Edgar Filing: PAM TRANSPORTATION SERVICES INC

As filed with the Securities and Exchange Commission on March 1, 2002

Registration No. 333-83084
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1

FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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P.A.M. TRANSPORTATION SERVICES, INC.
(Exact name of registrant as specified in its charter)
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Delaware 71-0633135
(State or other (IRS Employer
jurisdiction of Identification Number)
incorporation or
organization)
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Highway 412 West
Tontitown, Arkansas 72770
(479) 361-9111
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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ROBERT W. WEAVER
President and Chief Executive Officer
P.A.M. Transportation Services, Inc.
Highway 412 West
Tontitown, Arkansas 72770
(479) 361-9111
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies Requested to:
MARLON F. STARR, ESQ. C. DOUGLAS BUFORD, JR.,
Smith, Gambrell & ESQ.
Russell, LLP Wright, Lindsey &
1230 Peachtree Street, Jennings LLP
N.E., Suite 3100 200 West Capitol Avenue,
Atlanta, Georgia Suite 2200
30309-3592 Little Rock, Arkansas
(404) 815-3500 72201
(404) 685-7053 (fax) (501) 371-0909
(501) 376-9442 (fax)
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415, check the following
box. [_]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legal facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
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The information in this preliminary prospectus is not complete and may be
changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This
preliminary prospectus is not an offer to sell these securities and it is not a
solicitation of an offer to buy these securities in any jurisdiction where such
an offer or sale is not permitted.

Subject to Completion, dated March 1, 2002

PROSPECTUS

3,475,000 Shares

[LOGO] P.A.M.
TRANSPORTATION SERVICES, INC.

Common Stock

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We are selling 2,100,000 shares of our common stock. The selling
stockholders identified in this prospectus are selling an additional 1,375,000
shares. We will not receive any of the proceeds from the sale of shares by the
selling stockholders. Our common stock is traded on the Nasdaq National Market
under the symbol "PTSI."

On February 28, 2002, the last reported sale price of our common stock on
the Nasdaq National Market was $20.00.

You should consider the risks we have described in "Risk Factors" beginning
on page 4 before buying shares of our common stock.

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Per
Share Total
----- -----

Public offering price................................. $ $
Underwriting discount................................. $ $
Proceeds, before expenses, to us...................... $ $
Proceeds, before expenses, to the selling stockholders $ $

The underwriters may purchase up to an additional 521,250 shares from us at
the public offering price, less the underwriting discount, within 30 days from
the date of this prospectus to cover over-allotments.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

The underwriters expect to deliver the shares to purchasers on or before
, 2002.

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Stephens Inc.
BB&T Capital Markets
A.G. Edwards & Sons, Inc.

The date of this prospectus is , 2002.

TABLE OF CONTENTS

Page
----

Prospectus Summary................................................................... 1
Risk Factors......................................................................... 4
Disclosure Regarding Forward-Looking Statements...................................... 7
Use of Proceeds...................................................................... 8
Dividend Policy...................................................................... 8
Common Stock Price Range............................................................. 8
Capitalization....................................................................... 9
Selected Consolidated Financial and Operating Data................................... 10
Management's Discussion and Analysis of Financial Condition and Results of Operations 12
Business............................................................................. 18
Management........................................................................... 23
Principal and Selling Stockholders................................................... 24
Description of Capital Stock......................................................... 25
Shares Eligible for Future Sale...................................................... 27
Underwriting......................................................................... 28
Legal Matters........................................................................ 30
Experts.............................................................................. 30
Where You Can Find More Information.................................................. 30
Index to Consolidated Financial Statements........................................... F-1

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You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not, and the underwriters have not,
authorized any person to provide you with different information. You should not
rely on any information provided by anyone that is different or inconsistent.
We are not, and the underwriters are not, making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. You
should not assume that the information in this prospectus and the documents
incorporated by reference is accurate as of any date other than their
respective dates. Our business, financial condition, results of operations and
prospects may have changed since those dates.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus.
Because it is a summary, it may not contain all of the information that is
important to you. We recommend that you read carefully this entire prospectus,
especially the section entitled "Where You Can Find More Information" on page
30 and the section entitled "Risk Factors" beginning on page 4, as well as the
documents incorporated by reference in this prospectus, before making a
decision to invest in our common stock.

As used in this prospectus, the terms "P.A.M.," the "company," "we," "our"
or "us" mean P.A.M. Transportation Services, Inc. and its subsidiaries.

Unless otherwise stated in this prospectus, we have assumed throughout this
prospectus that the underwriters' over-allotment option is not exercised.

Our Business

We are a leading truckload dry van carrier transporting general commodities
throughout the continental United States, as well as in the Canadian provinces
of Ontario and Quebec. We also provide transportation services in Mexico
through our gateways in Laredo and El Paso, Texas under agreements with Mexican
carriers.

Through our executive officers, who together have over 50 years experience
managing our company, we focus on providing a high level of service and on
becoming a preferred provider, or "core carrier," for our customers, while
strictly controlling costs. As a result, we have consistently had one of the
lowest operating ratios among publicly held truckload carriers.

Our business strategy is designed to achieve long-term profitable growth.
Since 1996, we have achieved substantial growth in revenues and net income. We
increased our operating revenues at a compound annual growth rate of 14.8%,
from $113.0 million in 1996 to $225.8 million in 2001. During the same period,
we increased our net income at a compound annual growth rate of 24.9%, from
$3.3 million to $10.1 million. The key elements of our strategy for achieving
long-term profitable growth include:

Maintaining Dedicated Fleets and High Density Lanes. We continually strive
to maximize utilization and increase revenue per tractor while minimizing our
time and empty miles between loads. In this regard, we seek to provide
dedicated equipment to our customers where possible and to concentrate our
equipment in defined regions and disciplined traffic lanes. Dedicated fleets
and high density lanes enable us to:

. maintain consistent equipment capacity;

. provide a high level of service to our customers, including time-sensitive
delivery schedules;

. attract and retain drivers; and

. maintain a sound safety record as drivers travel familiar routes.

During 2001, approximately 61% of our operating revenues were generated through
dedicated equipment and we maintained an empty mile factor of 5.5%, figures
which we believe are among the best among publicly traded truckload carriers.

Providing Superior and Flexible Customer Service. We believe our
service-oriented operation provides a base for long-term customer retention and
sources of recurring revenue. In addition, we believe that as consolidation
continues to be a trend in our industry, shippers will seek higher quality
providers. Our wide range of services includes dedicated fleet services,
just-in-time delivery, two-man driving teams, cross-docking and consolidation
programs, specialized trailers, and Internet-based customer access to delivery
status. These services combined with a decentralized regional operating
strategy allow us to quickly and reliably respond to the diverse

needs of our customers, and provide an advantage in securing new business. We
also maintain ISO 9002 certification, which is required by many of our larger
customers to ensure that their truckload carriers operate in accordance with
approved quality assurance standards.

Employing Stringent Cost Controls. We believe that we operate with the
lowest cost per mile among publicly held truckload carriers. We focus intently
on controlling our costs while not sacrificing customer service. We maintain
this balance by scrutinizing all expenditures, minimizing non-driver personnel
(we had a driver to non-driver personnel ratio of 5.2:1 at December 31, 2001),
operating a late-model fleet of tractors and trailers to minimize maintenance
costs and enhance fuel efficiency, and adopting new technology only when proven
and cost justified.

Making Strategic Acquisitions. We continually evaluate strategic
acquisition opportunities, focusing on those that complement our existing
business or that could profitably expand our business or services. Since 1995,
approximately 48% of our revenue growth has been attributable to acquisitions,
while approximately 52% has been attributable to internal growth. We believe
economic trends are driving further consolidation in our industry. We have
successfully integrated three acquisitions since 1995. Our operational
integration strategy is to centralize administrative functions of acquired
business at our headquarters, while maintaining the localized operations of
acquired businesses. We believe that allowing acquired businesses to continue
to operate under their pre-acquisition names and in their original regions
allows such businesses to maintain driver loyalty and customer relationships.

Recent Development

On January 18, 2002, we announced that we had entered into a non-binding
letter of intent to purchase for cash certain assets of East Coast Transport,
Inc., a freight brokerage operation based in Paulsboro, New Jersey. East Coast
has represented to us that, for the year ended December 31, 2001, it had
revenues of approximately $32 million. Consummation of the transaction is
subject to satisfactory completion of a due diligence investigation,
negotiation of a definitive agreement, and receipt of various regulatory
approvals.

Our principal executive offices are located at Highway 412 West, Tontitown,
Arkansas 72770, and our telephone number is (479) 361-9111. Information
contained on our web site does not form a part of this prospectus.

The Offering

Common stock being offered by us.................
2,100,000 shares

Common stock being offered by the selling
stockholders....................................
1,375,000 shares

Common stock to be outstanding after the offering
10,726,957 shares (1)

Use of proceeds..................................
We estimate that our net proceeds from the shares of
common stock we sell in this offering, after deducting
underwriting discounts and other estimated expenses,
will be approximately $39.6 million. We intend to use
these net proceeds to repay indebtedness. We will not
receive any proceeds from the sale of shares sold by
the selling stockholders.

Nasdaq National Market symbol....................
PTSI

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(1) Based on 8,626,957 shares outstanding as of February 15, 2002. This number
does not include 88,000 shares of common stock issuable upon the exercise
of stock options outstanding on February 15, 2002.

Summary Consolidated Financial Data

The summary consolidated financial data as of and for the fiscal years ended
December 31, 1997 through December 31, 2001 are derived from our audited
consolidated financial statements. You should also read the "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
section of this prospectus and our financial statements.

Year Ended December 31,
----------------------------------------------------
1997 1998 1999 2000 2001
-------- -------- ---------- -------- ----------
(in thousands, except per share amounts and ratios)

Statement of Operations Data:
Operating revenues................ $127,211 $143,164 $ 207,381 $205,245 $225,794
Operating expenses................ 113,596 126,104 182,926 185,845 204,525
-------- -------- ---------- -------- --------
Operating income.................. 13,615 17,060 24,455 19,400 21,269
Interest expense.................. (3,423) (3,830) (5,650) (5,048) (4,477)
Income before income taxes........ 10,192 13,231 18,805 14,352 16,792
Income taxes...................... 3,892 5,158 7,536 5,694 6,721
Net income........................ $ 6,300 $ 8,073 $ 11,269 $ 8,658 $ 10,071
======== ======== ========== ======== ========
Earnings per common share:
Basic.......................... $ 0.77 $ 0.97 $ 1.34 $ 1.02 $ 1.18
======== ======== ========== ======== ========
Diluted........................ $ 0.76 $ 0.96 $ 1.33 $ 1.02 $ 1.18
======== ======== ========== ======== ========
Average common shares outstanding:
Basic.......................... 8,192 8,306 8,393 8,455 8,522
Diluted........................ 8,290 8,444 8,488 8,518 8,550

Other Financial Data:
Operating ratio(1)................ 89.3% 88.1% 88.2% 90.5% 90.6%
Return on equity(2)............... 21.2% 21.6% 23.8% 15.0% 14.9%
EBITDA(3)......................... $ 27,050 $ 31,503 $ 43,274 $ 38,337 $ 41,700
Capital expenditures, net......... 16,541 38,273 38,812 17,890 36,979

December 31, 2001
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As
Actual Adjusted(4)
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(in thousands)
Balance Sheet Data:
Total assets..................................................... $182,516 $182,516
Long-term debt, including current portion........................ 64,715 25,100
Stockholders' equity............................................. 72,597 112,212

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(1) Operating ratio is defined as total operating expenses as a percentage of
total operating revenues.

(2) Return on equity is defined as net income divided by average stockholders'
equity.

(3) EBITDA is defined as operating income plus depreciation and amortization.
We have included data with respect to EBITDA because it is commonly used as
a measurement of financial performance by investors to analyze and compare
companies on the basis of operating performance. EBITDA is not a measure of
financial performance under generally accepted accounting principles (GAAP)
and should not be considered an alternative to operating income, as
determined in accordance with GAAP, as an indicator of our operating
performance, or to cash flows from operating activities, as determined in
accordance with GAAP, as a measurement of our liquidity.

(4) Gives effect to our sale of 2,100,000 shares of common stock at an assumed
offering price of $20.00 per share and our application of the net proceeds
as described in the "Use of Proceeds" section of this prospectus.

RISK FACTORS

An investment in our common stock involves risks. You should consider
carefully the following information about these risks, together with the other
information contained in this prospectus, including the financial statements
and notes thereto, and the documents incorporated by reference in this
prospectus, before buying shares of our common stock.

Our business is subject to general economic and business factors that are
largely out of our control, any of which could have a material adverse effect
on our operating results.

Our business is dependent upon a number of factors that may have a material
adverse effect on the results of our operations, many of which are beyond our
control. These factors include significant increases or rapid fluctuations in
fuel prices (which affected our operating performance in 2000 and 2001), excess
capacity in the trucking industry, surpluses in the market for used equipment,
interest rates, fuel taxes, license and registration fees, insurance premiums,
self-insurance levels, and difficulty in attracting and retaining qualified
drivers and independent contractors.

We are also affected by recessionary economic cycles and downturns in
customers' business cycles, particularly in market segments and industries,
such as the automotive industry, where we have a significant concentration of
customers. Economic conditions may adversely affect our customers and their
ability to pay for our services. It is not possible to predict the medium- or
long-term effects of the September 11, 2001 terrorist attacks and subsequent
events on the economy or on customer confidence in the United States, or the
impact, if any, on our future results of operations.

We operate in a highly competitive and fragmented industry, and our business
may suffer if we are unable to adequately address downward pricing pressures
and other factors that may adversely affect our ability to compete with other
carriers.

Numerous competitive factors could impair our ability to maintain our
current profitability. These factors include the following:

. we compete with many other truckload carriers of varying sizes and, to a
lesser extent, with less-than-truckload carriers and railroads, some of
which have more equipment and greater capital resources than we do;

. some of our competitors periodically reduce their freight rates to gain
business, especially during times of reduced growth rates in the economy,
which may limit our ability to maintain or increase freight rates,
maintain our margins or maintain significant growth in our business;

. many customers reduce the number of carriers they use by selecting
so-called "core carriers" as approved service providers, and in some
instances we may not be selected;

. many customers periodically accept bids from multiple carriers for their
shipping needs, and this process may depress freight rates or result in
the loss of some of our business to competitors;

. the trend toward consolidation in the trucking industry may create other
large carriers with greater financial resources and other competitive
advantages relating to their size and with whom we may have difficulty
competing;

. advances in technology require increased investments to remain
competitive, and our customers may not be willing to accept higher freight
rates to cover the cost of these investments;

. competition from Internet-based and other logistics and freight brokerage
companies may adversely affect our customer relationships and freight
rates; and

. economies of scale that may be passed on to smaller carriers by
procurement aggregation providers may improve their ability to compete
with us.

We are highly dependent on our major customers, the loss of one or more of
which could have a material adverse effect on our business.

A significant portion of our revenue is generated from our major customers.
For 2001, our top five customers, based on revenue, accounted for approximately
59% of our revenue, and our largest customer, General Motors Corporation,
accounted for approximately 40% of our revenue. We also provide transportation
services to other manufacturers who are suppliers for automobile manufacturers.
As a result, concentration of our business within the automobile industry is
greater than the concentration in a single customer. Approximately 55% of our
revenues for 2001 were derived from transportation services provided to the
automobile industry.

Generally, we do not have long-term contractual relationships with our major
customers, and we cannot assure you that our customer relationships will
continue as presently in effect. A reduction in or termination of our services
by our major customers could have a material adverse effect on our business and
operating results.

We may be unable to successfully integrate businesses we acquire into our
operations.

Integrating businesses we acquire may involve unanticipated delays, costs or
other operational or financial problems. Successful integration of the
businesses we acquire depends on a number of factors, including our ability to
transition acquired companies to our management information systems. In
integrating businesses we acquire, we may not achieve expected economies of
scale or profitability or realize sufficient revenues to justify our
investment. We also face the risk that an unexpected problem at one of the
companies we acquire will require substantial time and attention from senior
management, diverting management's attention from other aspects of our
business. We cannot be certain that our management and operational controls
will be able to support us as we grow.

Ongoing insurance and claims expenses could significantly reduce our earnings.

After several years of aggressive pricing, insurance carriers have begun to
raise premiums for most trucking companies. We experienced an increase of $1.0
million in insurance premiums for 2002 and could experience an additional
increase in our insurance and claims expense after our current coverage expires
in December 2002. If these expenses increase, and we are unable to offset the
increase with higher freight rates, our earnings could be materially and
adversely affected.

Difficulty in attracting drivers could affect our profitability and ability to
grow.

Periodically, the transportation industry experiences difficulty in
attracting and retaining qualified drivers, including independent contractors,
resulting in intense competition for drivers. We have from time to time
experienced under-utilization and increased expenses due to a shortage of
qualified drivers. If we are unable to continue to attract drivers and contract
with independent contractors, we could be required to adjust our driver
compensation package or let trucks sit idle, which could adversely affect our
growth and profitability.

If we are unable to retain our key employees, our business, financial condition
and results of operations could be harmed.

We are highly dependent upon the services of the following key employees:
Robert W. Weaver, our President and Chief Executive Officer; W. Clif Lawson,
our Executive Vice President and Chief Operating Officer; and Larry J. Goddard,
our Vice President and Chief Financial Officer. We do not maintain key-man life
insurance on any of these executives. The loss of any of their services could
have a material adverse effect on our operations and future profitability. We
must continue to develop and retain a core group of managers if we are to
realize our goal of expanding our operations and continuing our growth. We
cannot assure you that we will be able to do so.

Matthew T. Moroun, one of our directors and our largest stockholder, will
continue to control a large portion of our stock following this offering and
will continue to have significant influence over us, including the outcome of
key transactions, such as a change of control.

Matthew T. Moroun beneficially owns 65.3% of our outstanding common stock
before this offering and will beneficially own 41.4% of our outstanding common
stock after this offering. Accordingly, he will continue to have significant
influence over decisions requiring stockholder approval, including election of
our board of directors, the adoption or extension of anti-takeover provisions,
mergers, and other business combinations. This concentration of ownership could
limit the price that some investors might be willing to pay in the future for
shares of our common stock, and could have the effect of making it more
difficult, preventing or delaying a change of control of P.A.M., which other
stockholders may favor. In addition, Mr. Moroun may resell these shares
pursuant to Rule 144 of the Securities Act. Sales of a large number of these
shares could depress our stock price.

Increased prices for new revenue equipment and decreases in the value of used
revenue equipment may adversely affect our earnings and cash flows.

In the past, we have acquired new tractors and trailers at favorable prices
and traded or disposed of them at prices significantly higher than current
market values. There is currently a large supply of used tractors and trailers
on the market, which has depressed the market value of used equipment to levels
significantly below the values we historically received. In addition, some
manufacturers have communicated their intention to raise the prices of new
equipment. If either or both of these events occur, we may increase our
depreciation expense or recognize less gain (or a loss) on the disposition of
our tractors and trailers. This could adversely affect our earnings and cash
flows.

We have significant ongoing capital requirements that could affect our
profitability if we are unable to generate sufficient cash from operations.

The trucking industry is very capital intensive. If we are unable to
generate sufficient cash from operations in the future, we may have to limit
our growth, enter into financing arrangements, or operate our revenue equipment
for longer periods, any of which could have a material adverse affect on our
profitability.

Our stock price is volatile, which could cause you to lose a significant
portion of your investment.

The market price of our common stock could be subject to significant
fluctuations in response to certain factors, such as variations in our
anticipated or actual results of operations, the operating results of other
companies in the transportation industry, changes in conditions affecting the
economy generally, including incidents of terrorism, analyst reports, general
trends in the industry, sales of common stock by insiders, as well as other
factors unrelated to our operating results. Volatility in the market price of
our common stock may prevent you from being able to sell your shares at or
above the price you paid for your shares.

Our operations are subject to various environmental laws and regulations, the
violation of which could result in substantial fines or penalties.

We are subject to various environmental laws and regulations dealing with
the handling of hazardous materials, underground fuel storage tanks, and
discharge and retention of stormwater. We operate in industrial areas, where
truck terminals and other industrial activities are located, and where
groundwater or other forms of environmental contamination could occur. We also
maintain bulk fuel storage and fuel islands at three of our facilities. Our
operations involve the risks of fuel spillage or seepage, environmental damage,
and hazardous waste disposal, among others. If we are involved in a spill or
other accident involving hazardous substances, or if we are found to be in
violation of applicable laws or regulations, it could have a materially adverse
effect on our business and operating results. If we should fail to comply with
applicable environmental regulations, we could be subject to substantial fines
or penalties and to civil and criminal liability.

We operate in a highly regulated industry and increased costs of compliance
with, or liability for violation of, existing or future regulations could have
a material adverse effect on our business.

The U.S. Department of Transportation and various state agencies exercise
broad powers over our business, generally governing such activities as
authorization to engage in motor carrier operations, safety, and financial
reporting. We may also become subject to new or more restrictive regulations
relating to fuel emissions, drivers' hours in service, and ergonomics.
Compliance with such regulations could substantially impair equipment
productivity and increase our operating expenses.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, including statements
about our operating and growth strategies, our expected financial position and
operating results, industry trends, our capital expenditure and financing plans
and similar matters. Such forward-looking statements are found under the
headings "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources," "Business--Business
Strategy," "Business--Industry" and "Business--Revenue Equipment." In those and
other portions of this prospectus, the words "believe," "may," "will,"
"estimate," "continue," "anticipate," "intend," "expect," "project" and similar
expressions, as they relate to us, our management, and our industry are
intended to identify forward-looking statements. We have based these
forward-looking statements largely on our current expectations and projections
about future events and financial trends affecting our business. Actual results
may differ materially. Some of the risks, uncertainties and assumptions about
P.A.M. that may cause actual results to differ from these forward-looking
statements are described above in "Risk Factors" and below in "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

All forward-looking statements attributable to us, or to persons acting on
our behalf, are expressly qualified in their entirety by this cautionary
statement.

We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks and uncertainties, the forward-looking events and
circumstances discussed in this prospectus might not transpire.

USE OF PROCEEDS

We estimate that the net proceeds to us in this offering, after deducting
underwriting discounts and other estimated expenses, will be approximately
$39.6 million (assuming a public offering price of $20.00 per share). We expect
to use $31.0 million of our net proceeds to repay installment notes we
previously entered into for purchases of tractors and trailers and
approximately $8.6 million to reduce indebtedness outstanding under a revolving
line of credit with a bank.

Installment Notes. As of February 15, 2002, we had approximately $31.0
million of indebtedness outstanding under various installment notes we
previously entered into in connection with purchases of tractors and trailers.
These installment notes have terms ranging from 36 to 48 months with various
maturity dates through March 1, 2005. The installment notes bear interest at
rates ranging from 5.75% to 7.63%, with a weighted average interest rate of
6.32% at December 31, 2001.

Revolving Line of Credit. We maintain two revolving lines of credit with
separate financial institutions (Line A and Line B), each providing for maximum
borrowings of $20.0 million. Line B is fully utilized, with $20.0 million
outstanding. Line A had $14.4 million outstanding at February 15, 2002. We
intend to use any net proceeds remaining after repayment of the installment
notes to reduce indebtedness outstanding under Line A. Funds borrowed under
Line A are secured by our accounts receivable and are subject to borrowing
limitations. Amounts outstanding under Line A bear interest at LIBOR (as of the
first day of each month) plus 1.40%. Amounts borrowed may be repaid and
borrowed over the life of the revolving line of credit, subject to the
borrowing restrictions, with a final maturity date of May 31, 2003.

We will not receive any proceeds from the sale of common stock by the
selling stockholders.

DIVIDEND POLICY

We have not paid any dividends on our common stock to date and we do not
anticipate paying any dividends in the foreseeable future. We currently intend
to retain all of our earnings, if any, for use in the expansion and development
of our business.

COMMON STOCK PRICE RANGE

Our common stock is listed on the Nasdaq National Market under the symbol
"PTSI." The table below shows the range of reported sale prices on the Nasdaq
National Market for the periods indicated.

Common Stock
Price
-------------
High Low
- ------ ------

Year ending December 31, 2002
First Quarter (through February 28, 2002). $20.54 $12.75
Year ended December 31, 2001
Fourth Quarter............................ $12.85 $ 8.60
Third Quarter............................. 12.00 9.10
Second Quarter............................ 10.00 5.88
First Quarter............................. 9.84 7.00
Year ended December 31, 2000
Fourth Quarter............................ $10.00 $ 7.63
Third Quarter............................. 10.63 8.25
Second Quarter............................ 11.00 8.00
First Quarter............................. 11.44 8.50

On February 28, 2002, the last reported sale price for our common stock was
$20.00 per share. As of February 7, 2002, there were approximately 260 holders
of record of our common stock.

CAPITALIZATION

The following table sets forth our capitalization as of December 31, 2001 on:

. an actual basis; and

. an adjusted basis, giving effect to:

. our sale of 2,100,000 shares of our common stock in this offering, at an
assumed public offering price of $20.00 per share, after deducting
underwriting discounts and estimated offering expenses, and

. our repayment of approximately $31.0 million of installment debt
previously incurred for equipment purchases and approximately $8.6
million of indebtedness under a bank line of credit with the net
proceeds from this offering.

The information regarding stockholders' equity in the table below does not
include 105,000 shares issuable upon the exercise of options granted by us
outstanding on December 31, 2001. The following table should be read together
with the financial statements and the related notes included elsewhere in this
prospectus.

December 31, 2001
-------------------

As
Actual Adjusted
-------- ---------
(in thousands)
Current portion of long-term debt.................................................... $ 17,692 --
======== =========
Long-term debt, less current portion................................................. $ 47,023 $ 25,100
Stockholders' equity:
Common stock, $0.01 par value: 20,000,000 shares authorized; 8,611,957 shares issued
and outstanding; 10,711,957 shares issued and outstanding, as adjusted............ 86 107
Preferred stock, $0.01 par value: 10,000,000 shares authorized; no shares issued and
outstanding....................................................................... -- --
Additional paid-in capital.......................................................... 20,461 60,055
Accumulated other comprehensive income (loss)....................................... (508) (508)
Retained earnings................................................................... 52,558 52,558
-------- ---------
Total stockholders' equity........................................................... 72,597 112,212
-------- ---------
Total capitalization................................................................. $119,620 $ 137,312
======== =========

SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

The selected consolidated financial and operating data as of and for the
fiscal years ended December 31, 1997 through December 31, 2001 are derived from
our audited consolidated financial statements. Since the information presented
below is only a summary and does not provide all of the information in our
financial statements, including the related notes, you should read the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" section of this prospectus and our financial statements.

Year Ended December 31,
--------------------------------------------------

1997 1998 1999 2000 2001
-------- -------- -------- -------- --------
(in thousands, except per share amounts and ratios
Statement of Operations Data:
Operating revenues.......................... $127,211 $143,164 $207,381 $205,245 $225,794
Operating expenses:
Salaries, wages and benefits............... 57,662 65,169 90,248 90,680 100,359
Operating supplies......................... 24,666 26,511 35,246 37,728 43,289
Rent and purchased transportation.......... 1,655 1,082 13,309 12,542 10,526
Depreciation and amortization.............. 12,995 14,003 18,392 18,806 20,300
Operating taxes and licenses............... 7,581 8,388 11,334 11,140 11,936
Insurance and claims....................... 5,571 6,069 7,945 8,674 10,202
Communications and utilities............... 1,001 1,583 2,365 2,234 2,320
Other(1)................................... 2,394 3,131 4,388 3,756 4,707
(Gain) loss on sale or disposal of property 71 168 (301) 285 886
-------- -------- -------- -------- --------
Total operating expenses.................... 113,596 126,104 182,926 185,845 204,525
-------- -------- -------- -------- --------
Operating income............................ 13,615 17,060 24,455 19,400 21,269
Interest expense............................ (3,423) (3,830) (5,650) (5,048) (4,477)
Other....................................... -- 1 -- -- --
-------- -------- -------- -------- --------
Income before income taxes.................. 10,192 13,231 18,805 14,352 16,792
Income taxes................................ 3,892 5,158 7,536 5,694 6,721
-------- -------- -------- -------- --------
Net income.................................. $ 6,300 $ 8,073 $ 11,269 $ 8,658 $ 10,071
======== ======== ======== ======== ========
Earnings per common share:..................
Basic...................................... $ 0.77 $ 0.97 $ 1.34 $ 1.02 $ 1.18
======== ======== ======== ======== ========
Diluted.................................... $ 0.76 $ 0.96 $ 1.33 $ 1.02 $ 1.18
======== ======== ======== ======== ========
Average common shares outstanding--Basic.... 8,192 8,306 8,393 8,455 8,522
Average common shares outstanding--Diluted.. 8,290 8,444 8,488 8,518 8,550

Other Financial Data:
Operating ratio(2).......................... 89.3% 88.1% 88.2% 90.5% 90.6%
Return on equity(3)......................... 21.2% 21.6% 23.8% 15.0% 14.9%
EBITDA(4)................................... $ 27,050 $ 31,503 $ 43,274 $ 38,337 $ 41,700
Capital expenditures, net................... 16,541 38,273 38,812 17,890 36,979

Footnotes on following page

Year Ended December 31,
------------------------------------------------

1997 1998 1999 2000 2001
-------- -------- -------- -------- --------
Operating Data:
Average number of truckloads per week.... 2,874 3,425 4,885 5,169 5,399
Average miles per trip................... 786 767 734 713 769
Average miles per tractor................ 125,404 125,569 128,966 128,936 131,554
Average revenue per tractor per day...... $ 539 $ 543 $ 570 $ 579 $ 591
Average revenue per loaded mile.......... $ 1.17 $ 1.15 $ 1.18 $ 1.18 $ 1.17
Empty mile factor........................ 5.8% 5.5% 5.4% 5.6% 5.5%

At end of period:
Total company-owned/leased tractors(5)... 975 1,127 1,468 1,413 1,660
Average age of all tractors (in years)... 1.94 1.74 1.64 1.72 1.81
Total trailers(6)........................ 2,678 2,784 3,846 3,759 3,932
Average age of trailers (in years)....... 2.85 3.31 3.97 4.66 5.31
Number of employees...................... 1,446 1,656 1,899 2,154 2,424
Ratio of drivers to non-driver personnel. 4.7:1 5.1:1 4.0:1 5.1:1 5.2:1

At December 31,
------------------------------------------------
1997 1998 1999 2000 2001
-------- -------- -------- -------- --------
(in thousands)

Balance Sheet Data:
Total assets............................. $100,688 $126,471 $168,961 $164,518 $182,516
Long-term debt, including current portion 43,770 58,178 77,888 59,826 64,715
Stockholders' equity..................... 33,162 41,457 53,365 62,210 72,597

--------

(1) Includes amortization of non-competition agreements in the amounts of
$440,000, $440,000, $427,000, $131,000 and $131,000 for the years 1997
through 2001, respectively.

(2) Operating ratio is defined as total operating expenses as a percentage of
total operating revenues.

(3) Return on equity is defined as net income divided by average stockholders'
equity.

(4) EBITDA is defined as operating income plus depreciation and amortization.
We have included data with respect to EBITDA because it is commonly used as
a measurement of financial performance by investors to analyze and compare
companies on the basis of operating performance. EBITDA is not a measure of
financial performance under generally accepted accounting principles (GAAP)
and should not be considered an alternative to operating income, as
determined in accordance with GAAP, as an indicator of our operating
performance, or to cash flows from operating activities, as determined in
accordance with GAAP, as a measurement of our liquidity.

(5) For years 1997 through 2001, includes 94, 94, 148, 117 and 135
owner-operator tractors, respectively.

(6) For the years 1997 through 1999, includes 66, 46 and 21 trailers leased
from an affiliate of our majority stockholder.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the
accompanying financial statements and related notes included elsewhere and
incorporated by reference in this prospectus. The "Liquidity and Capital
Resources" section below contains forward-looking information. Our actual
results may differ significantly from the results suggested by these
forward-looking statements. Some factors that may cause our results to differ
from these statements are described in the "Risk Factors" section of this
prospectus.

Results of Operations

The following table sets forth the percentage relationship of revenue and
expense items to operating revenues for the periods indicated.

Year Ended December 31,
----------------------

1999 2000 2001
----- ----- -----
Operating revenues............................... 100.0% 100.0% 100.0%
Operating expenses:
Salaries, wages and benefits.................. 43.5 44.2 44.4
Operating supplies............................ 17.0 18.4 19.2
Rent and purchased transportation............. 6.4 6.1 4.7
Depreciation and amortization................. 8.9 9.2 9.0
Operating taxes and licenses.................. 5.5 5.4 5.3
Insurance and claims.......................... 3.8 4.2 4.5
Communications and utilities.................. 1.1 1.1 1.0
Other......................................... 2.1 1.8 2.1
(Gain) loss on sale or disposal of property... (0.1) 0.1 0.4
----- ----- -----
Total operating expenses......................... 88.2 90.5 90.6
----- ----- -----
Operating income................................. 11.8 9.5 9.4
Interest expense................................. (2.7) (2.5) (2.0)
----- ----- -----
Income before income taxes....................... 9.1 7.0 7.4
Federal and state income taxes................... 3.6 2.8 3.0
----- ----- -----
Net income....................................... 5.5% 4.2% 4.4%
===== ===== =====

2001 Compared to 2000

For the year ended December 31, 2001, our revenues were $226.0 million as
compared to $205.2 million for the year ended December 31, 2000. The increase
relates primarily to an increase in the average number of tractors, from 1,423
in 2000 to 1,553 in 2001, and an increase in our utilization (revenue per
tractor per work day), which increased 2.1%, from $579 in 2000 to $591 in 2001.

Operating supplies and expenses increased from 18.4% of revenues in 2000 to
19.2% of revenues in 2001. The increase relates to an increase in fuel costs of
0.3% of revenues, net of a fuel surcharge passed to customers, and an increase
of 0.5% of revenues in equipment repair costs.

Rent and purchased transportation decreased from 6.1% of revenues in 2000 to
4.7% of revenues in 2001. 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 4.2% of revenues in 2000 to 4.5% of
revenues in 2001. The increase relates primarily to an increase in rates for
auto liability insurance coverage.

Loss on sale or disposal of property increased from 0.1% of revenues in 2000
to 0.4% of revenues in 2001. This increase is primarily the result of a
one-time write-down in the amount of $304,810, net of tax, of the value

of the tractors we acquired in the Decker Transport Co. Inc. acquisition,
which, unlike the rest of our tractors, do not have guaranteed residual resale
or trade-in values.

Our effective tax rate increased from 39.7% in 2000 to 40.0% in 2001, which,
combined with increased revenues, resulted in an increase in the provision for
income taxes from $5.7 million in 2000 to $6.7 million in 2001.

Net income increased to $10.1 million, or 4.4% of revenues, in 2001 from
$8.6 million, or 4.2% of revenues in 2000, representing an increase in diluted
net income per share to $1.18 in 2001 from $1.02 in 2000.

2000 Compared to 1999

For the year ended December 31, 2000, revenues were $205.2 million as
compared to $207.4 million for the year ended December 31, 1999. The decrease
relates primarily to a decrease in the average number of tractors from 1,445 in
1999 to 1,423 in 2000. The decrease in revenue from fewer tractors was
partially offset by an increase in our utilization (revenue per tractor per
work day), which increased 1.6% from $570 in 1999 to $579 in 2000.

Our operating ratio increased from 88.2% in 1999 to 90.5% in 2000.

Salaries, wages and benefits increased from 43.5% of revenues in 1999 to
44.2% of revenues in 2000. The increase relates primarily to an increase in
driver pay packages early in the third quarter of 2000.

Operating supplies and expenses increased from 17.0% of revenues in 1999 to
18.4% of revenues in 2000. The increase relates primarily to an increase in
fuel costs of 1.3% of revenues net of a fuel surcharge passed to customers.

Insurance and claims increased from 3.8% of revenues in 1999 to 4.2% of
revenues in 2000. The increase relates primarily to an increase in rates for
auto liability insurance coverage.

Our effective tax rate decreased from 40.1% in 1999 to 39.7% in 2000.

Net income decreased to $8.6 million, or 4.2% of revenues, in 2000 from
$11.3 million, or 5.5% of revenues in 1999, representing a decrease in diluted
net income per share to $1.02 in 2000 from $1.33 in 1999.

Quarterly Results of Operations

The following table presents selected consolidated financial information for
each of our last eight fiscal quarters through December 31, 2001. The
information has been derived from unaudited consolidated financial statements
that, in the opinion of management, reflect all adjustments, consisting of
normal recurring adjustments, necessary for a fair presentation of the
quarterly information.

Quarter Ended
---------------------------------------------------------------------------------
Mar. 31, June 30, Sept. 30, Dec. 31, Mar. 31, June 30, Sept. 30, Dec. 31,
2000 2000 2000 2000 2001 2001 2001 2001
--------- --------- ---------- --------- --------- --------- ---------- ---------
(unaudited)
(in thousands, except earnings per share data)

Operating revenues...... $ 54,147 $ 53,034 $ 47,100 $ 50,964 $ 58,406 $ 57,462 $ 53,662 $ 56,264
Total operating expenses 49,253 46,965 43,749 45,878 52,861 51,502 49,192 50,971
Operating income........ 4,894 6,069 3,351 5,086 5,545 5,960 4,470 5,293
Net income.............. 2,128 2,820 1,344 2,366 2,639 2,885 2,002 2,545
Earnings per share:
Basic.................. $ 0.25 $ 0.33 $ 0.16 $ 0.28 $ 0.31 $ 0.34 $ 0.23 $ 0.30
========= ========= ========== ========= ========= ========= ========== =========
Diluted................ $ 0.25 $ 0.33 $ 0.16 $ 0.28 $ 0.31 $ 0.34 $ 0.23 $ 0.30
========= ========= ========== ========= ========= ========= ========== =========

Liquidity and Capital Resources

During 2001, we generated $31.4 million in cash from operating activities
compared to $32.5 million and $39.6 million in 2000 and 1999, respectively.
Investing activities used $36.7 million in cash during 2001 compared to $17.7
million and $47.8 million in 2000 and 1999, respectively. The cash used in all
three years related primarily to the purchase of revenue equipment (tractors
and trailers) used in our operations. Financing activities generated $5.7
million in cash during 2001, compared to cash used in financing activities of
$17.8 million in 2000 and cash generated by financing activities of $5.8
million in 1999. In all three years, the cash used or generated in financing
activities was primarily from long-term borrowings incurred to finance the
purchase of revenue equipment used in our operations.

Our primary use of funds is for the purchase of revenue equipment. We
typically finance the acquisition of revenue equipment through installment
notes with fixed interest rates and terms ranging from 36 to 48 months. At
December 31, 2001, we had outstanding indebtedness under such installment notes
of $32.9 million. At February 15, 2002, $31.0 million was outstanding under
such installment notes, with various maturity dates through March 1, 2005. The
weighted average interest rates on these installment notes were 6.73%, 6.75%
and 6.32% for 1999, 2000 and 2001, respectively.

We also maintain two $20.0 million revolving lines of credit (Line A and
Line B) with separate financial institutions. Amounts outstanding under Line A
bear interest at LIBOR (on the first day of the month) plus 1.40%, are secured
by our accounts receivable and mature on May 31, 2003. At December 31, 2001,
$11.9 million was outstanding under Line A and at February 15, 2002, $14.4
million was outstanding under Line A (including $2.9 million in letters of
credit), with availability to borrow $5.6 million. Amounts outstanding under
Line B bear interest at LIBOR (on the last day of the previous month) plus
1.15%, are secured by revenue equipment and mature on November 30, 2003. At
December 31, 2001 and February 15, 2002, Line B was fully utilized with $20.0
million outstanding. In an effort to reduce interest rate risk associated with
these floating rate facilities, we have entered into interest rate swap
agreements in an aggregate notional amount of $20.0 million. See "--Market
Risk."

We occasionally use our existing lines of credit on an interim basis, in
addition to cash flows from operations, to finance capital expenditures and
repay long-term debt. Although we typically utilize long-term installment notes
to finance purchases of revenue equipment, during 2000 and 2001, we utilized
cash on hand and our lines of credit to finance revenue equipment purchases for
an aggregate of $28.8 million and $39.4 million, respectively.

For 2002, we expect to purchase approximately 465 new tractors and
approximately 280 trailers while continuing to sell or trade older equipment,
which we expect to result in net capital expenditures of approximately $23.9
million. We are also in the process of expanding our corporate headquarters at
our main facility in Tontitown, Arkansas. We expect the expansion to cost
approximately $2.3 million, which we expect to finance from cash on hand and
advances under Line A.

On January 18, 2002, we entered into a non-binding letter of intent to
purchase for cash certain assets of East Coast Transport, Inc., a freight
brokerage operation based in Paulsboro, New Jersey. Consummation of the
transaction is subject to the satisfactory completion of a due diligence
investigation, negotiation of a definitive agreement and receipt of various
regulatory approvals. If the transaction is completed, we do not expect the
ultimate purchase price to have a material impact on our liquidity or financial
condition.

We expect that our working capital and available credit under our credit
lines will be sufficient to meet our capital commitments and fund our operating
needs for at least the next twelve months.

Insurance

Auto liability and collision coverage are subject to a $2,500 deductible per
occurrence while cargo loss coverage has a $5,000 deductible. We maintain a
reserve for estimated losses for claims incurred, and maintain a

reserve for claims incurred but not reported (based on our historical
experience). We are insured for workers' compensation claims in excess of
$350,000. We have reserved for estimated losses to pay such claims as incurred
as well as claims incurred but not reported. We have not experienced any
adverse trends involving differences in claims experienced versus claims
estimates for workers' compensation reserves. Letters of credit are held by a
bank as security for workers' compensation claims in Arkansas, Oklahoma,
Mississippi, and Florida, and two letters of credit are held by a bank for auto
liability claims.

Insurance carriers have recently begun to raise premiums for most trucking
companies. We experienced an increase of approximately $1.0 million in
insurance premiums for 2002 and could experience additional increases after our
current coverage expires in December 2002.

Seasonality

Our revenues do not exhibit a significant seasonal pattern, due primarily to
our varied customer mix. Operating expenses can be somewhat higher in the
winter months, primarily due to decreased fuel efficiency and increased
maintenance costs associated with inclement weather. In addition, the
automobile plants for which we transport a large amount of freight typically
utilize scheduled shutdowns of two weeks in July and one week in December and
the volume of freight we ship is reduced during such scheduled plant shutdowns.

Inflation

Inflation has an impact on most of our operating costs. Recently, the effect
of inflation has been minimal.

Market Risk

Our primary market risk exposures include commodity price risk (the price
paid to obtain diesel fuel for our tractors) and interest rate risk. The
potential adverse impact of these risks and the general strategies we employ to
manage such risks are discussed below.

The following sensitivity analyses do not consider the effects that an
adverse change may have on the overall economy nor do they consider additional
actions we may take to mitigate our exposure to such changes. Actual results of
changes in prices or rates may differ materially from the hypothetical results
described below.

Commodity Price Risk. Prices and availability of all petroleum products are
subject to political, economic and market factors that are generally outside of
our control. Accordingly, the price and availability of diesel fuel, as well as
other petroleum products, can be unpredictable. Because our operations are
dependent upon diesel fuel, significant increases in diesel fuel costs could
materially and adversely affect our results of operations and financial
condition. For 2001 and 2000, fuel expenses represented 15.7% and 16.1%,
respectively, of our total operating expenses. Based upon our 2001 fuel
consumption, a 10% increase in the average annual price per gallon of diesel
fuel would increase our annual fuel expenses by $3.2 million.

In August 2000 and July 2001, we entered into agreements to obtain price
protection and reduce a portion of our exposure to fuel price fluctuations.
Under these agreements, we were obligated to purchase minimum amounts of diesel
fuel per month, with a price protection component, for the six month periods
ended March 31, 2001 and February 28, 2002. The August 2000 agreement provides
that if during the 48 months commencing April 2001, the price of heating oil on
the New York Mercantile Exchange ("NY MX HO") falls below $.58 per gallon, we
are obligated to pay, for a maximum of twelve different months selected by the
contract holder during such 48-month period, the difference between $.58 per
gallon and NY MX HO average price for such month, multiplied by 900,000
gallons. Accordingly, in any month in which the holder exercises such right, we
would be obligated to pay the holder $9,000 for each cent by which $.58 exceeds
the average NY MX HO price for that month. For example, the NY MX HO average
price during February 2002 was approximately $.54, and if the holder were to
exercise its payment right, we would be obligated to pay the holder
approximately $36,000. The July 2001 agreement provides that if during any
month in the twelve-month period commencing January 2005,

the average NY MX HO is below $.58 per gallon, we will be obligated to pay the
contract holder the difference between $.58 and the average NY MX HO price for
such month, multiplied by 1,000,000 gallons.

Interest Rate Risk. Our two lines of credit bear interest at a floating
rate equal to LIBOR plus a fixed percentage. Accordingly, changes in LIBOR,
which are effected by changes in interest rates generally, will affect the
interest rate on, and therefore our costs under, the lines of credit. In an
effort to manage the risks associated with changing interest rates, we entered
into interest rate swap agreements effective February 28, 2001 and May 31,
2001, on notional amounts of $15,000,000 and $5,000,000, respectively. The "pay
fixed rates" under the $15,000,000 and $5,000,000 swap agreements are 5.08% and
4.83%, respectively. The "receive floating rate" for both swap agreements is
"1-month" LIBOR. These interest rate swap agreements terminate on March 2, 2006
and June 2, 2006, respectively. Assuming $20.0 million of variable rate debt
was outstanding under each of Line A and Line B for a full fiscal year, a
hypothetical 100 basis point increase in LIBOR would result in approximately
$200,000 of additional interest expense, net of the effect of the swap
agreements. For additional information with respect to the interest rate swap
agreements, see Note 10 to our consolidated financial statements.

New 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), which was amended by Statement of
Financial Accounting Standards No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities--an Amendment of FASB Statement No.
133" (SFAS No. 138). 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. Companies must
formally document, designate, and assess the effectiveness of transactions that
receive hedge accounting. SFAS No. 138 amends the accounting and reporting
standards for certain derivative instruments and certain hedging activities,
including the normal purchases and normal sales exception.

SFAS No. 133 is effective for fiscal years beginning after June 15, 2000 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).

On January 1, 2001, we adopted SFAS No. 133. We had no transition adjustment
as a result of adopting SFAS No. 133 on January 1, 2001 as our only derivative
instruments were entered into after January 1, 2001. See "Market Risk."

SFAS No. 142 addresses the accounting for goodwill and other intangible
assets after an acquisition. Goodwill and other intangibles that have
indefinite lives will no longer be amortized, but will be subject to annual
impairment tests. All other intangible assets will continue to be amortized
over their estimated useful lives. We adopted this statement effective January
1, 2002, and we no longer amortize existing goodwill on the unamortized portion
of goodwill associated with acquisitions. Goodwill amortization would have been
approximately $243,000, net of tax, based on the goodwill balances as of
January 1, 2002. SFAS No. 142 also requires a new methodology for the testing
of impairment of goodwill and other intangibles that have indefinite lives.
During 2002, we will begin testing goodwill for impairment under the new rules,
applying a fair-value-based test. At this time, we have not yet determined what
impact, if any, the change in the required approach to impairment testing will
have on either our financial position or results of operations.

statement disclosures. SFAS No. 143 requires that an asset retirement cost be
capitalized as part of the cost of the related long-lived asset and
subsequently allocated to expense using a systematic and rational method. This
standard becomes effective for fiscal years beginning after June 15, 2002. We
will adopt the Statement effective January 1, 2003. At this time, we have not
yet determined what impact, if any, the adoption of this Statement will have on
either our financial position or results of operations.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 addresses financial
accounting and reporting for impairment or disposal of long-lived assets. This
Statement supersedes FASB Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets to be Disposed Of," and the accounting and reporting
provisions of APB Opinion No. 30, "Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions," for
the disposal of a segment of a business. This Statement also amends ARB No. 51,
"Consolidated Financial Statements," to eliminate the exception to
consolidation for a subsidiary for which control is likely to be temporary.
SFAS No. 144 is effective for fiscal years beginning after December 15, 2001.
At present, we are assessing but have not yet determined the complete impact,
if any, that the adoption of SFAS No. 144 will have on our financial position
and results of operations.

BUSINESS

Overview

Business Strategy

Our business strategy is designed to achieve long-term profitable growth.
Since 1996, we have achieved substantial growth in revenues and net income. We
increased our operating revenues at a compound annual growth rate of 14.8%,
from $113.0 million in 1996 to $225.8 million in 2001. During the same period,
we increased our net income at a compound annual growth rate of 24.9%, from
$3.3 million to $10.1 million. We plan to use the proceeds from this offering
to strengthen our balance sheet and continue executing our strategy of
profitable long-term growth. The key elements of our strategy include:

. maintain consistent equipment capacity;

. provide a high level of service to our customers, including time-sensitive
delivery schedules;

. attract and retain drivers; and

. maintain a sound safety record as drivers travel familiar routes.

During 2001, approximately 61% of our operating revenues were generated through
dedicated equipment and we maintained an empty mile factor of 5.5%, figures
which management believes are among the best among publicly traded truckload
carriers.

Many of our customers depend on us to make delivery on a "just-in-time"
basis, meaning that parts or raw materials are scheduled for delivery as they
are needed on the manufacturer's production line. The need for this service is
a product of modern manufacturing and assembly methods that are designed to
drastically decrease inventory levels and handling costs. Such requirements
place a premium on the freight carrier's delivery performance and reliability.
During 2001, approximately 61% of our deliveries to customers were made on a
just-in-time basis.

We have successfully integrated three acquisitions since 1995. Our
operational integration strategy is to centralize administrative functions of
acquired business at our headquarters, while maintaining the localized
operations of acquired businesses. We believe that allowing acquired businesses
to continue to operate under their pre-acquisition names and in their original
regions allows such businesses to maintain driver loyalty and customer
relationships. The following table provides information regarding our
historical acquisitions.

Target's Annual
Acquisition Date Acquired Business Revenue Prior to Acquisition
---------------- ----------------- ----------------------------

February 1995 Choctaw Express, Inc. and Choctaw Brokerage, Inc $ 8 million
March 1996 Allen Freight Services, Inc. $16 million
January 1999 Decker Transport Co. Inc. and Van Houten Ltd. $48 million

On January 18, 2002, we announced that we had entered into a non-binding
letter of intent to purchase for cash certain assets of East Coast Transport,
Inc., a freight brokerage operation based in Paulsboro, New Jersey. East Coast
has represented to us that, during the year ended December 31, 2001, it had
revenues of approximately $32 million. Consummation of the transaction is
subject to satisfactory completion of a due diligence investigation,
negotiation of a definitive agreement, and receipt of various regulatory
approvals.

Industry

The U.S. market for truck-based transportation services approximates $500
billion in annual revenue and is growing in line with the overall U.S. economy.
We believe truckload services, such as those we provide, include approximately
$65 billion of for-hire revenue and $80 billion of private fleet revenue. The
truckload industry is highly fragmented, with the nine largest publicly traded
truckload carriers, as measured by market capitalization, accounting for $7.9
billion in revenue, or 12.2% of the for-hire truckload market. We also believe
that the size of the private fleet services market provides us an opportunity
to expand our dedicated services business.

The truckload industry is impacted by several economic and business factors,
many of which are beyond the control of individual carriers. The state of the
economy coupled with equipment capacity levels can impact freight rates.
Volatility of various operating expenses, such as fuel and insurance, make the
predictability of profit levels unclear. Availability, attraction, retention
and compensation of drivers affect operating costs, as well as equipment
utilization. In addition, the capital requirements for equipment, along with
potential uncertainty of used equipment values, impact the ability of many
carriers to expand their operations.

The current operating environment is characterized by the following:

. Freight rates have remained relatively stable despite the slowing economy,
and the low level of truck orders may keep equipment capacity at a
favorable position. According to ACT Research, it is estimated that Class
8 retail truck sales approximated 170,000 trucks in 2001, as compared to
an average of approximately 258,000 trucks per year during the 1997-2000
period.

. Trends in diesel fuel prices have shown significant declines relative to
the price spikes experienced in 2000 and 2001. According to the U.S.
Department of Energy, average fuel prices were $1.153 per gallon as of
February 11, 2002, compared to $1.518 per gallon as of February 12, 2001.

. Rising unemployment has benefited the trucking industry by making it
easier to recruit new drivers.

. Price increases by insurance companies and erosion of equipment values in
the used truck market partially offset these positive industry trends.

In response to the industry forces described above, many less profitable or
undercapitalized carriers have been forced to consolidate or exit the industry.
During the last two years, there have been a significant number of carrier
failures and we believe this creates an opportunity for well-capitalized and
efficiently operated companies, like P.A.M., to enhance market share through
internal expansion and selective acquisitions.

Marketing and Major Customers

Our marketing emphasis is directed to that segment of the truckload market
which is generally service-sensitive, as opposed to being solely price
competitive. We seek to become a core carrier for our customers in order to
maintain high utilization and capitalize on recurring revenue opportunities.
Our marketing efforts are diversified and designed to gain access to dedicated
fleet services (including those in Mexico and Canada), domestic regional
freight traffic, and cross-docking and consolidation programs.

Our marketing efforts are conducted by a sales staff of eight employees who
are located in our major markets and supervised from our headquarters. These
individuals emphasize profitability by maintaining an even flow of freight
traffic (taking into account the balance between originations and destinations
in a given geographical area) and high utilization, and minimizing movement of
empty equipment.

Our five largest customers, for which we provide carrier services covering a
number of geographic locations, accounted for approximately 52%, 55% and 59% of
our total revenues in 1999, 2000 and 2001, respectively. General Motors
Corporation accounted for approximately 30%, 33% and 40% of our revenues in
1999, 2000 and 2001, respectively.

We also provide transportation services to other manufacturers who are
suppliers for automobile manufacturers. During 1999, 2000 and 2001, we derived
approximately 46%, 50% and 55% of our revenues, respectively, from
transportation services provided to the automobile industry. This portion of
our business, however, is spread over 18 assembly plants and 50
supplier/vendors located throughout North America, which reduces the risk of a
material loss of business.

Revenue Equipment

At December 31, 2001, we operated a fleet of 1,660 tractors and 3,932
trailers. We operate late-model, well-maintained premium tractors to help
attract and retain drivers, promote safe operations, minimize maintenance and
repair costs, and improve customer service by minimizing service interruptions
caused by breakdowns. We evaluate our equipment decisions based on factors such
as initial cost, useful life, warranty terms, expected maintenance costs, fuel
economy, driver comfort, customer needs, manufacturer support, and resale
value. Our current policy is to replace most of our tractors within 500,000
miles, which normally occurs 30 to 48 months after purchase. Maintaining a
relatively new fleet allows us to operate the tractors while under warranty to
minimize repair and maintenance costs. As of December 31, 2001, 1,642 of our
1,660 our tractors had guaranteed residual buy-back or trade-in values. The
following table provides information regarding our tractor and trailer turnover
and the age of our fleet over the past three years:

1999 2000 2001
----- ----- -----

Tractors
Purchased............................. 748 304 505
Disposed.............................. 407 359 258
End of year total..................... 1,468 1,413 1,660
Average age at end of year (in years). 1.6 1.7 1.8
Trailers
Purchased............................. 1,191 51 228
Disposed.............................. 129 138 55
End of year total..................... 3,846 3,759 3,932
Average age at end of year (in years). 4.0 4.7 5.3

We historically have contracted with owner-operators to provide and operate
a small portion of our tractor fleet. Owner-operators provide their own
tractors and are responsible for all associated expenses, including financing
costs, fuel, maintenance, insurance, and taxes. We believe that a combined
fleet complements our recruiting efforts and offers greater flexibility in
responding to fluctuations in shipper demand.

Technology

We have installed Qualcomm Omnitracs/TM display units in all of our
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 our
computer, saving telephone usage cost and increasing productivity and
convenience. The Omnitracs system provides us with accurate estimated time of
arrival information, which optimizes load selection and service levels to our
customers. In order to lower our tractor-to-trailer ratio, we have also
installed Qualcomm TrailerTracsTM tracking units in all of our trailers. The
TrailerTracs system is a tethered trailer tracking product that enables us to
more efficiently track the location of all trailers in our inventory as they
connect to and disconnect from Qualcomm-equipped tractors. /

Our computer system manages the information provided by the Qualcomm devices
to provide us real-time information regarding the location, status and load
assignment of all of our equipment, which permits us to better meet delivery
schedules, respond to customer inquiries and match equipment with the next
available load. Our system also provides electronically to our customers
real-time information regarding the status of freight shipments and anticipated
arrival times. This system provides our customers flexibility and convenience
by extending supply chain visibility through electronic data interchange, the
Internet and e-mail.

Maintenance

We have a strictly enforced comprehensive preventive maintenance program for
our tractors and trailers. Inspections and various levels of preventive
maintenance are performed at set mileage intervals on both tractors and
trailers. Although a significant portion of maintenance is performed at our
primary maintenance facility in

Tontitown, Arkansas, we have additional maintenance facilities in Jacksonville,
Florida; Effingham, Illinois; Columbia, Mississippi; Springfield, Missouri;
Riverdale, New Jersey; Warren and Willard, Ohio; Oklahoma City, Oklahoma; and
El Paso, Irving and Laredo, Texas. These facilities enhance our preventive and
routine maintenance operations and are strategically located on major
transportation routes where a majority of our freight originates and
terminates. A maintenance and safety inspection is performed on all vehicles
each time they return to a terminal.

Our tractors carry full warranty coverage for at least three years or
350,000 miles. Extended warranties are negotiated with the tractor manufacturer
and manufacturers of major components, such as engine, transmission and
differential, for up to four years or 500,000 miles. Trailers are also
warranted by the manufacturer and major component manufacturers for up to five
years.

Drivers

At December 31, 2001, we utilized 2,012 company drivers in our operations.
We also had 135 owner-operators under contract compensated on a per mile basis.
All of our drivers are recruited, screened, drug tested and trained and are
subject to the control and supervision of our operations and safety
departments. Our driver training program stresses the importance of safety and
reliable, on-time delivery. Drivers are required to report to their driver
managers daily and at the earliest possible moment when any condition en route
occurs that might delay their scheduled delivery time.

In addition to strict application screening and drug testing, before being
permitted to operate a vehicle our drivers must undergo classroom instruction
on our policies and procedures, safety techniques as taught by the Smith System
of Defensive Driving, and the proper operation of equipment, and must pass both
written and road tests. Instruction in defensive driving and safety techniques
continues after hiring, with seminars at our terminals in Tontitown, Arkansas;
Jacksonville, Florida; Riverdale, New Jersey; Warren, Ohio; Oklahoma City,
Oklahoma; and Irving, Texas. At December 31, 2001, we employed 56 persons on a
full-time basis in our driver recruiting, training and safety instruction
programs.

Our drivers are compensated on the basis of miles driven, loading and
unloading, extra stops and layovers in transit. Drivers can earn bonuses by
recruiting other qualified drivers who become employed by us 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. Our
operations have also been impacted and from time to time we have experienced
under-utilization and increased expenses due to a shortage of qualified
drivers. However, due to the significant number of trucking company failures,
drivers' wages have stabilized and availability has increased somewhat in
recent months. We place a high priority on the recruitment and retention of an
adequate supply of qualified drivers.

Facilities

We are headquartered and maintain our primary terminal, maintenance
facilities and corporate and administrative offices in Tontitown, Arkansas,
which is located in northwest Arkansas, a major center for the trucking
industry and where support services, including warranty repair services, for
most major tractor and trailer equipment manufacturers are readily available.
We also maintain dispatch offices at our headquarters in Tontitown, Arkansas,
as well as at our offices in Jacksonville, Florida; Breese, Illinois; Columbia,
Mississippi; Warren and Willard, Ohio; Oklahoma City, Oklahoma; Riverdale, New
Jersey; and Irving and Laredo, Texas. These regional dispatch offices
facilitate communications with both our customers and drivers.

Employees

At December 31, 2001, we employed 2,424 persons, of whom 2,012 were drivers,
127 were maintenance personnel, 126 were employed in operations, 31 were
employed in marketing, 56 were employed in safety and personnel, and 72 were
employed in general administration and accounting. None of our employees is
represented by a collective bargaining unit and we believe that our employee
relations are good.

MANAGEMENT

Our directors and executive officers and their positions, ages and years of
service with P.A.M., at February 1, 2002, are set forth in the following table.

Years of Service
Name Age Position with P.A.M.
---- --- -------- ----------------

Robert W. Weaver...... 51 President and Chief Executive 19
Officer
W. Clif Lawson........ 48 Executive Vice President and 17
Chief Operating Officer
Larry J. Goddard...... 43 Vice President--Finance, Chief 14
Financial Officer, Secretary
and Treasurer
Daniel C. Sullivan.... 61 Director 15
Matthew T. Moroun..... 29 Director 9
Charles F. Wilkins.... 63 Director 6
Frederick P. Calderone 51 Director 3

Each of our executive officers has held his present position with P.A.M. for
the last five years. We have entered into employment agreements with each of
our executive officers with terms extending through 2004.

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth, as of February 15, 2002, information
concerning shares of our common stock beneficially owned by:

. our directors;

. all of our executive officers and directors as a group; and

. each stockholder known by us to be the beneficial owner of more than 5% of
our outstanding common stock.

The table also sets forth information as to the shares of common stock to be
sold in this offering by the selling stockholders. The percentage ownership
after the offering is based upon the sale by us of 2,100,000 shares and the
sale by the selling stockholders of 1,375,000 shares.

Unless otherwise indicated, each person has sole voting and investment power
with respect to shares shown as beneficially owned by such person. The number
of shares of our common stock beneficially owned by a person includes shares of
common stock issuable with respect to presently exercisable options held by the
person. The percentage of our common stock beneficially owned by a person has
been calculated assuming that the person has exercised all presently
exercisable options the person holds and that no other persons exercised any
options.

Shares Beneficially Owned Shares to be Beneficially
Prior to this Offering Owned After this Offering
------------------------ ------------------------
Shares
Name Number Percentage Being Sold Number Percentage
---- --------- ---------- ---------- --------- ----------

Matthew T. Moroun.......................... 5,641,713(1) 65.3% 1,200,000(2) 4,441,713 41.4%
Robert W. Weaver........................... 340,428(3) 3.9% 50,000 290,428(3) 2.7%
W. Clif Lawson............................. 80,000 * 30,000 50,000 *
Larry J. Goddard........................... 82,313 1.0% 20,000 62,313 *
Paula R. Weaver............................ 188,022 2.2% 75,000 113,022 1.1%
FMR Corporation............................ 846,600(4) 9.8% -- 846,600(4) 7.9%
Daniel C. Sullivan......................... 20,000(5) * -- 20,000(5) *
Charles F. Wilkins......................... 9,000(5) * -- 9,000(5) *
Frederick P. Calderone..................... 6,000(6) * -- 6,000(6) *
Directors and executive officers as a group
(7 persons).............................. 6,179,454(7) 71.2% 1,300,000 4,879,454(7) 45.2%

--------
* Less than 1%
(1) Represents 32,000 shares owned directly, 7,000 shares subject to presently
exercisable stock options, 3,092,000 shares held in a trust of which Mr.
Moroun is a co-trustee and a beneficiary (the "Moroun Trust"), and
2,510,713 shares held by a limited partnership, the general partner of
which is controlled by Mr. Moroun. Norman E. Harned is co-trustee with
Matthew T. Moroun of the Moroun Trust and may therefore be deemed to
beneficially own the shares held by the Moroun Trust. The business address
of each of Messrs. Moroun and Harned is 12225 Stephens Road, Warren,
Michigan 48091.
(2) Shares to be sold by the Moroun Trust.
(3) Includes 30,000 shares subject to presently exercisable stock options.
(4) Based upon a Schedule 13G dated February 14, 2002 filed by FMR Corp. which
indicates that it has the sole power to dispose of the shares. The Schedule
13G indicates that shares are held by the Fidelity Low Price Stock Fund, a
registered investment company, for which FMR acts as investment adviser. We
make no representation as to the accuracy or completeness of the
information reported. FMR's address is 82 Devonshire Street, Boston,
Massachusetts 02109.
(5) Includes 7,000 shares subject to presently exercisable stock options.
(6) Represents shares subject to presently exercisable stock options.
(7) Includes 57,000 shares subject to presently exercisable stock options.

DESCRIPTION OF CAPITAL STOCK

The following description summarizes the most important terms of our capital
stock. Because it is only a summary, it does not contain all of the information
that may be important to you. For a complete description, you should refer to
our Certificate of Incorporation and Bylaws. Our authorized capital stock
consists of 20,000,000 shares of common stock, par value $.01 per share, and
10,000,000 shares of preferred stock, par value $.01 per share. At February 15,
2002, there were 8,626,957 shares of our common stock and no shares of our
preferred stock issued and outstanding.

Common Stock

The holders of our common stock, subject to such rights as may be granted to
any preferred stockholders, elect all directors and are entitled to one vote
per share. All shares of common stock participate equally in dividends when and
as declared by the Board of Directors and in net assets on liquidation. The
shares of common stock have no preference, conversion, exchange, preemptive or
cumulative voting rights.

Preferred Stock

Preferred stock may be issued from time to time by our Board of Directors,
without stockholder approval, in such series and with such preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or other provisions, as may be fixed by the Board of
Directors in the resolution authorizing their issuance. The issuance of
preferred stock by the Board of Directors could adversely affect the rights of
holders of shares of common stock; for example, the issuance of preferred stock
could result in a class of securities outstanding that would have certain
preferences with respect to dividends and in liquidation over the common stock,
and that could result in a dilution of the voting rights, net income per share
and net book value of the common stock. We have no agreements or understandings
for the issuance of any shares of preferred stock.

Anti-Takeover Provisions of Delaware Law and Charter Provisions

We are subject to Section 203 of the Delaware General Corporation Law. In
general, the statute prohibits a publicly held Delaware corporation from
engaging in any business combination with any interested stockholder for a
period of three years following the date that the stockholder became an
interested stockholder unless:

. prior to that date, the board of directors of the corporation approved
either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder;

. upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding those shares owned by persons who are
directors and also officers, and employee stock plans in which employee
participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange
offer; or

. on or subsequent to that date, the business combination is approved by the
board of directors and authorized at an annual or special meeting of
stockholders by the affirmative vote of at least two-thirds of the
outstanding voting stock not held by the interested stockholder.

Section 203 defines "business combination" to include:

. any merger or consolidation involving the corporation and the interested
stockholder;

. any sale, transfer, pledge or other disposition involving the interested
stockholder of 10% or more of the assets of the corporation;

. subject to exceptions, any transaction that results in the issuance or
transfer by the corporation of any stock of the corporation to the
interested stockholder; or

. the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation.

In general, Section 203 defines an interested stockholder as any person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and or person affiliated with or controlling or controlled by that
person.

Our Certificate of Incorporation also contains anti-takeover provisions.
Under Article XII of our Certificate of Incorporation, the affirmative vote or
consent of the holders of 75% of the shares of stock entitled to elect
directors is required to authorize, adopt or approve a "business combination"
(defined similarly to the definition under Delaware law, as described above),
with any interested person (defined generally as any person owning 5% or more
of the outstanding shares of any class of our stock) unless:

. our board of directors approved a memorandum of understanding with such
interested person with respect to such transaction prior to the time that
the interested person became a beneficial owner of 5% or more of the
shares of any class of stock entitled to vote in elections of directors; or

. such business combination is otherwise approved by our board of directors,
provided that a majority of the members of our board of directors voting
for approval of the transaction were duly elected and acting members of
the board of directors prior to the time that such interested person
became a beneficial owner of 5% or more of the shares of any class of
stock entitled to vote in elections of directors.

In addition, under Article XIII of our Certificate of Incorporation, the
approval of a business combination also generally requires the affirmative vote
or consent of a majority of the shares entitled to be voted and not held by the
interested person.

Limitation of Liability and Indemnification Agreements

Our Certificate of Incorporation provides that to the fullest extent
permitted by Delaware law, our directors will not be liable to us or our
stockholders for monetary damages for breach of fiduciary duty as a director.
Under Delaware law, liability of a director may not be limited:

. for any breach of the director's duty of loyalty to us or our stockholders;

. for acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law;

. in respect of certain unlawful dividend payments or stock redemptions or
repurchases; and

. for any transaction from which the director derives an improper personal
benefit.

The effect of the provisions of our Certificate of Incorporation is to
eliminate the rights of P.A.M. and its stockholders (through stockholders'
derivative suits on behalf of P.A.M.) to recover monetary damages against a
director for breach of the fiduciary duty of care as a director (including
breaches resulting from negligent or grossly negligent behavior), except in the
situations described above. This provision does not limit or eliminate the
rights of P.A.M. or any stockholder to seek nonmonetary relief, such as an
injunction or rescission, in the event of a breach of a director's duty of
care. Our Certificate of Incorporation and Bylaws provide that P.A.M. shall
indemnify its directors, officers, employees and agents against claims,
liabilities, damages, expenses, losses, costs, penalties or amounts paid in
settlement incurred by such director or officer in or arising out of his or her
capacity as a director, officer, employee and/or agent of P.A.M. to the extent
the person acted in good faith and in a manner reasonably believed to be in or
not opposed to the best interest of P.A.M.

Transfer Agent and Registrar

The Transfer agent and Registrar for our common stock is Securities Transfer
Corporation.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, we will have outstanding 10,726,957 shares
of our common stock assuming no exercise of the underwriters' over-allotment
option or any other options or warrants. Of these shares, 4,822,454 will be
"restricted securities" held by our directors and executive officers, and the
rest (including the 2,100,000 shares issued and sold in this offering) will be
freely transferable without restriction or further registration under the
Securities Act of 1933. In addition, upon completion of this offering, we will
also have 88,000 shares of common stock available for issuance upon exercise of
outstanding options, not including the 521,250 shares of common stock subject
to the underwriters' over-allotment option.

The "restricted securities" as defined in Rule 144 under the Securities Act,
in the absence of an effective registration statement, may only be sold
pursuant to an exemption from registration, including Rule 144 or Regulation S.
In general, under Rule 144 as currently in effect, beginning 90 days after the
effective date of the registration statement of which this prospectus is a
part, a stockholder who has beneficially owned restricted securities for at
least one year from the later of the date such securities were acquired from
either us or one of our affiliates, as applicable, is entitled to sell, within
any three-month period, a number of shares that does not exceed the greater of
one percent of the then outstanding common shares (approximately 107,000 shares
after the offering) or the average weekly trading volume of the shares during
the four calendar weeks proceeding the date on which notice of such sale was
filed under Rule 144, provided that certain procedural and information
requirements are also met. In addition, if a period of at least two years has
elapsed between the later of the date that the restricted securities were
acquired from us or one of our affiliates, a stockholder who is not an
affiliate of us and has not been an affiliate of us for at least three months
prior to the sale of the securities is entitled to sell the securities
immediately without compliance with the foregoing requirements under Rule 144.

We have filed a registration statement on Form S-8 with respect to our 1995
Stock Option Plan. Shares issued upon the exercise of stock options
contemplated by the Form S-8 are eligible for resale in the public market
without restriction, except that sales by our affiliates will be subject to the
Rule 144 limitations described above.

No prediction can be made as to the effect, if any, that market sales of our
common stock, or the availability of the shares for sale, will have on the
market price of the shares prevailing from time to time. Nevertheless, sales of
a significant number of shares in the public market, or the perception that
such sales could occur, could adversely affect the market price of the shares
and impair our future ability to raise capital through an offering of our
equity securities.

UNDERWRITING

Subject to the terms and conditions of an underwriting agreement dated
, 2002, the underwriters named below, through their representatives,
Stephens Inc., BB&T Capital Markets, a division of Scott & Stringfellow, Inc.
and A.G. Edwards & Sons, Inc., have severally agreed to purchase from us and
the selling stockholders the respective number of shares of common stock set
forth opposite their names below:

Number of
Underwriters Shares
------------ ---------

Stephens Inc..................................................
BB&T Capital Markets, a division of Scott & Stringfellow, Inc.
A.G. Edwards & Sons, Inc......................................
---------
Total...................................................... 3,475,000
=========

The underwriting agreement provides that the obligations of the underwriters
are subject to certain conditions, including the absence of any materially
adverse change in our business and the receipt of certain certificates,
opinions and letters from us and our attorneys and independent auditors. The
nature of the underwriters' obligation is such that they are committed to
purchase all shares of common stock offered hereby if any of the shares are
purchased.

We have granted an option to the underwriters, exercisable for 30 days after
the date of this prospectus, to purchase an additional 521,250 shares of our
common stock at the public offering price, less the underwriting discounts set
forth on the cover page of this prospectus. The underwriters may exercise this
option solely to cover over-allotments, if any, in connection with the sale of
our common stock. If the underwriters exercise this option, each underwriter
will be obligated, subject to certain conditions, to purchase a number of
additional shares of our common stock proportionate to the underwriter's
initial amount set forth in the table above.

The following table summarizes the underwriting discounts to be paid by us
and the selling stockholders to the underwriters and the expenses payable by us
for each share of our common stock and in total. This information is presented
assuming either no exercise or full exercise of the underwriters' option to
purchase additional shares of common stock.

Aggregate Aggregate
Per Without With
Share Option Option
----- --------- ---------

Underwriting discounts payable by us...................... $ $ $
Underwriting discounts payable by the selling stockholders $ $ $
Expenses payable by us.................................... $ $ $

We have been advised that the underwriters propose to offer the shares of
our common stock to the public at the public offering price set forth on the
cover page of this prospectus and to certain dealers at that price less a
concession not in excess of $ per share. The underwriters may allow, and
such dealers may re-allow, a concession not in excess of $ per share to
certain other dealers. The offering of the shares of common stock is made for
delivery when, as and if accepted by the underwriters and subject to prior sale
and to withdrawal, cancellation or modification of this offering without
notice. The underwriters reserve the right to reject an order for the purchase
of shares, in whole or in part.

We, along with our directors, officers and the selling stockholders have
agreed under lock-up agreements not to, directly or indirectly, offer, sell or
dispose of any shares of common stock or any securities which may be converted
into or exchanged for shares of common stock without the prior written consent
of Stephens Inc. for a period of 90 days from the date of this prospectus.

We and the selling stockholders have agreed to indemnify the underwriters
against certain liabilities, including liabilities under the Securities Act,
and to contribute to payments which the underwriters may be required to make in
respect thereof.

The underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions, and penalty bids or purchases for the purpose
of pegging, fixing or maintaining the price of the common stock, in accordance
with Regulation M under the Securities Exchange Act of 1934:

. Over-allotment involves sales by the underwriters of shares in excess of
the number of shares the underwriters are obligated to purchase, which
creates a syndicate short position. The short position may be either a
covered short position or a naked short position. In a covered short
position, the number of shares over-allotted by the underwriters is not
greater than the number of shares that they may purchase in the
over-allotment option. In a naked short position, the number of shares
involved is greater than the number of shares in the over-allotment
option. The underwriters may close out any short position by either
exercising their over-allotment option and/or purchasing shares in the
open market.

. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.

. Syndicate covering transactions involve purchases of the common stock in
the open market after the distribution has been completed in order to
cover syndicate short positions. In determining the source of shares to
close out the short position, the underwriters will consider, among other
things, the price of shares available for purchase in the open market as
compared to the price at which they may purchase shares through the
over-allotment option. If the underwriters sell more shares than could be
covered by the over- allotment option, a naked short position, the
position can only be closed out by buying shares in the open market. A
naked short position is more likely to be created if the underwriters are
concerned that there could be downward pressure on the price of the shares
in the open market after pricing that could adversely affect investors who
purchase in the offering.

. Penalty bids permit the underwriters to reclaim a selling concession from
a syndicate member when the common stock originally sold by the syndicate
member is purchased in a stabilizing or syndicate covering transaction to
cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty
bids may have the effect of raising or maintaining the market price of the
common stock or preventing or retarding a decline in the market price of the
common stock. As a result, the price of the common stock may be higher than the
price that might otherwise exist in the open market. These transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.

Neither we nor any of the underwriters make any representation or prediction
as to the direction or magnitude of any effect that the transactions described
above may have on the price of the common stock. In addition, neither we nor
any of the underwriters make any representation that the underwriters will
engage in these stabilizing transactions or that any transaction, once
commenced, will not be discontinued without notice.

In connection with the offering, the underwriters and selling group members
may engage in passive market making transactions in the common stock on the
Nasdaq National Market in accordance with Rule 103 of Regulation M under the
Securities Exchange Act of 1934 during the period before the commencement of
offers or sales of common stock and extending through the completion of the
distribution. A passive market maker must display its bids at a price not in
excess of the highest independent bid of the security. However, if all
independent bids are lowered below the passive market maker's bid, that bid
must be lowered when specified purchase limits are exceeded.

A prospectus in electronic format may be made available on Internet sites or
through other online services maintained by one or more of the underwriters
and/or selling group members participating in this offering, or by their
affiliates. In those cases, prospective investors may view offering terms
online and, depending upon the

particular underwriter or selling group member, prospective investors may be
allowed to place orders online. The underwriters may agree with us to allocate
a specific number of shares for sale to online brokerage account holders. Any
such allocation for online distributions will be made by the representatives on
the same basis as other allocations.

Other than the prospectus in electronic format, information contained in any
other web site maintained by an underwriter or selling group member is not part
of this prospectus or the registration statement of which this prospectus forms
a part, has not been endorsed by us or the underwriters or any selling group
member in its capacity as underwriter or selling group member and should not be
relied on by investors in deciding whether to purchase any shares of common
stock. The underwriters and selling group members are not responsible for
information contained in web sites that they do not maintain.

LEGAL MATTERS

The legality of the shares of common stock offered by this prospectus will
be passed upon for us by Smith, Gambrell & Russell, LLP, Atlanta, Georgia.
Legal matters will be passed upon for the underwriters by Wright, Lindsey &
Jennings LLP, Little Rock, Arkansas.

EXPERTS

The financial statements included in this prospectus have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the Commission. The file number under the Securities Exchange
Act of 1934 for our Commission filings is No. 0-15057. You may read and copy
materials that we have filed with the Commission, including the registration
statement of which this prospectus is a part, at the Commission's public
reference room located at:

450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549

Please call the Commission at 1-800-SEC-0330 for further information on the
public reference room. Our Commission filings also are available to the public
on the Commission's web site at www.sec.gov, which contains reports, proxy and
information statements and other information regarding issuers that file
electronically.

The Commission allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is an important part of this prospectus, and information that we file later
with the Commission will automatically update and supersede this information.
We incorporate by reference into this prospectus the documents and information
we filed with the Commission that are identified below and any future filings
made with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 (except, with respect to Current Reports on
Form 8-K, any information furnished solely under Item 9) until we have sold all
of the common stock to which this prospectus relates or the offering is
otherwise terminated.

1. Our Annual Report on Form 10-K for the year ended December 31, 2001.

2. The description of our common stock included in our Registration
Statement on Form 8-A (filed with the Commission on October 7, 1986).

You may request a copy of these filings, at no cost, by writing us at the
following address or telephoning us at (479) 361-9111 between the hours of 9:00
a.m. and 5:00 p.m., Central Time: Corporate Secretary, P.A.M. Transportation
Services, Inc., Highway 412 West, Tontitown, Arkansas 72770.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
----

Report of Arthur Andersen LLP, Independent Public Accountants.............................. F-2
Consolidated Balance Sheets as of December 31, 2001 and 2000............................... F-3
Consolidated Statements of Income for the Years Ended December 31, 2001, 2000 and 1999..... F-4
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2001, 2000
and 1999.................................................................................. F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2001, 2000..........
and 1999.................................................................................. F-6
Notes to Consolidated Financial Statements................................................. F-7

F-1

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, 2001 and 2000, and the related consolidated statements of income,
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 2001. 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
the 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, 2001 and
2000, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index of
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.

Arthur Andersen LLP
Tulsa, Oklahoma
February 21, 2002

F-2

P.A.M. TRANSPORTATION SERVICES, INC.

CONSOLIDATED BALANCE SHEETS
(thousands, except shares and par value)

December 31,
------------------
2001 2000
-------- --------

Assets
Current assets:
Cash and cash equivalents..................... $ 896 $ 485
Accounts receivable:..........................
Trade....................................... 24,327 23,291
Other....................................... 744 640
Operating supplies and inventories............ 255 71
Prepaid expenses and deposits................. 3,980 3,426
Deferred income taxes......................... 472 401
Income taxes refundable....................... 393 628
-------- --------
Total current assets....................... 31,067 28,942
Property and equipment:
Land.......................................... 2,237 1,337
Structures and improvements................... 4,336 3,158
Revenue equipment............................. 198,482 173,512
Service vehicles.............................. 595 583
Office furniture and equipment................ 6,252 6,046
-------- --------
211,902 184,636
Accumulated depreciation...................... (70,190) (59,308)
-------- --------
141,712 125,328
Other assets:
Excess of cost over net assets acquired,
net of amortization (2001--$1,782;
2000--$1,378)............................... 8,102 8,506
Non-competition agreements, net of
accumulated amortization (2001--$392;
2000--$261)................................. -- 131
Other......................................... 1,635 1,611
-------- --------
9,737 10,248
-------- --------
Total assets............................... $182,516 $164,518
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Trade accounts payable........................ $ 7,800 $ 10,610
Accrued expenses.............................. 8,722 8,074
Current portion of long-term debt............. 17,692 17,753
-------- --------
Total current liabilities.................. 34,214 36,437
Long-term debt, less current portion........... 47,023 42,073
Deferred income taxes.......................... 28,682 23,798
Shareholders' equity:
Preferred stock, $.01 par value:
10,000,000 shares authorized; none issued
and outstanding at December 31, 2001 and
2000....................................... -- --
Common stock, $.01 par value:
20,000,000 shares authorized; 8,611,957
and 8,469,657 shares issued and
outstanding at December 31, 2001 and 2000.. 86 85
Additional paid-in capital.................... 20,461 19,638
Accumulated other comprehensive loss.......... (508) --
Retained earnings............................. 52,558 42,487
-------- --------
Total shareholders' equity................. 72,597 62,210
-------- --------
Total liabilities and shareholders'
equity.................................... $182,516 $164,518
======== ========

See accompanying notes.

F-3

P.A.M. TRANSPORTATION SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME
(thousands, except per share data)

Year ended December 31,
----------------------------
2001 2000 1999
-------- -------- --------

Operating revenues...................... $225,794 $205,245 $207,381
Operating expenses and costs:
Salaries, wages and benefits......... 100,359 90,680 90,248
Operating supplies and expenses...... 43,289 37,728 35,246
Rents and purchased transportation... 10,526 12,542 13,309
Depreciation and amortization........ 20,300 18,806 18,392
Operating taxes and licenses......... 11,936 11,140 11,334
Insurance and claims................. 10,202 8,674 7,945
Communications and utilities......... 2,320 2,234 2,365
Other................................ 4,707 3,756 4,388
(Gain) loss on sale or disposal of
equipment.......................... 886 285 (301)
-------- -------- --------
204,525 185,845 182,926
-------- -------- --------
Operating income........................ 21,269 19,400 24,455
Interest expense........................ (4,477) (5,048) (5,650)
-------- -------- --------
Income before income taxes.............. 16,792 14,352 18,805
Federal and state income taxes:
Current.............................. 1,301 1,056 2,107
Deferred............................. 5,420 4,638 5,429
-------- -------- --------
6,721 5,694 7,536
-------- -------- --------
Net income.............................. $ 10,071 $ 8,658 $ 11,269
======== ======== ========
Earnings per common share:
Basic................................ $ 1.18 $ 1.02 $ 1.34
======== ======== ========
Diluted.............................. $ 1.18 $ 1.02 $ 1.33
======== ======== ========
Average common shares outstanding:
Basic................................ 8,522 8,455 8,393
======== ======== ========
Diluted.............................. 8,550 8,518 8,488
======== ======== ========

See accompanying notes.

F-4

P.A.M. TRANSPORTATION SERVICES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(thousands)

Additional Accumulated
Common Paid-In Retained Other
Stock Capital Earnings Comprehensive Total
------ ---------- -------- ------------- -------

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
Net income........................... -- -- 8,658 -- 8,658
Exercise of stock options--shares
issued............................. 1 186 -- -- 187
--- ------- ------- ----- -------
Balances at December 31, 2000........... 85 19,638 42,487 -- 62,210
Components of comprehensive income:
Net earnings......................... -- -- 10,071 -- 10,071
Unrealized loss on hedge, net of tax
of $339............................ -- -- -- (508) (508)
--- ------- ------- ----- -------
Total comprehensive income........... -- -- -- -- 9,563
--- ------- ------- ----- -------
Exercise of stock options--shares
issued............................. 1 823 -- -- 824
--- ------- ------- ----- -------
Balances at December 31, 2001........... $86 $20,461 $52,558 $(508) $72,597
=== ======= ======= ===== =======

See accompanying notes.

F-5

P.A.M. TRANSPORTATION SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(thousands)

Year ended December 31,
-------------------------------
2001 2000 1999
--------- --------- ---------

Operating activities
Net income........................................................... $ 10,071 $ 8,658 $ 11,269
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization..................................... 20,300 18,806 18,392
Non-competition agreement amortization............................ 131 131 427
Provision for deferred income taxes............................... 5,420 4,638 5,429
(Gain) loss on sale or disposal of equipment...................... 886 285 (301)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable........................................... (1,556) (242) 2,322
Prepaid expenses and other assets............................. (763) 592 563
Income taxes refundable....................................... 235 (516) (75)
Trade accounts payable........................................ (3,927) (295) 920
Accrued expenses.............................................. 648 400 609
--------- --------- ---------
Net cash provided by operating activities............................ 31,445 32,457 39,555
--------- --------- ---------
Investing activities
Purchases of property and equipment.................................. (47,515) (30,732) (51,480)
Proceeds from sale or disposal of equipment.......................... 10,536 12,842 12,668
Lease payments received on direct financing leases................... 232 231 670
Acquisition of business, net of cash acquired........................ -- -- (9,642)
--------- --------- ---------
Net cash used in investing activities................................ (36,747) (17,659) (47,784)
--------- --------- ---------
Financing activities
Borrowings under line of credit...................................... 278,147 196,472 199,508
Repayments under line of credit...................................... (258,197) (191,295) (195,559)
Borrowings of long-term debt......................................... 7,943 4,384 24,179
Repayments of long-term debt......................................... (23,004) (27,158) (22,589)
Other................................................................ 824 (273) 284
--------- --------- ---------
Net cash provided by (used in) financing activities.................. 5,713 (17,870) 5,823
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents................. 411 (3,072) (2,406)
Cash and cash equivalents at beginning of year....................... 485 3,557 5,963
--------- --------- ---------
Cash and cash equivalents at end of year............................. $ 896 $ 485 $ 3,557
========= ========= =========

See accompanying notes.

F-6

P.A.M. TRANSPORTATION SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 wholly owned subsidiaries: P.A.M. Transport, Inc., P.A.M. Dedicated
Services, Inc., Choctaw Express, Inc., Allen Freight Services, Inc., T.T.X.,
Inc., and Decker Transport Co., Inc. All significant intercompany accounts and
transactions have been eliminated.

Majority ownership of the Company is held by an affiliate of another
transportation company.

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.

Accounts Receivable

Accounts receivable is presented net of an allowance for doubtful accounts
of $1,514,000 and $656,000 at December 31, 2001 and 2000, respectively. The
Company recorded bad debt expense of approximately $897,000, $29,000 and
$29,000 for the years ending December 31, 2001, 2000 and 1999, respectively.

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. No
reduction of goodwill was required in 2001, 2000, or 1999. See "Recent
Accounting Pronouncements".

Claims Liabilities

With respect to cargo loss, physical damage and auto liability, the Company
maintains insurance coverage to protect it from certain business risks. These
policies are with various carriers and have deductibles of $2,500 per
occurrence. 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 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

F-7

P.A.M. TRANSPORTATION SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

claims experienced versus claims estimates for workers' compensation reserves.
Letters of credit in the amounts of $100,000, $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 $569,500 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.

Repairs and Maintenance

Repairs and maintenance costs are expensed 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:

Estimated
Asset Class Asset Life
----------- ----------

Revenue Equipment........... 3-7 years
Service Vehicles............ 3-5 years
Office Furniture & Equipment 3-7 years
Structures & Improvements... 5-30 years

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 2001, 2000 and 1999, one customer accounted for 40%, 33% and 30% of
revenues, respectively. A second customer accounted for 8%, 10% and 9% of
revenues in 2001, 2000 and 1999, respectively. 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 2001, 2000
and 1999, 55%, 50% and 46%, respectively, were derived from transportation
services provided to the automobile manufacturing industry.

F-8

P.A.M. TRANSPORTATION SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Compensation to Employees

Stock based compensation to employees is accounted for based on the
intrinsic value method under Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees.

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), which was amended by Statement of
Financial Accounting Standards No. 138, Accounting for Certain Derivative
Instruments and Certain Hedging Activities--an Amendment of FASB Statement No.
133 (SFAS No. 138). 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. Companies must formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting. SFAS No. 138 amends the accounting and reporting standards
for certain derivative instruments and certain hedging activities, including
the normal purchases and normal sales exception.

On January 1, 2001, the Company adopted SFAS No. 133. The Company had no
transition adjustment as a result of adopting SFAS No. 133 on January 1, 2001
as the Company's only derivative instruments were entered into after January 1,
2001. (Note 10)

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, Business Combinations (SFAS No. 141),
and Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets, (SFAS No. 142) and announced the approval for issuance of
Statement of Financial Accounting Standards No. 143, Accounting for Asset
Retirement Obligations (SFAS No. 143).

SFAS No. 141 requires all business combinations completed after June 30,
2001, to be accounted for under the purchase method. This standard also
establishes for all business combinations made after June 30, 2001, specific
criteria for the recognition of intangible assets separately from goodwill.
SFAS No. 141 also requires that the excess of the fair value of acquired assets
over cost (negative goodwill) be recognized immediately as an extraordinary
gain, rather than deferred and amortized. The Company will account for all
future business combinations under SFAS No. 141.

SFAS No. 142 addresses the accounting for goodwill and other intangible
assets after an acquisition. Goodwill and other intangibles that have
indefinite lives will no longer be amortized, but will be subject to annual
impairment tests. All other intangible assets will continue to be amortized
over their estimated useful lives. The Company adopted this statement on
January 1, 2002. At that time, amortization of existing goodwill ceased on the
unamortized portion of goodwill associated with acquisitions. This will have a
favorable annual impact of approximately $243,000, net of tax. SFAS No. 142
also requires a new methodology for the testing of impairment of goodwill and
other intangibles that have indefinite lives. During 2002, the Company will
begin testing goodwill for impairment under the new rules, applying a
fair-value-based test. At this time, the Company

F-9

P.A.M. TRANSPORTATION SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

has not yet determined what impact, if any, the change in the required approach
to impairment testing will have on either its financial position or results of
operations.

SFAS No. 143 provides accounting requirements for retirement obligations
associated with tangible long-lived assets, including: (i) the timing of
liability recognition; (ii) initial measurement of the liability;
(iii) allocation of asset retirement cost to expense; (iv) subsequent
measurement of the liability; and (v) financial statement disclosures. SFAS No.
143 requires that an asset retirement cost should be capitalized as part of the
cost of the related long-lived asset and subsequently allocated to expense
using a systematic and rational method. This standard becomes effective for
fiscal years beginning after June 15, 2002. The Company will adopt the
Statement effective January 1, 2003. At this time, the Company has not yet
determined what impact, if any, the adoption of this Statement will have on
either its financial position or results of operations.

In October 2001, the FASB issued Statement of Financial Accounting Standards
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS
No. 144 addresses financial accounting and reporting for impairment or disposal
of long-lived assets. This Statement supersedes FASB Statement No. 121,
Accounting for the Impairment of Long-Lived Assets to be Disposed Of, and the
accounting and reporting provisions of APB Opinion No. 30, Reporting the
Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions", for the disposal of a segment of a business. This Statement also
amends ARB No. 51, Consolidated Financial Statements, to eliminate the
exception to consolidation for a subsidiary for which control is likely to be
temporary. SFAS No. 144 is effective for fiscal years beginning after December
15, 2001. At present, the Company is currently assessing but has not yet
determined the complete impact, if any, that the adoption of SFAS No. 144 will
have on its financial position and results of operations.

Reclassifications

Certain reclassifications have been made to prior years' consolidated
financial statements to conform to the current year presentation. These
reclassifications had no impact on net income.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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.

2. ACCRUED EXPENSES

December 31,
-------------
2001 2000
------ ------
(thousands)

Payroll...................................... $1,607 $1,266
Accrued vacation............................. 911 784
Taxes........................................ 1,575 1,654
Interest..................................... 159 195
Driver escrows............................... 803 818
Insurance.................................... 1,852 1,652
Current portion of non-competition agreements -- 131
Self-insurance claims reserves............... 1,815 1,574
------ ------
$8,722 $8,074
====== ======

F-10

P.A.M. TRANSPORTATION SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

3. LONG-TERM DEBT

Long-term debt consists of the following:

December 31,
---------------
2001 2000
------- -------
(thousands)

Equipment financings (1)....................................................... $32,883 $47,496
Line of credit with a bank, due May 31, 2003 and collateralized by accounts
receivable (2)............................................................... 9,076 4,127
Line of credit with a bank, due November 30, 2003 and collateralized by revenue
equipment (3)................................................................ 20,000 5,000
Note payable (4)............................................................... 1,810 2,602
Other (5)...................................................................... 946 601
------- -------
64,715 59,826
Less current maturities........................................................ 17,692 17,753
------- -------
$47,023 $42,073
======= =======

--------
(1) Equipment financings consist of installment obligations for revenue and
service equipment purchases, payable in various monthly installments
through 2005, at a weighted average interest rate of 6.32% and
collateralized by equipment with a net book value of approximately $41.9
million at December 31, 2001.
(2) The line of credit agreement with a bank provides for maximum borrowings of
$20.0 million and contains certain restrictive covenants that must be
maintained by the Company on a consolidated basis. Borrowings on the line
of credit are at an interest rate of LIBOR as of the first day of the month
plus 1.40%. The Company was in compliance with all provisions of the
agreement at December 31, 2001.
(3) The line of credit agreement with a bank provides for maximum borrowings of
$20.0 million and contains certain restrictive covenants that must be
maintained by the Company on a consolidated basis. Borrowings on the line
of credit are at an interest rate of LIBOR as of the last day of the
previous month plus 1.15%. The Company was in compliance with all
provisions of the agreement at December 31, 2001.
(4) 6.0% note to the former owner of Decker Transport Company, Inc., payable in
monthly installments of $77,216 through January 2004 and secured by a
letter of credit from a bank in the amount of $1,300,000.
(5) Various notes with interest rates ranging from 6.0% to 8.0% payable in
monthly installments through December 2005.

Scheduled annual maturities on long-term debt outstanding at December 31,
2001 are:

(thousands)

2002 $17,692
2003 40,379
2004 4,140
2005 2,504
2006 --
-------
$64,715
=======

Interest payments of approximately $4.5 million, $5.1 million, and $5.5
million were made during 2001, 2000 and 1999, respectively.

F-11

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,
---------------
2001 2000
------- -------
(thousands)

Deferred tax liabilities:
Property and equipment................. $32,863 $29,301
Prepaid expenses....................... 1,975 1,722
------- -------
Total deferred tax liabilities..... 34,838 31,023
Deferred tax assets:
Alternative minimum tax credit......... 3,345 4,785
Investment credit carryovers........... -- 355
Allowance for doubtful accounts........ 575 249
Vacation reserves...................... 346 297
Self-insurance reserves................ 1,396 1,225
Non-competition agreement.............. 505 515
Other.................................. 461 200
------- -------
Total deferred tax assets.......... 6,628 7,626
------- -------
Net deferred tax liabilities.............. $28,210 $23,397
======= =======

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,
----------------------
2001 2000 1999
------ ------ ------
(thousands)

Income tax at the statutory Federal rate of 34% $5,709 $4,879 $6,394
Nondeductible expenses......................... 338 311 330
State income taxes............................. (98) (195) (82)
Other.......................................... (130) (336) (255)
------ ------ ------
Federal income taxes........................... 5,819 4,659 6,387
State income taxes............................. 902 1,035 1,149
------ ------ ------
Total income taxes............................. $6,721 $5,694 $7,536
====== ====== ======
Effective tax rate............................. 40.0% 39.7% 40.1%
====== ====== ======

F-12

P.A.M. TRANSPORTATION SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The current income tax provision consists of the following:

2001 2000 1999
------ ------ ------
(thousands)

Federal $ 951 $ 656 $1,866
State.. 350 400 241
------ ------ ------
$1,301 $1,056 $2,107
====== ====== ======

The Company has alternative minimum tax credits of approximately $3.3
million at December 31, 2001, which carryover indefinitely.

Income taxes paid totaled approximately $1,100,000, $1,100,000 and
$2,200,000 for the years ended December 31, 2001, 2000 and 1999, respectively.

5. SHAREHOLDERS' EQUITY

The Company maintains an incentive stock option plan and a nonqualified
stock option plan for the issuance of options to directors, officers, key
employees and others. The option price under these plans is the fair market
value of the stock at the date the options were granted, ranging from $6.00 to
$10.63 as of December 31, 2001. At December 31, 2001, approximately 625,000
shares were available for granting future options.

Outstanding incentive stock options at December 31, 2001, 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, 2001 must be
exercised within five to six years and certain nonqualified options may not be
exercised within one year of the date of grant.

Transactions in stock options under these plans are summarized as follows:

Shares
Under Option Price Range
------------ ------------

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
Granted.............................. 10,000 $9.13
Exercised............................ (29,700) $5.75-$6.75
Canceled............................. (5,000) $7.38-$9.13
-------- ------------
Outstanding at December 31, 2000........ 240,300 $5.75-$10.63
Granted.............................. 8,000 $8.25
Exercised............................ (142,300) $5.75-$7.38
Canceled............................. (1,000) $7.38
-------- ------------
Outstanding at December 31, 2001........ 105,000 $6.00-$10.63
======== ============
Options exercisable at December 31, 2001 81,000
========

F-13

P.A.M. TRANSPORTATION SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The following is a summary of stock options outstanding as of December 31,
2001:

Weighted
Option Average
Options Exercise Remaining Options
Outstanding Price Years Exercisable
----------- -------- --------- -----------

2,000 $ 6.50 .4 2,000
1,000 $ 6.00 1.2 1,000
3,000 $10.63 2.2 3,000
30,000 $ 9.25 2.5 24,000
8,000 $ 8.63 3.2 8,000
45,000 $10.25 3.6 27,000
8,000 $ 9.13 4.2 8,000
8,000 $ 8.25 5.2 8,000
------- ------
105,000 81,000
======= ======

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:

2001 2000 1999
- ------- ------ -------
(thousands)

Net income:
As reported................. $10,071 $8,658 $11,269
Pro forma................... $10,023 $8,542 $11,076
Earnings per share as reported:
Basic....................... $ 1.18 $ 1.02 $ 1.34
Diluted..................... $ 1.18 $ 1.02 $ 1.33
Pro forma earnings per share:
Basic....................... $ 1.18 $ 1.01 $ 1.32
Diluted..................... $ 1.18 $ 1.00 $ 1.31

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 used during the periods above: dividend yield of 0%; expected
volatility range of 31.63% to 76.64%; risk-free interest rate range of 4.74% to
7.02%; and expected lives of five years.

F-14

P.A.M. TRANSPORTATION SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

6. EARNINGS PER SHARE

The Company applies Statement of Financial Accounting Standards No. 128,
Earnings Per Share, for computing and presenting earnings per share. Basic
earnings per common share were computed by dividing net income by the weighted
average number of shares outstanding during the period. Diluted earnings per
common share were calculated as follows:

For the Year Ended
December 31, 2001
------------------------
Per Share
Income Shares Amount
------- ------ ---------
(thousands, except
per share data)

Basic earnings per share
Net income............. $10,071 8,522 $1.18
Options issued......... 28
Diluted earnings per share
Net income............. $10,071 8,550 $1.18

For the Year Ended
December 31, 2000
-----------------------
Per Share
Income Shares Amount
------ ------ ---------
(thousands, except
per share data)

Basic earnings per share
Net income............. $8,658 8,455 $1.02
Options issued......... 63
Diluted earnings per share
Net income............. $8,658 8,518 $1.02

For the Year Ended
December 31, 1999
------------------------
Per Share
Income Shares Amount
------- ------ ---------
(thousands, except
per share data)

Basic earnings per share
Net income............. $11,269 8,393 $1.34
Options issued......... 95
Diluted earnings per share
Net income............. $11,269 8,488 $1.33

7. PROFIT SHARING PLAN

P.A.M. Transport, Inc. 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. Total employer matching contributions to the
plan totaled approximately $225,000, $255,000 and $200,000 in 2001, 2000 and
1999, respectively.

F-15

P.A.M. TRANSPORTATION SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

8. COMMITMENTS AND CONTINGENCIES

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.

9. 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.

Lines of credit--The carrying amount for the line of credit approximates
fair value.

Interest hedges--The fair value of all hedging financial instruments is the
amount at which they could be settled, based on estimates determined by dealers.

The carrying amounts and fair values of the Company's financial instruments
at December 31 are as follows (in thousands):

2001 2000
---------------- ----------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ------- -------- -------

Cash and cash equivalents $ 896 $ 896 $ 485 $ 485
Long-term debt........... 35,639 35,583 50,699 50,305
Lines of credit.......... 29,076 29,076 9,127 9,127
Interest hedges.......... 847 847 -- --

10. DERIVATIVES AND HEDGING ACTIVITIES

Effective February 28, 2001, the Company entered into an interest rate swap
agreement on a notional amount of $15,000,000. The pay fixed rate under the
swap is 5.08%, while the receive floating rate is "1-month" LIBOR. This
interest rate swap agreement terminates on March 2, 2006. Effective May 31,
2001 the Company entered into an interest rate swap agreement on a notional
amount of $5,000,000. The pay fixed rate under the swap is 4.83%, while the
receive floating rate is "1-month" LIBOR. This interest rate swap agreement
terminates on June 2, 2006.

The Company designates both of these interest rate swaps as cash flow hedges
of its exposure to variability in future cash flows resulting from interest
payments indexed to "1-month" LIBOR. Changes in future cash flows

F-16

P.A.M. TRANSPORTATION SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

from the interest rate swaps will offset changes in interest rate payments on
the first $20,000,000 of the Company's current revolving credit facility or
future "1-month" LIBOR based borrowings that reset on the second London
Business Day prior to the start of the next interest period. The hedge locks
the interest rate at 5.08% or 4.83% plus the pricing spread (currently 1.15%)
for the notional amounts of $15,000,000 and $5,000,000, respectively.

These interest rate swap agreements meet the specific hedge accounting
criteria. The measurement of hedge effectiveness is based upon a comparison of
the floating-rate leg of the swap and the hedged floating-rate cash flows on
the underlying liability. The effective portion of the cumulative gain or loss
has been reported as a component of accumulated other comprehensive loss in
shareholders' equity and will be reclassified into current earnings by June 2,
2006, the latest termination date for all current swap agreements. At December
31, 2001, the net after tax deferred hedging loss in accumulated other
comprehensive loss was approximately $508,000. There was no ineffectiveness
recorded during 2001. At December 31, 2001, approximately $150,000 of the
amount in accumulated other comprehensive loss is expected to be reclassified
into earnings during 2002.

11. SUBSEQUENT EVENTS

On January 18, 2002, the Company signed a non-binding letter of intent to
acquire for cash certain assets of a transportation brokerage company. The
transaction is subject to completion of a due diligence investigation,
negotiation and execution of a definite agreement and receipt of certain
regulatory approvals.

On February 20, 2002, the Company filed a registration statement on Form S-2
under the Securities Act of 1933, to register 3,475,000 shares of the Company's
common stock to be sold in a secondary offering.

12. QUARTERLY RESULTS OF OPERATIONS (Unaudited)

The tables below present quarterly financial information for 2001 and 2000:

2001
Three Months Ended
-----------------------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
(thousands, except per share data)

Operating revenues................ $58,406 $57,462 $53,662 $56,264
Operating expenses................ 52,861 51,502 49,192 50,970
------- ------- ------- -------
Operating income.................. 5,545 5,960 4,470 5,294
Other expenses--net............... 1,147 1,159 1,148 1,023
Income taxes...................... 1,759 1,916 1,320 1,726
------- ------- ------- -------
Net income........................ $ 2,639 $ 2,885 $ 2,002 $ 2,545
======= ======= ======= =======
Net income per common share:
Basic.......................... $ .31 $ .34 $ .23 $ .30
======= ======= ======= =======
Diluted........................ $ .31 $ .34 $ .23 $ .30
======= ======= ======= =======
Average common shares outstanding:
Basic.......................... 8,474 8,484 8,525 8,607
======= ======= ======= =======
Diluted........................ 8,519 8,526 8,537 8,617
======= ======= ======= =======

F-17

P.A.M. TRANSPORTATION SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

2000
Three Months Ended
-----------------------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
(thousands, except per share data)

Operating revenues................ $54,147 $53,034 $47,100 $50,964
Operating expenses................ 49,253 46,965 43,749 45,878
------- ------- ------- -------
Operating income.................. 4,894 6,069 3,351 5,086
Other expenses--net............... 1,354 1,368 1,184 1,142
Income taxes...................... 1,412 1,881 823 1,578
------- ------- ------- -------
Net income........................ $ 2,128 $ 2,820 $ 1,344 $ 2,366
======= ======= ======= =======
Net income per common share:
Basic.......................... $ .25 $ .33 $ .16 $ .28
======= ======= ======= =======
Diluted........................ $ .25 $ .33 $ .16 $ .28
======= ======= ======= =======
Average common shares outstanding:
Basic.......................... 8,440 8,444 8,465 8,470
======= ======= ======= =======
Diluted........................ 8,515 8,515 8,525 8,520
======= ======= ======= =======

F-18

[LOGO] P.A.M.
TRANSPORTATION SERVICES, INC.

-----------------

PROSPECTUS

-----------------

Stephens Inc.

BB&T Capital Markets

A.G. Edwards & Sons, Inc.

, 2002

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by us in connection with the
sale and distribution of the securities being registered. All amounts except
the SEC registration fee and the NASD filing fee are estimated.

SEC Registration Fee........ $ 6,101

NASD Filing Fee............. $ 7,132
Accounting Fees and Expenses $ 40,000
Legal Fees and Expenses..... $150,000
Printing Expenses........... $ 60,000
Miscellaneous............... $ 21,767
--------
Total.................. $285,000
========

Item 15. Indemnification of Directors and Officers

Under Section 145 of the Delaware General Corporation Law (the "Delaware
Law"), a corporation may indemnify its directors, officers, employees and
agents and its former directors, officers, employees and agents and those who
serve, at the corporation's request, in such capacities with another
enterprise, against expenses (including attorneys' fees), as well as judgments,
fines and settlements in nonderivative lawsuits, actually and reasonably
incurred in connection with the defense of any action, suit or proceeding in
which they or any of them were or are made parties or are threatened to be made
parties by reason of their serving or having served in such capacity. The
Delaware Law provides, however, that such person must have acted in good faith
and in a manner such person reasonably believed to be in (or not opposed to)
the best interest of the corporation and, in the case of a criminal action,
such person must have had no reasonable cause to believe his or her conduct was
unlawful. In addition, the Delaware Law does not permit indemnification in an
action or suit by or in the right of the corporation, where such person has
been adjudged liable to the corporation, unless, and only to the extent that, a
court determines that such person fairly and reasonably is entitled to
indemnity for costs the court deems proper in light of liability adjudication.
Indemnity is mandatory to the extent a claim, issue or matter has been
successfully defended.

P.A.M.'s Bylaws provide for indemnification of P.A.M.'s directors and
officers to the full extent permitted by the Delaware Law. In addition,
P.A.M.'s Certificate of Incorporation eliminates the monetary liability of
directors to the fullest extent permitted by the Delaware Law. P.A.M. has
purchased directors' and officers' liability insurance covering certain
liabilities that may be incurred by its directors and officers in connection
with the performance of their duties.

Item 16. Exhibits

The Exhibit Index filed herewith and appearing immediately before the
exhibits hereto is incorporated by reference in response to this Item.

Item 17. Undertakings

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in this registration
statement shall be deemed to be a new registration statement related to
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

II-1

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

II-2

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this pre-effective
Amendment No. 1 to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Tontitown, State of Arkansas, on March 1, 2002.

P.A.M. TRANSPORTATION SERVICES, INC.

/s/ ROBERT W. WEAVER
By: _______________________________
Robert W. Weaver
President and Chief Executive Officer
(principal executive officer)

/s/ LARRY J. GODDARD
By: _______________________________
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
Registration Statement has been signed below by the following persons on behalf
of the Registrant in the capacities and on the dates indicated:

Signature Title Date
--------- ----- ----

/s/ Robert W. Weaver President, Chief Executive March 1, 2002
----------------------------- Officer and Director
Robert W. Weaver

/s/ Larry J. Goddard Vice President--Finance, March 1, 2002
----------------------------- Chief Financial Officer,
Larry J. Goddard Secretary and Treasurer

* Director March 1, 2002
-----------------------------
Danel C. Sullivan

* Director March 1, 2002
-----------------------------
Matthew T. Moroun

* Director March 1, 2002
-----------------------------
Charles F. Wilkins

* Director March 1, 2002
-----------------------------
Frederick P. Calderone

*By: /s/ LARRY J. GODDARD
-------------------------
Larry J. Goddard
Attorney-in-Fact

EXHIBIT INDEX

The following exhibits are filed with or incorporated by reference into this
report. The exhibits 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 ("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 Annual Report on Form 10-K for the year ended December 31, 1996
("1996 10-K");

(v) the Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
("6/30/98 10-Q"); or

(vi) the Annual Report on Form 10-K for the year ended December 31, 2001
("2001 10-K").

Exhibit # Description of Exhibit
--------- ----------------------------------------------------------------------------------------------

1 Form of Underwriting Agreement

*4.1 Specimen Stock Certificate (Exh. 4.1, S-1)

*4.2 Amended and Restated Certificate of Incorporation of the Registrant (Exh. 3.1, S-1)

*4.2.1 Amendment to Certificate of Incorporation dated June 24, 1987 (Exh. 3.1.1, 1987 10-K)

*4.3 Amended and Restated By-Laws of the Registrant (Exh. 3.2, S-1)

*4.3.1 Amendment to Article I, Section 3 of Bylaws of Registrant (Exh. 3.2.1, S-1)

*4.3.2 Amendments to Bylaws of Registrant adopted May 7, 1987 (Exh. 3.2.2, 1987 10-K)

*4.3.3 Amendments to Bylaws of Registrant adopted January 4, 1993 (Exh. 3.2.3, 1992 10-K)

5.1 Opinion of Smith, Gambrell & Russell, LLP regarding legality of securities being registered

*10.1 Employment Agreement between the Registrant and Robert W. Weaver dated July 1, 1998 (Exh.
10.1, 6/30/98 10-Q)

*10.1.1 Employment Agreement between the Registrant and Robert W. Weaver, effective July 1, 2002 (Exh.
10.1.1, 2001 10-K)

*10.2 Employment Agreement between the Registrant and W. Clif Lawson, dated January 1, 2002 (Exh.
10.2, 2001 10-K)

*10.3 Employment Agreement between the Registrant and Larry J. Goddard, dated January 1, 2002 (Exh.
10.3, 2001 10-K)

*10.4 1995 Stock Option Plan, effective June 29, 1995 (Exh. 10.6, 1996 10-K)

*10.5 Interest rate swap agreement, dated March 1, 2001 (Exh. 10.5, 2001 10-K)

*10.6 Interest rate swap agreement, dated June 1, 2001 (Exh. 10.6, 2001 10-K)

23.1 Consent of Arthur Andersen LLP

23.2 Consent of Smith, Gambrell & Russell, LLP (contained in their opinion at Exhibit 5.1)

24.1 Powers of Attorney (previously filed)