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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT TO APPLICATION OR REPORT
Filed pursuant to Section 12, 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
P.A.M. TRANSPORTATION SERVICES, INC.
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(Exact name of registrant as specified in charter)
AMENDMENT NO. ONE
The undersigned registrant hereby amends the following items,
financial statements, exhibits or other portions of its Current Report on Form
8-K (Event January 31, 1995) filed February 10, 1995.
(List all such items, financial statements,
exhibits or other portions amended)
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired:
CHOCTAW EXPRESS, INC. AND CHOCTAW BROKERAGE, INC.
Independent Auditors' Report
Combined Balance Sheet as of December 31, 1994
Consolidated Statement of Income for the Year ended December 31,
1994
Combined Statement of Cash Flows for the Year Ended December 31,
1994
Notes to Combined Financial Statements
(b) Pro Forma Financial Information:
P.A.M. TRANSPORTATION SERVICES, INC. PRO FORMA CONDENSED
FINANCIAL INFORMATION (UNAUDITED)
Introduction
Pro Forma Condensed Consolidated Balance Sheet as of December
31, 1994
Pro Forma Condensed Consolidated Statement of Income for the
Year Ended December 31, 1994
Notes to Pro Forma Condensed Consolidated Financial Statements
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TABLE OF CONTENTS
PAGE NO.
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(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED:
CHOCTAW EXPRESS, INC. AND CHOCTAW BROKERAGE, INC.
Independent Auditors' Report . . . . . . . . . . . . . . . 3
Combined Balance Sheet as of December 31, 1994 . . . . . . 4
Consolidated Statement of Income for the Year Ended
December 31, 1994 . . . . . . . . . . . . . . . . . . . 5
Combined Statement of Cash Flows for the Year Ended
December 31, 1994 . . . . . . . . . . . . . . . . . . . 6
Notes to Combined Financial Statements . . . . . . . . . . 7
(b) PRO FORMA FINANCIAL INFORMATION:
P.A.M. TRANSPORTATION SERVICES, INC. PRO FORMA
CONDENSED FINANCIAL INFORMATION (UNAUDITED)
Introduction . . . . . . . . . . . . . . . . . . . . . . . 11
Pro Forma Condensed Consolidated Balance Sheet as of
December 31, 1994 . . . . . . . . . . . . . . . . . . . 12
Pro Forma Condensed Consolidated Statement of Income for
the Year Ended December 31, 1994 . . . . . . . . . . . 13
Notes to Pro Forma Condensed Consolidated Financial
Statements . . . . . . . . . . . . . . . . . . . . . . 14
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Report of Independent Auditors
The Board of Directors and Shareholder
Choctaw Express, Inc.
Choctaw Brokerage, Inc.
We have audited the accompanying combined balance sheet of Choctaw Express,
Inc. and Choctaw Brokerage, Inc. as of December 31, 1994, and the related
combined statement of income and cash flows for the year then ended. These
financial statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of Choctaw Express, Inc.
and Choctaw Brokerage, Inc. at December 31, 1994, and the combined results of
their operations and their cash flows for the year then ended, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Little Rock, Arkansas
March 24, 1995
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CHOCTAW EXPRESS, INC. AND CHOCTAW BROKERAGE, INC.
COMBINED BALANCE SHEET
December 31, l994
ASSETS
Current assets:
Cash and cash equivalents $ 919,342
Trade accounts receivable, net of allowance for
doubtful accounts of $5,000 1,128,671
Prepaid expenses 22,978
Income taxes refundable (Note 2) 129,092
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Total current assets 2,200,083
Equipment (Note 1):
Revenue equipment 576,638
Office furniture, equipment and vehicles 96,153
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672,791
Allowances for depreciation (240,992)
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431,799
Total assets $2,631,882
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LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Trade accounts payable $ 524,283
Accrued expenses 129,783
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Total current liabilities 654,066
Deferred income taxes (Note 2) 60,431
Commitments and contingencies (Notes 3, 4, 5, and 6)
Shareholder's equity (Note 1):
Common stock 1,500
Retained earnings 2,783,701
Less treasury stock (867,816)
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Total shareholder's equity 1,917,385
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Total liabilities and shareholder's equity $2,631,882
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See accompanying notes.
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CHOCTAW EXPRESS, INC. AND CHOCTAW BROKERAGE, INC.
CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 1994
Operating revenues (Note 1) $12,140,607
Operating expenses and costs:
Salaries, wages and benefits 4,237,728
Operating supplies and expenses 2,197,652
Rents and purchased transportation 3,609,558
Depreciation 69,791
Operating taxes and licenses 251,362
Insurance and claims 697,614
Communications and utilities 76,210
Other 194,207
Gain on sale of property and equipment (3,209)
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11,330,913
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Operating income 809,694
Interest income 36,259
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Income before income taxes 845,953
Federal and state income taxes:
Current 321,146
Deferred 4,613
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325,759
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Net income $ 520,194
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See accompanying notes.
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CHOCTAW EXPRESS, INC. AND CHOCTAW BROKERAGE, INC.
COMBINED STATEMENT OF CASH FLOWS
Year ended December 31, 1994
OPERATING ACTIVITIES
Net income $ 520,194
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 69,791
Provision for doubtful accounts 5,592
Provision for deferred income taxes 4,613
Gain on sale or disposal of property and equipment (3,209)
Changes in operating assets and liabilities:
Accounts receivable (285,074)
Note receivable from shareholder 151,000
Prepaid expenses (18,678)
Prepaid income taxes (198,572)
Trade accounts payable 89,464
Accrued expenses 59,700
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Net cash provided by operating activities 394,821
INVESTING ACTIVITIES
Purchases of property and equipment (63,236)
Proceeds from sale or disposal of property and equipment 12,501
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Net cash used in investing activities (50,735)
FINANCING ACTIVITIES
Treasury stock reacquired (175,000)
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Net cash used in financing activities (175,000)
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Net increase in cash and cash equivalents 169,086
Cash and cash equivalents at beginning of year 750,256
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Cash and cash equivalents at end of year $ 919,342
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See accompanying notes.
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CHOCTAW EXPRESS, INC. AND CHOCTAW BROKERAGE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
December 31, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS AND COMBINED FINANCIAL STATEMENTS
Choctaw Express, Inc. ("Choctaw Express") operates as a truckload motor
carrier, providing transportation services. Choctaw Brokerage, Inc., ("Choctaw
Brokerage") owns and leases equipment to Choctaw Express. Choctaw Express and
Choctaw Brokerage are related due to common ownership.
The combined financial statements include the accounts of Choctaw Express and
Choctaw Brokerage (the "Companies"). All material intercompany transactions and
accounts have been eliminated.
Information regarding the Companies' common stock structure as of December 31,
1994 is as follows:
SHARES
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PAR VALUE AUTHORIZED ISSUED TREASURY STOCK OUTSTANDING
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Choctaw Express $1 500 500 (320) 180
Choctaw Brokerage 1 1,000 1,000 (574) 426
CASH AND CASH EQUIVALENTS
The Companies consider all highly liquid investments with a maturity of these
months or less when purchased to be cash equivalents.
REVENUE RECOGNITION
Choctaw Express recognizes revenue at the time of goods are picked up from the
shipper. There is no material difference in this method and the percentage of
completion method.
EQUIPMENT
Equipment is recorded at cost. For financial reporting purposes, the cost of
such equipment is depreciated over its useful life, which is estimated to be
from three to ten years, by the straight-line method.
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CHOCTOW EXPRESS, INC. AND CHOCTAW BROKERAGE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
INCOME TAXES
Income taxes in the accompanying combined financial statements have been
provided in accordance with the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("FAS 109"). Under FAS 109,
the liability method is used in accounting for income taxes. Under this method,
deferred income taxes relate principally to the timing of depreciation and to
temporary differences in the recognition of certain expenses of operations.
CONCENTRATIONS OF CREDIT RISK AND SIGNIFICANT CUSTOMERS
Choctaw Express operates in one business segment, motor carrier operations. One
company, General Motors Corporation, accounts for substantially all of the
Company's sales. The Company maintains reserves for potential credit losses and
such losses have not been significant.
2. INCOME TAXES
The provision for income taxes consists of the following:
1994
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Current:
Federal $275,427
State 45,719
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321,146
Deferred:
Federal 3,921
State 692
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4,613
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$325,759
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CHOCTAW EXPRESS, INC. AND CHOCTAW BROKERAGE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
2. INCOME TAXES (continued)
Deferred tax assets and liabilities consist of the following as of December 31,
l994:
1994
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Deferred tax liabilities
Basis difference on equipment $(89,733)
Defined tax assets:
Accrued expenses 27,417
Allowance for doubtful accounts 1,885
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Net deferred tax liabilities $(60,431)
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A reconciliation between the effective income tax rate and the statutory
federal income tax rate is presented in the following table:
Income tax at statutory federal rate of 34% $287,624
Federal income tax effect of:
State income taxes (15,779)
Other nondeductible expenses 7,504
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Federal income taxes 279,349
State income taxes 46,410
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Total income taxes $325,759
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Effective tax rate 38.5%
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Income taxes paid totaled $430,000 for the year ended December 31, 1994.
3. PROFIT SHARING PLAN
In 1994, the Companies began sponsoring a profit sharing plan for the benefit
of all eligible employees. The plan is intended to qualify 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 annual employer
matching contributions of 50% of the contribution of eligible employees, up to
a 3% matching.
In 1994, the Companies' matching contributions to the plan were $13,531.
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CHOCTAW EXPRESS, INC. AND CHOCTAW BROKERAGE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
4. RELATED PARTY TRANSACTIONS
In 1994, the President and former sole shareholder of the Companies paid a note
receivable to Choctaw Brokerage in the amount of $151,000.
5. COMMITMENTS AND CONTINGENCIES
Choctaw Express has a $60,000 unused letter of credit with a bank which expires
December 31, 1995.
Choctaw Express leases equipment under operating lease agreements. Approximate
minimum payments under noncancelable leases for tractors is as follows:
1995--$187,000; 1996--$146,000; and 1997--$72,000.
The Company also rents transportation equipment under short term leases of one
year or less. Total expense under such leases for 1994 amounted to
approximately $2,800,000.
The Companies are not a party to any pending legal proceedings which management
believes to be material to the financial condition of the Companies. The
Companies maintain liability insurance against risks arising from the normal
course of its business.
6. SUBSEQUENT EVENT
On January 31, 1995, P.A.M. Transportation Services, Inc. acquired
substantially all of the assets and liabilities of the Companies for
approximately $2.5 million, subject to closing audit adjustments. Also, the
sole shareholder of the Companies entered into a five year noncompete agreement
and will receive $325,000 per year under this agreement.
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P.A.M. TRANSPORTATION SERVICES, INC.
PRO FORMA FINANCIAL INFORMATION
On January 31, 1995, P.A.M. Transportation Services, Inc. (the "Company")
consummated the purchase of all the stock of Choctaw Express, Inc. and Choctaw
Brokerage, Inc. (collectively the "Choctaw Group").
The following pro forma condensed consolidated statement of income for the year
ended December 31, 1994 and the pro forma condensed consolidated balance sheet
as of December 31, 1994 are unaudited and have been prepared on a pro forma
basis to give effect to the Choctaw Acquisition. The pro forma condensed
consolidated statement of income for the year ended December 31, 1994 gives
effect to the Choctaw Acquisition as if it had occurred on January 1, 1994.
The pro forma condensed consolidated balance sheet has been prepared to give
effect to the Choctaw Acquisition as if it occurred on December 31, 1994.
The pro forma statements do no purport to represent what the Company's results
of operations or financial condition for the indicated periods or date would
actually have been had the Choctaw Acquisition occurred on the aforementioned
dates, or to project the Company's results of operations for any future
periods. The pro forma adjustments are based upon currently available
information and upon certain assumptions that management believes are
reasonable under the circumstances.
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PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of December 31, 1994
P.A.M.
TRANSPORTATION CHOCTAW
SERVICES, INC. GROUP ADJUSTMENTS PRO FORMA
(Historical) (Historical)
- -------------------------------------------------------------------------------------------------- -----------
Current Assets:
Cash and cash equivalents $ 4,077,854 $ 919,342 $ (590,000)(2) $ 4,407,196
Accounts receivable
Trade 8,498,364 1,128,671 9,627,035
Other 481,986 481,986
Equipment held for resale 1,164,262 1,164,262
Prepaid expenses 2,870,033 22,978 2,893,011
Investment in direct financing lease 622,790 622,790
Income taxes refundable 154,313 129,092 283,405
Other 578,679 578,679
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Total current assets 18,448,281 2,200,083 (590,000) 20,058,364
Property, plant and equipment, net 44,983,579 431,799 59,384 (1) 45,474,762
Goodwill, net 602,214 577,900 (2) 1,180,114
Other assets 1,289,824 1,374,000 (3) 2,663,824
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Total assets $65,323,898 $2,631,882 $ 1,421,284 $69,377,064
============================================== ===========
Current liabilities:
Trade accounts payable $ 4,983,179 $ 524,283 $ -- $ 5,507,462
Accrued expenses 2,456,504 129,783 -- 2,586,287
Deferred income taxes 368,866 -- 368,866
Current portion of long-term debt 10,358,442 10,358,442
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Total current liabilities 18,166,991 654,066 0 18,821,057
Long-term debt, less current portion 32,206,125 1,940,915 (2) 34,147,040
Deferred income taxes 1,917,198 60,431 23,754 (1) 2,001,383
Other liabilities 1,374,000 (3) 1,374,000
Shareholders' equity:
Common stock 49,379 1,500 (1,500)(2) 49,379
Additional paid-in capital 13,123,241 13,123,241
Accumulated deficit (139,036) 2,783,701 (2,783,701)(2) (139,036)
Less treasury stock (867,816) 867,816 (2)
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Total shareholders' equity 13,033,584 1,917,385 (1,917,385) 13,033,584
Total liabilities and shareholders' equity $65,323,898 $2,631,882 $ 1,421,284 $69,377,064
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See notes to pro forma condensed consolidated financial statements.
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PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 1994
P.A.M.
TRANSPORTATION CHOCTAW
SERVICES, INC. GROUP ADJUSTMENTS PRO FORMA
(Historical) (Historical)
- ---------------------------------------- ------------------------------------------------ -----------
Operating revenues $76,147,103 $12,140,607 $ -- $88,287,710
Operating expenses and costs 67,175,292 11,330,913 19,795 (1) 78,820,263
275,000 (3)
19,263 (4)
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Operating income 8,971,811 809,694 (314,058) 9,467,447
Other (income) expenses-net 2,737,959 (36,259) 160,902 (5) 2,962,602
100,000 (3)
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Income before income taxes 6,233,852 845,953 (574,960) 6,504,845
Provision for income taxes 2,493,542 325,759 (234,968)(6) 2,584,333
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Net income $ 3,740,310 $ 520,194 $(339,992) $ 3,920,512
================================================ ===========
Net income per common share (primary) $ 0.50 $ 0.52
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Average common and common equivalent
shares outstanding 7,520,027 7,520,027
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See notes to pro forma condensed consolidated financial statements.
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NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Reflects write-up ($59,384) of certain equipment to fair market value,
deferred income taxes ($23,754) related to the write-up and
depreciation($19,795).
(2) Reflects the allocation of the estimated purchase price ($2,530,915). The
purchase was funded through cash ($590,000) and borrowings under line of
credit agreement ($1,940,915). The purchase price will be subject to
certain closing audit adjustments. The preliminary purchase price
allocation is as follows:
Current assets $2,200,083
Property, plant and equipment 491,183
Goodwill 577,900
Current liabilities (654,066)
Deferred income taxes (84,185)
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2,530,915
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(3) Reflects intangible asset, related liability, amortization and interest on
noncompete agreement; $1,625,000 payable in five annual installments, each
in the amount of $325,000. The agreement has been discounted at an assumed
rate of 8.29% for a present value of approximately $1,374,000. The first
payment is due six months after closing date (1/31/95).
(4) Reflects amortization of goodwill recorded on the Choctaw Acquisition;
$577,900 over 30 years.
(5) Reflects interest on funds borrowed to finance the Choctaw Acquisition;
$1,940,915 at an assumed rate of 8.29%.
(6) Reflects adjustment of income tax expense at the marginal tax rate of 40%
for the effect of the pro forma adjustments.
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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 hereunto duly authorized.
P.A.M. TRANSPORTATION SERVICES, INC.
Date: April 14, 1995 By: /s/ Larry J. Goddard
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Larry J. Goddard
Vice President Finance
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