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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 September 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to _________________
Commission File Number 0-15057
P.A.M. TRANSPORTATION SERVICES, INC.
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(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, 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
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(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
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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 November 7, 1997
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Common Stock, $.01 Par Value 8,275,157
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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
(in thousands)
September 30, December 31,
1997 1996
---- ----
ASSETS (unaudited) (note)
Current assets:
Cash and cash equivalents $ 415 $ 5,941
Receivables:
Trade, net of allowance 21,009 16,072
Other 607 1,030
Equipment held for sale 1,453 1,264
Operating supplies and inventories 483 382
Deferred income taxes 129 0
Prepaid expenses and deposits 2,890 2,816
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Total current assets 26,571 27,505
Property and equipment, at cost 102,794 92,594
Less: accumulated depreciation (37,922) (29,714)
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Net property and equipment 64,872 62,880
Other assets:
Excess of cost over net assets acquired 2,419 2,511
Non compete agreement 847 1,178
Other 783 821
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Total other assets 4,049 4,510
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Total assets $ 95,907 $ 94,895
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 16,985 $ 16,849
Trade accounts payable 8,060 5,583
Deferred income taxes 0 65
Other current liabilities 5,203 3,817
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Total current liabilities 30,248 26,314
Long-term debt, less current portion 24,894 34,938
Non compete agreement 356 762
Deferred income taxes 8,814 6,569
Shareholders' equity:
Common stock 83 81
Additional paid-in capital 18,464 18,044
Retained earnings 13,048 8,187
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Total shareholders' equity 31,595 26,312
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Total liabilities and shareholders' equity $ 95,907 $ 94,895
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Note: The balance sheet at December 31, 1996 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)
(in thousands except per share data)
Three months Ended Nine months Ended
September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
Operating revenues $ 30,776 $ 29,618 $ 94,759 $ 83,319
Operating expenses:
Salaries, wages and benefits 14,071 14,044 42,936 38,628
Operating supplies 5,714 5,510 18,152 15,574
Rent/purchased transportation 487 523 1,342 1,483
Depreciation and amortization 3,243 3,110 9,598 8,847
Operating taxes and licenses 1,843 1,702 5,608 4,965
Insurance and claims 1,390 1,296 4,223 3,661
Communications and utilities 251 222 699 780
Other 582 485 1,731 1,432
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27,581 26,892 84,289 75,370
----------- ----------- ----------- -----------
Operating income 3,195 2,726 10,470 7,949
Other income (expense)
Interest expense (801) (1,088) (2,560) (3,120)
Other 0 0 0 31
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(801) (1,083) (2,560) (3,089)
Income before income taxes 2,394 1,638 7,910 4,860
Income taxes --current 429 85 988 483
--deferred 481 570 2,061 1,436
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910 655 3,049 1,919
Net income $ 1,484 $ 983 $ 4,861 $ 2,941
=========== =========== =========== ===========
Net income per share $ 0.18 $ 0.13 $ 0.59 $ 0.38
=========== =========== =========== ===========
Average common and common
equivalent shares outstanding 8,362,783 7,610,448 8,228,282 7,654,033
=========== =========== =========== ===========
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)
(in thousands)
Nine months Ended
September 30,
1997 1996
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OPERATING ACTIVITIES
Net income $ 4,861 $ 2,941
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 9,598 8,847
Non compete agreement amortization 330 287
Provision for deferred income taxes 2,061 1,436
Changes in operating assets and liabilities:
Accounts receivable (4,513) (3,543)
Prepaid expenses and other current assets (136) 1,056
Accounts payable 2,468 (1,487)
Accrued expenses 1,386 362
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Net cash provided by operating activities 16,055 9,899
INVESTING ACTIVITIES
Purchases of property and equipment (11,832) (16,399)
Proceeds from sales of assets 145 --
Lease payments received on direct financing lease -- 1,240
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Net cash used in investing activities (11,687) (15,159)
FINANCING ACTIVITIES
Borrowings under lines of credit 108,014 89,335
Repayments under lines of credit (112,822) (90,750)
Borrowings of long-term debt 6,131 13,993
Repayments of long-term debt (11,638) (14,254)
AFS acquisition less cash acquired -- (200)
Proceeds from exercise of stock options 422 69
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Net cash provided by (used in) financing activities (9,893) (1,807)
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Net decrease in cash and cash equivalents (5,525) (7,067)
Cash and cash equivalents at beginning of period $ 5,940 $ 7,629
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Cash and cash equivalents at end of period $ 415 $ 562
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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)
SEPTEMBER 30, 1997
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 nine-month period ended September 30, 1997 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1997. 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, 1996.
NOTE B: NOTES PAYABLE AND LONG-TERM DEBT
In the first nine months of 1997, the Company's subsidiaries, P.A.M. Dedicated
Services, Inc. and P.A.M. Transport, Inc., entered into installment obligations
for the purchase of revenue equipment in the aggregate amount of approximately
$1.7 million and $6.1 million, respectively. These obligations are payable in 36
and 48 monthly installments at interest rates ranging from 7.50% to 7.60%. The
Company also purchased additional revenue equipment during the first nine months
with a cost of approximately $5.4 million using its existing bank line of
credit.
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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
FORWARD-LOOKING INFORMATION
Certain information included in this Quarterly Report on Form 10-Q contains, and
other reports or materials filed or to be filed by the Company with the
Securities and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the Company or its
management) contain or will contain, "forward-looking statements" within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
Section 27A of the Securities Act of 1933, as amended, and pursuant to the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements may relate to financial results and plans for future business
activities, and are thus prospective. Such forward-looking statements are
subject to risks, uncertainties and other factors which could cause actual
results to differ materially from future results expressed or implied by such
forward-looking statements. Potential risks and uncertainties include, but are
not limited to, general economic conditions, competition and other uncertainties
detailed in this report and detailed from time to time in other filings by the
Company with the Securities and Exchange Commission. Any forward-looking
statements are made pursuant to the Private Securities Litigation Reform Act of
1995 and, as such, speak only as of the date made.
THREE MONTHS ENDED SEPTEMBER 30, 1997 VS. THREE MONTHS ENDED SEPTEMBER 30, 1996
For the quarter ended September 30, 1997, revenues increased 3.9% to $30.8
million as compared to $29.6 million for the quarter ended September 30, 1996.
The main factor for the increase in revenues was a 3.9% increase in the average
number of tractors from 883 in 1996 to 917 in 1997.
The Company's operating ratio was 89.6% of revenues in the third quarter of 1997
compared to 90.8% in the third quarter of 1996.
Salaries, wages and benefits decreased from 47.2% of revenues in the third
quarter of 1996 to 45.7% of revenues in the third quarter of 1997. The major
factor for the decrease was a 2.2% decrease in the amounts paid to Allen Freight
Services, Inc. (AFS) fleet owners.
Interest expense decreased from 3.7% of revenues in the third quarter of 1996 to
2.6% of revenues in the third quarter 1997. This decrease resulted primarily
from the Company reducing its long term debt and its borrowings under its line
of credit during the fourth quarter of 1996 using proceeds of $4.6 million
received by the Company in connection with the exercise of stock purchase
warrants by its majority shareholder.
The Company's effective tax rate remained constant at 38% for the periods
compared.
NINE MONTHS ENDED SEPTEMBER 30, 1997 VS. NINE MONTHS ENDED SEPTEMBER 30, 1996
For the nine months ended September 30, 1997, revenues increased 13.7% to $94.8
million as compared to $83.3 million for the nine months ended September 30,
1996. The main factor for the increase in revenues was a 13.6% increase in the
average number of tractors from 807 in 1996 to 917 in 1997.
The Company's operating ratio was 89.0% of revenues in the first nine months of
1997 compared to 90.5% in the first nine months of 1996.
Salaries, wages and benefits decreased from 46.4% of revenues in the first nine
months of 1996 to 45.3% of revenues in first nine months of 1997. The primary
reason for the decrease was a 1.8% decrease in the amounts paid to AFS fleet
owners.
Operating supplies and expenses increased from 18.7% of revenues in the first
nine months of 1996 to 19.2% of revenues in the first nine months of 1997. The
increase was due to the reduction in the number of fleet owners used in AFS
operations, the corresponding increase in the use of Company owned equipment and
the related increase in fuel and maintenance expense attributable to Company
owned equipment.
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As a percentage of revenues, the Company's depreciation expense decreased 0.5%
from 10.6% in the first nine months of 1996 to 10.1% in the first nine months of
1997. This decrease was the result of the tractors acquired in 1996 and 1997
having higher salvage values relative to the total cost of the tractors
purchased in such periods.
Interest expense decreased from 3.7% of revenues in the first nine months of
1996 to 2.7% of revenues in the first nine months of 1997. This decrease
resulted primarily from the Company reducing its long term debt and its
borrowings under its line of credit during the fourth quarter 1996 using
proceeds of $4.6 million received by the Company in connection with the exercise
of stock purchase warrants by its majority shareholder.
LIQUIDITY AND CAPITAL RESOURCES
During the first nine months of 1997 the Company generated $16.1 million in cash
from operating activities. Investing activities used $11.7 million in cash in
the first nine months of 1997. Financing activities used $9.8 million in the
first nine months of 1997 primarily for the repayment of the Company's line of
credit and repayments of long-term debt.
The Company's principal subsidiary, P.A.M. Transport, Inc., has a $15.0 million
secured bank line of credit subject to borrowing limitations. The line of credit
includes a provision that allows the Company to finance equipment at a reduced
interest rate of LIBOR + 1.75% (currently 7.41%). The maximum amount of
equipment that may be financed under this equipment provision is $7.5 million
with the remaining $7.5 million representing a general "working capital" line of
credit at an interest rate of LIBOR + 2.15% (currently 7.81%). Outstanding
advances on this line of credit were approximately $3.9 million at September 30,
1997, including $1.5 million in letters of credit and $2.4 million in equipment
financing. The Company's borrowing base limitation at September 30, 1997 was
$15.0 million. The line of credit is guaranteed by the Company and matures on
May 31, 1998 while the equipment portion of the line of credit matures on May
31, 1999.
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 the first nine months of 1997 with a cost of approximately $5.4 using its
existing line of credit. In addition, P.A.M. Dedicated Services, Inc. and P.A.M.
Transport, Inc., subsidiaries of the Company, entered into installment
obligations during the first nine months of 1997 for the purchase of revenue
equipment in the amount of approximately $1.7 million and $6.1 million,
respectively, payable in 36 and 48 monthly installments at interest rates
ranging from 7.50% to 7.60%.
During the remainder of 1997 the Company plans to replace and/or add 317
trailers and 41 tractors and expects to incur additional debt of approximately
$9.0 million. Management expects that the Company's existing working capital and
its available line of credit will be sufficient to meet the Company's capital
commitments as of September 30, 1997, to repay indebtedness coming due in the
current year, and to fund its operating needs during the remainder of fiscal
1997.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are filed with this report:
4.1.5 - Third Amendment to loan agreement dated July 1,
1997 by and among P.A.M. Transport, Inc. and First
Tennessee National Bank Association.
11.1 - Statement Re: Computation of Per Share Earnings.
27.1 - Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
None.
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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: November 10, 1997 By: /s/ Robert W. Weaver
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Robert W. Weaver
President and Chief Executive Officer
(principal executive officer)
Dated: November 10, 1997 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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