1
EXHIBIT 13
Boyd Bros. Transportation Inc. and Subsidiary
Selected Financial Data
The following tables set forth selected financial data and selected pro forma
financial data of the Company. The selected financial data presented below for
the five-year period ended December 31, 1999, are derived from the Company's
audited financial statements. The data presented below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the Consolidated Financial Statements and Notes
thereto.
Year Ended December 31,
1999 1998 1997 1996 1995
(in thousands, except per share data)
- ---------------------------------------------------------------------------------------------------------------------------------
Statement of Operations Data:
Operating revenues $ 133,137 $ 118,123 $ 77,215 $ 65,523 $ 61,866
Operating expenses:
Salaries, wages and employee benefits 35,461 36,608 32,427 28,420 27,573
Cost of independent contractors 45,132 31,818 2,500 -- --
Operating supplies 22,934 21,429 20,832 19,550 17,156
Taxes and licenses 2,847 2,566 2,306 2,222 1,823
Insurance and claims 6,111 5,393 3,439 3,379 3,210
Communications and utilities 1,480 1,554 1,305 1,186 1,022
Depreciation and amortization 10,720 10,320 9,181 8,261 7,296
Gain on disposition of property and equipment, net (1,627) (433) (577) (805) (648)
Other 1,862 1,541 711 660 333
Total operating expenses 124,920 110,796 72,124 62,873 57,765
- ------------------------------------------------------------------------------------------------------------------------------------
Operating income 8,217 7,327 5,091 2,650 4,101
Interest income 92 97 136 164 82
Interest expense (2,422) (1,608) (1,391) (1,408) (781)
Other 0 82 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 5,887 5,898 3,836 1,406 3,402
Income taxes 2,430 2,326 1,519 578 1,277
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 3,457 $ 3,572 $ 2,317 $ 828 $ 2,125
Basic and diluted net income per share $ .99 $ .87 $ .62 $ .22 $ .56
====================================================================================================================================
(1) Reflects an operating expense (credit) accrued for environmental remediation
during 1995.
Boyd Bros. Transportation Inc. and Subsidiary
Selected Financial Data
December 31,
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
(in thousands)
Balance Sheet Data:
Working capital $ 1,049 $ 4,360 $ 3,785 $ 2,495 $ 2,676
Net property and equipment 61,882 48,691 48,859 44,593 37,188
Total assets 99,456 77,047 71,526 57,262 48,892
Long-term debt, less current maturities 34,689 18,049 19,252 15,198 9,228
Total liabilities 69,062 44,186 42,071 33,374 24,903
Stockholders' equity 30,393 32,862 29,455 23,888 23,989
2
Selected Operating Data:
The following table sets forth certain operating data regarding the Company.
Year Ended December 31,
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------
Operating ratio 93.83% 93.80% 93.41% 95.95% 93.37%
Average length of haul in miles 634 576 663 677 694
Average number of truckloads per week 3,368 3,330 1,908 1,607 1,470
Average revenues per total mile $ 1.18 $ 1.17 $ 1.17 $ 1.14 $ 1.14
Equipment at period end:
Tractors 1,112 1,032 950 575 522
Trailers 1,451 1,337 1,227 916 875
Boyd Bros. Transportation Inc. and Subsidiary
Management's Discussion and Analysis of Financial Condition and Results of
Operations
The following is a discussion of the financial condition and results of
operations of the Company for each of the years in the three-year period ended
December 31, 1999. This discussion should be read in conjunction with the
Consolidated Financial Statements and Notes thereto included elsewhere herein.
3
General
The Company was founded in 1956 by Dempsey Boyd and his brothers as a small
regional flatbed trucking operation with three tractors. Since that time, the
Company has grown to one with 1,112 tractors and 1,451 trailers operating in the
eastern two-thirds of the United States. Historically, the Company owned its
revenue equipment and operated through employee drivers. The Company's expansion
in the past, therefore, has required significant capital expenditures which have
been funded through secured borrowings. During 1997, as a strategy to expand the
Company's potential for growth without the increase in capital expenditures
typically related to owned equipment, the Company began adding owner/operators
to its fleet. The Company then accelerated the implementation of this strategy
in December 1997 with the acquisition of Welborn Transport, Inc. ("Welborn"),
which specializes in short-haul routes using largely an owner/operated fleet.
Results of Operations
The following table sets forth the percentage relationship of the expense items
to operating revenues for the periods indicated.
Percentage of Operating Revenues
Year Ended December 31,
1999 1998 1997
Operating revenues 100.00% 100.00% 100.00%
-----------------------------------------------------------------------------------------------
Operating expenses
Salaries, wages, and employee benefits 26.64 31.00 42.00
Cost of independent contractors 33.89 26.94 3.16O
Operating supplies 17.23 18.14 26.98
Taxes and licenses 2.14 2.17 2.99
Insurance and claims 4.59 4.57 4.45
Communication and utilities 1.11 1.31 1.69
Depreciation and amortization 8.05 8.74 11.89
Gain on disposition of property and equipment, net (1.22) (.37) (.47)
Other 1.40 1.30 .72
Total operating expenses 93.83 93.80 93.41
-----------------------------------------------------------------------------------------------
Operating income 6.17 6.20 6.59
Interest expense, net (1.75) (1.28) (1.62)
Other income -- .07 --
-----------------------------------------------------------------------------------------------
Income before income taxes 4.42 4.99 4.97
Income taxes 1.83 1.97 1.97
-----------------------------------------------------------------------------------------------
Net income 2.59% 3.02% 3.00%
===============================================================================================
4
COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO YEAR ENDED DECEMBER 31, 1998
Operating revenues for 1999 increased $15.0 million, or 12.7%, to $133.1 million
compared to $118.1 million for 1998. Revenues increased due to better equipment
utilization and the addition of 80 tractors.
Salaries, wages and employee benefits decreased $1.1 million, or 3.1%, to $35.5
million compared to $36.6 million in 1998. Salaries decreased due to the
increase in the owner/operator fleet, and therefore, a decrease in employee
drivers. Salaries made up 26.6% of operating revenue in 1999 compared to 31.0%
in 1998.
Cost of independent contractors for 1999 increased $13.3 million, or 41.8%, to
$45.1 million from $31.8 million in 1998. As of December 31, 1999 Boyd Bros. had
an owner/operator fleet of 209 operators compared to 150 owner/operators in
1998. Additionally, Welborn, had 298 owner/operators as of December 31, 1999
compared to 281 operators in 1998.
Operating supplies expense for 1999 increased $1.5 million, or 7.0%, to $22.9
million compared with $21.4 million for 1998, despite the fact that a large
portion of the fleet is comprised of owner/operators. This increase is almost
entirely due to increased fuel prices.
Taxes and licenses expense for 1999 increased $.2 million, or 7.7%, to $2.8
million compared to $2.6 million in 1998. Taxes and licenses increased at a
slower rate than revenue due to the greater percentage of owner/operators.
Insurance and claims expense increased $.7 million, or 13.0%, to $6.1 million
compared to $5.4 million in 1998. The increase was primarily due to an increase
in accident claims.
Communications and utilities expense decreased $.1 million, or 6.3%, to $1.5
million from $1.6 million in 1998. Improved cost management contributed to the
decrease in communications costs.
Depreciation and amortization expense increased $.4 million, or 3.9%, to $10.7
million from $10.3 million in 1998. Depreciation expense increased due to the
addition of newer and more expensive tractors in order to reduce the age of the
Company's tractor fleet and due to the replenishing of the Company's trailer
fleet with longer and more expensive trailers.
Rent expense increased $.2 million, or 67.0%, to $.5 million from $.3 million in
1998. Rent expense includes operating leases for both trailers and terminals.
Rent expense increased due to the Company entering into several lease agreements
for new trailers during 1999.
Other expenses increased approximately $.4 million, or 26.7%, to $1.9 million in
1999 from $1.5 million in 1998. Other expenses include, but are not limited to,
consulting fees, legal fees, advertising costs and bank charges.
Interest expense (net of interest income) increased $.8 million, or 50%, to $2.4
million from $1.6 million in 1998. During 1999 the Company incurred additional
indebtedness for the purpose of financing an increase in its tractor and trailer
fleets.
Net income for 1999 decreased approximately $.1 million, or 2.8%, to $3.5
million compared to $3.6 million for 1998.
5
COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997
Operating revenues for 1998 increased $40.9 million, or 52.9%, to $118.1 million
compared to $77.2 million for 1997. The inclusion of Welborn revenues for the
entire year accounted for 78.5% of this increase. Revenues also increased due to
better equipment utilization and the addition of 70 tractors.
Salaries, wages and employee benefits increased $4.2 million, or 12.9%, to $36.6
million compared to $32.4 million in 1997. Salaries increased at a slower rate
than revenues, making up 31.0% of operating revenue in 1998 compared to 42.0% in
1997, due to the expansion of the owner/ operator program.
Cost of independent contractors for 1998 increased $29.4 million to $31.8
million from $2.4 million in 1997, due to a full year of the owner/operator
program and the inclusion of Welborn. As of December 31, 1998 Boyd Bros. had an
owner/operator fleet of 150 operators compared to 50 operators in 1997.
Additionally, Welborn, had 310 owner/operators as of December 31, 1998, which
constitutes substantially all of its fleet.
Operating supplies expense for 1998 increased $.6 million, or 2.9%, to $21.4
million compared to $20.8 million for 1997. Operating supplies expense increased
at a slower rate than revenue because of lower fuel prices and the increase in
the owner/operator fleet. Maintenance costs on a per mile basis decreased $.06,
or 16.7%, due to a decrease in the average age of the Company's fleet.
Taxes and licenses expense for 1998 increased $.3 million, or 11.3%, to $2.6
million compared to $2.3 million in 1997. Taxes and licenses increased at a
slower rate than revenue due to the greater percentage of owner/operators.
Insurance and claims expense increased $2.0 million, or 56.8%, to $5.4 million
compared to $3.4 million in 1997. The increase was primarily due to an increase
in the accident frequency and the inclusion of Welborn for the entire year.
Communications and utilities expense increased $.3 million, or 19.1%, to $1.6
million from $1.3 million in 1997. Improved cost management contributed to the
slower rate of increase compared to revenue growth.
Depreciation and amortization expense increased $1.1 million, or 12.4%, to $10.3
million from $9.2 million in 1997. The slower rate of growth compared to revenue
was due to higher utilization of equipment, a full year of Boyd's owner/operator
program, and Welborn's high percentage of owner/operators.
Rent expense increased $.2 million, or 113.0%, to $.3 million from $.1 million
in 1997 largely due to the inclusion of Welborn . Rent expense includes
operating leases for both trailers and terminals.
Other expenses increased approximately $1.0 million, or 176.7%, to $1.5 million
in 1998 from $.6 million in 1997 due largely to Welborn being included for the
entire year. Other expenses include, but are not limited to, consulting fees,
legal fees, advertising costs and bank charges.
Interest expense (net of interest income) increased $.2 million, or 20.4%, to
$1.5 million from $1.3 million in 1997. During 1998, the Company incurred
additional indebtedness to finance the addition of 70 new tractors to its fleet.
Net income for 1998 increased approximately $1.25 million, or 53.9%, to $3.57
million compared to $2.32 million for 1997.
6
Liquidity and Capital Resources
The growth of the Company's business and maintenance of its modern fleet has
required significant investments in new tractors and trailers, and has been
financed largely through long-term debt. Capital expenditures, net of proceeds
from disposals of property and equipment related to company tractors, was
approximately $23.1 million in 1999, compared to $12.1 million in 1998. At
December 31, 1999, the Company had long-term debt (including current portions)
of $48.9 million, which was primarily incurred to purchase revenue equipment.
Management anticipates increasing the Company's fleet by approximately 50
tractors in 2000, net of replacements, at an anticipated cost of approximately
$6.9 million. Management expects to finance such equipment purchases through
equipment financing arrangements with various lenders. Net cash flow provided by
operating activities was approximately $11.6 million during 1999 compared to
approximately $9.2 million in 1998. The Company had working capital of $1.0
million at December 31, 1999.
Historically, the Company has relied on cash generated from operations to fund
its working capital requirements. However, the Company has two bank lines of
credit permitting short-term borrowings of up to $4.25 million. The revolving
lines of credit are collateralized by accounts receivable and inventory.
Pursuant to the Company's stock repurchase program, the Company purchased 25,000
and 263,940 shares of the common stock in open market or negotiated transactions
during 1998 and 1999, for aggregate purchase prices of $165,625 and $2,342,746,
respectively. The Company funded these purchases using working capital. On
January 8, 1999, the Company purchased 500,000 shares of its outstanding common
stock from a former Chief Executive Officer of the Company for $3,660,000. The
stock purchase was funded by available cash and a bank line of credit.
The Company currently has outstanding letters of credit, totaling approximately
$3.6 million at December 31, 1999, to cover liability insurance claims and
outstanding claims related to its previous self-insured workers' compensation
program. Annual commitment fees relating to these letters of credit do not
exceed 1.5% of the face amounts thereof.
Management believes that cash flow from future operations and borrowings
available under its lines of credit will be sufficient to meet its needs for
working capital for the foreseeable future. Over the long term, the Company will
continue to have significant capital requirements which may require the Company
to seek additional borrowings or equity capital. The availability of debt
financing or equity capital will depend upon prevailing market conditions, the
market price of the common stock and other factors over which the Company has no
control, as well as the Company's financial condition and results of operations.
Interest Rate Risk
The Company is exposed to interest rate risk due to its long-term debt, which at
December 31, 1999, bore interest at rates ranging from 1.00% to 1.50% above the
bank's LIBOR rate. Under the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 107, Disclosures about Fair Value of Financial
Instruments, the Company has estimated the fair value of its long-term debt
approximates its carrying value, using a discounted cash flow analysis based on
borrowing rates available to the Company. The effect of a hypothetical ten
percent increase in interest rates would increase the estimated fair value of
the Company's long-term debt by approximately $600,000. Management believes that
current working capital funds are sufficient to offset any adverse effects
caused by changes in the interest rates.
Year 2000 Compliance
In June 1998, the Company developed and began implementing a plan to review its
overall Year 2000 compliance. The plan encompassed the Company's critical
information technology ("IT") and its critical non-IT systems that are necessary
to execute the Company's basic functions of hauling freight via the Company's
flat-bed trucks.
7
The Company did not experience any significant malfunctions or errors in its
operating or business systems when the date changed from 1999 to 2000. Based on
operations since January 1, 2000, the Company does not expect any significant
impact to its on-going business as a result of the "Year 2000 issue." However,
it is possible that the full impact of the date change, which was of concern due
to computer programs that use two digits instead of four digits to define years,
has not been fully recognized. For example, it is possible that Year 2000 or
similar issues such as leap year-related problems may occur with billing,
payroll, or financial closings at month, quarterly or year end. The Company
believes that any such problems are likely to be minor and correctable. In
addition, the Company could still be negatively impacted if its customers or
suppliers are adversely affected by the Year 2000 or similar issues. The Company
currently is not aware of any significant Year 2000 or similar problems that
have arisen for its customers and suppliers.
The Company expended $105,000 on Year 2000 readiness efforts from 1998 to 1999.
These efforts included replacing some outdated, noncompliant hardware and
noncompliant software as well as identifying and remediating Year 2000 problems.
Seasonality
In the trucking industry, results of operations show a seasonal pattern because
customers generally reduce shipments during the winter season, and the Company
does experience some seasonality due to the open, flatbed nature of its
trailers. The Company has at times experienced delays in meeting its shipping
schedules as a result of severe weather conditions, particularly during the
winter months. In addition, the Company's operating expenses have historically
been higher in the winter months due to decreased fuel efficiency and increased
maintenance costs in colder weather.
Fuel Price Trend
Diesel fuel prices have increased materially during the first quarter of 2000.
The average price per gallon of diesel fuel has increased from about $.96 per
gallon at the beginning of 1999 to nearly $1.50 at the end of the first quarter
of 2000. If fuel prices continue to increase or are sustained at these higher
levels for a continuing period of time, the higher fuel costs may have a
materially adverse effect on the financial condition and business operations of
the Company. Additionally, the increased fuel costs may also have a materially
adverse effect on the Company's efforts to build a base of owner/operators,
expand its pool of available trucks and diversify its operations. Higher fuel
costs dilute the financial incentive for owner/operators, who are typically paid
a flat rate per mile; therefore, as a result of higher fuel prices, about 50
drivers left the Company's owner/operator program in the fourth quarter of 1999,
and additional drivers have departed in the first quarter of 2000. The
diminishing number of owner/operators compounds the direct impact of higher fuel
costs because each owner/operator who leaves the Company's program also leaves
behind a power unit that must then be absorbed into the Company's fleet. As a
result, each of these trucks can no longer be recorded as a variable expense
related to a contractual rate per mile, but must instead be recorded as a
Company-owned truck with indirect costs of ownership, such as depreciation,
maintenance and capital expenses. As a result, the continuing higher fuel costs
may have an adverse impact on the Company's results of operations due to empty
trucks, diminished fleet efficiency, and reduced revenue potential.
Recently Issued Accounting Standard
In June, 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities, which is effective (as amended) for fiscal
years beginning after June 15, 2000. It requires that an entity recognize all
derivative financial instruments as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. The
Company is currently evaluating this Statement and has not yet determined its
impact on the Company's financial statements.
8
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
1999 1998
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,006,826 $ 1,361,664
Short-term investments 250,000 250,000
Accounts receivable, less allowance for doubtful
accounts of $347,000 (1999) and $272,000 (1998):
Trade and interline 12,475,739 12,735,168
Other 1,082,615 170,094
Current portion of net investment in sales-type leases 3,620,723 1,495,510
Parts and supplies inventory 326,202 263,943
Prepaid tire expense 837,136 838,900
Other prepaid expenses 2,488,484 2,059,490
Deferred income taxes 281,834 644,712
----------- -----------
Total current assets 22,369,559 19,819,481
----------- -----------
PROPERTY AND EQUIPMENT:
Land and land improvements 2,263,326 2,262,486
Buildings 2,927,611 2,927,611
Revenue equipment 69,944,259 60,619,648
Other equipment 11,510,214 10,375,893
Leasehold improvements 377,831 339,994
Construction in progress 3,539,437 430,884
----------- -----------
Total 90,562,678 76,956,516
Less accumulated depreciation and amortization 28,680,556 28,265,861
----------- -----------
Property and equipment, net 61,882,122 48,690,655
----------- -----------
OTHER ASSETS:
Net investment in sales-type leases 8,522,614 4,120,787
Goodwill, net of accumulated amortization of $464,378 (1999)
and $240,578 (1998) 3,955,834 4,235,422
Revenue equipment held for lease 2,287,267
Deposits and other assets 438,372 181,081
----------- -----------
Total other assets 15,204,087 8,537,290
----------- -----------
TOTAL $99,455,768 $77,047,426
=========== ===========
9
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
1999 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 14,245,584 $ 7,833,286
Accounts payable - trade and interline 4,070,946 1,648,537
Income taxes 802,395 1,686,502
Accrued liabilities:
Self-insurance claims 1,768,114 2,132,042
Salaries and wages 746,805 957,710
Other 1,785,087 1,200,642
------------ -----------
Total current liabilities 23,418,931 15,458,719
LONG-TERM DEBT 34,688,582 18,049,490
DEFERRED INCOME TAXES 10,954,964 10,677,510
------------ -----------
Total liabilities 69,062,477 44,185,719
------------ -----------
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value - 1,000,000 shares
authorized; no shares issued and outstanding
Common stock, $.001 par value - 10,000,000 shares
authorized; 4,081,910 (1999) and 4,069,640 (1998) shares
issued and outstanding 4,082 4,070
Additional paid-in capital 16,839,570 16,864,622
Retained earnings 19,450,385 15,993,015
Treasury stock, at cost; 751,670 shares (5,900,746)
------------ -----------
Total stockholders' equity 30,393,291 32,861,707
------------ -----------
TOTAL $ 99,455,768 $77,047,426
============ ===========
See notes to consolidated financial statements.
10
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
1999 1998 1997
OPERATING REVENUES $ 133,137,272 $ 118,123,424 $ 77,214,629
------------- ------------- ------------
OPERATING EXPENSES:
Salaries, wages and employee benefits 35,461,400 36,607,732 32,427,094
Cost of independent contractors 45,132,153 31,817,649 2,440,687
Operating supplies 22,934,366 21,429,224 20,831,643
Taxes and licenses 2,846,677 2,565,842 2,305,506
Insurance and claims 6,110,604 5,392,526 3,438,761
Communications and utilities 1,479,546 1,553,511 1,305,448
Depreciation and amortization 10,719,647 10,320,379 9,181,399
Gain on disposition of property and equipment, net (1,626,983) (433,023) (363,970)
Other 1,862,170 1,542,703 557,508
------------- ------------- ------------
Total operating expenses 124,919,580 110,796,543 72,124,076
------------- ------------- ------------
OPERATING INCOME 8,217,692 7,326,881 5,090,553
------------- ------------- ------------
OTHER INCOME (EXPENSES):
Interest income 91,740 97,052 135,819
Interest expense (2,421,910) (1,607,482) (1,390,455)
Other income 82,308
------------- ------------- ------------
Other expenses, net (2,330,170) (1,428,122) (1,254,636)
------------- ------------- ------------
INCOME BEFORE PROVISION FOR
INCOME TAXES 5,887,522 5,898,759 3,835,917
------------- ------------- ------------
PROVISION FOR INCOME TAXES:
Current 1,789,821 2,284,318 995,000
Deferred 640,331 41,703 524,070
------------- ------------- ------------
Total provision for income taxes 2,430,152 2,326,021 1,519,070
------------- ------------- ------------
NET INCOME $ 3,457,370 $ 3,572,738 $ 2,316,847
============= ============= ============
BASIC AND DILUTED NET INCOME
PER SHARE $ 0.99 $ 0.87 $ 0.62
============= ============= ============
BASIC AND DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING 3,507,311 4,090,175 3,726,591
============= ============= ============
See notes to consolidated financial statements.
11
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
ADDITIONAL
COMMON PAID-IN RETAINED TREASURY
STOCK CAPITAL EARNINGS STOCK TOTAL
BALANCE, JANUARY 1, 1997 $ 3,701 $ 13,780,616 $ 10,103,430 $23,887,747
Issuance of common stock in
connection with acquisition 394 3,249,606 3,250,000
Net income 2,316,847 2,316,847
----------- ------------ ------------ -----------
BALANCE, DECEMBER 31, 1997 4,095 17,030,222 12,420,277 29,454,594
Purchase and retirement of
common stock (25) (165,600) (165,625)
Net income 3,572,738 3,572,738
----------- ------------ ------------ -----------
BALANCE, DECEMBER 31, 1998 4,070 16,864,622 15,993,015 32,861,707
Exercise of stock options 6 (12,318) $ 51,000 38,688
Sale of common stock under
employee stock purchase plan 6 (12,734) 51,000 38,272
Purchase of treasury stock (6,002,746) (6,002,746)
Net income 3,457,370 3,457,370
----------- ------------ ------------ ------------ -----------
BALANCE, DECEMBER 31, 1999 $ 4,082 $ 16,839,570 $ 19,450,385 $ (5,900,746) $30,393,291
=========== ============ ============ ============ ===========
See notes to consolidated financial statements.
12
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
1999 1998 1997
OPERATING ACTIVITIES:
Net income $ 3,457,370 $ 3,572,738 $ 2,316,847
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 10,719,647 10,320,379 9,181,399
Gain on disposal of property and equipment, net (1,626,983) (433,023) (363,970)
Net effect of sales-type leases on cost of
independent contractors (1,741,454) (1,800,538) (212,780)
Provision for deferred income taxes 640,332 41,703 524,070
Changes in assets and liabilities provided
(used) cash:
Accounts receivable (493,392) (3,372,491) (3,716,424)
Refundable income taxes 579,573
Other current assets (666,293) (1,001,836) (851,868)
Deposits and other assets (257,291) (68,220) 233,189
Accounts payable - trade and interline 2,414,894 131,319 (605,343)
Accrued liabilities and other current liabilities (874,865) 1,776,724 1,119,302
------------ ------------ ------------
Net cash provided by operating activities 11,571,965 9,166,755 8,203,995
------------ ------------ ------------
INVESTING ACTIVITIES:
Purchase of short-term investments (150,000)
Payments received on sales-type leases 3,939,430 1,750,705 43,374
Capital expenditures:
Revenue equipment (36,950,717) (12,117,225) (15,341,667)
Other property and equipment (4,650,303) (2,360,188) (1,995,791)
Proceeds from disposals of property
and equipment 8,542,604 1,975,628 5,948,765
Receipt of acquisition escrow 55,788
------------ ------------ ------------
Net cash used in investing activities (29,063,198) (10,751,080) (11,495,319)
------------ ------------ ------------
FINANCING ACTIVITIES:
Purchase of common stock (165,625)
Proceeds from sales of common stock 38,272
Proceeds from exercise of stock options 38,688
Purchase of treasury stock (6,002,746)
Proceeds from line of credit 1,021,849
Proceeds from long-term debt 36,785,635 12,572,123 17,830,191
Principal payments on long-term debt (13,723,454) (12,877,683) (15,736,748)
------------ ------------ ------------
Net cash provided by (used in)
financing activities 17,136,395 (471,185) 3,115,292
------------ ------------ ------------
13
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------------------------------------------
1999 1998 1997
NET DECREASE IN CASH
AND CASH EQUIVALENTS $ (354,838) $(2,055,510) $ (176,032)
CASH AND CASH EQUIVALENTS:
BEGINNING OF YEAR 1,361,664 3,417,174 3,593,206
----------- ----------- -----------
END OF YEAR $ 1,006,826 $ 1,361,664 $ 3,417,174
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the year for:
Interest $ 2,358,576 $ 1,612,715 $ 1,254,636
=========== =========== ===========
Income taxes, net of refunds $ 2,727,399 $ 816,729 $ 30,469
=========== =========== ===========
SUPPLEMENTAL NONCASH INVESTING AND
FINANCING ACTIVITIES:
Acquisition of Welborn Transport, Inc.
in December 1997 (see Note 2)
Net investment in sales-type leases $ 1,817,598 $ 2,177,249 $ 2,165,319
=========== =========== ===========
See notes to consolidated financial statements.
14
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS - Boyd Bros. Transportation Inc. and its subsidiary
(the "Company") are flatbed carriers, transporting a variety of products,
primarily steel and building materials. The Company has authority to
operate in the continental United States; however, its market generally
encompasses the eastern two-thirds of the United States. The Company is
headquartered in Clayton, Alabama and operates regional and satellite
terminals in locations near interstate highways or customer facilities.
All of the Company's operations (flatbed trucking) constitute only one
segment under the requirements of Statement of Financial Accounting
Standards ("SFAS") No. 131, Disclosures about Segments of an Enterprise
and Related Information.
PRINCIPLES OF CONSOLIDATION - The accompanying financial statements
include the accounts of the Company and its wholly owned subsidiary,
Welborn Transport, Inc. since its acquisition on December 8, 1997 (Note
2). All significant intercompany items have been eliminated in
consolidation.
ACCOUNTING ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents include cash on
hand, cash on deposit and highly liquid investments with a maturity of
three months or less at purchase date.
SHORT-TERM INVESTMENTS - Short-term investments, which consist of
certificates of deposit with maturities of three to twelve months, are
stated at cost, which approximates market.
REVENUE EQUIPMENT HELD FOR LEASE - Revenue equipment held for lease and
not in use is stated at cost, less accumulated depreciation, which
approximates net realizable value.
TIRES IN SERVICE - Tires placed in service on newly purchased revenue
equipment are carried at cost and depreciated over their useful lives,
estimated to be eighteen months. The undepreciated cost of tires is
included in prepaid tire expense.
PROPERTY AND EQUIPMENT - Property and equipment is stated at cost.
Depreciation is computed using the straight-line method at rates intended
to distribute the cost of the assets over their estimated service lives as
follows:
Land improvements 15 years
Buildings 5 - 25 years
Revenue equipment 4 - 7 years
Other equipment 3 - 10 years
Leasehold improvements 3 - 20 years
15
Expenditures which significantly increase values or extend useful lives of
property and equipment are capitalized, whereas those for normal
maintenance and repairs are expensed. Gains and losses on disposal of
property and equipment are reflected in operations in the year of
disposal.
GOODWILL - Goodwill is amortized over 20 years using the straight-line
method. The Company evaluates goodwill for impairment by comparing
projected future cash flows to carrying amounts of goodwill using a
discount rate based on the cost of capital of that business. If such
evaluation indicates impairment, the Company would record a change to
operations in the period such impairment is determined.
CLAIMS - The Company accrues estimates for the uninsured portion of claims
relating to the Company's insurance programs (see Note 6).
REVENUE RECOGNITION - Operating revenue and related costs are recorded
upon shipment of products to customers provided that pervasive evidence of
an arrangement exists, the selling price is fixed and determinable, and
collectibility of the resulting receivables is probable.
NET INCOME PER SHARE - In accordance with SFAS No. 128, Earnings per
Share, the Company reports two separate earnings per share numbers, basic
and diluted, on the face of its statements of income.
For the years ended December 31, 1999, 1998 and 1997, all of the Company's
outstanding options, totaling 456,100, 444,810, and 323,350 shares,
respectively, were excluded from the computation of weighted average
shares as such options would have been anti-dilutive.
FAIR VALUE OF FINANCIAL INSTRUMENTS - SFAS No. 107, Disclosures about Fair
Value of Financial Instruments (as amended by SFAS No. 119), requires
certain disclosures for financial instruments for which it is practicable
to estimate the fair value. The Company's financial instruments consist of
cash equivalents, short-term investments, trade receivables, trade
payables, accrued expenses, and interest-bearing debt. The fair value of
the Company's financial instruments, excluding interest-bearing debt,
approximates the carrying value reflected in the accompanying consolidated
balance sheets at December 31, 1999 and 1998, primarily because of the
short-term nature of these instruments. Fair value disclosure for the
Company's interest-bearing debt is presented in Note 5.
ACCOUNTING STANDARD NOT YET ADOPTED - In June 1998, the Financial
Accounting Standards Board issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, which is effective (as amended) for
fiscal years beginning after June 15, 2000. It requires that an entity
recognize all derivative financial instruments as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value. The Company is currently evaluating this
Statement and has not yet determined its impact on the Company's financial
statements.
RECLASSIFICATIONS - Certain reclassifications have been made to the 1998
and 1997 consolidated financial statements to conform to the 1999
presentation.
2. ACQUISITION
On December 8, 1997, the Company acquired Welborn Transport, Inc.
("Welborn") for a total purchase price of $6,631,000, including direct
acquisition costs. The acquisition was accounted for using the purchase
method of accounting and, accordingly, the purchase price was allocated to
the
16
assets acquired and liabilities assumed based on their estimated fair
values at the acquisition date. Goodwill totaling $4,476,000 was
recognized on the acquisition equal to the excess of the purchase price
over the estimated fair value of the net assets acquired. The consolidated
statements of income include the results of Welborn's operations from its
acquisition date forward.
The estimated fair value of assets acquired and liabilities assumed in
this acquisition is summarized as follows:
Fair value of assets acquired $11,985,000
Less liabilities assumed 5,354,000
-----------
$ 6,631,000
===========
Consideration consisted of:
Fair value of common stock issued $ 3,250,000
Issuance of notes payable to stockholders (Note 5) 3,250,000
Amounts paid or accrued for acquisition costs 131,000
-----------
Total purchase price $ 6,631,000
===========
The following unaudited pro forma consolidated results of operations for
the year ended December 31, 1997 have been prepared as though the
acquisition occurred as of January 1, 1997:
Operating revenues $ 105,551,554
Net income 2,119,420
Basic and diluted net income per share .52
The unaudited proforma consolidated results of operations have been
prepared for comparative purposes only and do not purport to be indicative
of the actual results that would have been achieved had the acquisition
taken place as of January 1, 1997 or in the future.
3. EMPLOYEE BENEFIT PLAN
The Company has a contributory 401(k) retirement plan, which covers
employees who elect to participate and meet certain eligibility
requirements. The amounts charged to operations related to this plan for
the years ended December 31, 1999, 1998, and 1997 were $280,890, $246,943,
and $151,527, respectively.
4. LEASES
LESSEE:
OPERATING LEASES - The Company leases certain terminal buildings, land and
equipment under agreements which expire at various dates through 2001. The
lease agreements generally include renewal options and the Company is
required to pay taxes, insurance and normal maintenance for the
facilities.
17
Future minimum lease payments under all operating leases with an initial
or remaining noncancelable lease term of more than one year are as
follows:
YEAR
2000 $ 72,200
2001 22,615
--------
Total $ 94,815
========
Total rental expense for all operating leases was $384,723, $378,961, and
$112,243 for the years ended December 31, 1999, 1998 and 1997,
respectively.
LESSOR:
SALES-TYPE LEASES - The Company leases revenue equipment to certain of its
owner/operators and accounts for these transactions as sales-type leases.
These receivables have terms of three and one-half to four years and are
collateralized by a security interest in the related revenue equipment.
Certain revenue equipment under these leases have a guaranteed residual
value from the vendor which will be redeemed by the Company at the end of
the lease term.
The components of the net investment in sales-type leases at December 31,
1999 and 1998 are as follows:
1999 1998
Minimum lease receivable $ 16,212,485 $ 8,731,437
Allowance for uncollectible receivables (910,754) (1,201,245)
------------ -----------
Net minimum lease receivable 15,301,731 7,530,192
Unearned interest income (3,158,394) (1,913,895)
------------ -----------
Net investment in sales-type leases 12,143,337 5,616,297
Less current portion (3,620,723) (1,495,510)
------------ -----------
Net amount due after one year $ 8,522,614 $ 4,120,787
============ ===========
Future minimum lease rentals for sales-type leases are as follows:
YEAR
2000 $ 5,171,648
2001 5,140,545
2002 4,518,729
2003 1,381,563
-----------
Total $16,212,485
===========
Gains on disposition of revenue equipment leased to owner operators,
interest income on these leases, and provisions for bad debts related to
sales-type leases have been included as components of cost of independent
contractors in the accompanying consolidated statements of income.
OPERATING LEASES - The Company also leases revenue equipment to certain of
its owner/operators and accounts for these transactions as operating
leases. These leases have terms of three to three
18
and one-half years. The revenue equipment under these leases had a cost of
$2,517,591 and $2,596,261 net of accumulated depreciation of $477,298 and
$75,532 at December 31, 1999 and 1998, respectively.
Future minimum lease rentals for operating leases are as follows:
YEAR
2000 $ 663,000
2001 649,230
2002 309,570
----------
Total $1,621,800
==========
Total rental income from operating leases was $353,630, $13,770, and $0
for the years ended December 31, 1999, 1998 and 1997, respectively.
5. LONG-TERM DEBT
Long-term debt at December 31, 1999 and 1998 is summarized as follows:
1999 1998
Revenue equipment obligations:
LIBOR plus 1.00% (7.00% - 1999 and 6.06% - 1998) note
payable in monthly installments through November 2005 $22,934,205 $13,380,676
LIBOR plus 1.25% (7.25% - 1999 and 6.31% - 1998) note
payable in monthly installments through December 2005 25,386,865 9,926,560
LIBOR plus 1.50% (7.50% - 1999 and 6.56% - 1998) note
payable in yearly installments through January 2001 571,429 1,500,000
Note repaid in 1999 763,444
Other 41,667 312,096
----------- -----------
Total 48,934,166 25,882,776
Less current maturities 14,245,584 7,833,286
----------- -----------
Long-term debt $34,688,582 $18,049,490
=========== ===========
Revenue equipment obligations are collateralized by revenue equipment.
19
Long-term debt is scheduled to mature as follows:
YEAR
2000 $14,245,584
2001 10,960,436
2002 10,239,622
2003 8,434,027
2004 4,813,354
Thereafter 241,143
-----------
Total $48,934,166
===========
The Company also has two lines of credit totaling $4,250,000 under a
commercial revolving note, expiring April 7, 2000, bearing interest at
LIBOR plus 1.75%. These lines of credit were not utilized at December 31,
1999 and 1998.
Covenants under these loan agreements require the Company, among other
things, to maintain a tangible net worth of $14,800,000, as defined, and
to maintain certain financial ratios. The Company received waivers from
certain creditors at December 31, 1999 due to non-compliance with
financial ratios related to the increase in the current portion of
long-term debt.
The fair value of long-term debt approximates its carrying value and was
estimated using a discounted cash flow analysis, based on the borrowing
rate currently available to the Company for bank loans with similar terms
and average maturities.
6. COMMITMENTS AND CONTINGENCIES
The Company is currently self-insured as follows:
RETENTION AMOUNT
PER OCCURRENCE
Liability - bodily injury and property damage $100,000
Employee medical and hospitalization 100,000
Cargo loss and damage 10,000
Collision 10,000
Environmental losses No Limit
The above retention amounts represent rates which were negotiated with the
Company's insurance carriers at December 31, 1999. Retention amounts under
other previous insurance programs may vary from those stated above. At
December 31, 1999, the Company has recorded liabilities for retention
amounts related to claims under previous insurance coverage. For claims
prior to 1997, the Company had a retention amount per occurrence under
workers' compensation of $300,000.
The Company has excess primary coverage on a per claim and aggregate basis
beyond the deductible levels and also maintains umbrella policies to
supplement the primary liability coverage.
The liabilities for self-insurance are accrued based on claims incurred,
with liabilities for unsettled claims and claims incurred but not yet
reported being estimated based on management's evaluation of the nature
and severity of individual claims and the Company's past claims
experience.
20
The Company has outstanding letters of credit at December 31, 1999
totaling $3,588,565 to cover liability insurance claims and claims related
to its previous self-insured workers' compensation program, and to
purchase revenue equipment.
There are sundry claims and suits pending against the Company in the
ordinary course of business. In the opinion of the Company's management,
any ultimate liability in these matters will have no material adverse
effect on the financial position, operations or cash flows of the Company.
7. STOCKHOLDERS' EQUITY
PREFERRED STOCK - The Board of Directors is authorized to issue, at its
discretion, up to 1,000,000 shares of preferred stock at par value of
$.001. The terms and conditions of the preferred stock are to be
determined by the Board of Directors.
EMPLOYEE STOCK PURCHASE PLAN - During 1999, the Company established an
Employee Stock Purchase Plan under which 175,000 shares of the Company's
common stock may be issued to eligible employees at a price equal to the
lesser of 90% of the market price of the stock as of the first or last day
of the offering periods (as defined). Employees may elect to have a
portion of their compensation withheld, subject to certain limits, to
purchase the Company's common stock. The expense associated with this plan
in 1999 was insignificant.
STOCK OPTION PLAN - The Company has a stock option plan (the "Plan") that
provides for the granting of stock options to key employees, executive
officers and directors. An aggregate of 500,000 shares of the Company's
common stock are reserved for this Plan. The options are exercisable in
increments over a five-year period beginning on the first anniversary of
the grant and will expire ten years after the date of the grant. No
options were exercised in 1997 or 1998.
Information regarding the Plan is summarized below:
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE FAIR VALUE
SHARES PRICE AT GRANT DATE
Outstanding at January 31, 1997 258,400 10.22
Granted 92,500 7.94 6.12
Terminated (27,550) 9.61
--------
Outstanding at December 31, 1998 323,350 9.62
Granted 174,900 8.84 7.05
Terminated (53,440) 9.22
--------
Outstanding at December 31, 1999 444,810 9.36
Granted 65,250 10.25 7.93
Exercised (6,000) 6.00
Terminated (47,960) 9.40
--------
Outstanding at December 31, 1999 456,100 9.53
========
The number of stock options exercisable was 228,830, 171,420 and 117,310
at December 31, 1999, 1998 and 1997 respectively. At December 31, 1999,
37,900 shares were available for future grant under the Plan.
21
The following table summarizes information about fixed stock options as of
December 31, 1999:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------------- ---------------------------
WEIGHTED
AVERAGE WEIGHTED
NUMBER REMAINING WEIGHTED NUMBER AVERAGE
RANGE OF OF SHARES CONTRACTUAL AVERAGE OF SHARES EXERCISE
EXERCISE PRICES OUTSTANDING LIFE EXERCISE PRICE EXERCISABLE PRICE
$6.00 - $11.00 456,100 6.9 years $ 9.53 228,830 $ 10.04
SFAS No. 123, Accounting for Stock-Based Compensation, encourages, but
does not require companies to record compensation cost for stock-based
employee compensation plans at fair value. The Company has chosen to
continue to account for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and related Interpretations.
Accordingly, compensation cost for stock options is measured as the
excess, if any, of the quoted market price of the Company's stock at the
date of the grant over the amount an employee must pay to acquire the
stock. The option price of all the Company's stock options is equal to the
market value of the stock at the grant date. As such, no compensation
expense is recorded in the accompanying consolidated financial statements.
Had compensation cost been determined based upon the fair value at the
grant date for options awarded in 1999, 1998 and 1997 under the Plan
consistent with the methodology prescribed under SFAS No. 123, the
Company's pro forma net income and net income per share would have
differed from the amounts reported as follows:
AS REPORTED PRO FORMA
------------------------------------------ --------------------------------------------
1999 1998 1997 1999 1998 1997
Net income $ 3,457,370 $ 3,572,738 $ 2,316,847 $ 3,310,578 $ 3,285,544 $ 2,208,410
Basic and diluted net
income per share $ .99 $ .87 $ .62 $ .94 $ .80 $ .59
The fair value for options was estimated at the date of the grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions:
1999 1998 1997
Risk-free interest rate 6.5 % 6.5 % 6.5 %
Dividend yield 0 % 0 % 0 %
Expected volatility 81.2 % 82.8 % 81.4 %
Weighted average expected life 7 years 7 years 7 years
22
8. INCOME TAXES
The provision for income taxes for the years ended December 31, 1999, 1998
and 1997 consisted of the following (in thousands):
1999 1998 1997
Current:
Federal $1,555 $1,944 $ 957
State 235 340 38
------ ------ ------
Total current 1,790 2,284 995
------ ------ ------
Deferred:
Federal 550 31 371
State 90 11 153
------ ------ ------
Total deferred 640 42 524
------ ------ ------
Total provision for income taxes $2,430 $2,326 $1,519
====== ====== ======
Total income tax expense for 1999, 1998, and 1997 is different from the
amount that would be computed by applying the statutory federal income tax
rate of 35% to income before income taxes. The reasons for this difference
are as follows (in thousands):
1999 1998 1997
Income tax at expected federal income tax rate $2,005 $2,006 $1,304
State income taxes, net of federal tax effect 214 214 130
Non-deductible operating expenses 38 29 25
Non-deductible goodwill amortization 77 77
Other 96 60
------ ------ ------
$2,430 $2,326 $1,519
====== ====== ======
At December 31, 1997, the Company had approximately $1,920,000 of state
net operating loss carryforwards for tax purposes available to offset
future state taxable income through 2011. The Company also had
approximately $630,000 of alternative minimum tax credit carryforwards
available to offset future federal income tax. These were utilized during
1998.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax liabilities and
assets as of December 31, 1999 and 1998 are as follows (in thousands):
1999 1998
Deferred tax liabilities:
Tax over book depreciation $10,722 $10,180
Prepaid expenses deductible when paid 797 590
Capitalized tires 327 292
Cash basis to accrual basis adjustment 271 542
Other 8 16
-------- --------
Total deferred tax liabilities 12,125 11,620
------- --------
23
1999 1998
Deferred tax assets:
Accrued self insurance claims $ 389 $ 500
Other accrued expenses not deductible until paid 496 437
Allowance for losses on receivables 496 577
Other 71 73
-------- --------
Total deferred tax assets 1,452 1,587
-------- --------
Net deferred tax liabilities $10,673 $10,033
======= =======
The above amounts are reflected in the accompanying consolidated balance
sheets as:
1999 1998
Current assets $ 282 $ 645
Noncurrent liabilities 10,955 10,678
------- --------
Net deferred tax liabilities $10,673 $10,033
======= =======
9. MAJOR CUSTOMERS
The Company does not believe that it is dependent upon any single
customer. Sales to the Company's largest customer amounted to 8%, 8% and
12% of operating revenues during 1999, 1998 and 1997, respectively.
10. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the quarterly results of operations for the
years ended December 31, 1999 and 1998 (in thousands, except per share
data):
1999
-----------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
Operating revenues $30,038 $33,247 $35,475 $34,777
Operating income 1,563 2,900 2,242 1,513
Net income 662 1,415 982 398
Basic and diluted net income per share 0.18 0.40 0.28 0.12
1998
----------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
Operating revenues $27,888 $30,370 $30,221 $29,644
Operating income 1,157 2,360 2,227 1,583
Net income 459 1,203 1,106 805
Basic and diluted net income per share 0.11 0.29 0.27 0.20
24
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Boyd Bros. Transportation Inc.:
We have audited the accompanying consolidated balance sheets of Boyd Bros.
Transportation Inc. and subsidiary as of December 31, 1999 and 1998, and the
related consolidated statements of income, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Boyd Bros. Transportation Inc. and
subsidiary as of December 31, 1999 and 1998, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1999 in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Birmingham, Alabama
February 4, 2000