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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
( x ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-15057
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P.A.M. TRANSPORTATION SERVICES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 71-0633135
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(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
Highway 412 West, Tontitown, Arkansas 72770
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(Address of principal executive offices)
(Zip Code)
(501) 361-9111
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(Registrants telephone number, including area code)
N/A
---
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class Outstanding at August 7, 1995
----- -----------------------------
Common Stock, $.01 Par Value 4,977,957
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
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P.A.M. TRANSPORTATION SERVICES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1995 1994
---- ----
ASSETS (unaudited) (note)
Current assets:
Cash and cash equivalents $ 84,091 $ 4,077,854
Receivables:
Trade, net of allowance 11,572,769 8,498,364
Other 262,172 481,986
Equipment held for sale 974,012 1,164,262
Prepaid expenses 2,320,103 2,870,033
Investment in direct financing lease 656,245 622,790
Income taxes refundable 10,495 154,313
Other 696,492 578,679
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Total current assets 16,576,379 18,448,281
Property and equipment, at cost 71,916,983 64,299,609
Less: accumulated depreciation (20,860,883) (19,316,030)
------------ ------------
Net property and equipment 51,056,100 44,983,579
Other assets:
Investment in direct financing lease, less current portion 903,117 1,239,824
Excess of cost over net assets acquired (Note C) 1,074,511 602,214
Non compete agreement (Note C) 1,238,362 0
Other 50,000 50,000
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Total other assets 3,265,990 1,892,038
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$ 70,898,469 $ 65,323,898
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 12,731,930 $ 10,358,442
Trade accounts payable 3,805,202 4,983,179
Deferred income taxes 116,093 368,866
Other current liabilities 2,600,405 2,456,504
------------ ------------
Total current liabilities 19,253,630 18,166,991
Long-term debt, less current portion 31,257,115 32,206,125
Non compete agreement (Note C) 1,373,779 0
Deferred income taxes 3,291,972 1,917,198
Common Stockholders' equity:
Common stock 49,695 49,379
Additional paid-in capital 13,197,975 13,123,241
Retained earnings (deficit) 2,474,303 (139,036)
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Total common stockholders' equity 15,721,973 13,033,584
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$ 70,898,469 $ 65,323,898
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Note: The balance sheet at December 31, 1994 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. See notes to condensed consolidated financial
statements.
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P.A.M. TRANSPORTATION SERVICES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
---- ---- ---- ----
Operating revenues $ 23,833,493 $ 19,833,308 $ 45,916,996 $ 38,679,862
Operating expenses:
Salaries, wages and benefits 10,243,678 8,901,576 20,330,731 17,010,588
Operating supplies 4,222,097 3,662,174 8,244,277 7,662,862
Rent and purchased transportation 299,505 259,112 903,042 616,270
Depreciation and amortization 2,213,867 1,808,559 4,228,400 3,481,339
Operating taxes and licenses 1,414,705 1,220,030 2,789,087 2,552,667
Insurance and claims 1,115,103 984,425 2,137,990 1,971,130
Communications and utilities 243,922 206,307 405,466 430,215
(Gain) loss on sale of equipment 247,000 (208,732) 247,000 (208,732)
Other 421,222 314,418 847,750 613,689
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20,421,099 17,147,869 40,133,743 34,130,028
------------ ------------ ------------ ------------
Operating income 3,412,394 2,685,439 5,783,253 4,549,834
Other income (expense)
Interest expense (871,891) (745,017) (1,659,506) (1,472,698)
Other 43,674 59,368 91,314 116,309
------------ ------------ ------------ ------------
(828,217) (688,649) (1,568,192) (1,356,389)
Income before income taxes and
dividends on redeemable preferred
stock 2,584,177 1,996,790 4,215,061 3,193,445
Income taxes--current 431,526 363,775 546,106 380,305
--deferred 550,461 434,941 1,055,617 826,884
------------ ------------ ------------ ------------
981,987 798,716 1,601,723 1,207,189
------------ ------------ ------------ ------------
Income before dividends on
redeemable preferred stock 1,602,190 1,198,074 2,613,338 1,986,256
Accrued dividends on redeemable
preferred stock 0 0 0 29,589
------------ ------------ ------------ ------------
Net income $ 1,602,190 $ 1,198,074 $ 2,613,338 $ 1,956,667
============ ============ ============ ============
$ 0.21 $ 0.16 $ 0.34 $ 0.26
============ ============ ============ ============
Net income per share
Average common and common
equivalent shares outstanding 7,604,724 7,492,741 7,626,268 7,557,222
============ ============ ============ ============
See notes to condensed consolidated financial statements.
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P.A.M. TRANSPORTATION SERVICES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
1995 1994
---- ----
OPERATING ACTIVITIES
Net income $ 2,613,338 $ 1,956,667
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,228,400 3,481,339
Non compete agreement amortization 135,417 0
(Gain) loss on retirement of property and equipment 247,000 (208,732)
Provision for doubtful accounts 0 36,857
Provision for deferred income taxes 1,271,862 1,004,030
Accrued dividends on redeemable preferred stock 0 29,589
Changes in operating assets and liabilities:
Accounts receivable (1,940,492) 483,653
Prepaid expenses and other current assets 766,173 27,171
Accounts payable (1,685,046) (543,806)
Accrued expenses (289,226) 1,026,107
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Net cash provided by operating activities 5,347,426 7,292,875
INVESTING ACTIVITIES
Purchases of property and equipment (1,868,946) (134,718)
Proceeds from sale or disposal of property and
equipment 1,421,550 1,290,269
Lease payments received on direct financing lease 303,252 273,120
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Net cash provided by (used in) investing activities (144,144) 1,428,671
FINANCING ACTIVITIES
Borrowings under lines of credit 48,263,159 17,066,807
Repayments under lines of credit (48,417,492) (20,030,989)
Repayments of long-term debt (7,818,072) (4,357,909)
Choctaw acquisition less cash acquired of $1,219,079 (Note C) (1,299,690) 0
Redemption of preferred stock 0 (4,425,205)
Proceeds from exercise of stock options 75,050 70,303
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Net cash used in financing activities (9,197,045) (11,676,993)
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Net decrease in cash and cash equivalents (3,993,763) (2,955,447)
Cash and cash equivalents at beginning of period 4,077,854 3,621,642
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Cash and cash equivalents at end of period $ 84,091 $ 666,195
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See notes to condensed consolidated financial statements.
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P.A.M. TRANSPORTATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1995
NOTE A: BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In management's opinion, all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation
have been included. Operating results for the six-month period ended June 30,
1995 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1995. For further information, refer to the
consolidated financial statements and the footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1994.
NOTE B: NOTES PAYABLE AND LONG-TERM DEBT
In the first six months of 1995, the Company's subsidiary, P.A.M. Transport,
Inc., entered into installment obligations for the purchase of revenue
equipment in the aggregate amount of $9.5 million payable in 48 and 60 monthly
installments at an interest rate ranging from 7.3% to 8.5%.
NOTE C: ACQUISITION
On January 31, 1995, the Company acquired 100% of the outstanding capital stock
of Choctaw Express, Inc. and Choctaw Brokerage, Inc. based in Oklahoma City,
(collectively "Choctaw"). Assets of approximately $2.7 million were acquired
and liabilities of approximately $.8 million were assumed. The total purchase
price for Choctaw was $2,518,769 in cash, subject to closing audit adjustments.
The Company paid an initial payment of $2,404,369 which was financed through
borrowings under the Company's bank line of credit agreement and available
cash. The remaining balance due is included in other current liabilities in
the accompanying consolidated financial statements. The final payment will be
funded through borrowings under the Company's bank line of credit agreement and
available cash.
The acquisition has been accounted for under the purchase method, effective
January 31, 1995, with operations of Choctaw included in the Company's
financial statements for the five months ended June 30, 1995. The purchase
price has been allocated to assets and liabilities based on their estimated
fair values as of the date of acquisition. Approximately $500,320 of goodwill
was recorded as a result of the purchase allocation and is being amortized over
a 30-year period. A final allocation of the purchase price will be completed
in 1995 based on determination of the final purchase price. The final
allocation is not expected to vary materially from amounts previously recorded.
The Company will also pay $325,000 per year for a five year noncompete
agreement with the former sole shareholder of Choctaw.
Pro forma unaudited financial information (as if the Choctaw acquisition was
completed at the beginning of the respective periods) for the first six months
of 1995 and 1994 is provided below:
Six Months Ended,
June 30,
1995 1994
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Operating revenues $ 46,784,056 $ 44,992,978
Operating expenses 40,900,041 40,173,871
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Operating income 5,884,015 4,819,107
Interest expense 1,589,196 1,476,542
Income taxes 1,632,031 1,337,026
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Net income $ 2,662,788 $ 2,005,539
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Net income per common share (primary) $ 0.35 $ 0.27
============ ============
Average common and common equivalent shares outstanding 7,626,268 7,557,222
============ ============
The above pro forma unaudited financial information does not purport to be
indicative of the results which actually would have occurred had the
acquisition been made at the beginning of the respective periods.
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PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1995 VS. THREE MONTHS ENDED JUNE 30, 1994
For the quarter ended June 30, 1995 revenues increased 20.2% to $23.8 million
as compared to $19.8 million for the quarter ended June 30, 1994. The main
factor for the increase in revenues was a 19.3% increase in average tractors
from 575 in 1994 to 686 in 1995, of which 55 were added in connection with the
acquisition of Choctaw which produced revenues of $2 million for the second
quarter of 1995.
The Company's operating ratio improved from 86.5% of revenues in the second
quarter of 1994 to 85.7% in the second quarter of 1995.
Salaries, wages and benefits decreased from 44.9% of revenues in the second
quarter of 1994 to 43% of revenues in the second quarter of 1995. The major
factors were a 1.1% decrease in workmen's compensation expense and a .6%
decrease in maintenance wages.
Operating supplies and expenses decreased from 18.5% of revenues in the second
quarter of 1994 to 17.7% of revenues in the second quarter of 1995, as the
Company continues to modernize its fleet. The largest areas of savings were
realized in repairs and maintenance where a 1.9% reduction was recorded.
The Company incurred an increase in depreciation expense as a result of the new
equipment being placed into service. Depreciation expense increased from 9.1%
of revenues in the second quarter of 1994 to 9.3% of revenues in the second
quarter of 1995.
Insurance and claims expense decreased from 5% of revenues in the second
quarter of 1994 to 4.7% of revenues in the second quarter of 1995. This
decrease was due to premium reductions as a result of continued favorable loss
experience.
SIX MONTHS ENDED JUNE 30, 1995 VS. SIX MONTHS ENDED JUNE 30, 1994
For the six months ended June 30, 1995 revenues increased 18.6% to $45.9
million as compared to $38.7 million for the six months ended June 30, 1994.
The main factors for the increase in revenues was a 15% increase in average
tractors from 572 in 1994 to 658 in 1995, of which 55 were added in connection
with the acquisition of Choctaw which produced revenues of $3.8 million for
the first six months of 1995.
The Company's operating ratio improved from 88.2% of revenues in the first six
months of 1994 to 87.4% in the first six months of 1995.
Operating supplies and expenses decreased from 19.8% of revenues in the first
six months of 1994 to 18% of revenues in the first six months of 1995, as the
Company continues to modernize its fleet. The largest areas of savings were
realized in repairs and maintenance where a 1.5% reduction was recorded.
Rent and purchased transportation increased from 1.6% of revenues in the first
six months of 1994 to 2% of revenues in the first six months of 1995. This was
primarily due to the use of rental equipment by Choctaw, which was acquired by
the Company on January 31, 1995. The majority of the rental equipment has been
replaced by Company owned equipment during the period since January 31.
The Company incurred an increase in depreciation expense as a result of the new
equipment being placed into service. Depreciation expense increased from 9% of
revenues in the first six months of 1994 to 9.2% of revenues in the first six
months of 1995.
Operating taxes and licenses as a percent of revenues decreased from 6.6% in
the first six months of 1994 to 6.1% in the first six months of 1995 due
largely to lower accruals of state fuel tax expenses.
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Insurance and claims expense decreased from 5.1% of revenues in the first six
months of 1994 to 4.7% of revenues in the first six months of 1995. This
decrease was due to premium reductions as a result of continued favorable loss
experience.
The Company's income tax rate differs from the expected rate primarily due to
state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal subsidiary, P.A.M. Transport, Inc., has a $10 million
secured bank line of credit subject to borrowing limitations. Outstanding
advances on this line of credit were approximately $2.8 million (at an interest
rate of 8.63%) at June 30, 1995. The Company's borrowing base limitation at
June 30, 1995 was $8 million. The line of credit is guaranteed by the Company
and matures May 31, 1997.
The Company entered into installment obligations in the first six months of
1995 for the purchase of revenue equipment for approximately $9.5 million
payable in 48 and 60 monthly installments at an interest rate ranging from 7.3%
to 8.5%.
During the remainder of 1995 the Company plans to replace 50 trailers and 151
tractors and expects to incur additional debt of approximately $11.4 million.
Operating results during the first six months of 1995 provided net cash from
operations of approximately $5.3 million.
Management of the Company believes that its cash requirements for 1995 will be
adequately met from operating cash flows and the Company's available credit
line.
ACQUISITION
On January 31, 1995, the Company acquired 100% of the outstanding capital stock
of Choctaw Express, Inc. and Choctaw Brokerage, Inc. based in Oklahoma City,
(collectively "Choctaw"). The total purchase price for Choctaw was
approximately $2.5 million in cash, subject to closing audit adjustments. The
acquisition was financed through borrowings under the Company's bank line of
credit agreement and available cash, and the acquisition will be accounted for
under the purchase method, effective January 31, 1995, with operations included
in the Company's financial statements beginning on the acquisition date. The
Company will also pay $325,000 per year for a five year noncompete agreement
with the former sole shareholder of Choctaw. See Note C to the accompanying
condensed consolidated financial statements (unaudited).
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The 1995 Annual Meeting of Stockholders of the Company was held on May
25, 1995. At the meeting the following persons were elected as directors to
serve for a term of one year and until their successors are elected and
qualified: Robert W. Weaver, Daniel C. Sullivan, William E. Morrissey, Beryl L.
Shroyer, Ronald W. Lech and Matthew T. Moroun.
The results of voting with respect to the election of directors were
as follows:
Votes Votes
FOR WITHHELD
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Robert W. Weaver 4,792,620 2,100
Daniel C. Sullivan 4,792,747 2,000
William E. Morrissey 4,771,760 2,225
Beryl L. Shroyer 4,792,522 2,225
Ronald W. Lech 4,792,522 2,225
Matthew T. Moroun 4,792,247 2,500
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are filed with this report:
4.1.1 - First Amendment to Loan Agreement dated 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.
4.1.3 - Security Agreement dated June 27, 1995 by and
between Choctaw Express, Inc. and First Tennessee Bank
National Association.
4.1.4 - 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.
4.2.2 - First Amendment to Security Agreement dated June
27, 1995 by and between P.A.M. Transport, Inc. and First
Tennessee Bank National Association.
11 - Statement Re: Computation of Per Share Earnings.
27 - Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
The Company filed the following report on Form 8-K during the
three months ended June 30, 1995:
(1) Amendment No. 1 to Current Report on Form 8-K (Event:
January 31, 1995) filed on April 14, 1995 regarding the
acquisition of Choctaw Express, Inc. and Choctaw Brokerage,
Inc.
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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 thereunto duly authorized.
P.A.M. TRANSPORTATION SERVICES, INC.
Dated: August 10, 1995 By: /s/ Robert W. Weaver
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Robert W. Weaver
President and Chief Executive Officer
(principal executive officer)
Dated: August 10, 1995 By: /s/ Larry J. Goddard
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Larry J. Goddard
Vice President-Finance, Chief Financial
Officer, Secretary and Treasurer
(principal accounting and financial officer)
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EXHIBIT INDEX
Exhibit
No. Description
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4.1.1 - First Amendment to Loan Agreement dated 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.
4.1.3 - Security Agreement dated June 27, 1995 by and between
Choctaw Express, Inc. and First Tennessee Bank
National Association.
4.1.4 - 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.
4.2.2 - First Amendment to Security Agreement dated June 28,
1995 by and between P.A.M. Transport, Inc. and First
Tennessee Bank National Association.
11 - Statement Re: Computation of Per Share Earnings.
27 - Financial Data Schedule (for SEC use only).