SELECTED FINANCIAL DATA EXHIBIT 13
The following tables set forth selected financial data with respect to the
Company's last five fiscal years. Data relating to the five fiscal years ended
December 31, 2001 are derived from the Consolidated Financial Statements
incorporated by reference elsewhere in this report or in previous reports. BDO
Seidman, LLP, certified independent accountants, audited the financial
statements for the year ended December 31, 2001. Deloitte & Touche LLP audited
the financial statements for the four-year period ended December 31, 2000. The
selected consolidated financial data should be read in conjunction with, and is
qualified in its entirety by reference to, the consolidated financial
statements of the Company, the notes thereto and the report thereon included
elsewhere in this report.
Year Ended December 31,
---------------------------------------------------------------
2001 2000 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------
(in thousands, except per share data)
Statement of Operations Data:
Operating revenues $ 123,856 $ 126,725 $ 133,137 $ 118,123 $ 77,215
Operating expenses:
Salaries, wages and employee benefits 39,561 39,263 35,461 36,608 32,427
Cost of independent contractors 31,779 35,173 45,132 31,818 2,500
Operating supplies 26,513 25,404 22,934 21,429 20,832
Taxes and licenses 2,241 2,965 2,847 2,566 2,306
Insurance and claims 6,458 7,060 6,111 5,393 3,439
Communications and utilities 1,371 1,520 1,480 1,554 1,305
Depreciation and amortization 12,290 11,611 10,720 10,320 9,181
Gain on disposition of property and
equipment, net (526) (1,113) (1,627) (433) (577)
Other 1,950 2,008 1,862 1,541 711
- ------------------------------------------------------------------------------------------------------------------
Total operating expenses 121,637 123,891 124,920 110,796 72,124
- ------------------------------------------------------------------------------------------------------------------
Operating income (loss) 2,219 2,834 8,217 7,327 5,091
Interest income 63 80 92 97 136
Interest expense (2,684) (3,904) (2,422) (1,608) (1,391)
Other -- -- -- 82 --
- ------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes (402) (990) 5,887 5,898 3,836
Income taxes (benefit) 5 (15) 2,430 2,326 1,519
- ------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (407) $ (975) $ 3,457 $ 3,572 $ 2,317
==================================================================================================================
Basic and diluted net income (loss) per
share $ (0.14) $ (0.32) $ 0.99 $ 0.87 $ 0.62
==================================================================================================================
As of December 31,
---------------------------------------------------------------
2001 2000 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------
(in thousands)
Balance Sheet Data:
Working capital (deficit) $ (2,089) $ (1,481) $ (1,049) $ 4,360 $ 3,785
Net property and equipment 58,513 66,737 61,882 48,691 48,859
Total assets 86,084 95,052 99,456 77,047 71,526
Long-term debt, less current maturities 25,606 33,322 34,689 18,049 19,252
Total liabilities 60,795 67,870 69,062 44,186 42,071
Stockholders' equity 25,288 27,182 30,393 32,862 29,455
Selected Operating Data:
The following table sets forth certain unaudited operating data regarding the
Company.
For the Year (or as of) December 31,
---------------------------------------------------------------
2001 2000 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------
Operating ratio 98.2% 97.8% 93.8% 93.8% 93.4%
Average length of haul in miles 688 661 634 576 663
Average number of truckloads per week 2,872 3,145 3,368 3,330 1,908
Average revenues per total mile $ 1.17 $ 1.19 $ 1.18 $ 1.17 $ 1.17
Equipment at period end:
Tractors 972 1,017 1,112 1,032 950
Trailers 1,395 1,398 1,451 1,337 1,227
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is a discussion of the financial condition and results of
operations of the Company for each of the years in the three-year period ended
December 31, 2001. This discussion should be read in conjunction with the
Consolidated Financial Statements and Notes thereto included elsewhere herein.
GENERAL
The Company was founded in 1956 as a small regional flatbed trucking operation.
Since that time, the Company has grown to one with 972 tractors and 1,395
trailers operating in the eastern two-thirds of the United States. The Company
became publicly held in 1994.
Historically, the Company owned its revenue equipment and operated through
employee drivers. The Company's expansion in the past, therefore, has required
significant capital expenditures, which have been funded through secured
borrowings. During 1997, as a strategy to expand the Company's potential for
growth without the increase in capital expenditures typically related to owned
equipment, the Company began adding independent contractors (owner-operators) to
its fleet. The Company then accelerated the implementation of this strategy in
December 1997 with the acquisition of WTI Transport, Inc., ("WTI") (f/k/a
Welborn Transport), which specializes in short-haul routes using largely an
owner-operated fleet. References to the "Company" contained herein refer to the
combined operations of Boyd and WTI. References hereinafter to "Boyd" or "WTI"
describe the distinct operations of the parent and subsidiary, respectively.
Boyd provides transportation services in the contiguous United States and into
some parts of Canada. During 2001, Boyd had an average length of haul of 749
miles and had 760 tractors and 1,099 trailers as of December 31, 2001. Pay for
owner-operators at Boyd is based on a per mile rate. Boyd utilizes agents in
some areas to solicit and book freight. Boyd also operates a separate logistics
department that provides logistical support to the Company.
WTI provides transportation services over shorter routes than those
traditionally provided by Boyd. WTI operates primarily in the southeastern
United States, with an average length of haul of less than 400 miles. Management
believes this enhances WTI's ability to retain quality drivers, as drivers' time
away from home is minimized. WTI operates 212 tractors and 296 flatbed trailers.
The WTI fleet consisted of 172 owner-operators and 40 company tractors at
December 31, 2001. The owner-operators are paid by WTI based upon a percentage
of revenue. WTI utilizes agents in some areas to solicit and book freight.
The Company's success depends on its ability to efficiently manage its resources
in the delivery of truckload transportation services to its customers. Resource
requirements vary with customer demand, which may be subject to seasonal or
general economic conditions. The Company's ability to adapt to changes in
customer transportation requirements is a key element in efficiently deploying
resources and in making capital investments in tractors and trailers and
technology. The Company may also be affected by the financial failure of its
customers or a loss of a customer's business from time-to-time.
The Company's greatest resource requirements include qualified drivers,
tractors, trailers, and related costs of operating its equipment (such as fuel,
driver pay, insurance, and supplies and maintenance). The Company has
historically been successful mitigating its risk to increases in fuel prices by
recovering additional fuel surcharges from its customers. The Company's
financial results are also affected by the availability of qualified drivers and
the market for new and used tractors. Because the Company is self-insured for
cargo, personal injury, and property damage claims on its tractors and for
workers' compensation benefits for its drivers (supplemented by premium-based
coverage above certain dollar levels), financial results may also be affected by
driver safety, medical costs, the weather, the legal and regulatory environment,
and the costs of insurance coverage to protect against catastrophic losses.
CRITICAL ACCOUNTING POLICIES
The most significant accounting policies and estimates that affect the Company's
financial statements include the following:
- - The Company reviews the adequacy of the lease receivable allowance for
doubtful accounts in the independent contractor (owner-operator)
program. This allowance represents an estimate of the notes receivable
of the lease purchase program that will become uncollectible and
possibly prevent the Company from maintaining its investment value in
the tractor.
- - The Company reviews long-lived assets for impairment as described in
Note 1 to the Consolidated Financial Statements. In analyzing potential
impairments, the Company uses projections of future cash flows from the
asset. These projections are based on management's view of growth rates
for the related business, anticipated future economic conditions, the
assignment of discount rates relative to risk and estimates of terminal
values.
- - The Company reviews the estimates of accrued liabilities for insurance
and claims for liability and both physical and property damage and
workers' compensation. The insurance and claims accruals are recorded
at the estimated payment amounts and are based upon individual case
estimates.
- - The Company reviews the selections of estimated useful lives and
salvage values for purposes of depreciating tractors and trailers.
Depreciable lives of tractors and trailers range from three to seven
years. Estimates of salvage value at the expected date of trade-in or
sale are based on the expected values of equipment at the time of
disposal.
- - The Company reviews the valuation of accounts receivable on a monthly
basis. The allowance for doubtful accounts is estimated based on
historical experience of write-offs and current economic conditions
that might impact the collectibility of customer accounts.
The Company's review of these accounting items and the resulting accounting
positions taken by the Company are based upon certain assumptions and conditions
and reflect management's best assumptions and estimates, but estimates of these
types of accounting items, particularly impairment and accrued liabilities,
involve inherent uncertainties as described above, which may or may not be
controllable by management. As a result, the accounting for such items could
result in different amounts if management used different assumptions or if
different conditions occur in future periods.
RESULTS OF OPERATIONS
COMPARISON OF YEAR ENDED DECEMBER 31, 2001 TO YEAR ENDED DECEMBER 31, 2000
The following tables set forth, by segment, the percentage relationship of
expense items to operating revenues and certain other operating statistics for
the periods indicated:
COMPANY BOYD WTI
------------------- -------------------- --------------------
YEARS ENDED DECEMBER 31,
2001 2000 2001 2000 2001 2000
- -------------------------------------------------------------------------------------------------------------------
Operating revenues 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses
Salaries, wages, and employee
benefits 31.9 31.0 35.1 35.7 14.3 11.4
Cost of independent contractors 25.7 27.8 18.5 17.5 65.5 70.4
Operating supplies 21.4 20.1 23.7 11.1 9.1 5.5
Taxes and licenses 1.8 2.3 1.9 2.3 1.2 2.3
Insurance and claims 5.2 5.6 5.2 5.4 5.1 6.3
Communications and utilities 1.1 1.2 1.1 1.2 1.1 1.2
Depreciation and amortization 9.9 9.2 10.5 10.3 6.7 4.4
Gain on disposition of property
and equipment, net (0.4) (0.9) (0.5) (0.8) 0.0 (1.0)
Other 1.6 1.6 1.4 1.0 2.8 3.9
- -------------------------------------------------------------------------------------------------------------------
Total operating expenses 98.2 97.8 96.8 96.1 105.9 104.4
- -------------------------------------------------------------------------------------------------------------------
Operating income 1.8 2.2 3.2 3.9 (5.9) (4.4)
Interest expense, net (2.1) (3.0) (2.4) (3.6) (1.0) (1.0)
Other income -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes (0.3) (0.8) 0.9 0.4 (6.8) (5.6)
Income taxes (benefit) (0.0) (0.0) 0.4 0.3 (2.1) (1.4)
- -------------------------------------------------------------------------------------------------------------------
Net income (loss) (0.3)% (0.8)% 0.5% 0.1% (4.7)% (4.2)%
===================================================================================================================
COMPANY BOYD WTI
- -------------------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
2001 2000 2001 2000 2001 2000
- -------------------------------------------------------------------------------------------------------------------
Company operated tractors 610 686 570 656 40 30
Owner-operated tractors 362 331 190 111 172 220
-----------------------------------------------------------------------------
Total tractors 972 1,017 760 767 212 250
Total trailers 1,395 1,398 1,099 1,104 296 294
Average length of haul in miles (1) 688 661 749 737 380 347
Average number of tractor loads
per week (2) 2,872 3,145 2,290 2,294 672 851
Average revenues per total mile (3) $ 1.17 $ 1.19 $ 1.16 $ 1.17 $ 1.17 $ 1.23
(1)The average length of haul in miles is calculated by dividing the total
line-haul miles for the year by the total number of loads for the year.
(2)The average number of tractor loads per week is calculated by dividing the
total number of loads by the number of working weeks in the year.
(3)The average revenue per total mile is calculated by dividing the total
line-haul revenue for the year by the total line- haul miles driven.
Operating revenues for 2001 decreased $2.9 million, or 2.3%, to $123.9 million
compared to $126.7 million for 2000. The average loads shipped per week for 2001
decreased 273 loads, or 9.0%, to 2,872 compared to 3,145 in 2000. Freight demand
during 2001, primarily in the first six months, was soft due to a weaker U.S.
economy as compared to 2000. Steel comprised 42% of the Company's freight that
was shipped in both 2001 and 2000, during which time the U.S. steel industry was
severely impacted by the sluggish economy.
Salaries, wages and employee benefits for 2001 increased $0.3 million, or 0.8%,
to $39.6 million compared to $39.3 million in 2000. Salaries increased at Boyd
due to an increase in the number of non-driver associates, primarily in the
logistics and health claims department. Workers' compensation and health
insurance expense increased due to rising medical costs and to the Company's
change to becoming self-insured for workers' compensation as of July 1, 2001.
The market for attracting experienced drivers improved during 2001; however, the
Company anticipates that the competition for qualified drivers will continue to
be intense, and cannot predict whether it will experience shortages in the
future. If such a shortage was to occur and increases in driver pay rates became
necessary to attract and retain drivers, the Company's results of operations
would be negatively impacted to the extent that the corresponding freight
increases are not obtained.
Cost of independent contractors (owner-operators) for 2001 decreased $3.4
million, or 9.6%, to $31.8 million from $35.2 million in 2000. Independent
contractors are owner-operators that either supply their own tractor or
lease-purchase one from the Company. Owner-operators are responsible for their
operating expenses including fuel, supplies and maintenance, and fuel taxes. As
of December 31, 2001, Boyd had an owner-operator fleet of 190 operators compared
to 111 operators as of December 31, 2000. The increase in the number of
owner-operators at Boyd occurred during the last five months of the year. WTI
had 172 owner-operators as of December 31, 2001 compared to 220 operators in
2000. The decrease was primarily attributable to owner-operators leaving the
industry altogether and, to a lesser extent, WTI closing its specialized freight
business during 2000. During the fourth quarter of 2001, WTI increased reserves
on its receivables associated with owner-operator leases in the amount of $0.3
million. The retention of independent contractors could remain difficult in the
foreseeable future due to the uncertainty of global fuel prices and continuing
weaknesses in certain sectors of the U.S. economy.
Operating supplies expense for 2001 increased $1.1 million, or 4.3%, to $26.5
million compared with $25.4 million for 2000. The increase in operating
supplies, which includes fuel costs, net of fuel surcharges, is partly due to
the decrease in the owner-operator fleet at WTI, which has resulted in an
increase of Company-operated units. The increase in operating supplies expense
also is attributable to the
Company fleet aging and requiring more repairs. The average age of the Company's
fleet at December 31, 2001 was 27.1 months compared to 16.3 months in 2000. The
fuel surcharge is a function of the cost of fuel that the Company has negotiated
with its vendors. These fuel surcharges, which automatically adjust from week to
week depending on the cost of fuel, enable the Company to recoup the higher cost
of fuel when prices increase. Conversely, when fuel prices decrease, fuel
surcharges decrease. The Company passes through any fuel surcharge collected to
the owner-operator that hauled the related load. Shortage of fuel, increases in
fuel prices, or rationing of petroleum products can have materially adverse
effects on the operations and profitability of the Company. The Company is
unable to accurately predict whether fuel prices will decrease or will increase
in the future or to the extent to which fuel surcharges will be collected from
customers. As of December 31, 2001, the Company had no derivative financial
instruments to reduce its exposure to fuel price fluctuations.
Taxes and licenses expense for 2001 decreased $0.7 million, or 24.4%, to $2.2
million compared to $2.9 million in 2000. Taxes and licenses decreased due to
the decrease in the overall Company fleet as well as a net increase in the
owner-operator fleet during the last quarter of the year. Taxes and licenses
also decreased due to cost savings initiatives implemented by the Company during
the end of 2000.
Insurance and claims expense for 2001 decreased $0.6 million, or 8.5%, to $6.4
million compared to $7.0 million in 2000. The decrease was primarily due to a
decrease in accident claims and insurance rates. Insurance rates were reduced as
the Company increased its retention rate per accident occurrence during 2001.
Communications and utilities expense for 2001 decreased $0.1 million, or 9.8%,
to $1.4 million from $1.5 million in 2000. The decrease was primarily due to an
increase in the overall owner-operator fleet, which has resulted in an increase
in the fees the Company charges for the use of the Company's satellite units.
Also, the Company changed to a lower rate long-distance service provider in
2001. The Company also continually monitors monthly usage and costs and makes
changes accordingly.
Depreciation and amortization expense for 2001 increased $0.7 million, or 5.8%,
to $12.3 million from $11.6 million in 2000. During the first quarter of 2001,
Boyd placed into service the new $5.0 million Birmingham, Alabama terminal.
During the fourth quarter of 2001, WTI reduced the carrying value of certain
revenue equipment by $0.4 million due to expected reductions in trade-in values.
Gain on disposition of property and equipment decreased $0.6 million or 52.8%,
to $0.5 million from $1.1 million. The Company traded fewer units during 2001
and the trade values were depressed during the year. Record levels of tractors
manufactured during 1999 and 2000, an increased supply of used tractors caused
in part by trucking company business failures, and slower fleet growth by many
carriers have all contributed to a decline in the market value of used tractors.
Other expenses for 2001 decreased approximately $0.1 million, or 2.9%, to $1.9
million in 2001 from $2.0 million in 2000. Other expenses include, but are not
limited to, consulting fees, legal fees, advertising costs, bank charges, rent
and bad debts. During the second half of 2001, the Company experienced an
increase in bad debt write-offs. Due to the difficult economic conditions facing
the steel industry in particular, additional bad debt reserves may be required
if industry conditions continue to deteriorate. Rent expense decreased due to
the Company canceling leases on trailers. Rent expense will be insignificant
going forward as the Company owns a large majority of its revenue equipment and
facilities.
Interest expense (net of interest income) decreased $1.2 million, or 31.5%, to
$2.6 million from $3.8 million in 2000. Interest expense decreased due to an
approximate 400 basis points decrease in the LIBOR rate, which is the interest
rate charged on a large majority of the Company's debt. The Company also reduced
debt levels, which contributed to the reduction in interest expense.
The effective tax rates for 2001 and 2000 are different from the federal
statutory rate due to the permanent non-deductibility of goodwill amortization
and other expenses for tax purposes. As a result of the foregoing, the Company's
net loss in 2001 decreased approximately $0.6 million, or 58.3%, to $(0.4)
million compared to $(1.0) million in 2000.
COMPARISON OF YEAR ENDED DECEMBER 31, 2000 TO YEAR ENDED DECEMBER 31, 1999
The following tables set forth, by segment, the percentage relationship of
expense items to operating revenues and certain other operating statistics for
the periods indicated:
COMPANY BOYD WTI
-------------------- ---------------------- ----------------------
Years Ended December 31,
2000 1999 2000 1999 2000 1999
- -------------------------------------------------------------------------------------------------------------------
Operating revenues 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses
Salaries, wages, and employee
benefits 31.0 26.6 35.7 33.4 11.4 8.1
Cost of independent contractors 27.8 33.9 17.5 20.2 70.4 71.6
Operating supplies 20.1 17.2 23.5 21.7 5.5 5.0
Taxes and licenses 2.3 2.1 2.3 2.2 2.3 1.9
Insurance and claims 5.6 4.6 5.4 4.7 6.3 4.3
Communications and utilities 1.2 1.1 1.2 1.2 1.2 1.0
Depreciation and amortization 9.2 8.1 10.3 9.9 4.4 3.0
Gain on disposition of property
and equipment, net (0.9) (1.2) (0.8) (1.7) (1.0) 0.0
Other 1.6 1.4 1.0 1.0 3.9 2.6
Total operating expenses 97.8 93.8 96.1 92.5 104.4 97.4
- -------------------------------------------------------------------------------------------------------------------
Operating income 2.2 6.2 3.9 7.5 (4.4) 2.6
Interest expense, net (3.0) (1.8) (3.5) (2.1) (1.2) (0.9)
Other income -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes (0.8) 4.4 0.4 5.4 (5.6) 1.7
Income taxes (benefit) (0.0) 1.8 0.3 2.1 (1.4) 1.0
- -------------------------------------------------------------------------------------------------------------------
Net income (loss) (0.8)% 2.6% 0.1% 3.3% (4.2)% 0.7%
===================================================================================================================
COMPANY BOYD WTI
Years Ended December 31,
-----------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999
- -------------------------------------------------------------------------------------------------------------------
Company operated tractors 686 529 656 501 30 28
Owner-operated tractors 331 533 111 209 220 324
-----------------------------------------------------------------------------
Total tractors 1,017 1,112 767 710 250 352
Total trailers 1,398 1,451 1,104 1,022 294 429
Average length of haul in miles (1) 661 634 737 733 347 320
Average number of tractor loads
per week (2) 3,145 3,368 2,294 2,267 851 1,108
Average revenues per total mile (3) $ 1.19 $ 1.18 $ 1.17 $ 1.16 $ 1.23 $ 1.18
(1)The average length of haul in miles is calculated by dividing the total
line-haul miles for the year by the total number of loads for the year.
(2)The average number of tractor loads per week is calculated by dividing the
total number of loads by the number of working weeks in the year.
(3)The average revenue per total mile is calculated by dividing the total
line-haul revenue for the year by the total line- haul miles driven.
Operating revenues for 2000 decreased $6.4 million, or 4.8%, to $126.7 million
compared to $133.1 million for 1999. The decrease was due in part to the closing
of the brokerage company at WTI, which was replaced by a new freight brokerage
company at Boyd, and also the closing of the specialized division at WTI. This
interruption in brokerage services and the closing of the specialized division
at WTI accounted for $4.0 million of the decrease in revenues. The remainder of
the decrease in revenues was attributable to a reduction in freight volume,
especially in the steel industry.
Salaries, wages and employee benefits for 2000 increased $3.8 million, or 10.7%,
to $39.2 million compared to $35.5 million in 1999. Salaries increased due to
the decrease in the owner-operator fleet at both segments and, therefore, an
increase in employee drivers. Owner-operators left the business due to reduced
freight volume and increased fuel costs during 2000. Salaries made up 31.0% of
operating revenue in 2000 compared to 26.6% in 1999.
Cost of independent contractors for 2000 decreased $10.0 million, or 22.1%, to
$35.1 million from $45.1 million in 1999. As of December 31, 2000, Boyd had an
owner-operator fleet of 111 operators compared to 209 owner-operators as of
December 31, 1999. Additionally, WTI had 220 owner-operators as of December 31,
2000 compared to 324 operators in 1999.
Operating supplies expense for 2000 increased $2.5 million, or 10.8%, to $25.4
million compared with $22.9 million for 1999. The increase in operating supplies
expense, which includes fuel costs, net of fuel surcharges, is due partly to the
decrease in the owner-operator fleet at both segments, which has resulted in an
increase of Company-operated units. The Company absorbs all of the variable
costs for the Company-operated units. The increase in fuel cost per gallon also
impacted overall fuel costs.
Taxes and licenses expense for 2000 increased $0.1 million, or 4.2%, to $2.9
million compared to $2.8 million in 1999. Taxes and licenses increased due to
the decrease in the owner-operator leased fleet at both segments, which has
resulted in an increase of company-operated tractors for which the Company bears
all of the licensing and permitting expenses.
Insurance and claims expense for 2000 increased $0.9 million, or 15.5%, to $7.0
million compared to $6.1 million in 1999. The increase was primarily due to an
increase in accident claims and insurance rates.
Communications and utilities expense for 2000 was relatively flat, $1.5 million,
as compared to 1999.
Depreciation and amortization expense for 2000 increased $0.9 million, or 8.3%,
to $11.6 million from $10.7 million in 1999. Depreciation expense increased
primarily due to the Company's absorption of leased owner-operator tractors back
into the Company fleet.
Other expenses for 2000 increased approximately $0.1 million, or 10.6%, to $1.5
million in 2000 from $1.4 million in 1999. Other expenses include, but are not
limited to, consulting fees, legal fees, advertising costs, bank charges, rent
and bad debts. The Company incurred higher bad debt expense in 2000, which
resulted primarily from the weakened U.S. economy, especially in the steel
industry sector. Rent expense for 2000 decreased $0.1 million, 9.3%, to $0.4
million from $0.5 million in 1999. Rent expense includes operating leases for
both trailers and terminals. Rent expense decreased due to the Company's
cancellation of leases at some of its outlying facilities.
Interest expense (net of interest income) increased $1.4 million, or 64.1%, to
$3.8 million from $2.4 million in 1999. Interest expense increased due to an
approximate 125 basis point increase in the LIBOR rate, on which the interest
rate charged on all of the Company's debt is based.
Based on the foregoing, net income in 2000 decreased approximately $4.5 million,
or 128.2%, to $(1.0) million compared to $3.5 million for 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary cash requirements are for capital expenditures and
operating expenses, including labor costs, fuel costs and operating supplies,
and the payment of current debt maturities. Historically, the Company's primary
sources of cash have been continuing operations and bank borrowings. The
following table summarizes sources and uses of cash for the following periods
indicated:
2001 2000 1999
-------------------------------------------------------
Operating activities $ 13,418,514 $ 10,108,834 $ 11,571,965
Investing activities 1,969,285 (6,578,204) (29,063,198)
Financing activities (14,439,625) (3,264,175) 17,136,395
NET CASH PROVIDED BY OPERATING ACTIVITIES
Cash generated by operations increased $3.3 million dollars during 2001 and
decreased $1.5 million dollars during 2000. The increase is due to improved
operating results over 2000, a reduction in income tax receivable of $1,615,566
and an increase of $764,297 in trade payables and accrued liabilities. Trade
accounts payable increased due in part to required increases in maintenance
supplies at the new Birmingham, Alabama terminal.
The decrease in cash generated by operations in 2000 was driven by the decrease
in accrued liabilities and other current liabilities and also the decrease in
accounts payable. These amounts were somewhat offset by the increase in other
current assets and also the increase in accounts receivable. The increase in
accounts receivable was related to an increase in load volume and not due to
inefficiency in collecting. The cash flow from operations enabled the Company to
make capital expenditures and repay debt as discussed below.
During the second quarter of 2001, the Company learned that a significant
customer had filed a voluntary petition for reorganization under Chapter 11 of
the U.S. Bankruptcy Code. The Company derived approximately 9% of its fiscal
2001 operating revenues from this customer. Through the fourth quarter of 2001,
the Company collected approximately $850,000 of the approximately $900,000 of
pre-petition debt from this customer. If the Company is unable to retain the
customer, or if the revenue the Company derives from its business with this
customer decline materially, such events could have a material adverse effect on
the Company's results of operations and financial condition.
NET CASH USED IN (PROVIDED BY) INVESTING ACTIVITIES
The growth of the Company's business and maintenance of its modern fleet has
required significant investments in new tractors and trailers, which has been
financed largely through long-term debt. Historically, the Company has financed
its major capital equipment purchases consisting of revenue equipment and
construction of terminals through banks. During 2001, the Company acquired $1.6
million in revenue equipment using cash flow from operations. All other
equipment purchases consisting of service vehicles, computer and office
equipment are purchased through its cash flow from operations. The amount of
revenue equipment purchased decreased from prior years due to the Company
increasing the length of its trade cycle. The Company currently has a 42-month
trade cycle and will be increasing it to 45 months with the new trades
anticipated in 2002. The Company plans to trade approximately 125 tractors
during the first six months of 2002.
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
During 2001, the Company paid $13.1 million towards the reduction of its
long-term debt. At December 31, 2001, the Company had debt (including current
portions) of $39.2 million, which was primarily incurred to purchase revenue
equipment and to construct the new terminal located in Birmingham, Alabama.
Pursuant to the Company's stock repurchase program, the Company purchased
244,463 and 263,940 shares of the Common Stock in open market or negotiated
transactions during 2000 and 1999, for aggregate purchase prices of $1,432,941
and $2,342,746. Under this program the Company still has the authority to
purchase approximately 90,000 more shares of its Common Stock. The Company
purchased in negotiated transactions 234,009 and 125,538 shares of Common Stock
from the former vice-chairman of the Company and the CEO of WTI during 2001 and
2000, respectively, at a price per
share of $6.50. The Company funded these purchases using working capital. On
January 8, 1999, the Company purchased 500,000 shares of its outstanding Common
Stock from a former Chief Executive Officer of the Company for $3,660,000. The
stock purchase was funded by available cash and a bank line of credit.
ANTICIPATED SOURCES AND USES OF FUNDS
The Company's primary cash requirements are for capital expenditures and
operating expenses, including labor costs, fuel costs and operating supplies,
and the payment of current debt maturities. Historically, the Company's primary
sources of cash have been continuing operations and bank borrowings. The Company
anticipates generating more than sufficient cash from operations in 2002 to
cover planned capital expenditures of approximately $5.0 million, and servicing
current maturities of long-term debt. Historically, the Company has relied on
cash generated from operations to fund its working capital requirements. The
Company has a bank line of credit permitting short-term borrowings of up to $2.5
million. The revolving line of credit is collateralized by accounts receivable
and inventory. As of December 31, 2001, the Company had $0.2 million outstanding
on its line of credit, which the Company expects to renew on March 31, 2002.
The Company's loan agreements with its major lenders require the Company, among
other things, to maintain a tangible net worth of $13.0 million, as defined in
the agreements, and to maintain certain financial ratios. On March 22, 2002, the
Company received waivers executed by two of its lenders relating to certain
financial covenant ratio requirements with respect to which the Company was not
in compliance as of December 31, 2001. There can be no assurance that the
Company will be able to comply with these covenants in the future. If the
Company is unable to comply with these covenants in the future, there can be no
assurance that the Company's lenders will provide any additional waivers with
respect to any such noncompliance; however, the Company is pursuing changes to
such financial ratios in its loan agreements, and believes that these new
financial ratios will increase the likelihood that the Company will be able to
comply with these covenants in the future.
Effective July 1, 2001, the Company increased its retention, per occurrence, for
auto liability, general liability and cargo coverage. These coverages are
included in one occurrence to determine if the retention has been met. The
Company has been involved in two accidents in the first quarter of 2002 that
resulted in third party fatalities. Each of these accidents, taken separately,
has the potential to cause the Company to reach its total per occurrence
retention amount for insurance purposes. Although no claims have been made
against the Company with respect to these accidents, in the event claims are
made and the Company ultimately is found to have some liability for these
accidents, the Company believes that its operating cash flows and unused lines
of credit would be sufficient to cover any amounts payable. The Company
currently purchases excess primary and umbrella insurance coverage in amounts
that management believes are adequate to supplement its retained liabilities.
The Company currently has outstanding letters of credit, totaling approximately
$4.5 million at December 31, 2001, to cover liability insurance claims and
outstanding claims related to its previously self- insured worker's
compensation. Annual commitment fees relating to these letters of credit do not
exceed 1.5% of the face amounts thereof.
The Company will continue to have significant capital requirements, which may
require the Company to seek additional borrowings or equity capital. The
availability of debt financing or equity capital will depend upon prevailing
market conditions, the market price of the Company's Common Stock and other
factors over which the Company has little or no control, as well as the
Company's financial condition and results of operations.
The following tables set forth information regarding the Company's contractual
obligations and commercial commitments. These disclosures are also included in
the Notes to the Consolidated Financial Statements and such Notes are
cross-referenced in the tables below.
CONTRACTUAL OBLIGATIONS
YEARS FOOTNOTE
-------------------------------------------------------------------------------------
TOTAL 1 2 3 4 5 >5 REF.
--------------------------------------------------------------------------------------
Long-term debt $ 39,186 $ 13,580 $ 12,923 $ 6,473 $ 2,217 $ 1,344 $ 2,649 4
Operating leases 26 26 -- -- --- -- -- 3
--------------------------------------------------------------------------------------
Total contractual
obligations $ 39,212 $ 13,606 $ 12,923 $ 6,473 $ 2,217 $ 1,344 $ 2,649
======================================================================================
The Company has decreased its operating lease commitments through increased
Company owned facilities and revenue equipment. The remaining operating lease
commitments in effect at December 31, 2001 are on a month-to-month basis.
OTHER COMMERCIAL COMMITMENTS
YEARS FOOTNOTE
-------------------------------------------------------------------------------------
TOTAL 1 2 3 4 5 >5 REF.
--------------------------------------------------------------------------------------
Unused lines of credit $ 2,290 $ 2,290 -- --- -- -- -- 4
Letters of credit 4,587 4,587 -- -- -- -- -- 5
--------------------------------------------------------------------------------------
Total contractual
obligations $ 6,877 $ 6,877 -- -- -- -- --
======================================================================================
The unused lines of credit are available to the Company in the event the Company
needs financing for the growth of its fleet. With the Company's strong financial
position, the Company expects it could obtain additional financing, if
necessary, on favorable terms. The letters of credit are primarily required for
insurance policies.
INTEREST RATE RISK
The Company is exposed to interest rate risk due to its long-term debt, which at
December 31, 2001, bore interest at rates ranging from 1.25% to 2.25% above the
bank's LIBOR rate. Under the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial
Instruments," the Company has estimated the fair value of its long-term debt
approximates its carrying value, using a discounted cash flow analysis based on
borrowing rates available to the Company. The effect of a hypothetical ten
percent increase in interest rates would increase the estimated fair value of
the Company's long-term debt by approximately $407,000. Management believes that
current working capital funds are sufficient to offset any adverse effects
caused by changes in the interest rates.
SEASONALITY
In the trucking industry, results of operations show a seasonal pattern because
customers generally reduce shipments during the winter season, and the Company
does experience some seasonality due to the open, flatbed nature of its trailers
and the type commodity that is being shipped. The Company has at times
experienced delays in meeting its shipping schedules as a result of severe
weather conditions, particularly during the winter months. In addition, the
Company's operating expenses have historically been higher in the winter months
due to decreased fuel efficiency and increased maintenance costs in colder
weather.
ECONOMY
The Company is sensitive to changes in overall economic conditions that impact
customer-shipping volumes. The general slowdown in the economy during 2000 and
2001 had a negative effect on freight volumes for truckload carriers, including
the Company. As the unemployment rate increased, driver availability improved
for the Company and the industry. Fuel prices increased beginning in the fourth
quarter 1999 and remained high through 2000 and 2001 before decreasing in the
latter part of 2001. Shortages of fuel, increases in fuel prices, or rationing
of petroleum products can have a materially adverse impact on the operations and
profitability of the Company. To the extent that the Company cannot recover the
higher cost of fuel through customer fuel surcharges, the Company's results
would be negatively impacted. Future economic conditions that may affect the
Company include employment levels, business conditions, fuel and energy costs,
interest rates, and tax rates.
SAFETY AND INSURANCE
The Company is committed to securing appropriate insurance coverage at
cost-effective rates. The primary claims that arise in the trucking industry
consist of cargo loss and damage, general liability, personal liability,
property damage and workers' compensation. The Company has grouped auto
liability, general liability and cargo coverage into one "basket," and this
basket limits the total retention per occurrence to $500,000. The Company is
self insured for workers' compensation claims as well as physical damage claims
for its own tractors. The Company currently purchases excess primary and
umbrella insurance coverage in amounts that management believes are adequate to
supplement its retained liabilities. The Company cannot guarantee that the
current retention amounts will not change or that insurance premiums will not
increase dramatically during its next insurance renewal, which is scheduled for
June 30,2002. The retention amounts and insurance premiums are reflective of the
Company's accident occurrence frequency and severity. The Company has adequate
working capital and unused lines of credit to offset any increase in retention
amounts or premiums.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS 141,
"Business Combinations," and No. 142, "Goodwill and Other Intangible Assets."
SFAS No. 141 supersedes Accounting Principles Board Opinion ("APB") No. 16,
"Business Combinations," and eliminates the pooling-of-interest method of
accounting for business combinations. SFAS No. 141 also changes the criteria for
recognizing intangible assets apart from goodwill and states the following
criteria should be considered in determining the recognition of intangible
assets: (1) whether the intangible asset arises from contractual or other
rights, or (2) whether the intangible asset is separable or divisible from the
acquired entity and capable of being sold, transferred, licensed, returned or
exchanged.
SFAS No. 142, generally effective January 1, 2002, supersedes APB No. 17,
"Intangible Assets," and requires goodwill and other acquired intangible assets
that have an indefinite useful life to no longer be amortized; however, these
assets must be reviewed at least annually for impairment. The Company currently
amortizes goodwill over its estimated useful life of twenty years. The Company
does not anticipate that the adoption of this statement will have a material
impact on the financial statements.
The Company recorded $223,800, or $0.08 per share on a pre-tax basis, of
goodwill amortization in 2001.
In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." SFAS No. 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated retirement costs. SFAS No. 143 is effective for fiscal years
beginning after June 30, 2002. The Company does not anticipate the adoption of
this statement will have a material impact on the financial statements.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," which supersedes SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of." SFAS No. 144 addresses financial accounting and reporting for the
impairment of long-lived assets and for long-lived assets to be disposed of.
However, SFAS No. 144 retains the fundamental provisions of SFAS No. 121 for:
(1) recognition and measurement of the impairment of long-lived assets to be
held and used and (2) measurement of long-lived assets to be disposed of by
sale. SFAS No. 144 is effective for fiscal years beginning after December 15,
2001. The Company does not anticipate the adoption of this standard will have a
material impact on the financial statements.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,221,455 $ 1,273,281
Short-term investments 278,000 250,000
Accounts receivable, less allowance for doubtful accounts of $318,981 (2001)
and $276,070 (2000):
Trade and interline 10,055,894 10,907,099
Other 956,576 690,212
Income tax receivable 339,220 1,954,786
Current portion of net investment in sales-type leases 1,200,175 1,562,329
Parts and supplies inventory 497,637 431,967
Tires on revenue equipment 152,300 282,915
Prepaid licenses and permits 946,054 557,368
Other prepaid expenses 1,157,370 1,049,446
Deferred income taxes 1,497,047 919,811
------------ ------------
Total current assets 19,301,728 19,879,214
------------ ------------
PROPERTY AND EQUIPMENT:
Land and land improvements 2,800,523 2,263,326
Buildings 7,635,280 2,927,611
Revenue equipment 70,927,529 76,637,858
Other equipment 12,090,626 11,781,884
Leasehold improvements 384,884 384,884
Construction in progress -- 5,090,631
------------ ------------
Total 93,838,842 99,086,194
Less accumulated depreciation and amortization 35,325,568 32,348,826
------------ ------------
Property and equipment, net 58,513,274 66,737,368
------------ ------------
OTHER ASSETS:
Net investment in sales-type leases 3,850,821 2,908,691
Goodwill, net of accumulated amortization of $912,077 (2001) and
$688,277 (2000) 3,452,446 3,676,246
Revenue equipment held for lease 500,125 1,395,865
Deposits and other assets 465,112 454,739
------------ ------------
Total other assets 8,268,504 8,435,541
------------ ------------
TOTAL $ 86,083,506 $ 95,052,123
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit $ 210,540 $ 1,049,831
Accounts payable - trade and interline 3,339,973 2,575,676
Current maturities of long-term debt 13,580,359 13,534,198
Accrued liabilities:
Self-insurance claims 2,820,773 2,510,396
Salaries and wages 485,599 505,181
Other 953,694 1,184,493
------------ ------------
Total current liabilities 21,390,938 21,359,775
LONG-TERM DEBT 25,606,297 33,322,377
DEFERRED INCOME TAXES 13,798,144 13,187,549
------------ ------------
Total liabilities 60,795,379 67,869,701
------------ ------------
COMMITMENTS AND CONTINGENCIES (NOTE 5)
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value - 1,000,000 shares authorized; no shares
issued and outstanding -- --
Common stock, $.001 par value - 10,000,000 shares authorized; 4,069,640
shares issued and outstanding 4,070 4,070
Additional paid-in capital 16,884,622 16,864,622
Retained earnings 18,008,625 18,451,689
Treasury stock, at cost; 1,355,041 shares (2001) and 1,118,746 shares (2000) (9,609,190) (8,137,959)
------------ ------------
Total stockholders' equity 25,288,127 27,182,422
------------ ------------
TOTAL $ 86,083,506 $ 95,052,123
============ ============
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2001 2000 1999
-------------------------------------------------------------------------------------------------------------------------
OPERATING REVENUES $ 123,856,279 $ 126,724,786 $ 133,137,272
------------- ------------- -------------
OPERATING EXPENSES
Salaries, wages and employee benefits 39,560,825 39,262,650 35,461,400
Cost of independent contractors 31,779,119 35,172,619 45,132,153
Operating supplies 26,513,199 25,403,579 22,934,366
Operating taxes and licenses 2,241,198 2,965,480 2,846,677
Insurance and claims 6,457,919 7,060,347 6,110,604
Communications and utilities 1,370,598 1,520,342 1,479,546
Depreciation and amortization 12,289,710 11,611,081 10,719,647
Gain on disposal of property and equipment, net (525,808) (1,113,574) (1,626,983)
Other 1,950,109 2,008,131 1,862,170
------------- ------------- -------------
Total operating expenses 121,636,869 123,890,655 124,919,580
------------- ------------- -------------
OPERATING INCOME 2,219,410 2,834,131 8,217,692
------------- ------------- -------------
OTHER INCOME (EXPENSES):
Interest income 63,357 80,338 91,740
Interest expense (2,684,429) (3,904,241) (2,421,910)
------------- ------------- -------------
Other expenses, net (2,621,072) (3,823,903) (2,330,170)
------------- ------------- -------------
INCOME (LOSS) BEFORE PROVISION (BENEFIT)
FOR INCOME TAXES (401,662) (989,772) 5,887,522
PROVISION (BENEFIT) FOR INCOME TAXES 5,038 (15,318) 2,430,152
------------- ------------- -------------
NET INCOME (LOSS) $ (406,700) $ (974,454) $ 3,457,370
============= ============= =============
BASIC AND DILUTED NET INCOME (LOSS)
PER SHARE $ (0.14) $ (0.32) $ 0.99
============= ============= =============
BASIC AND DILUTED WEIGHTED
AVERAGE SHARES OUTSTANDING 2,829,614 3,090,292 3,507,311
============= ============= =============
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED ADDITIONAL
DECEMBER 31, COMMON PAID-IN RETAINED TREASURY
2001, 2000, 1999 AND 1998 STOCK CAPITAL EARNINGS STOCK TOTAL
- -------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 $ 4,070 $ 16,864,622 $ 15,993,015 $ - $ 32,861,707
Exercise of stock options -- -- (4,932) 43,620 38,688
Sale of common stock
under employee stock
purchase plan -- -- (7,311) 45,583 38,272
Purchase of treasury stock -- -- -- (6,002,746) (6,002,746)
Net income -- -- 3,457,370 -- 3,457,370
------------------------------------------------------------------------------------
Balance, December 31, 1999 4,070 16,864,622 19,438,142 (5,913,543) 30,393,291
Sale of common stock
under employee stock
purchase plan -- -- (11,999) 24,525 12,526
Purchase of treasury stock -- -- -- (2,248,941) (2,248,941)
Net loss -- -- (974,454) -- (974,454)
------------------------------------------------------------------------------------
Balance, December 31, 2000 4,070 16,864,622 18,451,689 (8,137,959) 27,182,422
Sale of common stock
under employee stock
purchase plan -- -- (36,364) 49,825 13,461
Capital contribution -- 20,000 -- -- 20,000
Purchase of treasury stock -- -- -- (1,521,056) (1,521,056)
Net loss -- -- (406,700) -- (406,700)
------------------------------------------------------------------------------------
Balance, December 31, 2001 $ 4,070 $ 16,884,622 $ 18,008,625 $ (9,609,190) $ 25,288,127
====================================================================================
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net income (loss) $ (406,700) $ (974,454) $ 3,457,370
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 12,289,710 11,611,081 10,719,647
Provision for bad debts 625,000 84,000 220,000
Gain on disposal of property and equipment, net (525,808) (1,113,574) (1,626,983)
Net effect of sales-type leases on cost of independent
contractors (526,708) 253,990 (1,741,454)
Provision for deferred income taxes 33,358 1,590,614 640,331
Changes in assets and liabilities provided (used) cash:
Accounts receivable (40,159) 1,818,149 (713,392)
Other current assets 1,155,901 1,158,104 (666,292)
Deposits and other assets (10,373) (16,367) (257,291)
Accounts payable - trade and interline 764,297 (1,436,371) 2,414,894
Accrued liabilities and other current liabilities 59,996 (2,866,338) (874,865)
-------------------------------------------------------
Net cash provided by operating activities 13,418,514 10,108,834 11,571,965
-------------------------------------------------------
INVESTING ACTIVITIES:
Payments received on sales-type leases 2,288,643 3,407,859 3,939,430
Capital expenditures:
Revenue equipment (1,642,936) (14,459,770) (36,950,717)
Other property and equipment (1,234,350) (1,617,129) (4,650,303)
Proceeds from disposals of property and equipment 2,557,928 6,090,836 8,542,604
Receipt of acquisition escrow -- -- 55,788
-------------------------------------------------------
Net cash provided by (used in) investing activities 1,969,285 (6,578,204) (29,063,198)
-------------------------------------------------------
FINANCING ACTIVITIES:
Proceeds from sales of common stock 13,461 12,526 38,272
Proceeds from capital contribution 20,000 -- --
Proceeds from exercise of stock options -- -- 38,688
Purchase of treasury stock (1,521,056) (2,248,941) (6,002,746)
Proceeds (payments) on line of credit (839,291) 1,049,831 --
Proceeds from long-term debt 1,012,949 9,949,052 36,785,635
Principal payments on long-term debt (13,125,688) (12,026,643) (13,723,454)
-------------------------------------------------------
Net cash (used in) provided by financing activities (14,439,625) (3,264,175) 17,136,395
-------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 948,174 266,455 (354,838)
CASH AND CASH EQUIVALENTS:
BEGINNING OF YEAR 1,273,281 1,006,826 1,361,664
-------------------------------------------------------
END OF YEAR $ 2,221,455 $ 1,273,281 $ 1,006,826
=======================================================
Supplemental disclosures of cash flow
information
Cash paid during the year for:
Interest $ 2,684,429 $ 3,904,593 $ 2,358,576
=======================================================
Income taxes, net of refunds $ (1,508,026) $ 1,138,562 $ 2,727,399
=======================================================
Supplemental non-cash investing and
financing activities
Net investment in sales-type of leases $ 1,065,389 $ (3,160,246) $ 1,817,598
=======================================================
Dealer financed purchases of revenue equipment $ 5,545,820 $ -- $ --
=======================================================
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS - Boyd Bros. Transportation Inc. and its subsidiary (the
"Company") are flatbed carriers, transporting a variety of products, primarily
steel and building materials. The Company has authority to operate in the
continental United States; however, its market generally encompasses the eastern
two-thirds of the United States. The Company is headquartered in Clayton,
Alabama and operates regional and satellite terminals in locations near
interstate highways or customer facilities.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiary, WTI Transport, Inc.
("WTI"). All significant intercompany items have been eliminated in
consolidation.
USE OF ACCOUNTING ESTIMATES - The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
REVENUE RECOGNITION - Operating revenue and related costs are recognized upon
delivery of products to customers provided that pervasive evidence of an
arrangement exists, the selling price is fixed and determinable, and
collectibility of the resulting receivables is probable.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents include cash on hand, cash
on deposit and highly liquid investments with a maturity of three months or less
at purchase date.
SHORT-TERM INVESTMENTS - Short-term investments, which consist of certificates
of deposit with maturities of three to twelve months, are stated at cost, which
approximates market.
REVENUE EQUIPMENT HELD FOR LEASE - Revenue equipment held for lease and not in
use is stated at cost, less accumulated depreciation, which approximates net
realizable value. Depreciation expense is suspended while the asset is in
revenue equipment held for lease.
TIRES ON REVENUE EQUIPMENT - Tires placed in service on newly purchased revenue
equipment are carried at cost and depreciated over their useful lives, estimated
to be eighteen months. The undepreciated cost of tires is included in tires on
revenue equipment. Cost of replacement tires are expensed when put into service.
PROPERTY AND EQUIPMENT - Property and equipment are stated at the lower of fair
value or cost. Depreciation is computed using the straight-line method at rates
intended to distribute the cost of the assets over their estimated service lives
as follows:
Land improvements 15 years
Buildings 5-30 years
Revenue equipment 4-7 years
Other equipment 3-10 years
Leasehold improvements 3-20 years
Depreciation is computed using accelerated methods for income tax purposes.
Expenditures which significantly increase values or extend useful lives of
property and equipment are capitalized, whereas those for normal maintenance and
repairs are expensed. Gains and losses on disposal of property and equipment are
reflected in operations in the year of disposal.
GOODWILL - Goodwill represents the excess purchase price of the net assets
acquired in the WTI business combination over their estimated fair value.
Goodwill is amortized on a straight-line basis over a 20 year estimated useful
life. Goodwill amortization amounted to $223,800 for each of the three years
ended December 31, 2001, 2000 and 1999.
IMPAIRMENT OF LONG-LIVED ASSETS -The Company periodically evaluates the carrying
value of long-lived assets to be held and used, including goodwill and other
intangible assets, when events and circumstances warrant such a review. The
carrying value of long-lived assets is considered impaired when the anticipated
undiscounted cash flow
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
from such assets is less than its carrying value. In that event, a loss is
recognized based on the amount by which the carrying value exceeds the fair
market value of the long-lived assets.
STOCK BASED COMPENSATION PLANS - The Company accounts for its stock-based
compensation plans under the provisions of APB No. 25, "Accounting for Stock
Issued to Employees." In Note 6, the Company presents the disclosure
requirements of SFAS No. 123, "Accounting for Stock-based Compensation." SFAS
123 requires companies that elect not to account for stock-based compensation as
prescribed by that statement to disclose, among other things, the pro forma
effects on operations as if SFAS 123 had been adopted.
INCOME TAXES - The Company accounts for income taxes under the asset and
liability method which requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
recognized in the Company's financial statements or tax returns. In estimating
future tax consequences, the Company generally considers all expected future
events other than possible enactments of changes in the tax laws or rates.
CLAIMS ACCRUALS - The Company accrues estimates for the uninsured portion of
claims relating to the Company's insurance programs (see Note 5).
NET (LOSS) INCOME PER SHARE - In accordance with SFAS No. 128, "Earnings per
Share", the Company reports two separate net income (loss) per share numbers,
basic and diluted, for all periods presented. These per share amounts have been
computed using the weighted-average number of shares of common stock outstanding
during each period. Diluted earnings per share amounts are to be presented to
include the effect of potentially dilutive securities.
Options that could potentially dilute basic net income (loss) per share in the
future were not included in the computation of diluted net income (loss) per
share because to do so would have been antidilutive. Antidilutive options were
85,200; 408,300; and 456,100 for the years ended December 31, 2001, 2000 and
1999, respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying value of the Company's cash
equivalents, short-term investments, trade receivables, trade payables and
accrued expenses approximates fair value because of the short-term nature of
these instruments. Additional fair value disclosure for the Company's
interest-bearing debt is presented in Note 4.
RECENT ACCOUNTING PRONOUNCEMENTS - Statement of Financial Accounting Standards
No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging
Activities" was adopted effective January 1, 2001. SFAS 133, as amended,
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities. Under SFAS 133, certain contracts that were not formerly
considered derivatives may now meet the definition of a derivative. The Company
does not enter into derivative contracts either to hedge existing risks or for
speculative purposes. Accordingly, the adoption of SFAS 133 has not had an
impact on the financial position, results of operations, or cash flows of the
Company.
In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS 141,
"Business Combinations," and No. 142, "Goodwill and Other Intangible Assets."
SFAS No. 141 supercedes Accounting Principles Board Opinion ("APB") No. 16,
"Business Combinations," and eliminates the pooling-of-interest method of
accounting for business combinations. SFAS No. 141 also changes the criteria for
recognizing intangible assets apart form goodwill and states the following
criteria should be considered in determining the recognition of intangible
assets: (1) whether the intangible asset arises from contractual or other
rights, or (2) whether the intangible asset is separable or divisible from the
acquired entity and capable of being sold, transferred, licensed, returned or
exchanged.
SFAS No. 142, generally effective January 1, 2002, supercedes APB No. 17,
"Intangible Assets," and requires goodwill and other acquired intangible assets
that have an indefinite useful life to no longer be amortized; however, these
assets must be reviewed at least annually for impairment. The Company currently
amortizes goodwill over its estimated useful life of twenty years.
The Company recorded $223,800, or $0.08 per share on a pre-tax basis, of
goodwill amortization in 2001.
In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." SFAS No. 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated retirement costs. SFAS No. 143 is effective for fiscal years
beginning after June 30, 2002. The Company does not anticipate the adoption of
this statement will have a material impact on the financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In October 2001, the FASB issued SFAS No. 144, "accounting for the Impairment or
Disposal of Long-Lived Assets," which supersedes SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of." SFAS No. 144 addresses financial accounting and reporting for the
impairment of long-lived assets and for long-lived assets to be disposed of.
However, SFAS No. 144 retains the fundamental provisions of SFAS No. 121 for:
(1) recognition and measurement of the impairment of long-lived assets to be
held and used and (2) measurement of long-lived assets to be disposed of by
sale. SFAS No. 144 is effective for fiscal years beginning after December 15,
2001. The Company does not anticipate the adoption of this standard will have a
material impact on the financial statements.
RECLASSIFICATIONS - Certain reclassifications have been made to the 2000 and
1999 consolidated financial statements to conform to the 2001 presentation.
2. EMPLOYEE BENEFIT PLAN
The Company has a contributory 401(k) retirement plan, which covers employees
who elect to participate and meet certain eligibility requirements. The amounts
charged to operations related to this plan for the years ended December 31,
2001, 2000 and 1999 were $226,731, $165,562, and $280,890, respectively.
3. LEASES
LESSEE
OPERATING LEASES - The Company leases certain terminal buildings, land and
equipment under agreements which expire at various dates through 2002. The lease
agreements generally include renewal options and the Company is required to pay
taxes, insurance and normal maintenance for the facilities. Future minimum lease
payments under all operating leases are insignificant.
Total rental expense for all operating leases was $170,741, $356,791, and
$384,723, for the years ended December 31, 2001, 2000 and 1999, respectively.
LESSOR
SALES-TYPE LEASES - The Company leases revenue equipment to certain of its
owner-operators and accounts for these transactions as sales-type leases. These
receivables have terms of three and one-half to four years and are
collateralized by a security interest in the related revenue equipment. Certain
revenue equipment under these leases have a guaranteed residual value from the
vendor which will be redeemed by the Company at the end of the lease term.
The components of the net investment in sales-type leases at December 31, 2001
and 2000 are as follows:
2001 2000
-------------------------------
Minimum lease receivable $ 7,929,530 $ 6,120,316
Allowance for uncollectible receivables (1,590,153) (677,910)
-------------------------------
Net minimum lease receivable 6,339,377 5,442,406
Unearned interest income (1,288,381) (971,386)
-------------------------------
Net investment in sales-type leases 5,050,996 4,471,020
Less current portion (1,200,175) (1,562,329)
-------------------------------
Net amount due after one year $ 3,850,821 $ 2,908,691
===============================
Future minimum lease rentals for sales-type leases are as follows:
YEAR
2002 $ 2,965,423
2003 2,511,297
2004 1,693,332
2005 759,478
--------------
Total $ 7,929,530
==============
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Gains on disposition of revenue equipment leased to owner-operators, interest
income on these leases, rental income on operating leases, and provisions for
bad debts related to sales-type leases are included as components of cost of
independent contractors in the accompanying consolidated statements of
operations.
OPERATING LEASES - The Company also leases revenue equipment to certain of its
owner-operators and accounts for these transactions as operating leases. These
leases have terms of three to three and one-half years. The revenue equipment
under these leases had a cost of $1,423,174 and $550,751, and accumulated
depreciation of $414,076 and $197,223 at December 31, 2001 and 2000,
respectively.
Future minimum lease rentals for operating leases are as follows:
YEAR
2002 $ 380,856
2003 249,074
2004 59,776
--------------
Total $ 689,706
==============
Total rental income from operating leases was $328,331, $273,360, and $713,030
for the years ended December 31, 2001, 2000 and 1999, respectively.
4. BORROWING ARRANGEMENTS
Long-term debt at December 31, 2001 and 2000 is summarized as follows:
Revenue equipment obligations: 2001 2000
-------------------------------
LIBOR plus 1.25% subject to 5.0% minimum (5.00% - 2001 and 7.65% - 2000)
Notes payable to banks in monthly installments through December 2005 $ 11,478,728 $ 39,513,292
LIBOR plus 1.50% (3.38% - 2001 and 7.90% - 2000)
Notes payable to banks in monthly installments through February 2006 3,876,631 3,621,086
LIBOR plus 2.00% (3.83% - 2001 and 8.15% - 2000)
Notes payable to banks in monthly installments through November 2006 2,054,475 3,722,197
LIBOR plus 2.25% (4.13%-2001)
Notes payable to banks in monthly installments through May 2004 16,718,438 --
Fixed rate of 5.75%
Notes payable to finance company in monthly installments through
December 2006 5,058,384 --
-------------------------------
Total 39,186,656 46,856,575
Less current maturities 13,580,359 13,534,198
-------------------------------
Long-term debt $ 25,606,297 $ 33,322,377
===============================
Revenue equipment obligations are collateralized by revenue equipment.
The notes payable to banks bear interest ranging from LIBOR plus 1.25% to LIBOR
plus 2.25% based on the Company's level of cash flows as defined in their loan
agreements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Long-term debt is scheduled to mature as follows:
YEAR
2002 $ 13,580,359
2003 12,923,034
2004 6,473,252
2005 2,217,770
2006 1,344,253
Thereafter 2,647,988
--------------
Total $ 39,186,656
==============
The Company also has a $2,500,000 line of credit under a commercial revolving
note expiring March 31, 2002, bearing interest at LIBOR plus 1.75%. There were
borrowings of $210,540 and $1,049,831 outstanding at December 31, 2001 and 2000,
respectively. The Company renewed this line of credit during the first quarter
of 2002.
Covenants under these loan agreements require the Company, among other things,
to maintain a tangible net worth of $13,000,000, as defined, and to maintain
certain financial ratios. On March 22, 2002, the Company received waivers from
certain lenders due to non-compliance with financial ratios at December 31,
2001. After giving effect to the waivers, the Company was in compliance with all
debt covenants at December 31, 2001.
The fair value of long-term debt approximates its carrying value and was
estimated using a discounted cash flow analysis, based on the borrowing rate
currently available to the Company for bank loans with similar terms and average
maturities.
5. COMMITMENTS AND CONTINGENCIES
Self Insurance Accruals
At December 31, 2001, the Company is self-insured as follows:
RETENTION
AMOUNT
PER OCCURRENCE
--------------
Workers' compensation $ 250,000
Liability - body injury $ 500,000*
Liability - property damage $ 500,000*
Employee medical and hospitalization
Cargo loss and damage $ 500,000*
General liability $ 500,000*
Environmental losses No limit
* These coverages are all included in one retention amount per occurrence.
Maximum retention is $500,000 per occurrence.
The above retention amounts represent rates which were negotiated with the
Company's insurance carriers at June 30, 2001. Retention amounts under other
previous insurance programs may vary from those stated above. At December 31,
2001, the Company has recorded liabilities for retention amounts related to
claims under previous insurance coverage. For claims prior to June 30, 1997, the
Company had a retention amount per occurrence under workers' compensation of
$300,000. For the period from July 1, 1997 to June 30, 2000, workers'
compensation insurance was provided under fully insured policies. Effective July
1, 2000, the Company has a retention amount per occurrence under workers'
compensation of $250,000.
The Company has excess primary coverage on a per claim and aggregate basis
beyond the deductible levels and also maintains umbrella policies to supplement
the primary liability coverage.
Effective January 2001, the Company became fully self-insured for liability -
physical damage, except for claims related to catastrophic physical damage. The
Company has a retention amount per occurrence under liability - catastrophic
physical damage of $10,000.
The liabilities for self-insurance are accrued based on claims incurred, with
liabilities for unsettled claims and claims incurred but not yet reported being
estimated based on management's evaluation of the nature and severity of
individual claims and the Company's past claims experience.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Letters of Credit
The Company has outstanding letters of credit at December 31, 2001 totaling
approximately $4,587,109 to cover liability insurance claims and claims related
to its previous self-insured workers' compensation program, and to purchase
revenue equipment.
Litigation
There are sundry claims and suits pending against the Company in the ordinary
course of business. In the opinion of the Company's management, any ultimate
liability in these matters will have no material adverse effect on the financial
position, operations or cash flows of the Company.
6. STOCKHOLDERS' EQUITY
PREFERRED STOCK - The Board of Directors is authorized to issue, at its
discretion, up to 1,000,000 shares of preferred stock at par value of $.001. The
terms and conditions of the preferred stock are to be determined by the Board of
Directors.
EMPLOYEE STOCK PURCHASE PLAN - During 1999, the Company established an Employee
Stock Purchase Plan under which 175,000 shares of the Company's common stock may
be issued to eligible employees at a price equal to the lesser of 85% of the
market price of the stock as of the first or last day of the offering periods
(as defined). Employees may elect to have a portion of their compensation
withheld, subject to certain limits, to purchase the Company's common stock. The
expense associated with this plan in 2001 and 2000 was insignificant.
STOCK OPTION PLAN - The Company has a stock option plan (the "Plan") that
provides for the granting of stock options to key employees, executive officers
and directors. An aggregate of 500,000 shares of the Company's common stock are
reserved for this Plan. The options are exercisable in increments over a
five-year period beginning on the first anniversary of the grant and will expire
ten years after the date of the grant. No options were exercised in 2001 or
2000.
Information regarding the Plan is summarized below:
WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE
-------------------------------
Outstanding at December 31, 1998 444,810 $ 9.36
Granted 65,250 10.25
Exercised (6,000) 6.00
Terminated (47,960) 9.40
-------------------------------
Outstanding at December 31, 1999 456,100 9.53
Terminated (47,800) 8.58
-------------------------------
Outstanding at December 31, 2000 408,300 9.62
Granted 20,000 2.55
Terminated (343,100) 9.54
-------------------------------
Outstanding at December 31, 2001 85,200 $ 8.28
===============================
Options exercisable at December 31, 2001 65,650 $ 7.75
Options exercisable at December 31, 2000 262,380 $ 9.88
Options exercisable at December 31, 1999 228,830 $ 10.04
At December 31, 2001, 414,800 shares were available for future grant under the
Plan.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes information concerning stock options outstanding
and options exercisable at December 31, 2001:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------ -------------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
RANGE OF NUMBER OF REMAINING AVERAGE NUMBER OF AVERAGE
EXERCISE SHARES CONTRACTUAL EXERCISE SHARES EXERCISE
PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
- -------------------------------------------------------------------------------------------------------------------
$2.50 - $11.00 85,200 6.2 $8.28 65,650 $7.75
SFAS No. 123, Accounting for Stock-Based Compensation, encourages, but does not
require companies to record compensation cost for stock-based employee
compensation plans at fair value. The Company has chosen to continue to account
for stock-based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, and related Interpretations. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted market price of the
Company's stock at the date of the grant over the amount an employee must pay to
acquire the stock. The option price of all the Company's stock options is equal
to the market value of the stock at the grant date. As such, no compensation
expense is recorded in the accompanying consolidated financial statements.
Had compensation cost been determined based upon the fair value at the grant
date for options awarded in 1999 under the Plan consistent with the methodology
prescribed under SFAS No. 123, the Company's pro forma net (loss) income and net
(loss) income per share would have differed from the amounts reported as
follows:
AS REPORTED PRO FORMA
2001 2000 1999 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------
Net (loss) income $ (406,700) $ (974,454) $ 3,457,370 $ (728,767) $ (1,506,993) $ 2,652,128
Basic and diluted
net (loss) income
per share $ (0.14) $ (0.32) $ 0.99 $ (.26) $ (0.49) $ 0.76
The fair value per share for options granted was $1.98 for the year ended
December 31, 2001 and $7.93 for the year ended December 31, 1999. The fair value
was estimated at the date of the grant using the Black-Scholes option pricing
model with the following weighted-average assumptions:
2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------
Risk-free interest rate 4.6% -- 6.5%
Dividend yield 0.0% -- 0.0%
Expected volatility 82.4% -- 81.2%
Weighted average expected life (in years) 6 -- 7
7. INCOME TAXES (BENEFIT)
The provision (benefit) for income taxes for the years ended December 31, 2001,
2000 and 1999 consisted of the following:
2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------
Current:
Federal $(24,428) $(1,603,762) $1,554,759
State (3,893) (2,170) 235,062
-------- ----------- ----------
Total current provision (benefit) (28,321) (1,605,932) 1,789,821
Deferred:
Federal 21,990 1,625,520 549,962
State 11,369 (34,906) 90,369
-------- ----------- ----------
Total deferred provision 33,359 1,590,614 640,331
-------- ----------- ----------
Total provision (benefit) for income taxes $ 5,038 $ (15,318) $2,430,152
======== =========== ==========
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Total income tax provision (benefit) for 2001, 2000 and 1999 is different from
the amount that would be computed by applying the statutory federal income tax
rate of 34% to income before income taxes. The reasons for this difference are
as follows:
2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------
Income tax (benefit) at expected federal income tax rate $ (136,565) $ (336,522) $ 2,001,757
State income taxes, net of federal tax effect 4,934 (24,470) 214,785
Nondeductible operating expenses 72,381 58,254 37,659
Nondeductible goodwill amortization 76,592 76,592 76,592
Adjustment to estimated income tax accruals -- 191,956 --
Other (12,304) 18,872 99,359
-------------------------------------------------
$ 5,038 $ (15,318) $ 2,430,152
=================================================
At December 31, 2001, the Company had state net operating loss carryforwards of
approximately $5,808,000, which will expire in 2021.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The sources of the
Company's deferred tax liabilities and assets as of December 31, 2001 and 2000
are as follows:
2001 2000
- -------------------------------------------------------------------------------------------------------------------
Deferred tax liabilities:
Tax over book depreciation $ 13,837,035 $ 13,496,705
Prepaid expenses deductible when paid 695,592 500,803
Capitalized tires 59,934 110,900
-------------------------------
Total deferred tax liabilities 14,592,561 14,108,408
===============================
Deferred tax assets:
Accrued self insurance claims $ 995,612 $ 710,342
Other accrued expenses not deductible until paid 179,247 416,007
Allowance for losses on receivables 751,296 375,915
State NOL carryforward 296,904 268,779
Other 68,405 69,627
-------------------------------
Total deferred tax assets 2,291,464 1,840,670
-------------------------------
Net deferred tax liabilities $ 12,301,097 $ 12,267,738
===============================
The above amounts are reflected in the accompanying consolidated balance sheets
as:
Current assets $ 1,497,047 $ 919,811
Noncurrent liabilities (13,798,144) (13,187,549)
-------------------------------
Net deferred tax liabilities $ 12,301,097 $ 12,267,738
===============================
8. MAJOR CUSTOMERS
The Company's largest 25, 10 and 5 customers accounted for approximately 41%,
24% and 16%, respectively, of the Company's revenues during the year ended
December 31, 2001. Many of the Company's largest 25 customers are publicly held
companies. No single customer accounted for more than 10% of the Company's
revenues during the years ended December 31, 2001, 2000 and 1999. The Company
does not believe that it is dependent upon any single customer. Sales to the
Company's largest customer amounted to 10%, 9% and 8% of operating revenues
during 2001, 2000 and 1999, respectively. Customers in the steel industry
accounted for 42%, 42% and 45% of the Company's operating revenues for the years
ended December 31, 2001, 2000 and 1999.
9. SEGMENT INFORMATION
SFAS No. 131 establishes standards for the way in which public companies are to
disclose certain information about operating segments in their financial
reports. It also establishes standards for related disclosures about products
and services, geographic areas, and major customers.
The Company has identified two reportable segments based on the criteria of SFAS
No. 131: Boyd and WTI. The Boyd segment is a flatbed carrier that hauls
primarily steel and building products, throughout most of the continental United
States, and operates 760 tractors. Boyd had 570 company drivers and 190
owner-operators as of December 31, 2001. The WTI segment is a flatbed carrier
that hauls steel and roofing products, primarily in the
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
eastern two-thirds of the United States, and operates 212 tractors. WTI had 40
company drivers and 172 owner-operators as of December 31, 2001. Management of
the Company evaluates segment performance based on measures of revenues,
operating ratio, depreciation, interest and capital expenditures. The accounting
policies of the segments are the same as those described in the summary of
significant accounting policies.
Summary information by segment follows:
BOYD WTI ELIMINATIONS TOTAL
---------------------------------------------------------------------------
RESULTS OF OPERATIONS
Year Ended December 31, 2001
Operating revenues $ 104,848,692 $ 19,154,927 $ (147,340) $ 123,856,279
Operating expenses 101,491,640 20,292,569 (147,340) 121,636,869
Operating income 3,357,052 (1,137,642) --- 2,219,410
Operating ratio 96.8% 105.9% 98.2%
Year Ended December 31, 2000
Operating revenues $ 102,009,220 $ 25,068,143 $ (352,577) $ 126,724,786
Operating expenses 98,066,670 26,176,562 (352,577) 123,890,655
Operating income 3,942,550 (1,108,419) -- 2,834,131
Operating ratio 96.1% 104.4% 97.8%
Year Ended December 31, 1999
Operating revenues $ 97,538,284 $ 35,820,537 $ (221,549) $ 133,137,272
Operating expenses 90,263,060 34,878,069 (221,549) 124,919,580
Operating income 7,275,224 942,468 -- 8,217,692
Operating ratio 92.5% 97.4% 93.8%
IDENTIFIABLE ASSETS
As of December 31, 2001
Cash and cash equivalents $ 943,574 $ 1,277,881 $ 2,221,455
Property and equipment 54,740,848 3,772,426 58,513,274
Goodwill, net -- 3,452,446 3,452,446
Long-term debt 37,587,257 1,599,399 39,186,656
As of December 31, 2000
Cash and cash equivalents $ (44,234) $ 1,317,515 $ 1,273,281
Property and equipment 62,137,993 4,599,375 66,737,368
Goodwill, net -- 3,676,246 3,676,246
Long-term debt 43,451,096 3,405,479 46,856,575
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the quarterly results of operations for the years
ended December 31, 2001 and 2000 (in thousands, except per share data). The
summation of quarterly earnings per share may not agree with annual earnings per
share.
2001
------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,(a)
------------------------------------------------------------------------------------
OPERATING REVENUES $ 30,259 $ 31,670 $ 32,457 $ 29,470
OPERATING INCOME (LOSS) 453 1,172 980 (386)
NET INCOME (LOSS) (293) 283 230 (627)
BASIC AND DILUTED NET INCOME
(LOSS) PER SHARE (0.10) 0.10 0.08 (0.22)
2000
------------------------------------------------------------------------------------
March 31, June 30, September 30, December 31,(b)
------------------------------------------------------------------------------------
Operating revenues $ 33,826 $ 32,601 $ 31,202 $ 29,096
Operating income (loss) 1,406 1,393 896 (861)
Net income (loss) 231 208 (65) (1,349)
Basic and diluted net income
(loss) per share 0.07 0.07 (0.02) (0.44)
(a) The fourth quarter of 2001 included a reduction in the carrying value
of revenue equipment and charges to increase reserves for receivables
associated with owner-operator leases at WTI of approximately $725,000.
(b) The fourth quarter of 2000 included charges to increase reserves for
owner-operator leases at Boyd of approximately $434,000.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Boyd Bros. Transportation Inc.
Clayton, Alabama
We have audited the consolidated balance sheet of Boyd Bros. Transportation
Inc. and subsidiary as of December 31, 2001, and the related statements of
operations, stockholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of Boyd Bros. Transportation Inc. as of
December 31, 2000 and for each of the two years in the period ended December 31,
2000, were audited by other auditors whose report dated February 9, 2001 (March
28, 2001 as to the waiver letters described in Note 4), expressed an unqualified
opinion on those statements.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Boyd Bros.
Transportation Inc. and subsidiary as of December 31, 2001, and the results of
their operations and their cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
/s/ BDO Seidman, LLP
Atlanta, Georgia
January 31, 2002, except for Note 4,
which is as of March 22, 2002