<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, 1996
--------------
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 9, 1996
----- --------------------------
Common Stock, $.01 Par Value 5,016,257
<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>
March 31, December 31,
1996 1995
---- ----
(unaudited) (note)
(thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 358 $ 7,629
Receivables:
Trade, net of allowance 13,868 12,517
Other 907 307
Operating supplies and inventories 665 468
Equipment held for sale 1,223 1,223
Prepaid expenses and deposits 2,830 3,341
Investment in direct financing lease 654 691
Income taxes refundable 0 95
-------- --------
Total current assets 20,505 26,271
Property and equipment, at cost 82,275 78,829
Less: accumulated depreciation (24,496) (21,540)
-------- --------
Net property and equipment 57,779 57,289
Other assets:
Investment in direct financing lease, less current
portion 426 548
Excess of cost over net assets acquired 2,604 1,140
Non compete agreement 1,508 1,059
Other 504 501
-------- --------
Total other assets 5,042 3,248
-------- --------
Total assets $ 83,326 $ 86,808
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 15,242 $ 15,120
Trade accounts payable 4,672 6,729
Deferred income taxes 88 409
Other current liabilities 4,339 3,048
-------- --------
Total current liabilities 24,341 25,306
Long-term debt, less current portion 33,656 37,966
Non-competion agreements 1,331 815
Deferred income taxes 4,967 4,489
Shareholder's Equity
Preferred stock -- --
Common stock 50 50
Additional paid-in capital 13,346 13,307
Retained earnings 5,635 4,875
-------- --------
Total shareholders' equity 19,031 18,232
-------- --------
Total liabilities and shareholder's equity $ 83,326 $ 86,808
======== ========
</TABLE>
Note: The balance sheet at December 31, 1995 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
March 31,
------------------------
1996 1995
---- ----
(thousands)
<S> <C> <C>
Operating revenues $23,532 $22,084
Operating expenses:
Salaries, wages and benefits 10,359 10,087
Operating supplies 4,574 4,022
Rent and purchased transportation 386 603
Depreciation and amortization 2,862 2,015
Operating taxes and licenses 1,529 1,374
Insurance and claims 1,038 1,023
Communications and utilities 257 162
Other 385 427
------- -------
21,390 19,713
------- -------
Operating income 2,142 2,371
Other income (expense)
Interest expense (948) (788)
Other 31 48
------- -------
(917) (740)
------- -------
Income before income taxes 1,225 1,631
Income taxes --current 156 115
--deferred 309 505
------- -------
465 620
------- -------
Net income $ 760 $ 1,011
======= =======
Net income per share $ .10 $ .13
======= =======
Average common and common
equivalent shares outstanding 7,724 7,648
======= =======
</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,
------------------------
1996 1995
---- ----
(thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 760 $ 1,011
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,862 2,015
Non compete agreement amortization 77 54
Provision for deferred income taxes 309 505
Changes in operating assets and liabilities:
Accounts receivable 280 (2,392)
Prepaid expenses and other current assets 770 175
Accounts payable (3,844) 1,125
Accrued expenses 223 752
-------- --------
Net cash provided by operating activities 1,437 3,245
INVESTING ACTIVITIES
Purchases of property and equipment (3,164) (3,157)
Proceeds from sale or disposal of property and equipment -- 1
Lease payments received on direct financing lease 160 150
-------- --------
Net cash used in investing activities (3,004) (3,006)
FINANCING ACTIVITIES
Borrowings under lines of credit 30,654 22,296
Repayments under lines of credit (32,202) (25,119)
Borrowing of long-term debt 1,909 2,788
Repayments of long-term debt (5,904) (2,584)
Choctaw acquisition-less cash acquired -- (1,185)
AFS acquisition less cash acquired (Note C) (200) --
Proceeds from exercise of stock options 39 65
-------- --------
Net cash used in financing activities (5,704) (3,739)
-------- --------
Net decrease in cash and cash equivalents (7,271) (3,500)
Cash and cash equivalents at beginning of period 7,629 4,078
-------- --------
Cash and cash equivalents at end of period $ 358 $ 578
======== ========
</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, 1996
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, 1996 are not necessarily indicative of the results that may be expected for
the year ended December 31, 1996. 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, 1995.
NOTE B: NOTES PAYABLE AND LONG-TERM DEBT
In the first three months of 1996, 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 $1.9 million payable in 48 monthly
installments at an interest rate of 6.95%.
NOTE C: ACQUISITION
On March 11, 1996, the Company closed the purchase of all of the outstanding
capital stock (the "Shares") of Allen Freight Services, Inc., a Missouri
corporation ("AFS"). The total purchase price for the Shares was $200,000,
which was negotiated by the parties at arms-length. Assets of approximately
$3.7 million were acquired and liabilities of approximately $3.5 million were
assumed. The Company paid the purchase price by utilizing its existing line of
credit.
The acquisition has been accounted for under the purchase method, effective
March 11, 1996, with the operations of AFS included in the Company's financial
statements since that date. If the acquisition had occurred at the beginning
of fiscal 1995, the effect on consolidated operating revenues, net income and
net income per share would not have been material. The purchase price has been
allocated to assets and liabilities based on their estimated fair values as of
the date of the acquisition. Approximately $1.5 million in goodwill was
recorded as a result of the purchase allocation and is being amortized over a
25-year period. The Company also entered into three-year Non-Competition
Agreements with the four former shareholders and officers/employees of AFS.
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, 1996 VS. THREE MONTHS ENDED MARCH 31, 1995
For the quarter ended March 31, 1996 revenues increased 6.6% to $23.5 million
as compared to $22.1 million for the quarter ended March 31, 1995. The
increase in revenues was attributable to a 15.1% increase in average tractors
from 630 in 1995 to 742. A total of 143 were added in connection with the
acquisition of AFS on March 11, 1996, producing revenues of $1.2 million for
the first quarter of 1996. Utilization of equipment declined 8.4% in the first
quarter of 1996 when revenue per tractor per work day is compared to the first
quarter of 1995 (see General Motors strike discussion).
The Company's operating ratio was 90.9% of revenues in the first quarter of
1996 compared to 89.3% in the first quarter of 1995.
Salaries, wages and benefits decreased from 45.7% of revenues in the first
quarter of 1995 to 44% of revenues in the first quarter of 1996. The factors
contributing to the decrease are as follows: a decrease in maintenance wages
which can be attributed to the Company's newer fleet; a decrease in the
Arkansas unemployment rate from 2.4% in the first quarter of 1995 to .5% for
the first quarter of 1996; and, a decrease in worker's compensation expense
which reflects the Company's favorable loss experience.
Operating supplies and expenses increased from 18.2% of revenues in the first
quarter of 1995 to 19.4% of revenues in the first quarter of 1996. Fuel expense
increased reflecting increased fuel prices for the quarter. The increase in
fuel expense was offset by a decrease in repairs and maintenance resulting from
the Company's more modernized fleet.
Rent and purchased transportation decreased from 2.7% of revenues in the first
quarter of 1995 to 1.6% of revenues in the first quarter of 1996. This
reduction relates to the use of rental equipment by Choctaw Express, Inc., a
subsidiary of the Company, in the first quarter of 1995, which was replaced by
Company owned equipment in 1996.
The Company incurred an increase in depreciation expense as a result of the new
equipment being placed into service. Depreciation expense increased from 9.1%
of revenues in the first quarter of 1995 to 12.2% of revenues in the first
quarter of 1996.
The Company's results for the quarter were adversely affected by a General
Motors brake plant strike for 23 days. The strike not only idled the G.M.
system but had repercussions felt by manufacturers and suppliers not normally
thought to be associated with the auto industry. Equipment utilization, as
measured in miles per truck per day, decreased 48 miles as a result of the
strike, while costs declined only marginally due to the proportion of costs
which are relatively fixed.
Interest expense increased from the first quarter of 1995 primarily as a result
of borrowings for equipment purchases.
8
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
P.A.M. Transport, Inc., has a $10.0 million secured bank line of credit subject
to borrowing limitations. Outstanding advances on this line of credit were
approximately $6.9 million (at an interest rate of 7.94%) at March 31, 1996.
The Company's borrowing base limitation at March 31, 1996 was $10.0 million.
The line of credit is guaranteed by the Company and matures May 31, 1997.
The Company entered into installment obligations in the first quarter of 1996
for the purchase of replacement revenue equipment for approximately $1.9
million payable in 48 monthly installments at an interest rate of 6.95%.
During 1996 the Company plans to replace and/or add 200 trailers and 100
tractors and expects to incur additional equipment financing debt of
approximately $9.4 million.
Operating results during the first quarter of 1996 provided net cash from
operations of approximately $1.4 million.
Management expects that the Company's existing working capital and its
available line of credit will be sufficient to meet the Company's commitments
as of March 31, 1996, and to fund its operating needs during fiscal 1996.
However, if additional financing were required, management believes that such
financing would be available from its existing lender.
ACQUISITION
On March 11, 1996 the Company closed the purchase of all of the outstanding
capital stock (the "Shares") of Allen Freight Services, Inc. ("AFS"), a
Missouri corporation. The total purchase price for the Shares was $200,000,
which was negotiated by the parties at arms-length. The acquisition was
financed through borrowings under the Company's bank line of credit agreement
and available cash, and the acquisition has been accounted for under the
purchase method of accounting effective March 11, 1996 with operations included
in the Company's financial statements beginning on the acquisition date. The
Company will also make payments under three-year Non-competition agreements
which were entered into with four AFS former stockholders and
officers/employees. 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
(b) Reports on Form 8-K
None.
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 13, 1996 By: /s/ Robert W. Weaver
--------------------------------------
Robert W. Weaver
President and Chief Executive Officer
(principal executive officer)
Dated: May 13, 1996 By: /s/ Larry J. Goddard
---------------------------------------
Larry J. Goddard
Vice President-Finance, Chief Financial
Officer, Secretary and Treasurer
(principal accounting and financial officer)
11
<PAGE> 12
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>
<S> <C>
EARNINGS PER SHARE FOR THE PERIOD ENDED MARCH 31,1996
- -----------------------------------------------------
Application of assumed proceeds ($6,862,711):
Toward repurchase of outstanding common shares at $6,862,711
March 31, 1996 market price of $7.521 per share
Reduction of borrowings under line of credit 0
----------
$6,862,711
==========
Adjustments of net income:
Actual net income 759,289
Interest expense reduction 0
----------
Adjusted net income (A) 759,289
Adjustment of shares outstanding:
Actual outstanding 5,015,657
Net additional shares issuable (3,621,164-912,473) 2,708,691
----------
Adjusted shares outstanding (B) 7,724,348
==========
Net income per common share (A) divided by (B) $ 0.10
==========
EARNINGS PER SHARE FOR THE PERIOD ENDED MARCH 31,1995
- -----------------------------------------------------
Application of assumed proceeds ($4,740,952):
Toward repurchase of outstanding common shares at
March 31, 1995 market price of $6.50 per share $4,740,952
Reduction of borrowings under line of credit 0
----------
$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 (3,432,664-790,159) 2,703,287
----------
Adjusted shares outstanding (B) 7,647,680
==========
Net income per common share (A) divided by (B) $ 0.13
==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 358
<SECURITIES> 0
<RECEIVABLES> 14,307
<ALLOWANCES> 439
<INVENTORY> 0
<CURRENT-ASSETS> 20,505
<PP&E> 82,275
<DEPRECIATION> 24,496
<TOTAL-ASSETS> 83,326
<CURRENT-LIABILITIES> 24,341
<BONDS> 33,656
0
0
<COMMON> 50
<OTHER-SE> 18,981
<TOTAL-LIABILITY-AND-EQUITY> 83,326
<SALES> 0
<TOTAL-REVENUES> 23,532
<CGS> 0
<TOTAL-COSTS> 21,390
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 948
<INCOME-PRETAX> 1,225
<INCOME-TAX> 465
<INCOME-CONTINUING> 760
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 760
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
