ITEM 1. Business
THE COMPANY
Boyd Bros. Transportation Inc. (the "Company") is a truckload carrier that operates exclusively in the flatbed segment of the industry and hauls primarily steel products and building materials. Since its founding in 1956, the Company has grown into what management believes is one of the largest exclusively flatbed carriers in the United States operating only Company-owned tractors. The Company owns and operates over 575 late model tractors and over 916 flatbed trailers. All of the Company's tractors are equipped with a two-way satellite communication system produced by QUALCOMM, Inc. ("QUALCOMM") as well as on-board computers that monitor engine and driver performance.
The Company's strategy is to offer high-quality flatbed transportation services to high-volume, time-sensitive shippers. Because much of the freight hauled by the Company consists of steel products and building materials, time-definite delivery is required. A late delivery can mean a shutdown of a production line at a plant or a delay in a construction project. The Company focuses its marketing efforts on the types of shippers that require time-definite delivery because the Company believes that service, rather than price, generally will be the primary factor that will dictate their choice of carrier.
Management believes that its ability to recruit and retain drivers has been critical to its success, and the Company has sought to attract and retain drivers by using only high-quality, late-model tractors, installing its two-way satellite communication equipment and offering financial and other incentives to drivers. Management recognizes that getting drivers home frequently is critical to driver retention. Accordingly, the Company makes load assignments to drivers to enable each driver to attain his or her goals in terms of miles driven as well as time at home.
STRATEGY
The Company's business strategy is to offer high quality flatbed transportation services in the truckload carrier market primarily to high-volume, time-sensitive customers. The key components of the Company's strategy are as follows:
Company-Owned Equipment. The Company owns all of its revenue equipment and all drivers are employees of the Company. Management believes that using Company-owned equipment and Company-employed drivers offers the Company an advantage over its competitors that depend solely on owner-operators. Management believes that controlling the dispatch of drivers is necessary for the Company to meet the needs of time-sensitive customers. The Company is considering the use of a small number of owner/operators in 1997.
Time-Sensitive Shippers. The Company focuses its marketing efforts on high-volume, time-sensitive shippers that are involved primarily in the steel and building materials businesses and require time-definite delivery.
Management believes that many large volume shippers in this segment of the industry have reduced the number of carriers they use so as to use only those "core carriers" that offer consistently superior service. The Company intends to continue its focus on developing relationships as a core-carrier for high-volume, time-sensitive shippers.
Technology. The Company's strategy has been to utilize technology to provide better service to its customers and to improve operating efficiency. The Company became the first major flatbed carrier in the country to install a satellite tracking system, manufactured by QUALCOMM, in 100% of its tractors. The tracking system enables the Company to monitor equipment locations and schedules more effectively and to communicate with both drivers and customers. The Company has also installed computers on board each of its tractors to monitor fuel efficiency and other operational data. The Company will continue to monitor and implement technological developments that will enable the Company to improve customer service and operating efficiency.
Premium Quality Tractors. The Company continuously upgrades its fleet of tractors. Maintaining a young, high quality fleet of tractors facilitates the Company's ability to recruit and retain drivers, achieve maximum on-time reliability, maximize fuel economy and convey an image of quality to existing and potential customers.
CUSTOMERS AND MARKETING
The Company markets itself on the basis of quality service and employees, its satellite communication system, the capabilities of its information system to interface with the information systems of its customers, its record of on-time deliveries, and its efficient and well-maintained tractors and trailers. The Company's marketing efforts concentrate on attracting customers that require time-definite delivery and ship multiple loads to and from locations that complement the Company's existing traffic flows.
The Company has written contracts with most of its customers. The contracts generally require the customer to use the Company for a specified minimum amount of shipments each year and may be terminated by either party upon 30 to 60 days' written notice. The largest 25, 10 and 5 customers accounted for approximately 69%, 52% and 36%, respectively, of the Company's revenues during 1996. Many of those customers are large, publicly-held companies. During 1996, the only customer that accounted for more than 10% of the Company's revenues was USG Interiors, Inc. ("USG"), which together with certain affiliates accounted for approximately 12.8% of the Company's revenues. The Company's contract with USG specifies that USG will permit the Company to transport at least 100 tons of USG's goods each year, has no minimum term, and is terminable by either party upon sixty days written notice. The loss of any of the Company's major customers could adversely affect the Company's profitability.
OPERATIONS
The Company's operations are designed to maximize efficiency and provide quality service to customers. All of the Company's fleet operations, routing and scheduling are centrally coordinated through a satellite tracking system from its corporate headquarters in Clayton, Alabama. Through the use of the Company's satellite-based communication system, which is complemented by its fully-integrated mainframe computer system, dispatchers monitor the location and delivery schedules of all shipments and equipment to coordinate routes and maximize utilization of the Company's drivers and equipment. See "-- Transportation Technology."
The Company conducts its operations through a network of 12 regional and satellite service centers in strategic locations in the eastern two-thirds of the United States. See "Item 2
ITEM 2. Properties
The Company's corporate headquarters and principal service center are located on a 17.9 acre tract in Clayton, Alabama, which the Company purchased during 1993. Such facilities consist of approximately 22,000 square feet of office space, 12,000 square feet of equipment repair facilities and approximately 3 acres of parking space. The following table sets forth information regarding each of the Company's service center and shuttle locations:
ITEM 3.
ITEM 3. Legal Proceedings
The Company is routinely a party to litigation incidental to its business, primarily involving claims for personal injury and property damage incurred in the transportation of freight. The Company maintains insurance that it believes is adequate to cover its liability risks. See "Item 1 Business -- Safety and Insurance."
ITEM 4.
ITEM 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth quarter of the year ended December 31, 1996, either through the solicitation of proxies or otherwise.
Executive Officers of the Registrant
Set forth below is information concerning the Executive Officers of the Company as of March 15, 1997.
Dempsey Boyd, age 70, founded the Company in 1956, and has been Chairman of the Board since April 1980. Mr. Boyd served as President of the Company from December 1962 until April 1980. Mr. Boyd is the father of Gail B. Cooper and Ginger B. Tibbs.
Donald G. Johnston, age 60, has served as President and Chief Executive Officer of the Company since April 1980, and as a Director since December 1979. Prior to that time, he served as Vice President and General Manager since joining the Company in 1979. Mr. Johnston has a background in industrial management and sales, and is active in, and has previously served as chairman of, the Alabama Trucking Association and the University of Georgia Trucking Profitability Strategies Conference. Mr. Johnston received a B.S. in industrial management from Auburn University.
Richard C. Bailey, age 46, has served as Chief Financial Officer since joining the Company in August 1992, and has served as a Director since February 1995. He served as president and director of Eastern Inter-Trans Services, Inc., a dry van truckload carrier based in Columbus, Georgia, from December 1989 to August 1992. Mr. Bailey is a certified public accountant with a B.S. in accounting from Georgia State University. He was previously employed in various financial positions by Ernst & Young, Intermet Corporation and Snapper Products (a division of The Actava Group Inc.). Mr. Bailey has served on the Advisory Board of the University of Georgia Trucking Profitability Strategies Conference.
Gail B. Cooper, age 46, has been the Secretary of the Company since December 1969, and served as a Director of the Company from December 1969 until March 1994. Ms. Cooper received a B.S. in business administration from Troy State University. She has served the Company in numerous administrative and accounting positions since joining the Company full-time in June 1972. Ms. Cooper is the daughter of Mr. Boyd and the sister of Ms. Tibbs.
Ginger B. Tibbs, age 43, has been the Treasurer of the Company since December 1979, and served as a Director from December 1978 until March 1994. Ms. Tibbs is primarily responsible for collection of the Company's accounts receivable and has served as Credit Manager since September 1980. Ms. Tibbs received a degree in elementary education from Auburn University. She is the daughter of Mr. Boyd and the sister of Ms. Cooper.
PART II
ITEM 5.
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters
The Common Stock of the Company is listed on the Nasdaq National Market under the symbol "BOYD." As of March 15, 1997, the Common Stock was held by approximately 80 holders of record. The table below sets forth the reported high and low sales price per share for the Common Stock as reported by the Nasdaq National Market for each fiscal quarter during 1996.
The Company currently anticipates that all of its earnings will be retained for development of the Company's business, and does not anticipate paying any cash dividends in the foreseeable future. Furthermore, certain of the Company's financing arrangements contain covenants that may restrict the payment of cash dividends for the foreseeable future. Future cash dividends, if any, will be at the discretion of the Company's Board of Directors and will depend upon, among other things, the Company's future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, and other factors as the Board of Directors may deem relevant.
ITEM 6.
ITEM 6. Selected Financial Data
The information required by this item is incorporated by reference from the information under the caption "Selected Financial Data" in the Company's Annual Report to Stockholders for the year ended December 31, 1996.
ITEM 7.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The information required by this item is incorporated by reference from the information under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report to Stockholders for the year ended December 31, 1996.
ITEM 8.
ITEM 8. Financial Statements and Supplementary Data
The information required by this item is incorporated by reference from the Financial Statements contained in the Company's Annual Report to Stockholders for the year ended December 31, 1996.
ITEM 9.
ITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
PART III
With the exception of information relating to the executive officers of the Company, which is provided in Part I hereof, all information required by Part III (Items 10, 11, 12 and 13) is incorporated by reference to the Company's definitive Proxy Statement relating to the 1997 Annual Meeting of Stockholders, which is scheduled to be filed on or before April 30, 1997.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Exhibits, Financial Statements and Schedules.
1. Financial Statements. The following financial statements for the Company and Independent Auditors' Report are incorporated by reference from the Company's Annual Report to Stockholders for the year ended December 31, 1996:
Independent Auditors' Report Balance Sheets at December 31, 1996 and 1995 Statements of Operations for the years ended December 31, 1996, 1995 and 1994 Statements of Stockholders' Equity for the years ended December 31, 1996, 1995 and 1994 Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 Notes to Financial Statements
2. Financial Statement Schedules. None.
Financial Statement Schedules are omitted because of the absence of conditions under which they are required or because the information is included in the financial statements or notes thereto.
3. Exhibits required by Item 601 of Regulation S-K.
The following exhibits are included in this Form 10-K:
EXHIBIT NO. DESCRIPTION
13 Those portions of the Company's Annual Report to Stockholders for the year ended December 31, 1996 that are specifically incorporated herein by reference.
23 Consent of Deloitte & Touche LLP
27 Financial Data Schedule
The following exhibits are incorporated by reference to the Company's Registration Statement on Form S-1 (File No. 33-76756), declared effective on May 9, 1994:
EXHIBIT NO. DESCRIPTION
3.1 Certificate of Incorporation of the Company
3.2 By-laws of the Company
10.1* Boyd Bros. Transportation Inc. 1994 Stock Option Plan
10.2* Form of the Company's Nonstatutory Stock Option Agreement
10.3* Form of the Company's Nonstatutory Stock Option Agreement for Nonemployee Directors
10.4* Description of Senior Management Bonus Plan
10.5* Description of Key Employee Bonus Program
10.11 Master Note for Business and Commercial Loans dated July 22, 1992 providing for a $1,500,000 line of credit from AmSouth Bank N.A. to the Company
10.12 Note for Business and Commercial Loans dated November 1, 1992 by the Company in favor of AmSouth Bank N.A. in the principal amount of $5,317,120.95
10.13 Note for Business and Commercial Loans dated August 2, 1993 by the Company in favor of AmSouth Bank N.A. in the principal amount of $5,122,702.70
10.14 Security Agreement for Tangible Personal Property dated February 15, 1994 by the Company in favor of AmSouth Bank N.A.
10.15 Note for Business and Commercial Loans dated February 15, 1994 for a $5,000,000 non-revolving draw note by the Company in favor of AmSouth Bank N.A.
10.22 Modification of the Continuation of Credit and Security Agreement and Loan Modification Agreement dated March 4, 1994 by and between the Company and Compass Bank
10.26 Credit and Security Agreement dated February 1, 1994 by and between the Company and Compass Bank
10.27 Security Agreement dated February 1994 by the Company in favor of Compass Bank
10.31 OMNITRACS Contract dated February 1, 1990 by and between the Company and QUALCOMM, Inc.
10.33 Stock Option Exercise and Cancellation Agreement dated as of March 22, 1994 by and between the Company and Donald G. Johnston
10.34 Indemnification Agreement dated as of March 22, 1994 by and between the Company and Donald G. Johnston
10.35 Form of Tax Indemnification Agreement by and between the Company and certain stockholders of the Company
10.37 Credit Agreement dated April 1, 1994 by and between the Company and AmSouth Bank N.A.
10.38 Trucking Contract dated May 2, 1988 by and between the Company and USG Interiors, Inc.
- ---------------------- * Identifies each exhibit that is a "management contract or compensatory plan or arrangement" required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 14(c) of Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BOYD BROS. TRANSPORTATION INC.
By: /s/ DONALD G. JOHNSTON ------------------------------------- Donald G. Johnston President and Chief Executive Officer
Date: March 20, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Exhibit Index