<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, 1997
--------------------
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 12, 1997
----- ---------------------------
Common Stock, $.01 Par Value 8,130,757
<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,
1997 1996
---- ----
(unaudited) (note)
(thousands, except per share amounts)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 460 $ 5,941
Receivables:
Trade, net of allowance 19,722 16,072
Other 1,127 1,030
Equipment held for sale 1,264 1,264
Operating supplies and inventories 382 382
Prepaid expenses and deposits 3,561 2,816
-------- --------
Total current assets 26,516 27,505
Property and equipment, at cost 94,499 92,594
Less: accumulated depreciation (32,929) (29,714)
-------- --------
Net property and equipment 61,570 62,880
Other assets:
Excess of cost over net assets acquired 2,480 2,511
Non compete agreement 1,068 1,178
Other 606 821
-------- --------
4,154 4,510
-------- --------
Total assets $ 92,240 $ 94,895
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 16,897 $ 16,849
Trade accounts payable 8,078 5,583
Deferred income taxes 502 65
Other current liabilities 5,133 3,817
-------- --------
Total current liabilities 30,610 26,314
Long-term debt, less current portion 26,454 34,938
Noncompetition agreement 740 762
Deferred income taxes 6,825 6,569
Shareholders' Equity
Common stock 81 81
Additional paid-in capital 18,059 18,044
Retained earnings 9,471 8,187
-------- --------
Total shareholders' equity 27,611 26,312
-------- --------
Total liabilities and shareholders' equity $ 92,240 $ 94,895
======== ========
</TABLE>
Note: The balance sheet at December 31, 1996 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,
1997 1996
---- ----
(thousands, except per share amounts)
<S> <C> <C>
Operating revenues $ 32,630 $ 23,532
Operating expenses:
Salaries, wages and benefits 15,156 10,359
Operating supplies 6,729 4,574
Rent and purchased transportation 411 386
Depreciation and amortization 3,242 2,862
Operating taxes and licenses 1,891 1,529
Insurance and claims 1,465 1,038
Communications and utilities 202 257
Other 524 385
-------- --------
29,620 21,390
-------- --------
Operating income 3,010 2,142
Other income (expense)
Interest expense (870) (948)
Other -- 31
-------- --------
(870) (917)
Income before income taxes 2,140 1,225
Income taxes--current 163 156
--deferred 693 309
-------- --------
856 465
-------- --------
Net income $ 1,284 $ 760
======== ========
Net income per share $ .16 $ .10
======== ========
Average common and common
equivalent shares outstanding 8,250 7,724
======== ========
</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,
1997 1996
---- ----
(thousands, except per share amounts)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,284 $ 760
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 3,242 2,862
Noncompete agreement amortization 110 77
Provision for deferred income taxes 693 309
Changes in operating assets and liabilities:
Accounts receivable (3,747) 280
Prepaid expenses and other assets (529) 770
Accounts payable 2,495 (3,844)
Accrued expenses 1,293 223
-------- --------
Net cash provided by operating activities 4,841 1,437
INVESTING ACTIVITIES
Purchases of property and equipment (1,904) (3,164)
AFS acquisition -- (200)
Lease payments received on direct financing lease -- 160
-------- --------
Net cash used in investing activities (1,904) (3,204)
FINANCING ACTIVITIES
Borrowings under lines of credit 33,011 30,654
Repayments under lines of credit (38,747) (32,202)
Borrowing of long-term debt 1,747 1,909
Repayments of long-term debt (4,445) (5,904)
Proceeds from exercise of stock options 16 39
-------- --------
Net cash used in financing activities (8,418) (5,504)
-------- --------
Net decrease in cash and cash equivalents (5,481) (7,271)
Cash and cash equivalents at beginning of period 5,941 7,629
-------- --------
Cash and cash equivalents at end of period $ 460 $ 358
======== ========
</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, 1997
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, 1997 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1997. 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, 1996.
NOTE B: NOTES PAYABLE AND LONG-TERM DEBT
In the first three months of 1997, the Company's subsidiary, P.A.M. Dedicated
Services, Inc., entered into an installment obligation for the purchase of
replacement revenue equipment in the aggregate amount of $1.7 million payable in
48 monthly installments at an interest rate of 7.50%.
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
FORWARD-LOOKING INFORMATION
Certain information included in this Quarterly Report on Form 10-Q contains, and
other reports or materials filed or to be filed by the Company with the
Securities and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the Company or its
management) contain or will contain, "forward-looking statements" within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
Section 27A of the Securities Act of 1933, as amended, and pursuant to the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements may relate to financial results and plans for future business
activities, and are thus prospective. Such forward-looking statements are
subject to risks, uncertainties and other factors which could cause actual
results to differ materially from future results expressed or implied by such
forward-looking statements. Potential risks and uncertainties include, but are
not limited to, general economic conditions, competition and other uncertainties
detailed in this report and detailed from time to time in other filings by the
Company with the Securities and Exchange Commission. Any forward-looking
statements are made pursuant to the Private Securities Litigation Reform Act of
1995 and, as such, speak only as of the date made.
THREE MONTHS ENDED MARCH 31, 1997 VS. THREE MONTHS ENDED MARCH 31, 1996
For the quarter ended March 31, 1997 revenues increased 38.7% to $32.6 million
as compared to $23.5 million for the quarter ended March 31, 1996. The increase
in revenues was attributable to a 23.9% increase in average tractors from 742 in
1996 to 919 in 1997 of which 166 were added in connection with the acquisition
of Allen Freight Services, Inc. (A.F.S.) on March 11, 1996. A.F.S. produced
revenues of $5.2 million for the first quarter of 1997 and $1.2 million for the
period from March 11, 1996 to March 31, 1996.
The Company's operating ratio was 90.8% in the first quarter of 1997 compared to
90.9% in the first quarter of 1996.
Salaries, wages and benefits increased from 44% as a percentage of revenues in
the first quarter of 1996 to 46.4% in the first quarter of 1997. The major
factors for the increase were an increase in workers' compensation expense, and
the accrual of bonus compensation related to the Company's Incentive
Compensation Plan.
Operating supplies and expenses increased from 19.4% of revenues in the first
quarter of 1996 to 20.6% in the first quarter of 1997. Factors contributing to
the increase were increases in tires and maintenance expenses and increases in
loading, unloading and spotting expenses. The tires and maintenance expense
increase was a result of the delayed delivery of new replacement and additional
equipment which forced the use of older equipment beyond its normal retirement
date. The loading, unloading and spotting expense increase can be attributed to
the acquisition of A.F.S. which has customers requiring this service as a part
of the movement of their freight.
The Company's operating taxes and licenses expenses decreased 0.7% from 6.5% as
a percentage of revenues in the first quarter of 1996 to 5.8% in the first
quarter of 1997. This reduction can be attributed to a decrease in fuel taxes
which relates to the use of fleet owners by A.F.S. and to a decrease in license
and registration expense which is attributable to a reduced amount of individual
state decals required as more states join the International Fuel Tax Agreement
(IFTA).
The Company realized a decrease in depreciation expense of 2.2% of revenues in
the first quarter of 1997 as compared to the first quarter of 1996 from 12.2% to
10.0%. This was the result of tractor additions in 1996 and 1997 having higher
salvage values relative to the total cost of the tractors purchased and the use
of fleet owners by A.F.S.
8
<PAGE> 9
Communications and utilities expenses decreased from 1.1% as a percentage of
revenues in the first quarter of 1996 to .6% in the first quarter of 1997. This
decrease reflects the negotiation of lower rates for communications services.
Interest expense decreased in absolute dollars $79,627, which reflects a lower
line of credit balance for the first quarter of 1997 when compared to the first
quarter of 1996.
The Company's effective tax rate increased from 38.0% in the first quarter of
1996 to 40.0% in the first quarter of 1997. This increase is primarily due to
state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of 1997 the Company generated $4.8 million in cash from
operating activities. Investing activities used $1.9 million in cash in the
first quarter of 1997. Financing activities used $8.4 million in the first
quarter of 1997 primarily for the repayment of the Company's line of credit and
repayments of long-term debt.
The Company's principal subsidiary, P.A.M. Transport, Inc., has a $15.0 million
secured bank line of credit subject to borrowing limitations. Outstanding
advances on this line of credit were approximately $2.9 million (at an interest
rate of 8.07%) at March 31, 1997, including $1.5 million in letters of credit.
The Company's borrowing base limitation at March 31, 1997 was $10.9 million. The
line of credit is guaranteed by the Company and matures May 31, 1998.
Proceeds of $4.6 million received by the Company from its majority shareholder
as a result of the exercise of stock purchase warrants, in the fourth quarter of
1996, were used to pay down the Company's line of credit.
In addition to cash flow from operations, the Company uses its existing line of
credit on an interim basis to finance capital expenditures and repay long-term
debt. Longer-term transactions, such as installment notes (generally three and
four year terms at fixed rates) are entered into for the purchase of revenue
equipment. P.A.M. Dedicated Services, Inc., a subsidiary of the Company, entered
into an installment obligation in the first quarter of 1997 for the purchase of
replacement revenue equipment for approximately $1.7 million payable in 48
monthly installments at an interest rate of 7.50%.
During 1997 the Company plans to replace and/or add 500 trailers and 205
tractors and expects to incur additional debt of approximately $17.0 million.
However, the Company intends to structure a portion of these equipment
expenditures in the form of operating leases. Management expects that the
Company's existing working capital and its available line of credit will be
sufficient to meet the Company's capital commitments as of March 31, 1997, to
repay indebtedness coming due in the current year, and to fund its operating
needs during fiscal 1997.
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, 1997 By: /s/ Robert W. Weaver
---------------------------------
Robert W. Weaver
President and Chief Executive Officer
(principal executive officer)
Dated: May 13, 1997 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 (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 31,1997
Application of assumed proceeds ($1,915,100):
Toward repurchase of outstanding common shares at $1,915,100
March 31, 1997 market price of $5.833 per share
Reduction of borrowings under line of credit 0
----------
$1,915,100
==========
Adjustments of net income:
Actual net income 1,284,245
Interest expense reduction 0
----------
Adjusted net income (A) 1,284,245
Adjustment of shares outstanding:
Actual outstanding 8,126,466
Net additional shares issuable (451,358-328,322) 123,036
----------
Adjusted shares outstanding (B) 8,249,502
==========
Net income per common share (A) divided by (B) $ 0.16
==========
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, 1995 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
==========
</TABLE>
<PAGE> 2
RECENT PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings Per Share (SFAS No. 128), which establishes new standards for
computing and presenting earnings per share. The provisions of SFAS No. 128 are
effective for earnings per share calculations for periods ending after December
15, 1997. At that time, the Company will be required to change the method
currently used to compute earnings per share and to restate all prior periods.
If the Company had adopted the provisions of SFAS No. 128, the results would
have been as follows:
<TABLE>
<CAPTION>
Quarter Ended March 31
----------------------
1997 1996
---- ----
<S> <C> <C>
Earnings per common share - basic $.16 $.15
Earnings per common share - diluted $.16 $.10
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1,000
<CASH> 460
<SECURITIES> 0
<RECEIVABLES> 20,243
<ALLOWANCES> 521
<INVENTORY> 382
<CURRENT-ASSETS> 26,516
<PP&E> 94,499
<DEPRECIATION> 32,929
<TOTAL-ASSETS> 92,240
<CURRENT-LIABILITIES> 30,610
<BONDS> 26,454
0
0
<COMMON> 81
<OTHER-SE> 27,530
<TOTAL-LIABILITY-AND-EQUITY> 92,240
<SALES> 0
<TOTAL-REVENUES> 32,630
<CGS> 0
<TOTAL-COSTS> 29,620
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 870
<INCOME-PRETAX> 2,140
<INCOME-TAX> 856
<INCOME-CONTINUING> 1,284
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,284
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
