<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, 1998
--------------
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 April 30, 1998
----- -----------------------------
Common Stock, $.01 Par Value 8,286,035
<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
(in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---- ----
ASSETS (unaudited) (note)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 974 $ 6,401
Receivables:
Trade, net of allowance 20,574 16,915
Other 680 1,703
Equipment held for sale 724 1,529
Operating supplies and inventories 466 449
Deferred income taxes 0 61
Prepaid expenses and deposits 4,352 3,384
Income taxes refundable 35 415
-------- -------
Total current assets 27,805 30,857
Property and equipment, at cost 116,391 103,572
Less: accumulated depreciation (39,886) (37,382)
-------- -------
Net property and equipment 76,505 66,190
Other assets:
Excess of cost over net assets acquired 2,369 2,400
Non compete agreement 627 737
Other 720 504
-------- --------
Total other assets 3,716 3,641
-------- --------
Total assets $108,026 $100,688
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 16,995 $ 15,544
Trade accounts payable 9,769 9,233
Deferred income taxes 225 0
Other current liabilities 5,456 4,835
-------- -------
Total current liabilities 32,445 29,612
Long-term debt, less current portion 29,811 28,226
Non compete agreement 282 312
Deferred income taxes 10,268 9,376
Shareholders' equity:
Common stock 83 83
Additional paid-in capital 18,707 18,592
Retained earnings 16,430 14,487
-------- --------
Total shareholders' equity 35,220 33,162
-------- --------
Total liabilities and shareholders' equity $108,026 $100,688
======== ========
</TABLE>
Note: The balance sheet at December 31, 1997 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)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months Ended
March 31,
1998 1997
---- ----
<S> <C> <C>
Operating revenues $ 35,440 $ 32,630
Operating expenses:
Salaries, wages and benefits 16,181 15,156
Operating supplies 6,863 6,729
Rent/purchased transportation 221 411
Depreciation and amortization 3,457 3,242
Operating taxes and licenses 2,140 1,891
Insurance and claims 1,463 1,465
Communications and utilities 349 202
Other 649 524
Loss on sale of equipment 48 0
-------- --------
31,371 29,620
-------- --------
Operating income 4,069 3,010
Other income/(expense): (829) (870)
-------- --------
Interest expense (829) (870)
Income before income taxes 3,240 2,140
Income taxes -current 119 163
--deferred 1,177 693
-------- --------
1,296 856
Net income $ 1,944 $ 1,284
======== ========
Net income per common share (basic and diluted) $ 0.23 $ 0.16
======== ========
Average common shares outstanding 8,286 8,126
======== ========
</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>
Three months Ended
March 31,
1998 1997
---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,944 $ 1,284
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,457 3,242
Non compete agreement amortization 110 110
Provision for deferred income taxes 1,177 693
Loss on retirement of property and equipment 48 0
Changes in operating assets and liabilities:
Accounts receivable (2,256) (3,747)
Prepaid expenses and other current assets (1,200) (529)
Accounts payable 536 2,495
Accrued expenses 620 1,293
------- -------
Net cash provided by operating activities 4,436 4,841
INVESTING ACTIVITIES
Purchases of property and equipment (14,073) (1,904)
Proceeds from sales of assets 1,090 0
------- --------
Net cash used in investing activities (12,983) (1,904)
FINANCING ACTIVITIES
Borrowings under lines of credit 36,265 33,011
Repayments under lines of credit (40,846) (38,747)
Borrowings of long-term debt 11,625 1,747
Repayments of long-term debt (4,038) (4,445)
Proceeds from exercise of stock options 114 16
------- --------
Net cash provided by (used in) financing activities 3,120 (8,418)
------- --------
Net decrease in cash and cash equivalents (5,427) (5,481)
Cash and cash equivalents at beginning of period $ 6,401 $ 5,941
------- --------
Cash and cash equivalents at end of period $ 974 $ 460
======= =======
</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, 1998
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, 1998 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1998. 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, 1997.
NOTE B: NOTES PAYABLE AND LONG-TERM DEBT
In the first three months of 1998, the Company's subsidiary, P.A.M. Dedicated
Services, Inc., entered into installment obligations for the purchase of revenue
equipment in the aggregate amount of approximately $11.6 million. These
obligations are payable in 36 and 60 monthly installments at interest rates
ranging from 7.00% to 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
"forward-looking statements" within the meaning of 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.
THREE MONTHS ENDED MARCH 31, 1998 VS. THREE MONTHS ENDED MARCH 31, 1997
For the quarter ended March 31, 1998, revenues increased 8.6% to $35.4 million
as compared to $32.6 million for the quarter ended March 31, 1997. The main
factor for the increase in revenues was a 9.3% increase in the average number of
tractors from 920 in the first quarter of 1997 compared to 1,005 in the first
quarter of 1998.
The Company's operating ratio improved to 88.5% of revenues in the first quarter
of 1998 compared to 90.8% in the first quarter of 1997.
Salaries, wages and benefits decreased from 46.5% of revenues in the first
quarter of 1997 to 45.7% of revenues in the first quarter of 1998. The major
factors for the decrease were decreases in the amounts paid to Allen Freight
Services, Inc. (AFS) fleet owners and a reduction in the amount accrued for the
Company's 1998 Incentive Bonus Plan. These reductions were partially offset by
an increase in amounts paid to drivers due to changes in driver pay packages.
Operating supplies and expenses decreased from 20.6% of revenues in the first
three months of 1997 to 19.4% of revenues in the first three months of 1998. The
decrease represents a lower price paid for diesel fuel.
Interest expense decreased from 2.7% of revenues in the first three months of
1997 to 2.3% of revenues in the first three months of 1998. This decrease
reflects a lower average line of credit balance for the first quarter of 1998
when compared to the first quarter of 1997.
The Company's effective tax rate remained constant at 40% for the periods
compared.
LIQUIDITY AND CAPITAL RESOURCES
During the first three months of 1998 the Company generated $4.4 million in cash
from operating activities. Investing activities used $13.0 million in cash in
the first three months of 1998. Financing activities generated $3.0 million in
the first three months of 1998 primarily from the borrowing 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. The line of credit
includes a provision that allows the Company to finance equipment at a reduced
interest rate of LIBOR + 1.50% (currently 7.19%). The maximum amount of
equipment that may be financed under this equipment provision is $7.5 million
with the remaining $7.5 million representing a general "working capital" line of
credit at an interest rate of LIBOR + 2.15% (currently 7.84%). Outstanding
advances on this line of credit were approximately $2.1 million at March 31,
1998, including $1.5 million in letters of credit. The Company's borrowing base
limitation at March 31, 1998 was $14.1 million. The line of credit is guaranteed
by the Company and matures on May 31, 1998 while the equipment portion of the
line of credit matures on May 31, 1999.
8
<PAGE> 9
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 to
five year terms at fixed rates), are typically entered into for the purchase of
revenue equipment. P.A.M. Dedicated Services, Inc., a subsidiary of the Company,
entered into installment obligations during the first three months of 1998 for
the purchase of revenue equipment in the amount of approximately $11.6 million
payable in 36 and 60 monthly installments at interest rates ranging from 7.00%
to 7.50%.
During the remainder of 1998, the Company plans to replace 355 tractors and to
add 105 additional new tractors and 300 additional new trailers, which would
result in additional debt of approximately $30.3 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 March 31,
1998, to repay indebtedness coming due in the current year, and to fund its
operating needs during the remainder of fiscal 1998.
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 Diluted Earnings Per
Share.
27.1 - 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: May 8, 1998 By: /s/ Robert W. Weaver
-------------------------------------
Robert W. Weaver
President and Chief Executive Officer
(principal executive officer)
Dated: May 8, 1998 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 DILUTED EARNINGS PER SHARE
12
<PAGE> 2
EXHIBIT (11)----STATEMENT RE: COMPUTATION OF DILUTED EARNINGS PER SHARE
Diluted 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 and only include those warrants and options whose
average share price during the period exceeds its related exercise price. The
net additional shares issuable are calculated based on the treasury stock method
and are added to the weighted average number of shares outstanding during the
period.
<TABLE>
DILUTED EARNINGS PER SHARE FOR THE PERIOD ENDED MARCH 31, 1998
<S> <C>
Actual net income (A) $ 1,943,673
============
Assumed exercise of stock options and warrants 323,850
Application of assumed proceeds ($1,682,557) toward
repurchase of outstanding common stock at an average
market price of $10.063 (167,202)
------------
Net additional shares issuable 156,648
============
Adjustment of shares outstanding:
Weighted average common shares outstanding 8,286,035
Net additional shares issuable 156,648
------------
Adjusted shares outstanding (B) 8,442,683
============
Net income per common share (A) divided by (B) $ 0.23
============
DILUTED EARNINGS PER SHARE FOR THE PERIOD ENDED MARCH 31, 1997
Actual net income (A) $ 1,284,245
============
Assumed exercise of stock options and warrants 451,358
Application of assumed proceeds ($1,915,100) toward
repurchase of outstanding common stock at an average
market price of $5.833 (328,322)
------------
Net additional shares issuable 123,036
============
Adjustment of shares outstanding:
Weighted average common shares outstanding 8,126,466
Net additional shares issuable 123,036
------------
Adjusted shares outstanding (B) 8,249,502
============
Net income per common share (A) divided by (B) $ 0.16
============
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 974
<SECURITIES> 0
<RECEIVABLES> 21,833
<ALLOWANCES> 579
<INVENTORY> 466
<CURRENT-ASSETS> 27,805
<PP&E> 116,391
<DEPRECIATION> 39,886
<TOTAL-ASSETS> 108,026
<CURRENT-LIABILITIES> 32,445
<BONDS> 29,811
0
0
<COMMON> 83
<OTHER-SE> 35,137
<TOTAL-LIABILITY-AND-EQUITY> 108,026
<SALES> 0
<TOTAL-REVENUES> 35,440
<CGS> 0
<TOTAL-COSTS> 31,371
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 829
<INCOME-PRETAX> 3,240
<INCOME-TAX> 1,296
<INCOME-CONTINUING> 1,944
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,944
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
</TABLE>
