<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 September 30, 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 November 8, 1995
----- -------------------------------
Common Stock, $.01 Par Value 4,988,257
<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>
September 30, December 31,
1995 1994
---- ----
ASSETS (unaudited) (note)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 73,660 $ 4,077,854
Receivables:
Trade, net of allowance 11,135,941 8,498,364
Other 635,871 481,986
Equipment held for sale 974,012 1,164,262
Prepaid expenses 2,075,639 2,870,033
Investment in direct financing lease 673,640 622,790
Income taxes refundable 0 154,313
Deferred income taxes 110,943 0
Other 709,763 578,679
------------ ------------
Total current assets 16,389,469 18,448,281
Property and equipment, at cost 78,184,289 64,299,609
Less: accumulated depreciation (23,393,125) (19,316,030)
------------ ------------
Net property and equipment 54,791,164 44,983,579
Other assets:
Investment in direct financing lease, less current portion 728,041 1,239,824
Excess of cost over net assets acquired (Note C) 1,156,217 602,214
Non compete agreement (Note C) 1,179,551 0
Other 50,000 50,000
------------ ------------
Total other assets 3,113,809 1,892,038
------------ ------------
$ 74,294,442 $ 65,323,898
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 14,049,130 $ 10,358,442
Trade accounts payable 3,461,103 4,983,179
Deferred income taxes 0 368,866
Other current liabilities 4,001,665 2,456,504
------------ ------------
Total current liabilities 21,511,898 18,166,991
Long-term debt, less current portion (Note B) 30,644,170 32,206,125
Non compete agreement (Note C) 1,090,914 0
Deferred income taxes 4,050,056 1,917,198
Stockholders' equity:
Common stock 49,861 49,379
Additional paid-in capital 13,237,134 13,123,241
Retained earnings (deficit) 3,710,409 (139,036)
------------ ------------
Total stockholders' equity 16,997,404 13,033,584
------------ ------------
$ 74,294,442 $ 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.
3
<PAGE> 4
P.A.M. TRANSPORTATION SERVICES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenues $22,241,118 $18,508,413 $68,158,113 $57,188,275
Operating expenses:
Salaries, wages and benefits 9,577,172 8,276,736 29,907,903 25,287,324
Operating supplies 4,022,869 3,503,628 12,267,146 11,166,490
Rent and purchased transportation 271,264 176,446 1,174,306 792,716
Depreciation and amortization 2,550,216 1,583,165 6,778,616 5,064,504
Operating taxes and licenses 1,341,392 1,266,207 4,130,479 3,818,875
Insurance and claims 1,032,237 910,062 3,170,227 2,881,192
Communications and utilities 243,704 220,564 649,170 650,779
(Gain) loss on sale of equipment 0 0 247,000 (208,732)
Other 326,074 314,590 1,173,823 928,278
----------- ----------- ----------- -----------
19,364,928 16,251,398 59,498,670 50,381,426
----------- ----------- ----------- -----------
Operating income 2,876,190 2,257,015 8,659,443 6,806,849
Other income (expense)
Interest expense (922,073) (733,047) (2,581,579) (2,205,745)
Other 39,602 52,701 130,917 169,010
----------- ----------- ----------- -----------
(882,471) (680,346) (2,450,662) (2,036,735)
Income before income taxes and
dividends on redeemable preferred
stock 1,993,719 1,576,669 6,208,781 4,770,114
Income taxes--current 223,020 (73,360) 769,126 306,945
--deferred 534,593 762,381 1,590,210 1,589,265
----------- ----------- ----------- -----------
757,613 689,021 2,359,336 1,896,210
----------- ----------- ----------- -----------
Income before dividends on
redeemable preferred stock 1,236,106 887,648 3,849,445 2,873,904
Accrued dividends on redeemable
preferred stock 0 0 0 29,589
----------- ----------- ----------- -----------
Net income $ 1,236,106 $ 887,648 $ 3,849,445 $ 2,844,315
=========== =========== =========== ===========
Net income per share $ 0.16 $ 0.12 $ 0.50 $ 0.38
=========== =========== =========== ===========
Average common and common
equivalent shares outstanding 7,663,755 7,410,918 7,658,827 7,505,246
=========== =========== =========== ===========
</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>
Nine Months Ended
September 30,
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 3,849,445 $ 2,844,315
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,778,616 5,064,504
Non compete agreement amortization 194,228 0
(Gain) loss on retirement of property and equipment 247,000 (208,732)
Provision for doubtful accounts 0 55,259
Provision for deferred income taxes 1,590,210 1,589,265
Accrued dividends on redeemable preferred stock 0 29,589
Changes in operating assets and liabilities:
Accounts receivable (1,871,131) (599,502)
Prepaid expenses and other current assets 953,245 249,084
Accounts payable (1,522,076) 337,674
Accrued expenses 849,856 796,987
------------ ------------
Net cash provided by operating activities 11,069,393 10,158,443
INVESTING ACTIVITIES
Purchases of property and equipment (2,793,192) (163,965)
Proceeds from sale or disposal of property and
equipment 1,421,550 3,017,694
Lease payments received on direct financing lease 460,933 415,135
------------ ------------
Net cash provided by (used in) investing activities (910,709) 3,268,864
FINANCING ACTIVITIES
Borrowings under lines of credit 70,940,681 39,851,722
Repayments under lines of credit (73,979,221) (45,143,458)
Repayments of long-term debt (9,589,921) (6,840,627)
Choctaw acquisition less cash acquired of $1,213,085 (Note C) (1,323,792) 0
Redemption of preferred stock 0 (4,425,205)
Proceeds from exercise of stock options 114,375 83,010
Payments on non-compete agreements (325,000) 0
------------ ------------
Net cash used in financing activities (14,162,878) (16,474,558)
------------ ------------
Net decrease in cash and cash equivalents (4,004,194) (3,047,251)
Cash and cash equivalents at beginning of period 4,077,854 3,621,642
------------ ------------
Cash and cash equivalents at end of period $ 73,660 $ 574,391
============ ============
</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)
SEPTEMBER 30, 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 nine-month period ended
September 30, 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 nine months of 1995, the Company's subsidiary, P.A.M. Transport,
Inc., entered into installment obligations for the purchase of revenue
equipment in the aggregate amount of $14.8 million payable in 48 and 60 monthly
installments at an interest rate ranging from 7.3% 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 $.8 million were assumed. The total purchase
price for Choctaw was $2.5 million in 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 eight months ended September 30, 1995. The
purchase price has been allocated to assets and liabilities based on their
estimated fair values as of the date of acquisition. Goodwill in the amount of
$600,000 was recorded as a result of the purchase allocation and is being
amortized over a 25-year period. 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 nine months
of 1995 and 1994 is provided below:
<TABLE>
<CAPTION>
Nine Months Ended,
September 30,
1995 1994
---- ----
<S> <C> <C>
Operating revenues $69,025,173 $66,536,542
Operating expenses 60,263,404 59,324,526
----------- -----------
Operating income 8,761,769 7,212,016
Interest expense 2,468,202 2,202,904
Income taxes 2,391,555 2,003,644
----------- -----------
Net income $ 3,902,012 $ 3,005,468
=========== ===========
Net income per common share (primary) $ 0.51 $ 0.40
=========== ===========
Average common and common equivalent shares outstanding 7,658,827 7,505,246
=========== ===========
</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 SEPTEMBER 30, 1995 VS. THREE MONTHS ENDED SEPTEMBER 30, 1994
For the quarter ended September 30, 1995 revenues increased 20.2% to $22.2
million as compared to $18.5 million for the quarter ended September 30, 1994.
The main factor for the increase in revenues was a 19.0% increase in average
tractors from 574 in 1994 to 683 in 1995, of which 46 were added in connection
with the acquisition of Choctaw which produced revenues of $2 million for the
third quarter of 1995.
The Company's operating ratio improved from 87.8% of revenues in the third
quarter of 1994 to 87.1% in the third quarter of 1995.
Salaries, wages and benefits decreased from 44.7% of revenues in the third
quarter of 1994 to 43.1% of revenues in the third quarter of 1995. The major
factor was a .8% decrease in maintenance wages.
Operating supplies and expenses decreased from 18.9% of revenues in the third
quarter of 1994 to 18.1% of revenues in the third quarter of 1995, as the
Company continues to modernize its fleet. The largest areas of savings were
realized in repairs and maintenance where a .8% reduction was recorded.
Operating taxes and licenses decreased from 6.8% of revenues in the third
quarter of 1994 to 6% of revenues in the third quarter of 1995 due largely to
lower accruals of state fuel tax expenses.
The Company incurred an increase in depreciation expense as a result of the new
equipment being placed into service. Depreciation expense increased from 8.6%
of revenues in the third quarter of 1994 to 11.5% of revenues in the third
quarter of 1995.
The Company's effective income tax rate of 38% differs from the expected tax
rate of 34% primarily due to state income taxes.
NINE MONTHS ENDED SEPTEMBER 30, 1995 VS. NINE MONTHS ENDED SEPTEMBER 30, 1994
For the nine months ended September 30, 1995 revenues increased 19.2% to $68.2
million as compared to $57.2 million for the nine months ended September 30,
1994. The main factor for the increase in revenues was a 16.2% increase in
average tractors from 573 in 1994 to 666 in 1995, of which 48 were added in
connection with the acquisition of Choctaw which produced revenues of $5.8
million for the first nine months of 1995.
The Company's operating ratio improved from 88.1% of revenues in the first nine
months of 1994 to 87.3% in the first nine months of 1995.
Operating supplies and expenses decreased from 19.5% of revenues in the first
nine months of 1994 to 18% of revenues in the first nine months of 1995, as the
Company continues to modernize its fleet. The largest areas of savings were
realized in repairs and maintenance where a 1.2% reduction was recorded.
The Company incurred a 1% 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 nine months of 1994 to 9.9% of revenues in the
first nine months of 1995.
Operating taxes and licenses as a percent of revenues decreased from 6.7% in
the first nine months of 1994 to 6.1% in the first nine months of 1995 due
largely to lower accruals of state fuel tax expenses.
The Company's effective income tax rate of 38% differs from the expected tax
rate of 34% primarily due to state income taxes.
8
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal subsidiary, P.A.M. Transport, Inc., has a $10 million
secured bank line of credit, including $.7 million in letters of credit,
subject to borrowing limitations. Outstanding advances on this line of credit
were approximately $2.5 million (at an interest rate of 8.34%) at September 30,
1995. The Company's borrowing base limitation at September 30, 1995 was $9.3
million. The line of credit is guaranteed by the Company and matures May 31,
1997.
The Company entered into installment obligations in the first nine months of
1995 for the purchase of revenue equipment for approximately $14.8 million
payable in 48 and 60 monthly installments at an interest rate ranging from 7.3%
to 8.5%.
During the remainder of 1995 the Company plans to add 111 tractors with
additional installment debt of approximately $6.4 million.
Operating results during the first nine months of 1995 provided net cash from
operations of approximately $11 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. The acquisition was financed through
borrowings under the Company's bank line of credit agreement and available
cash, and the acquisition was 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:
11.1 - Statement Re: Computation of Per Share Earnings.
27.1 - Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the quarter
ended September 30, 1995.
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.
<TABLE>
<S> <C>
P.A.M. TRANSPORTATION SERVICES, INC.
Dated: November 13, 1995 By: /s/ Robert W. Weaver
--------------------------------------------
Robert W. Weaver
President and Chief Executive Officer
(principal executive officer)
Dated: November 13, 1995 By: /s/ Larry J. Goddard
--------------------------------------------
Larry J. Goddard
Vice President-Finance, Chief Financial
Officer, Secretary and Treasurer
(principal accounting and financial officer)
</TABLE>
11
<PAGE> 1
EXHIBIT NO. 11.1
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<PAGE> 2
EXHIBIT (11)----STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
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 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 SEPTEMBER 30, 1995
- ----------------------------------------------------------
Three Months Nine Months
<S> <C> <C>
Application of assumed proceeds ($6,870,874 and $5,955,209):
Toward repurchase of outstanding common shares at the
average market price for the three months of $7.125 per share $ 6,870,874 $ 5,955,209
and the average market price for the nine months of $6.563
per share
Reduction of borrowings under line of credit 0 0
------------ ------------
$ 6,870,874 $ 5,955,209
============ ============
Adjustments of net income:
Actual net income $ 1,236,106 $ 3,849,445
Interest expense reduction 0 0
------------ ------------
Adjusted net income (A) $ 1,236,106 $ 3,849,445
============ ============
Adjustment of shares outstanding:
Actual outstanding 4,986,457 4,986,457
Net additional shares issuable 2,677,298 2,672,370
------------ ------------
Adjusted shares outstanding (B) 7,663,755 7,658,827
============ ============
Net income per common share (A) divided by (B) $ 0.16 $ 0.50
============ ============
</TABLE>
<TABLE>
<CAPTION>
EARNINGS PER SHARE FOR THE PERIOD ENDED SEPTEMBER 30, 1994
- ----------------------------------------------------------
Three Months Nine Months
<S> <C> <C>
Application of assumed proceeds ($4,774,269 and $4,786,483):
Toward repurchase of outstanding common shares at the
average market price for the three months of $4.938 per $ 4,774,269 $ 4,786,483
share and the average market price for the nine months of
$5.556 per share
Reduction of borrowings under line of credit 0 0
------------- ------------
$ 4,774,269 $ 4,786,483
============= ============
Adjustments of net income:
Actual net income $ 887,648 $ 2,844,315
Interest expense reduction 0 0
------------- ------------
Adjusted net income (A) $ 887,648 $ 2,844,315
============= ============
Adjustment of shares outstanding:
Actual outstanding 4,926,492 4,916,025
Net additional shares issuable 2,484,426 2,589,221
------------- ------------
Adjusted shares outstanding (B) 7,410,918 7,505,246
============= ============
Net income per common share (A) divided by (B) $ 0.12 $ 0.38
============= ============
</TABLE>
2
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 74
<SECURITIES> 0
<RECEIVABLES> 11,375
<ALLOWANCES> 239
<INVENTORY> 0
<CURRENT-ASSETS> 16,389
<PP&E> 78,184
<DEPRECIATION> 23,393
<TOTAL-ASSETS> 74,294
<CURRENT-LIABILITIES> 21,512
<BONDS> 30,644
<COMMON> 50
0
0
<OTHER-SE> 16,947
<TOTAL-LIABILITY-AND-EQUITY> 74,294
<SALES> 68,158
<TOTAL-REVENUES> 68,158
<CGS> 59,499
<TOTAL-COSTS> 59,499
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,582
<INCOME-PRETAX> 6,208
<INCOME-TAX> 2,359
<INCOME-CONTINUING> 3,849
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,849
<EPS-PRIMARY> .50
<EPS-DILUTED> .50
</TABLE>
