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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
 FORM 10-Q
 (Mark One)[X]
    
    QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2004 OR [  ]
    
    TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ______________________ to _____________________ Commission File Number 0-23948 Boyd Bros. Transportation Inc. (Exact name of
Registrant as specified in its charter)
 Delaware(State or other jurisdiction of
incorporation or organization)
    
    63-6006515(IRS Employer Identification
Number)
 3275 Highway 30, Clayton, Alabama 36016  (Address of principal executive offices)
(Zip Code)
 (334) 775-1400  (Registrants
telephone number, including area code)
 Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [  ] Indicate by check mark whether the registrant is an accelerated filter (as
defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X] Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of March 31, 2004. Common Stock, $.001 Par Value
    
    2,711,958(Class)
    
    (Number of Shares)




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INDEX Page NumberPart I. Financial InformationItem 1. Consolidated Financial StatementsConsolidated Balance Sheets March 31, 2004 (unaudited) and December 31, 2003
    
    
    3Consolidated Statements of Income (unaudited) Periods Ended March 31, 2004 and 2003
    
    
    5Consolidated Statements of Cash Flows (unaudited) Periods Ended March 31, 2004 and 2003
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    19Item 4. Controls and Procedures
    
    
    19Part II. Other InformationItem 1. Legal Proceedings
    
    
    20Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
    
    
    20Item 3. Defaults Upon Senior Securities
    
    
    20Item 4. Submission of Matters to a Vote of Security Holders
    
    
    20Item 5. Other Information
    
    
    20Item 6. Exhibits and Reports on Form 8-K
    
    
    20Signatures
    
    
    21EX-10.1  SECURITY AGREEMENTEX-31.1  SECTION 302 CERTIFICATION OF THE CEOEX-31.2  SECTION 302 CERTIFICATION OF THE CFOEX-32.0  SECTION 906 CERTIFICATION OF THE CEO&CFO
  2




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BOYD BROS. TRANSPORTATION INC. 
 CONSOLIDATED BALANCE SHEETS March 31,
    
    DECEMBER 31,2004
    
    2003(UNAUDITED)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    19,753
    
    
    $
    283,474Accounts receivable, less allowance for doubtful accounts of
$338,426 (2004) and $323,426 (2003):Trade and interline
    
    
    11,795,122
    
    
    
    9,415,968Other
    
    
    942,565
    
    
    
    620,366Current portion of net investment in sales-type leases
    
    
    2,199,402
    
    
    
    2,217,101Parts and supplies inventory
    
    
    737,914
    
    
    
    677,899Prepaid licenses and permits
    
    
    204,212
    
    
    
    487,586Other prepaid expenses
    
    
    786,747
    
    
    
    952,751Deferred and refundable income taxes
    
    
    2,630,875
    
    
    
    2,571,959Total current assets
    
    
    19,316,590
    
    
    
    17,227,104PROPERTY AND EQUIPMENT:Land and land improvements
    
    
    2,952,576
    
    
    
    2,952,576Buildings
    
    
    7,976,061
    
    
    
    7,976,061Revenue equipment
    
    
    63,620,810
    
    
    
    63,005,857Other equipment
    
    
    13,114,616
    
    
    
    12,991,961Leasehold improvements
    
    
    386,384
    
    
    
    386,384Total
    
    
    88,050,447
    
    
    
    87,312,839Less accumulated depreciation and
amortization
    
    
    35,979,518
    
    
    
    34,906,078Property and equipment, net
    
    
    52,070,929
    
    
    
    52,406,761OTHER ASSETS:Net investment in sales-type leases
    
    
    4,711,465
    
    
    
    5,402,732Goodwill, net of accumulated amortization of $912,077
    
    
    3,466,746
    
    
    
    3,466,746Revenue equipment held for lease
    
    
    399,693
    
    
    
    981,974Deposits and other assets
    
    
    624,980
    
    
    
    384,767Total other assets
    
    
    9,202,884
    
    
    
    10,236,219TOTAL
    
    $
    80,590,403
    
    
    $
    79,870,084
 See notes to unaudited consolidated financial statements. 3




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BOYD BROS. TRANSPORTATION INC. CONSOLIDATED BALANCE SHEETS March 31,
    
    DECEMBER 31,2004
    
    2003(UNAUDITED)LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts
payable - trade and interline
    
    
    4,516,799
    
    
    
    3,362,064Line of credit
    
    
    2,149,514
    
    
    
    1,141,772Accrued liabilities:Self-insurance claims
    
    
    5,502,747
    
    
    
    5,480,194Salaries and wages
    
    
    816,589
    
    
    
    338,503Other
    
    
    920,153
    
    
    
    1,160,683Current maturities of long-term debt
    
    
    8,758,440
    
    
    
    10,498,666Total current liabilities
    
    
    22,664,242
    
    
    
    21,981,882LONG-TERM DEBT
    
    
    19,039,027
    
    
    
    19,385,035DEFERRED INCOME TAXES
    
    
    12,415,398
    
    
    
    12,415,398Total liabilities
    
    
    54,118,667
    
    
    
    53,782,315COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS 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 outstanding at March 31, 2004 and
December 31, 2003, respectively
    
    
    4,070
    
    
    
    4,070Additional paid-in capital
    
    
    16,884,622
    
    
    
    16,884,622Retained earnings
    
    
    19,207,122
    
    
    
    18,823,155Treasury stock at cost; 1,357,682 shares at March 31,2004
and December 31, 2003
    
    
    (9,624,078
    )
    
    
    (9,624,078
    )Total stockholders equity
    
    
    26,471,736
    
    
    
    26,087,769TOTAL
    
    $
    80,590,403
    
    
    $
    79,870,084
 See notes to unaudited consolidated financial statements. 4




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BOYD BROS. TRANSPORTATION INC. 
 CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended March 31,2004
    
    2003OPERATING REVENUES
    
    $
    34,617,390
    
    
    $
    32,577,476OPERATING EXPENSES:Salaries, wages and employee benefits
    
    
    10,127,732
    
    
    
    9,288,776Cost of independent contractors
    
    
    10,554,994
    
    
    
    10,545,354Operating supplies
    
    
    7,902,504
    
    
    
    6,931,122Operating taxes and licenses
    
    
    611,789
    
    
    
    601,614Insurance and claims
    
    
    1,090,769
    
    
    
    1,282,399Communications and utilities
    
    
    271,888
    
    
    
    331,847Depreciation and amortization
    
    
    2,659,397
    
    
    
    2,694,053Loss on disposition of property and equipment, net
    
    
    1,142
    
    
    
    Other
    
    
    497,857
    
    
    
    564,322Total operating expenses
    
    
    33,718,072
    
    
    
    32,239,487OPERATING INCOME
    
    
    899,318
    
    
    
    337,989OTHER INCOME (EXPENSES):Interest income
    
    
    330
    
    
    
    4,798Interest expense
    
    
    (257,705
    )
    
    
    (308,420
    )Other income (expenses)
    
    
    5,690
    
    
    
    (27,517
    )Other expenses, net
    
    
    (251,685
    )
    
    
    (331,139
    )INCOME BEFORE
PROVISION FOR INCOME TAXES
    
    
    647,633
    
    
    
    6,850PROVISION FOR INCOME TAXES
    
    
    263,666
    
    
    
    2,665NET INCOME
    
    $
    383,967
    
    
    $
    4,185BASIC NET INCOME PER SHARE
    
    $
    0.14
    
    
    $
    0.00DILUTED NET INCOME PER SHARE
    
    $
    0.13
    
    
    $
    0.00AVERAGE SHARES OUTSTANDING
    
    
    2,711,958
    
    
    


    2,710,665AVERAGE SHARES OUTSTANDING ASSUMING DILUTION
    
    
    2,950,653
    
    
    
    2,842,739
 See notes to unaudited consolidated financial statements. 5




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BOYD BROS. TRANSPORTATION INC. 
 CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED) Three Months Ended March 31,2004
    
    2003OPERATING ACTIVITIES:Net income
    
    $
    383,967
    
    
    $
    4,185Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    2,659,397
    
    
    
    2,694,053Provision for bad debts
    
    
    15,000
    
    
    
    21,960Net effect of sales-type leases on cost of independent contractors
    
    
    (291,621
    )
    
    
    (267,856
    )Loss on disposal of property and equipment, net
    
    
    1,142
    
    
    
    Changes in assets and liabilities that provided (used) cash:Accounts receivable
    
    
    (2,716,353
    )
    
    
    (2,444,475
    )Other current assets
    
    
    330,447
    
    
    
    450,461Deposits and other assets
    
    
    (14,926
    )
    
    
    Accounts payable- trade and interline
    
    
    1,154,735
    
    
    
    3,497,162Accrued liabilities and other current liabilities
    
    
    260,109
    
    
    
    (1,145,538
    )Net cash provided by operating activities
    
    
    1,781,897
    
    
    
    2,809,952INVESTING ACTIVITIES:Payments received on sales-type leases
    
    
    1,040,202
    
    
    
    784,459Capital expenditures:Revenue equipment
    
    
    (524,649
    )
    
    
    (585,859
    )Other equipment
    
    
    (156,719
    )
    
    
    (208,395
    )Proceeds from disposals of property and equipment
    
    
    232,340
    
    
    
    Net cash used in investing activities
    
    
    591,174
    
    
    
    (9,795
    )FINANCING ACTIVITIES:Proceeds from sales of common stock
    
    
    
    
    
    
    2,151Proceeds
from line of credit - net
    
    
    1,007,742
    
    
    
    473,747Proceeds from long-term debt
    
    
    
    
    
    
    382,060Principal payments on long-term debt
    
    
    (3,644,534
    )
    
    
    (3,754,442
    )Net cash used in financing activities
    
    
    (2,636,792
    )
    
    
    (2,896,484
    )NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (263,721
    )
    
    
    (96,327
    )CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    283,474
    
    
    
    292,514BALANCE AT END OF PERIOD
    
    $
    19,753
    
    
    $
    196,187SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid during the period for :Income taxes, net of refunds
    
    $
    123,942
    
    
    $
    1,637,989Interest
    
    $
    257,705
    
    
    $
    308,420SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES:Net investment in sales-type leases
    
    $
    39,615
    
    
    $
    127,993Dealer financed purchases of revenue equipment
    
    $
    1,558,300
    
    
    $
    
 See notes to unaudited consolidated financial statements. 6




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BOYD BROS. TRANSPORTATION INC. 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation The accompanying consolidated financial statements have been prepared in
compliance with Form 10-Q instructions and, thus, do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. In the
opinion of management, the statements reflect all adjustments, including those
of a normally recurring nature, necessary to present fairly the results of the
reported interim periods. Interim results are not necessarily indicative of
results for a full year. The statements should be read in conjunction with the
summary of accounting policies and notes to financial statements included in
the Companys latest annual report on Form 10-K. 2. Principles of Consolidation The consolidated financial statements include the accounts of Boyd Bros.
Transportation Inc. 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. 3. Environmental Matters The Companys operations are subject to certain 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. 4. Stockholders Equity Earnings Per Share
The following is a reconciliation from basic earnings per share to diluted
earnings per share for each of the periods presented: For the Quarter endedMarch 31,2004
    
    2003Numerator:Net income
    
    $
    383,967
    
    
    $
    4,185Denominator:Basic weighted-average shares outstanding
    
    
    2,711,958
    
    
    
    2,710,665Effect of dilutive stock options
    
    
    238,695
    
    
    
    132,074Diluted weighted-average shares outstanding
    
    
    2,950,653
    
    
    
    2,842,739Basic earnings per share
    
    $
    0.14
    
    
    $
    0.00Diluted earnings per share
    
    $
    0.13
    
    
    $
    0.00
 At March 31, 2004 and 2003 respectively, the Company had outstanding 59,500 and
62,200 in stock options granted that were antidilutive and, therefore, excluded
from the diluted earnings per share calculations for each period presented. 7




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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 the first quarter of 2004
or 2003. 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. 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 income and net income per share would
have differed from the amounts reported as follows: For the Quarter Ended March 31,
    
    2004
    
    2003Net income, as reported
    
    $
    383,967
    
    
    $
    4,185Stock-based employee compensation expense determined
under fair value basis, net of tax
    
    
    (5,677
    )
    
    
    (55,347
    )Pro forma net income (loss)
    
    $
    378,290
    
    
    $
    (51,162
    )Earnings per share:Basic -as reported
    
    $
    0.14
    
    
    $
    0.00Basic -pro forma
    
    $
    0.14
    
    
    $
    (0.02
    )Diluted -as reported
    
    $
    0.13
    
    
    $
    0.00Diluted -pro forma
    
    $
    0.13
    
    
    $
    (0.02
    )
 No options were granted in the first quarter of 2004 or 2003. 8




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5. Related Party Transactions The Company entered into an agreement with Dempsey Boyd to lease an aircraft
for Company use. The agreement is on a month-to-month basis. The Company pays
a monthly lease amount of $22,000 with an allowance of twenty hours of flight
time per 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 $44,000
in lease payments to Mr. Boyd during the first quarter of 2004. 6. 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. SFAS
No.142 requires, among other things, that companies no longer amortize
goodwill, but instead test goodwill for impairment at least annually. The
Company adopted SFAS Nos. 141 and 142 on January 1, 2002 and, accordingly,
ceased amortization of goodwill at that time. The Company evaluates its
goodwill for potential impairment in the fourth quarter of each year. As a
result of its evaluation in the fourth quarter of 2003, the Company determined
there was no impairment. No events have occurred since that assessment to
cause a significant change in the values used for evaluating impairment. 7. Recent Accounting Pronouncements On March 31, 2004, the FASB issued an Exposure Draft on Share-Based Payments,
which is a proposed amendment to FAS 123. The Exposure Draft would require all
share-based payments to employees, including grants of employee stock options,
to be recognized in the income statement based on their fair values. The FASB
expects to issue a final standard late in 2004 that would be effective for
public companies for fiscal years beginning after December 15, 2004. If the
exposure draft is issued in final form, the Company will be required to expense
the fair value of the stock options granted beginning January 1, 2005 and the
fair value of unvested prior grants. The expense for these options will occur
over the option vesting period. The Companys 2003 Form 10-K includes proforma
information in Note 1 regarding the impact of expensing stock options on the
Companys net income and earnings per share for prior years. 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 700 trucks
during the first quarter of 2004. Boyd averaged 545 company drivers and 155
owner-operators during the first quarter of 2004. 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 service 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 215 trucks during the first quarter of 2004. WTI
averaged 40 company drivers and 175 owner-operators during the first quarter of
2004. Unaudited segment reporting information for the periods ended March 31,
2004 and 2003 is as follows: 9




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##### Table of Contents



Results of Operations Three Months Ended March 31, 2004
    
    Boyd
    
    Logistics
    
    WTI
    
    TotalOperating revenues
    
    $
    25,747,341
    
    
    $
    2,828,088
    
    
    $
    6,041,961
    
    
    $
    34,617,390Operating expenses
    
    
    25,250,908
    
    
    
    2,563,627
    
    
    
    5,903,537
    
    
    $
    33,718,072Operating income
    
    
    496,433
    
    
    
    264,461
    
    
    
    138,424
    
    
    $
    899,318Operating ratio
    
    
    98.1
    %
    
    
    90.6
    %
    
    
    97.7
    %
    
    
    97.4
    %
 Three Months Ended March 31, 2003
    
    Boyd
    
    Logistics
    
    WTI
    
    TotalOperating revenues
    
    $
    24,311,657
    
    
    $
    2,738,900
    
    
    $
    5,526,919
    
    
    $
    32,577,476Operating expenses
    
    
    24,009,483
    
    
    
    2,593,347
    
    
    
    5,636,657
    
    
    
    32,239,487Operating income
    
    
    302,174
    
    
    
    145,553
    
    
    
    (109,738
    )
    
    
    337,989Operating ratio
    
    
    98.8
    %
    
    
    94.7
    %
    
    
    102.0
    %
    
    
    99.0
    %
 Identifiable Assets As of March 31, 2004
    
    Boyd
    
    Logistics
    
    WTI
    
    TotalCash and bank overdrafts
    
    $
    19,740
    
    
    $
    
    
    
    $
    13
    
    
    $
    19,753Property and equipment
    
    
    47,493,398
    
    
    
    277,757
    
    
    
    4,299,774
    
    
    
    52,070,929Goodwill, net
    
    
    
    
    
    
    14,300
    
    
    
    3,452,446
    
    
    
    3,466,746Capital expenditures
    
    
    2,181,005
    
    
    
    5,135
    
    
    
    53,528
    
    
    
    2,239,668Total assets
    
    
    72,471,103
    
    
    
    1,483,848
    
    
    
    6,635,452
    
    
    
    80,590,403Long-term debt (including current maturities)
    
    
    26,361,629
    
    
    
    
    
    
    
    1,435,838
    
    
    
    27,797,467
 As of December 31, 2003
    
    Boyd
    
    Logistics
    
    WTI
    
    TotalCash 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
    
    
    
    29,883,701
 10




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##### Table of Contents



9. Merger Agreement 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 Acquisition) 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 Acquisition and its stockholders) 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
Acquisition 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 Acquisition 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 $37 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 March 31, 2004, the Company had a
receivable for approximately $400,000 due from BBT Acquisition Corporation for
payment of expenses including, but not limited to, legal fees and valuations
associated with the transaction. 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. 11




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations The following discussion should be read in conjunction with the attached
interim consolidated financial statements and with the Companys 2003 Form
10-K, which included audited financial statements and notes thereto for the
fiscal year ended December 31, 2003, as well as 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. First Quarter Highlights  Revenue Growth.The Companys operating revenues increased by 6.3%, or
approximately $2 million in the first quarter of 2004 as compared to the same
period in 2003. The increase in total operating revenues was primarily due to
increased revenues generated by the Companys Boyd and WTI divisions. Boyds
operating revenues increased 5.9% over operating revenues from the first
quarter of 2003, and WTIs operating revenues increased 9.3% over the same
period last year. In each case, the increase in operating revenues was due to
both diversification outside of the steel and building materials industries and
increases in revenue per mile. Boyd revenue per mile increased by $0.09 per
mile and WTI revenue per mile increased by $0.11 per mile, in each case over
revenues per mile for the same period in 2003. Logistics operating revenues
increased 3.3% or $89,188 over the same period last year.  Driver Retention.Increases in driver pay and the implementation of a
new program for retention of new owner-operators helped to decrease driver
turnover. Boyd drivers received pay increases totaling $0.03 per mile during
the first quarter of 2004. Additionally, new owner-operators entering the Boyd
lease purchase program with less than one year of previous experience as an
owner-operator must work as Company drivers for a period of four (4) weeks.
The program allows drivers to become acclimated to working for Boyd prior to
entering the lease purchase program.   12




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##### Table of Contents



First Quarter Challenges  Fuel Costs.The increasing cost of diesel fuel continues to be one of
the Companys most difficult challenges. Fuel expense increased $520,483, or
11.3%, during the first quarter of 2004 as compared to the same period in 2003.
The Company has been able to partially offset increased fuel prices by
recovering fuel surcharges from customers. Fuel surcharge revenue, which is
included in operating revenues, increased $437,551 to $1,429,115, or 44.1%,
from $991,564 for the quarter ended March 31, 2003. Competitive conditions in
the transportation industry, as well as poor economic conditions in the steel
industry, have negatively impacted the Companys ability to pass through fuel
cost increases to its customers.  Increased Operating Expenses.Total operating expenses increased $1.5
million, or 4.6%, over the same period in 2003. Fuel expense was a large
component of this increase, as discussed above, but increases in salaries,
wages and employee benefits also contributed to the increase in total operating
expenses. Salaries, wages and employee benefits increased 9% during the first
quarter of 2004 as compared to the same period in 2003. The increase is
attributable to the Boyd division, both due to the increases in driver pay
during the first quarter of 2004 and an increase of approximately 400,000 miles
in the number of miles driven by Company drivers during the quarter compared to
the same period last year. Recent Developments On December 31, 2003, the Company announced that it had entered into an
Agreement and Plan of Merger which sets forth the terms and conditions of the
proposed acquisition of the Company by BBT Acquisition Corporation, a Delaware
corporation (BBT Acquisition). BBT Acquisition is controlled by Dempsey
Boyd, the founder of the Company, Gail B. Cooper, the President and Chief
Executive Officer of the Company, Frances S. Boyd and Ginger B. Tibbs, and
together they hold approximately 72% of the Companys outstanding common stock.
The Agreement and Plan of Merger provides for the merger of BBT Acquisition
into the Company and results in each stockholder of the Company (other than BBT
Acquisition and its stockholders) receiving $7.00 in cash for each share of
Company common stock owned at the time of the merger. On May 5, 2004, the Company announced that it had entered into an amendment to
the merger agreement with BBT Acquisition extending its termination date until
June 30, 2004, from April 30, 2004. The Company also announced that a
commitment for financing for the merger had been entered into by the parties,
subject to certain closing conditions. The transaction remains subject to the
completion of financing arrangements, approval by a majority of the Companys
stockholders, and certain other customary closing conditions. 13




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##### Table of Contents



Quarterly Review: 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
    
    WTIQuarter Ended March 31,2004
    
    2003
    
    2004
    
    2003
    
    2004
    
    2003
    
    2004
    
    2003Operating revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating expensesSalaries, wages, and employee
benefits
    
    
    29.3
    
    
    
    28.5
    
    
    
    35.4
    
    
    
    34.4
    
    
    
    7.8
    
    
    
    7.4
    
    
    
    12.9
    
    
    
    13.0Cost of independent contractors
    
    
    30.5
    
    
    
    32.4
    
    
    
    17.9
    
    
    
    20.2
    
    
    
    78.0
    
    
    
    81.2
    
    
    
    62.0
    
    
    
    61.5Fuel
    
    
    14.8
    
    
    
    14.1
    
    
    
    18.6
    
    
    
    17.7
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    5.3
    
    
    
    5.2Operating supplies
    
    
    8.0
    
    
    
    7.2
    
    
    
    9.5
    
    
    
    8.3
    
    
    
    2.4
    
    
    
    2.6
    
    
    
    4.7
    
    
    
    4.4Operating taxes and licenses
    
    
    1.8
    
    
    
    1.8
    
    
    
    1.9
    
    
    
    2.1
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    2.0
    
    
    
    1.6Insurance and claims
    
    
    3.1
    
    
    
    3.9
    
    
    
    3.6
    
    
    
    3.7
    
    
    
    0.8
    
    
    
    0.0
    
    
    
    2.4
    
    
    
    6.8Communications and utilities
    
    
    0.8
    
    
    
    1.0
    
    
    
    0.8
    
    
    
    1.1
    
    
    
    0.6
    
    
    
    1.2
    
    
    
    0.7
    
    
    
    0.8Depreciation and amortization
    
    
    7.7
    
    
    
    8.4
    
    
    
    9.3
    
    
    
    10.1
    
    
    
    0.8
    
    
    
    0.3
    
    
    
    4.1
    
    

    
    4.1Gain on disposition of property
and equipment, net
    
    
    0.0
    
    
    
    (0.0
    )
    
    
    0.0
    
    
    
    (0.0
    )
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0Other
    
    
    1.4
    
    
    
    1.7
    
    
    
    1.1
    
    
    
    1.1
    
    
    
    0.2
    
    
    
    2.0
    
    
    
    3.6
    
    
    
    4.6Total operating expenses
    
    
    97.4
    
    
    
    99.0
    
    
    
    98.1
    
    
    
    98.7
    
    
    
    90.6
    
    
    
    94.7
    
    
    
    97.7
    
    
    
    102.0Operating (loss) income
    
    
    2.6
    
    
    
    1.0
    
    
    
    1.9
    
    
    
    1.3
    
    
    
    9.4
    
    
    
    5.3
    
    
    
    2.3
    
    
    
    (2.0
    )Interest expense, net

    
    
    (0.7
    )
    
    
    (1.0
    )
    
    
    (1.1
    )
    
    
    (1.5
    )
    
    
    0.0
    
    
    
    (0.0
    )
    
    
    0.8
    
    
    
    0.5(Loss) income before income taxes
    
    
    1.9
    
    
    
    0.0
    
    
    
    0.8
    
    
    
    (0.2
    )
    
    
    9.4
    
    
    
    5.3
    
    
    
    3.1
    
    
    
    (1.5
    )Income taxes
    
    
    0.8
    
    
    
    0.0
    
    
    
    0.7
    
    
    
    0.1
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    1.4
    
    
    
    (0.5
    )Net (loss) income
    
    
    1.1
    %
    
    
    0.0
    %
    
    
    0.1
    %
    
    
    (0.3
    )%
    
    
    9.4
    %
    
    
    5.3
    %
    
    
    1.7
    %
    
    
    (1.0
    )%
 Company
    
    Boyd
    
    WTIAverage Tractor Counts For the Quarter Ended March 31,2004
    
    2003
    
    2004
    
    2003
    
    2004
    
    2003Company operated tractors
    
    
    585
    
    
    
    575
    
    
    
    545
    
    
    
    540
    
    
    
    40
    
    
    
    35Owner-operated tractors
    
    
    330
    
    
    
    337
    
    
    
    155
    
    
    
    160
    
    
    
    175
    
    
    
    177Total tractors
    
    
    915
    
    
    
    912
    
    
    
    700
    
    
    
    700
    
    
    
    215
    
    
    
    212Company operated tractor %
    
    
    64
    %
    
    
    63
    %
    
    
    78
    %
    
    
    77
    %
    
    
    19
    %
    
    
    17
    %Owner-operated tractor %
    
    
    36
    %
    
    
    37
    %
    
    
    22
    %
    
    
    23
    %
    
    
    81
    %
    
    
    83
    %Total %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Quarterly Results of Operations The Companys total operating revenues increased $2,039,914 or 6.3% to
$34,617,390 for the quarter ended March 31, 2004, compared with $32,577,476 for
the same period in 2003. This change reflected an increase of $1,435,684 or
5.9% in the Boyd division, an increase of $89,188 or 3.26% in the Logistics
division and an increase of $515,042 or 9.3% in the WTI division. These
changes are reflective of diversification outside of the steel and building
materials industries and also reflective of an increase in revenue resulting
from increased rates charged to customers. Revenue per mile increased by
approximately $0.09 per mile for Boyd and approximately $0.11 per mile for WTI.
Included in revenues are fuel surcharges in the amount of $1,429,115 and
$991,564 for the quarter ended March 31, 2004 and 2003, respectively. Average
revenue per total mile for the first quarter of 2004 was $1.30 while average
revenue per total mile was $1.20 for the same period in 2003. Total operating expenses increased $1,478,585 or 4.6% to $33,718,072 for the
first quarter ended March 31, 2004, compared to $32,239,487 for the same period
last year. As a percentage of revenues, total operating expenses decreased from
99.0% in 2003 to 97.4% in 2004. Of this increase in total operating
expenses, $1,241,425 was attributable
the Boyd division 14




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##### Table of Contents



and the WTI division accounted for $266,880. The Logistics division accounted
for a decrease of $29,720. As discussed below,
the net increase in operating expenses is primarily a result of increases in
salaries, wages, and employee benefits, fuel expense, and operating supplies
expense, combined with decreases in insurance and claims expense. Owner-operators are responsible for payment of the expenses they incur
including fuel, operating supplies, 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. As a percentage of revenues, salaries, wages and employee benefits increased
9.0% during the first quarter of 2004 compared to the same period in 2003.
This increase is attributable to the Boyd division resulting from pay increases

to drivers. Boyd increased Company driver pay by a total of $0.03 per mile
during the first quarter of 2004. Increases were given in $0.01 increments per
month during each of the first three months of the year. Additionally, Company
drivers drove approximately 400,000 more miles during the first quarter of 2004
compared to the first quarter of 2003. Included in cost of independent contractors are costs for which owner-operators
are responsible, costs incurred/earned by the Company related to the lease
purchase of tractors to owner-operators, and costs related to the Logistics
division. Cost of independent contractors for the Company increased $9,640, or
0.1%, for the quarter ended March 31, 2004 compared to the same period last
year. The Boyd division accounted for a decrease of $298,538. This decrease
was primarily a result of a decrease in the amounts paid to owner-operators.
Though owner-operators received the same pay per mile increases as described
above for Company drivers (a total of $0.03 in increments of $0.01 per month),
owner-operators drove approximately 420,000 fewer total miles in the first
three months of 2004 compared to the same period in 2003. During the forth
quarter of 2003, the Boyd division implemented a new program whereby new
owner-operators entering the lease purchase program with less than one year of
previous experience as a successful owner-operator must become a Company driver
for a minimum of four weeks prior to becoming a Boyd owner-operator. This
program has helped to decrease driver turnover and enabled owner-operators to
become more profitable. The Logistics division accounted for a slight decrease
of $17,241 of the total net increase in cost of independent contractors. The
WTI division accounted for $345,801 of the increase in cost of independent
contractors. The increase of costs contributed by WTI was a direct result of
the WTI contribution of increased revenue of 9.3%, as discussed above. Fuel expense, also associated with Company drivers and included in the line
item Operating supplies in the consolidated statement of income, increased
$520,483 or 11.3% from 2003. The significant portion of the increase, $488,294,
was recognized by the Boyd division because the Boyd division has a larger
percentage of Company drivers. The Company generally has been able to partially
offset significant increases in fuel costs through increased rates and through
a fuel surcharge that increases incrementally as the price of fuel increases.
Total miles driven by Company drivers increased by approximately 400,000 miles
for the first quarter of 2004 compared to the same period in 2003. Insurance and claims decreased to 3.1% of revenues in the first quarter of
2004, compared to 3.9% of revenues during the first quarter of 2003. The
Company reserved approximately $250,000 during the first quarter of 2003
related to one accident involving a fatality during the quarter. During the
first quarter of 2004, the Company was not involved in any accidents involving
fatalities. See Insurance and Liability Claims for further information
regarding the Companys insurance program and claims exposure. Other operating supplies included with fuel within the item Operating
Supplies increased $450,899 over the first quarter of 2003. The increase was
primarily due to less income generated from repairs done by Boyd and charged to
owner-operators. The repairs Boyd makes to owner-operator equipment is charged
to the owner-operator and reduces the expense recognized for repairs. With
approximately 420,000 fewer miles driven by owner-operators, fewer repairs were
required on these vehicles. Also, repair costs were higher in the first quarter
of 2004 due to increased miles driven on Company owned vehicles. 15




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##### Table of Contents



Provisions for income tax for the quarter ended March 31, 2004 resulted in a
provision of $263,666 and an effective tax rate of 40.7%. The effective tax
rate was higher than the U.S. federal statutory rate primarily due to state
income taxes and the non-deductibility of certain expenses for tax purposes. 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
dealer financings. Cash Flows from Operating Activities Cash flow from operations provided $1.8 million for the first quarter of 2004
and $2.8 million for the first quarter of 2003. Net income adjusted for
non-cash income and expense items provided cash of $2.8 million and $2.5
million for the first quarter of 2004 and 2003, respectively. Non-cash income
and expense items include depreciation and amortization, provisions for bad
debt losses, losses on disposals of property and equipment, income related to
owner-operator sales-type leases, and deferred income taxes. Working capital
items used cash of $1.0 million in the first quarter of 2004 and provided $0.4
million in the first quarter of 2003. The increase in net income adjusted for non-cash items from 2003 to 2004 of
$0.3 million was due primarily to increased net income during 2004. The increase in working capital items used in cash flows of $1.4 million in the
first quarter of 2004 was a result of increases in accounts receivable, due to
increased revenue. The Company lengthened its payment cycle for accounts
payable, which increased trade and interline payables in the amount of $1.2
million since December 31, 2003. Additionally, accruals for salaries payable
increased approximately $0.5 million since December 31, 2003, due to increases
in driver pay rates during the first quarter of 2004. 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. 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.
Dealer financed purchases in the first quarter of 2004 amounted to $1.6
million, while no dealer-financed purchases were made during the first quarter
of 2003. The Company invested $0.7 million and $0.8 million for revenue equipment and
other property and equipment during the first quarter of 2004 and 2003,
respectively. The proceeds from property dispositions exclude revenue equipment
traded on new equipment. Cash Flows from Financing Activities During the first quarter of 2004, the Company paid $3.6 million towards the
reduction of its long-term debt. At March 31, 2004, the Company had debt
(including current maturities) of $27.8 million. In the first quarter of 2004,
new debt of approximately $1.6 was incurred through dealer-financed purchases
for revenue equipment. During the first quarter of 2003, $0.4 million of new
debt was incurred to purchase equipment. The Company drew approximately $1.0 million, net, from its line of credit
during the first quarter of 2004. Proceeds were used primarily to support
operations. The Company has entered into a commitment letter with a third party lender
pursuant to which the lender has committed, subject to satisfactory completion
of due diligence and various other closing conditions, to provide the financing
necessary to complete the Companys going private transaction. This financing
will also replace all of the Companys current outstanding financing, and will
consist of (i) a revolving line of credit facility of approximately $13
million, and (ii) a term loan in the amount of $37 million. The Company will
grant a first priority security interest in substantially all of the Companys
assets. Each of the revolving credit facility and the term loan will require
the Company to comply with affirmative, negative and financial covenants
customarily found in credit 16




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##### Table of Contents



agreements of this type, including restrictions on the Companys ability to
incur additional indebtedness, restrictions on asset sales, restrictions on
change in control and limitations on capital expenditures and dividend
payments. The Company anticipates generating sufficient cash from operations in 2004 to
cover planned capital expenditures and servicing current maturities of
long-term debt. As of March 31, 2004, the Company purchased twenty-five new
tractors, offset by the same number of trade-ins. 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. The availability of debt financing or equity capital will
depend on prevailing market conditions, the market price of its common stock,
and other factors over which the Company has no control, as well as the
Companys financial condition and results of operations. Factors That May Affect Future Results The Companys future results may be affected by a number of factors 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. Significant increases or rapid fluctuations
in fuel prices, interest rates, insurance costs or liability claims, to the
extent not offset by increases in freight rates, and the resale value of
revenue equipment could result in Company losses. Weakness in the general
economy, including a weakness in consumer demand for goods and services, could
adversely affect customers and result in customers reducing their demand for
transportation services, which, in turn, could adversely affect the Companys
growth and revenues. Weakness in customer demand for the Companys services or
in the general rate environment also may restrain the Companys ability to
increase rates or obtain fuel surcharges. The following issues and uncertainties, along with the other issues and
uncertainties discussed in this report and the Companys 2003 Form 10-K, should
be considered in evaluating the Companys 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. Throughout the first quarter of 2004, the Company experienced
fluctuations in fuel costs as a result of conditions in the petroleum industry.
Increases in fuel costs 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 obtain rate
increases or fuel surcharges in the future. As of March 31, 2004, the Company
had no derivative financial instruments to reduce its exposure to fuel price
fluctuations. The Company also has periodically experienced some wage increases
for drivers. Increases in driver compensation may affect operating income,
unless the Company is able to pass those increased costs to customers through
rate increases and fuel surcharges. 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 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. If fuel
prices continue to increase or are sustained at these higher levels for a
continuing period of time, the higher fuel costs may have a materially adverse
effect on the financial condition and business operations of the Company.
Additionally, the increased fuel costs may continue to have a materially
adverse effect on the Companys efforts to attract and retain owner-operators,
expand its pool of available trucks, and diversify its operations. 17




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##### Table of Contents



Insurance and Liability Claims The Companys future insurance and claims expenses could exceed historical
levels, which could have a material adverse effect on the financial condition
of the Company. 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. In addition, the Company will share
costs above the $750,000 self-insured amount at a rate of thirty three percent,
up to the Companys coverage amount of two million dollars. Costs and claims
in excess of the Companys coverage amount of two million dollars will be borne
solely by the Company. The Companys workers compensation self-insurance
level is 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, the financial condition of the
Company 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, 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. The Company has provided for its best
estimate of losses on these claims at March 31, 2004 in the accompanying
unaudited consolidated balance sheet. 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. 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 methods, estimates and judgments the Companys management uses in applying
Company accounting policies may have a significant effect on the results the
Company reports in its financial statements. The estimates and judgments in
applying those accounting policies which may have the most significant effect
on the Companys financial statements and operating results include: allowance
for doubtful accounts for tractors leased to owner- 18




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operators; determinations of impairment of long-lived assets; estimates of
accrued liabilities for insurance claims for liability and both physical and
property damage and workers compensation; estimates of useful lives and
salvage values for the depreciation of tractors and trailers; allowance for
doubtful accounts receivable; and evaluation of impairment of goodwill. 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. Please refer to Managements Discussion and Analysis
of Financial Condition  Critical Accounting Policies in the Companys Form
10-K for the year ended December 31, 2003 for a more complete description of
the Companys critical accounting policies. 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 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 effect 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; that the cost of
complying with governmental regulations that are applicable to the Company will
not have a material adverse affect on the Company; that the financing for the
proposed going private transaction and continuing operations following the
closing of the transaction provided for in the financing commitment will be
consummated; or that the proposed merger of BBT Acquisition Corporation with
and into the Company will be successfully completed. 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, including the Companys Annual Report on Form 10-K 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. 19




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Item 3. Quantitative and Qualitative Disclosures about Market Risk Interest Rate Risk The Company is exposed to interest rate risk due to its long-term debt, which
at March 31, 2004 bore interest at rates ranging from 1.25% to 2.85% above the
applicable banks LIBOR rate. Under the provisions of SFAS No. 107,
Disclosures about Fair Value of Financial Instruments, the Company has
estimated that 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 March 31, 2004, 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 4. 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-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the Exchange Act), as of the end of
the period covered by this quarterly report. Based on such evaluation,
such officers have concluded that, as of March 31, 2004, 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
quarterly 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. 20




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PART II. OTHER INFORMATION 
 Item 1. Legal Proceedings Reference is made to the legal proceedings previously reported in the
Companys Form 10-K for the fiscal year ended December 31, 2003, under
the heading Item 3  Legal Proceedings. The description of legal
proceedings in the Companys Form 10-K remains unchanged. 
 Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
Securities. Not applicable. 
 Item 3. Defaults Upon Senior Securities. None. 
 Item 4. Submission of Matters to a Vote of Security Holders. None 
 Item 5. Other Information. None. 
 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits  10.1
    
    Security Agreement dated April 1, 2004 by and between the
Company and Navistar Financial Corporation.31.1
    
    Section 302 Certification of the CEO31.2
    
    Section 302 Certification of the CFO32.0
    
    Section 906 Certification of the CEO & CFO (b) Reports on Form 8-K On February 20, 2004, the Company furnished on Form 8-K a Regulation FD
disclosure, which included the earnings release for the fourth quarter
and year ended December 31, 2003. On May 5, 2004, the Company furnished on Form 8-K a copy of a press
release announcing unaudited first quarter 2004 earnings, the amendment
of the merger agreement and the Companys receipt of a financing
commitment in connection with the proposed merger. 21




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. Boyd Bros. Transportation Inc. 
(Registrant)Date: May 17, 2004
    /s/ Richard C. BaileyRichard C. Bailey, Chief Financial Officer(Principal Accounting Officer) 22