<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, 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 August 11, 1997
----- ------------------------------
Common Stock, $.01 Par Value 8,206,457
<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
(thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------- ------------
ASSETS (unaudited) (note)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 822 $ 5,941
Receivables:
Trade, net of allowance 19,201 16,072
Other 1,083 1,030
Equipment held for sale 1,388 1,264
Operating supplies and inventories 477 382
Prepaid expenses and deposits 2,910 2,816
-------- --------
Total current assets 25,881 27,505
Property and equipment, at cost 98,569 92,594
Less: accumulated depreciation (36,324) (29,714)
-------- --------
Net property and equipment 62,245 62,880
Other assets:
Excess of cost over net assets acquired 2,450 2,511
Non compete agreement 957 1,178
Other 898 821
-------- --------
Total other assets 4,305 4,510
-------- --------
Total assets $ 92,431 $ 94,895
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 16,716 $ 16,849
Trade accounts payable 6,721 5,583
Deferred income taxes 295 65
Other current liabilities 4,529 3,817
-------- --------
Total current liabilities 28,261 26,314
Long-term debt, less current portion 25,734 34,938
Non compete agreement 664 762
Deferred income taxes 7,918 6,569
Shareholders' equity:
Common stock 82 81
Additional paid-in capital 18,208 18,044
Retained earnings 11,564 8,187
-------- --------
Total shareholders' equity 29,854 26,312
-------- --------
Total liabilities and shareholders' equity $ 92,431 $ 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)
(thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenues $ 31,353 $ 30,169 $ 63,983 $ 53,701
Operating expenses:
Salaries, wages and benefits 13,656 14,225 28,813 24,584
Operating supplies 5,758 5,490 12,487 10,064
Rent and purchased transportation 445 574 856 960
Depreciation and amortization 3,112 2,875 6,354 5,737
Operating taxes and licenses 1,873 1,734 3,764 3,263
Insurance and claims 1,369 1,327 2,833 2,366
Communications and utilities 250 302 452 558
Other 626 562 1,150 947
----------- ----------- ----------- -----------
27,089 27,089 56,709 48,479
----------- ----------- ----------- -----------
Operating income 4,264 3,080 7,274 5,222
Other income (expense)
Interest expense (889) (1,083) (1,758) (2,031)
Other 0 0 0 31
----------- ----------- ----------- -----------
(889) (1,083) (1,758) (2,000)
Income before income taxes 3,375 1,997 5,516 3,222
Income taxes --current 396 242 559 398
--deferred 887 557 1,580 866
----------- ----------- ----------- -----------
1,283 799 2,139 1,264
Net income $ 2,092 $ 1,198 $ 3,377 $ 1,958
=========== =========== =========== ===========
Net income per share $ 0.25 $ 0.16 $ 0.41 $ 0.26
=========== =========== =========== ===========
Average common and common
equivalent shares outstanding 8,280,749 7,643,314 8,238,837 7,675,774
=========== =========== =========== ===========
</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)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 3,377 $ 1,958
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,354 5,737
Non compete agreement amortization 220 177
Provision for deferred income taxes 1,580 866
Changes in operating assets and liabilities:
Accounts receivable (3,182) (2,430)
Prepaid expenses and other current assets (265) 1,167
Accounts payable 1,138 (4,042)
Accrued expenses 711 1,269
-------- --------
Net cash provided by operating activities 9,933 4,702
INVESTING ACTIVITIES
Purchases of property and equipment (6,145) (15,026)
Proceeds from the sale of assets 363 --
Lease payments received on direct financing lease -- 1,239
-------- --------
Net cash used in investing activities (5,782) (13,787)
FINANCING ACTIVITIES
Borrowings under lines of credit 68,619 58,772
Repayments under lines of credit (71,124) (61,754)
Borrowings of long-term debt 1,747 13,502
Repayments of long-term debt (8,677) (8,456)
AFS acquisition less cash acquired -- (200)
Proceeds from exercise of stock options 166 59
-------- --------
Net cash provided by (used in) financing activities (9,269) 1,923
-------- --------
Net decrease in cash and cash equivalents (5,118) (7,162)
Cash and cash equivalents at beginning of period $ 5,940 $ 7,629
-------- --------
Cash and cash equivalents at end of period $ 822 $ 467
======== ========
</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, 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 six-month period ended June 30, 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 six 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 approximately $1.7
million payable in 48 monthly installments at an interest rate of 7.50%. The
Company also purchased additional revenue equipment during the first six months
with a cost of $5,726,425 using its existing line of credit.
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 JUNE 30, 1997 VS. THREE MONTHS ENDED JUNE 30, 1996
For the quarter ended June 30, 1997, revenues increased 3.9% to $31.4 million as
compared to $30.2 million for the quarter ended June 30, 1996. The main factor
for the increase in revenues was a 4.7% increase in the average number of
tractors from 873 in 1996 to 914 in 1997.
The Company's operating ratio was 86.4% of revenues in the second quarter of
1997 compared to 89.8% in the second quarter of 1996.
Salaries, wages and benefits decreased from 47.2% of revenues in the second
quarter of 1996 to 43.6% of revenues in the second quarter of 1997. The major
factor for the decrease was a 2.8% decrease in the amounts paid to Allen Freight
Services, Inc. (AFS) fleet owners.
Rent and purchased transportation decreased by 0.5% of revenues in the second
quarter of 1997 as compared to the same period in 1996. This decrease relates
primarily to the transition at AFS from using leased equipment to using Company
owned equipment.
As a percentage of revenues, the Company's depreciation expense increased 0.4%
from 9.5% in the second quarter of 1996 to 9.9% in the second quarter of 1997.
This increase was a result of the transition at AFS from using leased equipment
to using Company owned equipment.
Interest expense decreased from 3.6% of revenues in the second quarter of 1996
to 2.8% of revenues in the second quarter 1997. This decrease resulted primarily
from the Company reducing its long term debt and its borrowings under its line
of credit during the fourth quarter of 1996 using proceeds of $4.6 million
received by the Company in connection with the exercise of stock purchase
warrants by its majority shareholder.
The Company's effective tax rate remained constant at 38% for the periods
compared.
SIX MONTHS ENDED JUNE 30, 1997 VS. SIX MONTHS ENDED JUNE 30, 1996
For the six months ended June 30, 1997, revenues increased 19.1% to $64.0
million as compared to $53.7 million for the six months ended June 30, 1996. The
main factor for the increase in revenues was a 13.6% increase in the average
number of tractors from 807 in 1996 to 917 in 1997.
8
<PAGE> 9
The Company's operating ratio was 88.6% of revenues in the first six months of
1997 compared to 90.3% in the first six months of 1996.
Salaries, wages and benefits decreased from 45.8% of revenues in the first six
months of 1996 to 45.0% of revenues in first six months of 1997. The primary
reason for the decrease was a 0.8% decrease in the amounts paid to AFS fleet
owners.
Operating supplies and expenses increased from 18.7% of revenues in the first
six months of 1996 to 19.5% of revenues in the first six months of 1997. The
increase was due to the reduction in the number of fleet owners used in AFS
operations, the corresponding increase in the use of Company owned equipment and
the related increase in fuel and maintenance expense attributable to Company
owned equipment.
As a percentage of revenues, the Company's depreciation expense decreased 0.8%
from 10.7% in the first six months of 1996 to 9.9% in the first six months of
1997. This decrease was the result of the tractors acquired in 1996 and 1997
having higher salvage values relative to the total cost of the tractors
purchased in such periods.
Interest expense decreased from 3.8% of revenues in the first six months of 1996
to 2.8% of revenues in the first six months of 1997. This decrease resulted
primarily from the Company reducing its long term debt and its borrowings under
its line of credit during the fourth quarter 1996 using proceeds of $4.6 million
received by the Company in connection with the exercise of stock purchase
warrants by its majority shareholder.
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of 1997 the Company generated $9.9 million in cash
from operating activities. Investing activities used $5.8 million in cash in the
first six months of 1997. Financing activities used $9.3 million in the first
six months 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 $6.2 million (at an interest
rate of 7.84%) at June 30, 1997, including $3.6 million (at an interest rate of
7.44%) in equipment debt and $1.5 million in letters of credit. The Company's
borrowing base limitation at June 30, 1997 was $14.8 million. The line of credit
is guaranteed by the Company and matures May 31, 1999.
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 typically entered into for the purchase of
revenue equipment; however, the Company purchased additional revenue equipment
during the first six months of 1997 with a cost of $5,726,425 using its existing
line of credit. In addition, 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.
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 June 30, 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 4. Submission of Matters to a Vote of Security Holders.
The 1997 Annual Meeting of Stockholders of the Company was held on May
16, 1997. 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 7,840,747 7,100
Daniel C. Sullivan 7,840,747 7,100
Charles F. Wilkins 7,840,647 7,200
Matthew T. Moroun 7,689,954 157,893
</TABLE>
No other matters were presented or voted for at the Annual Meeting of
Stockholders.
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 use only).
(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: August 12, 1997 By: /s/ Robert W. Weaver
--------------------------------------------
Robert W. Weaver
President and Chief Executive Officer
(principal executive officer)
Dated: August 12, 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 purchase 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 JUNE 30, 1997 Three Months Six Months
- ----------------------------------------------------- ------------ ----------
<S> <C> <C>
Application of assumed proceeds ($2,193,626 and $2,224,938):
Toward repurchase of outstanding common stock at
June 30, 1997 market price of $6.896 and $6.365 per share $2,193,626 $2,224,938
Reduction of borrowings under line of credit 0 0
---------- ----------
$2,193,626 $2,224,938
========== ==========
Adjustments of net income:
Actual net income $2,092,690 $3,376,933
Interest expense reduction 0 0
---------- ----------
Adjusted net income (A) $2,092,690 $3,376,933
========== ==========
Adjustment of shares outstanding:
Actual outstanding 8,147,492 8,137,037
Net additional shares issuable 147,387 122,029
---------- ----------
Adjusted shares outstanding (B) 8,294,879 8,259,066
========== ==========
Net income per common share (A) divided by (B) $ 0.25 $ 0.41
========== ==========
<CAPTION>
EARNINGS PER SHARE FOR THE PERIOD ENDED JUNE 30, 1996 Three Months Six Months
- ----------------------------------------------------- ------------ ----------
<S> <C> <C>
Application of assumed proceeds ($6,844,604 and $6,853,656):
Toward repurchase of outstanding common stock 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 $6,853,656
========== ==========
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 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
========== ==========
</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>
Three Months Ended June 30 Six Months Ended June 30
-------------------------- ------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Earnings per common share - basic $.25 $.24 $.41 $.39
Earnings per common share - diluted $.25 $.16 $.41 $.26
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1,000
<CASH> 822
<SECURITIES> 0
<RECEIVABLES> 20,797
<ALLOWANCES> 513
<INVENTORY> 477
<CURRENT-ASSETS> 25,881
<PP&E> 98,569
<DEPRECIATION> 36,324
<TOTAL-ASSETS> 92,431
<CURRENT-LIABILITIES> 28,261
<BONDS> 25,734
0
0
<COMMON> 82
<OTHER-SE> 29,772
<TOTAL-LIABILITY-AND-EQUITY> 92,431
<SALES> 0
<TOTAL-REVENUES> 63,983
<CGS> 0
<TOTAL-COSTS> 56,709
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,758
<INCOME-PRETAX> 5,516
<INCOME-TAX> 2,139
<INCOME-CONTINUING> 3,377
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,377
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
