-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Wuddw342P2RLpVu26IAWsxq4EgQlij3wZyVVz0GXFQxjJghkhbAUytX/2BqdrjVK ATFbHP//A4Ghl149yFkPMQ== 0000798287-00-000002.txt : 20000329 0000798287-00-000002.hdr.sgml : 20000329 ACCESSION NUMBER: 0000798287-00-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAM TRANSPORTATION SERVICES INC CENTRAL INDEX KEY: 0000798287 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 710633135 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-15057 FILM NUMBER: 580664 BUSINESS ADDRESS: STREET 1: HIGHWAY 412 WEST STREET 2: P O BOX 188 CITY: TONTITOWN STATE: AR ZIP: 72770 BUSINESS PHONE: 5013619111 MAIL ADDRESS: STREET 1: HIGHWAY 412 WEST CITY: TONTITOWN STATE: AR ZIP: 72770 10-K 1 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 -------- ---------- (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 - ---------------- 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 - ------------------------- 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 ---- --- 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. - ------------------------------------ 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 --------------------------------------------------- (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 -------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 EX-21.1 2 SUBSIDIARIES OF REGISTRANTS EXHIBIT 21.1 SUBSIDIARIES OF REGISTRANT -------------------------- P.A.M. Transport, Inc. (Arkansas Corporation) P.A.M. Special Services, Inc. (Arkansas Corporation) P.A.M. Dedicated Services, Inc. (Ohio Corporation) P.A.M. Logistics Services, Inc. (Arkansas Corporation) T.T.X., Inc. (Texas Corporation) Choctaw Express, Inc. (Oklahoma Corporation) Choctaw Brokerage, Inc. (Oklahoma Corporation) Allen Freight Services, Inc. (Missouri Corporation) Decker Transport Co., Inc. (Ohio Corporation) EX-23.1 3 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in the Registration Statements (Form S-8 No. 33-16220, Form S-8 No. 33-16084, Form S-8 No. 33-60926, and Form S-8 No. 333-10813 pertaining to the Incentive Stock Option Plan, the Non-Qualified Stock Option Plan, the 1993 Employee Stock Option Plan and the 1995 Stock Option Plan) of P.A.M. Transportation Services, Inc. of our report dated February 18, 2000, with respect to the consolidated financial statements and schedule of P.A.M. Transportation Services, Inc. included in the Annual Report (Form 10-K) for the year ended December 31, 1999. ARTHUR ANDERSEN LLP Fayetteville, Arkansas March 13, 2000 EX-27.1 4 FINANCIAL DATA SCHEDULE FOR 1999 10K
5 1000 YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 3557 0 24577 655 60 32438 177502 51382 168961 41155 55617 0 0 84 53281 168961 0 207381 0 182926 0 0 5650 18805 7536 11269 0 0 0 11269 1.34 1.33
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