<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 June 30, 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 August 6, 1996
- ---------------------------- -----------------------------
Common Stock, $.01 Par Value 5,022,057
<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>
June 30, December 31,
1996 1995
----------- ------------
ASSETS (unaudited) (note)
<S> <C> <C>
Current assets: (thousands)
Cash and cash equivalents $ 467 $ 7,629
Receivables:
Trade, net of allowance 16,755 12,517
Other 731 307
Equipment held for sale 1,223 1,223
Prepaid expenses 2,433 3,341
Investment in direct financing lease - 691
Income taxes refundable - 95
Deferred income taxes 110 -
Other 410 468
------- -------
Total current assets 22,129 26,271
Property and equipment, at cost 94,134 78,829
Less: accumulated depreciation (27,340) (21,540)
------- -------
Net property and equipment 66,794 57,289
Other assets:
Investment in direct financing lease, less current portion - 548
Excess of cost over net assets acquired (Note C) 2,573 1,140
Non compete agreement (Note C) 1,398 1,059
Other 760 501
------- -------
Total other assets 4,731 3,248
------- -------
Total assets $93,654 $86,808
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $17,861 $15,120
Trade accounts payable 4,473 6,729
Deferred income taxes - 409
Other current liabilities 5,362 3,048
------- -------
Total current liabilities 27,696 25,306
Long-term debt, less current portion 38,854 37,966
Non-compete agreement 1,131 815
Deferred income taxes 5,722 4,489
Shareholders' equity:
Preferred stock - -
Common stock 50 50
Additional paid-in capital 13,368 13,307
Retained earnings 6,833 4,875
------- -------
Total shareholders' equity 20,251 18,232
------- -------
Total liabilities and shareholders' equity $93,654 $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 Six Months Ended
June 30, June 30,
1996 1995 1996 1995
-------- -------- -------- --------
(in 000s except per share data) (in 000s except per share data)
<S> <C> <C> <C> <C>
Operating revenues $ 30,169 $ 23,833 $ 53,701 $ 45,917
Operating expenses:
Salaries, wages and benefits 14,225 10,244 24,584 20,331
Operating supplies 5,490 4,222 10,064 8,244
Rent and purchased transportation 574 299 960 903
Depreciation and amortization 2,875 2,214 5,737 4,229
Operating taxes and licenses 1,734 1,415 3,263 2,789
Insurance and claims 1,327 1,115 2,366 2,138
Communications and utilities 302 244 558 405
(Gain) loss on sale of equipment 0 247 0 247
Other 562 421 947 848
------- -------- -------- --------
27,089 20,421 48,479 40,134
------- -------- -------- --------
Operating income 3,080 3,412 5,222 5,783
Other income (expense) (1,083) (872) (2,031) (1,659)
Interest expense 0 44 31 91
Other
------- -------- -------- --------
(1,083) (828) (2,000) (1,568)
Income before income taxes 1,997 2,584 3,222 4,215
Income taxes--current 242 431 398 546
--deferred 557 551 866 1,056
------- -------- -------- --------
799 982 1,264 1,602
Net income $ 1,198 $ 1,602 $ 1,958 $ 2,613
======= ======== ======== ========
Net income per share $ 0.16 $ 0.21 $ 0.26 $ 0.34
======= ======== ======== ========
Average common and common
equivalent shares outstanding 7,643,314 7,604,724 7,675,774 7,626,268
========= ========= ========= =========
</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>
Six Months Ended
June 30,
1996 1995
------- -------
<S> <C> <C>
OPERATING ACTIVITIES (000s) (000s)
Net income $ 1,958 $ 2,613
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,737 4,227
Non-compete agreement amortization 177 135
Loss on retirement of property and equipment - 247
Provision for doubtful accounts - -
Provision for deferred income taxes 866 1,270
Changes in operating assets and liabilities:
Accounts receivable (2,430) (1,940)
Prepaid expenses and other current assets 1,167 766
Accounts payable (4,042) (1,685)
Accrued expenses 1,269 (286)
------- -------
Net cash provided by operating activities 4,702 5,347
INVESTING ACTIVITIES
Purchases of property and equipment (15,026) (1,868)
Proceeds from sale or disposal of property and
equipment - 1,421
Lease payments received on direct financing lease 1,239 303
------- -------
Net cash used in investing activities (13,787) (144)
FINANCING ACTIVITIES
Borrowings under lines of credit 58,772 48,263
Repayments under lines of credit (61,754) (48,417)
Borrowings of long-term debt 13,502 -
Repayments of long-term debt (8,456) (7,818)
Choctaw acquisition less cash acquired - (1,299)
AFS acquisition less cash acquired (Note C) (200) -
Proceeds from exercise of stock options 59 75
------- -------
Net cash provided by (used in) financing activities 1,923 (9,196)
------- -------
Net decrease in cash and cash equivalents (7,162) (3,993)
Cash and cash equivalents at beginning of period $ 7,629 $ 4,077
------- -------
Cash and cash equivalents at end of period $ 467 $ 84
======= =======
</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)
JUNE 30, 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 six-month period ended June 30,
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 six months of 1996, the Company's subsidiary, P.A.M. Transport,
Inc., entered into installment obligations for the purchase of revenue
equipment in the approximate amount of $13.5 million payable in 48 and 60
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 acquisition. Approximately $1.5 million in goodwill was recorded
as a result of the purchase allocation and it is being amortized over a 25-year
period. The Company also entered into three-year Non-competition Agreements
with 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 JUNE 30, 1996 VS. THREE MONTHS ENDED JUNE 30, 1995
For the quarter ended June 30, 1996, revenues increased 26.6% to $30.2 million
as compared to $23.8 million for the quarter ended June 30, 1995. The main
factor for the increase in revenues was a 27.2% increase in average tractors
from 686 in 1995 to 873 in 1996, of which 145 were added in connection with the
acquisition of Allen Freight Services, Inc. (AFS). AFS which produced
revenues of $4.3 million for the second quarter of 1996.
The Company's operating ratio was 89.8% of revenues in the second quarter of
1996 compared to 85.7% in the second quarter of 1995.
Salaries, wages and benefits increased from 43.0% of revenues in the second
quarter of 1995 to 47.2% of revenues in the second quarter of 1996. The major
factor for the increase was a 3.8 % increase in the amounts paid to AFS fleet
owners.
Operating supplies and expenses increased from 17.7% of revenues in the second
quarter of 1995 to 18.2% of revenues in the second quarter of 1996, reflecting
the approximate four cents per share increase in fuel costs for the quarter.
Rent and purchased transportation increased 0.6% of revenues in the second
quarter of 1996 as compared to the same period in 1995. This increase relates
primarily to the acquisition of AFS which uses operating leases for its trailer
requirements. This increase is offset by a reduction in the use of rental
equipment by Choctaw Express, Inc., a subsidiary of the Company, in 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 9.3%
of revenues in the second quarter of 1995 to 9.5% of revenues in the second
quarter of 1996.
Interest expense increased approximately $200,000 in the second quarter of 1996
when compared to the second quarter of 1995, primarily as a result of
borrowings associated with new equipment purchases and an increased line of
credit balance.
The Company's effective tax rate increased from 38% in the second quarter of
1995 to 40% in the second quarter of 1996 as a result of AFS' practice of
paying per diem expenses to its drivers a portion of which is a nondeductible
permanent difference in the calculation of income tax expense. As of July 1,
1996 per diems will no longer be paid to AFS drivers.
SIX MONTHS ENDED JUNE 30, 1996 VS. SIX MONTHS ENDED JUNE 30, 1995
For the six months ended June 30, 1996, revenues increased 17.0% to $53.7
million as compared to $45.9 million for the six months ended June 30, 1995.
The main factor for the increase in revenues was a 22.6% increase in average
tractors from 658 in 1995 to 807 in 1996, of which 145 were added in connection
with the acquisition of AFS which produced revenues of $5.5 million for the
first six months of 1996.
The Company's operating ratio was 90.3% of revenues in the first six months of
1996 compared to 87.4% in the first six months of 1995.
Salaries, wages and benefits increased to 45.8% of revenues in the first six
months of 1996 compared to 44.3% of revenues in the first six months of 1995.
This increase results from the 2.5% increase in amounts paid to AFS fleet
owners. This increase is partially offset by a decrease in employee bonus
expense of 1.2% in the first six months of 1996 when compared to the first six
months of 1995.
Operating supplies and expenses increased to 18.7% of revenues in the first six
months of 1996 from 18% of
8
<PAGE> 9
revenues in the first six months of 1995, reflecting the increase in fuel costs
for the six month period which is approximately eight cents per share. This
increase was offset by a decrease in repairs and maintenance of .2% of
revenues. This decrease is indicative of the operation of a newer fleet of
trucks.
The Company incurred an increase in depreciation expense as a result of the new
equipment being placed into service. Depreciation expense increased from 9.2%
of revenues in the first six months of 1995 to 10.7% of revenues in the first
six months of 1996.
Interest expense increased approximately $370,000 in the first six months of
1996 when compared to the same period in 1995. This increase relates to
borrowings for new equipment purchases and an increased line of credit balance.
The Company's effective tax rate increased to 39.2% from 38% as a result of
AFS' practice of paying per diem expenses to its drivers a portion of which is
a nondeductible permanent difference in the calculation of income tax expense.
As of July 1, 1996 per diems will no longer be paid to AFS drivers.
The Company's results for the first 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.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal subsidiary, P.A.M. Transport, Inc., has a $10 million
secured bank line of credit subject to borrowing limitations. Outstanding
advances on this line of credit were approximately $6.5 million, including $0.7
million in letters of credit, (at an interest rate of 8.00%) at June 30, 1996.
The Company's borrowing base limitation at June 30, 1996 was $10 million. The
line of credit is guaranteed by the Company and matures May 31, 1997. On July
3, 1996, P.A.M. Transport, Inc. entered into a new loan agreement, with its
existing lender, to increase its secured bank line of credit subject to
borrowing limitations to $15 million. This new agreement matures May 31, 1998.
The Company entered into installment obligations in the first six months of
1996 for the purchase of revenue equipment for approximately $13.5 million
payable in 48 and 60 monthly installments at an interest rate of 6.95%.
Operating results during the first six months of 1996 provided net cash from
operations of approximately $4.7 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 June 30, 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 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 4. Submission of Matters to a Vote of Security Holders.
The 1996 Annual Meeting of Stockholders of the Company was held on May
23 1996. At the meeting the following persons were elected as directors to
serve for a term of one year and until their successors are elected and
qualified: Robert W. Weaver, Daniel C. Sullivan, Matthew T. Moroun and
Charles F. Wilkins.
The results of voting with respect to the election of directors were
as follows:
<TABLE>
<CAPTION>
Votes Votes
FOR WITHHELD
--- --------
<S> <C> <C>
Robert W. Weaver 4,754,094 38,815
Daniel C. Sullivan 4,754,094 38,815
Charles F. Wilkins 4,754,094 38,815
Matthew T. Moroun 4,749,619 43,290
</TABLE>
Also at the 1996 Annual Meeting of Stockholders, the stockholders approved
the 1995 Stock Option Plan. Votes for approval of the plan were 3,687,818,
votes against were 55,581, and votes withheld were 2,800.
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).
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: August 12, 1996 By: /s/ Robert W. Weaver
--------------------------------------------
Robert W. Weaver
President and Chief Executive Officer
(principal executive officer)
Dated: August 12, 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> 1
EXHIBIT NO. 11.1
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<PAGE> 2
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 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> <C>
EARNINGS PER SHARE FOR THE PERIOD ENDED JUNE 30, 1996
Three Months Six Months
Application of assumed proceeds ($6,844,604 and $6,853,656):
Toward repurchase of outstanding common shares at
June 30, 1996 market price of $ 6.979 and $7.250 per share $ 6,844,604 $ 6,853,656
Reduction of borrowings under line of credit 0 0
----------- ----------
$ 6,844,604 $6,844,604
=========== ==========
Adjustments of net income:
Actual net income $ 1,198,330 $ 1,957,619
Interest expense reduction 0 0
----------- -----------
Adjusted net income (A) $ 1,198,330 $ 1,957,619
=========== ===========
Adjustment of shares outstanding:
Actual outstanding 5,017,750 5,008,646
Net additional shares issuable (3,606,307-980,743 and
3,613,736-946,608) 2,625,564 2,667,128
----------- ----------
Adjusted shares outstanding (B) 7,643,314 7,675,774
=========== ==========
Net income per common share (A) divided by (B) $0.16 $0.26
===== =====
EARNINGS PER SHARE FOR THE PERIOD ENDED JUNE 30, 1995
Three Months Six Months
Application of assumed proceeds ($4,716,633 and $4,738,633):
Toward repurchase of outstanding common shares at
June 30, 1995 market price of $6.06 and $6.28 per share $ 4,716,633 $ 4,738,633
Reduction of borrowings under line of credit 0 0
----------- -----------
$ 4,716,633 $ 4,793,285
=========== ===========
Adjustments of net income:
Actual net income $ 1,602,189 $ 2,613,338
Interest expense reduction 0 0
----------- -----------
Adjusted net income (A) $ 1,602,189 $ 2,613,338
=========== ===========
Adjustment of shares outstanding:
Actual outstanding 4,968,200 4,956,362
Net additional shares issuable (3,414,461-777,937 and
3,427,683-757,777) 2,636,524 2,669,906
----------- ----------
Adjusted shares outstanding (B) 7,604,724 7,626,268
=========== ==========
Net income per common share (A) divided by (B) $0.21 $0.34
===== =====
</TABLE>
2
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 467
<SECURITIES> 0
<RECEIVABLES> 17,925
<ALLOWANCES> 439
<INVENTORY> 0
<CURRENT-ASSETS> 22,129
<PP&E> 94,134
<DEPRECIATION> 27,340
<TOTAL-ASSETS> 93,654
<CURRENT-LIABILITIES> 27,696
<BONDS> 38,854
0
0
<COMMON> 50
<OTHER-SE> 20,201
<TOTAL-LIABILITY-AND-EQUITY> 93,654
<SALES> 0
<TOTAL-REVENUES> 53,701
<CGS> 0
<TOTAL-COSTS> 48,479
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,031
<INCOME-PRETAX> 3,222
<INCOME-TAX> 1,264
<INCOME-CONTINUING> 1,958
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,958
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
