10-Q 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 [ _ ] 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. ------------------------------------ (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, Tontitown, Arkansas 72770 ------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrants telephone number, including area code: (501) 361-9111 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ _ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Class Outstanding at August 1, 2000 ----- ----------------------------- Common Stock, $.01 Par Value 8,444,957 PART I - FINANCIAL INFORMATION Item 1. Financial Statements
P.A.M. TRANSPORTATION SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) June 30, December 31, 2000 1999 ---- ---- (unaudited) (note) ASSETS Current assets: Cash and cash equivalents $ 482 $ 3,557 Receivables: Trade, net of allowance 23,541 22,890 Other 1,115 1,032 Operating supplies and inventories 72 60 Deferred income taxes 272 378 Prepaid expenses and deposits 6,163 4,408 Income taxes refundable 434 113 --------- --------- Total current assets 32,079 32,438 Property and equipment, at cost 186,747 177,502 Less: accumulated depreciation (58,987) (51,382) --------- --------- Net property and equipment 127,760 126,120 Other assets: Excess of cost over net assets acquired 8,709 8,911 Non compete agreement 196 261 Other 1,255 1,231 --------- --------- Total other assets 10,160 10,403 --------- --------- Total assets $ 169,999 $ 168,961 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 21,718 $ 22,271 Trade accounts payable 8,371 11,210 Other current liabilities 9,595 7,674 --------- --------- Total current liabilities 39,684 41,155 Long-term debt, less current portion 50,307 55,617 Non compete agreement 66 131 Deferred income taxes 21,598 18,693 Shareholders' equity: Common stock 84 84 Additional paid-in capital 19,483 19,452 Retained earnings 38,777 33,829 --------- --------- Total shareholders' equity 58,344 53,365 --------- --------- Total liabilities and shareholders' equity $ 169,999 $ 168,961 ========= ========= Note: The balance sheet at December 31, 1999 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.
P.A.M. TRANSPORTATION SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2000 1999 2000 1999 ---- ---- ---- ---- Operating revenues $ 53,034 $ 53,675 $ 107,181 $ 105,066 Operating expenses: Salaries, wages and benefits 22,807 23,310 47,050 45,712 Operating supplies 9,264 8,719 19,100 16,879 Rent/purchased transportation 3,374 3,293 6,931 7,323 Depreciation and amortization 4,806 4,649 9,623 8,879 Operating taxes and licenses 2,915 2,914 5,871 5,765 Insurance and claims 2,289 2,098 4,578 4,096 Communications and utilities 598 591 1,184 1,201 Other 962 1,124 1,977 2,107 (Gain) loss on sale of equipment (50) (90) (96) (113) --------- --------- --------- --------- 46,965 46,608 96,218 91,849 --------- --------- --------- --------- Operating income 6,069 7,067 10,963 13,217 Other income (expense) Interest expense (1,368) (1,479) (2,722) (2,884) --------- --------- --------- --------- (1,368) (1,479) (2,722) (2,884) Income before income taxes 4,701 5,588 8,241 10,333 Income taxes --current 168 488 304 1,072 --deferred 1,713 1,806 2,989 3,160 --------- --------- --------- --------- 1,881 2,294 3,293 4,232 Net income $ 2,820 $ 3,294 $ 4,948 $ 6,101 ========= ========= ========= ========= Net income per common share: Basic $ 0.33 $ 0.39 $ 0.59 $ 0.73 ========= ========= ========= ========= Diluted $ 0.33 $ 0.39 $ 0.58 $ 0.72 ========= ========= ========= ========= Average common shares outstanding-Basic 8,443,980 8,377,960 8,442,139 8,360,178 ========= ========= ========= ========= Average common shares outstanding-Diluted 8,514,654 8,457,711 8,514,788 8,449,431 ========= ========= ========= ========= See notes to condensed consolidated financial statements.
P.A.M. TRANSPORTATION SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) (in thousands) Six months Ended June 30, 2000 1999 ---- ---- OPERATING ACTIVITIES Net income $ 4,948 $ 6,101 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 9,623 8,879 Non compete agreement amortization 65 196 Provision for deferred income taxes 2,989 3,160 Gain on retirement of property and equipment (96) (113) Changes in operating assets and liabilities: Accounts receivable (877) 469 Prepaid expenses and other current assets (2,111) (1,897) Accounts payable (2,824) 4,389 Accrued expenses 1,920 1,688 --------- --------- Net cash provided by operating activities 13,637 22,872 INVESTING ACTIVITIES Purchases of property and equipment (15,120) (28,704) Acquisition of business, net of cash acquired - (9,642) Proceeds from sales of assets 4,162 2,750 Lease payments received on direct financing leases 144 582 --------- --------- Net cash used in investing activities (10,814) (35,014) FINANCING ACTIVITIES Borrowings under lines of credit 94,901 100,491 Repayments under lines of credit (95,152) (100,491) Borrowings of long-term debt 4,204 18,469 Repayments of long-term debt (9,881) (10,058) Proceeds from exercise of stock options 30 76 --------- --------- Net cash (used in) provided by financing activities (5,898) 8,487 --------- --------- Net decrease in cash and cash equivalents (3,075) (3,655) Cash and cash equivalents at beginning of period $ 3,557 $ 5,963 --------- --------- Cash and cash equivalents at end of period $ 482 $ 2,308 ========= ========= See notes to condensed consolidated financial statements.
P.A.M. TRANSPORTATION SERVICES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 2000 NOTE A: BASIS OF PRESENTATION --------------------------------- The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In management's opinion, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. Operating results for the six-month period ended June 30, 2000 are not necessarily indicative of the results that may be expected for the year ended December 31, 2000. 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, 1999. NOTE B: NOTES PAYABLE AND LONG-TERM DEBT ---------------------------------------------- In the first six months of 2000, the Company's subsidiary, P.A.M. Transport, Inc., entered into an installment obligation for the financing of revenue equipment in the amount of approximately $4.2 million. This obligation is payable in 48 monthly installments at an interest rate of 7.25%. PART I - FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 "forward-looking statements" within the meaning of 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. THREE MONTHS ENDED JUNE 30, 2000 VS. THREE MONTHS ENDED JUNE 30, 1999 -------------------------------------------------------------------------------- For the quarter ended June 30, 2000, revenues decreased 1.2% to $53.0 million as compared to $53.7 million for the quarter ended June 30, 1999. The main reason for the decrease was a decrease in the average number of tractors from 1,449 in the second quarter of 1999 to 1,434 in the second quarter of 2000. The Company's operating ratio increased to 88.6% in the second quarter of 2000 compared to 86.8% in the second quarter of 1999. Operating supplies and expenses increased from 16.2% of revenues in the second quarter of 1999 to 17.5% of revenues in the second quarter of 2000. The increase relates primarily to an increase in fuel costs of 1.1% net of a fuel surcharge passed to customers. The Company's effective tax rate decreased from 41.0% in the second quarter of 1999 to 40.0% in the second quarter of 2000. This decrease is related to an increase in the deduction allowed for per diem payments made to drivers. SIX MONTHS ENDED JUNE 30, 2000 VS. SIX MONTHS ENDED JUNE 30, 1999 ----------------------------------------------------------------------------- For the six months ended June 30, 2000, revenues increased 2.0% to $107.2 million as compared to $105.1 million for the six months ended June 30,1999. The main reason for the increase was an increase in the average number of tractors from 1,427 for the first six months of 1999 to 1,456 for the first six months of 2000. The Company's operating ratio increased to 89.8% in the first six months of 2000 as compared to 87.4% in the first six months of 1999. Operating supplies and expenses increased from 16.1% of revenues in the first six months of 1999 to 17.8% of revenues in the first six months of 2000. The increase relates primarily to an increase in fuel costs of 2.1% net of a fuel surcharge passed to customers. Rent and purchased transportation decreased from 7.0% of revenues in the first six months of 1999 to 6.5% of revenues in the first six months of 2000. The decrease relates to the replacement of leased trailers with Company owned trailers. Depreciation and amortization expense increased from 8.5% of revenues in the first six months of 1999 to 9.0% of revenues in the first six months of 2000. The increase relates to the replacement of older tractors which were fully depreciated. The Company's effective tax rate decreased from 40.9% in the first six months of 1999 to 40.0% in the first six months of 2000. This decrease is related to an increase in the deduction allowed for per diem payments made to drivers. LIQUIDITY AND CAPITAL RESOURCES ---------------------------------- During the first six months of 2000, the Company generated $13.6 million in cash from operating activities. Investing activities used $10.8 million in cash in the first six months of 2000. Financing activities used $5.9 million in the first six months of 2000 primarily for scheduled payments against long-term borrowings. 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% (8.05% at June 30, 2000). Outstanding advances on this line of credit were approximately $7.0 million at June 30, 2000, including $3.3 million in letters of credit. The Company's borrowing base limitation at June 30, 2000 was $8.0 million. The line of credit is guaranteed by the Company and matures on May 31, 2001. In addition to cash flows 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 to five 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 six months of 2000 at a cost of approximately $13.8 million using its existing line of credit. In addition, P.A.M. Transport, Inc. entered into an installment obligation during the first six months of 2000 in the amount of approximately $4.2 million in order to finance revenue equipment previously acquired utilizing it line of credit. This obligation is payable in 48 monthly installments at an interest rate of 7.25%. During the remainder of 2000, the Company plans to replace 129 tractors which would result in additional debt of approximately $6.7 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 June 30, 2000, to repay indebtedness coming due in the current year, and to fund its operating needs during the remainder of fiscal 2000. PART II. OTHER INFORMATION ------------------------------ Item 3. Quantitative and Qualitative Disclosures about Market Risk. ----------------------------------------------------------------------------- The Company's line of credit agreement provides for borrowings which bear interest at variable rates based on the LIBOR. At June 30, 2000, the Company had approximately $7.0 million outstanding pursuant to the line of credit. The Company believes that the effect, if any, of reasonably possible near-term changes in interest rates on the Company's financial position, results of operations, and cash flows should not be material. All customers are required to pay for the Company's services in U.S. dollars and the Company does not engage in hedging transactions relating to diesel fuel or any other commodity. Item 4. Submission of Matters to a Vote of Security Holders. ------------------------------------------------------------------------ The 2000 Annual Meeting of Stockholders of the Company was held on June 15, 2000. At the meeting, the following persons were elected as directors to serve for a term of one year and until their successors are elected and qualified: Robert W. Weaver, Daniel C. Sullivan, Matthew T. Moroun, Charles F. Wilkins, Fredrick P. Calderone and Joseph J. Casaroll. The results of voting with respect to the election of directors were as follows: Votes Votes FOR WITHHELD --- -------- Robert W. Weaver 7,352,211 2,000 Daniel C. Sullivan 7,398,933 2,000 Charles F. Wilkins 7,398,933 2,000 Matthew T. Moroun 7,352,211 2,000 Fredrick P. Calderone 7,398,003 2,000 Joseph J. Casaroll 7,395,033 2,000 Item 6. Exhibits and Reports on Form 8-K. -------------------------------------------------- (a) The following exhibits are filed with this report: 11.1 - Statement Re: Computation of Diluted Earnings Per Share. 27.1 - Financial Data Schedule (for SEC use only). (b) Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. P.A.M. TRANSPORTATION SERVICES, INC. Dated: August 3, 2000 By: /s/ Robert W Weaver --------------------------------- Robert W. Weaver President and Chief Executive Officer (principal executive officer) Dated: August 3, 2000 By: /s/ Larry J. Goddard --------------------------------- Larry J. Goddard Vice President-Finance, Chief Financial Officer, Secretary and Treasurer (principal accounting and financial officer)