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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Fiscal Year Ended December 31, 1999
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File No. 0-15057
P.A.M. TRANSPORTATION SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 71-0633135
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Highway 412 West
P.O. Box 188
Tontitown, Arkansas 72770
(501) 361-9111
(Address of principal executive offices, including zip code,
and telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act: Common Stock, $.01
par value
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the common stock of the registrant held by
non-affiliates of the registrant on March 13, 2000 was $18,874,651. Solely for
the purposes of this response, executive officers, directors and beneficial
owners of more than five percent of the Company's common stock are considered
the affiliates of the Company at that date.
The number of shares outstanding of the issuer's common stock, as of March 13,
2000: 8,439,957 shares of $.01 par value common stock.
Certain statements contained in this filing are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995, such
as statements relating to financial results and plans for future business
development 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 in the
transportation industry and other uncertainties detailed from time to time in
the Company's Securities and Exchange Commission filings.
PART I
ITEM 1. BUSINESS
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P.A.M. Transportation Services, Inc. (the "Company"), operating through its
wholly-owned subsidiaries, is an irregular route, common and contract motor
carrier authorized to transport general commodities throughout the continental
United States and the Canadian provinces of Ontario and Quebec, pursuant to
operating authorities granted by the former Interstate Commerce Commission
("ICC"), various state regulatory agencies and Canadian regulatory agencies.
Under its operating authorities, the Company may transport all types of freight
(except household goods, commodities in bulk and certain explosives) intrastate
within any state, and from any point in the continental United States, Ontario
or Quebec to any other point in the continental United States or in Ontario or
Quebec over any route selected by the Company. The Company transports dry
freight commodities ("freight") in 48-foot and 53-foot long, high cube
conventional and specialized freight vans ("trailers"). The freight consists
primarily of automotive parts, consumer goods, such as general retail store
merchandise and products from the manufacturing sector, such as heating and air
conditioning units. All freight is transported as truckload quantities.
The Company is a holding company organized under the laws of the State of
Delaware in June 1986 and conducts its operations through its wholly-owned
subsidiaries, P.A.M. Transport, Inc. ("P.A.M. Transport"), P.A.M. Special
Services, Inc., T.T.X., Inc., P.A.M. Dedicated Services, Inc., P.A.M. Logistics
Services, Inc., Choctaw Express, Inc., Choctaw Brokerage, Inc., Allen Freight
Services, Inc. and Decker Transport Co., Inc. The Company's operating
authorities are held by P.A.M. Transport, P.A.M. Dedicated Services, Inc.,
Choctaw Express, Inc., Choctaw Brokerage, Inc., Allen Freight Services, Inc. and
Decker Transport Co., Inc. Although not organized until June 1986, the Company
is, for financial accounting purposes, the successor to P.A.M. Transport, which
was organized under the laws of the State of Arkansas in 1980. Unless the
context otherwise requires, all references to the Company in this Annual Report
on Form 10-K include P.A.M. Transportation Services, Inc. and its subsidiaries.
At December 31, 1999, the Company operated a transport fleet consisting of 1,468
over-the-road tractors ("tractors") and 3,846 trailers.
The Company is headquartered and maintains its primary terminal,
maintenance facilities and corporate and administrative offices in Tontitown in
the northwest corner of Arkansas, a major center for the trucking industry and
where the support services (including warranty repair services) of most major
tractor and trailer equipment manufacturers are readily available.
MARKETING/MAJOR CUSTOMERS
The Company's marketing emphasis is directed to that segment of the
truckload market which is generally service-sensitive, as opposed to being
solely price competitive. Since 1990, the Company has diversified its marketing
efforts to gain access to non-traditional freight traffic, including
international (Mexico and Canada), domestic regional short-haul, dedicated fleet
services and intermodal transportation. The Company also participates in
various "core carrier" partnerships with its larger customers. The Company
estimates that approximately 55% of its deliveries to customers are made on a
JIT ("just in time") basis, whereby products and raw materials are scheduled for
delivery as they are needed on the retail customer's shelves or in the
manufacturing customer's production line. Such requirements place a premium on
the freight carrier's delivery performance and reliability. With respect to
these JIT deliveries, approximately 50% require the use of two-man driver teams
to meet the customer's schedule. The need for this service is a product of
modern manufacturing and assembly methods which are designed to drastically
decrease inventory levels and handling costs.
The Company's marketing efforts are conducted by eight outside sales
persons domiciled within the Company's major markets. Field personnel are
supervised from Company headquarters, emphasizing an even flow of freight
traffic (balance between originations and destinations in a given geographical
area) and minimization of movement of empty equipment.
During 1999, the Company's five largest customers, for which the Company
provides carrier services covering a number of geographic locations, accounted
for approximately 52% of total revenues. General Motors Corporation accounted
for approximately 30% of 1999 revenues. A total loss of this business, however
unlikely, would have an adverse impact on the Company's operations, at least
over the short term.
The Company also provides transportation services to other manufacturers
who are suppliers for automobile manufacturers. As a result, concentration of
the Company's business within the industry is greater than the concentration in
a single customer. Of the Company's revenues for 1999 that were attributable to
its top ten customers, approximately 46% were derived from transportation
services provided to the automobile industry.
The Company is no longer required to file tariffs with the Interstate
Commerce Commission ("ICC") or any successor agency. See "Regulation."
OPERATIONS
The Company maintains dispatch offices at its headquarters, as well as its
offices in Jacksonville, Florida; Columbia, Mississippi; Warren, Ohio; Oklahoma
City, Oklahoma; Willard, Ohio; Riverdale, New Jersey; and Irving, Texas, with a
toll free WATS line to facilitate communications with both customers and
drivers. The location, status and contact assignment of all of the Company's
equipment are available on an up-to-date basis through the Company's computer
system, which permits the Company to better meet delivery schedules, respond to
customer inquiries and match equipment with the next available load.
The Company has installed Qualcomm Omnitracs(TM) display units in all of
its tractors. The Omnitracs system is a satellite-based global positioning and
communications system that allows fleet managers to communicate directly with
drivers. Drivers can provide location status and updates directly to the
customer's computer, saving telephone usage cost, lost productivity, and
inconvenience. The Omnitracs system provides customer service with accurate
estimated time of arrival information which optimizes load selection and service
levels to the Company's customers.
The Company communicates through electronic data interchange with many of
its customers, providing live status reports of freight shipments and arrival
time information. This system provides the Company's customers flexibility and
convenience by allowing the customer to tender freight electronically.
The Company has contractual arrangements with some customers to move
freight in dedicated lanes within the United States. A majority of this freight
is moved on a round-trip basis, and due to the volume involved, the Company has
agreed to dedicate equipment and personnel to handle this part of its business.
The Company has found that dedicated service promotes increased utilization of
equipment and greater driver satisfaction due to the greater regularity of the
routes and schedules, which allows the drivers to be at home more often. There
exists a large volume of dedicated-type business throughout the continental
United States. The Company has enjoyed considerable success in entering this
market, and is aggressively seeking to expand its share of the dedicated
services market.
OVER-THE-ROAD EQUIPMENT
The Company operated a fleet of 1,468 tractors and 3,846 trailers at
December 31, 1999. All of the trailers and all except 148 tractors are owned or
leased by the Company. The tractors that are not Company owned are leased from
owner/operators on a per mile basis.
At the end of the respective years, the average age of the Company's
tractors was 1.94 in 1997, 1.74 in 1998 and 1.64 in 1999. The average age of
the Company's trailer fleet was 2.85, 3.31, and 3.97 at the end of 1997, 1998,
and 1999, respectively.
During 1999, the Company purchased 545 new tractors and 455 new trailers
and disposed of 407 tractors and 129 trailers. During 2000, the Company expects
to purchase 330 new tractors and 25 new trailers while continuing to sell or
trade older equipment.
MAINTENANCE
The Company has a strictly enforced comprehensive preventive maintenance
program for the tractors and trailers it operates. Inspections and various
levels of repair and preventive maintenance are performed at set mileage
intervals on both tractors and trailers. Although a significant portion of
maintenance is performed at the Company's maintenance facility in Tontitown,
Arkansas, the Company's subsidiaries have additional maintenance facilities in
Columbia, Mississippi; Springfield, Missouri; Riverdale, New Jersey; Willard and
Warren, Ohio; Oklahoma City, Oklahoma; and Irving, Laredo and El Paso, Texas.
These facilities enhance the Company's preventive and routine maintenance
operations and are strategically located on major transportation routes where a
majority of the Company's freight originates and terminates. A maintenance and
safety inspection is performed on all vehicles each time they return to a
terminal. The Company's primary maintenance facilities consist of thirteen
mechanical repair bays, four body-shop bays and three safety and maintenance
inspection bays. The Company believes that its current maintenance facilities
will be adequate to accommodate its fleet for the foreseeable future.
The Company's tractors carry full warranty coverage of at least 100,000
miles. Extended warranties are negotiated with the manufacturer and major
component manufacturer (i.e., engine, transmission, differential) for up to
750,000 miles. Trailers are also warranted by the manufacturer and major
component manufacturer for up to five years.
Manufacturers of tractors are required to certify that new tractors meet
federal emission standards and the Company receives such certifications on each
new tractor it acquires. Certain governmental regulations require the Company
to adhere to a fuel and oil spillage prevention plan and to comply with
regulations concerning the discharge and disposal of waste oil. The Company
believes it is in compliance with applicable waste disposal and emission
regulations. The Company also maintains insurance to cover clean up expense in
the event of a spill.
DRIVERS
At December 31, 1999, the Company utilized 1,486 drivers in its operations.
All drivers are recruited, screened, drug tested and trained and are subject to
the control and supervision of the Company's operations and safety departments.
The Company's driver training program stresses the importance of safety and
reliable, on-time delivery. Drivers are required to report to their dispatchers
daily and at the earliest possible moment when any condition en route occurs
which might delay their scheduled delivery time.
The Company's drivers are selected only after strict application screening
and drug testing. Before being permitted to operate a vehicle for the Company,
drivers must undergo classroom instruction on Company policies and procedures,
safety techniques and proper operation of equipment and then must pass both
written and road tests. Instruction in defensive driving and safety techniques
continues after hiring, with the Company holding seminars at its terminals in
Tontitown, Arkansas; Jacksonville, Florida; Columbia, Mississippi; Riverdale,
New Jersey; Warren, Ohio; and Oklahoma City, Oklahoma. The Company currently
employs approximately 56 persons on a full-time basis in its driver recruiting,
training and safety instruction programs.
The Company's drivers are compensated on the basis of miles driven, loading
and unloading, extra stop pay and layovers in transit. Drivers can earn bonuses
by recruiting other qualified drivers who become employed by the Company and
both cash and non-cash prizes are awarded for consecutive periods of safe,
accident-free driving.
Intense competition in the trucking industry for qualified drivers over the
last several years, along with difficulties and added expense in recruiting and
retaining qualified drivers, has had a negative impact on the industry. The
Company's operations have also been impacted and from time to time the Company
has experienced under-utilization and increased expenses due to a shortage of
qualified drivers. Management places the highest of priorities on the
recruitment and retention of an adequate supply of qualified drivers.
EMPLOYEES
At December 31, 1999, the Company employed 1,899 persons, of which 1,486
are drivers, 112 are maintenance personnel, 139 are employed in operations, 34
are employed in marketing, 56 are employed in safety and personnel, and 72 are
employed in general administration and accounting. The Company also has 148
owner/operators under contract who are compensated on a per mile basis. None of
these employees are represented by a collective bargaining unit and the Company
believes that its employee relations are good.
REGULATION
The Company is a common and contract motor carrier that is regulated by
certain state and Canadian regulatory agencies. Prior to January 1, 1996, the
Company was also regulated by the ICC. The ICC governed such activities as the
authority to engage in motor carrier operations, rates and charges, accounting
systems, certain mergers, consolidations, acquisitions and periodic financial
reporting. On January 1, 1996, however, the ICC Termination Act of 1995 (the
"Termination Act") was enacted, terminating the ICC and substantially
deregulating the rail and motor carrier industries.
The Termination Act substantially revises the Motor Carrier Act of 1980,
eliminating numerous unnecessary provisions and streamlining many of the ICC's
functions regarding the regulation of the motor carrier industry. The majority
of the remaining ICC functions are transferred to the United States Department
of Transportation ("DOT"), with limited responsibilities transferred to a newly
formed Surface Transportation Board. Some of the ICC functions that have been
eliminated include: tariff filings, except for non-contiguous domestic trade;
rate regulation, except for non-contiguous domestic trade and individual
household goods movements; federal grants of operating authority; price
regulation and tariff filing requirements for office and exhibit moves; the
possibility of future undercharge claims; restrictions on intermodal ownership;
review of motor carrier mergers; and state regulation of transportation
intermediaries. In addition, registration and insurance filings under the Motor
Carrier Act are streamlined into a single federal registration and insurance
system to eliminate duplicative and burdensome filing requirements. Exemption
authority to permit administrative deregulation has also been substantially
broadened, with restrictions remaining on only cargo loss and damage, insurance,
safety fitness and antitrust immunity.
Prior to the enactment of the Termination Act, most of the ICC's authority
to oversee the commercial operation of the motor carrier industry had already
been transferred to the DOT. The primary remaining functions which are
transferred to the DOT by the Termination Act are motor carrier registration and
the setting and maintenance of minimum levels of liability insurance. In
addition, the maintenance of nationwide motor carrier industry commercial rules
(such as leasing rules, uniform cargo loss and damage rules, rules for shipper
payment, and perfecting security interests) are transferred to the DOT.
Currently, the ICC and the DOT operate separate registration systems. The
ICC requires that interstate, for hire carriers receive a license (operating
authority) with the standards for granting of authority limited to a showing of
safety and fitness and insurance coverage at a specified level. The DOT
registration system extends to all carriers, including private and exempt
carriers not regulated by the ICC. The DOT assigns each carrier an
identification number. Carriers are not required to show proof of insurance at
the time of DOT registration, nor is any fee currently charged. The Termination
Act continues the two registration systems for a period of twenty-four months,
during which time the Secretary of Transportation shall conduct a rule-making
and implement changes to consolidate these two registration systems into one
system. The new system will serve as a clearing house and depository of
information on and identification of all domestic and foreign motor carriers,
brokers, freight forwarders and others required to register. The DOT will
utilize the information in overseeing safety fitness and compliance with
required levels of insurance. Registrations will be renewed periodically and
the on-line system will be available to state authorities and the public.
The Termination Act also continues antitrust immunity granted by the ICC
but contains reforms intended to prevent any potential market abuses.
Motor carrier operations are also subject to safety requirements prescribed
by the DOT governing interstate operation. Such matters as weight and
dimensions of equipment are also subject to federal and state regulations.
The Company believes that it is in compliance in all material respects with
applicable regulatory requirements relating to its trucking business and
operates with a satisfactory rating from the DOT.
COMPETITION
The trucking industry is highly competitive. The Company competes
primarily with other irregular route long-haul truckload carriers, with private
carriage conducted by its existing and potential customers, and, to a lesser
extent, with the railroads. Increased competition has resulted from
deregulation of the trucking industry and has generally exerted downward
pressure on prices. The Company competes on the basis of its quality of service
and delivery performance as well as price. Many of the other irregular route
long-haul truckload carriers have substantially greater financial resources, own
more equipment or carry a larger total volume of freight than the Company.
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
Name Position with Company
---- -----------------------
Robert Weaver President and Chief Executive Officer
W. Clif Lawson Executive Vice President and Chief Operating Officer
Larry J. Goddard Vice President-Finance, Chief Financial Officer,
Secretary and Treasurer
ROBERT W. WEAVER, age 49, is a co-founder of the Company and served as its
Vice President from March 1980 to June 1986. He was President and Chief
Operating Officer from June 1986 until he resigned in February 1987. Between
February 1987 and September 1989, he was self-employed as a transportation
Consultant. In September 1989, Mr. Weaver returned to the Company as President
and Chief Operating Officer and a director. On February 22, 1990, he was
appointed Chief Executive Officer.
W. CLIF LAWSON, age 46, has been Executive Vice President of the Company
since August 1989 and Chief Operating Officer since March 1992. He joined the
Company in June 1984 and served in various operations and sales capacities until
August 1989.
LARRY J. GODDARD, age 41, has been Vice President-Finance and Chief
Financial Officer since January 1991 and served as Controller of the Company
from May 1989 to January 1991. In addition, he has served as Secretary since
September 1989, and Treasurer since May 1991. From November 1987 to May 1989,
he served as General Accounting Manager of the Company.
ITEM 2. PROPERTIES
- ------------------
The Company's executive offices and primary terminal facilities are located
in Tontitown, Arkansas. The Company's facilities are located on approximately
45 acres and consist of 79,193 square feet of office space and maintenance and
storage facilities. The Company's facilities in Tontitown are owned by the
Company.
The Company's subsidiaries also lease terminal facilities in Jacksonville,
Florida; Springfield, Missouri; Riverdale, New Jersey; Willard and Warren, Ohio;
Oklahoma City, Oklahoma; Memphis, Tennessee; and Laredo, El Paso, and Irving,
Texas; the terminal facilities in Columbia, Mississippi are owned. These
facilities are leased primarily on a month-to-month basis, and provide
on-the-road maintenance and trailer drop and relay stations.
The Company has access to trailer drop and relay stations in various
locations across the country. Certain of these facilities are leased by the
Company on a month-to-month basis from an affiliate of its majority shareholder.
The Company believes that all of the properties owned or leased by the
Company are suitable for their purposes and adequate to meet the Company's
needs.
ITEM 3. LEGAL PROCEEDINGS
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The nature of the Company's business routinely results in litigation,
primarily involving claims for personal injuries and property damage incurred in
the transportation of freight, and management of the Company believes all such
litigation is adequately covered by insurance and that adverse results in one or
more of those cases would not have a material adverse effect on the Company's
financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- ----------------------------------------------------------------------
No matters were submitted to a vote of security holders of the Company
during the fourth quarter ended December 31, 1999.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
- --------------------------------------------------------------------------------
The Company's Common Stock is traded on the Nasdaq National Market System under
the Nasdaq symbol PTSI. The following table sets forth, for the fiscal quarters
indicated, the range of the high and low sales price per share for the Common
Stock as quoted on the Nasdaq National Market System.
Fiscal Year Ended December 31, 1999
- ----------------------------------------
High Low
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First Quarter $ 10 $ 7
Second Quarter 9 7/8 8 15/16
Third Quarter 12 7/8 9 1/4
Fourth Quarter 12 1/8 9 13/16
Fiscal Year Ended December 31, 1998
- ----------------------------------------
High Low
---- ---
First Quarter $ 11 3/4 $ 8 3/4
Second Quarter 12 8 3/4
Third Quarter 10 6 1/4
Fourth Quarter 9 6 1/2
As of March 13, 2000, the number of stockholders of record was
approximately 331. The Company has not declared or paid any cash dividend on
its common stock. The policy of the Board of Directors of the Company is to
retain earnings for the expansion and development of the Company's business.
Future dividend policy and the payment of dividends, if any, will be determined
by the Board of Directors in light of circumstances then existing, including the
Company's earnings, financial condition and other factors deemed relevant by the
Board of Directors.
ITEM 6. SELECTED FINANCIAL DATA.
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The following selected financial data should be read in conjunction with the
Consolidated Financial Statements and notes thereto included elsewhere herein.
Years Ended December 31,
1999 1998 1997 1996 1995
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(in thousands, except per share amounts)
Statement of operations:
Operating revenues $207,381 $143,164 $127,211 $113,021 $91,595
---------------------------------------------------
Operating expenses:
Salaries, wages and benefits 90,248 65,169 57,662 52,444 40,020
Operating supplies 35,246 26,511 24,666 21,909 16,719
Rent and purchased transportation 13,309 1,082 1,655 1,824 1,538
Depreciation and amortization 18,392 14,003 12,995 11,999 9,428
Operating taxes and licenses 11,334 8,388 7,581 6,734 5,608
Insurance and claims 7,945 6,069 5,571 5,004 4,163
Communications and utilities 2,365 1,583 1,001 1,090 852
Other 4,388 3,131 2,394 2,077 1,666
(Gain) loss on sale or disposal of property (301) 168 71 375 159
---------------------------------------------------
Total operating expenses 182,926 126,104 113,596 103,456 80,153
---------------------------------------------------
Operating income 24,455 17,060 13,615 9,565 11,442
Interest expense (5,650) (3,830) (3,423) (4,137) (3,521)
Other - 1 - 31 166
---------------------------------------------------
Income before income taxes 18,805 13,231 10,192 5,459 8,087
Income taxes 7,536 5,158 3,892 2,147 3,073
---------------------------------------------------
Net income $ 11,269 $ 8,073 $ 6,300 $ 3,312 $ 5,014
===================================================
Earnings per common share:
Basic $ 1.34 $ 0.97 $ 0.77 $ 0.66 $ 1.01
===================================================
Diluted $ 1.33 $ 0.96 $ 0.76 $ 0.44 $ 0.66
===================================================
Average common shares outstanding-Basic 8,393 8,306 8,192 5,035 4,970
===================================================
Average common shares outstanding-Diluted(1) 8,488 8,444 8,290 7,578 7,654
===================================================
(1) Income per share for 1999, 1998, 1997, 1996 and 1995 assumes the exercise of stock purchase
warrants and stock options to purchase an aggregate of 262,097, 317,040, 347,850, 3,545,280
and 3,529,278 shares of Common Stock, respectively.
Balance Sheet Data
At December 31,
1999 1998 1997 1996 1995
-----------------------------------------
(in thousands)
Total assets 168,961 126,471 100,688 94,985 86,808
Long term debt 55,617 44,816 28,226 34,938 37,966
Shareholders' equity 53,365 41,457 33,162 26,312 18,232
Operating Data
Years Ended December 31,
1999 1998 1997 1996 1995
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Operating ratio (1) 88.2% 88.1% 89.4% 91.5% 87.5%
Average number of truckloads per week 4,885 3,425 2,874 2,437 1,913
Average miles per trip 734 767 786 845 899
Total miles traveled (in thousands) 176,358 131,847 115,622 102,946 85,588
Average miles per tractor 128,966 125,569 125,404 122,250 118,424
Average revenue per tractor per week $ 2,848 $ 2,716 $ 2,694 $ 2,684 $ 2,711
Average revenue per loaded mile $ 1.18 $ 1.15 $ 1.17 $ 1.17 $ 1.14
Empty mile factor 5.4% 5.5% 5.8% 6.1% 6.2%
At end of period:
Total company-owned/leased tractors. . 1,468(2) 1,127(3) 975(3) 912(4) 716(5)
Average age of all tractors (in years) 1.64 1.74 1.94 1.85 1.26
Total trailers 3,846(6) 2,784(7) 2,678(8) 2,398(9) 1,638(10)
Average age of trailers (in years) 3.97 3.31 2.85 2.60 2.34
Number of employees 1,899 1,656 1,446 1,438 1,192
(1) Total operating expenses as a percentage of total operating revenues.
(2) Includes 148 owner operator tractors.
(3) Includes 94 owner operator tractors.
(4) Includes 126 owner operator tractors.
(5) Includes 45 owner operator tractors.
(6) Includes 21 trailers leased from an affiliate of the Company's majority shareholder.
(7) Includes 46 trailers leased from an affiliate of the Company's majority shareholder.
(8) Includes 66 trailers leased from an affiliate of the Company's majority shareholder.
(9) Includes 74 trailers leased from an affiliate of the Company's majority shareholder.
(10) Includes 82 trailers leased from an affiliate of the Company's majority shareholder.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS.
- ------------------------
Certain statements contained in this filing are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, such as statements relating to financial results and plans for future
business development 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 in the
transportation industry and other uncertainties detailed from time to time in
the Company's Securities and Exchange Commission filings.
The following table sets forth the percentage relationship of revenue and
expense items to operating revenues for the periods indicated.
Percentage of Operating Revenues
Years Ended December 31,
1999 1998 1997
------------------
Operating revenues 100% 100% 100%
------------------
Operating expenses:
Salaries, wages and benefits 43.5 45.5 45.3
Operating supplies 17.0 18.5 19.4
Rent and purchased transportation 6.4 0.8 1.3
Depreciation and amortization 8.9 9.8 10.2
Operating taxes and licenses 5.5 5.9 6.0
Insurance and claims 3.8 4.2 4.4
Communications and utilties 1.1 1.1 0.8
Other 2.1 2.2 1.9
(Gain) loss on sale or disposal of property (0.1) 0.1 0.1
------------------
Total operating expenses 88.2 88.1 89.4
------------------
Operating income 11.8 11.9 10.6
Interest expense (2.7) (2.7) (2.7)
------------------
Income before income taxes 9.1 9.2 7.9
Federal and state income taxes (3.6) (3.6) (3.1)
------------------
Net income 5.5 5.6 4.8
==================
RESULTS OF OPERATIONS
1999 COMPARED TO 1998
For the year ended December 31, 1999, revenues increased 44.9% to $207
million as compared to $143 million for the year ended December 31, 1998. The
Company's utilization (revenue per tractor per work day) increased 5.0% from
$543 in 1998 to $570 in 1999.
The Company's operating ratio increased from 88.1% in 1998 to 88.2%
in 1999
Salaries, wages and benefits decreased from 45.5% of revenues in 1998 to
43.5% of revenues in 1999. The decrease relates primarily to the brokerage
operations of Decker Transport in which revenues are generated through the use
of outside transportation services and not Company paid drivers.
Operating supplies and expenses decreased from 18.5% of revenues in 1998 to
17.0% of revenues in 1999. The decrease, which was partially offset by an
increase in fuel costs, relates primarily to costs associated with the Decker
brokerage operations being combined and paid to other transportation companies
in the form of purchased transportation.
Rent and purchased transportation increased from 0.8% of revenues in 1998
to 6.4% of revenues in 1999. The increase relates primarily to the purchase
of transportation services from other transportation companies in order to
support brokerage operations.
Depreciation and amortization decreased from 9.8% of revenues in 1998 to
8.9% of revenues in 1999. The decrease relates primarily to the utilization of
outside transportation companies' drivers and equipment in order to perform
brokerage activities.
The Company's effective tax rate increased from 38.9% in 1998 to 40.1% in
1999. This increase is related to payments made to Decker drivers in the form
of a per diem which is only partially deductible by the Company for federal and
state income tax purposes.
1998 COMPARED TO 1997
For the year ended December 31, 1998, revenues increased 12.5% to $143
million as compared to $127 million for the year ended December 31, 1997. The
Company's utilization (revenue per tractor per work day) increased .74% from
$539 in 1997 to $543 in 1998.
The Company's operating ratio improved from 89.4% in 1997 to 88.1% in 1998.
Operating supplies and expenses decreased from 19.4% of revenues in 1997 to
18.5% of revenues in 1998, reflecting a decrease of 1.9% in fuel costs for 1998.
This decrease was partially offset by an increase of .8% in driver recruiting
and training costs.
Rent and purchased transportation decreased from 1.3% of revenues in 1997
to 0.8% of revenues in 1998. This decrease was due to the replacement of rental
trailers with Company-owned trailers and a planned decrease in intermodal
operations, thus reducing purchased transportation costs.
The Company's effective tax rate increased from 38.2% in 1997 to 39.0% in
1998.
LIQUIDITY AND CAPITAL RESOURCES
During 1999, the Company generated $39.6 million in cash from operating
activities. The ratio of current assets to current liabilities was .8 at the
end of 1999, compared to 1.2 and 1.0 at the end of 1998 and 1997, respectively.
Investing activities used $47.8 million in cash in 1999 compared to $38.3
million and $16.5 million in 1998 and 1997, respectively. The cash used in all
three years related primarily to the purchase of revenue equipment used in the
Company's operations.
Financing activities provided $5.8 million in cash in 1999 primarily from
long-term debt incurred to finance the purchase of revenue equipment used in the
Company's operations.
The Company's principal subsidiary, P.A.M. Transport, Inc., has a $15.0
million secured bank line of credit subject to borrowing limitations.
Withdrawals from the line of credit are at an interest rate of LIBOR as of the
first day of the month plus 1.40% (7.88% at December 31, 1999). The Company's
borrowing limitation at December 31, 1999 was $7.5 million. This line of credit
is guaranteed by the Company and matures May 31, 2001. The line of credit
agreement contains restrictive covenants which require the Company to maintain a
net worth of $12.5 million and a debt service coverage ratio of not less than
1.0 to 1.0. The line of credit agreement also includes restrictions on dividend
payments and certain corporate acts such as mergers and consolidations. At
December 31, 1999, the Company was in compliance with all such covenants.
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 1999 with a cost of approximately $24.0 million using its
existing line of credit and cash on hand. Four subsidiaries of the Company,
P.A.M. Transport, Inc., P.A.M. Dedicated Services, Inc., Choctaw Express, Inc.,
and Decker Transport Co., Inc., entered into installment obligations in 1999 for
the purchase of replacement revenue equipment which totaled approximately $11.1
million, $2.2 million, $12.4 million, and $7.5 million, respectively, payable in
36, 48, and 60 monthly installments at interest rates ranging from 6.34% to
7.73%. The Company's weighted average interest rates on all borrowings were
6.73%, 7.68% and 7.69% for 1999, 1998 and 1997, respectively.
During 1999, the Company sold or traded revenue equipment for approximately
$12.7 million. The Company plans to replace 25 trailers and 330 tractors in
2000, which would result in additional debt of approximately $26.2 million.
Management expects that the Company's net cash provided by operating activities
and its available line of credit will be sufficient to meet the Company's
capital commitments as of December 31, 1999, to repay indebtedness coming due in
the current year, and to fund its operating needs during fiscal 2000.
INSURANCE
Auto liability and collision coverage are generally subject to a $2,500
deductible per occurrence while cargo loss coverage generally has a $1,000
deductible. The Company maintains a reserve for estimated losses for claims
incurred, and maintains a reserve for claims incurred but not reported (based on
the Company's historical experience). The Company is fully-insured through an
insurance company for workers' compensation coverage in Arkansas, Oklahoma,
Mississippi and Florida. The Company continues to be self-insured for workers'
compensation coverage in Ohio with excess coverage maintained for claims
exceeding $350,000. The Company has reserved for estimated losses to pay such
claims as incurred as well as claims incurred but not reported. The Company has
not experienced any adverse trends involving differences in claims experienced
versus claims estimates for workers' compensation reserves. The Company
contracts a third-party licensed associate of risk management and a certified
Hazard Control Manager to develop its workers' compensation reserves using the
Company's historical data of past injuries. Letters of credit are held by a
bank as security for workers' compensation claims in Arkansas, Oklahoma,
Mississippi, and Florida, respectively, and two letters of credit are held by a
bank for auto liability claims.
SEASONALITY
The Company's revenues do not exhibit a seasonal pattern, due primarily to
its varied customer mix. Operating expenses are generally somewhat higher in
the winter months, primarily due to decreased fuel efficiency and increased
maintenance costs in cold weather.
ENVIRONMENTAL
The Company has no outstanding inquiries with any federal or state
environmental agency at December 31, 1999.
INFLATION
Inflation has an impact on most of the Company's operating costs.
Recently, the effect of inflation has been minimal.
Competition for drivers has increased in recent years, leading to increased
labor costs. While increases in fuel and driver costs affect the Company's
operating costs, the effects of such increases are not greater for the Company
than for other trucking concerns.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
- ---------------------------------------------------------------------------
The Company is exposed to cash flow and interest rate risk due to changes
in interest rates with respect to its long-term debt. See note 3 to the
consolidated financial statements for details on the Company's long-term debt.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- ----------------------------------------------------------
The following statements are filed with this report:
Report of Independent Public Accountants
Consolidated Balance Sheets - December 31, 1999 and 1998
Consolidated Statements of Income - Years ended December 31, 1999, 1998
and 1997
Consolidated Statements of Shareholders' Equity - Years ended December 31,
1999, 1998 and 1997
Consolidated Statements of Cash Flows - Years ended December 31, 1999, 1998
and 1997
Notes to Consolidated Financial Statements
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- --------------------------------------------------------------------------------
FINANCIAL DISCLOSURE.
- ----------------------
No response is required to this item.
P.A.M. Transportation Services, Inc. and Subsidiaries
Consolidated Financial Statements
Years ended December 31, 1999, 1998 and 1997
CONTENTS
Report of Independent Public Accountants
Audited Consolidated Financial Statements:
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
To the Board of Directors and Shareholders of
P.A.M. Transportation Services, Inc.:
We have audited the accompanying consolidated balance sheets of P.A.M.
Transportation Services, Inc. (a Delaware corporation) and subsidiaries as of
December 31, 1999 and 1998, and the related consolidated statements of income,
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform an audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of P.A.M.
Transportation Services, Inc. and subsidiaries as of December 31, 1999 and 1998,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Fayetteville, Arkansas
February 18, 2000
P.A.M. Transportation Services, Inc.
Consolidated Balance Sheets
(thousands, except shares and par value)
December 31,
1999 1998
-----------------------
Assets
Current assets:
Cash and cash equivalents $ 3,557 $ 5,963
Accounts receivable:
Trade, net of allowance for doubtful
accounts(1999--$655; 1998--$579) 22,890 20,816
Other 1,032 63
Equipment held for sale - 505
Operating supplies and inventories 60 458
Prepaid expenses and deposits 4,408 3,860
Deferred income taxes 378 19
Income taxes refundable 113 38
-----------------------
Total current assets 32,438 31,722
Property and equipment:
Land 1,224 959
Structures and improvements 3,021 2,667
Revenue equipment 167,012 124,354
Service vehicles 667 1,944
Office furniture and equipment 5,578 3,936
-----------------------
177,502 133,860
Allowances for depreciation (51,382) (42,429)
-----------------------
126,120 91,431
Other assets:
Excess of cost over net assets acquired, net of
accumulated amortization (1999--$973; 1998--$849) 8,911 2,277
Non-competition agreements, net of accumulated
amortization (1999--$131; 1998--$1,549) 261 297
Other 1,231 744
-----------------------
10,403 3,318
-----------------------
Total assets $ 168,961 $ 126,471
=======================
December 31,
1999 1998
-----------------------
Liabilities and Shareholders' Equity
Current liabilities:
Trade accounts payable $ 11,210 $ 8,494
Accrued expenses 7,674 5,178
Current portion of long-term debt 22,271 13,362
-----------------------
Total current liabilities 41,155 27,034
Long-term debt, less current portion 55,617 44,816
Deferred income taxes 18,693 13,164
Non-competition agreements 131 _
Shareholders' equity:
Common stock, $.01 par value:
Authorized shares--20,000,000
Issued and outstanding shares: 1999-8,439,957;
1998-8,324,957 84 83
Additional paid-in capital 19,452 18,814
Retained earnings 33,829 22,560
-----------------------
Total shareholders' equity 53,365 41,457
-----------------------
Total liabilities and shareholders' equity $ 168,961 $ 126,471
=======================
See accompanying notes.
P.A.M. Transportation Services, Inc.
Consolidated Statements of Income
(thousands, except per share data)
Year ended December 31,
1999 1998 1997
-------------------------------
Operating revenues $207,381 $143,164 $127,211
Operating expenses and costs:
Salaries, wages and benefits 90,248 65,169 57,662
Operating supplies and expenses 35,246 26,511 24,666
Rents and purchased transportation 13,309 1,082 1,655
Depreciation and amortization 18,392 14,003 12,995
Operating taxes and licenses 11,334 8,388 7,581
Insurance and claims 7,945 6,069 5,571
Communications and utilities 2,365 1,583 1,001
Other 4,388 3,131 2,394
(Gain) loss on sale or disposal of equipment (301) 168 71
-------------------------------
182,926 126,104 113,596
-------------------------------
Operating income 24,455 17,060 13,615
Interest expense (5,650) (3,829) (3,423)
-------------------------------
Income before income taxes 18,805 13,231 10,192
Federal and state income taxes:
Current 2,107 1,323 1,120
Deferred 5,429 3,835 2,772
-------------------------------
7,536 5,158 3,892
-------------------------------
Net income $ 11,269 $ 8,073 $ 6,300
===============================
Earnings per common share:
Basic $ 1.34 $ .97 $ .77
===============================
Diluted $ 1.33 $ .96 $ .76
===============================
Average common shares outstanding:
Basic 8,393 8,306 8,192
===============================
Diluted 8,488 8,444 8,290
===============================
See accompanying notes.
P.A.M. Transportation Services, Inc.
Consolidated Statements of Shareholders' Equity
(thousands)
Additional
Common Paid-In Retained
Stock Capital Earnings Total
- ------------------------------------------------------------------------------------------------
Balances at December 31, 1996 $ 81 $ 18,044 $ 8,187 $ 26,312
Net income - - 6,300 6,300
Exercise of stock options-shares issued 2 467 - 469
Tax benefits of stock options - 81 - 81
- ------------------------------------------------------------------------------------------------
Balances at December 31, 1997 83 18,592 14,487 33,162
Net income - - 8,073 8,073
Exercise of stock options-shares issued - 175 - 175
Tax benefits of stock options - 47 - 47
- ------------------------------------------------------------------------------------------------
Balances at December 31, 1998 83 18,814 22,560 41,457
Net income - - 11,269 11,269
Exercise of stock options-shares issued 1 488 - 489
Tax benefits of stock options - 150 - 150
- ------------------------------------------------------------------------------------------------
Balances at December 31, 1999 $ 84 $ 19,452 $ 33,829 $ 53,365
================================================================================================
See accompanying notes.
P.A.M. Transportation Services, Inc.
Consolidated Statements of Cash Flows
(thousands)
Year ended December 31,
1999 1998 1997
----------------------------------
Net income $ 11,269 $ 8,073 $ 6,300
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 18,392 14,003 12,995
Non-competition agreement amortization 427 440 440
Provision for deferred income taxes 5,429 3,835 2,772
(Gain) loss on sale or disposal of equipment (301) 168 71
Changes in operating assets and liabilities,
net of acquisition:
Accounts receivable 2,322 (2,261) (1,515)
Prepaid expenses and other assets 563 (724) (318)
Income taxes refundable (75) 377 (415)
Trade accounts payable 920 (739) 3,650
Accrued expenses 609 343 1,018
----------------------------------
Net cash provided by operating activities 39,555 23,515 24,998
----------------------------------
Investing Activities
Purchases of property and equipment (51,480) (46,119) (16,736)
Proceeds from sale or disposal of equipment 12,668 7,846 195
Lease payments received on direct financing lease 670 - -
Acquisition of business, net of cash acquired (9,642) - -
----------------------------------
Net cash used in investing activities (47,784) (38,273) (16,541)
----------------------------------
Financing Activities
Borrowings under line of credit 199,508 173,227 151,616
Repayments under line of credit (195,559) (178,449) (153,624)
Borrowings of long-term debt 24,179 43,785 12,784
Repayments of long-term debt (22,589) (24,017) (18,792)
Payments under non-competition agreements (355) (448) (450)
Proceeds from exercise of stock options and warrants 489 175 388
Tax benefits of stock options 150 47 81
----------------------------------
Net cash provided by (used in) financing activities 5,823 14,320 (7,997)
----------------------------------
Net (decrease) increase in cash and cash equivalents (2,406) (438) 460
Cash and cash equivalents at beginning of year 5,963 6,401 5,941
----------------------------------
Cash and cash equivalents at end of year $ 3,557 $ 5,963 $ 6,401
==================================
See accompanying notes.
P.A.M. Transportation Services, Inc.
Notes to Consolidated Financial Statements
December 31, 1999
1. ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS AND CONSOLIDATION
P.A.M. Transportation Services, Inc. (the "Company"), through its subsidiaries,
operates as a truckload motor carrier.
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany accounts and transactions have
been eliminated.
Majority ownership of the Company is held by an affiliate of another
transportation company, with whom the Company has certain business
relationships.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
TIRE PURCHASES
Tires purchased with revenue equipment are capitalized as a cost of the related
equipment. Replacement tires are included in other current assets and are
amortized over a 24-month period. Amounts paid for the recapping of tires are
expensed when incurred.
EXCESS OF COST OVER NET ASSETS ACQUIRED
The excess of cost over net assets acquired, or goodwill, is being amortized on
a straight-line basis over 25 years. The carrying value of goodwill will be
reviewed if the facts and circumstances suggest that it may be impaired. If this
review indicates that goodwill will not be recoverable, as determined based on
undiscounted cash flows expected over the remaining amortization period, the
Company's carrying value of the goodwill would be reduced by the estimated
shortfall of cash flows. No reduction of goodwill was required in 1999, 1998, or
1997.
CLAIMS LIABILITIES
With respect to cargo loss, physical damage and auto liability, the Company
maintains the following insurance coverage and deductibles: P.A.M. Transport,
Inc., P.A.M. Dedicated Services, Inc., and Choctaw Express, Inc. are covered
under the same insurance policy issued by St. Paul Insurance Company. The auto
liability and physical damage coverages are subject to a $2,500 deductible per
occurrence while the cargo loss coverage has a $1,000 deductible. Allen Freight
Services, Inc., is also insured by St. Paul Insurance Company.
P.A.M. Transportation Services, Inc.
Notes to Consolidated Financial Statements (continued)
1. ACCOUNTING POLICIES (continued)
The auto liability policy does not have a deductible. The physical damage
coverage is subject to a $2,500 deductible per occurance, while the cargo loss
coverage is subject to a deductible of $5,000 per occurrence. Decker Transport
Company, Inc. is insured by Wausau Insurance Company for auto liability and
Lexington Insurance Company for cargo loss and physical damage coverage. Each
of these coverages are subject to a $2,500 deductible per occurance. The
Company maintains a reserve for estimated losses for claims incurred and
maintains a reserve for claims incurred but not reported (based on the Company's
historical experience). During 1998, the Company changed from being
self-insured for workers' compensation coverage in Arkansas, Oklahoma,
Mississippi and Florida with excess coverage maintained for claims exceeding
$250,000, to being fully-insured through Virginia Surety Insurance Company for
workers' compensation coverage in those states. The Company continues to be
self-insured for workers' compensation coverage in Ohio with excess coverage
maintained for claims exceeding $350,000. The Company has reserved for
estimated losses to pay such claims as incurred as well as claims incurred but
not reported. The Company has not experienced any adverse trends involving
differences in claims experienced versus claims estimates for workers'
compensation reserves. The Company contracts a third-party licensed associate
of risk management and a certified Hazard Control Manager to develop its
workers' compensation reserves using the Company's historical data of past
injuries. Letters of credit in the amounts of $300,000, $200,000, $250,000, and
$100,000 are held by a bank as security for workers' compensation claims in
Arkansas, Oklahoma, Mississippi, and Florida, respectively, and letters of
credit aggregating $704,500 are held by a bank for auto liability claims.
REVENUE RECOGNITION POLICY
The Company recognizes revenue based upon relative transit time in each
reporting period with expenses recognized as incurred.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. For financial reporting purposes,
the cost of such property is depreciated principally by the straight-line
method. For tax reporting purposes, accelerated depreciation or applicable cost
recovery methods are used. Gains and losses are reflected in the year of
disposal. The following is a table reflecting estimated ranges of asset lives
by major class of depreciable assets:
Asset Class Estimated Asset Life
----------- --------------------
Revenue Equipment 3-7 years
Service Vehicles 3-5 years
Office Furniture & Equipment 3-7 years
Structures & Improvements 5-30 years
P.A.M. Transportation Services, Inc.
Notes to Consolidated Financial Statements (continued)
1. ACCOUNTING POLICIES (continued)
EQUIPMENT HELD FOR SALE
Equipment held for sale consists of revenue equipment no longer in service that
is expected to be sold within the next year. This equipment is recorded at its
estimated net realizable value.
INCOME TAXES
The Company applies the provisions of Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes ("SFAS No. 109"). SFAS No. 109
requires recognition of deferred tax liabilities and assets for expected future
consequences of events that have been included in a company's financial
statements or tax return. Under this method, deferred tax liabilities and
assets are determined based on the difference between the financial statements
and the tax basis of assets and liabilities using enacted tax rates.
BUSINESS SEGMENT AND CONCENTRATIONS OF CREDIT RISK
The Company operates in one business segment, motor carrier operations. The
Company provides transportation services to customers throughout the United
States and portions of Canada and Mexico. The Company performs ongoing credit
evaluations and generally does not require collateral. The Company maintains
reserves for potential credit losses and such losses have been within
management's expectations.
In 1999, 1998 and 1997, one customer accounted for 30%, 35% and 25% of revenues,
respectively. A second customer accounted for 9% of revenues in 1999 and 12% of
revenues in both 1998 and 1997. The Company's largest customer is an automobile
manufacturer. The Company also provides transportation services to other
manufacturers who are suppliers for automobile manufacturers including the
Company's largest customer. As a result, concentration of the Company's
business within the automobile industry is greater than the concentration in a
single customer. Of the Company's revenues for 1999, 1998 and 1997, 46%, 53%
and 41%, respectively, were derived from transportation services provided to the
automobile manufacturing industry.
COMPENSATION TO EMPLOYEES
Stock based compensation to employees is accounted for based on the instrinsic
value method under Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees.
P.A.M. Transportation Services, Inc.
Notes to Consolidated Financial Statements (continued)
1. ACCOUNTING POLICIES (continued)
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities, ("SFAS No. 133"), as amended by Statement of Financial
Accounting Standards No. 137, Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133. SFAS No.
133 establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement. Companies must formally document, designate, and
assess the effectiveness of transactions that receive hedge accounting. SFAS
No. 133 is effective for fiscal years beginning after June 15, 2000; however,
companies may implement the statement as of the beginning of any fiscal quarter
beginning on or after June 16, 1998.
SFAS No. 133 cannot be applied retroactively and must be applied to (a)
derivative instruments and (b) certain derivative instruments embedded in hybrid
contracts that were issued, acquired, or substantively modified after December
31, 1997 (and, at the company's election, before January 1, 1998). The Company
has not yet quantified the impact of adopting SFAS No. 133 on its financial
statements and has not determined the timing of or method of the adoption of
SFAS No. 133. However, as of December 31, 1999, the Company had no outstanding
derivative instruments or embedded derivatives.
RECLASSIFICATIONS
Certain reclassifications have been made to prior years' consolidated financial
statements to conform to the current year presentation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
P.A.M. Transportation Services, Inc.
Notes to Consolidated Financial Statements (continued)
2. ACCRUED EXPENSES
December 31,
1999 1998
--------------
(thousands)
Payroll $1,812 $1,382
Taxes 1,645 1,094
Interest 256 163
Driver escrows 925 681
Insurance 1,330 461
Current portion of non-competition agreements 131 312
Self-insurance claims reserves 1,575 1,085
--------------
$7,674 $5,178
==============
3. LONG-TERM DEBT
Long-term debt consists of the following:
December 31,
1999 1998
----------------
(thousands)
Equipment financings (1) $69,728 $55,655
Line of credit with a bank, due May 31, 2001 and
collateralized by accounts receivable (2) 3,949 -
Note payable (3) 3,348 -
Note payable (4) 244 308
Capitalized lease obligations (5) - 1,269
Insurance financings (6) 619 946
----------------
77,888 58,178
Less current maturities 22,271 13,362
----------------
$55,617 $44,816
================
(1) Equipment financings consist of installment obligations for revenue and
service equipment purchases, payable in various monthly installments through
2004, at a weighted average interest rate of 6.73% and collateralized by
equipment with a net book value of approximately $74.7 million at December 31,
1999.
P.A.M. Transportation Services, Inc.
Notes to Consolidated Financial Statements (continued)
3. LONG-TERM DEBT (continued)
(2) The line of credit agreement with a bank provides for maximum borrowings
of $15.0 million and contains restrictive covenants which require the Company to
maintain, on a consolidated basis, a net worth of $12.5 million and a debt
service coverage ratio of not less than 1.0 to 1.0. Borrowings on the line of
credit are at an interest rate of LIBOR as of the first day of the month plus
1.40% (7.88% at December 31, 1999). The line of credit agreement also includes
restrictions on dividend payments and certain corporate acts such as mergers and
consolidations. The Company was in compliance with all provisions of the
agreement at December 31, 1999.
(3) 6% note to the former owner of Decker Transport Company, Inc., payable
in monthly installments through January 2004 and secured by a letter of credit
from a bank in the amount of $2,000,000.
(4) 8% real estate note to the former majority shareholder, payable in
monthly installments through March 2003.
(5) Capitalized lease obligations terminated during 1999.
(6) Insurance financings consist of a premium finance agreement with an
insurance premium funding company, payable in monthly installments through 2001
at an interest rate of 6%.
Scheduled annual maturities on long-term debt outstanding at December 31, 1999
are:
(thousands)
2000 $ 22,271
2001 23,744
2002 20,557
2003 10,175
2004 1,141
---------
$ 77,888
=========
Interest payments of approximately $5.5 million, $3.8 million, and $3.5 million
were made during 1999, 1998 and 1997, respectively.
P.A.M. Transportation Services, Inc.
Notes to Consolidated Financial Statements (continued)
4. INCOME TAXES
Under SFAS No. 109, deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the carrying amounts for income tax purposes.
Significant components of the Company's deferred tax liabilities and assets are
as follows:
December 31,
1999 1998
---------------------
(thousands)
Deferred tax liabilities:
Property and equipment $25,628 $19,619
Prepaid expenses 1,558 1,275
Total deferred tax liabilities 27,186 20,894
Deferred tax assets:
Net operating loss carryovers - 792
Alternative minimum tax credit 4,659 4,106
Investment credit carryovers 1,096 1,096
Allowance for doubtful accounts 249 220
Vacation reserves 278 277
Self-insurance reserves 1,105 560
Non-competition agreement 691 422
Revenue recognition 793 276
---------------------
Total deferred tax assets 8,871 7,749
---------------------
Net deferred tax liabilities $18,315 $13,145
=====================
The reconciliation between the effective income tax rate and the statutory
Federal income tax rate is presented in the following table:
Year Ended December 31,
1999 1998 1997
-------------------------
(thousands)
Income tax at the statutory Federal rate of 34% $6,394 $4,499 $3,465
Nondeductible expenses 330 60 63
State income taxes (82) (85) (85)
Other (255) (329) (412)
Federal income taxes 6,387 4,145 3,031
State income taxes 1,149 1,013 861
-------------------------
Total income taxes $7,536 $5,158 $3,892
=========================
Effective tax rate 40.1% 39.0% 38.2%
=========================
P.A.M. Transportation Services, Inc.
Notes to Consolidated Financial Statements (continued)
4. INCOME TAXES (continued)
The current income tax provision consists of the following:
1999 1998 1997
-------------------------
(thousands)
Federal $1,866 $1,073 $ 870
State 241 250 250
-------------------------
$2,107 $1,323 $1,120
=========================
As of December 31, 1999, the Company has investment tax credit carryovers of
approximately $1.1 million, which begin expiring in 2000. The current taxes
provided in 1999, 1998 and 1997 result from alternative minimum taxable income.
The Company has alternative minimum tax credits of approximately $4.7 million at
December 31, 1999, which carryover indefinitely.
Income taxes paid totaled approximately $2,200,000, $1,200,000 and $1,300,000
for the years ended December 31, 1999, 1998 and 1997, respectively.
5. SHAREHOLDERS' EQUITY
The Company maintains an incentive stock option plan, a nonqualified stock
option plan, and an employee stock option plan for the issuance of options to
directors, officers, key employees and others. During 1998, the incentive stock
option plan was amended to include an additional 400,000 shares available for
future granting. The option price under these plans is the fair market value of
the stock at the date the options were granted, ranging from $5.75 to $10.63 as
of December 31, 1999. At December 31, 1999, approximately 650,000 shares were
available for granting future options.
Outstanding incentive stock options and employee stock options at December 31,
1999, must be exercised within six years from the date of grant and vest in
increments of 20% each year. Outstanding nonqualified stock options at December
31, 1999, must be exercised within five to six years and certain nonqualified
options may not be exercised within one year of the date of grant.
P.A.M. Transportation Services, Inc.
Notes to Consolidated Financial Statements (continued)
5. SHAREHOLDERS' EQUITY (continued)
Transactions in stock options under these plans are summarized as follows:
Shares
Under
Option Price Range
-----------------------
Outstanding at December 31, 1996 491,600 $ 2.38-$7.38
Granted 3,000 $ 6.00
Exercised (151,350) $ 2.38-$6.00
Canceled (400) $ 2.38-$6.75
------------------------
Outstanding at December 31, 1997 342,850 $ 2.38-$7.38
Granted 33,000 $ 9.25-$10.63
Exercised (49,800) $ 2.38-$5.75
------------------------
Outstanding at December 31, 1998 326,050 $ 2.38-$10.63
Granted 55,000 $ 8.63-$10.25
Exercised (115,000) $ 2.38-$6.00
Canceled (1,050) $ 2.38
------------------------
Outstanding at December 31, 1999 265,000 $ 5.75-$10.63
========================
Options exercisable at December 31, 1999 210,000
=========
The following is a summary of stock options outstanding as of December 31, 1999:
Weighted
Option Average
Options Exercise Remaining Options
Outstanding Price Years Exercisable
- -----------------------------------------------
143,000 $ 5.75 1.6 143,000
2,000 $ 6.00 3.2 2,000
25,000 $ 6.32 1.5 25,000
5,000 $ 6.50 2.4 4,000
2,000 $ 6.75 1.2 2,000
10,000 $ 8.63 5.2 10,000
30,000 $ 9.25 4.6 12,000
45,000 $ 10.25 5.6 9,000
3,000 $ 10.63 4.2 3,000
- -----------------------------------------------
265,000 210,000
===============================================
P.A.M. Transportation Services, Inc.
Notes to Consolidated Financial Statements (continued)
5. SHAREHOLDERS' EQUITY (continued)
The Company adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation ("SFAS No.
123"). Accordingly, no compensation cost has been recognized for the stock
option plans. Had compensation cost for the Company's stock option plans been
determined consistent with the provisions of SFAS No. 123, the Company's net
income and earnings per share would have been reduced to the pro forma amounts
indicated below:
1999 1998
-----------------
(thousands)
Net income:
As reported $11,269 $8,073
Pro forma $11,076 $7,941
Earnings per share as reported:
Basic $1.34 $.97
Diluted $1.33 $.96
Pro forma earnings per share:
Basic $1.32 $.96
Diluted $1.31 $.94
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions: dividend yield of 0%; expected volatility of 31.63% to 76.64%;
risk-free interest rate of 5.25% to 7.02%; and expected lives of five years.
6. EARNINGS PER SHARE
The Company applies Financial Accounting Standards Board Statement No. 128,
Earnings Per Share, for computing and presenting earnings per share. Basic
earnings per common share were computed by dividing the income by the weighted
average number of shares outstanding during the period. Diluted earnings per
share were calculated as follows:
P.A.M. Transportation Services, Inc.
Notes to Consolidated Financial Statements (continued)
6. EARNINGS PER SHARE (continued)
1999 1998 1997
--------------------------------
(thousands, except per share data)
Actual net income (A) $11,269 $8,073 $6,300
================================
Assumed exercise of options and warrants 262 317 348
Application of assumed proceeds ($1,621,
$1,606 and $1,972, respectively)
toward repurchase of stock at an average
market price of $9.719, $8.958 and
$7.888 per share, respectively. (167) (179) (250)
--------------------------------
Net additional shares issuable 95 138 98
================================
Adjustment of shares outstanding:
Weighted average common shares outstanding 8,393 8,306 8,192
Net additional shares issuable 95 138 98
--------------------------------
Adjusted shares outstanding (B) 8,488 8,444 8,290
================================
Diluted earnings per common share - (A) divided by (B) $ 1.33 $ .96 $ .76
================================
7. RELATED PARTY TRANSACTIONS
The Company provides motor carrier services to an affiliate of its majority
shareholder. Revenues from these transactions totaled approximately $.3 million,
$.5 million and $1.9 million for 1999, 1998, and 1997, respectively.
Payments made by the Company to an affiliate of the majority shareholder for the
reimbursement of operating and other expenses paid on behalf of the Company and
debt repayments made on notes payable to the affiliate totaled approximately
$1.2 million, $1.1 million and $.9 million in 1999, 1998, and 1997,
respectively.
Trade accounts payable at December 31, 1999, includes a payable to an affiliate
of the majority shareholder of $117,020.
P.A.M. Transportation Services, Inc.
Notes to Consolidated Financial Statements (continued)
8. LEASES AND COMMITMENTS
No capital lease obligations were entered into during 1999 or 1998 and all
previous capital lease commitments terminated during 1999. Lease amortization
is included in depreciation expense.
9. PROFIT SHARING PLAN
P.A.M. Transport, Inc., a subsidiary of the Company, sponsors a profit sharing
plan for the benefit of all eligible employees. The plan qualifies under Section
401(k) of the Internal Revenue Code thereby allowing eligible employees to make
tax deductible contributions to the plan. The plan provides for employer
matching contributions of 50% of each participant's voluntary contribution up to
3% of the participant's compensation.
Decker Transport Company, Inc., a subsidiary of the Company, sponsors a 401(k)
Profit Sharing Plan, which is a defined contribution plan covering all eligible
employees. Subsequent to 1999, Decker's Plan was merged with the P.A.M.
Transport, Inc. 401(k) Retirement Savings Plan and Trust.
Total contributions to the above plans totaled approximately $200,000, $133,000
and $92,000 in 1999, 1998 and 1997, respectively.
10. LITIGATION
The Company is not a party to any pending legal proceedings which management
believes to be material to the financial position or results of operations of
the Company. The Company maintains liability insurance against risks arising out
of the normal course of its business.
P.A.M. Transportation Services, Inc.
Notes to Consolidated Financial Statements (continued)
11. QUARTERLY RESULTS OF OPERATIONS (Unaudited)
The tables below present quarterly financial information for 1999 and 1998:
1999
Three Months Ended
March 31 June 30 September 30 December 31
---------------------------------------------------------------
(thousands, except per share data)
Operating revenues $ 51,391 $ 53,675 $ 51,284 $ 51,032
Operating expenses 45,241 46,608 45,228 45,850
---------------------------------------------------------------
Operating income 6,150 7,067 6,056 5,182
Other expenses - net 1,404 1,479 1,413 1,354
Income taxes 1,938 2,294 1,849 1,455
---------------------------------------------------------------
Net income $ 2,808 $ 3,294 $ 2,794 $ 2,373
===============================================================
Net income per common share:
Basic $ .34 $ .39 $ .33 $ .28
===============================================================
Diluted $ .33 $ .39 $ .33 $ .28
===============================================================
Average common shares outstanding:
Basic 8,342 8,378 8,421 8,445
===============================================================
Diluted 8,441 8,458 8,527 8,535
===============================================================
1998
Three Months Ended
March 31 June 30 September 30 December 31
---------------------------------------------------------------
(thousands, except per share data)
Operating revenues $ 35,440 $ 36,012 $ 34,131 $ 37,581
Operating expenses 31,371 31,088 30,122 33,523
---------------------------------------------------------------
Operating income 4,069 4,924 4,009 4,058
Other expenses - net 829 1,027 981 992
Income taxes 1,296 1,481 1,175 1,206
---------------------------------------------------------------
Net income $ 1,944 $ 2,416 $ 1,853 $ 1,860
===============================================================
Net income per common share:
Basic $ .23 $ .29 $ .22 $ .22
===============================================================
Diluted $ .23 $ .29 $ .22 $ .22
===============================================================
Average common shares outstanding:
Basic 8,286 8,300 8,313 8,325
===============================================================
Diluted 8,443 8,473 8,421 8,410
===============================================================
P.A.M. Transportation Services, Inc.
Notes to Consolidated Financial Statements (continued)
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating
fair value disclosures for financial instruments:
Cash and cash equivalents - The carrying amount reported in the balance sheet
for cash and cash equivalents approximates fair value.
Long-term debt - The fair values of the Company's long-term debt are estimated
using discounted cash flow analyses, based on the Company's current incremental
borrowing rates for similar types of borrowing arrangements.
Line of credit - The carrying amount for the line of credit approximates fair
value.
The carrying amounts and fair values of the Company's financial instruments at
December 31 are as follows (in thousands):
1999 1998
- ----------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- ----------------------------------------------------------------------
Cash and cash equivalents $ 3,557 $ 3,557 $ 5,963 $ 5,963
Long-term debt 73,939 73,705 58,178 58,567
Line of credit 3,949 3,949 - -
======================================================================
13. ACQUISITION
On January 11, 1999, the Company closed the purchase of substantially all of the
assets and assumed certain liabilities of Decker Transport Co., Inc., a
truckload carrier located in New Jersey. The Company acquired assets, which
consisted primarily of revenue equipment and trade accounts receivable, totaling
approximately $21.0 million and assumed liabilities, which consisted primarily
of installment note obligations and trade accounts payable, totaling
approximately $14.1 million. In connection with this acquisition, the Company
issued to the seller an installment note in the amount of $4.0 million at an
interest rate of 6% and paid cash of approximately $9.8 million utilizing
existing cash and its line of credit.
The purchase price has been allocated to assets and liabilities based on their
estimated fair values as of the date of acquisition. Goodwill was recorded as a
result of the purchase allocation and it is being amortized over a 25-year
period. The Company also entered into three-year Non-competition Agreements
with eight shareholders or officers/employees of Decker Transport Co., Inc.
P.A.M. Transportation Services, Inc.
Notes to Consolidated Financial Statements (continued)
13. ACQUISITION (continued)
The acquisition has been accounted for under the purchase method, effective
January 11, 1999, with the operations of Decker included in the Company's
financial statements since that date. Actual fiscal 1999 operating results are
representative of 1999 pro forma amounts. The following fiscal 1998 pro forma
financial information is based on the audited consolidated financial statements
of P.A.M. Transportation Services, Inc. for the year ended December 31, 1998 and
from the audited combined financial statements of Decker Transport Co., Inc. and
Van Houten Ltd. for the year ended December 31, 1998 and adjusted as if the
acquisition had occurred on January 1, 1998, with certain assumptions made that
management believes to be reasonable. This information is for comparative
purposes only and does not purport to be indicative of the results of operations
that would have occurred had the transaction been completed at the beginning of
the period or indicative of the results that may occur in the future.
1998
(unaudited)
------------------
(thousands, except
per share data)
Operating revenue $ 191,616
Income from operations 17,402
Income before income tax provision 11,813
Net income 7,239
Earnings per share -basic .87
Earnings per share -diluted .86
Weighted average shares -basic 8,306
Weighted average shares -diluted 8,444
PART III
Except as to information with respect to executive officers which is
contained in a separate heading under Item 1 to this Form 10-K, the information
required by Part III of Form 10-K is, pursuant to General Instruction G (3) of
Form 10-K, incorporated by reference from the Company's definitive proxy
statement to be filed pursuant to Regulation 14A for the Company's Annual
Meeting of Shareholders to be held on June 15, 2000. The Company will, within
120 days of the end of its fiscal year, file with the Securities and Exchange
Commission a definitive proxy statement pursuant to Regulation 14A.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
- --------------------------------------------------------------------
The information responsive to this item is incorporated by reference from
the section entitled "Election of Directors" contained in the proxy statement.
ITEM 11. EXECUTIVE COMPENSATION.
- -----------------------------------
The information responsive to this item is incorporated by reference from
the section entitled "Executive Compensation" contained in the proxy statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
- --------------------------------------------------------------------------------
The information responsive to this item is incorporated by reference from
the section entitled "Security Ownership of Certain Beneficial Owners and
Management" contained in the proxy statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- --------------------------------------------------------------
The information responsive to this item is incorporated by reference from
the section entitled "Certain Relationships and Related Transactions" contained
in the proxy statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
- --------------------------------------------------------------------------------
(a)1. Financial Statements and Auditors' Report.
----------------------------------------------
The following financial statements and auditors' report have been filed as
Item 8 in Part II of this report:
Report of Independent Public Accountants
Consolidated Balance Sheets - December 31, 1999 and 1998
Consolidated Statements of Income - Years ended December 31, 1999,
1998 and 1997
Consolidated Statements of Shareholders' Equity - Years ended December
31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows - Years ended December 31, 1999,
1998 and 1997
Notes to Consolidated Financial Statements
(a)2. Financial Statement Schedules.
--------------------------------
The following supporting financial statement schedule is filed with this
report:
II - Valuation and Qualifying Accounts - Years Ended December 31, 1999,
1998 and 1997
All other schedules are omitted as the required information is inapplicable
or the information is presented in the consolidated financial statements or
related notes.
(a)3. Exhibits.
---------
The following exhibits are filed with or incorporated by reference into
this report. The exhibits which are denominated by an asterisk (*) were
previously filed as a part of, and are hereby incorporated by reference from
either (i) the Form S-1 Registration Statement under the Securities Act of 1933,
as filed with the Securities and Exchange Commission on July 30, 1986,
Registration No. 33-7618, as amended on August 8, 1986, September 3, 1986 and
September 10, 1986 ("1986 S-1"); (ii) the Annual Report on Form 10-K for the
year ended December 31, 1987 ("1987 10-K"); (iii) the Annual Report on Form 10-K
for the year ended December 31, 1992 ("1992 10-K"); (iv) the Quarterly Report on
Form 10-Q for the quarter ended June 30, 1994 ("6/30/94 10-Q"); (v) the
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 ("6/30/95
10-Q"); (vi) the Quarterly Report on Form 10-Q for the quarter ended September
30, 1996 (9/30/96 10-Q); (vii) the Annual Report on Form 10-K for the year ended
December 31, 1996 ("1996 10-K"); (viii) the Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998 ("6/30/98 10-Q"); or (ix) the Current Report on
Form 8-K dated January 11, 1999 ("1/11/99 8-K").
Exhibit# Description of Exhibit
- -------- -------------------------------------------------------------------
*2.1 Asset Purchase Agreement, dated as of January 11, 1999, by and
among P.A.M. NewCo., Inc. (a wholly-owned subsidiary of the
Registrant), Decker Transport Co. Inc., Van Houten Ltd. and
William Van Houten (Exh. 2.1, 1/11/99 8-K)
*3.1 Amended and Restated Certificate of Incorporation of the
Registrant (Exh. 3.1, 1986 S-1)
*3.1.1 Amendment to Certificate of Incorporation dated June 24, 1987
(Exh. 3.1.1, 1987 10-K)
*3.2 Amended and Restated By-Laws of the Registrant (Exh. 3.2, 1986 S-1)
*3.2.1 Amendment to Article I, Section 3 of Bylaws of Registrant (Exh.
3.2.1, 1986 S-1)
*3.2.2 Amendments to Bylaws of Registrant adopted May 7, 1987 (Exh. 3.2.2,
1987 10-K)
*3.2.3 Amendments to Bylaws of Registrant adopted January 4, 1993 (Exh.
3.2.3, 1992 10-K)
*4.1 Specimen Stock Certificate (Exh. 4.1, 1986 S-1)
*4.2 Loan Agreement dated July 26, 1994 among First Tennessee Bank
National Association, Registrant and P.A.M. Transport, Inc.
together with Promissory Note (Exh. 4.1, 6/30/94 10-Q)
*4.2.1 Security Agreement dated July 26, 1994 between First Tennessee
Bank National Association and P.A.M. Transport, Inc.(Exh. 4.2,
6/30/94 10-Q)
*4.3 First Amendment to Loan Agreement date June 27, 1995 by and among
P.A.M. Transport, Inc., First Tennessee Bank National Association
and P.A.M. Transportation Services, Inc., together with Promissory
Note in the principal amount of $2,500,000 (Exh. 4.1.1, 6/30/95
10-Q)
*4.3.1 First Amendment to Security Agreement dated June 28, 1995 by and
between P.A.M. Transport, Inc. and First Tennessee Bank National
Association (Exh. 4.2.2, 6/30/95 10-Q)
*4.3.2 Security Agreement dated June 27, 1995 by and between Choctaw
Express, Inc. and First Tennessee Bank National Association (Exh.
4.1.3, 6/30/95 10-Q)
*4.3.3 Guaranty Agreement of P.A.M. Transportation Services, Inc. dated
June 27, 1995 in favor of First Tennessee Bank National Association
respecting $10,000,000 line of credit (Exh. 4.1.4, 6/30/95 10-Q)
*4.4 Second Amendment to Loan Agreement dated July 3, 1996 by and among
P.A.M. Transport, Inc., First Tennessee Bank National Association
and P.A.M. Transportation Services, Inc., together with Promissory
Note in the principal amount of $5,000,000 (Exh. 4.1.1, 9/30/96
10-Q)
*4.4.1 Second Amendment to Security Agreement dated July 3, 1996 by and
between P.A.M. Transport, Inc. and First Tennessee National Bank
Association (Exh. 4.1.2, 9/30/96 10-Q)
*4.4.2 First Amendment to Security Agreement dated July 3, 1996 by and
between Choctaw Express, Inc. and First Tennessee Bank National
Association(Exh. 4.1.3, 9/30/96 10-Q)
*4.4.3 Security Agreement dated July 3, 1996 by and between Allen Freight
Services, Inc. and First Tennessee Bank National Association
(Exh. 4.1.4, 9/30/96 10-Q)
No other long-term debt instrument of the Registrant or its
subsidiaries authorizes indebtedness exceeding 10% of the total
assets of the Registrant and its subsidiaries on a consolidated
basis and the Registrant hereby undertakes to provide the
Commission upon request with any long-term debt instrument not
filed herewith.
*10.1 Employment Agreement between the Registrant and Robert W. Weaver
dated July 1, 1998 (Exh. 10.1, 6/30/98 10-Q)
*10.2 1995 Stock Option Plan, effective June 29, 1995 (Exh. 10.6, 1996
10-K)
21.1 Subsidiaries of the Registrant
23.1 Consent of Arthur Andersen LLP
27 Financial Data Schedule
(b) Reports on Form 8-K.
-----------------------
No reports on Form 8-K were filed during the fourth quarter ended December
31, 1999.
P.A.M. TRANSPORTATION SERVICES, INC.
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1999, 1998 and 1997
ADDITIONS
---------
Charged to
Balance at Charged to Other Balance
Beginning Costs and Accounts Deductions at End
Description of Period Expenses (Describe) (Describe) of Period
----------- ---------- ---------- ---------- ---------- ---------
1999 - Allowance for doubtful accounts $579,333 -- $75,710 -- $655,043
1998 - Allowance for doubtful accounts 579,333 -- -- -- 579,333
1997 - Allowance for doubtful accounts 579,333 -- -- -- 579,333
SIGNATURES
- ----------
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
P.A.M. TRANSPORTATION SERVICES, INC.
Dated: March 29, 2000 By: /s/ Robert W. Weaver
-----------------------------
ROBERT W. WEAVER
President and Chief Executive Officer
(principal executive officer)
Dated: March 29, 2000 By: /s/ Larry J. Goddard
-----------------------------
LARRY J. GODDARD
Vice President - Finance, Chief Financial
Officer, Secretary and Treasurer (principal
financial and accounting officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
P.A.M. TRANSPORTATION SERVICES, INC.
Dated: March 29, 2000 By: /s/ Robert W. Weaver
----------------------------
ROBERT W. WEAVER
President and Chief Executive Officer,
Director
Dated: March 29, 2000 By: /s/ Matthew T. Moroun
----------------------------
MATTHEW T. MOROUN, Director
Dated: March 29, 2000 By: /s/ Daniel C. Sullivan
----------------------------
DANIEL C. SULLIVAN, Director
Dated: March 29, 2000 By: /s/ Charles F. Wilkins
----------------------------
CHARLES F. WILKINS, Director
Dated: March 29, 2000 By: /s/ Frederick P. Calderone
----------------------------
FREDERICK P. CALDERONE, Director
Dated: March 29, 2000 By: /s/ Joseph J. Casaroll
----------------------------
JOSEPH J. CASAROLL, Director
EXHIBIT INDEX
Exhibit No. Description
- ------------ ----------------------------------
21.1 Subsidiaries of the Registrant
23.1 Consent of Arthur Anderson LLP
27 Financial Data Schedule