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 September 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 November 3, 2000 ----- ------------------------------- Common Stock, $.01 Par Value 8,469,657 PART I - FINANCIAL INFORMATION Item 1. Financial Statements
P.A.M. TRANSPORTATION SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) September 30, December 31, 2000 1999 ---- ---- (unaudited) (note) ASSETS Current assets: Cash and cash equivalents $ 312 $ 3,557 Receivables: Trade, net of allowance 23,878 22,890 Other 1,244 1,032 Operating supplies and inventories 72 60 Deferred income taxes 281 378 Prepaid expenses and deposits 5,580 4,408 Income taxes refundable 459 113 --------- --------- Total current assets 31,826 32,438 Property and equipment, at cost 181,566 177,502 Less: accumulated depreciation (56,808) (51,382) --------- --------- Net property and equipment 124,758 126,120 Other assets: Excess of cost over net assets acquired 8,608 8,911 Non compete agreement 163 261 Other 1,516 1,231 --------- --------- Total other assets 10,287 10,403 --------- --------- Total assets $ 166,871 $ 168,961 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 16,840 $ 22,271 Trade accounts payable 15,175 11,210 Other current liabilities 9,097 7,674 --------- --------- Total current liabilities 41,112 41,155 Long-term debt, less current portion 43,923 55,617 Non compete agreement 33 131 Deferred income taxes 21,959 18,693 Shareholders' equity: Common stock 85 84 Additional paid-in capital 19,639 19,452 Retained earnings 40,120 33,829 --------- --------- Total shareholders' equity 59,844 53,365 --------- --------- Total liabilities and shareholders' equity $ 166,871 $ 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 Nine Months Ended September 30, September 30, 2000 1999 2000 1999 ---- ---- ---- ---- Operating revenues $ 47,100 $ 51,284 $ 154,282 $ 156,350 Operating expenses: Salaries, wages and benefits 21,137 22,084 68,187 67,796 Operating supplies 9,228 9,027 28,327 25,901 Rent/purchased transportation 2,498 3,076 9,429 10,399 Depreciation and amortization 4,629 4,833 14,253 13,712 Operating taxes and licenses 2,453 2,683 8,324 8,453 Insurance and claims 2,032 1,903 6,610 5,999 Communications and utilities 500 608 1,685 1,809 Other 874 1,163 2,851 3,270 (Gain) loss on sale of equipment 398 (149) 302 (262) --------- --------- --------- --------- 43,749 45,228 139,968 137,077 --------- --------- --------- --------- Operating income 3,351 6,056 14,314 19,273 Other income (expense) Interest expense (1,184) (1,413) (3,906) (4,297) --------- --------- --------- --------- (1,184) (1,413) (3,906) (4,297) Income before income taxes 2,167 4,643 10,408 14,976 Income taxes --current 618 547 923 1,620 --deferred 205 1,302 3,193 4,461 --------- --------- --------- --------- 823 1,849 4,116 6,081 Net income $ 1,344 $ 2,794 $ 6,292 $ 8,895 ========= ========= ========= ========= Net income per common share: Basic $ 0.16 $ 0.33 $ 0.74 $ 1.06 ========= ========= ========= ========= Diluted $ 0.16 $ 0.33 $ 0.74 $ 1.05 ========= ========= ========= ========= Average common shares outstanding-Basic 8,465,309 8,420,603 8,449,861 8,380,541 ========= ========= ========= ========= Average common shares outstanding-Diluted 8,525,269 8,527,189 8,518,227 8,477,753 ========= ========= ========= ========= See notes to condensed consolidated financial statements.
P.A.M. TRANSPORTATION SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) (in thousands) Nine months Ended September 30, 2000 1999 ---- ---- OPERATING ACTIVITIES Net income $ 6,292 $ 8,895 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 14,253 13,712 Non compete agreement amortization 98 295 Provision for deferred income taxes 3,193 4,461 (Gain)/loss on retirement of property and equipment 302 (262) Changes in operating assets and liabilities: Accounts receivable (1,392) 34 Prepaid expenses and other current assets (1,467) (1,489) Accounts payable 3,697 3,620 Accrued expenses 1,422 1,297 --------- --------- Net cash provided by operating activities 26,398 30,563 INVESTING ACTIVITIES Purchases of property and equipment (24,354) (37,151) Acquisition of business, net of cash acquired - (9,642) Proceeds from sales of assets 11,467 5,251 Lease payments received on direct financing leases 192 749 --------- --------- Net cash used in investing activities (12,695) (40,793) FINANCING ACTIVITIES Borrowings under lines of credit 141,199 147,185 Repayments under lines of credit (139,999) (146,233) Borrowings of long-term debt 4,204 18,469 Repayments of long-term debt (22,538) (14,861) Proceeds from exercise of stock options 186 436 --------- --------- Net cash (used in) provided by financing activities (16,948) 4,996 --------- --------- Net decrease in cash and cash equivalents (3,245) (5,234) Cash and cash equivalents at beginning of period $ 3,557 $ 5,963 --------- --------- Cash and cash equivalents at end of period $ 312 $ 729 ========= ========= See notes to condensed consolidated financial statements.
P.A.M. TRANSPORTATION SERVICES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 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 nine-month period ended September 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 nine 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 SEPTEMBER 30, 2000 VS. THREE MONTHS ENDED SEPTEMBER 30, 1999 -------------------------------------------------------------------------------- For the quarter ended September 30, 2000, revenues decreased 8.2% to $47.1 million as compared to $51.3 million for the quarter ended September 30, 1999. The principal reason for the decrease was a decrease in the average number of tractors from 1,459 in the third quarter of 1999 to 1,379 in the third quarter of 2000. The Company's operating ratio increased to 92.9% in the third quarter of 2000 compared to 88.2% in the third quarter of 1999. Salaries, wages and benefits increased from 43.1% of revenues in the third quarter of 1999 to 44.9% of revenues in the third quarter of 2000. The increase relates to an increase in driver pay packages during the third quarter of 2000. Operating supplies and expenses increased from 17.6% of revenues in the third quarter of 1999 to 19.6% of revenues in the third quarter of 2000. The increase relates primarily to an increase in fuel costs of 1.8% net of a fuel surcharge passed to customers. Rent and purchased transportation decreased from 6.0% of revenues in the third quarter of 1999 to 5.3% of revenues in the third quarter of 2000. The decrease relates primarily to a decrease in amounts paid to other transportation companies in the form of brokerage fees. Insurance and claims increased from 3.7% of revenues in the third quarter of 1999 to 4.3% of revenues in the third quarter of 2000. The increase relates to increased costs of auto liability insurance coverage. The Company's effective tax rate decreased from 39.8% in the third quarter of 1999 to 38.0% in the third quarter of 2000. This decrease is related to an increase in the deduction allowed for per diem payments made to drivers. NINE MONTHS ENDED SEPTEMBER 30, 2000 VS. NINE MONTHS ENDED SEPTEMBER 30, 1999 -------------------------------------------------------------------------------- For the nine months ended September 30, 2000, revenues decreased 1.3% to $154.3 million as compared to $156.3 million for the nine months ended September 30, 1999. The principal reason for the decrease was a decrease in the average number of tractors from 1,438 for the first nine months of 1999 to 1,418 for the first nine months of 2000. The Company's operating ratio increased to 90.7% in the first nine months of 2000 as compared to 87.7% in the first nine months of 1999. Salaries, wages and benefits increased from 43.4% of revenues in the first nine months of 1999 to 44.2% of revenues in the first nine months of 2000. The increase relates to an increase in driver pay packages early in the third quarter of 2000. Operating supplies and expenses increased from 16.6% of revenues in the first nine months of 1999 to 18.4% of revenues in the first nine months of 2000. The increase relates primarily to an increase in fuel costs of 2.0% net of a fuel surcharge passed to customers. Rent and purchased transportation decreased from 6.7% of revenues in the first nine months of 1999 to 6.1% of revenues in the first nine months of 2000. The decrease relates primarily to the replacement of leased trailers with Company owned trailers. The Company's effective tax rate decreased from 40.6% in the first nine months of 1999 to 39.5% in the first nine 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 nine months of 2000, the Company generated $26.4 million in cash from operating activities. Investing activities used $12.7 million in cash in the first nine months of 2000. Financing activities used $16.9 million in the first nine 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% (8.03% at September 30, 2000). Outstanding advances on this line of credit were approximately $8.4 million at September 30, 2000, including $3.3 million in letters of credit. The Company's borrowing base limitation at September 30, 2000 was $6.6 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 nine months of 2000 at a cost of approximately $22.8 million using its existing line of credit. In addition, P.A.M. Transport, Inc. entered into an installment obligation during the first nine months of 2000 in the amount of approximately $4.2 million in order to finance revenue equipment previously acquired utilizing its 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 58 tractors which would result in additional debt of approximately $2.7 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 September 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 September 30, 2000, the Company had approximately $8.4 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 did not engage in hedging transactions relating to diesel fuel or any other commodity during the nine months ending September 30, 2000. 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: November 9, 2000 By: /s/ Robert W Weaver --------------------------------- Robert W. Weaver President and Chief Executive Officer (principal executive officer) Dated: November 9, 2000 By: /s/ Larry J. Goddard --------------------------------- Larry J. Goddard Vice President-Finance, Chief Financial Officer, Secretary and Treasurer (principal accounting and financial officer)