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UNITED STATES SECURITIES AND EXCHANGE COMMISSION  FORM 10-K
 (Mark One) x
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2003  o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number 0-23948 BOYD BROS. TRANSPORTATION INC. 
  Delaware
    
    63-6006515(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)3275 Highway 30, Clayton, Alabama
    
    36016(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code (334) 775-1400 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange onTitle of each class
    
    which registeredNone
    
    None
 Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001 par value Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes xNo o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. x Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes oNo x The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
June 28, 2003 was $2,179,325. The number of shares outstanding of the issuers $.001 par value common stock
was 2,711,958 as of March 19, 2004. DOCUMENTS INCORPORATED BY REFERENCE List hereunder the following documents if incorporated by reference and the
part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) any annual report to security holders; and 2) any prospectus
filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The
listed documents should be clearly described for identification purposes (e.g.,
annual report to security holders for fiscal year ended December 24, 1980).




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TABLE OF CONTENTS ITEM
    
    
    
    PAGENUMBER
    
    
    
    NUMBERPART IItem 1.
    
    Business
    
    
    2Item 2.
    
    Properties
    
    
    9Item 3.
    
    Legal Proceedings
    
    
    9Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    10PART IIItem 5.
    
    Market for the Registrants Common Stock, Related Stockholder Matters and Issuer of Purchases of Equity Securities
    
    
    11Item 6.
    
    Selected Financial Data
    
    
    12Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    26Item 8.
    
    Financial Statements and Supplementary Data
    
    
    26Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    26Item 9A.
    
    Controls and Procedures
    
    
    27PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    28Item 11.
    
    Executive Compensation
    
    
    30Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management
    
    
    34Item 13.
    
    Certain Relationships and Related Transactions
    
    
    35Item 14.
    
    Principal Accountant Fees and Services
    
    
    36PART IVItem 15.
    
    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
    
    
    37SIGNATURES
    
    
    
    
    42Exhibit IndexEX-10.1 PROMISSORY NOTE 03/12/04EX-10.2 WAIVER & CONSENT AGREEMENT 01/23/04EX-10.3 WAIVER & CONSENT AGREEMENT 02/23/04EX-21 SUBSIDIARIES OF THE REGISTRANTEX-23 CONSENT OF BDO SEIDMAN, LLP.EX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32 SECTION 906 CERTIFICATION OF THE CEO & CFO
  1




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PART I 
 Item 1. Business The Company Boyd Bros. Transportation Inc. (Boyd or the Company) is a truckload carrier
that operates exclusively in the flatbed segment of the industry and hauls
primarily steel products and building materials. Since its founding in 1956,
Boyd has grown into what management believes is one of the largest exclusively
flatbed carriers in the United States. The Companys strategy is to offer high-quality flatbed transportation services
to high-volume, time-sensitive shippers. Because much of the freight hauled by
the Company consists of steel products and building materials, time-definite
delivery is required. A late delivery can result in a shutdown of a production
line at a plant or a delay in a construction project. Management focuses its
marketing efforts on those shippers who require time-definite delivery because
it believes that service, rather than price, generally will be the primary
factor that will dictate their choice of carrier. Management believes that its ability to recruit and retain drivers has been
critical to its success, and Boyd has sought to attract and retain drivers by
using only high quality, late-model tractors equipped with its two-way
satellite communication equipment, and offering financial and other incentives
to drivers. Management recognizes that getting drivers home frequently is
critical to driver retention. Accordingly, Boyd makes load assignments to
drivers that enable each driver to attain his or her goals with respect to both
miles driven as well as time at home. On December 31, 2003, the Company announced that it had entered into an
Agreement and Plan of Merger, dated as of December 31, 2003 (the Merger
Agreement), which sets forth the terms and conditions of the proposed
acquisition (the Merger) of the Company by BBT Acquisition Corporation, a
Delaware corporation (BBT Corp.) controlled by Dempsey Boyd, the founder and
former Chairman and CEO of the Company, his daughter, Gail B. Cooper, the
current President and CEO of the Company, his daughter, Ginger B. Tibbs, the
current Secretary/Treasurer of the Company, and his wife, Frances S. Boyd. Under the terms of the Merger Agreement, stockholders of the Company (other
than BBT Corp. and the Boyd family members) will receive $7.00 per share, in
cash, for each outstanding share of Company Common Stock owned by such
stockholders. The transaction is structured as a forward merger in which BBT
Corp. will merge with and into the Company, with the Company continuing as the
surviving corporation. The boards of directors of each of the Company and BBT
Corp. have unanimously approved the Merger Agreement and the Merger. In the
case of the Companys Board, the approval follows the unanimous recommendation
of a special committee of outside directors of the Company that was formed to
evaluate and respond to the original proposal of Mr. Boyd and Ms. Cooper. The Merger is subject to (i) approval by the holders of a majority of the
outstanding shares of the Companys Common Stock which are outstanding as of
the record date for the special meeting of the Companys stockholders to be
called to consider the Merger, (ii) the completion of the financing
arrangements necessary to consummate the Merger, and (iii) certain other
closing conditions. In June 1997, Boyd began contracting with independent owner-operators to
provide service to its customers. Boyd offers a lease-purchase program,
providing Boyds drivers with both career opportunities at Boyd and the
opportunity to own their own tractor. Under the program, the driver leases the
tractor from Boyd, along with an option to purchase the tractor. In 1998, Boyd
added another option under the owner-operator program. Under operating lease
agreements, owner-operators are able to lease a new tractor for three and
one-half years. Boyd will retain ownership of the tractor at the end of the
lease, but this will enable the owner-operator to operate a new tractor and
maintain his or her status as an independent contractor. Boyd also operates Boyd Logistics, Inc. a subsidiary that provides logistical
support to the Company. Boyd Logistics requires minimal overhead and capital
resources. Boyd Logistics out-sources freight to third party carriers in
situations where the Company does not have available tractors. Boyd Logistics
also brokers freight for other outside carriers. 2




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Boyd operates primarily in the southeastern United States, with an average
length of haul of 726 miles. Management tracks Boyds ability to retain quality
drivers, by ensuring drivers receive home time at their scheduled intervals.
Boyd operated approximately 711 tractors and 1,200 flatbed trailers as of
December 31, 2003. Owner-operators owned 189 of the 711 tractors utilized by
Boyd. Boyd compensates the owner-operators of these units on a per mile basis.
Boyd utilizes agents in some areas to solicit and book freight. On December 8, 1997, Boyd acquired WTI Transport, Inc., (WTI), (f/k/a Welborn
Transport, Inc.) located in Tuscaloosa, Alabama. WTI is operated by Boyd as a
stand-alone subsidiary. References to the Company contained herein refer to
the combined operations of Boyd, Boyd Logistics and WTI. References hereinafter
to Boyd, Logistics or WTI describe the distinct operations of the parent
and subsidiaries. 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 519 miles. Management believes
this enhances WTIs ability to retain quality drivers, as drivers time away
from home is minimized. WTI operated approximately 216 tractors and 289 flatbed
trailers as of December 31, 2003. Owner-operators owned 180 of the 216 tractors
utilized by WTI. The owner-operators of these units are compensated for each
haul by WTI generally based upon a percentage of revenue. WTI utilizes agents
in some areas to solicit and book freight. Strategy As discussed above, the Companys business strategy is to offer high-quality
flatbed transportation services in the truckload carrier market primarily to
high-volume, time-sensitive customers. The key components of the Companys
strategy are as follows: Time-Sensitive Shippers. The Company focuses its marketing efforts on
high-volume, time-sensitive shippers that are involved primarily in the steel
and building materials businesses and require time-definite delivery.
Management believes that many large volume shippers in this segment of the
industry have reduced the number of carriers they use to 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 utilizes satellite-tracking systems that enable it to monitor equipment
locations and schedules more effectively and to communicate with both drivers
and customers. Customers are also able to track their loads by utilizing this
technology. 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 it to improve customer service and operating efficiency. Premium Quality Tractors. Boyd continuously upgrades its fleet of tractors.
Boyds management believes that maintaining a young, high-quality fleet of
tractors facilitates Boyds ability to recruit and retain drivers, achieve
maximum on-time reliability, maximize fuel economy and convey an image of
quality to existing and potential customers. While WTI maintains a fleet of
high-quality tractors, the shorter routes over which its vehicles are
dispatched enables these units to be serviced more frequently. Accordingly, it
has not been necessary for WTI to replace its fleet as frequently as Boyd. Customers and Marketing The Company markets itself on the basis of quality service and employees, its
satellite communication system, the capabilities of its information system to
interface with the information systems of its customers, its record of on-time
deliveries, and its efficient and well-maintained tractors and trailers. The
Companys marketing efforts concentrate on attracting customers that require
time-definite delivery and ship multiple loads to and from locations that
complement the Companys existing traffic flows. The Company has written contracts with most of its customers. The contracts
include, among other things, the pricing arrangements, the products that will
be shipped and the specific destination points applicable to the contract. The
contracts generally require the customer to use Boyd for a specified minimum
amount of shipments each year and may be terminated by either party upon 30 to
60 days written notice. 3




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The Companys largest 25, 10 and 5 customers, predominately within the Boyd
division, accounted for approximately 50%, 35% and 25% respectively, of the
Companys revenues during the year ended December 31, 2003. One customer, USG
Corporation, accounted for 12%, 10%, and 10% of the Companys
revenues in 2003, 2002, and 2001, respectively. Many of the
Companys largest 25 customers are publicly held companies. The Company does
not believe that it is dependent upon any single customer. Customers in the
steel industry accounted for 24%, 39% and 42% of the Companys operating
revenues for the years ended December 31, 2003, 2002 and 2001, respectively. Operations 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, including dealer-financed purchases of
revenue equipment in the past three years. Historically, the Company financed
its major capital equipment purchases consisting primarily of revenue equipment
and, to a lesser extent, construction of terminals, through bank financings. The Companys operations are designed to maximize efficiency and provide
quality service to customers. All of Boyds fleet operations, routing and
scheduling are centrally coordinated through a satellite tracking system from
its corporate headquarters in Clayton, Alabama. Through the use of Boyds
satellite-based communication system, which is complemented by its fully
integrated mainframe computer system, dispatchers monitor the location and
delivery schedules of all shipments and equipment to coordinate routes and
maximize utilization of Boyds drivers and equipment. See Transportation
Technology. Boyd conducts its operations through a network of 10 regional and satellite
service centers in strategic locations in the eastern two-thirds of the United
States. See Item 2  Properties. Boyd operates regional service centers in
Clayton and Birmingham, Alabama; Springfield, Ohio; and Greenville,
Mississippi. These regional service centers are supported by smaller satellite
service centers, each having between one to three employees, located in Calvert
City, Kentucky; Danville, Virginia; Lisbon Falls, Maine; Conley, Georgia;
Walworth, Wisconsin and Cofield, North Carolina. These service centers allow
Boyd to re-dispatch equipment terminating in a given area, enhance driver
recruitment and return drivers to their homes more regularly. Boyd also has
arrangements to deposit trailers near various major customers or shipping
locations to facilitate pre-loading of shipments and thereby increasing
efficiency. WTIs corporate offices are located in Tuscaloosa, Alabama. Both Boyd and WTI
utilize independent agents to book freight. These agents are located in Texas,
Tennessee, West Virginia, Florida, Alabama, Mississippi and Ohio. As previously mentioned, the Company also operates a Logistics division, Boyd
Logistics. Boyd Logistics solicits freight for both Company trucks and carriers
wanting Boyd Logistics to locate freight. Drivers and Employees Recruiting and retaining professional, well-trained drivers is critical to the
Companys success, and all of the Companys drivers must meet specific
guidelines relating primarily to safety records, driving experiences and
personal evaluations, including drug testing. To maintain high equipment utilization, particularly during periods of growth,
the Company strongly emphasizes continuous driver and owner-operator
recruitment and training. Drivers are recruited at all of the Companys
regional terminal locations and primarily at the Companys corporate
headquarters. Boyd drivers attend orientation at the Birmingham terminal while
WTI drivers attend orientation at the Tuscaloosa office. The Company recognizes that its professional drivers are one of its most
valuable assets. Drivers are trained in Company policies and operations, safety
techniques and fuel-efficient operation of equipment. In addition, each driver
must pass a rigorous road test prior to his or her assignment to a vehicle. The
Company believes that experienced drivers have better safety records than new
driver-school graduates, and management believes that their skills will help
Boyd improve overall fleet efficiency as a result of higher utilization and
historically lower maintenance costs on tractors operated by experienced
drivers. As a result, beginning in February 2001, Boyd began hiring only
experienced drivers and discontinued hiring drivers directly from drivers
schools. All drivers are required to participate in annual safety training and
defensive driving courses for re-certification by the Company. Recognizing the
importance of driver contact while drivers are on the road for extended
periods, the Company 4




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maintains toll-free telephone lines and publishes a newsletter containing
Company information, in addition to maintaining daily contact between
dispatchers and drivers. The Company also recognizes that carefully selected owner-operators complement
its Company-employed drivers. Owner-operators are independent contractors who
supply their own tractor and driver and are responsible for their operating
expenses. Because owner-operators either provide their own tractors or
lease-purchase tractors from the Company for which they make payments to the
Company, less financial capital is required from the Company for growth. Also,
owner-operators provide the Company with another source of drivers to support
its growth. The Company intends to continue its emphasis on recruiting
owner-operators, as well as Company drivers. Competition for qualified drivers is intense. The short- to medium-haul
truckload segment of the trucking industry, including the Company, experiences
significant driver and owner-operator turnover, and the Company anticipates
that the intense competition for qualified drivers in the trucking industry
will continue. However, it has been more difficult for the Company, and the
industry as a whole, to recruit and retain owner-operators over the past
several years due to many factors including, but not limited to, higher fuel
and insurance costs. Boyd implemented a program in November of 2003 by which
all new drivers with less than one year of proven experience as an owner-
operator must enter a minimum four-week program as a Company driver prior to
becoming a Boyd owner- operator. At December 31, 2003, the Company had 793 employees; of these, approximately
558 were Company drivers, and the balance were mechanics, other equipment
maintenance personnel and support personnel, including management and
administration. In addition, owner-operators accounted for the operation of
approximately 369 tractors. None of the Companys employees is subject to a
collective bargaining agreement, and the Company has never experienced a work
stoppage. Management believes that its relationship with its employees is good. Revenue Equipment The Companys philosophy is to purchase premium quality tractors to help
attract and retain drivers and to promote safe operations, and management
believes the higher initial cost of such equipment is recovered through better
resale marketability. Each of the Companys tractors is equipped with a
sleeper cab to permit all drivers to comply conveniently and cost-effectively
with the United States Department of Transportation (DOT) hours of service
guidelines and to facilitate team operations when necessary. The Company adheres to a comprehensive maintenance program for both tractors
and trailers. Owner-operator tractors are inspected prior to acceptance by the
Company for compliance with operational and safety requirements of the Company
and the DOT. These tractors are then periodically inspected, similar to
Company tractors, to monitor continued compliance. At December 31, 2003, the Company directly owned or leased through independent
contractors (owner-operators) 927 tractors and 1,489 flatbed trailers.
Freightliner and International manufacture the tractors, and Utility, Dorsey,
Fontaine, Wabash and Great Dane manufacture the trailers. Transportation Technology Management believes that the application of technology is an ongoing part of
providing high-quality service at competitive prices, and further believes that
Boyd has enhanced its strong reputation for customer satisfaction through the
early and fleet-wide implementation of its satellite systems as well as its
tracking and load tendering ability. The Companys satellite system permits more efficient transmission of load
assignments to drivers, and enhances the Companys ability to monitor loads in
transit and rapidly bill customers for completed deliveries. Once a load
planner assigns a load, the assignment is transmitted to the Companys
operations department where it is reviewed by a dispatcher who then relays the
assignment to the appropriate driver through the display unit in each of the
Companys vehicles. The driver can respond to the dispatcher in a matter of
seconds, thereby eliminating waiting time and inefficient dependence on truck
stop telephones or other methods of communication between drivers and
dispatchers. The Companys can electronically record a load assignment, report
the load to the billing department and generate customer invoices. 5




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In addition, the Company uses the satellite system to automatically transmit
location and equipment information and other data to the dispatcher, thereby
reducing the need for drivers to stop to communicate with dispatchers in the
event of a problem. The system continually tracks every cargo load with
accuracy within one-tenth of a mile. This information, along with information
concerning available loads, is constantly updated on the Companys on-line
computer. Load planners use this information to match available equipment with
available loads, meet delivery schedules and respond more quickly to customer
inquiries. Customers are able to access and track their loads through the
Companys internet web site. The Company has also equipped its entire fleet of tractors with the
SENSORTRACS(C) on-board computer system (Sensortracs). This system monitors
fuel efficiency and other operational data. Information from Sensortracs is
periodically processed by one of the Companys computers, which generates
reports on vehicle efficiency and driver performance. Reports generated by this
system enhance the Companys ability to counsel its drivers on strengths and
deficiencies in their driving habits and fuel efficiency and to monitor the
effectiveness of driver training programs. The Company has developed load tendering and tracking capabilities. Customers
are able to track the progress of their loads during transport using their own
personal computer. Additionally, customers are able to book loads over the
internet. Customers submit potential loads to the appropriate regional load
planner, and the load planner will then contact the customer via the internet
e-mail system to acknowledge acceptance of the load. This technological
advancement enables customers to book loads routinely without having to
duplicate the same paperwork. Additionally, the Company utilizes a software
program by The LOGISTICS.COM Group that enables the Company to review each
shipping lane to determine overall profitability and also to determine which
customers are the most profitable within the lane. Safety and Insurance The Companys safety department is responsible for training and supervising
personnel to keep safety awareness at its highest level. The Company has
implemented an active safety and loss prevention program. The emphasis on
safety begins in the hiring and training process, where prospective employees
and owner-operators are given physical examinations and drug tests, and newly
hired drivers and owner-operators, regardless of experience level, must
participate in an intensive orientation program. See Drivers and Employees. The directors of safety for the Company continuously monitor driver performance
and have final authority regarding employment and retention of drivers. The
Company is committed to securing appropriate insurance coverage at
cost-effective rates. The primary claims that arise in the trucking industry
consist of cargo loss and damage, personal injury, property damage and workers
compensation. The Companys future insurance and claims expenses could exceed
historical levels, which could have a material adverse effect on earnings.
Effective July 1, 2003, the Company self-insures for a portion of the claims
exposure resulting from cargo loss, personal injury and property damage,
combined up to $750,000 per occurrence. In addition, the Company shares costs
above the $750,000 self-insured amount, at a rate of thirty-three percent up to
the Companys coverage amount of $2 million. Costs and claims in excess of the
Companys coverage amount of $2 million will be borne solely by the Company.
The workers compensation self-insurance level has an annual maximum of
$500,000, and the health insurance self-insurance level is $175,000 per person
per year. If the number or dollar amount of claims for which the Company is
self-insured increases, operating results could be adversely affected. A Company driver was involved in an accident in the first quarter of 2002 that
resulted in a third party fatality. Company drivers were also involved in five
accidents resulting in fatalities during 2003, one of which involved personal
injury to three individuals. During the first quarter of 2002, the self-insured
amount for cargo loss, personal injury and property damage, combined was
$500,000 per occurrence, which would be the amount applicable to the accident
during the first quarter of 2002. The self-insured amount for the two accidents
in the first half of 2003 was $750,000, with the Company also responsible for
its shared amount of 50% of any amounts between $750,000 and the $2 million
insurance coverage and all amounts in excess of the insured amount. The Company
was involved in three accidents involving fatalities during the third quarter
of 2003. The self-insured amount relating to these accidents is $750,000, with
the Company also responsible for its shared amount of 33% of any amounts in
excess of $750,000 up to the $2 million insurance coverage and all amounts in
excess of the insured amount. Each of these accidents, taken separately, has the potential to cause the
Company to reach its total per occurrence retention amount for insurance
purposes. To date, five lawsuits have been filed against the Company with
respect to the fatalities arising from these accidents. If the Company is
ultimately found to have some liability for one or more of these accidents, 6




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the Company would seek to pay or structure payments of the amount due from its
operating cash flows and, if needed, additional bank financing. Although the
Company does not expect this to occur, it is possible that liability resulting
from these accidents could exceed the Companys operating cash flows and
available financing. Therefore, there can be no assurance that the Companys
operations and financial condition would not be materially affected if the
Company were found to have liability for one or more of these accidents. If
insurance expenses continue to increase, and the Company is unable to offset
the increase with higher freight rates, the Companys operations and financial
condition could be adversely affected. Fuel Motor carrier service is dependent upon the availability of diesel fuel. The
Companys fuel expense as a percent of operating revenue was 13.0%, 11.9% and
14.3% in 2003, 2002 and 2001, respectively. Through on-board computers, the
Company continually monitors fuel usage, miles per gallon, cost per mile and
cost per gallon. The Company has not experienced any difficulty in maintaining
fuel supplies sufficient to support its operations. Shortages of fuel,
increases in fuel prices, or rationing of petroleum products can have a
materially adverse effect on the operations and profitability of the Company.
Beginning in the second half of 1999 and continuing throughout most of 2001,
the Company experienced significant increases in the cost of diesel fuel.
Diesel fuel prices decreased in the fourth quarter of 2001, but the Company has
again experienced significant increases during 2002 and 2003. The Companys customer fuel surcharge reimbursement programs have historically
enabled the Company to recover most of the higher fuel prices from its
customers compared to normalized average fuel prices. These fuel surcharges,
which automatically adjust from week to week depending on the cost of fuel,
enable the Company to rapidly recoup the higher cost of fuel when prices
increase. Conversely, when fuel prices decrease, fuel surcharges decrease. The
Company cannot predict whether fuel prices will decrease or increase in the
future or the extent to which fuel surcharges will be collected to offset
potential increases. As of December 31, 2003, the Company had no derivative
financial instruments to reduce its exposure to fuel price fluctuations. The Company maintains aboveground and underground fuel storage tanks at most of
its terminals. Leakage or damage to these facilities could expose the Company
to environmental clean-up costs. The tanks are routinely inspected to help
prevent and detect such problems. Competition The trucking industry is highly competitive and fragmented. The Company
competes primarily with other short- to medium-haul, flatbed truckload
carriers, internal shipping conducted by existing and potential customers and,
to a lesser extent, railroads. Deregulation of the trucking industry during the
1980s created an influx of new truckload carriers, which along with certain
other factors, continues to create substantial downward pressure on the
industrys rate structure. Competition for the freight transported by the
Company is based primarily on service and efficiency and, to a lesser degree,
on freight rates. There are other trucking companies, including truckload
carriers that have flatbed divisions that have greater financial resources,
operate more equipment or carry a larger volume of freight than the Company.
The existence of these other motor carriers has also resulted in increased
competition for hiring and retaining qualified drivers. Due primarily to a weakened U.S. economy, trucking company failures in the last
three years are continuing at a pace much higher than the previous fifteen
years. Some truckload carriers are having extreme difficulty obtaining
adequate trucking insurance coverage at a reasonable price and equipment
lenders have tightened their credit policies for truck financing. Demand for
the Companys services has been positively impacted because of these trucking
company failures, which in the flatbed segment have primarily occurred among
the Companys smaller competitors. Seasonality In the trucking industry, results of operations show a seasonal pattern because
customers generally reduce shipments during the winter season. 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 due to the colder
weather. 7




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Regulation The trucking industry is subject to regulatory oversight and legislative
changes that can affect the economics of the industry by requiring certain
operating practices or influencing the demand for, and the costs of providing,
services to shippers. The Intermodal Surface Transportation Board (the ISTB),
as well as various state agencies that have jurisdiction over the
Company, have
broad powers, generally governing such matters as authority to engage in motor
carrier operations, rates and charges, accounting systems, certain mergers,
consolidations and acquisitions and periodic financial reporting. The Federal Motor Carrier Act of 1980 commenced a program to increase
competition among motor carriers and to diminish the level of regulation in the
industry. Following this deregulation, applicants have been able to more easily
obtain operating authority, and interstate motor carriers such as the Company
have been able to implement certain rate changes without federal approval. The
Motor Carrier Act also removed many route and commodity restrictions on
transportation of freight. In 1995, the Interstate Commerce Commission (the
ICC) was eliminated, and the ISTB was established within the DOT. The ISTB
performs all functions previously performed by the ICC. Since 1981, the Company
has held authority to carry general commodities throughout the 48 contiguous
states, as both a common and contract carrier. Interstate motor carrier operations are subject to safety requirements
prescribed by the DOT. Such matters as weight and dimensions of equipment and
also legal number of hours of driver operation are subject to federal and state
regulation. All of the Companys drivers are required to obtain national
commercial drivers licenses pursuant to the regulations promulgated by the
DOT. DOT regulations require mandatory drug testing of drivers, and the Company
has implemented its own ongoing drug-testing program. The DOTs national
commercial drivers license and drug testing requirements have not to date
adversely affected the availability of qualified drivers to the Company. DOT
alcohol testing rules require certain tests, random and otherwise, for alcohol
levels in drivers and other safety personnel. See Safety and Insurance. Effective January 4, 2004, the Federal Motor Carrier Safety Administration
(FMCSA) mandated reforms to the hours of service (HOS) regulations prescribed
for truck drivers. The new regulations provide commercial truck drivers a work
and rest schedule that is designed to reduce driver fatigue. The new rules
allow long haul drivers to drive eleven hours after ten consecutive hours off
duty. Truck drivers may not drive after being on duty for 60 hours in a
seven-consecutive-day period or 70 hours in an eight-consecutive-day period.
This on-duty cycle may be restarted only after a driver takes a weekend off,
that is, at least 34 consecutive hours off duty. Rules prior to January 4,
2004, allowed ten hours of driving within a fifteen-hour, on-duty period and
required only eight hours of off-duty time. The Company does not expect to be
significantly affected by these changes, as Company policies already closely
resemble these new regulations. Environmental Matters The Companys operations are subject to federal, state and local laws and
regulations concerning the environment. Certain of the Companys facilities are
located in historically industrial areas and, therefore, there is the
possibility of environmental liability as a result of operations by prior
owners as well as the Companys use of fuels and underground storage tanks at
its regional service centers. Leakage or damage to these facilities could
expose the Company to environmental clean-up costs. The tanks are routinely
inspected to help prevent and detect such problems. Currently, management does not know of any environmental remediation issues or
liabilities. However, there can be no assurance that material liabilities or
expenditures will not arise from these or additional environmental matters that
may be discovered, or from future requirements of law. Forward Looking Statements With the exception of historical information, the matters discussed and
statements made in this report constitute forward-looking statements and are
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Specifically, this report contains
forward-looking statements regarding the Companys marketing efforts and
initiative to broaden its customer base; the Companys emphasis on safety and
efforts to 8




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##### Table of Contents



reduce insurance claims and costs; the Companys belief that the availability
of credit under its line of credit, together with internally generated cash,
will be adequate to finance its operations through fiscal year 2004 and will
also be adequate to cover any liability with respect to the accidents that
occurred during 2002 and 2003; expectations regarding the freight business and
the economy; and results in future quarters and for the year. Whenever
possible, the Company has identified these forward-looking statements (as
defined in Section 21E of the Securities Exchange Act of 1934) by words such as
anticipates, may, believes, estimates, projects, expects, intends
and words of similar import. Forward-looking statements contained in this
report involve certain assumptions, risks and uncertainties that could cause
actual results to differ materially from those included in or contemplated by
the statements. In particular, there can be no assurance that the Companys
marketing efforts and initiatives to broaden its customer base will be
successful; that the Companys emphasis on safety and efforts to reduce
insurance claims and costs will be successful; that business conditions and the
economy will improve, including the transportation and construction sectors in
particular; that costs associated with increased insurance and claims costs,
and liability claims for which the Company is self-insured will not have a
material adverse affect on the Company; that the Company will be able to
recruit and retain qualified drivers; that the Company will be able to control
internal costs, particularly rising fuel costs that may or may not be passed on
to the Companys customers; that departures and defaults by owner-operators
will not have a material adverse affect on the Company; or that the cost of
complying with governmental regulations that are applicable to the Company will
not have a material adverse affect on the Company. These assumptions, risks and
uncertainties include, but are not limited to, those discussed or indicated in
all documents filed by the Company with the Securities and Exchange Commission
for the year ended December 31, 2003. The Company expressly disclaims any
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise except as may be required
by disclosure obligations in filings the Company makes with the SEC under
federal securities laws. 
 Item 2. Properties The Companys corporate headquarters and principal service center are located
on a 17.9-acre tract in Clayton, Alabama. These 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 the location and ownership of
each of Boyds service centers and shuttle facilities: Clayton, AL
    
    Owned, 34,000 sq. ft.Springfield, OH
    
    Owned, 21,520 sq. ft.Birmingham, AL
    
    Owned, 45,200 sq. ft.Birmingham, AL
    
    Owned, 80,000 sq. ftGreenville, MS
    
    Owned, 1,440 sq. ft.Cofield, NC
    
    Owned, 440 sq. ft.Calvert City, KY
    
    Leased month- to-monthDanville, VA
    
    Leased month- to-monthLisbon Falls, ME
    
    Leased month- to-monthConley, GA
    
    Leased month- to-monthWalworth, WI
    
    Leased month -to-month
 WTI leases its corporate offices in Tuscaloosa, Alabama and also uses the
Birmingham terminal. Additionally, WTI leases a service center located in
Atlanta, Georgia. The WTI leases are on a month-to month basis. The Birmingham terminal secures a loan to a bank with a principal balance of
approximately $3.3 million at December 31, 2003. The loan bears interest at
LIBOR plus 1.50% and monthly principal payments of $15,503 are due through
February 2006, with a balloon payment of approximately $2.8 million due at that
time. 
 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 for descriptions of the Companys insurance coverage. A Company
driver was involved in an accident in the first quarter of 2002 that resulted
in a third party fatality. Company drivers were also involved in five accidents
resulting in fatalities during 2003, one of which also involved personal injury
to three individuals. Each of these accidents, taken separately, has 9




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##### Table of Contents



the potential to cause the Company to reach its total per occurrence retention
amount for insurance purposes. To date, five lawsuits have been filed against
the Company with respect to the fatalities arising from these accidents. Two
of the lawsuits have been filed in the Circuit Court of Montgomery County,
Alabama with respect to an accident that occurred on July 5, 2003 in
Montgomery, Alabama. The accident, which is the basis of these suits, occurred
when a Company truck jackknifed and crossed the median of I-65 into oncoming
traffic. The accident resulted in one fatality and personal injury to three
individuals. The Circuit Court granted a motion to consolidate the cases, and
the combined relief sought by the plaintiffs includes both compensatory and
punitive damages. The plaintiffs have not specified the amount of damages
sought. If the Company is ultimately found to have some liability for one or more of
these accidents, the Company would seek to pay or structure payments of the
amount due from its operating cash flows and, if needed, additional bank
financing. Although the Company does not expect this to occur, it is possible
that the liability resulting from these accidents could exceed the Companys
operating cash flows and available financing. Therefore, there can be no
assurance that the Companys operations and financial condition would not be
materially affected if the Company were found to have liability for one or more
of these accidents. If insurance expenses continue to increase, and the Company
is unable to offset the increase with higher freight rates, the Companys
operations and financial condition could be adversely affected. 
 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 ended December 31, 2003. 10




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##### Table of Contents



PART II 
 Item 5. Market For Registrants Common Stock, Related Stockholder Matters and
Issuer Purchases of Equity Securities The Common Stock of the Company is listed on The NASDAQ SmallCap Market under
the symbol BOYD. As of March 19, 2004, approximately 500 beneficial owners
including 62 holders of record held the Common Stock. The table below sets
forth the reported high and low sales price per share for the Common Stock as
reported by the NASDAQ SmallCap Market for each fiscal quarter during 2003 and
2002. Price RangeHigh
    
    Low2003First Quarter
    
    $
    4.25
    
    
    $
    3.25Second Quarter
    
    
    4.89
    
    
    
    3.26Third Quarter
    
    
    5.91
    
    
    
    4.25Fourth Quarter
    
    
    6.75
    
    
    
    4.502002First Quarter
    
    $
    3.52
    
    
    $
    2.65Second Quarter
    
    
    3.40
    
    
    
    2.60Third Quarter
    
    
    5.25
    
    
    
    2.54Fourth Quarter
    
    
    4.74
    
    
    
    2.90
 The above quotes reflect inter-dealer prices, without retail mark-up, markdown,
or commission, and may not necessarily represent actual transactions.
Management currently anticipates that all of its earnings will be retained for
development of the Companys business and does not anticipate paying any cash
dividends in the foreseeable future. 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. Pursuant to the Companys stock repurchase program, the Company purchased 6,500
and 244,463 shares of the Common Stock in open market or negotiated
transactions during 2002 and 2001, for aggregate purchase prices of $42,250 and
$1,521,056. No shares were repurchased in 2003. The Company purchased 164,304
shares of Common Stock from the former vice-chairman of the Company during 2001
in negotiated transactions at a price per share of $6.50. The Company funded
these purchases using working capital. Securities Authorized for Issuance Under Equity Compensation Plans The following table provides information as of December 31, 2003 regarding
compensation plans (including individual compensation arrangements) under which
Common Stock of the Company is authorized for issuance. Number of securitiesremaining availablefor futureissuance under equityNumber of Securities to be
    
    
    
    
    
    compensation plansissued upon exercise of
    
    Weighted-average exercise
    
    (excludingoutstanding options,
    
    price of outstanding options,
    
    securities reflectedwarrants and rights
    
    warrants and rights
    
    in column (a))Plan Category
    
    (a)
    
    (b)
    
    (c)Equity Compensation
Plans Approved by
Security Holders
    
    
    449,450
    
    
    $
    3.64
    
    
    
    50,550Equity Compensation
Plans not Approved
by Security Holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    449,450
    
    
    $
    3.64
    
    
    
    50,550
 See footnote 5 Stockholders Equity  Stock Option Plan in the accompanying
consolidated financial statements for additional disclosure on the above equity
compensation plan. 11




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##### Table of Contents



Item 6. Selected Financial Data The following tables set forth certain selected financial data with respect to
the Companys last five fiscal years. The Statement of Operations Data table and the Balance Sheet Data table
relating to the five fiscal years ended December 31, 2003, are derived from the
Consolidated Financial Statements included elsewhere in this Form 10-K or in
previous reports. The Selected Operating Data table data is not derived from
the Consolidated Financial Statements. BDO Seidman, LLP, independent certified
public accountants, audited the financial statements for the years ended
December 31, 2003, 2002 and 2001. Deloitte & Touche LLP audited the financial
statements for the two-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 Item 7  Managements
Discussion and Analysis of Financial Condition and Results of Operations
included elsewhere in this Form 10-K. Year Ended December 31,2003
    
    2002
    
    2001
    
    2000
    
    1999(in thousands, except per share data)Statement of Operations Data:Operating revenues
    
    $
    134,346
    
    
    $
    127,792
    
    
    $
    127,560
    
    
    $
    131,630
    
    
    $
    133,137Operating expenses:Salaries, wages and employee benefits
    
    
    37,366
    
    
    
    36,960
    
    
    
    39,561
    
    
    
    39,263
    
    
    
    35,461Cost of independent contractors
    
    
    44,228
    
    
    
    38,968
    
    
    
    31,779
    
    
    
    35,173
    
    
    
    45,132Operating supplies
    
    
    28,146
    
    
    
    25,966
    
    
    
    30,217
    
    
    
    30,309
    
    
    
    22,934Taxes and licenses
    
    
    2,532
    
    
    
    2,599
    
    
    
    2,241
    
    
    
    2,965
    
    
    
    2,847Insurance and claims
    
    
    6,510
    
    
    
    6,535
    
    
    
    6,458
    
    
    
    7,060
    
    
    
    6,111Communications and utilities
    
    
    1,250
    
    
    
    1,275
    
    
    
    1,371
    
    
    
    1,520
    
    
    
    1,480Depreciation and amortization
    
    
    10,605
    
    
    
    11,605
    
    
    
    12,290
    
    
    
    11,611
    
    
    
    10,720Gain on disposition of property and
equipment, net
    
    
    (479
    )
    
    
    (468
    )
    
    
    (526
    )
    
    
    (1,113
    )
    
    
    (1,627
    )Other
    
    
    2,117
    
    
    
    1,615
    
    
    
    1,950
    
    
    
    2,008
    
    
    
    1,862Total operating expenses
    
    
    132,275
    
    
    
    125,054
    
    
    
    125,340
    
    
    
    128,796
    
    
    
    124,920Operating income
    
    
    2,071
    
    
    
    2,738
    
    
    
    2,219
    
    
    
    2,834
    
    
    
    8,217Interest expense
    
    
    (1,359
    )
    
    
    (1,752
    )
    
    
    (2,684
    )
    
    
    (3,904
    )
    
    
    (2,422
    )Other expense (income)
    
    
    
    
    
    
    (51
    )
    
    
    63
    
    
    
    80
    
    
    
    92Income before provision for (benefit of)
income taxes
    
    
    712
    
    
    
    935
    
    
    
    (402
    )
    
    
    (990
    )
    
    
    5,887Provision for (benefit of) income taxes
    
    
    356
    
    
    
    460
    
    
    
    5
    
    
    
    (15
    )
    
    
    2,430Net income (loss)
    
    $
    356
    
    
    $
    474
    
    
    $
    (407
    )
    
    $
    (975
    )
    
    $
    3,457Basic net income (loss) per share
    
    $
    0.13
    
    
    $
    0.18
    
    
    $
    (0.14
    )
    
    $
    (0.32
    )
    
    $
    0.99Diluted net income (loss) per share
    
    $
    0.12
    
    
    $
    0.17
    
    
    $
    (0.14
    )
    
    $
    (0.32
    )
    
    $
    0.99Cash dividends per common share
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.00
 As of December 31,2003
    
    2002
    
    2001
    
    2000
    
    1999(in thousands)Balance Sheet Data:Working
capital deficit
    
    $
    (4,755
    )
    
    $
    (8,551
    )
    
    $
    (2,089
    )
    
    $
    (1,481
    )
    
    $
    (1,049
    )Net property and equipment
    
    
    52,407
    
    
    
    54,724
    
    
    
    58,513
    
    
    
    66,737
    
    
    
    61,882Total assets
    
    
    79,870
    
    
    
    81,582
    
    
    
    86,084
    
    
    
    95,052
    
    
    
    99,456Long-term debt, less current maturities
    
    
    19,385
    
    
    
    19,136
    
    
    
    25,606
    
    
    
    33,322
    
    
    
    34,689Total liabilities
    
    
    53,782
    
    
    
    55,857
    
    
    
    60,795
    
    
    
    67,870
    
    
    
    69,062Stockholders equity
    
    
    26,088
    
    
    
    25,725
    
    
    
    25,288
    
    
    
    27,182
    
    
    
    30,393
 Selected Operating Data: The following table sets forth certain unaudited operating data regarding the
Company. Year Ended December 31,2003
    
    2002
    
    2001
    
    2000
    
    1999Operating ratio (a)
    
    
    98.5
    %
    
    
    97.9
    %
    
    
    98.3
    %
    
    
    97.8
    %
    
    
    93.8
    %Average length of haul in miles
    
    
    672
    
    
    
    683
    
    
    
    688
    
    
    
    661
    
    
    
    634Average number of truckloads per week
    
    
    2,938
    
    
    
    2,852
    
    
    
    2,872
    
    
    
    3,145
    
    
    
    3,368Average revenues per total mile
    
    $
    1.26
    
    
    $
    1.19
    
    
    $
    1.20
    
    
    $
    1.20
    
    
    $
    1.18Equipment at period end:Tractors
    
    
    927
    
    
    
    955
    
    
    
    972
    
    
    
    1,017
    
    
    
    1,112Trailers
    
    
    1,489
    
    
    
    1,354
    
    
    
    1,395
    
    
    
    1,398
    
    
    
    1,451
 (a) Operating expenses stated as a percentage of operating revenues 12




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##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results
of Operations Executive Summary The Company is one of the largest exclusively flatbed trucking carriers in the
United States. The Company provides flatbed transportation services through
three divisions:  
    
    Boyd Bros.provides longer haul flatbed trucking
services in the contiguous United States and some parts of Canada
primarily for the steel and construction industries.  
    
    WTI Transportprovides shorter haul flatbed trucking
services in the southeastern United States for the steel and
construction industries and for an increasingly diverse customer
base.  
    
    Boyd Logisticsprovides logistical support to the Boyd
and WTI divisions of the Company and brokers freight through the
use of other trucking companies. The Company uses both Company employed drivers and independent owner-operators
who are responsible for maintaining and insuring their own equipment. The
Company has continued to pursue a strategy of reducing the number of Company
employed drivers in favor of independent owner-operators in an effort to reduce
costs. As part of this strategy, the Company maintains an owner-operator lease
program to attract qualified owner-operators. Despite recent problems
encountered with keeping qualified drivers in the lease program, the Company
believes new policies implemented in the fourth quarter of 2003 will eventually
be successful in recruiting and maintaining qualified owner-operators. The Companys greatest cash requirements are recruiting and retaining qualified
drivers, acquiring tractors and trailers, and operating its equipment
(including driver pay, fuel costs, insurance and maintenance). The Companys
financial results are affected by the availability of qualified drivers and the
market for new and used tractors. Because the Company is primarily
self-insured for cargo, personal injury and property damage claims on its
tractors and for workers compensation benefits for its drivers, financial
results may also be affected by driver safety, medical costs, the legal and
regulatory environment and the costs of insurance coverage to protect against
catastrophic losses. 2003 Highlights  Revenue Growth.The Companys operating revenues increased by 5.1%, or
$6.6 million in 2003. The increase in total operating revenues was primarily
due to increased revenues generated by the Companys WTI and Logistics
divisions. WTIs 2003 operating revenues increased by 18.7% over 2002
operating revenues primarily due to diversification of customers outside of the
steel and construction industries. Logistics division revenues increased by
35.1% over 2002 revenues primarily due to increased brokerage of freight to
third-party carriers.  Going Private Transaction.On December 31, 2003, the Company entered
into a merger agreement with BBT Acquisition Corp., a corporation controlled by
members of the Boyd family. Under the terms of the merger, stockholders of the
Company (other than BBT Corp. and members of the Boyd family) will receive
$7.00 per share, in cash, for each outstanding share of Company common stock.
Completion of the merger is subject to certain conditions, including approval
by Company stockholders and completion of financing arrangements necessary to
complete the merger. If the merger is completed, the Companys common stock
will no longer be publicly traded and all of the Companys current credit
arrangements will be refinanced.  Reduction of Long-Term Debt.During 2003, the Company paid $20.2
million towards the reduction of its long-term debt. 2003 Challenges  Fuel Costs.Operating supplies expense for 2003 increased $2.2 million,
or 8.4%, over 2002, primarily due to increased fuel costs. Average fuel prices
for 2003 increased approximately $0.18 per gallon versus 2002 prices. The
Company has been able to partially offset increased fuel prices by recovering
fuel surcharges from customers. Fuel surcharge revenue increased $3.2 million
or 207.3% from $1.5 million in 2002. Competitive conditions in the
transportation industry, as well as poor economic conditions in the steel
industry, have negatively affected the Companys ability to pass through fuel
cost increases to its customers. Additionally, the Company has historically
experienced higher turnover among its owner-operators during periods with high
fuel prices. 13




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##### Table of Contents



 Accident Claims/Cost of Insurance.The Company was involved in five
accidents resulting in fatalities in 2003. One of these accidents also
resulted in personal injury to three individuals. To date, five lawsuits have
been filed against the Company as a result of these fatal accidents. Effective
July 1, 2003, the Company is self-insured for personal injury claims up to
$750,000 per occurrence. Thirty-three percent of the costs above the $750,000
self-insured amount are borne by the Company, and the Company is solely
responsible for claims in excess of the Companys $2 million insurance limits.
If the Company is found to have liability for one or more of these accidents,
the Companys operations and financial conditions could be materially affected.  Increased Costs for Independent Contractors.The Companys total
operating expenses increased $7.2 million, or 5.8%, in 2003. A substantial
portion of the increase in operating expenses resulted from increased costs for
independent contractors. The cost for independent contractors increased $5.3
million, or 13.5%, for 2003 as compared to 2002. Increased costs for
independent contractors in the WTI and Logistics divisions, which rely more
heavily on independent contractors than the Boyd division, generally
corresponded to the increase in revenues in these divisions. Logistics brokers
freight utilizing outside carriers in most cases to haul freight. The costs
associated with paying these outside carriers are shown within the line item
cost of independent contractors. In the Boyd division, however, independent
contractor costs increased even though the total number of independent
owner-operators decreased from 213 to 189 during 2003. Increased independent
contractor costs in the Boyd division were largely the result of increased bad
debt expense and decreased revenues in the Companys lease purchase program for
owner-operators. 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, 2003. This discussion should be read in conjunction with Item 6
 Selected Financial Data, the Consolidated Financial Statements and Notes
thereto included elsewhere herein. 2003 vs. 2002 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
    
    Logistics
    
    WTIYears Ended December 31,2003
    
    2002
    
    2003
    
    2002
    
    2003
    
    2002
    
    2003
    
    2002Operating revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating expensesSalaries, wages, and employee
benefits
    
    
    27.8
    
    
    
    28.9
    
    
    
    33.4
    
    
    
    33.6
    
    
    
    8.2
    
    
    
    8.5
    
    
    
    13.1
    
    
    
    13.4Cost of independent contractors
    
    
    32.9
    
    
    
    30.5
    
    
    
    21.1
    
    
    
    20.3
    
    
    
    82.0
    
    
    
    82.3
    
    
    
    61.7
    
    
    
    61.6Operating supplies
    
    
    20.9
    
    
    
    20.3
    
    
    
    25.5
    
    
    
    23.9
    
    
    
    2.3
    
    
    
    2.3
    
    
    
    9.5
    
    
    
    9.6Operating taxes and licenses
    
    
    1.8
    
    
    
    2.0
    
    
    
    2.2
    
    
    
    2.3
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    1.2
    
    
    
    1.6Insurance and claims
    
    
    4.8
    
    
    
    5.1
    
    
    
    5.5
    
    
    
    5.9
    
    
    
    0.3
    
    
    
    0.0
    
    
    
    3.8
    
    
    
    2.9Communications and utilities
    
    
    0.9
    
    
    
    1.0
    
    
    
    1.0
    
    
    
    1.1
    
    
    
    1.1
    
    
    
    0.7
    
    
    
    0.6
    
    
    
    0.8Depreciation and amortization
    
    
    7.9
    
    
    
    9.1
    
    
    
    9.6
    
    
    
    10.7
    
    
    
    0.3
    
    
    
    0.0
    
    
    
    3.8
    
    
    
    4.3Gain on disposition of property
and equipment, net
    
    
    (0.4
    )
    
    
    (0.3
    )
    
    
    (0.5
    )
    
    
    (0.3
    )
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.2
    
    
    
    (0.9
    )Other
    
    
    1.6
    
    
    
    1.3
    
    
    
    1.0
    
    
    
    0.9
    
    
    
    0.8
    
    
    
    0.4
    
    
    
    4.2
    
    
    
    3.3Total operating expenses
    
    
    98.4
    
    
    
    97.9
    
    
    
    98.8
    
    
    
    98.4
    
    
    
    95.1
    

    
    
    94.2
    
    
    
    98.1
    
    
    
    96.6Operating income
    
    
    1.6
    
    
    
    2.1
    
    
    
    1.2
    
    
    
    1.6
    
    
    
    4.9
    
    
    
    5.7
    
    
    
    1.9
    
    
    
    3.4Interest expense, net
    
    
    (1.0
    )
    
    
    (1.4
    )
    
    
    (1.4
    )
    
    
    (1.7
    )
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.5
    
    
    
    (0.7
    )Income (loss) before income taxes
    
    
    0.6
    
    
    
    0.7
    
    
    
    (0.2
    )
    
    
    (0.1
    )
    
    
    4.9
    
    
    
    5.7
    
    
    
    2.4
    
    
    
    2.7Income taxes
    
    
    0.3
    
    
    
    0.3
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    1.0
    
    
    
    1.1Net income(loss)
    
    
    0.3
    %
    
    
    0.4
    %
    
    
    (0.3
    )%
    
    
    (0.3
    )%
    
    
    4.9
    %
    
    
    5.7
    %
    
    
    1.4
    %
    
    
    1.6
    %
 Company
    
    Boyd
    
    WTIYears Ended December 31,2003
    
    2002
    
    2003
    
    2002
    
    2003
    
    2002Company operated tractors (average)
    
    
    558
    
    
    
    560
    
    
    
    522
    
    
    
    523
    
    
    
    36
    
    
    
    37Owner-operated tractors (average)
    
    
    369
    
    
    
    395
    
    
    
    189
    
    
    
    213
    
    
    
    180
    
    
    
    182Total tractors
    
    
    927
    
    
    
    955
    
    
    
    711
    
    
    
    736
    
    
    
    216
    
    
    
    219Total trailers
    
    
    1,489
    
    
    
    1,354
    
    
    
    1,200
    
    
    
    1,056
    
    
    
    289
    
    
    
    298Average length of haul in miles(1)
    
    
    672
    
    
    
    683
    
    
    
    726
    
    
    
    734
    
    
    
    519
    
    
    
    401Average number of tractor loads
Per week(2)
    
    
    2,938
    
    
    
    2,852
    
    
    
    2,168
    
    
    
    2,188
    
    
    
    769
    
    
    
    664Average revenues per mile(3)
    
    $
    1.26
    
    
    $
    1.19
    
    
    $
    1.26
    
    
    $
    1.20
    
    
    $
    1.24
    
    
    $
    1.17
 14




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##### Table of Contents



(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 for the year by the number
of working weeks in the year.  (3)
    
    The average revenue per mile is calculated by dividing the total line-haul
revenue for the year (excluding logistics
revenue) by the total line-haul miles driven. Operating Revenue The Companys total operating revenues increased $6.6 million or 5.1% to
$134.3 million compared to $127.8 million for 2002. Boyd division revenues
(74.4% of consolidated revenues) increased $0.1 million or less than one
percent from 2002. Boyd division revenues were negatively impacted by
continued economic problems encountered by U.S. steel manufacturers. Boyd was
able to partially offset these revenue losses with higher revenues in the
building materials industry, including wallboard, ceiling tiles and roofing
materials. WTI division revenues (18.5% of consolidated revenues) increased $3.9
million or 18.7% over 2002 due to an increase of approximately $0.5 million in
fuel surcharges combined with increased business, resulting in an increase of
approximately 2.3 million miles driven by WTI in 2003 over 2002. WTI broadened
its customer base and enjoyed more availability of freight during 2003 through
improved lane management, which resulted in better utilization of equipment. Logistics revenue for 2003 increased $2.5 million or 35.1% over 2002 due
to expansion of its customer base and increases in volume of business. The net
increase in consolidated revenues is reflective of increased fuel surcharges,
an increase in revenue resulting from the Companys brokerage of freight to
third-party carriers via Logistics and, to a lesser extent, diversification
outside of the steel and building materials markets. Fuel surcharge revenue increased $3.2 million or 207.3% to $4.7 million in
2003 from $1.5 million in 2002. Fuel prices increased in the fourth quarter of
2002 and increased upwards through the first quarter of 2003. The fuel
surcharge is a function of the cost of fuel that the Company has negotiated
with its customers. These fuel surcharges, which automatically adjust from week
to week depending on the cost of fuel, enable the Company to recoup a portion
of the higher cost of fuel when prices increase. Conversely, when fuel prices
decrease, fuel surcharges decrease. Operating Expenses Total operating expenses increased $7.2 million or 5.8% to $132.3 million
for the year ended December 31, 2003, compared to $125.1 for the year ended
December 31, 2002. The increase in the Companys operating expenses resulted
primarily from increases in net cost of independent contractors, operating
supplies (including fuel), and other expenses, together with a decrease in
depreciation and amortization. Net cost of independent contractors with an
increase of $5.3 million and fuel expense with an increase of $2.3 million,
offset by a decrease of $1.0 million in deprecation and amortization expense,
primarily account for the increase in operating expenses. The Companys
operating ratio (operating expenses stated as a percentage of operating
revenues) increased from 97.9% in 2002 to 98.5% in 2003 due primarily to
increases in net cost of independent contractors and fuel expense. As a
percentage of consolidated revenues, the following operating expense accounts
increased from the prior year: net cost of independent contractors; operating
supplies; and other expenses. Of the total miles driven for 2003, 60% were
driven by Company drivers, compared to 61% during 2002. Increased Costs for Independent Contractors-A substantial portion of the
increase in the Companys total operating expenses for 2003 is due to the
increase in the cost of independent contractors. Owner-operators are
independent contractors that either own their own tractors or lease-purchase
tractors from the Company. Owner-operators are responsible for payment of the
expenses they incur, including fuel, operating supplies, health insurance and
taxes and licenses, while the Company incurs these expenses related to Company
drivers. Consequently, the amount paid per mile (shown as salaries and wages
for Company drivers and within cost of independent contractors for
owner-operators) for owner-operators is greater than that of Company drivers.
Included in cost of independent contractors are costs incurred/earned by the
Company related to the purchase of tractors to be leased to owner-operators and
costs related to the Logistics division, which relies heavily upon independent
contractors. The cost of independent contractors for the Company increased $5.3
million, or 13.5% for 2003 as compared to 2002. As a 15




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##### Table of Contents



percentage of revenue, these costs increased 30.5% in 2002 to 32.9% in 2003.
The following table summarizes the change in operating revenues and independent
contractor expenses from 2002 to 2003: The following table summarizes the change in operating revenues and
independent contractor expenses from 2002 to 2003: Company
    
    Boyd
    
    Logistics
    
    WTIYears Ended December 31,2003
    
    2002
    
    2003
    
    2002
    
    2003
    
    2002
    
    2003
    
    2002Operating revenues
    
    $
    134,345,652
    
    
    $
    127,792,396
    
    
    $
    99,909,480
    
    
    $
    99,761,284
    
    
    $
    9,570,777
    
    
    $
    7,086,596
    
    
    $
    24,865,395
    
    
    $
    20,944,516Independent Contractor Expenses
    
    
    44,228,370
    
    
    
    38,967,610
    
    
    
    21,034,060
    
    
    
    20,229,527
    
    
    
    7,852,261
    
    
    
    5,833,365
    
    
    
    15,342,049
    
    
    
    12,904,718
 Increased independent contractor expenses for the Boyd division primarily
resulted from increased costs and decreased revenues in the owner-operator
lease purchase program. Increased independent contractor expenses in the
Logistics and WTI divisions are the direct result of the increase in loads in
these divisions during 2003. The Boyd division accounted for $0.8 million of
the net increase in cost of independent contractors. This net increase resulted
from a decrease of $1.1 million in total owner-operator pay and a net increase
of $1.9 million in the costs associated with the lease purchase program. The
reduction in owner-operator pay was due to a decrease of approximately 1.6
million miles driven by owner-operators during 2003 compared to 2002. Of the
total increase in costs associated with the lease purchase program, $0.4
million resulted from an increase in bad debt expense related to owner-operator
leases, $1.4 million resulted from a decrease in gains on operator leases and
$0.1 million resulted from a decrease in interest income. As an enticement for drivers to enter into and remain in leases, the Boyd
division began decreasing monthly lease payments on new lease agreements
entered into by owner-operators beginning in September 2002. Payments were
reduced by $25 to $30 per month until December 2002, at which time payments
were further reduced by another $15 to $30 per month. In June 2003 payments
were again reduced by an average of $40 month as the average age of the
tractors in the fleet increased. Additionally, during the fourth quarter of
2003, the Boyd division increased the amount reserved for bad debt on each
lease receivable related to the lease purchase program due to the uncertainty
of owner-operator retention resulting from uncertainty of fuel prices and
insurance costs. The average number of owner-operators at the Boyd division
decreased from 213 in 2002 to 189 in 2003, thus causing a decrease in the usage
and costs of independent contractors. The Boyd division implemented a policy in
the fourth quarter of 2003 by which all new drivers hired were required to have
either one-year of experience as an owner-operator or enter a minimum four-week
program as a Company driver prior to becoming an owner-operator. This new
policy, combined with the negative impact of winter seasonality, significantly
decreased the number of owner-operators entering into the lease purchase
program in the fourth quarter of 2003. The Logistics division accounted for $2.0 million of the increase in cost
of independent contractors. The most significant costs associated with the
Logistics division are included in this account. These costs also include
expenses related to payment of the outside carriers contracted to haul certain
brokered loads. The 34.6% increase in Logistics cost of independent
contractors for 2003 is consistent with its 35.1% increase in revenues. The WTI
division accounted for $2.4 million or 18.9% of the increase in cost of
independent contractors. The increase of costs contributed by WTI was a direct
result of WTIs increase of 1.9 million owner-operator miles driven in 2003
over 2002 and is consistent with WTIs 18.7% increase in revenues in 2003.
WTIs increase in miles was made possible through improved lane management,
which resulted in better utilization of equipment. Increased Fuel ExpensesOperating supplies expense for 2003 increased
$2.2 million, or 8.4%, to $28.1 million compared with $26.0 million for 2002.
The increase in operating supplies is primarily due to the increase in fuel
costs. This increase was a result of the continued tensions in the Middle East,
as well as reduced fuel supplies from Venezuela during the first half of 2003. Fuel prices began rising in the fourth quarter of 2002 and continued to
rise during the first quarter of 2003. Average fuel prices began declining
slightly during March of 2003. However, prices remained higher for the
remainder of 2003 compared to 2002. Average fuel prices for 2003 increased
approximately $0.18 per gallon versus 2002 prices. The significant portion of
the increase, $2.1 million was recognized by the Boyd division because the Boyd
division has a larger percentage of Company drivers. 16




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##### Table of Contents



Taxes and Licenses ExpenseTaxes and licenses expense for 2003 decreased
$0.1 million, or 2.6%, to $2.5 million compared to $2.6 million in 2002. The
amounts due for taxes and licensing are based on the value of the associated
property. The lower costs were a result of a smaller overall fleet size. Insurance and Claims Expense Insurance and claims expense for 2003
decreased by approximately $25,000 in 2003 over 2002. The decrease was due
primarily to a decrease in the number of total accidents in 2003 compared to
2002, lower premium rates due to increased self-insured amounts and an actively
managed safety and loss prevention program. Communications and Utilities ExpenseCommunications and utilities expense
for 2003 decreased approximately $25,000 in 2003 over 2002. The decrease was
primarily due to a decrease in fees the Company incurs for use of satellite
units on equipment. The decrease in fees was due to an overall decrease in
fleet size. Depreciation, Amortization and Other ExpensesDepreciation and
amortization expense for 2003 decreased $1.0 million, or 8.6%, to $10.6 million
from $11.6 million in 2002. The decrease in depreciation and amortization was
primarily associated with the Boyd division and was due to the increase in the
average age of revenue equipment in the fleet and the decrease in the number of
tractors and trailers in the total fleet. Additionally, the Boyd division
reviewed the salvage values of all tractors in its fleet based on current
market values and trade-in values and, as a result, increased the salvage
values on certain tractors, resulting in a decrease of approximately $0.4
million in depreciation expense in 2003. Other expenses for 2003 increased approximately $0.5 million, or 31.1%, to
$2.1 million in 2003 from $1.6 million in 2002. Other expenses include, but
are not limited to, consulting fees, legal fees, advertising costs, bank
charges, rent and customer bad debts. Legal and audit fees increased
approximately $80,000 and bad debt expense increased approximately $150,000 due
primarily to write-offs for bankrupt customers. Advertising costs to recruit
new drivers increased by approximately $42,000. Costs associated with the
recovery of abandoned equipment increased approximately $40,000. The costs
associated with the lease of airplane flight time and associated aircraft fuel
increased by approximately $100,000 due to flight time in excess of contracted
amounts and increased fuel costs. The airplane is leased through a related
party as discussed in Item 13-Certain Relationships and Related Transactions. Interest expense (net of interest income) decreased $0.4 million, or
24.7%, to $1.4 million from $1.8 million in 2002. Interest expense decreased
due to a 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 by
$2.6 million, which contributed to the reduction in interest expense. The effective tax rates for 2003 and 2002 are different from the U.S.
federal statutory rate due to state income taxes and the permanent
non-deductibility of certain expenses for tax purposes. See Note 6 to the
consolidated financial statements for further discussion of income tax items. As a result of the foregoing, the Companys net income in 2003 decreased
approximately $0.1 million, to $0.4 million compared to $0.5 million in 2002. 17




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##### Table of Contents



2002 vs. 2001 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
    
    Logistics
    
    WTIYears Ended December 31,2002
    
    2001
    
    2002
    
    2001
    
    2002
    
    2001
    
    2002
    
    2001Operating revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating expensesSalaries, wages, and employee
benefits
    
    
    28.9
    
    
    
    31.0
    
    
    
    33.6
    
    
    
    34.9
    
    
    
    8.5
    
    
    
    9.7
    
    
    
    13.4
    
    
    
    14.0Cost of independent contractors
    
    
    30.5
    
    
    
    24.9
    
    
    
    20.3
    
    
    
    15.5
    
    
    
    82.3
    
    
    
    84.6
    
    
    
    61.6
    
    
    
    64.1Operating supplies
    
    
    20.3
    
    
    
    23.7
    
    
    
    23.9
    
    
    
    26.8
    
    
    
    2.3
    
    
    
    3.3
    
    
    
    9.6
    
    
    
    11.1Operating taxes and licenses
    
    
    2.0
    
    
    
    1.8
    
    
    
    2.3
    
    
    
    1.9
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    1.6
    
    
    
    1.2Insurance and claims
    
    
    5.1
    
    
    
    5.1
    
    
    
    5.9
    
    
    
    5.3
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    2.9
    
    
    
    5.0Communications and utilities
    
    
    1.0
    
    
    
    1.1
    
    
    
    1.1
    
    
    
    1.1
    
    
    
    0.7
    
    
    
    0.5
    
    
    
    0.8
    
    
    
    1.1Depreciation and amortization
    
    
    9.1
    
    
    
    9.6
    
    
    
    10.7
    
    
    
    10.6
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    4.3
    
    
    
    6.6Gain on disposition of property
And equipment, net
    
    
    (0.3
    )
    
    
    (0.4
    )
    
    
    (0.3
    )
    
    
    (0.5
    )
    
    
    0.0
    
    
    
    0.0
    
    
    
    (0.9
    )
    
    
    0.0Other
    
    
    1.3
    
    
    
    1.5
    
    
    
    0.9
    
    
    
    1.3
    
    
    
    0.4
    
    
    
    1.1
    
    
    
    3.3
    
    
    
    2.7Total operating expenses
    
    
    97.9
    
    
    
    98.3
    
    
    
    98.4
    
    
    
    96.9
    
    
    
    94.2
    
    
    
    99.2
    
    
    
    96.6
    
    
    
    105.8Operating
(loss) income
    
    
    2.1
    
    
    
    1.7
    
    
    
    1.6
    
    
    
    3.1
    
    
    
    5.7
    
    
    
    0.8
    
    
    

    3.4
    
    
    
    (5.8
    )Interest expense, net
    
    
    (1.4
    )
    
    
    (2.0
    )
    
    
    (1.7
    )
    
    
    (2.4
    )
    
    
    0.0
    
    
    
    (0.3
    )
    
    
    (0.7
    )
    
    
    (1.0
    )Other Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Loss) income before income taxes
    
    
    0.7
    
    
    
    (0.3
    )
    
    
    (0.1
    )
    
    
    0.7
    
    
    
    5.7
    
    
    
    0.5
    
    
    
    2.7
    
    
    
    (6.8
    )Income taxes
    
    
    0.3
    
    
    
    (0.0
    )
    
    
    0.2
    
    
    
    0.4
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    1.1
    
    
    
    (2.1
    )Net (loss) income
    
    
    0.4
    %
    
    
    (0.3
    )%
    
    
    (0.3
    )%
    
    
    0.3
    %
    
    
    5.7
    %
    
    
    0.5
    %
    
    
    1.6
    %
    
    
    (4.7
    )%
 Company
    
    Boyd
    
    WTIYears Ended December 31,2002
    
    2001
    
    2002
    
    2001
    
    2002
    
    2001Company operated tractors (average)
    
    
    560
    
    
    
    610
    
    
    
    523
    
    
    
    570
    
    
    
    37
    
    
    
    40Owner-operated tractors (average)
    
    
    395
    
    
    
    362
    
    
    
    213
    
    
    
    190
    
    
    
    182
    
    
    
    172Total tractors
    
    
    955
    
    
    
    972
    
    
    
    736
    
    
    
    760
    
    
    
    219
    
    
    
    212Total trailers
    
    
    1,354
    
    
    
    1,395
    
    
    
    1,056
    
    
    
    1,099
    
    
    
    298
    
    
    
    296Average length of haul in miles(1)
    
    
    683
    
    
    
    688
    
    
    
    734
    
    
    
    749
    
    
    
    401
    
    
    
    380Average number of tractor loads
Per week(2)
    
    
    2,852
    
    
    
    2,872
    
    
    
    2,188
    
    
    
    2,290
    
    
    
    664
    
    
    
    672Average revenues per mile(3)
    
    $
    1.19
    
    
    $
    1.20
    
    
    $
    1.20
    
    
    $
    1.17
    
    
    $
    1.17
    
    
    $
    1.17
  (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 for the year by the number
of working weeks in the year.  (3)
    
    The average revenue per mile is calculated by dividing the total line-haul
revenue for the year (excluding logistics
revenue) by the total line-haul miles driven. Operating Revenues The Companys total operating revenues increased $0.2 million or 0.2% to
$127.8 million compared to $127.6 million for 2001. Boyd division revenues
(83.6% of consolidated revenues) decreased $1.1 million or 1% from 2001 while
WTI division revenues (16.4% of consolidated revenues) increased $1.4 million
or 6.9% over 2001. Fuel surcharge revenue decreased $2.2 million or 58.5% from
$3.7 million in 2001 to $1.5 million in 2002. Fuel prices decreased in the
fourth quarter of 2001 and did not increase upwards until the latter part of
2002. As a flatbed carrier, a significant portion of the Companys business
relates to the steel industry, which has been in a virtual recession for more
than two years, and the building products industry, which has remained flat due
to the downturn in commercial construction offset by the ongoing resiliency of
the residential housing market. Given these market conditions, the Company has
had less success over the past two years passing through fuel cost increases.
The net increase in consolidated revenues is reflective of diversification
outside of the steel and building materials industries 18




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##### Table of Contents



and also is reflective of an increase in revenue resulting from the Companys
brokerage of freight to third-party carriers via its logistics department.
Excluding revenue from Boyds logistics department, Boyd division revenues
decreased $4.4 million or 4.2% from 2001. Logistics revenue for 2002 increased
$3.2 million or 84.5% over 2001. Operating Expenses Total operating expenses decreased $0.3 million or 0.2% to $125.0 million
for the year ended December 31, 2002, compared to $125.3 million for the year
ended December 31, 2001. The Companys operating ratio (operating expenses
stated as a percentage of operating revenues) improved from 98.3% in 2001 to
97.9% in 2002 due to better margins provided by logistics revenue. As a
percentage of consolidated revenues, the following operating expense accounts
decreased from the prior year: salaries, wages and employee benefits;
operating supplies; depreciation and amortization; and other expenses.
Expenses related to Company drivers and the equipment they use are primarily
reflected in these accounts. These expenses decreased primarily due to the
shift in the utilization of the Company fleet. Of the total miles driven for
2002, 61% were driven by Company drivers, compared to 68% during 2001. Salaries, Wages and Employee BenefitsSalaries, wages and employee
benefits for 2002 decreased $2.6 million, or 6.6%, to $37.0 million compared to
$39.6 million in 2001. This decrease is directly related to the shift in fleet
utilization of Company drivers versus owner-operators as mentioned above.
Company drivers are paid on a per mile basis, and they accounted for 7.7
million fewer miles in 2002. 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 occurs and
increases in driver pay rates become necessary to attract and retain drivers,
the Companys results of operations would be negatively impacted to the extent
that corresponding freight increases are not obtained. Cost of Independent ContractorsCost of independent contractors
(owner-operators) for 2002 increased $7.2 million, or 22.6%, to $39.0 million
from $31.8 million in 2001. Of the 101 million total miles driven for the year
ended December 31, 2002, 39% were driven by owner-operators, compared to 32% in
2001. Owner-operators accounted for 6.2 million more miles in 2002 than in
2001, an increase of 18.8%. Gains on sales-type leases to owner-operators, net
of reserves, and interest income on the leases amounted to $1.9 million in 2002
compared to $0.5 million in 2001. The increase was due to the increased number
of owner-operators in the lease program in 2002 compared to 2001. As of
December 31, 2002, the Boyd division had an owner-operator fleet of 213
operators compared to 190 operators as of December 31, 2001, a 12% increase.
WTI had 182 owner-operators as of December 31, 2002 compared to 172 operators
in 2001, a 5.9% increase. Operating Supplies ExpenseOperating supplies expense for 2002 decreased
$4.2 million, or 14.1%, to $26.0 million compared with $30.2 million for 2001.
The decrease in operating supplies, which includes fuel costs, is partly due to
the increase in owner-operator utilization. Fuel costs decreased $3.1 million
or 17.1% from $18.3 million in 2001 to $15.2 million in 2002, despite a 30%
increase in cost, from less than $1.20 per gallon at the beginning of 2002 to
$1.50 per gallon by the end of 2002. The decrease in operating supplies is
also attributable to younger tractors in the Company-owned fleet, which require
fewer repairs and replacements of auxiliary equipment (e.g. tarps, chains,
etc.). Taxes and Licenses ExpenseTaxes and licenses expense for 2002 increased
$0.4 million, or 16.0%, to $2.6 million compared to $2.2 million in 2001. The
amounts due for taxes and licensing are based on the value of the associated
property. The higher values of newer equipment resulted in higher taxes,
permits, and licenses. Communications and Utilities ExpenseCommunications and utilities expense
for 2002 decreased $0.1 million, or 7.0%, to $1.3 million from $1.4 million in
2001. 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. The Company also
continually monitors monthly usage and costs, making changes accordingly. 19




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##### Table of Contents



Depreciation, Amortization and Other ExpensesDepreciation and
amortization expense for 2002 decreased $0.7 million, or 5.6%, to $11.6 million
from $12.3 million in 2001. The decrease in depreciation and amortization was
primarily associated with the Boyd division, which during 2002 has converted
certain depreciable Company tractors to non-depreciable, owner-operated
tractors subject to lease-purchase arrangements, thereby contributing to the
increase in cost of independent contractors. Effective January 1, 2002, the
Company discontinued amortization of goodwill at its WTI division in accordance
with SFAS No.142. Goodwill amortization expense was $223,800 in 2001 and,
primarily because of this change, the WTI division recognized approximately
$377,000 less expense during 2002 as compared to 2001. Gain on disposition of property and equipment decreased $0.1 million or
10.9%, to $0.4 million from $0.5 million. The trade values of tractors were
depressed during 2002. 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. See
Factors that May Affect Future Results  Revenue Equipment. Other expenses for 2002 decreased approximately $0.3 million, or 17.2%, to
$1.6 million in 2002 from $1.9 million in 2001. Other expenses include, but
are not limited to, consulting fees, legal fees, advertising costs, bank
charges, rent and bad debts. During 2001, the Boyd division recognized an
additional charge of approximately $0.4 million in bad debts due to certain of
its customers filing for bankruptcy. Such events were not prevalent during
2002. Interest expense (net of interest income) decreased $0.8 million, or
31.2%, to $1.8 million from $2.6 million in 2001. Interest expense decreased
due to a 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 by
$5.6 million, which contributed to the reduction in interest expense. The effective tax rates for 2002 and 2001 are different from the U.S.
federal statutory rate due to the permanent non-deductibility of certain
expenses for tax purposes, including goodwill amortization in 2001. See Note 6
to the consolidated financial statements for further discussion of income tax
items. As a result of the foregoing, the Companys net income in 2002 increased
approximately $0.9 million, to $0.5 million compared to a $0.4 million net loss
in 2001. Off-Balance Sheet Arrangements As of December 31, 2003, the Company had no off-balance sheet
arrangements. 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, bank borrowings and,
in the last two years, dealer financings. The following table summarizes cash
flows for the periods indicated: 2003
    
    2002
    
    2001Operating activities
    
    $
    10,366,391
    
    
    $
    12,264,939
    
    
    $
    13,418,514Investing activities
    
    
    (6,036,404
    )
    
    
    (3,913,078
    )
    
    
    1,969,285Financing activities
    
    
    (4,339,027
    )
    
    
    (10,280,802
    )
    
    
    (14,439,625
    )
 Cash flows from operating activitiesCash flow from operations decreased
by $1.9 million, or 15.5%, from 2002 to 2003, and decreased by $1.2 million, or
8.6% from 2001 to 2002. Net income (loss) adjusted to net cash
provided by operating activities generated cash of $10.6 million, $7.3 million,
and $11.5 million for 2003, 2002 and 2001, respectively. Reconciling items
include depreciation and amortization, provisions for bad debt losses, gains on
disposals of property and equipment, income related to owner-operator
sales-type leases, and deferred income taxes. Working capital items used cash
of $0.2 million in 2003 and provided cash of $5.0 million and $1.9 million in
2002 and 2001, respectively. The cash flow from operations enabled the Company
to repay current maturities of debt and make capital expenditures as discussed
below. 20




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The increase in net income (loss) reconciled to net cash provided by
operating activities from 2002 to 2003 of $3.3 million, or 46.9%, was due to
decreased income related to owner-operators ($1.7 million), a decrease in
deferred tax benefits of $2.7 million, higher bad debt provision in 2003 as
compared to 2002, and lower depreciation expense ($1.0 million). Income from
owner-operators was lower in 2003 due to a 6.6% decrease in the number of
drivers compared to 2002 and a decrease in the amount of gain recognized on
lease purchase sales to owner-operators. The decrease in recognized deferred
tax benefits was primarily a result of stabilized insurance claims accruals in
2003 compared to 2002. Bad debt provisions increased from $79,000 in 2002 to
$184,000 in 2003 as the Company had slightly more exposure to customer
bankruptcies in 2003. Depreciation expense decreased due to a 2.9% decrease in
the company fleet combined with an older average fleet age and increases in
salvage values on some equipment. Decreased levels of accident claims and other accrued liabilities used
approximately $0.8 million of cash. A $0.6 million increase in self-insurance
claims and multiple accidents involving Company drivers in 2003 was offset by a
decrease in income taxes payable of $1.4 million due to federal and state tax
payments made in 2003. A $0.6 million increase in accounts receivable,
attributable to a 9.2% increase in revenues in the fourth quarter of 2003
compared to the same period in 2002, also used cash. These were offset by an
increase in accounts payable of $1.0 million, due primarily to increased
brokerage transportation costs incurred by the Logistics division and, to a
lesser extent, lengthened payment terms. The decrease in net income (loss) reconciled to net cash provided by
operating activities from 2001 to 2002 of $4.2 million, or 36.7%, was due to
increased income related to owner-operators ($1.9 million), lower deferred tax
liabilities ($2.6 million) and lower bad debt provision in 2002 as compared to
2001, offset somewhat by a $0.9 million increase in net income. Income from
owner-operators was higher in 2002 due to a 9.1% increase in the number of
drivers compared to 2001. Deferred tax liabilities decreased due primarily to
increased insurance claims which are not deductible for tax purposes until
paid, and higher gains recognized on disposals of property and equipment for
tax purposes compared to financial reporting purposes. Bad debt provisions
decreased from $625,000 in 2001 to $79,000 in 2002 as the Company had less
exposure to customer bankruptcies in 2002. The increase in cash provided by working capital items from 2001 to 2002
of $3.1 million, or 158.6%, was due to increased accident claims accruals and
other accrued liabilities of $3.5 million and a decrease in accounts receivable
of $1.3 million, offset by a decrease in accounts payable of $1.0 million. The
increase in accident claims and other accrued liabilities was attributable to
an increase in self-insurance claims and multiple accidents involving Company
drivers in 2002. The Company became self-insured for workers compensation as
of July 1, 2001 and, thus, during 2001 the Company was self-insured for only
six months versus the entire year for 2002. Rising medical and insurance costs
have increased the amounts necessary for accrual. Included in these accruals
are amounts estimated by management that are necessary to account for the
Companys exposure to claims incurred in 2002. The decrease in accounts
receivable is attributable to improved collection efforts as well as reduced
Company exposure to customer bankruptcies in 2002 as compared to 2001. These
bankruptcies were occurring primarily in the steel industry. Cash flows from 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,
including dealer-financed purchases of revenue equipment in the past three
years. Historically, the Company financed its major capital equipment purchases
consisting primarily of revenue equipment and, to a lesser extent, construction
of terminals, through bank financings. In 2003, the Company invested $11.8 million for revenue equipment and
other property and equipment. The Company financed less with dealers in 2003
than in 2002, thus proceeds from disposals increased as the Company sold more
of its used trucks rather than trading-in with dealers. Dealer financed
purchases in 2003 amounted to $1.7 million compared to $4.5 million in 2002.
Dealer financings were lower in 2003 as the Company was able to secure better
financing terms with financial institutions. Sales-type lease proceeds from
owner-operators amounted to $3.7 million in 2003, compared to $3.6 million in
2002. 21




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##### Table of Contents



In 2002, the Company invested $8.0 million in cash for revenue equipment
and other property and equipment. As the Company began financing with dealers
in 2001, the proceeds from disposals began decreasing as the Company began
trading in more tractors to the dealers rather than selling them for cash.
Dealer financed purchases in 2002 amounted to $4.5 million. Also, as the
number of owner-operators increased in 2002, the payments received on
sales-type leases increased. During 2002, the Companys fleet was 39%
owner-operators compared to 32% in 2001. Thus, owner-operators payments to the
Company increased from $2.3 million in 2001 to $3.6 million in 2002. During 2001, the Company acquired $5.5 million in revenue equipment
financed through the manufacturers financing company rather than the Company
securing the financing through one of its existing lenders. There were no such
dealer financings in 2000. All other equipment purchases consisting of service
vehicles, computer and office equipment are purchased through cash flow from
operations. The amount of revenue equipment purchased decreased in 2001
compared to 2000 due to the Company increasing the length of its trade cycle
from 42 months to 45 months. Cash flows from financing activitiesDuring 2003, the Company paid $20.2
million towards the reduction of its long-term debt. At December 31, 2003, the
Company had debt (including current maturities) of $29.9 million. New debt of
$17.6 million was incurred primarily to purchase revenue equipment and support
working capital requirements. Approximately $1.7 million of revenue equipment
was acquired through dealer financing rather than securing additional financing
through existing lenders. These financing activities supported the Companys
investing activities. During 2002, the Company paid $15.4 million towards the reduction of its
long-term debt. At December 31, 2002, the Company had debt (including current
maturities) of $33.6 million. New debt was primarily incurred to purchase
revenue equipment. Revenue equipment was also acquired through dealer
financing rather than securing additional financing through existing lenders.
These financing activities supported the Companys investing 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
maturities) of $39.2 million, which was primarily incurred to purchase revenue
equipment and to construct the terminal located in Birmingham, Alabama. The
Company purchased in negotiated transactions 223,239 and 126,000 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. Pursuant to the Companys stock repurchase program, the Company purchased
6,500, and 244,463 shares of the Companys common stock in open market or
negotiated transactions during 2002 and 2001, respectively, for aggregate
purchase prices of $42,250 and $1,521,056, respectively. No shares were
repurchased in 2003. The timing and amount of such repurchases depends on the
market and other factors. The Companys board of directors has authorized the
repurchase of up to 600,000 shares, excluding 822,739 shares related to various
executives. As of December 31, 2003, the Company had purchased 561,405 shares
pursuant to this authorization and had 38,595 shares remaining available for
repurchase. Anticipated Sources and Uses of Funds The Companys bank debt relates largely to its revenue equipment, although
a portion was incurred for the construction of the terminal in Birmingham,
Alabama. The construction loan was converted to a term loan in January 2001.
The Companys bank debt bears interest ranging from LIBOR plus 1.25% to LIBOR
plus 2.85%, all payable in monthly installments and with maturities through
July 2009. The bank debt is collateralized by revenue equipment and the real
property related to the Birmingham terminal. The Company has dealer-financed
debt collateralized by revenue equipment with fixed rates ranging from 5.0% to
5.75%. The Company also has a line of credit totaling $2.5 million, bearing
interest at the banks prime rate (4.0% at December 31, 2003) minus 0.25%.
Accounts receivable and other working capital assets collateralize the line of
credit. As of December 31, 2003, the Company had outstanding borrowings of $1.1
million and availability of $1.4 million at year-end. The Company anticipates generating sufficient cash from operations in 2004
to cover planned capital expenditures and servicing current maturities of
long-term debt. The Company anticipates purchasing 100 new tractors and
trading or selling 100 used tractors in 2004 at a net cost of approximately
$6.0 million. Historically, the Company has relied on cash generated from
operations to fund its working capital requirements. Over the long term, the
Company will continue to have significant capital needs that may require it to
seek additional borrowings or equity capital. 22




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The Companys loan agreements with its major lenders require the Company,
among other things, to maintain a tangible net worth, as defined in the
agreements, and to maintain certain financial ratios. In January and February
2004, the Company received two waivers executed by two of its lenders due to
non-compliance for exceeding annual capital expenditure limits and its cash
flow ratio. Management anticipates the Company will be in compliance with this
covenant in 2004. While management believes that the Companys relationships
with its lenders are good, there is no assurance that the Company will be able
to comply with its covenants in the future. If the Company is unable to comply
with its covenants in the future, there can be no assurance that the Companys
lenders will provide additional waivers with respect to any such noncompliance. The following tables set forth information regarding the Companys
contractual obligations and commercial commitments in thousands of dollars.
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(in thousands) Years
    
    FootnoteTotal
    
    >1
    
    1-3
    
    3-5
    
    >5
    
    Ref.Long-term debt obligations
    
    $
    29,884
    
    
    $
    10,499
    
    
    $
    11,158
    
    
    $
    7,919
    
    
    $
    308
    
    
    
    3Letters of
credit
    
    
    6,300
    
    
    
    6,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Employment
agreement obligations
    
    
    175,000
    
    
    
    175,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    28
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Total
    
    $
    211,212
    
    
    $
    191,827
    
    
    $
    11,158
    
    
    $
    7,919
    
    
    $
    308
 The Company has decreased its operating lease commitments through
increased Company-owned facilities and revenue equipment. Primarily all of the
Companys operating lease commitments in effect at December 31, 2003 are on a
month-to-month basis. The Company had no contractual purchase obligations at
December 31, 2003. As of December 31, 2003, the Company had outstanding borrowings of $1.1
million against its $2.5 million line of credit. Additionally, the Company had
letters of credit of $6.3 million as of December 31, 2003, primarily required
by insurance providers. With the Companys financial performance, the Company
expects it could obtain additional financing, if necessary, with favorable
terms. The Company entered into a consulting agreement with its Chairman
Emeritus, Dempsey Boyd, effective January 1, 2002 through December 31, 2003.
Mr. Boyd was paid $145,000 in 2003 under this consulting agreement. Completion of the proposed merger between the Company and BBT Acquisition
Corporation is conditioned upon, among other things, the availability of
sufficient funds for BBT Acquisition Corporation to acquire the outstanding
shares of common stock of the Company. BBT Acquisition Corporation anticipates
that the merger would be funded from a bank financing in the form of (i) an
approximately $13 million revolving line of credit, and (ii) a $40 million term
loan. The merger financing would include a refinancing of all of the Companys
outstanding debt as described above. The Company and BBT Acquisition
Corporation are currently involved in the negotiation of a definitive
commitment to finance the merger. Factors that May Affect Future Results The Companys future results may be affected by certain material trends
and uncertainties over which the Company has little or no control. Fuel prices,
insurance and claims costs, liability claims, interest rates, the availability
of qualified drivers, fluctuations in the resale value of revenue equipment,
economic and customer business cycles, and shipping demands are economic
factors over which the Company has little or no control. The following trends
and uncertainties, among other things, should be considered in evaluating the
Companys growth outlook: Fuel Price TrendMany of the Companys operating expenses, including fuel
costs and fuel taxes, are sensitive to the effects of inflation, which could
result in higher operating costs. During 2003, 2002, and 2001, the Company
experienced fluctuations in fuel costs as a result of conditions in the
petroleum industry. The Company also has periodically experienced some wage
increases for drivers. Increases in fuel costs and driver compensation are
expected to continue during 2004 and may affect operating income, unless the
Company is able to pass those increased costs to customers through rate
increases and fuel surcharges. The Company has initiated a program to obtain rate increases and fuel
surcharges from customers in order to cover increased costs due to these
increases in fuel prices, driver compensation, and other expenses and has been
successful in implementing some fuel surcharges and certain rate increases.
Competitive conditions in the transportation industry, including lower demand
for transportation services, could limit the Companys ability to 23




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obtain rate increases or fuel surcharges in the future. As of December 31,
2003, the Company had no derivative financial instruments to reduce its
exposure to fuel price fluctuations. The motor carrier industry depends upon the availability of diesel fuel.
Fuel shortages or increases in fuel taxes or fuel costs have adversely
affected, and may in the future adversely affect, the financial condition and
results of operations of the Company. Fuel prices have fluctuated greatly, and
fuel taxes have generally increased in recent years. The tensions in the Middle
East, as well as reduced fuel supplies from Venezuela, have caused an increase
in oil and fuel prices during 2003. The Company has not experienced difficulty
in maintaining necessary fuel supplies and, in the past, the Company generally
has been able to partially offset significant increases in fuel costs and fuel
taxes through increased freight rates and through a fuel surcharge which
increases incrementally as the price of fuel increases. However, there can be
no assurance that the Company will be able to recover any future increases in
fuel costs and fuel taxes through increased rates. Insurance and Accident ClaimsThe Companys future insurance and claims
expenses could exceed historical levels, which could have a material adverse
effect on earnings. The Company currently self-insures for a portion of the
claims exposure resulting from cargo loss, personal injury, and property
damage, combined up to $750,000 per occurrence, effective July 1, 2003. In
addition, costs above the $750,000 self-insured amount, up to the Companys
coverage amount of two million dollars, will be shared by the Company at a rate
of thirty-three percent. Costs and claims in excess of the Companys coverage
amount of two million dollars will be borne solely by the Company. Also,
effective July 1, 2002, the workers compensation self-insurance level
increased to a maximum of $500,000, and the health insurance self-insurance
level is $175,000 per person per year. If the number or dollar amount of
claims for which the Company is self-insured increases, operating results could
be adversely affected. The Company was involved in an accident in the first quarter of 2002 that
resulted in a third party fatality. The Company was also involved in five
accidents resulting in fatalities during 2003, one of which involved personal
injury to three individuals. During the first quarter of 2002, the self-insured
amount for cargo loss personal injury, and property damage, combined was
$500,000 per occurrence, which would be the amount applicable to the accident
during the first quarter of 2002. The self-insured amount for the two accidents
in the first half of 2003 was $750,000, with the Company also responsible for
its shared amount of 50% of any amounts between $750,000 and the $2 million
insurance coverage and all amounts in excess of the insured amount. The company
was involved in three accidents involving fatalities during the third quarter
of 2003. The self-insured amount relating to these accidents is $750,000, with
the Company also responsible for its shared amount of 33% of any amounts in
excess of $750,000 up to $2 million insurance coverage and all amounts in
excess of the insured amount. Each of these accidents, taken separately, has the potential to cause the
Company to reach its total per occurrence retention amount for insurance
purposes. To date, five lawsuits have been filed against the Company with
respect to the fatalities arising from these accidents. If the Company is
ultimately found to have some liability for one or more of these accidents, the
Company would seek to pay or structure payments of the amount due from its
operating cash flows and, if needed, additional bank financing. Although the
Company does not expect this to occur, it is possible that liability resulting
from these accidents could exceed the Companys operating cash flows and
available financing. Therefore, there can be no assurance that the Companys
operations and financial condition would not be materially affected if the
Company were found to have liability for one or more of these accidents. If
insurance expenses continue to increase, and the Company is unable to offset
the increase with higher freight rates, the Companys operations and financial
condition could be adversely affected. Revenue Equipment The Companys growth has been made possible through the addition of new
revenue equipment. Difficulty in financing or obtaining new revenue equipment
(for example, delivery delays from manufacturers or the unavailability of
independent contractors) could have an adverse effect on the Companys
operations and financial condition. 24




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In the past the Company has acquired new tractors and trailers at
favorable prices and has entered into agreements with the manufacturers to
repurchase the tractors from the Company at agreed prices. Current
developments in the secondary tractor and trailer resale market have resulted
in a large supply of used tractors and trailers on the market. This has
depressed the market value of used equipment to levels significantly below the
prices at which the manufacturers have agreed to repurchase the equipment.
Accordingly, some manufacturers may refuse or be financially unable to keep
their commitments to repurchase equipment according to their repurchase
agreement terms. Critical Accounting Policies The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. The most significant accounting policies
and estimates that affect our financial statements include the following: Useful Life and Salvage ValuesWe review the selections of estimated
useful lives and salvage values for purposes of depreciating tractors and
trailers. Depreciable lives of tractors and trailers range from 3 to 7 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. On average, the
salvage value of equipment is 25% of cost. The accuracy of these estimates
affects the amount of depreciation expense recognized in a period and,
ultimately, the gains or losses on the disposal of the asset. We have
recognized net gains on disposal of property and equipment of $478,988,
$468,321 and $525,808 for the years ended December 31, 2003, 2002, and 2001,
respectively. However, such amounts may differ materially in the future based
on accident frequency, regulatory requirements, and other factors beyond our
control. Certain revenue equipment has a guaranteed residual value from the
vendor, which will be redeemable by the Company upon trade-in. Accrued Liabilities for Insurance and Liability ClaimsWe review the
estimates of accrued liabilities for insurance and claims for liability and
both physical and property damage and workers compensation. The measurement of
these costs requires the consideration of historical loss experienced and
judgments about the present and expected levels of cost per claim. The
insurance and claims accruals are recorded at the estimated payment amounts and
are based upon individual case estimates. The specific information for each
case is reviewed, detailed, and an estimate is determined based on each case
separately. Similar cases, historical costs, and current trends in costs are
considered when establishing estimates. Management believes the recorded
obligations for these expenses are consistently measured on a conservative
basis. However, changes in health costs, accident frequency and severity, and
other factors can materially affect the estimates for these liabilities. Allowance for Doubtful Accounts for Lease Purchase ProgramWe review the
adequacy of the lease receivable allowance for doubtful accounts in the
independent contractor (owner-operator) program. This allowance represents an
estimate of notes receivable between the Company and owner-operators
participating in the lease purchase program that will become uncollectible and
which may, in turn, prevent the Company from maintaining its investment value
in the tractor. Historical data, trends, current economic conditions, and
profitability of owner-operators are factors considered when determining this
estimate. Due to continuing turnover experienced in the owner-operator
program, the Company decreased the percentage of gain on lease purchases that
is recognized at lease inception from 20% to 10% in October 2002, and from 10%
to 0% in October 2003. Gains are deferred and recognized in income over the
life of the corresponding leases. Impairment of AssetsBecause we must plan for future tractor load levels
in order to make commitments for revenue equipment based on those projections,
we have risks that excess capacity may exceed demand and that an impairment of
our revenue equipment may occur. We review long-lived assets for impairment as
described in Note 1 to our Consolidated Financial Statements. In analyzing
potential impairments, we use projections of future undiscounted cash flows
from the asset. These projections are based on our views of growth rates for
the related business, anticipated future economic conditions, and estimates of
terminal values. If the cash flows do not exceed the carrying values, the
asset must be adjusted to its current fair value. In 2001, we reduced carrying
values of certain WTI revenue equipment by $0.4 million due to expected
reductions in trade-in values. Valuation of Accounts ReceivableWe review 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, including such
factors as bankruptcies and insolvencies. The Company performs ongoing credit
evaluations of its customers. The Company continually updates the history it
uses to make these estimates so as to reflect the most recent information
available. Our allowance for doubtful accounts was 25




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approximately $323,000 and $341,000 at December 31, 2003 and 2002,
respectively. The Company experienced losses from bad debt in the amount of
$625,000 in 2001 due primarily to increased bankruptcies experienced in the
steel industry. Goodwill ImpairmentWe have approximately $3.5 million of goodwill on our
consolidated balance sheet resulting from the acquisition of WTI. Accounting
standards adopted in 2002 require that we review this goodwill for impairment
on an annual basis and cease all goodwill amortization. The adoption of these
new rules did not result in an impairment of our goodwill. The annual
evaluation for goodwill impairment requires the use of estimates about the
future cash flows of WTI to determine its estimated fair value. Changes in
forecasted operations and changes in discount rates can materially affect these
estimates. Our review of these accounting items and the resulting accounting
positions taken by the Company are based upon certain assumptions and
conditions and reflect our managements best assumptions and estimates;
however, estimates of these types of accounting items, particularly impairment
and accrued liabilities, involve inherent uncertainties as described above,
that are beyond managements control. As a result, the accounting for such
items could result in different amounts if management uses different
assumptions or if different conditions occur in future periods. 
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest
Rate Risk Interest Rate Risk The Company is exposed to interest rate risk due to its long-term debt, which
at December 31, 2003, bore interest at rates ranging from 1.25% to 2.85% above
the applicable 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 one percent increase in interest rates would decrease pre-tax
income by approximately $261,000. Management believes that current working
capital funds are sufficient to offset any adverse effects caused by changes in
these interest rates. Commodity Price Risk The price and availability of diesel fuel are subject to fluctuations due to
changes in the level of global oil production, seasonality, weather, and other
market factors. The geopolitical situation in the Middle East caused oil
prices to rise dramatically in the first quarter of 2003. Historically, the
Company has been able to recover a majority of fuel price increases from
customers in the form of fuel surcharges. The Company cannot predict the
extent to which high fuel price levels will continue in the future or the
extent to which fuel surcharges could be collected to offset such increases.
As of December 31, 2003, the Company had no derivative financial instruments to
reduce its exposure to fuel price fluctuations. The Company will consider
possible opportunities to hedge fuel costs in the future. 
 Item 8. Financial Statements and Supplementary Data The financial statements listed on page F-1 of this Report are filed as part of
this Report on the pages indicated. 
 Item 9. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure None. 26




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Item 9A. Controls and Procedures  a)
    
    Evaluation of Disclosure Controls and Procedures. Our Chief
Executive Officer and Chief Financial Officer have evaluated the
effectiveness of our disclosure controls and procedures (as such term
is defined in Rules 13a-14(c) and 15d-14(c) under the Securities
Exchange Act of 1934, as amended (the Exchange Act) as of the end of
the period covered by this report. Based on such evaluation, such
officers have concluded that, as of December 31, 2003, our disclosure
controls and procedures are effective in alerting them on a timely
basis to material information relating to our Company (including our
consolidated subsidiaries) required to be included in our reports filed
or submitted under the Exchange Act.  b)
    
    Changes in Internal Controls. During the period covered by this
report, there have not been any significant changes in our internal
controls that have materially affected or are reasonably likely to
materially affect, our internal controls over financial reporting. The
Company discovered a fraudulent activity during the third quarter of
2003, which, while it did not materially affect the Companys internal
control over financial reporting or the Companys financial statements,
resulted in changes to the Companys internal control. An employee
with access to certain driver payroll transactions processed
unauthorized transactions. Discovery of these transactions arose
through routine internal audit procedures over driver payroll
accounting. Management investigated the extent of the fraud and
concluded that the impact was not material to the Company. Companys
management believes that the internal controls over financial reporting
have been enhanced in a manner that will prevent similar occurrences in
the future by strengthening authorization controls and review controls
in this area. 27




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##### Table of Contents



PART III 
 Item 10. Directors and Executive Officers of the Registrant Directors Incumbent Director Whose Term Will Expire in 2004 Boyd Whigham, age 67, has been a Director of the Company since February 1989.
He has been the District Attorney for the Third Judicial Circuit, in Barbour
and Bullock Counties, Alabama, since January 1993. Prior to 1993, he operated
a general civil law practice in Clayton, Alabama and periodically provided
legal services to the Company and to Mr. Boyd, former Chairman of the Company.
Mr. Whigham is the brother-in-law of J. Larry Baxter. Incumbent Directors Whose Terms Will Expire in 2005 Richard C. Bailey, age 53, has served as Chief Financial Officer since joining
the Company in August 1992 and has served as a Director since February 1995.
Mr. Bailey was named Chief Operating Officer of the Company in July 2001. 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. Stephen J. Silverman, age 59, has been the President and Chief Executive
Officer of Silver Solutions, Inc., a transportation consulting firm based in
Jacksonville, Florida since January 1997. Prior thereto, he served as
President/Chief Executive Officer and a Director of Silver Eagle Transport,
Inc., an irregular route truckload carrier based in Jacksonville, Florida, from
1984 until 1997. He is also currently President and Chief Executive Officer of
Raven Transport Holding, Inc., a minority owned dry van truckload carrier, and
has held these positions since December 1998. Mr. Silverman has been a
Director of the Company since May 1997. He has previously served as Chairman
of the University of Georgia Trucking Profitability Strategies Conference, as
well as on the Boards of the American Trucking Association, Florida Trucking
Association, and the Interstate Truckload Carriers Conference. Mr. Silverman
received a B.A. from Bradley University, and an M.B.A. from the University of
Michigan. J. Mark Dunning, age 44, has been President of Mark Dunning Industries, Inc., a
waste collection and disposal company, since September 1980, and has been a
Director of the Company since May 2000. Mr. Dunning is a director of Regions
Bank in Dothan, Alabama. Incumbent Directors Whose Terms Will Expire in 2006 J. Larry Baxter, age 56, retired from his position as an insurance broker in
2002. Mr. Baxter has served as a Director of the Company since May 2000.
Previously, Mr. Baxter was an insurance broker with The Baxter Agency, LLC, an
insurance placement and risk management firm, from October 1980 to July 2002,
and served as President of The Baxter Agency, LLC from June 1999 to April 2001.
Mr. Baxter served as President of The Baxter Agency, Inc., an insurance and
risk management company, from October 1980 to June 1999. In 2002, the Baxter
Agency, LLC placed insurance coverage for the Company in return for commission
payments from the Company. Mr. Baxter is the brother-in-law of Boyd Whigham. Gail B. Cooper, age 53, has served as President, Chief Executive Officer and as
a Director of the Company since February 17, 2000. Ms. Cooper served as
Secretary of the Company from December 1969 until February 2000. 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 1972. 28




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##### Table of Contents



Executive Officers Set forth below is information concerning the Executive Officers of the Company
as of March 26, 2004. Gail B. Cooper, age 53, has served as President and Chief Executive Officer and
as a Director of the Company since February 17, 2000. Ms. Cooper served as
Secretary of Boyd from December 1969 until February 2000. Ms. Cooper received a
B.S. in business administration from Troy State University. She has served Boyd
in numerous administrative and accounting positions since joining Boyd
full-time in June 1972. Ms. Cooper is the sister of Ms. Tibbs. Richard C. Bailey, age 53, has served as Chief Financial Officer of the Company
since joining Boyd in August 1992, has served as a Director since February 1995
and has served as Chief Financial Officer since July 2001. 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. Steven S. Rumsey, age 40, founded WTI Transport in 1989 and has served the
company in various capacities including President and presently C.E.O. Mr.
Rumsey graduated from the University of Alabama with a B.A. in
Communication. He serves on the Board of Directors of Southeastern Financial
and Amsouth Bank in Tuscaloosa, Alabama. He is married to wife, Frances, and
has two children. Ginger B. Tibbs, age 50, has been the Secretary/Treasurer of Boyd since
February 2000, and served as a Director from December 1978 until March 1994.
Ms. Tibbs is primarily responsible for collection of Boyds accounts receivable
and has served as Credit Manager since September 1980. Ms. Tibbs received a
degree in elementary education from Auburn University. She is the sister of Ms.
Cooper. Audit Committee In accordance with its written charter adopted by the Board of Directors
(Board), the Audit Committee of the Board assists the Board in fulfilling its
responsibility for oversight of the quality and integrity of the accounting,
auditing and financial reporting practices of the Company. Audit Committee
members include Mr. Boyd Whigham, Mr. J. Mark Dunning (Chair) and Mr. Stephen
J. Silverman. During 2003, the Committee met one time. Additionally, the
Audit Committee independently reviewed the Companys quarterly financial
statements and related Form 10-Q prior to the filing of the Form 10-Q for each
quarter of 2003. All of the members of the Audit Committee are independent
within the meaning of Securities and Exchange Commission regulations and the
listing standards of the NASDAQ SmallCap Market. Mr. Stephen J. Silverman is
qualified as an audit committee financial expert within the meaning of
Securities and Exchange Commission regulations and the Board has determined
that he has accounting and related financial management expertise within the
meaning of the listing standards of the NASDAQ SmallCap Market. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934, as amended (the Exchange
Act), requires that the Companys Directors, Executive Officers and persons
who beneficially own more than ten percent (10%) of the Companys Common Stock
file with the Securities and Exchange Commission initial reports of beneficial
ownership and reports of changes in beneficial ownership of such Common Stock.
Directors, Executive Officers and persons who beneficially own greater than ten
percent (10%) of the Common Stock are required by the Securities and Exchange
Commissions rules to furnish the Company with copies of all such reports. To
the Companys knowledge, based solely on review of the copies of such reports
furnished to the Company or written representations from the Companys
Directors and Executive Officers that no other reports were required, all
Section 16(a) filing requirements applicable to the Companys Directors and
Executive Officers were complied with during the year ended December 31, 2003. 29




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##### Table of Contents



Code of Ethics The Company has adopted a Code of Ethics applicable to all directors, officers
and employees of the Company, including the Companys principal executive
officer, principal financial officer and principal accounting officer. The
Code of Ethics is included as an exhibit to this Form 10-K, and the Company has
posted it and intends to post amendments to or waivers from its Code of Ethics
on the Companys website at www.boydbros.com under the heading Investors. 
 Item 11. Executive Compensation Summary of Cash and Certain Other Compensation The following table sets forth in summary form all compensation for all
services rendered in all capacities to the Company for the years ended December
31, 2003, 2002 and 2001, respectively, to (a) each person who served as Chief
Executive Officer of the Company during the fiscal year most recently
completed, and (b) those executive officers of the Company who earned in excess
of $100,000 (collectively with each Chief Executive Officer, the Named
Executive Officers): SUMMARY COMPENSATION TABLE LONG TERMANNUAL COMPENSATION
    
    COMPENSATIONSecuritiesName and
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other Annual
    
    Underlying
    
    All OtherPrincipal Position
    
    Year
    
    Salary
    
    Bonus
    
    Compensation
    
    Options (#)
    
    Compensation (1)Gail B. Cooper

Chief Executive Officer and

President
    
    
    2003
    
    
    $
    150,000
    
    
    $
    10,000
    
    
    
    
    
    
    
    
    
    
    $
    4,9742002
    
    
    
    150,000
    
    
    
    25,000
    
    
    
    
    
    
    
    43,500
    
    
    
    4,9742001
    
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,674Richard C. Bailey,

Chief Operating Officer & Chief

Financial Officer
    
    
    2003
    
    
    $
    175,000
    
    
    $
    10,000
    
    
    
    
    
    
    
    
    
    
    $
    5,7242002
    
    
    
    155,667
    
    
    
    25,000
    
    
    
    
    
    
    
    158,500
    
    
    
    2,9122001
    
    
    
    146,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,554Steven S. Rumsey,

Chief Executive Officer-

WTI Transport, Inc.
    
    
    2003
    
    
    $
    110,000
    
    
    $
    9,130
    
    
    
    
    
    
    
    
    
    
    $
    3,3002002
    
    
    
    110,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,3002001
    
    
    
    144,993
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,560
  (1)
    
    Constitutes matching contributions by the Company to the 401(k) plan:
(i) in 2003, $4,800 to Ms. Cooper; $5,550 to Mr. Bailey; and $3,300 to
Mr. Rumsey; (ii) in 2002, $4,800 to Ms. Cooper; $2,738 to Mr. Bailey;
and $3,300 to Mr. Rumsey; and (iii) in 2001, $4,500 to Ms. Cooper;
$4,380 to Mr. Bailey; and $4,560 to Mr. Rumsey. Also includes payment
of life insurance premiums: (i) in 2003, $174 each for each of Ms. Cooper
and Mr. Bailey; (ii) in 2002, $174 for each of Ms. Cooper and Mr.
Bailey; and (iii) in 2001, $174 for each of Ms. Cooper and Mr. Bailey. 30




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##### Table of Contents



Stock Option Grants The Company did not grant any stock options to executive officers during fiscal
2003. Stock Option Exercises and Year-End Holdings SharesAcquiredon
    
    Value
    
    Number of Unexercised
    
    Value of Unexercised In-the-MoneyExercise
    
    Realized
    
    Options/SARs at FY-End
    
    Options/SARs at FY-EndName
    
    (#)
    
    ($)(1)
    
    (#)
    
    ($)(2)(a)
    
    (b)
    
    (c)
    
    (d)
    
    (e)Exercisable
    
    Unexercisable
    
    Exercisable
    
    UnexercisableGail B. Cooper
    
    
    
    
    
    
    
    
    
    
    43,500
    
    
    
    
    
    
    $
    151,780
    
    
    
    Richard C. Bailey
    
    
    
    
    
    
    
    
    
    
    158,500
    
    
    
    
    
    
    $
    551,980
    
    
    
    Steven S. Rumsey
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  (1)
    
    This column indicates the market value of the underlying securities at time
of exercise minus the exercise price.  (2)
    
    This column indicates the market value of the underlying securities at
the market price on December 31, 2003 ($6.15 per share) minus the exercise
price. Director Compensation Directors who are not executive officers of the Company receive an annual
retainer of $5,000, are paid a fee of $1,500 for each Board meeting attended in
person and $750 for each Board meeting attended by telephone, and are
reimbursed for travel expenses incurred in connection with attending meetings.
Non-employee Directors who serve on the Executive Committee receive an
additional fee of $1,000 for each Executive Committee meeting attended.
Directors are not entitled to additional fees for serving on other committees
of the Board of Directors, with the exception of Directors serving on the
Special Committee. On August 12, 2003, the Board formed a Special Committee composed of Stephen J.
Silverman (Chair), J. Larry Baxter, J. Mark Dunning and Boyd Whigham to
consider any proposal offered by members of the Boyd family to form an entity
to purchase the shares of the Companys Common Stock not held by Boyd family
members, followed by a merger of such entity with and into the Company. The
Board formed the Special Committee, consisting solely of Directors who are not
officers or employees of the Company and who have no financial interest in the
proposed merger different from the Companys stockholders generally, to
evaluate, negotiate and recommend the merger agreement and to evaluate whether
the merger is in the best interests of the Companys stockholders. The Board
determined that each member of the Special Committee would receive $500 for
attending each meeting of the Special Committee, whether in person or via
teleconference. Stock Option Cancellations On July 16, 2001, the Company implemented an option cancellation and
replacement program to address the substantial loss in value of the outstanding
stock options held by the Companys employees and the increasing inability of
those options to serve as a meaningful incentive for optionees to remain in the
Companys employ. Under the option cancellation and replacement program,
current employees of the Company were permitted to cancel existing options in
anticipation of intended future option grants. The employees and executive
officers of the Company agreed that the replacement grants could not be made
for at least six months and one day after the cancellation date so the Company
would not have to recognize compensation expense. The options were cancelled on July 16, 2001, and had original exercise prices
ranging from a high of $11.00 per share to a low of $7.38 per share.
Participants received new options on January 17, 2002 at an exercise price of
$2.67 per share, the fair market value of the common stock on that day.
Options granted on January 17, 2002 were planned to vest at a rate of 20% per
year on the anniversary date of the grant; provided, however, that the options
could vest earlier if certain pricing conditions were met. The options expire
ten years from the date of grant or 31




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##### Table of Contents



January 17, 2012. Both Richard Bailey and Gail Cooper participated in the
option cancellation and replacement program. The following table sets forth certain information concerning option
cancellation and replacements, including (i) the name and position of each
executive officer who participated in the program, (ii) the date of any such
repricing, (iii) the number of securities underlying replaced options, (iv) the
per share market price of the underlying security at the time of the repricing,
(v) the original exercise price of the cancelled option at the time of
repricing, (vi) the per share exercise price of the option received in exchange
for the existing option, and (vii) the original option term remaining at the
date of exchange. There have been no other stock option repricing programs of
the Company within the last ten years. TEN YEAR OPTION REPRICING Market
    
    
    
    
    
    
    
    
    
    Length ofNumber of
    
    Price of
    
    Exercise
    
    
    
    
    
    OriginalSecurities
    
    Common
    
    Price
    
    
    
    
    
    Option TermName
    
    Date
    
    Underlying
    
    Stock at Time
    
    at Time
    
    New
    
    Remainingand
    
    of
    
    Options
    
    of
    
    of
    
    Exercise
    
    at Date ofPosition
    
    Repricing
    
    Repriced
    
    Repricing
    
    Repricing
    
    Price
    
    RepricingGail B. Cooper,
    
    
    1/17/02
    
    
    
    15,000
    
    
    $
    2.67
    
    
    $
    11.00
    
    
    $
    2.67
    
    
    
    2.4Chief
Executive Officer and
    
    
    1/17/02
    
    
    
    5,000
    
    
    
    2.67
    
    
    
    9.31
    
    
    
    2.67
    
    
    
    5.9President
    
    
    1/17/02
    
    
    
    3,500
    
    
    
    2.67
    
    
    
    10.25
    
    
    
    2.67
    
    
    
    7.3Richard C. Bailey,
    
    
    1/17/02
    
    
    
    30,000
    
    
    $
    2.67
    
    
    $
    11.00
    
    
    $
    2.67
    
    
    
    2.4Chief
Financial Officer and
    
    
    1/17/02
    
    
    
    10,000
    
    
    
    2.67
    
    
    
    11.00
    
    
    
    2.67
    
    
    
    3.0Chief Operating Officer
    
    
    1/17/02
    
    
    
    10,000
    
    
    
    2.67
    
    
    
    7.75
    
    
    
    2.67
    
    
    
    4.01/17/02
    
    
    
    15,000
    
    
    
    2.67
    
    
    
    7.38
    
    
    
    2.67
    
    
    
    5.71/17/02
    
    
    
    35,000
    
    
    
    2.67
    
    
    
    9.50
    
    
    
    2.67
    
    
    
    6.31/17/02
    
    
    
    35,000
    
    
    
    2.67
    
    
    
    8.00
    
    
    
    2.67
    
    
    
    6.61/17/02
    
    
    
    3,500
    
    
    
    2.67
    
    
    
    10.25
    
    
    
    2.67
    
    
    
    7.3
 Severance Agreement In 1998, the Company entered into a Severance Agreement with Mr. Bailey (the
Severance Agreement). The Severance Agreement provides that in the event (a)
Mr. Baileys employment is terminated by the Company other than for Cause (as
such term is defined in the Severance Agreement) or (b) Mr. Bailey resigns from
his employment with the Company for Good Reason (as such term is defined in the
Severance Agreement), Mr. Bailey will be entitled to a payment which, if such
termination occurs in 2002 or any year thereafter, will be equal to twelve (12)
months salary at the rate in effect immediately prior to the Severance Date (as
defined in the Severance Agreement)(the Severance Payment). At the Companys
option, the Severance Payment may be made either (1) as a lump sum within
thirty (30) days of the Severance Date or (2) as a series of payments in
accordance with the Companys normal payroll procedures. In addition to the
Severance Payment, Mr. Bailey is entitled to receive payment for all vacation
time accrued during the calendar year in which the Severance Date occurred and
a pro rata payment for any bonus earned for the year through the Severance
Date. The Severance Agreement also provides that the Company will reimburse Mr.
Bailey for any costs incurred in electing COBRA continuation coverage under the
Companys health insurance and will maintain life insurance coverage for Mr.
Bailey until the earlier of (a) the date which is twelve months from the
Severance Date or (b) such time as Mr. Bailey obtains medical coverage from a
new employer. 32




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##### Table of Contents



Compensation Committee Report on Executive Compensation The following paragraphs constitute the report of the Compensation Committee of
the Board of Directors (the Committee) on executive compensation policies for
fiscal year 2003. In accordance with Securities and Exchange Commission rules,
this report shall not be deemed to be incorporated by reference into any
statements or reports filed by the Company with the Securities and Exchange
Commission that do not specifically incorporate this report by reference,
notwithstanding the incorporation of this Form 10-K into any such report. Compensation Committee Interlocks and Insider Participation The Companys Compensation Committee is comprised of J. Mark Dunning, Stephen
J. Silverman and Boyd Whigham, all of who are members of the Companys Board of
Directors. During 2003, no executive officer of the Company served as a member
of the Committee or as a director of any other entity, one of whose executive
officers served on the Committee or was a director of the Company, nor does any
such relationship exist currently. The Committee administers the compensation
program for operating officers of the Company and bases its decisions on both
individual performance and the financial results achieved by the Company.
While the Committee consults with the Chief Executive Officer on certain
matters, all compensation decisions are made by the Committee without such
officers participation. The Committee held one meeting during 2003. The principal elements of the compensation program for executive officers are
base salary, performance-based annual bonuses and stock options. The goals of
the program are to give the executive officers incentives to work toward the
improved financial performance of the Company and to reward them for their
contributions to the Companys success. The program is also designed to
encourage the Companys key executives to maximize the Companys premium
service to its customers and maintain high standards of efficiency,
productivity and safety. For a summary of 2003 compensation, see the Summary
Compensation Table under the heading Summary of Cash and Certain Other
Compensation above. Salaries.The Committee has based its decisions on salaries for the Companys
executive officers, including its chief executive officer and chief financial
officer, on a number of factors, both objective and subjective. Objective
factors considered include increases in the cost of living, the Companys
overall historical performance, and comparable industry data, although no
specific formulas based on such factors have been used to determine salaries.
Salary decisions are based primarily on the Committees subjective analysis of
the factors contributing to the Companys long-term success and of the
executives individual contributions to such success. Bonuses.For fiscal year 2003, the Committee imposed a sliding scale for which
no bonuses would be paid unless the Company achieved a minimum of $1,025,000 of
income before taxes. Under this program, the Company paid no bonuses to Ms.
Cooper or Mr. Bailey for fiscal 2003. Stock Options.The Committee views stock options as its primary long-term
compensation vehicle for the Companys executive officers. At the time of the
Companys initial public offering in May 1994, the Committee granted an
aggregate of 94,000 stock options under the 1994 Stock Option Plan to each of
the Companys executive officers, other than Mr. Boyd, who, as founder of the
Company, elected not to participate. The Company has granted options to its
executive officers since then, most recently in 2002 when the Committee granted
an aggregate of 202,000 shares to two executive officers whose individual
performance, in the Committees view, warranted an enhanced equity position in
the Company. Options granted in 2002 included replacement grants of 162,000
for options, which were cancelled in 2001 under the stock option cancellation
and replacement program. The Company did not grant any stock options to its
executive officers in 2003. Stock Option Cancellation and Replacement Program. In light of the substantial
decline in the market price of the Companys Common Stock that occurred as a
result of the economic downturn in the U.S. economy and the flatbed trucking
industry, many of the outstanding options held by the Companys executive
officers and key employees had exercise prices significantly higher than the
market price of the underlying Common Stock. The Committee believed that many
of these options had little or no value and were unlikely to be exercised in
the foreseeable future. As a result, the Committee decided that these options
were no longer effective in achieving the desired objectives of retaining and
incentivizing employees important to the Companys attainment of its business
and financial objectives and the creation of value for its stockholders. The
Committee recommended the stock option cancellation and replacement program to
the Board of Directors as a means of addressing these issues. 33




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##### Table of Contents



Chief Executive Officer Compensation.In February 2000, Ms. Gail B. Cooper
became Chief Executive Officer and President of the Company. Her base salary
was increased from $90,000 to $150,000 based on the factors and analysis
described above and in recognition of her increased responsibilities. Ms.
Coopers salary did not increase in 2003. Chief Financial Officer/Chief Operating Officer Compensation.Mr. Baileys
base salary was increased from $146,000 to $175,000 during 2002. Mr. Baileys
salary did not increase in 2003. By the Members of the Compensation Committee: Mark Dunning, Stephen J. Silverman and Boyd Whigham (Chairman). 
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth, as of March 26, 2004, certain information with
respect to all stockholders known by the Company to be the beneficial owners of
more than five percent (5%) of the Common Stock, the only class of voting
securities of the Company outstanding, as well as information with respect to
the Common Stock owned beneficially by each Director and Director Nominee of
the Company, by each Executive Officer named in the Summary Compensation Table
and by all Directors and Executive Officers of the Company as a group. Certain
information set forth in the table is based upon information contained in
filings made by such beneficial owners with the Commission. Amount and Nature
    
    Approximateof Beneficial
    
    Percent ofName of Beneficial Owner
    
    Ownership (1)
    
    Common StockDempsey Boyd (2)
    
    
    1,137,216
    (3)
    
    
    41.9
    %Gail B. Cooper (2)
    
    
    451,900
    (4)
    
    
    16.4
    %Ginger B. Tibbs (2)
    
    
    412,400
    (5)
    
    
    15.1
    %Frances S. Boyd (2)
    
    
    1,137,216
    (6)
    
    
    41.9
    %Richard C. Bailey
    
    
    170,622
    (7)
    
    
    5.9
    %Steven S. Rumsey
    
    
    7,400
    
    
    
    *J. Mark Dunning
    
    
    6,000
    (8)
    
    
    *Boyd Whigham
    
    
    14,800
    (9)
    
    
    *Stephen J. Silverman
    
    
    6,500
    (10)
    
    
    *J. Larry Baxter
    
    
    6,501
    (11)
    
    
    *All Directors and
Executive Officers as a group
(8 persons)
    
    
    1,076,123
    
    
    
    36.3
    %
  *
    
    Less than one percent of the Common Stock.(1)
    
    Under the Rules of the Commission, a person is deemed to be the
beneficial owner of a security if such person has or shares the power to
vote or direct the voting of such security or the power to dispose or
direct the disposition of such security. A person is also deemed to be a
beneficial owner of any securities if that person has the right to acquire
beneficial ownership within 60 days. Accordingly, more than one person
may be deemed to be a beneficial owner of the same securities. Unless
otherwise indicated by footnote, the named persons have sole voting and
investment power with respect to the shares of Common Stock beneficially
owned.(2)
    
    The address for each of Mr. and Mrs. Boyd, Ms. Cooper and Ms. Tibbs is
3275 Highway 30, Clayton, Alabama 36016. 34




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##### Table of Contents



(3)
    
    Includes 384,000 shares owned by Mr. Boyds wife, Frances S. Boyd.
Excludes 2,500 shares held as custodian for five minor grandchildren, as
to which shares Mr. Boyd disclaims beneficial ownership.(4)
    
    Includes 43,500 shares obtainable by Ms. Cooper within 60 days of March
26, 2004 upon the exercise of stock options. Includes 1,000 shares held
by a third party custodian for Ms. Coopers children, as to which shares
she disclaims beneficial ownership.(5)
    
    Includes 21,000 shares obtainable by Ms. Tibbs within 60 days of March
26, 2004 upon the exercise of stock options. Includes 1,500 shares held
by a third party custodian for Ms. Tibbs children, as to which shares she
disclaims beneficial ownership.(6)
    
    Includes 827,516 shares owned by Mrs. Boyds husband, Dempsey Boyd.(7)
    
    Includes 158,500 shares obtainable by Mr. Bailey within 60 days of March
26, 2004 upon the exercise of stock options.(8)
    
    Includes 6,000 shares obtainable by Mr. Dunning within 60 days of March
26, 2004 upon the exercise of non-qualified stock options.(9)
    
    Includes 8,500 shares obtainable by Mr. Whigham within 60 days of March
26, 2004 upon the exercise of non-qualified stock options.(10)
    
    Includes 6,500 shares obtainable by Mr. Silverman within 60 days of March
26, 2004 upon the exercise of non-qualified stock options.(11)
    
    Includes 321 shares held by the J. Larry Baxter  IRA and 180 shares held
by the Haldine D. Baxter   IRA and also includes 6,000 shares obtainable
by Mr. Baxter within 60 days of March 26, 2004 upon the exercise of
non-qualified stock options. 
 Item 13. Certain Relationships and Related Transactions On December 31, 2003, the Company announced that it had entered into an
Agreement and Plan of Merger, dated as of December 31, 2003 (the Merger
Agreement), which sets forth the terms and conditions of the proposed
acquisition (the Merger) of the Company by BBT Acquisition Corporation, a
Delaware corporation (BBT Corp.) controlled by Dempsey Boyd, the founder and
former Chairman and CEO of the Company, his daughter, Gail B. Cooper, the
current President and CEO of the Company, his daughter, Ginger B. Tibbs, the
current Secretary/Treasurer of the Company, and his wife, Frances S. Boyd. Under the terms of the Merger Agreement, stockholders of the Company (other
than BBT Corp. and the Boyd family members) will receive $7.00 per share, in
cash, for each outstanding share of Company Common Stock owned by such
stockholders. The transaction is structured as a forward merger in which BBT
Corp. will merge with and into the Company, with the Company continuing as the
surviving corporation. The boards of directors of each of the Company and BBT
Corp. have unanimously approved the Merger Agreement and the Merger. In the
case of the Companys Board, the approval follows the unanimous recommendation
of a special committee of outside directors of the Company that was formed to
evaluate and respond to the original proposal of Mr. Boyd and Ms. Cooper. The Merger is subject to (i) approval by the holders of a majority of the
outstanding shares of the Companys Common Stock which are outstanding as of
the record date for the special meeting of the Companys stockholders to be
called to consider the Merger, (ii) the completion of the financing
arrangements necessary to consummate the Merger, and (iii) certain other
closing conditions. The Company has previously entered into a consulting agreement with Dempsey
Boyd, the Companys former Chairman of the Board. The agreement had a term,
which began on January 1, 2002 and ended December 31, 2003, pursuant to which
Mr. Boyd was paid $145,000 annually. Mr. Boyd provided advice and expertise,
and performed such duties and services from time to time, during the term of
the agreement, as the Company reasonably requested. The services provided
included, without limitation, negotiating equipment and tire agreements,
reviewing equipment requirements, researching and investigating equipment,
advising the Company regarding certain on-going litigation matters, advising
the Company regarding construction projects and providing the Company with an
experienced perspective on the trucking industry. Ms. Cooper and Ms. Tibbs are
Mr. Boyds daughters. The Company had entered into an agreement with Mr. Boyd to lease an aircraft
for Company use. The agreement expired September 1, 2003, and the Company is
currently negotiating to renew the agreement through August 2004 on the same
terms. In the interim, the Company continues to lease the aircraft on the same
terms contained in the prior agreement, paying a monthly lease amount of
$20,000 with an allowance of twenty hours of flight time per 35




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##### Table of Contents



month. For any flight hours that exceed twenty per month, the Company pays an
additional $1,000 per flight hour. The Company paid a total of $240,000 in
lease payments to Mr. Boyd during 2003. 
 Item 14. Principal Accountant Fees and Services The firm of BDO Seidman, LLP examined the financial statements of the Company
for the years ended December 31, 2003 and 2002, and the Board of Directors
intends to continue the services of this firm for the fiscal year ending
December 31, 2004. Fee Disclosure The following table presents fees for professional services rendered by BDO
Seidman, LLP for the audit of the Companys annual financial statements for
fiscal 2003, 2002, and 2001 and fiscal 2002 and fees billed for audit-related services, tax
services and all other services rendered by BDO Seidman, LLP for fiscal 2003
and fiscal 2002. 2003
    
    2002(1) Audit fees
    
    $
    135,276
    
    
    $
    135,394(2) Audit-related fees (a)
    
    
    
    
    
    
    1,250(3) Tax fees
    
    
    
    
    
    
    (4) All other fees
    
    
    
    
    
    
    
  (a)
    
    Consultation on Sarbanes-Oxley legislation All audit, audit-related services, tax services and other services were pre-approved
by our Audit Committee, which concluded that the provision of such services by
BDO Seidman LLP was compatible with the maintenance of that firms independence
in the conduct of its auditing functions. The Audit Committees pre-approval
policy provides for pre-approval of all services provided by the Companys
independent auditor by the Audit Committee prior to the commencement of any
work on the engagement. For 2003, approximately 56% of the total hours
required to complete the audit of the consolidated financial statements were
provided by persons employed by Smith & Howard, P.C. (Smith & Howard), a
public accounting firm located in Atlanta, Georgia. Smith & Howard personnel
worked under the supervision and direction of BDO Seidman, LLP. 36




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##### Table of Contents



PART IV 
 Item 15. Exhibits, Financial Statements, Financial Statement Schedules and Reports on Form 8-K  (a)
    
    The following documents are filed as part of this Report.  1.
    
    Financial Statements:Index to Consolidated Financial Statements       
                 
                  
            
        F-12.
    
    Financial Statement Schedules:Index to Consolidated Financial Statements Schedule         
               
             
        F-213.
    
    Exhibits required by Item 601 of Regulation S-K.The following exhibits are included in this Form 10-K: ExhibitNumber
    
    Description10.1
    
    Promissory Note and Security Agreement dated March 12, 2004
by and between the Company and GE Capital.10.2
    
    Waiver and Consent Agreement by and between the
Company and AmSouth Bank, dated January 23, 2004.10.3
    
    Waiver and Consent Agreement by and between the
Company and Compass Bank, dated February 23, 2004.21
    
    Subsidiaries of the Registrant.23
    
    Consent of BDO Seidman, LLP.31.1
    
    Certification per Section 302 of the Sarbanes-Oxley Act of 2002 for Gail B. Cooper.31.2
    
    Certification per Section 302 of the Sarbanes-Oxley Act of
2002 for Richard C. Bailey.32
    
    Certification per Section 906 of the Sarbanes-Oxley Act of
2002 for Gail B. Cooper and Richard C. Bailey.
 The following exhibits are incorporated by reference to the Companys Quarterly
Report on Form 10-Q for the period ended September 30, 2003: ExhibitNumber
    
    Description10.1
    
    Security Agreement dated July 10, 2003 by and between the
Company and PACCAR Financial.10.2
    
    Security Agreement dated July 11, 2003 by and between the
Company and Navistar Financial Corp.10.3
    
    Promissory Note and Security Agreement dated July 29, 2003 by
and between the Company and GE Capital.10.4
    
    Security Agreement dated August 11, 2003 by and between the
Company and PACCAR Financial.10.5
    
    Security Agreement dated August 26, 2003 by and between the
Company and PACCAR Financial.
 37




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##### Table of Contents



The following exhibits are incorporated by reference to the Companys Quarterly
Report on Form 10-Q for the period ended June 30, 2003: ExhibitNumber
    
    Description10.1
    
    Security Agreement dated April 3, 2003 by and between
the Company and PACCAR Financial.10.2
    
    Security Agreement dated April 22, 2003 by and between
the Company and PACCAR Financial.10.3
    
    Security Agreement dated May 15, 2003 by and between
the Company and PACCAR Financial.10.4
    
    Security Agreement dated May 23, 2003 by and between
the Company and PACCAR Financial.10.5
    
    Promissory Note and Security Agreement dated July 1,
2003 by and between the Company and GE Capital.
 The following exhibits are incorporated by reference to the Companys Quarterly
Report on Form 10-Q for the period ended March 31, 2003: ExhibitNumber
    
    Description10.1
    
    Commercial Loan and Security Agreement dated January
16, 2003 by and between the Company and Compass Bank.
 The following exhibits are incorporated by reference to the Companys Annual
Report on Form 10-K for the year ended December 31, 2002: ExhibitNumber
    
    Description10.1
    
    Commercial Variable Rate Promissory Note by and between the
Company and Compass
Bank dated November 08, 2002 in the amount of $1,273,280.10.2
    
    Commercial Security Agreement by and between the Company
and Compass Bank dated November 8, 2002.10.3
    
    Commercial Variable Rate Promissory Note by and between
the Company and Compass Bank dated November 8, 2002 for
$630,250.10.3
    
    Commercial Security Agreement by and between the Company and
Compass Bank dated November 8, 2002.10.4
    
    Waiver and consent by and between the Company and AmSouth
Bank dated February 3, 2003.10.5
    
    Waiver and consent by and between the Company and Compass
Bank dated February 10, 2003.13
    
    Portions of the Companys Annual Report to
Stockholders for the year ended December 31, 2002 are
specifically incorporated herein by reference.
 38




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##### Table of Contents



The following exhibits are incorporated by reference to the Companys Annual
Report on Form 10-K for the year ended December 31, 2001: ExhibitNumber
    
    Description10.1
    
    March 2002 Waiver between Compass Bank and Boyd Bros.
Transportation Inc.10.2
    
    March 2002 Waiver between Amsouth Bank and Boyd Bros.
Transportation Inc10.3
    
    Note by and between the Company and Navistar Financial Corp.
and Boyd Bros. Transportation Inc. dated November 27, 2001 for
$615,564.10.4
    
    Note by and between the Company and Navistar Financial Corp.
and Boyd Bros. Transportation Inc. dated December 19, 2001 in the
amount of $4,442,820.13
    
    These portions of the Companys Annual Report to Stockholders
for the year ended December 31, 2001 that are specifically
incorporated herein be reference.
 The following exhibits are incorporated by reference to the Companys Annual
Report on Form 10-K for the year ended December 31, 2000: ExhibitNumber
    
    Description10.1
    
    Credit and Security Agreement dated April 11, 2000 between the
Company and Compass Bank in the amount of $3,267,160 for truck
equipment10.2
    
    Security Agreement dated April 11, 2000 between the Company and Compass
Bank in the amount of $3,267,160 for truck equipment* 10.3
    
    First Amendment to Acquisition Agreement, Employment
Agreement and Covenant Not To Compete dated March 17, 2000 between
the Company, Miller Welborn and Steven Rumsey10.4
    
    Second Amendment to Acquisition Agreement dated May 30, 2000
between the Company, Miller Welborn and Steven Rumsey* 10.5
    
    Second Amendment to Employment Agreement dated May 22, 2000
between the Company and Steven Rumsey10.7
    
    Debt Covenant Waiver dated March 27, 2001 from Compass Bank
relating to Credit and Security Agreement dated April 11, 2000.10.8
    
    Waiver and Consent Agreement dated March 28, 2001 by and between
the Company and AmSouth Bank N.A. relating to Credit Agreement
dated April 1, 1994.
  *
    
    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 15(c) of Form 10-K. The following exhibits are incorporated by reference to the Companys Annual
Report on Form 10-K for the year ended December 31, 1999: 39




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##### Table of Contents



ExhibitNumber
    
    Description10.1
    
    Credit and Security Agreement dated March 16, 1999 between the
Company and Compass Bank in the amount of $10,000,000 for truck
equipment10.2
    
    Security Agreement dated March 16, 1999 between the Company and
Compass Bank in the amount of $10,000,000 for truck equipment
 The following exhibits are incorporated by reference to the Companys Annual
Report on Form 10-K for the year ended December 31, 1998: ExhibitNumber
    
    Description10.2
    
    Credit and Security Agreement dated May 29, 1998 between the
Company and Compass Bank in the amount of $4,500,000 for truck
equipment
 The following exhibits are incorporated by reference to the Companys Annual
Report on Form 10-K for the year ended December 31, 1997: ExhibitNumber
    
    Description* 10.1
    
    First Amendment to Boyd Bros. Transportation Inc. 1994 Stock Option Plan* 10.3
    
    Employment Agreement between the Company and Steven Rumsey dated December 8, 1997
  *
    
    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 15(c) of Form 10-K. The following exhibit is incorporated by reference to the Companys
Registration Statement on Form S-8, declared effective on May 20, 1999: ExhibitNumber
    
    Description4
    
    Boyd Bros. Transportation Inc. 1999 Employee Stock Purchase Plan
 The following exhibits are incorporated by reference to the Companys
Registration Statement on Form S-1, declared effective on May 9, 1994: ExhibitNumber
    
    Description3.1
    
    Certificate of Incorporation of the Company3.2
    
    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 Agreement10.3
    
    Form of the Companys Nonstatutory Stock Option Agreement for
Nonemployee Directors
 40




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##### Table of Contents



*
    
    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 15 (c) of Form 10-K. The following exhibit is incorporated by reference to the Companys
Amendment to Report on Form 10-Q filed on August 5, 1997: ExhibitNumber
    
    Description10.33
    
    OMNITRACS contract dated February 5, 1997, between the Company
and QUALCOMM, Inc.
 The following exhibit is incorporated by reference to the Companys Report on
Form 8-K filed on December 19, 1997: ExhibitNumber
    
    Description2.1
    
    Acquisition Agreement dated December 8, 1997, by and among the
Company, W-T Acquisition Company, WTI, Miller Welborn and Steven
Rumsey
  (b)
    
    Reports on Form 8-KDuring the quarter ended December 31, 2003, the Company filed two current
reports on Form 8-K: Filing Date
    
    Items Reported
    
    Financial StatementsNovember 3, 2003
    
    7 and 12
    
    NoneDecember 31, 2003
    
    5 and 7
    
    None
 41




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##### Table of Contents



SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, 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/  Gail B. CooperGail B. CooperPresident and Chief Executive Officer
 Date: March 26, 2004 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: Signature
    
    Title
    
    Date/s/  Gail B. Cooper
    
    Chief Executive Officer, President
    
    March 26, 2004Gail B. Cooper
    
    and Director
(Principal Executive Officer)/s/  Richard C. Bailey
    
    Chief Operating Officer, Chief
    
    March 26, 2004Richard C. Bailey
    
    Financial Officer and Director
(Principal Financial and Accounting Officer)/s/ Boyd Whigham
    
    Chairman and Director
    
    March 26, 2004Boyd Whigham/s/ J. Mark Dunning
    
    Director
    
    March 26, 2004J. Mark Dunning/s/ Stephen J. Silverman
    
    Director
    
    March 26, 2004Stephen J. Silverman/s/ J. Larry Baxter
    
    Director
    
    March 26, 2004J. Larry Baxter
 42




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##### Table of Contents



Boyd Bros. Transportation Inc.Index to Consolidated Financial Statements Report of Independent Certified Public Accountants
    
    
    F-2Consolidated Balance Sheets at December 31, 2003 and 2002
    
    
    F-3Consolidated Statements of Operations for the years ended December 31, 2003, 2002 and 2001
    
    
    F-4Consolidated Statements of Stockholders Equity for the years ended December 31, 2003, 2002 and 2001
    
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7
 F-1




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##### Table of Contents



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 sheets of Boyd Bros. Transportation
Inc. and subsidiaries as of December 31, 2003 and 2002 and the related
consolidated statements of operations, stockholders equity and cash flows for
each of the three years in the period ended December 31, 2003. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits in accordance with 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
audits provide 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 subsidiaries as of December 31, 2003 and 2002 and the
results of their operations and their cash flows for each of the three years in the
period ended December 31, 2003 in conformity with accounting principles
generally accepted in the United States of America.  /s/ BDO Seidman, LLP Atlanta, Georgia
February 12, 2004 except for Note 3,
which is as of February 23, 2004 F-2




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##### Table of Contents



Boyd Bros. Transportation Inc. 
 Consolidated Balance Sheets
 December 31,2003
    
    2002ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    283,474
    
    
    $
    292,514Short-term investments
    
    
    
    
    
    
    288,000Accounts receivable, less allowance for doubtful accounts
of $323,426 (2003) and $341,338 (2002):Trade and interline
    
    
    9,415,968
    
    
    
    9,083,921Other
    
    
    620,366
    
    
    
    542,963Current portion of net investment in sales-type leases
    
    
    2,217,101
    
    
    
    1,427,617Parts and supplies inventory
    
    
    677,899
    
    
    
    521,201Prepaid licenses and permits
    
    
    487,586
    
    
    
    547,460Other prepaid expenses
    
    
    952,751
    
    
    
    965,995Deferred income tax assets
    
    
    2,571,959
    
    
    
    2,378,688Total current assets
    
    
    17,227,104
    
    
    
    16,048,359PROPERTY AND EQUIPMENT:Land and land improvements
    
    
    2,952,576
    
    
    
    2,948,297Buildings
    
    
    7,976,061
    
    
    
    7,804,015Revenue equipment
    
    
    63,005,857
    
    
    
    64,644,891Other equipment
    
    
    12,991,961
    
    
    
    12,466,476Leasehold improvements
    
    
    386,384
    
    
    
    386,384Total
    
    
    87,312,839
    
    
    
    88,250,063Less accumulated depreciation and amortization
    
    
    34,906,078
    
    
    
    33,525,571Property and equipment, net
    
    
    52,406,761
    
    
    
    54,724,492OTHER ASSETS:Net investment in sales-type leases
    
    
    5,402,732
    
    
    
    6,706,848Goodwill, net of accumulated amortization of $912,077
    
    
    3,466,746
    
    
    
    3,452,446Revenue equipment held for lease
    
    
    981,974
    
    
    
    310,405Deposits and other assets
    
    
    384,767
    
    
    
    339,531Total other assets
    
    
    10,236,219
    
    
    
    10,809,230TOTAL
    
    $
    79,870,084
    
    
    $
    81,582,081LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts
payable - trade and interline
    
    $
    3,362,064
    
    
    $
    2,375,475Line of credit
    
    
    1,141,772
    
    
    
    Income taxes payable
    
    
    
    
    
    
    1,424,791Accrued liabilities:Self-insurance claims
    
    
    5,480,194
    
    
    
    4,553,396Salaries and wages
    
    
    338,503
    
    
    
    447,911Other
    
    
    1,160,683
    
    
    
    1,308,825Current maturities of long-term debt
    
    
    10,498,666
    
    
    
    14,488,695Total current liabilities
    
    
    21,981,882
    
    
    
    24,599,093LONG-TERM DEBT
    
    
    19,385,035
    
    
    
    19,135,870DEFERRED INCOME TAXES
    
    
    12,415,398
    
    
    
    12,122,259Total liabilities
    
    
    53,782,315
    
    
    
    55,857,222COMMITMENTS AND CONTINGENCIES (Notes 4 and 7)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; 2,711,958 shares (2003) and 2,709,956 shares (2002)
outstanding
    
    
    4,070
    
    
    
    4,070Additional paid-in capital
    
    
    16,884,622
    
    
    
    16,884,622Retained earnings
    
    
    18,823,155
    
    
    
    18,474,441Treasury stock, at cost; 1,357,682 shares (2003) and 1,359,684 shares (2002)
    
    
    (9,624,078
    )
    
    
    (9,638,274
    )Total stockholders equity
    
    
    26,087,769
    
    
    
    25,724,859TOTAL
    
    $
    79,870,084
    
    
    $
    81,582,081
 See accompanying notes to consolidated financial statements. F-3




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##### Table of Contents



Boyd Bros. Transportation Inc. 
 Consolidated Statements of Operations
 For the Years Ended December 31,2003
    
    2002
    
    2001OPERATING REVENUES
    
    $
    134,345,652
    
    
    $
    127,792,396
    
    
    $
    127,559,594OPERATING EXPENSESSalaries, wages and employee benefits
    
    
    37,365,528
    
    
    
    36,960,066
    
    
    
    39,560,825Cost of independent contractors
    
    
    44,228,370
    
    
    
    38,967,610
    
    
    
    31,779,119Operating supplies
    
    
    28,146,337
    
    
    
    25,965,633
    
    
    
    30,216,514Operating taxes and licenses
    
    
    2,531,974
    
    
    
    2,599,431
    
    
    
    2,241,198Insurance and claims
    
    
    6,509,583
    
    
    
    6,534,920
    
    
    
    6,457,919Communications and utilities
    
    
    1,250,403
    
    
    
    1,275,475
    
    
    
    1,370,598Depreciation and amortization
    
    
    10,604,674
    
    
    
    11,604,696
    
    
    
    12,289,710Gain on disposal of property and equipment, net
    
    
    (478,988
    )
    
    
    (468,321
    )
    
    
    (525,808
    )Other
    
    
    2,117,041
    
    
    
    1,614,719
    
    
    
    1,950,109Total operating expenses
    
    
    132,274,922
    
    
    
    125,054,229
    
    
    
    125,340,184OPERATING INCOME
    
    
    2,070,730
    
    
    
    2,738,167
    
    
    
    2,219,410OTHER (EXPENSE) INCOME:Interest expense
    
    
    (1,358,582
    )
    
    
    (1,752,390
    )
    
    
    (2,684,429
    )Other income (expense)
    
    
    390
    
    
    
    (51,196
    )
    
    
    63,357Other expense, net
    
    
    (1,358,192
    )
    
    
    (1,803,586
    )
    
    
    (2,621,072
    )INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES
    
    
    712,538
    
    
    
    934,581
    
    
    
    (401,662
    )PROVISION FOR INCOME TAXES
    
    
    356,068
    
    
    
    460,149
    
    
    
    5,038NET INCOME (LOSS)
    
    $
    356,470
    
    
    $
    474,432
    
    
    $
    (406,700
    )BASIC NET INCOME (LOSS) PER SHARE
    
    $
    0.13
    
    
    $
    0.18
    
    
    $
    (0.14
    )DILUTED NET INCOME (LOSS) PER SHARE
    
    $
    0.12
    
    
    $
    0.17
    
    
    $
    (0.14
    )BASIC WEIGHTED AVERAGE SHARES
OUTSTANDING
    
    
    2,711,082
    
    
    
    2,709,333
    
    
    
    2,829,614DILUTED WEIGHTED AVERAGE SHARES
OUTSTANDING
    
    
    2,875,821
    
    
    
    2,788,234
    
    
    
    2,829,614
 See accompanying notes to consolidated financial statements. F-4




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##### Table of Contents



Boyd Bros. Transportation Inc. 
 Consolidated Statements of Stockholders Equity
 For the Years Ended December 31, 2003, 2002 and 2001
 AdditionalCommon
    
    Share
    
    Paid-in
    
    Retained
    
    TreasuryShares
    
    Amount
    
    Capital
    
    Earnings
    
    Stock
    

TotalBalance,
January 1, 2001
    
    
    2,950,894
    
    
    $
    4,070
    
    
    $
    16,864,622
    
    
    $
    18,451,689
    
    
    $
    (8,137,959
    )
    
    $
    27,182,422Sale of common
stock under
employee stock
purchase plan
    
    
    6,950
    
    
    
    
    
    
    
    
    
    
    
    (36,364
    )
    
    
    49,825
    
    
    
    13,461Capital contribution
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    20,000Purchase of treasury
stock
    
    
    (243,245
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,521,056
    )
    
    
    (1,521,056
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (406,700
    )
    
    
    
    
    
    
    (406,700
    )Balance,
December 31,
2001
    
    
    2,714,599
    
    
    
    4,070
    
    
    
    16,884,622
    
    
    
    18,008,625
    
    
    
    (9,609,190
    )
    
    
    25,288,127Sale of common
stock under
employee stock
purchase plan
    
    
    1,857
    
    
    
    
    
    
    
    
    
    
    
    (8,616
    )
    
    
    13,166
    
    
    
    4,550Purchase of
treasury
stock
    
    
    (6,500
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,250
    )
    
    
    (42,250
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    474,432
    
    
    
    
    
    
    
    474,432Balance,
December 31,
2002
    
    
    2,709,956
    
    
    
    4,070
    
    
    
    16,884,622
    
    
    
    18,474,441
    
    
    
    (9,638,274
    )
    
    
    25,724,859Sale of common
stock under
employee stock
purchase plan
    
    
    2,002
    
    
    
    
    
    
    
    
    
    
    
    (7,756
    )
    
    
    14,196
    
    
    
    6,440Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    356,470
    
    
    
    
    
    
    
    356,470Balance,
December 31,
2003
    
    
    2,711,958
    
    
    $
    4,070
    
    
    $
    16,884,622
    
    
    $
    18,823,155
    
    
    $
    (9,624,078
    )
    
    $
    26,087,769
 See accompanying notes to consolidated financial statements. F-5




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##### Table of Contents



Boyd Bros. Transportation Inc. 
 Consolidated Statements
of Cash Flows
 For the years ended December 31,
    
    2003
    
    2002
    
    2001OPERATING ACTIVITIES:Net income (loss)
    
    $
    356,470
    
    
    $
    474,432
    
    
    $
    (406,700
    )Adjustments to reconcile net income (loss) to net
cash provided by operating activities:Depreciation and amortization
    
    
    10,604,674
    
    
    
    11,604,696
    
    
    
    12,289,710Provision for bad debts
    
    
    184,227
    
    
    
    78,565
    
    
    
    625,000Gain on disposal of property and equipment, net
    
    
    (478,988
    )
    
    
    (468,321
    )
    
    
    (525,808
    )Net effect of sales-type leases on cost of independent
contractors
    
    
    (182,113
    )
    
    
    (1,857,793
    )
    
    
    (526,707
    )Provision for (benefit from) deferred income taxes
    
    
    99,868
    
    
    
    (2,557,526
    )
    
    
    33,359Changes in assets and liabilities that provided (used) cash:Accounts receivable
    
    
    (593,677
    )
    
    
    1,307,021
    
    
    
    (40,159
    )Other current assets
    
    
    204,420
    
    
    
    1,047,925
    
    
    
    1,155,901Deposits and other assets
    
    
    (59,536
    )
    
    
    125,581
    
    
    
    (10,375
    )Accounts
payable - trade and interline
    
    
    986,589
    
    
    
    (964,498
    )
    
    
    764,297Accrued liabilities and other current liabilities
    
    
    (755,543
    )
    
    
    3,474,857
    
    
    
    59,996Net cash provided by operating activities
    
    
    10,366,391
    
    
    
    12,264,939
    
    
    
    13,418,514INVESTING ACTIVITIES:Payments received on sales-type leases
    
    
    3,740,063
    
    
    
    3,622,436
    
    
    
    2,288,643Capital expenditures:Revenue equipment
    
    
    (11,184,162
    )
    
    
    (7,366,910
    )
    
    
    (1,642,936
    )Other property and equipment
    
    
    (622,550
    )
    
    
    (602,969
    )
    
    
    (1,234,350
    )Proceeds from disposals of property and equipment
    
    
    2,030,245
    
    
    
    434,365
    
    
    
    2,557,928Net cash (used in) provided by investing activities
    
    
    (6,036,404
    )
    
    
    (3,913,078
    )
    
    
    1,969,285FINANCING ACTIVITIES:Proceeds from sales of common stock
    
    
    6,440
    
    
    
    4,550
    
    
    
    13,461Proceeds from capital contribution
    
    
    
    
    
    
    
    
    
    
    20,000Purchase of treasury stock
    
    
    
    
    
    
    (42,250
    )
    
    
    (1,521,056
    )Proceeds (payments) on line of credit
    
    
    1,141,772
    
    
    
    (210,540
    )
    
    
    (839,291
    )Proceeds from long-term debt
    
    
    14,723,077
    
    
    
    5,333,183
    
    
    
    1,012,949Principal payments on long-term debt
    
    
    (20,210,316
    )
    
    
    (15,365,745
    )
    
    
    (13,125,688
    )Net cash used in financing activities
    
    
    (4,339,027
    )
    
    
    (10,280,802
    )
    
    
    (14,439,625
    )Net (decrease) increase in cash and cash equivalents
    
    
    (9,040
    )
    
    
    (1,928,941
    )
    
    
    948,174CASH AND CASH EQUIVALENTS:BEGINNING OF YEAR
    
    
    292,514
    
    
    
    2,221,455
    
    
    
    1,273,281END OF YEAR
    
    $
    283,474
    
    
    $
    292,514
    
    
    $
    2,221,455SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATIONCash paid (received) during the year for:Interest
    
    $
    1,684,085
    
    
    $
    1,752,390
    
    
    $
    2,684,429Income taxes, net of refunds
    
    $
    1,286,185
    
    
    $
    1,252,497
    
    
    $
    (1,508,026
    )SUPPLEMENTAL NON-CASH INVESTING AND
FINANCING ACTIVITIESNet investment in sales-type leases
    
    $
    (3,043,318
    )
    
    $
    (4,848,112
    )
    
    $
    (1,065,389
    )Dealer financed purchases of revenue equipment
    
    $
    1,746,375
    
    
    $
    4,470,471
    
    
    $
    5,545,820
 See accompanying notes to consolidated financial statements. F-6




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##### Table of Contents



Boyd Bros Transportation, Inc. 
 Notes to Consolidated Financial Statements
 1. Summary of Significant Accounting Policies Nature of Operations-
Boyd Bros. Transportation Inc. and its subsidiaries (the
Company) are flatbed carriers, transporting a variety of products, primarily
steel and building materials. The Company has authority to operate throughout
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 subsidiaries, Boyd Logistics, Inc.
(Logistics) and WTI Transport, Inc. (WTI). Boyd, Logistics and WTI are
referred to herein collectively as the Company. All significant inter-company
balances, transactions and stockholdings have been eliminated. Certain
reclassifications have been made to prior periods to conform to the current
period presented. 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. Estimates and assumptions are used when
accounting for, among other areas, depreciation, allowance for doubtful
accounts, valuation of long-lived tangible and intangible assets, accident
claims and commitments and contingencies. Revenue Recognition- Operating revenue and related costs, including revenue
and costs related to the Companys brokerage services, are recognized upon
delivery of freight to customers provided that pervasive evidence of an
arrangement exists, the contract price is fixed and determinable, and
collectibility of the resulting receivables is probable. Effective September 1, 2003, all gains recognized on sales-type lease
transactions are deferred and amortized into income over the life of the lease,
typically 36  42 months. Prior to that date, 10% of such gains were
recognized at the time of sale. The increase in gain deferral was a result of
continued driver turnover experienced in the Companys owner-operator lease
program. Fuel Surcharges - Fuel surcharges in the amount of $4,726,209, $1,538,028 and
$3,703,315 for fiscal years 2003, 2002 and 2001, respectively, are included in
revenues in the accompanying consolidated statements of operations in
accordance with Emerging Issues Task Force release 01-14, Income Statement
Characterization of Reimbursements Received for Out of Pocket Expenses
Incurred. Cash and Cash Equivalents- Cash and cash equivalents include cash on hand,
cash on deposit, and highly liquid investments with maturity of three months or
less at purchase date. Accounts Receivable and
Allowance for Doubtful Accounts - Accounts receivable
are customer obligations due under normal trade terms. The Company sells its
services primarily to manufacturers and consumers of building materials and
related products. Senior management performs continuing credit evaluations of
its customers financial condition and although the Company generally does not
require collateral, letters of credit may be required from its customers in
certain circumstances. The Company records an allowance for doubtful accounts
based on specifically identified amounts that senior management believes to be
uncollectible. The Company also records additional allowance based on certain
percentages of its aged receivables, which are determined based on historical
experience and the assessment of the general financial conditions affecting its
customer base. After all attempts to collect a receivable have failed, the
receivable is written off against the allowance. Based on the information
available to management, the Company believes its allowance for doubtful
accounts as of December 31, 2003 is adequate. However, actual write-offs might
exceed the recorded allowance. 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. F-7




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##### Table of Contents



Boyd Bros Transportation, Inc.
Notes to Consolidated Financial Statements 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, less estimated salvage
values, over their estimated service lives as follows: YearsLand improvements
    
    
    15Buildings
    
    
    5-30Revenue equipment
    
    
    4-7Other equipment
    
    
    3-10Leasehold improvements
    
    
    3-20
 Depreciation is computed using accelerated methods for income tax purposes.
Revenue equipment salvage values are based on current market trade-in values.
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 period of disposal. In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, the Company periodically evaluates the carrying value of
long-lived assets to be held and used when events and circumstances warrant
such a review. The carrying value of long-lived assets is considered impaired
when the anticipated undiscounted cash flow 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. 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. Goodwill - In June 2001, the Financial Accounting Standards Board (the FASB)
issued SFAS No. 141, Business Combinations, and SFAS No.142, Goodwill and
Other Intangible Assets. SFAS No. 141 requires the use of the purchase method
of accounting and prohibits the use of the pooling-of-interests method of
accounting for business combinations initiated after June 30, 2001. This
statement also requires that the Company recognize acquired intangible assets
apart from goodwill if the acquired intangible assets meet certain criteria.
SFAS No.142 requires, among other things, that companies no longer amortize
goodwill, but instead test goodwill for impairment at least annually. In addition, SFAS No. 142 requires that the Company identify reporting units
for purposes of assessing potential future impairments of goodwill, reassess
the useful lives of other existing recognized finite-lived intangible assets,
and cease amortization of intangible assets with an indefinite useful life. An
intangible asset with an indefinite useful life should be tested for impairment
in accordance with the guidance in SFAS No. 142. This statement is required to
be applied in fiscal years beginning after December 15, 2001, to all goodwill
and other intangible assets recognized at that date, regardless of when those
assets were initially recognized. SFAS No. 142 requires the Company to
complete a transitional goodwill impairment test within six months from the
date of adoption and reassess the useful lives of other intangible assets
within the first interim quarter after adoption. The Company adopted SFAS Nos. 141 and 142 on January 1, 2002 and, accordingly,
ceased amortization of goodwill at that time. Goodwill amortization expense of
$223,800 was included in the consolidated financial statements for the year
ended December 31, 2001. Had goodwill amortization expense not been recognized
in that year, loss per share would have decreased from $(0.14) per share to
$(0.07) per share for the year ended December 31, 2001. The following table presents the impact of SFAS No. 142 on operating income and
net loss, as if it had been in effect for the year ended December 31, 2001. 2001Operating income, as reported
    
    $
    2,219,410Add back: Goodwill amortization
    
    
    223,800Adjusted operating income
    
    $
    2,443,210Net loss, as reported
    
    $
    (406,700
    )Add back: Goodwill amortization
    
    
    223,800Tax effect
    
    
    Adjusted net loss
    
    $
    (182,900
    )
 F-8




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##### Table of Contents



Boyd Bros Transportation, Inc.
Notes to Consolidated Financial Statements As of June 30, 2002, the Company completed the first phase of transitional
testing for the potential impairment of goodwill in the amount of $3,452,446,
relating to its WTI subsidiary. This goodwill impairment test is completed
annually on October 1 unless events or evidence exist that would significantly
alter amounts used in the annual calculation. The Company uses a multiple of
EBITDA (earnings before interest, tax, depreciation and amortization expenses)
in evaluating the fair value of WTI. This was consistent with the valuation
method used in calculating the original purchase price of WTI in 1997. Based
on results of current year impairment testing, the Company determined there was
no impairment of goodwill that should be included in the accompanying financial
statements. At December 31, 2003, the net book value recorded for goodwill
related to WTI was $3,452,446. Earnings 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 presented to include the
effect of potentially dilutive securities. The following is a reconciliation from basic earnings per share to diluted
earnings (loss) per share for each of the periods presented: For the years ended December 31,2003
    
    2002
    
    2001Numerator:Net income (loss)
    
    $
    356,470
    
    
    $
    474,432
    
    
    $
    (406,700
    )Denominator:Basic weighted-average shares outstanding
    
    
    2,711,082
    
    
    
    2,709,333
    
    
    
    2,829,614Effect of dilutive stock options
    
    
    164,739
    
    
    
    78,901
    
    
    
    Diluted weighted-average shares outstanding
    
    
    2,875,821
    
    
    
    2,788,234
    
    
    
    2,829,614Basic earnings per share
    
    $
    0.13
    
    
    $
    0.18
    
    
    $
    (0.14
    )Diluted earnings per share
    
    $
    0.12
    
    
    $
    0.17
    
    
    $
    (0.14
    )
 Options amounting to 85,200 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 for the year ended December 31, 2001 because to do
so would have been anti-dilutive. Stock Options-The Company adopted the disclosure provisions of Statement of
Financial Accounting Standards (SFAS or Statement) No. 148, Accounting for
Stock-Based Compensation Transition and Disclosure, which amends SFAS No. 123,
Accounting for Stock-Based Compensation. SFAS No. 148 provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation, which was originally provided
under SFAS No. 123. The Statement also improves the timeliness of disclosures
by requiring the information be included in interim, as well as annual,
financial statements. The adoption of these disclosure provisions did not have
a material effect on the Companys consolidated results of operations,
financial position, or cash flows. 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 2003 or in 2002. SFAS No. 123 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. F-9




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##### Table of Contents



Boyd Bros Transportation, Inc.
Notes to Consolidated Financial Statements Had compensation cost been determined based upon the fair value at the grant
date for awards 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: For the Years ended December 31,
    
    2003
    
    2002
    
    2001Net income (loss), as reported
    
    $
    356,470
    
    
    $
    474,432
    
    
    $
    (406,700
    )Stock-based employee compensation expense determined
under fair value basis, net of tax
    
    
    (276,882
    )
    
    
    (388,892
    )
    
    
    (322,067
    )Pro forma net income (loss)
    
    $
    79,588
    
    
    $
    85,540
    
    
    
    (728,767
    )Earnings per share:Basic -as reported
    
    $
    0.13
    
    
    $
    0.18
    
    
    $
    (0.14
    )Basic -pro forma
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    (0.26
    )Diluted -as reported
    
    $
    0.12
    
    
    $
    0.17
    
    
    $
    (0.14
    )Diluted -pro forma
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    (0.26
    )
 The weighted-average fair value per share for options granted was $2.20 and
$1.98 for the years ended December 31, 2002 and 2001, respectively. No options
were granted in 2003. The fair value was estimated at the date of the grant
using the Black-Scholes option-pricing model with the following
weighted-average assumptions: 2002
    
    2001Risk-free interest rate
    
    
    4.6
    %
    
    
    4.6
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Expected volatility
    
    
    104.4
    %
    
    
    82.4
    %Weighted average expected life (in years)
    
    
    6
    
    
    
    6
 Income Taxes- The Company accounts for income taxes under the asset and
liability method that 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. Fair Value of Financial
Instruments- The carrying value of the Companys cash
equivalents, short-term investments, trade receivables, short-term lease
receivables, trade payables and accrued expenses approximates fair value
because of the short-term nature of these instruments. The fair value of
long-term sales-type lease receivables and long-term debt approximates its
carrying value and are estimated using a discounted cash flow analysis.
Discounted cash flows for long-term debt are based on borrowing rates currently
available to the Company for bank loans with similar terms and average
maturities. Recent Accounting Pronouncements- In January 2003, the FASB issued FIN No. 46,
Consolidation of Variable Interest Entities and in December 2003, a revised
interpretation was issued (FIN No. 46, as revised) which addresses
consolidation by business enterprises of variable interest entities that have
certain characteristics. In general, FIN No. 46, as revised, requires a
variable interest entity to be consolidated by a company if that company is
subject to a majority of the risk of loss from the variable interest entitys
activities or is entitled to receive a majority of the entitys residual
returns or both. An entity that meets this definition is considered the
primary beneficiary. FIN No. 46, as revised, requires disclosures about
variable interest entities by the primary beneficiary and an enterprise that
holds significant variable interests in a variable interest entity but is not
the primary beneficiary. FIN No. 46, as revised, provides for exceptions to the
scope of this interpretation including transfers to qualifying special purpose
entities subject to the reporting of Statement No. 140, which would not be
consolidated. FIN No. 46, as revised applies immediately to variable interest
entities created after January 31, 2003 and to variable interest entities in
which an enterprise obtains an interest after January 31, 2003. FIN No. 46, as
revised, applies in the first fiscal year, or interim period, beginning after
December 15, 2003 to variable interests entities in which an enterprise holds a
variable interest that it acquired before February 1, 2003. This statement did
not have a material impact on the Companys consolidated financial statements. In May 2003, the FASB issued Statement of Financial Accounting Standards No.
150, Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity (Statement No. 150). Statement No. 150 F-10




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Boyd Bros Transportation, Inc.
Notes to Consolidated Financial Statements establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its
scope as a liability (or an asset in some circumstances). Many of those
instruments previously were classified in financial statements as equity.
Statement No. 150 is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. The adoption of Statement
No. 150 did not have a material impact on the Companys consolidated financial
statements. There were no other recently issued accounting pronouncements with delayed
effective dates that would currently have a material impact on the Companys
consolidated financial position and results of operations. Reclassifications Certain previously reported amounts have been reclassified
to conform to the current period presentation. 2. Leases Lessee Operating Leases The Company leases certain terminal buildings, land and
equipment on a month-to-month basis. The lease agreements generally require
the Company 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 $208,504, $139,158 and
$170,741, for the years ended December 31, 2003, 2002 and 2001, 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 has a guaranteed residual value
from the vendor that 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, 2003
and 2002 are as follows: 2003
    
    2002Minimum lease receivable
    
    $
    12,107,876
    
    
    $
    12,643,883Allowance for uncollectible receivables
    
    
    (1,889,546
    )
    
    
    (2,141,106
    )Net minimum lease receivable
    
    
    10,218,330
    
    
    
    10,502,777Unearned interest income
    
    
    (2,598,497
    )
    
    
    (2,368,312
    )Net investment in sales-type leases
    
    
    7,619,833
    
    
    
    8,134,465Less current portion
    
    
    (2,217,101
    )
    
    
    (1,427,617
    )Net amount due after one year
    
    $
    5,402,732
    
    
    $
    6,706,848
 Future minimum lease rentals for sales-type leases are as follows: Year
    
    Amount2004
    
    $
    3,994,3152005
    
    
    3,572,7792006
    
    
    2,895,5342007
    
    
    1,645,248Total
    
    $
    12,107,876
 Gains on disposition of revenue equipment leased to owner-operators, interest
income on these leases, and provisions for bad debts related to sales-type
leases are included as components of cost of independent contractors in the
accompanying consolidated statements of operations. The income from these
items totaled $182,113, $1,857,793 and $526,707, for the years ended December
31, 2003, 2002 and 2001, respectively. F-11




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Boyd Bros Transportation, Inc.
Notes to Consolidated Financial Statements Operating Leases- The Company 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 $302,521 and $664,519, and accumulated
depreciation of $179,111 and $295,302 at December 31, 2003 and 2002,
respectively. Total rental income from operating leases was $257,188, $384,946
and $328,331 for the years ended December 31, 2003, 2002 and 2001,
respectively, and is included as a component of cost of independent contractors
in the accompanying Consolidated Statements of Operations. Future minimum lease
rentals for operating leases are not significant. 3. Borrowing Arrangements Long-term debt at December 31, 2003 and 2002 is summarized as follows: 2003
    
    2002Revenue equipment obligations:LIBOR plus 2.50% (3.67% - 2003 and 3.63% - 2002)

Notes payable to banks in monthly installments through September 2008
    
    $
    10,930,398
    
    
    $
    8,519,700LIBOR plus 1.25% subject to 3.625% minimum (3.625% - 2003 and 2002)

Notes payable to banks in monthly installments through July 2009
    
    
    4,954,472
    
    
    
    8,541,151LIBOR plus 2.35% (3.52% - 2003)

Notes payable to banks in monthly installments through May 2008
    
    
    3,056,993
    
    
    
    LIBOR plus 2.38% (3.55% - 2003 and 4.15% - 2002)

Notes payable to banks in monthly installments through June 2007
    
    
    2,248,846
    
    
    
    2,878,004Fixed rate of 5.00%

Notes payable to finance company in monthly installments through January 2008
    
    
    1,617,009
    
    
    
    Fixed rate of 5.60%

Notes payable to finance company in monthly installments through March 2007
    
    
    1,574,035
    
    
    
    539,939LIBOR plus 2.00% (3.16% - 2003 and 3.82% - 2002)

Notes payable to banks in monthly installments through November 2006
    
    
    767,826
    
    
    
    1,436,593Fixed rate of 5.75%

Notes payable to finance company in monthly installments through July 2007
    
    
    556,486
    
    
    
    8,090,630LIBOR plus 2.85% (4.02% - 2003)

Notes payable to banks in monthly installments through May 2009
    
    
    516,245
    
    
    
    LIBOR plus 1.75% (3.515% - 2003)

Notes payable to banks in monthly installments through February 2008
    
    
    317,294
    
    
    
    Other obligations:LIBOR plus 1.50% (2.678% - 2003 and 2.93% - 2002)

Note payable to bank in monthly installments through February 2006
    
    
    3,344,097
    
    
    
    3,618,548Total
    
    
    29,883,701
    
    
    
    33,624,565Less current maturities
    
    
    10,498,666
    
    
    
    14,488,695Long-term debt
    
    $
    19,385,035
    
    
    $
    19,135,870
 F-12




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##### Table of Contents



Boyd Bros Transportation, Inc.
Notes to Consolidated Financial Statements Revenue equipment obligations are collateralized by revenue equipment. Other
obligations are collateralized by the Birmingham, Alabama terminal building. The notes payable to banks bear interest ranging from LIBOR plus 1.25% to LIBOR
plus 2.85% based on the Companys level of cash flows as defined in their loan
agreements. Long-term debt is scheduled to mature as follows: Year
    
    Amount2004
    
    $
    10,498,6662005
    
    
    5,882,3442006
    
    
    5,276,2762007
    
    
    6,486,9532008
    
    
    1,432,201Thereafter
    
    
    307,261Total
    
    $
    29,883,701
 The Company also has a $2,500,000 line of credit under a commercial revolving
note expiring May 25, 2004, bearing interest at the banks prime rate (4.0% at
December 31, 2003) minus 0.25% and collateralized by trade accounts receivable
and other working capital asset items. The line had an outstanding balance of
$1,141,772 at December 31, 2003 with availability of $1,358,228. Covenants under these loan agreements require the Company, among other things,
to maintain tangible net worth, as defined, and to maintain certain financial
ratios. On January 23 and February 23, 2004, the Company received two waivers
from two of its lenders due to non-compliance with its cash flow ratio and for
exceeding annual capital expenditure limits. Management anticipates the Company
will be in compliance with these covenants in 2004. 4. Commitments and Contingencies Self-Insurance Accruals At December 31, 2003, the Company is self-insured as
follows: Retention AmountPer OccurrenceWorkers compensation
    
    $
    500,000Liability  body injury
    
    $
    750,000
    *Liability  property damage
    
    $
    750,000
    *Employee medical and hospitalization
    
    $
    175,000
    **Cargo loss and damage
    
    $
    750,000
    *General liability
    
    $
    750,000
    *Environmental losses
    
    No limit
  *
    
    These coverages are all included in one retention amount per occurrence.
Maximum retention is $750,000 per
occurrence.**
    
    Retention amount is per person per year. The above retention amounts represent rates that were negotiated with the
Companys insurance carriers at June 30, 2003. Retention amounts under other
previous insurance programs may vary from those stated above. At December 31,
2003, the Company has recorded liabilities for retention amounts related to
claims under previous insurance coverage. From July 1, 2000 through June 30,
2002, the Company had a retention amount per occurrence under workers
compensation of $250,000. Prior to June 30, 2000, workers compensation
insurance was provided under fully insured policies. The Company currently self-insures for a portion of the claims exposure
resulting from cargo loss, personal injury, and property damage, combined up to
$750,000 per occurrence, effective July 1, 2003. In addition, costs above the
$750,000 self-insured amount, up to the Companys coverage amount of two
million dollars, will be shared by the F-13




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##### Table of Contents



Boyd Bros Transportation, Inc.
Notes to Consolidated Financial Statements Company at a rate of thirty-three
percent. Costs and claims in excess of the Companys coverage amount of two
million dollars will be borne solely by the Company. Also, effective July 1,
2003, the health insurance self-insurance level is $175,000 per person per
year. 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. A Company driver was involved in an accident in the first quarter of 2002 that
resulted in a third party fatality. Company drivers were also involved in five
motor vehicle accidents resulting in fatalities during 2003, one of which
involved personal injury to three individuals. During the first quarter of
2002, the self-insured amount for cargo loss personal injury, and property
damage, combined was $500,000 per occurrence, which would be the amount
applicable to the accident during the first quarter of 2002. The self-insured
amount for the two accidents in the first half of 2003 was $750,000, with the
Company also responsible for its shared amount of 50% of any amounts between
$750,000 and the $2 million insurance coverage and all amounts in excess of the
insured amount. The company was involved in three accidents involving
fatalities during the third quarter of 2003. The self-insured amount relating
to these accidents is $750,000, with the Company also responsible for its
shared amount of 33% of any amounts in excess of $750,000 up to $2 million
insurance coverage and all amounts in excess of the insured amount. Each of these accidents, taken separately, has the potential to cause the
Company to reach its total per occurrence retention amount for insurance
purposes. To date, five lawsuits have been filed against the Company with
respect to the fatalities arising from these accidents. If the Company is
ultimately found to have some liability for one or more of these accidents, the
Company would seek to pay or structure payments of the amount due from its
operating cash flows and, if needed, additional bank financing. Although the
Company does not expect this to occur, it is possible that liability resulting
from these accidents could exceed the Companys operating cash flows and
available financing. Therefore, there can be no assurance that the Companys
operations and financial condition would not be materially affected if the
Company were found to have liability for one or more of these accidents. If
insurance premiums continue to increase, and the Company is unable to offset
the increase with higher freight rates, the Companys operations and financial
condition could be adversely affected. Letters of Credit The Company has outstanding letters of credit at December
31, 2003 totaling approximately $6.3 million to cover liability insurance
claims and claims related to its previous self-insured workers compensation
program, and to purchase revenue equipment. 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, 2003, 2002 and 2001 were $222,285, $241,940 and
$226,731, respectively. Litigation  As discussed above, Company drivers were involved in a motor
vehicle accident in the first quarter of 2002, two accidents in the first half
of 2003, and three accidents in the third quarter of 2003 that resulted in
third party fatalities. Five suits have been filed against the Company with
respect to these matters. Each of these matters is in the preliminary stage;
therefore, it is not possible for management to fully assess the potential
liability of the Company in these matters. However, based on currently
available information, it is the view of management that, in the event the
Company is ultimately found to have some liability for one or more of these
accidents, operating cash flows, insurance proceeds and, if needed, additional
bank financing would be sufficient to cover any amounts payable. However, the
potential exists for unanticipated material adverse judgments against the
Company. The Company has provided for its best estimate of losses on these
claims at December 31, 2003 in the accompanying consolidate balance sheet. The Company is a party from time to time to various legal proceedings that are
incidental to its business. Certain of these cases filed against the Company
and other companies engaged in businesses similar to the Company often allege,
among other things, personal injury and property damage. These types of suits
sometimes seek the imposition of large amounts of compensatory and punitive
damages and trials by juries. In the opinion of the Companys management, the
ultimate liability, if any, with respect to the proceedings in which the
Company is currently involved is not presently expected to have a material
adverse effect on the Company. However, the potential exists for unanticipated
material adverse judgments against the Company. F-14




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##### Table of Contents



Boyd Bros Transportation, Inc.
Notes to Consolidated Financial Statements 5. 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. At December 31, 2003 and 2002, none was outstanding. Employee Stock Purchase Plan The Company has an Employee Stock Purchase Plan
under which 175,000 shares of the Companys common stock may be issued to
eligible employees at a price equal to the lesser of 90% of the market price of
the stock as of the first or last day of the offering periods (as defined).
Employees may elect to have a portion of their compensation withheld, subject
to certain limits, to purchase the Companys common stock. The expense
associated with this plan in 2003, 2002 and 2001 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
2003, 2002, and 2001. Options vest 100% immediately if the market price is
double the issuance price for three consecutive days. Due to this vesting
policy, 10,000 options vested fully on August 7, 2003 and 355,450 vested fully
on September 9, 2003. Information regarding the Plan is summarized below: WeightedAverageExerciseShares
    
    PriceOutstanding at December 31, 2000
    
    
    408,300
    
    
    $
    9.62Granted
    
    
    20,000
    
    
    
    2.55Terminated
    
    
    (343,100
    )
    
    
    9.54Outstanding at December 31, 2001
    
    
    85,200
    
    
    
    8.28Granted
    
    
    390,450
    
    
    
    2.67Outstanding at December 31, 2002
    
    
    475,650
    
    
    
    3.67Terminated
    
    
    26,200
    
    
    
    2.83Outstanding at December 31, 2003
    
    
    449,450
    
    
    $
    3.64Options exercisable at December 31, 2001
    
    
    65,650
    
    
    $
    7.75Options exercisable at December 31, 2002
    
    
    83,600
    
    
    $
    7.33Options exercisable at December 31, 2003
    
    
    445,600
    
    
    $
    3.58
 The following table summarizes information concerning stock options outstanding
and options exercisable at December 31, 2003: Options Outstanding
    
    Options ExercisableWeightedAverage
    
    Weighted
    
    
    
    
    
    WeightedRange of
    
    Number of
    
    Remaining
    
    Average
    
    Number of
    
    AverageExercise
    
    Shares
    
    Contractual
    
    Exercise
    
    Shares
    
    ExercisePrices
    
    Outstanding
    
    Life
    
    Price
    
    Exercisable
    
    Price$2.00 - $  6.00
    
    
    389,950
    
    
    
    8.0
    
    
    $
    2.66
    
    
    
    389,950
    
    
    $
    2.66$6.00 - $11.00
    
    
    59,500
    
    
    
    3.0
    
    
    $
    10.05
    
    
    
    55,650
    
    
    $
    10.04449,450
    
    
    
    7.4
    
    
    $
    3.64
    
    
    
    445,600
    
    
    $
    3.58
 F-15




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##### Table of Contents



Boyd Bros Transportation, Inc.
Notes to Consolidated Financial Statements 6. Income Taxes The provision for income taxes for the years ended December 31, 2003, 2002 and
2001 consisted of the following: 2003
    
    2002
    
    2001Current:Federal
    
    $
    231,434
    
    
    $
    2,660,536
    
    
    $
    (24,428
    )State
    
    
    24,766
    
    
    
    357,139
    
    
    
    (3,893
    )Total current provision (benefit)
    
    
    256,200
    
    
    
    3,017,675
    
    
    
    (28,321
    )Deferred:Federal
    
    
    83,589
    
    
    
    (2,362,812
    )
    
    
    21,990State
    
    
    16,279
    
    
    
    (194,714
    )
    
    
    11,369Total deferred (benefit) provision
    
    
    99,868
    
    
    
    (2,557,526
    )
    
    
    33,359Total provision for income taxes
    
    $
    356,068
    
    
    $
    460,149
    
    
    $
    5,038
 Total income tax provisions for 2003, 2002 and 2001 are 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: 2003
    
    2002
    
    2001Income tax provision (benefit) at expected
federal income tax rate
    
    $
    242,263
    
    
    $
    317,758
    
    
    $
    (136,565
    )State income taxes, net of federal tax effect
    
    
    27,090
    
    
    
    107,201
    
    
    
    4,934Nondeductible operating expenses
    
    
    11,186
    
    
    
    10,419
    
    
    
    15,394Nondeductible
fines and penalties
    
    
    33,136
    
    
    
    9,832
    
    
    
    34,546Nondeductible
acquisition costs
    
    
    22,441
    
    
    
    22,441
    
    
    
    22,441Nondeductible
goodwill amortization
    
    
    
    
    

    
    
    

    76,502Other
    
    
    19,952
    
    
    
    (7,502
    )
    
    
    (12,304
    )$
    356,068
    
    
    $
    460,149
    
    
    $
    5,038
 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, 2003 and 2002
are as follows: 2003
    
    2002Deferred tax liabilities:Tax over book depreciation
    
    $
    12,333,267
    
    
    $
    12,179,379Prepaid expenses deductible when paid
    
    
    470,683
    
    
    
    476,943Total deferred tax liabilities
    
    $
    12,803,950
    
    
    $
    12,656,322Deferred tax assets:Accrued self insurance claims
    
    $
    2,058,059
    
    
    $
    1,750,732Other accrued expenses not deductible until paid
    
    
    28,470
    
    
    
    117,519Allowance for losses on receivables
    
    
    840,045
    
    
    
    962,681State NOL carryforward
    
    
    
    
    
    
    45,492Other
    
    
    33,937
    
    
    
    36,327Total deferred tax assets
    
    
    2,960,511
    
    
    
    2,912,751Net deferred tax liabilities
    
    $
    9,843,439
    
    
    $
    9,743,571
 The above amounts are reflected in the accompanying consolidated balance sheets as: 2003
    
    2002Current assets
    
    $
    2,571,959
    
    
    $
    2,378,688Noncurrent liabilities
    
    
    (12,415,398
    )
    
    
    (12,122,259
    )Net deferred tax liabilities
    
    $
    9,843,439
    
    
    $
    9,743,571
 F-16




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##### Table of Contents



Boyd Bros Transportation, Inc.
Notes to Consolidated Financial Statements 7. Major Customers The Companys largest 25, 10 and 5 customers, predominately within the Boyd
division, accounted for approximately 50%, 35% and 25%, respectively, of the
Companys consolidated revenues during the year ended December 31, 2003. Many
of the Companys largest 25 customers are publicly-held companies. The Company
does not believe that it is dependent upon any single customer. Sales to the
Companys largest customer amounted to 12%, 10% and 10%, of consolidated
operating revenues during 2003, 2002 and 2001, respectively. Customers in the
steel industry accounted for 24%, 39% and 42% of the Companys consolidated
operating revenues for the years ended December 31, 2003, 2002 and 2001,
respectively. 8. Segment Information The Company has three reportable segments: the Boyd division (Boyd), the
Logistics division (Logistics), and the WTI division (WTI). Boyd is a
flatbed carrier that hauls primarily steel and building products throughout
most of the continental United States, and operated an average of 711 trucks
during 2003. Boyd averaged 522 company drivers and 189 owner-operators during
2003. Logistics brokers freight by identifying external shipping needs and
matching available external carrier resources to those needs. This division
requires minimal overhead and capital resources and provides a service through
logistically coordinating needs for carriers to available carriers and
scheduling the services to be provided. All carriers brokered through Logistics
are responsible for maintaining proper insurance coverage and are required to
provide proof of such coverage prior to brokerage of a load. WTI is a flatbed
carrier that hauls steel and roofing products, primarily in the
eastern two-thirds of the United States, and operated an average of 216 tractors during
2003. WTI averaged 36 company drivers and 180 owner-operators during 2003. Due
to the significant growth of Logistics, and the operating characteristics that
differentiate it from the Boyd and WTI divisions, management now views
Logistics as a separate reportable segment. The Company formed a new subsidiary
that contains the assets and liabilities of the Logistics operations. Segment reporting information is as follows: F-17




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##### Table of Contents



Boyd Bros Transportation, Inc.
Notes to Consolidated Financial Statements IntersegmentBoyd
    
    Logistics
    
    WTI
    
    Eliminations
    
    TotalResults of OperationsYear Ended December 31, 2003Operating revenues
    
    $
    99,909,480
    
    
    $
    9,570,777
    
    
    $
    24,865,395
    
    
    
    
    
    
    $
    134,345,652Operating expenses
    
    
    98,757,340
    
    
    
    9,099,562
    
    
    
    24,418,020
    
    
    
    
    
    
    
    132,274,922Operating income
    
    
    1,152140
    
    
    
    471,215
    
    
    
    447,375
    
    
    
    
    
    
    
    2,070,730Operating ratio
    
    
    98.8
    %
    
    
    95.1
    %
    
    
    98.2
    %
    
    
    
    
    
    
    98.5
    %Year Ended December 31, 2002Operating revenues
    
    $
    99,761,284
    
    
    $
    7,086,596
    
    
    $
    20,944,516
    
    
    
    
    
    
    $
    127,792,396Operating expenses
    
    
    98,131,894
    
    
    
    6,680,625
    
    
    
    20,241,710
    
    
    
    
    
    
    
    125,054,229Operating income
    
    
    1,629,390
    
    
    
    405,971
    
    
    
    702,806
    
    
    
    
    
    
    
    2,738,167Operating ratio
    
    
    98.4
    %
    
    
    94.3
    %
    
    
    96.6
    %
    
    
    
    
    
    
    97.9
    %Year Ended December 31, 2001Operating revenues
    
    $
    104,266,025
    
    
    
    3,853,497
    
    
    $
    19,587,412
    
    
    $
    (147,340
    )
    
    $
    127,559,594Operating expenses
    
    
    100,941,389
    
    
    
    3,821,081
    
    
    
    20,725,054
    (a)
    
    
    (147,340
    )
    
    
    125,340,184Operating income (loss)
    
    
    3,324,636
    
    
    
    32,416
    
    
    
    (1,137,642
    )
    
    
    
    
    
    
    2,219,410Operating ratio
    
    
    96.9
    %
    
    
    99.2
    %
    
    
    105.8
    %
    
    
    
    
    
    
    98.3
    %Identifiable AssetsAs of December 31, 2003Cash and cash equivalents
    
    $
    116,141
    
    
    
    
    
    
    $
    167,333
    
    
    
    
    
    
    $
    283,474Property and equipment
    
    
    47,804,787
    
    
    
    310,784
    
    
    
    4,291,190
    
    
    
    
    
    
    
    52,406,761Goodwill, net
    
    
    14,300
    
    
    
    
    
    
    
    3,452,446
    
    
    
    
    
    
    
    3,466,746Capital expenditures
    
    
    13,348,312
    
    
    
    90,249
    
    
    
    114,526
    
    
    
    
    
    
    
    13,553,087Total assets
    
    
    72,230,246
    
    
    
    904,813
    
    
    
    6,735,025
    
    
    
    
    
    
    
    79,870,084Long-term debt, including current
maturities
    
    
    28,281,728
    
    
    
    
    
    
    
    1,601,973
    
    
    
    
    
    
    
    29,883,701As of December 31, 2002Cash and cash equivalents
    
    $
    97,157
    
    
    
    
    
    
    $
    195,357
    
    
    
    
    
    
    $
    292,514Property and equipment
    
    
    49,978,922
    
    
    
    293,208
    
    
    
    4,452,362
    
    
    
    
    
    
    
    54,724,492Goodwill, net
    
    
    
    
    
    
    
    
    
    
    3,452,446
    
    
    
    
    
    
    
    3,452,446Capital expenditures
    
    
    12,221,777
    
    
    
    106,345
    
    
    
    112,228
    
    
    
    
    
    
    
    12,440,350Total assets
    
    
    75,437,558
    
    
    
    648,542
    
    
    
    5,495,981
    
    
    
    
    
    
    
    81,582,081Long-term debt, including current
maturities
    
    
    31,551,103
    
    
    
    
    
    
    
    2,073,462
    
    
    
    
    
    
    
    33,624,565As of December 31, 2001Cash and cash equivalents
    
    $
    943,574
    
    
    
    
    
    
    $
    1,277,881
    
    
    
    
    
    
    $
    2,221,455Property and equipment
    
    
    54,486,189
    
    
    
    254,659
    
    
    
    3,772,426
    
    
    
    
    
    
    
    58,513,274Goodwill, net
    
    
    
    
    
    
    
    
    
    
    3,452,446
    
    
    
    
    
    
    
    3,452,446Capital expenditures
    
    
    7,128,629
    
    
    
    383,080
    
    
    
    911,397
    
    
    
    
    
    
    
    8,423,106Total assets
    
    
    80,197,988
    
    
    
    594,615
    
    
    
    5,290,903
    
    
    
    
    
    
    
    86,083,506Long-term debt, including current
maturities
    
    
    37,587,257
    
    
    
    
    
    
    
    1,599,399
    
    
    
    
    
    
    
    39,186,656
  (a)
    
    Amounts for 2001 included goodwill amortization expense of $223,800. Upon
the adoption of SFAS No. 142 on January 1,
2002, the Company ceased amortization of goodwill. F-18




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##### Table of Contents



Boyd Bros Transportation, Inc.
Notes to Consolidated Financial Statements 9. Quarterly Results of Operations (Unaudited) The following is a summary of the quarterly results of operations for the years
ended December 31, 2003 and 2002 (in thousands, except per share data). The
summary of quarterly earnings per share may not agree with annual earnings per
share. 2003March 31,
    
    June 30,
    
    September 30,(a)
    
    December 31,Operating revenues
    
    $
    32,577
    
    
    $
    34,368
    
    
    $
    34,123
    
    
    $
    33,278Operating income (loss)
    
    
    338
    
    
    
    1,414
    
    
    
    (428
    )
    
    
    747Net income (loss)
    
    
    4
    
    
    
    645
    
    
    
    (421
    )
    
    
    128Basic net income (loss)
per share
    
    
    0.00
    
    
    
    0.24
    
    
    
    (0.16
    )
    
    
    0.05Diluted net income (loss)
per share
    
    
    0.00
    
    
    
    0.23
    
    
    
    (0.16
    )
    
    
    0.04
 2002March 31,
    
    June 30,
    
    September 30,
    
    December 31,Operating revenues
    
    $
    30,633
    
    
    $
    33,059
    
    
    $
    33,618
    
    
    $
    30,482Operating income (loss)
    
    
    (55
    )
    
    
    1,530
    
    
    
    1,342
    
    
    
    (79
    )Net income (loss)
    
    
    (288
    )
    
    
    607
    
    
    
    495
    
    
    
    (340
    )Basic net (loss) income
per share
    
    
    (0.11
    )
    
    
    0.22
    
    
    
    0.18
    
    
    
    (0.13
    )Diluted net (loss) income
per share
    
    
    (0.11
    )
    
    
    0.22
    
    
    
    0.18
    
    
    
    (0.13
    )
  (a)
    
    The third quarter of 2003 included an increase in the provision for
potential bad debts on owner-operator leases of approximately $460,000. 10. Proposed Merger On December 31, 2003, the Company announced that it had entered into an
Agreement and Plan of Merger, dated as of December 31, 2003 (the Merger
Agreement), which sets forth the terms and conditions of the proposed
acquisition (the Merger) of the Company by BBT Acquisition Corporation, a
Delaware corporation (BBT Corp.) controlled by Dempsey Boyd, the founder and
former Chairman and CEO of the Company, his daughter, Gail B. Cooper, the
current President and CEO of the Company, his daughter, Ginger B. Tibbs, the
current Secretary/Treasurer of the Company, and his wife, Frances S. Boyd. Under the terms of the Merger Agreement, stockholders of the Company (other
than BBT Corp. and the Boyd family members) will receive $7.00 per share, in
cash, for each outstanding share of Company Common Stock owned by such
stockholders. The transaction is structured as a forward merger in which BBT
Corp. will merge with and into the Company, with the Company continuing as the
surviving corporation. The boards of directors of each of the Company and BBT
Corp. have unanimously approved the Merger Agreement and the Merger. In the
case of the Companys Board, the approval follows the unanimous recommendation
of a special committee of outside directors of the Company that was formed to
evaluate and respond to the original proposal of Mr. Boyd and Ms. Cooper. Completion of the proposed merger between the Company and BBT Acquisition
Corporation is conditioned upon, among other things, the availability of
sufficient funds for BBT Acquisition Corporation to acquire the outstanding
shares of common stock of the Company. BBT Acquisition Corporation anticipates
that the merger would be funded from a bank financing in the form of (i) an
approximately $13 million revolving line of credit, and (ii) a $40 million term
loan. The merger financing would include a refinancing of all of the Companys
outstanding debt as described above. The Company and BBT Acquisition
Corporation are currently involved in the negotiation of a definitive
commitment to finance the merger. As of December 31, 2003, the Company had a
receivable for approximately $181,000 due from BBT Acquisition Corporation for
payment of expenses including, but not limited to, legal fees and valuations
associated with the transaction. F-19




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##### Table of Contents



Boyd Bros Transportation, Inc.
Notes to Consolidated Financial Statements The Merger is subject to (i) approval by the holders of a majority of the
outstanding shares of the Companys Common Stock which are outstanding as of
the record date for the special meeting of the Companys stockholders to be
called to consider the Merger, (ii) the completion of the financing
arrangements necessary to consummate the Merger, and (iii) certain other
closing conditions. F-20




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##### Table of Contents



Boyd Bros. Transportation Inc.Index to Consolidated Financial Statements Schedule Report of Independent Certified Public Accountants
    
    F-21Schedule II  Valuation and Qualifying Accounts and Reserves
    
    F-22
 F-21




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##### Table of Contents



Report of Independent Certified Public Accountants Boyd Bros Transportation, Inc.
Clayton, Alabama The audits referred to in our report dated February 12, 2004, except for Note
3, which is as of February 23, 2004 relating to the consolidated financial
statements of Boyd Bros. Transportation, Inc., which is contained in Item 8 of
this Form 10-K, included the audit of the financial statement schedule listed
in the accompanying index. This financial statement schedule is the
responsibility of the Companys management. Our responsibility is to express
an opinion on the financial statement schedule based upon our audits. In our opinion, such
financial statement schedule presents fairly, in all material respects, the
information set forth therein.  /s/ BDO Seidman, LLP Atlanta, Georgia
February 12, 2004 F-22




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##### Table of Contents



SCHEDULE II
BOYD BROS. TRANSPORTATION INC.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
For the Three Fiscal Years Ended December 31, 2003
(in Thousands) Additions
    
    AdditionsBalance
    
    Charged to
    
    Charged toBeginning
    
    Costs and
    
    Other
    
    
    
    
    
    Balance atDescription
    
    Of Year
    
    Expenses
    
    Accounts
    
    Deduction(a)
    
    End of YearAllowance for doubtful accounts- deducted
from trade receivables in
the balance sheetYear ended December 31, 2003
    
    $
    341
    
    
    $
    184
    
    
    $
    
    
    
    $
    202
    
    
    $
    323Year ended December 31, 2002
    
    $
    319
    
    
    $
    79
    
    
    $
    
    
    
    $
    57
    
    
    $
    341Year ended December 31, 2001
    
    $
    276
    
    
    $
    625
    
    
    $
    
    
    
    $
    582
    
    
    $
    319
 AdditionsBalance at
    
    Charged toBeginning
    
    Costs and
    
    
    
    
    
    Balance atDescription
    
    Of Year
    
    Expenses
    
    Deductions(a)
    
    End of YearAllowance for uncollectible receivables related to sales-type leases
-deducted from investment in sales-type leases in the balance sheetYear ended December 31, 2003
    
    $
    2,141
    
    
    $
    7,045
    
    
    $
    7,296
    
    
    $
    1,890Year ended December 31, 2002
    
    $
    1,590
    
    
    $
    6,788
    
    
    $
    6,237
    
    
    $
    2,141Year ended December 31, 2001
    
    $
    678
    
    
    $
    2,738
    
    
    $
    1,826
    
    
    $
    1,590
  (a)
    
    Uncollectible accounts written off. F-23