<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, 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 August 10, 1998
----- ------------------------------
Common Stock, $.01 Par Value 8,324,957
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
P.A.M. TRANSPORTATION SERVICES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---- ----
ASSETS (unaudited) (note)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,273 $ 6,401
Receivables:
Trade, net of allowance 19,147 16,915
Other 390 1,703
Equipment held for sale 192 1,529
Operating supplies and inventories 458 449
Deferred income taxes 107 61
Prepaid expenses and deposits 3,769 3,384
Income taxes refundable 65 415
--------- ---------
Total current assets 29,401 30,857
Property and equipment, at cost 124,140 103,572
Less: accumulated depreciation (42,773) (37,382)
--------- ---------
Net property and equipment 81,367 66,190
Other assets:
Excess of cost over net assets acquired 2,339 2,400
Non compete agreement 517 737
Other 616 504
--------- ---------
Total other assets 3,472 3,641
--------- ---------
Total assets $ 114,240 $ 100,688
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 17,178 $ 15,544
Trade accounts payable 9,531 9,233
Other current liabilities 5,107 4,835
--------- ---------
Total current liabilities 31,816 29,612
Long-term debt, less current portion 33,048 28,226
Non compete agreement 282 312
Deferred income taxes 11,456 9,376
Shareholders' equity:
Common stock 83 83
Additional paid-in capital 18,708 18,592
Retained earnings 18,847 14,487
--------- ---------
Total shareholders' equity 37,638 33,162
--------- ---------
Total liabilities and shareholders' equity $ 114,240 $ 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.
2
<PAGE> 3
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,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenues $ 36,012 $ 31,353 $ 71,451 $ 63,983
Operating expenses:
Salaries, wages and benefits 16,252 13,656 32,433 28,813
Operating supplies 6,490 5,758 13,353 12,487
Rent/purchased transportation 253 445 474 856
Depreciation and amortization 3,588 3,112 7,045 6,354
Operating taxes and licenses 1,886 1,873 4,025 3,764
Insurance and claims 1,489 1,369 2,952 2,833
Communications and utilities 409 250 758 452
Other 696 626 1,345 1,150
Loss on sale of equipment 25 0 73 0
----------- ----------- ----------- -----------
31,088 27,089 62,458 56,709
----------- ----------- ----------- -----------
Operating income 4,924 4,264 8,993 7,274
Other income (expense)
Interest expense (1,027) (889) (1,857) (1,758)
----------- ----------- ----------- -----------
(1,027) (889) (1,857) (1,758)
Income before income taxes 3,897 3,375 7,136 5,516
Income taxes --current 623 396 741 559
--deferred 858 887 2,035 1,580
----------- ----------- ----------- -----------
1,481 1,283 2,776 2,139
Net income $ 2,416 $ 2,092 $ 4,360 $ 3,377
=========== =========== =========== ===========
Net income per common share:
Basic $ 0.29 $ 0.26 $ 0.53 $ 0.42
=========== =========== =========== ===========
Diluted $ 0.29 $ 0.25 $ 0.52 $ 0.41
=========== =========== =========== ===========
Average common shares outstanding-Basic 8,299,702 8,147,492 8,292,906 8,137,037
=========== =========== =========== ===========
Average common shares outstanding-Diluted 8,473,015 8,280,749 8,461,769 8,238,837
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
P.A.M. TRANSPORTATION SERVICES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 4,360 $ 3,377
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 7,045 6,354
Non compete agreement amortization 220 220
Provision for deferred income taxes 2,034 1,580
Loss on retirement of property and equipment 73 0
Changes in operating assets and liabilities:
Accounts receivable (569) (3,182)
Prepaid expenses and other current assets (506) (265)
Accounts payable 298 1,138
Accrued expenses 272 711
-------- --------
Net cash provided by operating activities 13,227 9,933
INVESTING ACTIVITIES
Purchases of property and equipment (23,174) (6,145)
Proceeds from sales of assets 2,277 363
-------- --------
Net cash used in investing activities (20,897) (5,782)
FINANCING ACTIVITIES
Borrowings under lines of credit 80,441 68,619
Repayments under lines of credit (85,663) (71,124)
Borrowings of long-term debt 20,807 1,747
Repayments of long-term debt (9,159) (8,677)
Proceeds from exercise of stock options 116 166
-------- --------
Net cash provided by (used in) financing activities 6,542 (9,269)
-------- --------
Net decrease in cash and cash equivalents (1,128) (5,118)
Cash and cash equivalents at beginning of period $ 6,401 $ 5,940
-------- --------
Cash and cash equivalents at end of period $ 5,273 $ 822
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
P.A.M. TRANSPORTATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 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 six-month period ended June 30, 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 six 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 $20.8 million. These
obligations are payable in 36 and 60 monthly installments at interest rates
ranging from 7.00% to 7.50%.
NOTE C: NEW ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivitive Instruments
and Hedging Activities". The Statement establishes accounting and reporting
standards requiring that every derivative instrument be recorded in the balance
sheet as either an asset or liability at its fair value. The Company has
determined that the adoption of this statement will have no material effect on
its financial statements.
5
<PAGE> 6
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
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 JUNE 30, 1998 VS. THREE MONTHS ENDED JUNE 30, 1997
For the quarter ended June 30, 1998, revenues increased 14.9% to $36.0 million
as compared to $31.4 million for the quarter ended June 30, 1997. The main
factor for the increase in revenues was a 15.0% increase in the average number
of tractors from 914 in the second quarter of 1997 compared to 1,051 in second
quarter of 1998.
The Company's operating ratio improved to 86.3% of revenues in the second
quarter of 1998 compared to 86.4% in the second quarter of 1997.
Salaries, wages and benefits increased from 43.6% of revenues in the second
quarter of 1997 to 45.1% of revenues in the second quarter of 1998. This
increase was due to an increase in amounts paid to drivers due to changes in
driver pay packages early in the first quarter of 1998.
Operating supplies and expenses decreased from 18.4% of revenues in the second
quarter of 1997 to 18.0% of revenues in the second quarter of 1998. The decrease
represents a lower price paid for diesel fuel.
Rent and purchased transportation decreased from 1.4% of revenues in the second
quarter of 1997 to 0.7% of revenues in the second quarter of 1998. This decrease
was due to the replacement of rental trailers with company-owned trailers.
Communications and utilities increased from 0.8% of revenues in the second
quarter of 1997 to 1.1% of revenues in the second quarter of 1998 due to
increased usage of Qualcomm units and federal surcharges related to inbound
"toll-free" calls initiated from payphones.
The Company's effective tax rate remained constant at 38% for the periods
compared.
SIX MONTHS ENDED JUNE 30, 1998 VS. SIX MONTHS ENDED JUNE 30, 1997
For the six months ended June 30, 1998, revenues increased 11.7% to $71.5
million as compared to $64.0 million for the six months ended June 30, 1997. The
main factor for the increase in revenues was a 12.1% increase in the average
number of tractors from 917 for the first six months of 1997 compared to 1,028
for the first six months of 1998.
The Company's operating ratio improved to 87.4% of revenues in the first six
months of 1998 compared to 88.6% in the first six months of 1997.
Salaries, wages and benefits increased from 45.0% of revenues in the first six
months of 1997 to 45.4% of revenues in the first six months of 1998. This
increase was due to an increase in amounts paid to drivers due to changes in
driver pay packages early in the first quarter of 1998. This increase in driver
pay was partially offset by a reduction in the amount accrued for the Company's
1998 Incentive Bonus Plan.
6
<PAGE> 7
Operating supplies and expenses decreased from 19.5% of revenues in the first
six months of 1997 to 18.7% of revenues in the first six months of 1998. The
decrease represents a lower price paid for diesel fuel.
Rent and purchased transportation decreased from 1.3% of revenues in the first
six months of 1997 to 0.7% of revenues in the first six months of 1998. This
decrease was due to the replacement of rental trailers with company-owned
trailers.
Communications and utilities increased from 0.7% of revenues in the first six
months of 1997 to 1.1% of revenues in the first six months of 1998 due to
increased usage of Qualcomm units and federal surcharges related to inbound
"toll-free"calls initiated from payphones.
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of 1998, the Company generated $13.2 million in cash
from operating activities. Investing activities used $20.9 million in cash in
the first six months of 1998. Financing activities generated $6.5 million in the
first six 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 7.16%). 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 7.81%). Outstanding
advances on this line of credit were approximately $1.5 million at June 30,
1998, which consisted entirely of letters of credit. The Company's borrowing
base limitation at June 30, 1998 was $15.0 million. The line of credit is
guaranteed by the Company and matures on May 31, 1999 while the equipment
portion of the line of credit matures on May 31, 2000.
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; however, the Company purchased additional revenue equipment
during the first six months of 1998 with a cost of approximately $3.2 million
using its existing line of credit. In addition, P.A.M. Dedicated Services, Inc.,
a subsidiary of the Company, entered into installment obligations during the
first six months of 1998 for the purchase of revenue equipment in the amount of
approximately $20.8 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 338 tractors and to
add 57 additional new tractors which would result in additional debt of
approximately $21.1 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, 1998, to repay indebtedness coming
due in the current year, and to fund its operating needs during the remainder of
fiscal 1998.
YEAR 2000
In the next two years, many companies may face a potentially serious information
systems problem because their computer software applications and operational
programs may not properly recognize calendar dates beginning in the year 2000.
This problem could force computers to either shut down or provide incorrect data
or information. The Company began the process of identifying the changes
required to its computer programs and hardware in 1997. Software upgrades
designed to correct the year 2000 problem are scheduled to be implemented by the
second quarter of 1999. Accordingly, the Company believes that it will
timely meet its year 2000 compliance requirements, and does not presently
anticipate the cost of these software and hardware changes to have a material
adverse impact on its business, financial condition, or results of operation.
However, there can be no assurance that unforeseen difficulties or costs will
not arise. The Company has issued certification requests to the software
companies on which its computer programs rely seeking assurance that they will
be year 2000 compliant. Approximately 90% of the questionnaires have been
returned. Respondents have indicated that they are year 2000 compliant now or
will be in advance of the year 2000.
7
<PAGE> 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The 1998 Annual Meeting of Stockholders of the Company was held on May
22, 1998. 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, Charles F.
Wilkins, Fredrick P. Calderone and Joseph J. Casaroll.
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 7,789,546 23,530
Daniel C. Sullivan 7,789,546 23,530
Charles F. Wilkins 7,784,546 28,530
Matthew T. Moroun 7,789,546 23,530
Fredrick P. Calderone 7,789,546 24,230
Joseph J. Casaroll 7,789,546 24,230
</TABLE>
Also at the 1998 Annual Meeting of Stockholders, the stockholders
approved an amendment to the 1995 Stock Option Plan to increase the number
of shares available for grant thereunder from 600,000 to 1,000,000 shares.
Votes for approval of the amendment were 6,464,877, votes against were
600,800 and votes withheld were 2,185.
Item 5. Other Information.
Any proposal to be presented at next year's Annual Meeting of
Stockholders must be received at the principal executive offices of the
Company not later than December 29, 1998, directed to the attention of the
Secretary, for consideration for inclusion in the Company's proxy statement
and form of proxy relating to that meeting. Any such proposals must comply
in all respects with the rules and regulations of the Securities and
Exchange Commission. With respect to any such proposals received by the
Company after March 15, 1999, the persons named in the form of proxy
solicited by management will vote the proxy in accordance with their
judgement of what is in the best interests of the Company.
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are filed with this report:
10.1 - Employment Agreement between Robert W. Weaver and
the Company.
11.1 - Statement Re: Computation of Diluted Earnings
Per Share.
27.1 - Financial Data Schedule (for SEC use only).
27.2 - Restated Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
None.
8
<PAGE> 9
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, 1998 /s/ Robert W Weaver
President and Chief Executive Officer
(principal executive officer)
Dated: August 12, 1998 /s/ Larry J. Goddard
Vice President-Finance, Chief Financial
Officer, Secretary and Treasurer
(principal accounting and financial
officer)
9
<PAGE> 1
EXHIBIT 10.1
Robert W. Weaver
Employment Agreement
EMPLOYMENT AGREEMENT
THIS AGREEMENT made effective as of the 1st day of July, 1998 by and
between P.A.M. TRANSPORTATION SERVICES, INC., a Delaware corporation
(hereinafter referred to as "P.A.M." or "COMPANY") and ROBERT W. WEAVER
(hereinafter referred to as "EMPLOYEE").
RECITALS:
The following is a recital of facts underlying this Agreement and it
replaces, survives and eliminates all prior agreements and is a continuation of
employment.
P.A.M. is a holding company which owns various subsidiary corporations
which operate as motor common carriers and desires to encourage EMPLOYEE to use
his best efforts to further develop such business. Hereinafter, P.A.M. and its
subsidiaries (whether or not now existing) shall be referred to collectively as
"COMPANY".
EMPLOYEE is the President and Chief Executive Officer of P.A.M. and
desires to continue to perform employment services as an employee and fiduciary
of P.A.M.
NOW, THEREFORE, in consideration of the mutual covenants and agreement of
the parties set forth herein, the parties hereto hereby agree as follows:
1. EMPLOYMENT OF EMPLOYEE. P.A.M. hereby continues to employ EMPLOYEE and
EMPLOYEE hereby continues in the same employment of P.A.M. for the business
conducted by COMPANY for a term commencing on July 1, 1998, and ending at the
close of business on June 30, 2001. If EMPLOYEE is terminated due to medical
disability, EMPLOYEE'S compensation shall be continued for twelve (12) months
thereafter from the determination of disability.
2. DUTIES OF EMPLOYEE. EMPLOYEE shall make himself available to serve as
President and Chief Executive Officer of P.A.M. and, at the request of the Board
of Directors, as an officer of its various subsidiaries, with such specific
duties, responsibilities and authority as may from time to time be assigned to
him by the Board of Directors of P.A.M. which may include, but shall not
necessarily be limited to, overall responsibility for operation of the business
of COMPANY in a manner which will maximize COMPANY'S profits. EMPLOYEE shall
devote all of his time, attention, knowledge and skills solely to the business
of COMPANY and EMPLOYEE shall obey and comply with all rules, regulations and
orders issued from time to time by the P.A.M. Board of Directors. COMPANY shall
be entitled to all of the benefits, profits, or other issues arising from or
incident to all work, services, and advise of EMPLOYEE. EMPLOYEE shall thus
devote his full attention to the operation of the COMPANY and shall not be
engaged in any other business or operation that in any way would inhibit
EMPLOYEE from devoting his full attention to the operation of the company,
EMPLOYEE shall be allowed to pursue other business interests unrelated to the
transportation
<PAGE> 2
industry as long as the EMPLOYEE'S participation in the unrelated business does
not inhibit the EMPLOYEE'S ability to devote his full attention to the operation
of the COMPANY.
3. BASE COMPENSATION AND BONUS. P.A.M. shall pay EMPLOYEE as base
compensation for all services to be rendered by EMPLOYEE compensation of
$337,000 Thousand Dollars for the period July 1, 1998 through June 30, 1999,
$350,000 Thousand Dollars for the period July 1, 1999 through June 30, 2000,
and $375,000 for the period July 1, 2000 through June 30, 2001. Each base
compensation amount is respective and specific to the time period of which the
EMPLOYEE'S service
2
<PAGE> 3
Robert W. Weaver
Employment Agreement
is rendered. Each amount of base compensation for the expressly mentioned time
periods is payable in equal bi-weekly payments. Any increase of EMPLOYEE'S base
compensation shall be at the sole discretion of the Board of Directors of P.A.M.
Also, P.A.M. shall grant to EMPLOYEE, under terms promulgated by the Board of
Directors, options to buy up to 30,000 Thousand shares of the stock of the
COMPANY. P.A.M. shall also provide EMPLOYEE with the use of a COMPANY car, as
approved by the P.A.M. Board of Directors, with full reimbursements to EMPLOYEE
for business use upon the submission to COMPANY of proper documentation and
shall be entitled to the fringe benefit package available to executive employees
of P.A.M. EMPLOYEE shall be entitled to all bonuses or bonus programs of which
he participated in prior to entering into this agreement. All future and
additional forms and amounts of bonus compensation shall be determined at the
full discretion of P.A.M. Board of Directors.
4. CONFIDENTIALITY. EMPLOYEE shall not at any time or in any manner,
directly or indirectly, divulge, disclose or communicate to any firm, person,
corporation or entity, in any manner whatsoever, any information concerning or
relating to the business of COMPANY, including without limitation, COMPANY'S
customer list, or the methods used by COMPANY in conducting business or any
matter relating to the business of COMPANY, including without limitation, the
prices it obtains or has obtained from the sale of its service, its manner of
operation, its plans, processes or other data, without regard to whether all of
the foregoing matters will be deemed confidential, material or important.
Anything to the contrary notwithstanding, the parties hereto stipulate that any
and all knowledge, data and information gathered by EMPLOYEE through this
Agreement, his employment with P.A.M. and the operation of the business of
COMPANY is deemed important, material and confidential, and gravely affects the
effective and successful conduct of the business of COMPANY and COMPANY'S good
will and that any breach of the terms of this Paragraph 4 shall be deemed a
material breach of this Agreement. This Paragraph 4 shall continue in full force
and effect for the lesser of the three (3) years after the termination or
earlier cancellation of this Agreement or the longest period of time found to be
enforceable by a court of competent jurisdiction and venue as defined herein. In
recognition of the difficulty of determine damages for violation of this
covenant, COMPANY shall be entitled to injunctive relief for the violation
available to it at law, in equity, or under this Agreement (without the
necessity or equity, or Agreement (without the necessity of posting a bond). All
reasonable costs of any nature whatsoever incurred by company in attempting to
enforce this Paragraph 4, including without limitation, attorneys fees, shall be
paid by EMPLOYEE, provided that company shall prevail in such proceedings or
litigation. If EMPLOYEE shall prevail in such proceedings or litigations, then
COMPANY shall pay all reasonable costs of any nature whatsoever incurred by
EMPLOYEE in defending the proceeding or litigation, including without
limitation, attorneys fees. Any such attorneys fees shall be calculated on a
time and charge basis. If any provision hereunder shall be determined to be
contrary to law, the remainder of this provision shall constitute the agreement
between the parties. This Paragraph shall not be deemed to prevent EMPLOYEE from
making such public disclosures as a person in his position is reputed to do from
time to time.
3
<PAGE> 4
Robert W. Weaver
Employment Agreement
5. RESTRICTION ON COMPETITION. As a material part of the consideration of
this Agreement, EMPLOYEE agrees not to compete with COMPANY during his
employment and for one (1) year period following the period of EMPLOYEE'S
employment with COMPANY in the geographic and marketing areas serviced and to be
serviced by COMPANY. EMPLOYEE shall not directly or indirectly, own, manage,
operate, or be connected as an officer, employee, partner, director,
shareholder, adviser or financially or otherwise, anyone else in the conduct of
any business or businesses which compete with any business conducted by the
COMPANY. This covenant is restricted geographically to (i) the United States, or
if found to be unenforceable by a final, unappealable order of a court of
competent jurisdiction and venue as defined herein (hereinafter referred to an
"Unenforceable"), (ii) the states in which COMPANY owns or leases and/or uses
and/or has plans for using a business facility at any time during the term of
EMPLOYEE'S employment of if Unenforceable, (iii) within a one hundred (100) mile
radius of such facilities or if Unenforceable, (iv) the largest geographic area
such court will allow. This covenant also includes all customers of COMPANY
regardless of their geographic location. In recognition of the difficulty of
determining damages for violation of this covenant, COMPANY shall be entitled to
injunctive relief for the violation hereof, in addition to such other relief as
may be available to it at law, in equity, or under this Agreement (without the
necessity of posting a bond). All reasonable costs of any nature whatsoever
incurred by company in attempting to enforce this Paragraph 4, including without
limitation, attorneys fees, shall be paid by EMPLOYEE, provided that COMPANY
shall prevail in such proceedings or litigation. If EMPLOYEE shall prevail in
such proceedings or litigations, then COMPANY shall pay all reasonable costs of
any nature whatsoever incurred by EMPLOYEE in defending the proceedings or
litigation, including without limitation, attorneys fees. Any such attorneys
fees shall be calculated on a time and charges basis. If any provision hereunder
shall be deemed to be contrary to law, the remainder of this provision shall
constitute the agreement between the parties. Anything to the contrary,
notwithstanding, this Paragraph 5 shall survive the termination or earlier
cancellation of this Agreement. EMPLOYEE can own up to five (5%) percent of the
stock of publicly traded transportation companies as a passive investor but
shall take no part in the management or direction of such companies.
Additionally, EMPLOYEE shall be paid $25,000 Thousand Dollars per quarter, for
each quarter following the termination of his service under this Agreement and
ceasing in (1) one year from that date or sooner if EMPLOYEE secures a position
with another firm or institution or is retained as a consultant by the COMPANY.
6. REMEDIES UPON DEFAULT.
6.1 DEFAULT BY EMPLOYEE. EMPLOYEE acknowledges that his loyal, faithful
and effective performance of the employment provided for herein, is of vital
importance to the success of the COMPANY, and that EMPLOYEE'S commitment to
perform for the entire term of this Agreement is an essential inducement to and
condition of COMPANY'S employment of EMPLOYEE, and that premature termination,
abandonment or failure of performance by EMPLOYEE would in all probability
result in substantial damages to the COMPANY, and that EMPLOYEE possesses
peculiar knowledge and expertise important to the success of the
4
<PAGE> 5
Robert W. Weaver
Employment Agreement
COMPANY. Accordingly, EMPLOYEE expressly warrants and represents to and
covenants with COMPANY that EMPLOYEE shall not voluntarily terminate his
employment with COMPANY or otherwise abandon the full and faithful performance
of his duties of employment prior to the expiration of the term of this
Agreement. In the event that EMPLOYEE shall breach any covenant set forth in
this Paragraph 6.1, COMPANY shall have the right to pursue and enforce any
remedies available to COMPANY by law, at equity or pursuant to this Agreement,
including without limitation, specific performance as a result of such breach.
COMPANY may commence a lawsuit for enforcement of its rights hereunder seeking
damages without waiving any other rights R may possess.
6.2 DEFAULT BY COMPANY. In the event COMPANY shall terminate the
employment of EMPLOYEE prior to the expiration of the term of this Agreement for
reasons other than good cause, COMPANY'S liability to employee shall be limited
to an amount equal to one-hundred (100%) percent of EMPLOYEE'S compensation as
set forth in paragraph 3 herein for the remainder of the contract term in
complete discharge of any further obligations COMPANY may have to EMPLOYEE by
law, in equity or under this Agreement. If such termination is for good cause,
COMPANY shall pay to EMPLOYEE an amount equal to one months of EMPLOYEE'S annual
compensation and shall not be liable to EMPLOYEE for any further damages or
severance compensation whatsoever. COMPANY shall be deemed to have terminated
EMPLOYEE without good cause if COMPANY conditions EMPLOYEE'S further employment
upon changing his residence from northwest Arkansas.
7. EXCLUSIVE CONSULTING CONTRACT. Upon termination of EMPLOYEE'S
employment with COMPANY for any reason whatsoever, COMPANY shall have the right,
at its option, to retain EMPLOYEE as an independent consultant under an
exclusive consulting contract, for the performance by EMPLOYEE of such duties as
may be reasonable assigned by the Board of Directors of P.A.M. consistent with
the position of an independent consultant, and EMPLOYEE shall be bound by the
restrictions on competition set forth in Paragraphs 4 and 5 hereof. EMPLOYEE
shall be entitled as full compensation for his services under such consulting
contract to an annual salary equal to fifty (50%) percent of his average total
annual compensation hereunder, averaged over the term of his employment with
COMPANY from and after July 1, 1998, payable in equal monthly payments. The
specific terms regarding the actual services to be performed, length of service
and other contractual terms not set forth in this paragraph, shall be mutually
agreeable to the EMPLOYEE and the COMPANY.
8. OPTION TO EXTEND. COMPANY shall have the right to extend this Agreement
for an additional one (1) year beyond termination of this Agreement. The
EMPLOYEE'S annual salary for the one-year option period shall be four hundred
thousand dollars ($400,000) payable in equal bi-weekly payments. COMPANY may
elect to exercise this extension right at any time prior to May 1, 2001.
9. MISCELLANEOUS.
9.1 NON-WAIVER. No covenant or condition of this Agreement may be
waived except by the written consent of the COMPANY. Forbearance or indulgence
5
<PAGE> 6
Robert W. Weaver
Employment Agreement
by COMPANY in any regard whatsoever shall not constitute a waiver of the
covenants or conditions to be preformed by EMPLOYEE to which the same may apply,
and, until complete performance by EMPLOYEE of said covenant or condition,
COMPANY shall be entitled to invoke any remedy available COMPANY under this
Agreement or by law or in equity, despite said forbearance or indulgence.
9.2 MODIFICATION OF AGREEMENT. This instrument constitutes the entire
agreement between P.A.M. and EMPLOYEE and no modification, extension, waiver,
renewal or termination of the Agreement or any of the provisions hereof may be
binding upon either party unless made in writing and signed by each of the
parties. No modification of this Agreement may be signed by COMPANY except upon
approval by the P.A.M. Board of Directors.
9.3 NOTICES. Service of all notices under this Agreement shall be
sufficient if given personally or mailed by certified mail, return receipt
requested, with postage prepaid, addressed to the party involved at the address
set forth below or at such other address as such party shall provide in writing
from time to time. Any notice mailed to such address shall be effective when
deposited in the United States mail.
COMPANY: Matthew Moroun and Daniel Sullivan
12225 Stephens Road Sullivan & Hicks
Warren, MI 48089 122 West 22nd Street
Suite 350
Oak Brook, Illinois 60521
EMPLOYEE: Robert W. Weaver
4470 Bridgewater Lane
Fayetteville, AR 72703
9.4 PARAGRAPH HEADINGS. The titles to the paragraphs of this Agreement are
for convenience of the parties only and shall not affect in any way the meaning
or construction of any Paragraph of this Agreement.
9.5 SEVERABILITY. All agreements, terms and covenants contained herein are
severable and in the event any of them, with the exception of those contained in
Paragraph 1, shall be held to be invalid by a court of competent jurisdiction
and venue as defined herein, this Agreement shall be interpreted as if such
invalid agreements, terms or covenants were not contained herein unless within
thirty (30) days of the issuance of a final and unappealable Order of a Court of
competent jurisdiction and venue, COMPANY shall have tendered to EMPLOYEE in the
manner provided for notices hereunder, its election to cancel this Agreement.
9.6 SUCCESSORS. This agreement shall be binding on any successor to the
COMPANY and shall also remain binding on EMPLOYEE in the event the COMPANY is
acquired, merged, consolidated or a change in control occurs.
9.7 TIME OF THE ESSENCE. Time is to be deemed of the essence of this
Agreement and each and all of its provisions.
6
<PAGE> 7
9.8 CONSTRUCTION. This Agreement shall be construed according to the laws
of the State of Delaware and exclusive jurisdiction and venue shall be deemed to
lie within the Circuit or Chancery Courts of Washington County, Arkansas.
10. BINDING EFFECTS. This Agreement shall, upon approval of the Board of
Directors of P.A.M. by corporate resolution, be binding upon the parties hereto,
their successors, assigns, heirs, estates or legal representatives and shall
ensure to the benefit of COMPANY and its successors and assigns. Each subsidiary
of P.A.M., of whether presently existing, shall be a third party beneficiary of
this Agreement. This Agreement contains the entire consideration to EMPLOYEE
during the tenure of this contract and supersedes all previous agreements.
IN WITNESS WHEREOF, the parties hereto have hereunto caused this Agreement
to be executed and delivered as of the date first above written.
P.A.M. TRANSPORTATION SERVICES, INC., EMPLOYEE
A DELAWARE CORPORATION
BY: /s/ Matthew T. Moroun 6-23-98 /s/ Robert W. Weaver 7-1-98
---------------------------- ------- -------------------- ------
MATTHEW T. MOROUN DATE ROBERT W. WEAVER DATE
DIRECTOR AND DULY
AUTHORIZED REPRESENTATIVE
AND
BY: /s/ W. Clif Lawson 7-1-98 WITNESSES: /s/ June Erisman
---------------------------- ------ ---------------------
W. CLIF LAWSON DATE
EXECUTIVE VICE PRESIDENT AND PRINT NAME: June Erisman
CHIEF OPERATING OFFICER --------------------
--------------------
PRINT NAME:
--------------------
7
<PAGE> 1
EXHIBIT 11.1
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>
<CAPTION>
DILUTED EARNINGS PER SHARE FOR THE PERIOD ENDED JUNE 30, 1998 Three Months Six Months
- ------------------------------------------------------------- ------------ ----------
<S> <C> <C>
Actual net income (A) $ 2,415,875 $ 4,359,548
=========== ===========
Assumed exercise of stock options and warrants 326,050 326,050
Application of assumed proceeds ($1,629,244) toward
repurchase of outstanding common stock at an average
market price of $10.667 and $10.365, respectively. (152,737) (157,187)
----------- -----------
Net additional shares issuable 173,313 168,863
=========== ===========
Adjustment of shares outstanding:
Weighted average common shares outstanding 8,299,702 8,292,906
Net additional shares issuable 173,313 168,863
----------- -----------
Adjusted shares outstanding (B) 8,473,015 8,461,769
=========== ===========
Net income per common share (A) divided by (B) $ 0.29 $ 0.52
=========== ===========
DILUTED EARNINGS PER SHARE FOR THE PERIOD ENDED JUNE 30, 1997 Three Months Six Months
- ------------------------------------------------------------- ----------- -----------
Actual net income (A) $ 2,092,690 $ 3,376,933
=========== ===========
Assumed exercise of stock options and warrants 451,358 451,358
Application of assumed proceeds ($2,193,626 and $2,224,938)
toward repurchase of outstanding common stock at an average
market price of $6.896 and $6.365, respectively. (318,101) (349,558)
----------- -----------
Net additional shares issuable 133,257 101,800
=========== ===========
Adjustment of shares outstanding:
Weighted average common shares outstanding 8,147,492 8,137,037
Net additional shares issuable 133,257 101,800
----------- -----------
Adjusted shares outstanding (B) 8,280,749 8,238,837
=========== ===========
Net income per common share (A) divided by (B) $ 0.25 $ 0.41
=========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1000
<CASH> 5,273
<SECURITIES> 0
<RECEIVABLES> 20,116
<ALLOWANCES> 579
<INVENTORY> 458
<CURRENT-ASSETS> 29,401
<PP&E> 124,140
<DEPRECIATION> 42,773
<TOTAL-ASSETS> 114,240
<CURRENT-LIABILITIES> 31,816
<BONDS> 33,048
83
0
<COMMON> 0
<OTHER-SE> 37,555
<TOTAL-LIABILITY-AND-EQUITY> 114,240
<SALES> 0
<TOTAL-REVENUES> 71,451
<CGS> 0
<TOTAL-COSTS> 62,458
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,857
<INCOME-PRETAX> 7,136
<INCOME-TAX> 2,776
<INCOME-CONTINUING> 4,360
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,360
<EPS-PRIMARY> .53
<EPS-DILUTED> .52
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1000
<CURRENCY> U.S. 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> 1000
<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
82
0
<COMMON> 0
<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> .42
<EPS-DILUTED> .41
</TABLE>
