
need for drivers to stop to communicate with dispatchers in the event of a
problem. The system continually tracks every cargo load with accuracy within
one-tenth of a mile. This information, along with information concerning
available loads, is constantly updated on Boyd's on-line computer. Load planners
use this information to match available equipment with available loads, meet
delivery schedules and respond more quickly to customer inquiries.
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Boyd has also equipped its entire fleet of tractors with the
SENSORTRACS(C) on-board computer system ("Sensortracs"), which is also produced
by QUALCOMM and which monitors fuel efficiency and other operational data.
Information from Sensortracs is periodically processed by one of Boyd's
computers, which generates reports on vehicle efficiency and driver performance.
Reports generated by this system enhance Boyd's ability to counsel its drivers
on strengths and deficiencies in their driving habits and fuel efficiency and to
monitor the effectiveness of driver training programs. Based on information
provided by QUALCOMM, Boyd believes the on-board computer systems are year 2000
compliant.
During 1998, Boyd developed load tendering and tracking capabilities.
Customers are able to track the progress of their loads during transport using
their own personal computer. Additionally, customers are able to book loads over
the internet. Customers submit potential loads to the appropriate regional load
planner, and the load planner will then contact the customer via the internet
e-mail system to acknowledge acceptance of the load. This technological
advancement enables customers to book loads routinely without having to complete
the same paperwork again. Additionally, in 1998, Boyd implemented a new software
program by The SABRE Group that enables Boyd to review each shipping lane to
determine overall profitability and also to determine which customers are the
most profitable within the lane. The end result will be that Boyd will be in a
position to direct the movement of the fleet in a way that will yield the most
results to the bottom line and not affecting the quality of the service.
SAFETY AND INSURANCE
The Company's safety department is responsible for training and
supervising personnel to keep safety awareness at its highest level. The Company
has implemented an active safety and loss prevention program. The emphasis on
safety begins in the hiring and training process, where prospective employees
and owner-operators are given physical examinations and drug tests, and newly
hired drivers and owner-operators, regardless of experience level, must
participate in an intensive training program. See "Drivers and Employees."
The directors of safety for the Company continuously monitor driver
performance and have final authority regarding employment and retention of
drivers. The Company is committed to securing appropriate insurance coverage at
cost-effective rates. The primary claims that arise in the trucking industry
consist of cargo loss and damage, personal injury, property damage and workers'
compensation. The Company currently retains liability up to $100,000 for each
claim for personal injury and property damage, $100,000 for each claim for
employee medical and hospitalization, and $10,000 for each claim for cargo
damage. The Company also maintains full coverage for workers' compensation
claims. The Company currently purchases excess primary and umbrella insurance
coverage in amounts that management believes are adequate to supplement its
retained liabilities.
FUEL
Motor carrier service is dependent upon the availability of diesel
fuel. The Company's fuel expense comprised 9.0% and 15.0% of revenues in 1998
and 1997, respectively. Through on-board computers, the Company continually
monitors fuel usage, miles per gallon, cost per mile and cost per gallon. The
Company has not experienced any difficulty in maintaining fuel supplies
sufficient to support its operations. Shortages of fuel, increases in fuel
prices or fuel tax rates or rationing of petroleum products could have a
material adverse effect on the operations and profitability of the Company.
COMPETITION
The trucking industry is highly competitive and fragmented. The Company
competes primarily with other short- to medium-haul, flatbed truckload carriers,
internal shipping conducted by existing and potential customers and, to a lesser
extent, railroads. Deregulation of the trucking industry during the 1980s
created an influx of new truckload carriers which, along with certain other
factors, continues to create substantial downward pressure on the industry's
rate structure. Competition for the freight transported by the Company is based
primarily on service and efficiency and, to a lesser degree, on freight rates.
There are other trucking companies, including truckload carriers that have
flatbed divisions, that have substantially greater financial resources, operate
more equipment or carry a larger volume of freight than the Company. The
existence of these other motor carriers has also resulted in increased
competition for qualified drivers.
REGULATION
The trucking industry is subject to regulatory oversight and
legislative changes that can affect the economics of the industry by requiring
certain operating practices or influencing the demand for, and the costs of
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providing, services to shippers. The Intermodal Surface Transportation Board
(the "ISTB"), as well as various state agencies that have jurisdiction over the
Company, have broad powers, generally governing such matters as authority to
engage in motor carrier operations, rates and charges, accounting systems,
certain mergers, consolidations and acquisitions, and periodic financial
reporting.
The Federal Motor Carrier Act of 1980 commenced a program to increase
competition among motor carriers and to diminish the level of regulation in the
industry. Following this deregulation, applicants have more easily been able to
obtain operating authority, and interstate motor carriers such as the Company
have been able to implement certain rate changes without federal approval. The
Motor Carrier Act also removed many route and commodity restrictions on
transportation of freight. In 1995, the Interstate Commerce Commission (the
"ICC") was eliminated, and the ISTB was established within the Department of
Transportation (the "DOT"). The ISTB performs all functions previously performed
by the ICC. Since 1981, the Company has held authority to carry general
commodities throughout the 48 contiguous states, as both a common and contract
carrier.
Interstate motor carrier operations are subject to safety requirements
prescribed by the DOT. Such matters as weight and dimensions of equipment are
also subject to federal and state regulation. All of the Company's drivers were
required to obtain national commercial driver's licenses by April 1, 1992
pursuant to the regulations promulgated by the DOT. Also, effective in 1989, DOT
regulations imposed mandatory drug testing of drivers. In addition, the Company
has completed the implementation of its own ongoing drug-testing program. The
DOT's national commercial driver's license and drug testing requirements have
not to date adversely affected the availability of qualified drivers to the
Company. DOT alcohol testing rules require certain tests, random and otherwise,
for alcohol levels in drivers and other safety personnel. See "Safety and
Insurance."
ENVIRONMENTAL MATTERS
The Company's operations are subject to federal, state and local laws
and regulations concerning the environment. Certain of the Company's facilities
are located in historically industrial areas and, therefore, there is the
possibility of environmental liability as a result of operations by prior owners
as well as the Company's use of fuels and underground storage tanks at its
regional service centers.
The Company's consolidated balance sheets as of December 31, 1998 and
1997 include reserves for environmental remediation of $46,000 and $75,000,
respectively, to cover final costs related to contamination caused by
underground storage tanks. The tanks were replaced and clean-up was
substantially complete in 1995. Currently, management knows of no other
environmental remediation issues or liabilities. There can be no assurance that
material liabilities or expenditures will not arise from these or additional
environmental matters that may be discovered, or from future requirements of
law. Management does not believe these expenditures will have a material adverse
effect on the Company's financial condition.
FORWARD LOOKING STATEMENTS
Certain statements incorporated by reference from the information under
the caption "Management's Discussion and Analysis of Financial Conditions and
Results of Operations" in the Company's Annual Report to Stockholders for the
year ended December 31, 1998 contained herein constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance,
or achievements of the Company to be materially different from any future
results, performance, or achievements expressed or implied by such
forward-looking statements. Such factors include, among other things, business
conditions and growth in the economy, including the transportation and
construction sectors in particular, competitive factors, including price
pressures and the ability to recruit and retain qualified drivers, the ability
to control internal costs as well as fuel costs, that are not passed on to the
Company's customers, and other factors referenced elsewhere herein.
ITEM 2. PROPERTIES
The Company's corporate headquarters and principal service center are
located on a 17.9 acre tract in Clayton, Alabama. Such facilities consist of
approximately 22,000 square feet of office space, 12,000 square feet of
equipment repair facilities and approximately 3 acres of parking space. The
Company is in the process of constructing a new "super terminal", containing
several maintenance and safety bays in Birmingham. The super terminal is
estimated to be completed in late 1999 or early 2000.
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The following table sets forth information regarding the location and
ownership of each of Boyd's service centers and shuttle facilities:
Clayton, AL........................................................ Owned
Springfield, OH.................................................... Owned
Birmingham, AL..................................................... Owned
Greenville, MS..................................................... Owned
Calvert City, KY................................................... Leased
Danville, VA....................................................... Leased
Lisbon Falls, ME................................................... Leased
Baltimore, MD...................................................... Leased
Walworth, WI....................................................... Leased
Blytheville, AR.................................................... Leased
Additionally, Welborn owns its corporate offices in Tuscaloosa, Alabama and
leases service centers located as follows:
Birmingham, Al..................................................... Leased
Memphis, TN........................................................ Leased
Decatur, AL........................................................ Leased
Columbia, SC....................................................... Leased
ITEM 3. LEGAL PROCEEDINGS
The Company is routinely a party to litigation incidental to its
business, primarily involving claims for personal injury and property damage
incurred in the transportation of freight. The Company maintains insurance that
it believes is adequate to cover its liability risks. See "Item 1 - Business --
Safety and Insurance."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the year ended December 31, 1998, either through the
solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock of the Company is listed on the Nasdaq National Market
under the symbol "BOYD." As of March 12, 1999, the Common Stock was held by
approximately 100 holders of record. The table below sets forth the reported
high and low sales price per share for the Common Stock as reported by the
Nasdaq National Market for each fiscal quarter during 1998 and 1997.
Price Range
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1998 High Low
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First Quarter.................................................... $10-3/8 $ 8-4/7
Second Quarter................................................... 12 8-1/2
Third Quarter.................................................... 10-1/8 5-7/8
Fourth Quarter................................................... 8 5-5/8
Price Range
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1997 High Low
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First Quarter.................................................... $ 8 $ 4-1/4
Second Quarter................................................... 7-3/4 4-3/8
Third Quarter.................................................... 10-3/8 6-3/4
Fourth Quarter................................................... 10-3/4 6
Management currently anticipates that all of its earnings will be
retained for development of the Company's business and does not anticipate
paying any cash dividends in the foreseeable future. Any future cash dividends,
if any, will be at the discretion of the Company's Board of Directors and will
depend upon, among other things, the
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Company's future operations and earnings, capital requirements and surplus,
general financial condition, contractual restrictions, and other factors as the
Board of Directors may deem relevant.
In January 1999, the Company repurchased 500,000 shares of the
Company's Common Stock from the Company's former Chief Executive Officer, Donald
G. Johnston for an aggregate purchase price of $3,660,000. The repurchase of the
shares, representing about 12% of the Company's outstanding Common Stock, was
funded by available cash and the Company's bank line of credit. Additionally,
the Board of Directors has authorized a program under which the Company may
purchase up to 500,000 shares of its Common Stock in open market or negotiated
transactions at such times and at such prices as management may from time to
time decide.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated by reference from
the information under the caption "Selected Financial Data" in the Company's
Annual Report to Stockholders for the year ended December 31, 1998.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this item is incorporated by reference from
the information under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's Annual Report to
Stockholders for the year ended December 31, 1998.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK
The Company is exposed to interest rate risk due to its long-term debt,
which at December 31, 1998, bore interest at rates ranging from 1.00% to 1.75%
above the bank's LIBOR rate. Under the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 107, Disclosures about Fair Value of Financial
Instruments, the Company has estimated the fair value of its long-term debt
approximates its carrying value, using a discounted cash flow analysis based on
borrowing rates available to the Company. The effect of a hypothetical ten
percent increase in interest rates would increase the estimated fair value of
the Company's long-term debt by approximately $300,000. Management believes that
current working capital funds are sufficient to offset any adverse effects
caused by changes in the interest rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated by reference from
the Consolidated Financial Statements contained in the Company's Annual Report
to Stockholders for the year ended December 31, 1998.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is information concerning the Directors and Executive
Officers of the Company as of March 12, 1999.
Dempsey Boyd, age 71, founded Boyd in 1956, and has been Chairman of
the Board since April 1980. Mr. Boyd served as President of Boyd from December
1962 until April 1980. Mr. Boyd is the father of Gail B. Cooper and Ginger B.
Tibbs.
Miller Welborn, age 40, has served as President and Chief Executive
Officer of the Company since July 17, 1998. Mr Welborn co-founded Welborn in
1989.
Richard C. Bailey, age 48, has served as Executive Vice President and
Chief Financial Officer since joining Boyd in August 1992, and has served as a
Director since February 1995. He served as President and Director of Eastern
Inter-Trans Services, Inc., a dry van truckload carrier based in Columbus,
Georgia, from December 1989 to August 1992. Mr. Bailey is a certified public
accountant with a B.S. in accounting from Georgia
8
11
State University. He was previously employed in various financial positions by
Ernst & Young, Intermet Corporation and Snapper Products (a division of The
Actava Group Inc.). Mr. Bailey has served on the Advisory Board of the
University of Georgia Trucking Profitability Strategies Conference.
Gail B. Cooper, age 48, has been the Secretary of Boyd since December
1969, and served as a Director of Boyd from December 1969 until March 1994. Ms.
Cooper received a B.S. in business administration from Troy State University.
She has served Boyd in numerous administrative and accounting positions since
joining Boyd full-time in June 1972. Ms. Cooper is the daughter of Mr. Boyd and
the sister of Ms. Tibbs.
Ginger B. Tibbs, age 45, has been the Treasurer of Boyd since December
1979, and served as a Director from December 1978 until March 1994. Ms. Tibbs is
primarily responsible for collection of Boyd's accounts receivable and has
served as Credit Manager since September 1980. Ms. Tibbs received a degree in
elementary education from Auburn University. She is the daughter of Mr. Boyd and
the sister of Ms. Cooper.
Gary Robinson, age 50, has been the Vice President of Operations of
Boyd since May 1997. From February of 1989 to April 1997, Mr. Robinson served as
Director of Sales and Marketing for the flatbed division of Prime, Inc., a
truckload carrier based in Springfield, Missouri.
Steven Rumsey, age 35, co-founded Welborn in 1989 and has served as its
President since such date. He holds a B.A. in communications from the University
of Alabama.
With the exception of information relating to the executive officers of
the Company, which is provided in Item 10 hereof, all information required by
Part III (Items 11, 12 and 13) is incorporated by reference to the Company's
definitive Proxy Statement relating to the 1999 Annual Meeting of Stockholders,
which is scheduled to be filed on or before April 9, 1999.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT
SCHEDULES AND CURRENT REPORTS ON FORM 8-K
(a) Exhibits, Financial Statements and Schedules.
1. Financial Statements. The following financial statements for the
Company and Independent Auditors' Report are incorporated by reference
from the Company's Annual Report to Stockholders for the year ended
December 31, 1998:
Independent Auditors' Report
Consolidated Balance Sheets at December 31, 1998 and 1997
Consolidated Statements of Income for the years ended December 31,
1998, 1997 and 1996
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows for the years ended December 31,
1998, 1997 and 1996
Notes to Consolidated Financial Statements
2. Financial Statement Schedules.
The schedule listed below is included herein immediately after the
signature pages hereto. Schedules not listed below have been omitted
because of the absence of conditions under which they are required or
because the information is included in the financial statements or notes
thereto.
SCHEDULE
NUMBER DESCRIPTION
------ -----------
II Valuation and Qualifying Accounts and Reserves for the Three
Fiscal Years Ended December 31, 1998
9
12
3. Exhibits required by Item 601 of Regulation S-K.
The following exhibits are included in this Form 10-K:
Exhibit
No. Description
-------- -----------
10.1 Credit and Security Agreement dated February 28, 1996 between the Company and Compass Bank in the
amount of $5,000,000 for truck equipment
10.2 Credit and Security Agreement dated May 29, 1998 between the Company and Compass Bank in the amount
of $4,500,000 for truck equipment
10.3* Agreement and General Release between the Company and Donald Johnston dated July 16, 1998
10.4 Consulting Agreement between the Company and Donald Johnston dated July 16, 1998
10.5 Stock Repurchase Agreement between the Company and Donald Johnston dated January 7, 1999
13 Those portions of the Company's Annual Report to Stockholders for the year ended December 31, 1997
that are specifically incorporated herein by reference
21 Subsidiaries of the Registrant
23 Consent of Deloitte & Touche LLP
27 Financial Data Schedule (for SEC use only)
The following exhibits are incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31, 1997 (File no.
000-23948):
Exhibit
No. Description
- ------- -----------
10.1* First Amendment to Boyd Bros. Transportation Inc. 1994 Stock Option Plan
10.2* Employment Agreement between the Company and Miller Welborn dated December 8, 1997
10.3* Employment Agreement between the Company and Steven Rumsey dated December 8, 1997
The following exhibits are incorporated by reference to the Company's
Registration Statement on Form S-1 (File No. 33-76756), declared effective on
May 9, 1994:
Exhibit
No. Description
- ------- -----------
3.1 Certificate of Incorporation of the Company
3.2 By-laws of the Company
- --------
* Identifies each exhibit that is a "management contract or compensatory
plan or arrangement" required to be filed as an exhibit to this Annual
Report on Form 10-K pursuant to Item 14(c) of Form 10-K.
10
13
Exhibit
No. Description
- ------- -----------
10.1* Boyd Bros. Transportation Inc. 1994 Stock Option Plan
10.2* Form of the Company's Nonstatutory Stock Option Agreement
10.3* Form of the Company's Nonstatutory Stock Option Agreement for Nonemployee Directors
10.11 Master Note for Business and Commercial Loans dated July 22, 1992 providing for a $1,500,000 line of
credit from AmSouth Bank N.A. to the Company
10.13 Note for Business and Commercial Loans dated August 2, 1993 by the Company in favor of AmSouth Bank
N.A. in the principal amount of $5,122,702.70
10.14 Security Agreement for Tangible Personal Property dated February 15, 1994 by the Company in favor of
AmSouth Bank N.A.
10.15 Note for Business and Commercial Loans dated February 15, 1994 for a $5,000,000 non-revolving draw
note by the Company in favor of AmSouth Bank N.A.
10.22 Modification of the Continuation of Credit and Security Agreement and Loan Modification Agreement dated
March 4, 1994 by and between the Company and Compass Bank
10.26 Credit and Security Agreement dated February 1, 1994 by and between the Company and Compass Bank
10.27 Security Agreement dated February 1, 1994 by the Company in favor of Compass Bank
10.37 Credit Agreement dated April 1, 1994 by and between the Company and AmSouth Bank N.A.
The following exhibit is incorporated by reference to the Company's
Amendment to Report on Form 10-Q filed on August 5, 1997:
Exhibit
No. Description
- ------- -----------
10.33 OMNITRACS contract dated February 5, 1997, between the Company and QUALCOMM, Inc.
The following exhibit is incorporated by reference to the Company's
Report on Form 8-K filed on December 19, 1997:
Exhibit
No. Description
- ------- -----------
2.1 Acquisition Agreement dated December 8, 1997, by and among the Company, W-T Acquisition Company,
Welborn Transport, Inc., Miller Welborn and Steven Rumsey
(b) Reports on Form 8-K
1. None.
11
14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BOYD BROS. TRANSPORTATION INC.
By: /s/ W. MILLER WELBORN
-------------------------------------
W. Miller Welborn
President and Chief Executive Officer
Date: March 30, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
SIGNATURES TITLE DATE
---------- ----- ----
/s/ W. MILLER WELBORN President, Chief Executive March 30, 1999
- ------------------------------------------- Officer and Director (Principal
W. Miller Welborn Executive Officer)
/s/ RICHARD C. BAILEY Executive Vice President,
- ------------------------------------------- Chief Financial Officer and
Richard C. Bailey Director (Principal Financial March 30, 1999
and Accounting Officer)
/s/ DEMPSEY BOYD Chairman and Director March 30, 1999
- -------------------------------------------
Dempsey Boyd
/s/ W. WYATT SHORTER Director March 30, 1999
- -------------------------------------------
W. Wyatt Shorter
/s/ BOYD WHIGHAM Director March 30, 1999
- -------------------------------------------
Boyd Whigham
/s/ STEPHEN J. SILVERMAN Director March 30, 1999
- -------------------------------------------
Stephen J. Silverman
15
SCHEDULE II
BOYD BROS. TRANSPORTATION INC.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
For the Three Years Ended December 31, 1998
ADDITIONS ADDITIONS
BALANCE AT CHARGED TO CHARGED TO
BEGINNING OF COSTS AND OTHER BALANCE AT
DESCRIPTION YEAR EXPENSES ACCOUNTS(b) DEDUCTIONS(a) END OF YEAR
- ----------- ------------ ---------- ----------- ------------- -----------
Allowance for doubtful accounts--deducted from trade
receivables in the balance sheet
Year ended December 31, 1996 $ 125,108 $ -- $ -- $ 108 $ 125,000
========== ========== =========== ========== ==========
Year ended December 31, 1997 $ 125,000 $ -- $ 112,000 $ -- $ 237,000
========== ========== =========== ========== ==========
Year ended December 31, 1998 $ 237,000 $ 150,400 $ -- $ 115,400 $ 272,000
========== ========== =========== ========== ==========
ADDITIONS
BALANCE AT CHARGED TO
BEGINNING OF COSTS AND BALANCE AT
DESCRIPTION YEAR EXPENSES DEDUCTIONS(a) END OF YEAR
- ----------- ------------ ---------- ------------ -----------
Allowance for uncollectible receivables related
to sales-type leases--deducted from investment
in sales-type leases in the balance sheet
Year ended December 31, 1996 $ -- $ -- $ -- $ --
========== =========== ========== ==========
Year ended December 31, 1997 $ -- $ 380,000 $ -- $ 380,000
========== =========== ========== ==========
Year ended December 31, 1998 $ 380,000 $ 1,627,506 $ 806,261 $1,201,245
========== =========== ========== ==========
Page 1
(a) Uncollectible accounts written off
(b) Addition of Welborn Transport, Inc., acquired on December 8, 1997