<PAGE> 1
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, 1995
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 0-15057
P.A.M. TRANSPORTATION SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 71-0633135
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Highway 412 West, Tontitown, Arkansas 72770
(Address of principal executive offices)
(Zip Code)
(501) 361-9111
(Registrants telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last
report)
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 X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class Outstanding at May 8,1995
----- -------------------------
Common Stock, $.01 Par Value 4,968,657
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
2
<PAGE> 3
P.A.M. TRANSPORTATION SERVICES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
---- ----
(unaudited) (note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 577,703 $ 4,077,854
Receivables:
Trade, net of allowance 11,966,156 8,498,364
Other 324,223 481,986
Equipment held for sale 1,164,262 1,164,262
Prepaid expenses 2,598,382 2,870,033
Investment in direct financing lease 639,299 622,790
Income taxes refundable 283,405 154,313
Other 698,039 578,679
---------- -----------
Total current assets 18,251,469 18,448,281
Property and equipment, at cost 67,946,991 64,299,609
Less: accumulated depreciation (21,317,354) (19,316,030)
---------- -----------
Net property and equipment 46,629,637 44,983,579
Other assets:
Investment in direct financing lease, less current portion 1,073,673 1,239,824
Excess of cost over net assets acquired 1,039,588 602,214
Non compete agreement 1,319,612 0
Other 50,000 50,000
---------- -----------
Total other assets 3,482,873 1,892,038
---------- -----------
$68,363,979 $65,323,898
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $11,253,251 $10,358,442
Trade accounts payable 6,735,545 4,983,179
Deferred income taxes 245,698 368,866
Other current liabilities 3,323,660 2,456,504
---------- -----------
Total current liabilities 21,558,154 18,166,991
Long-term debt, less current portion 28,692,768 32,206,125
Non compete agreement 1,373,779 0
Deferred income taxes 2,629,707 1,917,198
Common stockholders' equity:
Common stock 49,652 49,379
Additional paid-in capital 13,187,806 13,123,241
Retained earnings (deficit) 872,113 (139,036)
---------- -----------
Total stockholders' equity 14,109,571 13,033,584
---------- -----------
$68,363,979 $65,323,898
========== ==========
</TABLE>
Note: The balance sheet at December 31, 1994 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. See notes to condensed consolidated financial
statements.
<PAGE> 4
P.A.M. TRANSPORTATION SERVICES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1994
---- ----
<S> <C> <C>
Operating revenues $22,083,502 $18,846,554
Operating expenses:
Salaries, wages and benefits 10,087,053 8,109,011
Operating supplies 4,022,180 4,000,689
Rent and purchased transportation 603,537 357,158
Depreciation and amortization 2,014,533 1,672,780
Operating taxes and licenses 1,374,382 1,332,637
Insurance and claims 1,022,887 986,705
Communications and utilities 161,544 223,908
Other 426,527 299,270
----------- -----------
19,712,643 16,982,158
----------- -----------
Operating income 2,370,859 1,864,396
Other income (expense)
Interest expense (787,615) (727,682)
Other 47,641 59,941
----------- -----------
(739,974) (667,741)
Income before income taxes and
dividends on redeemable preferred stock 1,630,885 1,196,655
Income taxes--current 114,580 16,530
--deferred 505,156 391,943
----------- -----------
619,736 408,473
----------- -----------
Income before dividends on
redeemable preferred stock 1,011,149 788,182
Accrued dividends on redeemable
preferred stock 0 29,589
----------- -----------
Net income $ 1,011,149 $ 758,593
=========== ===========
Net income per share $ 0.13 $ 0.10
=========== ===========
Average common and common
equivalent shares outstanding 7,647,680 7,571,958
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
P.A.M. TRANSPORTATION SERVICES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,011,149 $ 758,593
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,014,533 1,672,780
Non compete agreement amortization 54,167 0
Provision for doubtful accounts 0 18,746
Provision for deferred income taxes 505,156 391,943
Accrued dividends on redeemable preferred stock 0 29,589
Changes in operating assets and liabilities:
Accounts receivable (2,392,439) (476,435)
Prepaid expenses and other current assets 175,269 (160,785)
Accounts payable 1,124,892 237,072
Accrued expenses 752,679 1,307,337
----------- -----------
Net cash provided by operating activities 3,245,406 3,778,840
INVESTING ACTIVITIES
Purchases of property and equipment (3,156,749) (5,132,382)
Proceeds from sale or disposal of property and
equipment 550 3,000
Lease payments received on direct financing lease 149,642 134,774
----------- -----------
Net cash used in investing activities (3,006,557) (4,994,608)
FINANCING ACTIVITIES
Borrowings under lines of credit 22,296,433 9,859,338
Repayments under lines of credit (25,119,257) (10,748,721)
Borrowing of long-term debt 2,788,150 5,035,186
Repayments of long-term debt (2,583,874) (2,034,009)
Choctaw acquisition less cash acquired of $1,219,079 (Note C) (1,185,290) 0
Redemption of preferred stock 0 (4,425,205)
Proceeds from exercise of stock options 64,838 40,613
----------- -----------
Net cash used in financing activities (3,739,000) (2,272,798)
----------- -----------
Net decrease in cash and cash equivalents (3,500,151) (3,488,566)
Cash and cash equivalents at beginning of period 4,077,854 3,621,642
----------- -----------
Cash and cash equivalents at end of period $ 577,703 $ 133,076
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
P.A.M. TRANSPORTATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1995
NOTE A: BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In management's opinion, all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation
have been included. Operating results for the three-month period ended March
31, 1995 are not necessarily indicative of the results that may be expected for
the year ended December 31, 1995. For further information, refer to the
consolidated financial statements and the footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1994.
NOTE B: NOTES PAYABLE AND LONG-TERM DEBT
In the first three months of 1995, the Company's subsidiary, P.A.M. Transport,
Inc., entered into installment obligations for the purchase of replacement
revenue equipment in the aggregate amount of $2.8 million payable in 48 and 60
monthly installments at an interest rate ranging from 8% to 8.5%.
NOTE C: ACQUISITION
On January 31, 1995, the Company acquired 100% of the outstanding capital stock
of Choctaw Express, Inc. and Choctaw Brokerage, Inc. based in Oklahoma City,
(collectively "Choctaw "). Assets of approximately $2.7 million were acquired
and liabilities of approximately $.7 million were assumed. The total purchase
price for Choctaw was $2,530,915 in cash, subject to closing audit adjustments.
The Company paid an initial payment of $2,404,369 which was financed through
borrowings under the Company's bank line of credit agreement and available
cash. The remaining balance due is included in other current liabilities in
the accompanying consolidated financial statements. The final payment will be
funded through borrowings under the Company's bank line of credit agreement and
available cash.
The acquisition has been accounted for under the purchase method, effective
January 31, 1995, with operations of Choctaw included in the Company's
financial statements for the two months ended March 31, 1995. The purchase
price has been allocated to assets and liabilities based on their estimated
fair values as of the date of acquisition. Approximately $451,000 of goodwill
was recorded as a result of the purchase allocation and is being amortized over
a 30-year period. A final allocation of the purchase price will be completed
in 1995 based on determination of the final purchase price. The final
allocation is not expected to vary materially from amounts previously recorded.
The Company will also pay $325,000 per year for a five year noncompete
agreement with the former sole shareholder of Choctaw.
Pro forma unaudited financial information (as if the Choctaw acquisition was
completed at the beginning of the respective periods) for the first quarter of
1995 and 1994 is provided below:
<TABLE>
<CAPTION>
Three Months Ended,
March 31,
1995 1994
---- ----
<S> <C> <C>
Operating revenues $22,950,562 $21,640,987
Operating expenses 20,478,941 19,684,879
----------- -----------
Operating income 2,471,621 1,956,108
Interest expense 760,978 762,556
Income taxes 650,044 419,384
----------- -----------
Net income $ 1,060,599 $ 774,169
=========== ===========
Net income per common share (primary) $ 0.14 $ 0.10
=========== ===========
Average common and common equivalent shares outstanding 7,647,680 7,571,958
=========== ===========
</TABLE>
The above pro forma unaudited financial information does not purport to be
indicative of the results which actually would have occurred had the
acquisition been made at the beginning of the respective periods.
6
<PAGE> 7
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995 VS. THREE MONTHS ENDED MARCH 31, 1994
For the quarter ended March 31, 1995 revenues increased 17.2% to $22.1 million
as compared to $18.8 million for the quarter ended March 31, 1994. The main
factors for the increase in revenues were (1) a 10.7% increase in average
tractors from 569 in 1994 to 630, of which 55 were added in connection with the
acquisition of Choctaw which produced revenues of $1.8 million for the first
quarter of 1995, and (2) improved utilization of equipment by increasing
revenue per tractor per work day by 4.3% for the first quarter of 1995 compared
to the first quarter of 1994.
The Company's operating ratio improved from 90.1% of revenues in the first
quarter of 1994 to 89.3% in the first quarter of 1995.
Salaries, wages and benefits increased from 43% of revenues in the first
quarter of 1994 to 45.7% of revenues in the first quarter of 1995. The major
factors were as follows: an increase in owner operator expense, an increase in
the Arkansas unemployment rate from .5% in the first quarter of 1994 to 2.4%
for the first quarter of 1995, and the accrual of bonus compensation related to
the Company's Incentive Compensation Plan.
Operating supplies and expenses decreased from 21.2% of revenues in the first
quarter of 1994 to 18.2% of revenues in the first quarter of 1995, as the
Company continues to modernize its fleet. The largest areas of savings were
realized in repairs and maintenance where a 2% reduction was recorded, coupled
with a 1.2% decrease in fuel expense.
Rent and purchased transportation increased from 1.9% of revenues in the first
quarter of 1994 to 2.7% of revenues in the first quarter of 1995. This was
primarily due to the use of rental equipment by Choctaw, which was acquired by
the Company on January 31, 1995. The majority of the rental equipment has been
replaced by Company owned equipment. Management expects cost reductions will
be recognized in the second quarter related to the change to Company owned
equipment at Choctaw.
The Company incurred an increase in depreciation expense as a result of the new
equipment being placed into service. Depreciation expense increased from 8.9%
of revenues in the first quarter of 1994 to 9.1% of revenues in the first
quarter of 1995.
Operating taxes and licenses as a percent of revenues decreased from 7.1% in
the first quarter of 1994 to 6.2% in the first quarter of 1995 due largely to
lower accruals of state fuel tax expenses.
Insurance and claims expense decreased from 5.2% of revenues in the first
quarter of 1994 to 4.6% of revenues in the first quarter of 1995. This
decrease was due to premium reductions as a result of continued favorable loss
experience and lower costs due to self insurance arrangements.
8
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal subsidiary, P.A.M. Transport, Inc., has a $7.5 million
secured bank line of credit subject to borrowing limitations. Outstanding
advances on this line of credit were approximately $2.7 million (at an interest
rate of 8.63%) at March 31, 1995. The Company's borrowing base limitation at
March 31, 1995 was $6.6 million. The line of credit is guaranteed by the
Company and matures May 31, 1996.
The Company entered into installment obligations in the first quarter of 1995
for the purchase of replacement revenue equipment for approximately $2.8
million payable in 48 and 60 monthly installments at an interest rate ranging
from 8% to 8.5%.
During 1995 the Company plans to replace 185 trailers and 155 tractors and
expects to incur additional debt of approximately $12 million.
Operating results during the first quarter of 1995 provided net cash from
operations of approximately $3.2 million.
Management of the Company believes that its cash requirements for 1995 will be
adequately met from operating cash flows and the Company's available credit
line.
ACQUISITION
On January 31, 1995, the Company acquired 100% of the outstanding capital stock
of Choctaw Express, Inc. and Choctaw Brokerage, Inc. based in Oklahoma City,
(collectively "Choctaw"). The total purchase price for Choctaw was
approximately $2.5 million in cash, subject to closing audit adjustments. The
acquisition was financed through borrowings under the Company's bank line of
credit agreement and available cash, and the acquisition will be accounted for
under the purchase method, effective January 31, 1995 with operations included
in the Company's financial statements beginning on the acquisition date. The
Company will also pay $325,000 per year for a five year noncompete agreement
with the former sole shareholder of Choctaw. See Note C to the accompanying
condensed consolidated financial statements (unaudited).
9
<PAGE> 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are filed with this report:
11 Statement Re: Computation of Per Share Earnings
27 Financial Data Schedule (for SEC purposes only)
(b) Reports on Form 8-K
The Company filed the following report on Form 8-K during the three
months ended March 31, 1995:
(1) Current Report on Form 8-K (Event: January 31, 1995) filed on
February 9, 1995 regarding the acquisition of Choctaw Express, Inc.
and Choctaw Brokerage, Inc.
10
<PAGE> 11
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.
P.A.M. TRANSPORTATION SERVICES, INC.
Dated: May 12, 1995
By: Robert W. Weaver
--------------------------- ---------------------------------------
President and Chief Executive Officer
(principal executive officer)
Dated: May 12, 1995
By: Larry J. Goddard
--------------------------- ---------------------------------------
Vice President-Finance, Chief Financial
Officer, Secretary and Treasurer
(principal accounting and
financial officer)
<PAGE> 1
EXHIBIT (11)----STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
Earnings per share computations assumes the exercise of stock warrants and
options to purchase shares of common stock. The shares assumed exercised are
based on the weighted average number of warrants and options outstanding during
the period. Under the treasury stock method of computing earnings per share,
the number of shares of treasury stock assumed to be repurchased is limited to
20% of common stock outstanding, with the remaining shares assumed to be newly
issued and with the excess proceeds assumed to have reduced long-term
borrowings outstanding for the periods.
<TABLE>
<CAPTION>
EARNINGS PER SHARE FOR THE PERIOD ENDED MARCH 31, 1995
- ------------------------------------------------------
<S> <C>
Application of assumed proceeds ($4,740,952):
Toward repurchase of outstanding common shares at $4,740,952
March 31, 1995 market price of $6.75 per share 0
----------
Reduction of borrowings under line of credit $4,740,952
==========
Adjustments of net income:
Actual net income 1,011,149
Interest expense reduction 0
----------
Adjusted net income (A) 1,011,149
Adjustment of shares outstanding:
Actual outstanding 4,944,393
Net additional shares issuable (3,432,664-729,377) 2,703,287
----------
Adjusted shares outstanding (B) 7,647,680
==========
Net income per common share (A) divided by (B) $ 0.13
==========
EARNINGS PER SHARE FOR THE PERIOD ENDED MARCH 31, 1994
- ------------------------------------------------------
Application of assumed proceeds ($4,815,503):
Toward repurchase of outstanding common shares at $4,815,503
March 31, 1994 market price of $6 per share 0
----------
Reduction of borrowings under line of credit $4,815,503
==========
Adjustments of net income:
Actual net income 758,593
Interest expense reduction 0
----------
Adjusted net income (A) 758,593
Adjustment of shares outstanding:
Actual outstanding 4,902,067
Net additional shares issuable (3,472,475 - 802,584) 2,669,891
----------
Adjusted shares outstanding (B) 7,571,958
==========
Net income per common share (A) divided by (B) $ 0.10
==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 578
<SECURITIES> 0
<RECEIVABLES> 11,966
<ALLOWANCES> 239
<INVENTORY> 0
<CURRENT-ASSETS> 18,251
<PP&E> 67,947
<DEPRECIATION> 21,317
<TOTAL-ASSETS> 68,363
<CURRENT-LIABILITIES> 21,558
<BONDS> 28,693
<COMMON> 49
0
0
<OTHER-SE> 14,110
<TOTAL-LIABILITY-AND-EQUITY> 68,364
<SALES> 22,084
<TOTAL-REVENUES> 22,084
<CGS> 19,713
<TOTAL-COSTS> 19,713
<OTHER-EXPENSES> 48
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 788
<INCOME-PRETAX> 1,631
<INCOME-TAX> 620
<INCOME-CONTINUING> 1,011
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,011
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
