P.A.M. Transportation Services, Inc. Annual Report 2008

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FY2008 Annual Report · P.A.M. Transportation Services, Inc.

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10-K 1 form10k_2008.htm PTSI 2008 FORM 10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, 2008
or

For the transition period from ________to________

Commission File No. 0-15057

P.A.M. TRANSPORTATION SERVICES, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

71-0633135
(I.R.S. Employer
Identification No.)

297 West Henri De Tonti Blvd, Tontitown, Arkansas 72770

(Address of principal executive offices) (Zip Code)

(479) 361-9111
Registrant's telephone number, including area code

Securities registered pursuant to section 12(b) of the Act:

Title of each class
Common Stock, $.01 par value

Name of each exchange on which registered
NASDAQ Global Market

Securities registered pursuant to section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o

No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o

No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ

No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer þ

Non-accelerated filer o

Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o

No þ

The aggregate market value of the common stock of the registrant held by non-affiliates of the registrant computed by
reference to the average of the closing bid and asked prices of the common stock as of the last business day of the
registrant's most recently completed second quarter was $46,796,134. Solely for the purposes of this response, executive
officers, directors and beneficial owners of more than five percent of the registrant’s common stock are considered the
affiliates of the registrant at that date.

The number of shares outstanding of the registrant’s common stock, as of March 5, 2009: 9,409,607 shares of $.01 par
value common stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement for its Annual Meeting of Stockholders to be held in May 2009 are
incorporated by reference in answer to Part III of this report, with the exception of information regarding executive officers
required under Item 10 of Part III, which information is included in Part I, Item 1. Such proxy statement will be filed with the
Securities and Exchange Commission within 120 days of the Registrant’s fiscal year ended December 31, 2008.

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (“this Report”) 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 throughout this Report,
including under Item 1, Business, Item 1A, Risk Factors, Item 7, Management’s Discussion and Analysis of Financial
Condition and Results of Operations, and Item 7A, Quantitative and Qualitative Disclosures About Market Risk. In those
and other portions of this Report, 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 under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” and “Quantitative and Qualitative Disclosures About Market Risk.”

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 Report might not transpire.

P.A.M. TRANSPORTATION SERVICES, INC.
FORM 10-K
For the fiscal year ended December 31, 2008
TABLE OF CONTENTS

Item 1
Item 1A
Item 1B
Item 2
Item 3
Item 4

Item 5

Item 6
Item 7

Item 7A
Item 8
Item 9

Item 9A
Item 9B

Item 10
Item 11
Item 12

Item 13
Item 14

PART I

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Submission of Matters to a Vote of Security Holders

Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities

PART II

Selected Financial Data
Management's Discussion and Analysis of Financial Condition
and Results of Operations

Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure

Controls and Procedures
Other Information

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters

PART III

Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services

Item 15

Exhibits, Financial Statement Schedules

PART IV

SIGNATURES

EXHIBIT INDEX

Page
1
8
11
11
11
11

12
14

15
28
29

56
56
57

58
58

58
59
59

Item 1. Business.

PART I

Unless the context otherwise requires, all references in this Annual Report on Form 10-K to “P.A.M.,” the “Company,” “we,”
“our,” or “us” mean P.A.M. Transportation Services, Inc. and its subsidiaries.

We are a truckload dry van carrier transporting general commodities throughout the continental United States, as well as in
certain Canadian provinces. We also provide transportation services in Mexico under agreements with Mexican carriers.
Our freight consists primarily of automotive parts, consumer goods, such as general retail store merchandise, and
manufactured goods, such as heating and air conditioning units.

P.A.M. Transportation Services, Inc. is a holding company incorporated under the laws of the State of Delaware in June
1986 which conducts operations through the following wholly owned subsidiaries: P.A.M. Transport, Inc., T.T.X., Inc.,
P.A.M. Dedicated Services, Inc., P.A.M. Logistics Services, Inc., Choctaw Express, Inc., Choctaw Brokerage, Inc.,
Transcend Logistics, Inc., Allen Freight Services, Inc., Decker Transport Co., Inc., East Coast Transport and Logistics,
LLC, S & L Logistics, Inc., P.A.M. International, Inc. and P.A.M. Canada, Inc. Our operating authorities are held by P.A.M.
Transport, Inc., P.A.M. Dedicated Services, Inc., Choctaw Express, Inc., Choctaw Brokerage, Inc., Allen Freight Services,
Inc., T.T.X., Inc., Decker Transport Co., Inc., and East Coast Transport and Logistics, LLC.

We are headquartered and maintain our primary terminal and maintenance facilities and our corporate and administrative
offices in Tontitown, Arkansas, which is located in northwest Arkansas, a major center for the trucking industry and where
the support services (including warranty repair services) for most major truck and trailer equipment manufacturers are
readily available.

Segment Financial Information

The Company's operations are all in the motor carrier segment and are aggregated into a single operating segment in
accordance with the aggregation criteria presented in Statement of Financial Accounting Standards No. 131.

Operations

Our operations can generally be classified into truckload services or brokerage and logistics services. Truckload services
include those transportation services in which we utilize company owned trucks or owner-operator owned trucks for the
pickup and delivery of freight. The brokerage and logistics services consists of services such as transportation scheduling,
routing, mode selection, transloading and other value added services related to the transportation of freight which may or
may not involve the use of company owned or owner-operator owned equipment. Both our truckload operations and our
brokerage and logistics operations have similar economic characteristics and are impacted by virtually the same economic
factors as discussed elsewhere in this Report. Truckload services operating revenues, before fuel surcharges represented
89.6%, 90.4%, and 87.8% of total operating revenues for the years ended December 31, 2008, 2007, and 2006,
respectively. The remaining operating revenues, before fuel surcharge for the same periods were generated by brokerage
and logistics services, representing 10.4%, 9.6%, and 12.2%, respectively. Approximately 99% of the Company's revenues
are generated by operations conducted in the United States and all of the Company's assets are located or based in the
United States.

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Business and Growth Strategy

Our strategy focuses on the following elements:

Maintaining Dedicated Fleets in High Density Lanes. We strive to maximize utilization and increase revenue per truck 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 in high density lanes enable us to:

· maintain more 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.

Providing Superior and Flexible Customer Service . Our wide range of services includes dedicated fleet services, logistics
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 to ensure that we operate in accordance with approved
quality assurance standards.

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.

Employing Stringent Cost Controls . Throughout our organization, emphasis is placed on gaining efficiency in our processes
with the primary goals of decreasing costs and improving customer satisfaction. Maintaining a high level of efficiency and
prioritizing our focus on improvements allows us to minimize the number of non-driving personnel we employ and positively
influence other overhead costs. Expenses are intensely scrutinized for opportunities for elimination, reduction or to further
leverage our purchasing power to achieve more favorable pricing.

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. Our operational integration
strategy is to centralize administrative functions of acquired businesses 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.

Industry

According to the American Trucking Association’s “American Trucking Trends 2007-2008” report, the trucking industry
transported approximately 70% of the total volume of freight transported in the United States during 2006, which equates to
an all-time high carrying load of 10.7 billion tons, and $645.6 billion in revenue, representing 83.8% of the nation’s freight
bill. The truckload industry is highly fragmented and 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
uncertain. Availability, attraction, retention and compensation for drivers also affect operating costs, as well as equipment
utilization. In addition, the

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capital requirements for equipment, coupled 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:

Price increases by truck and trailer equipment manufacturers, volatile fuel costs, and intense competition for freight.

I n recent years, many less profitable or undercapitalized carriers have been forced to consolidate or to exit the
industry.

Competition

The trucking industry is highly competitive and includes thousands of carriers, none of which dominates the market in
which the Company operates. The Company's market share is less than 1% and we compete primarily with other irregular
route medium- to long-haul truckload carriers, with private carriage conducted by our existing and potential customers,
and, to a lesser extent, with the railroads. Increased competition has resulted from deregulation of the trucking industry.
We compete on the basis of quality of service and delivery performance, as well as price. Many of the other irregular route
long-haul truckload carriers have substantially greater financial resources, own more equipment or carry a larger total
volume of freight as compared to the Company.

Marketing and Significant Customers

Our marketing emphasis is directed to that portion 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 10 employees who are located in our major markets and supervised
from our headquarters. These individuals work to improve 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 49%, 56% and 59% of our total revenues in 2008, 2007 and 2006, respectively. General Motors Corporation
accounted for approximately 31%, 38% and 41% of our revenues in 2008, 2007 and 2006, respectively.

We also provide transportation services to other manufacturers who are suppliers for automobile manufacturers.
Approximately 40%, 49% and 52% of our revenues were derived from transportation services provided to the automobile
industry during 2008, 2007 and 2006, respectively.

Revenue Equipment

At December 31, 2008, we operated a fleet of 1,839 trucks and 4,809 trailers. We operate late-model, well-maintained
premium trucks 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
purchasing 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 trucks at 500,000 miles, which normally occurs 30 to 48 months after purchase.

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We have historically contracted with owner-operators to provide transportation services for a small portion of our business.
Owner-operators provide their own trucks and are contractually responsible for all associated expenses, including
financing costs, fuel, maintenance, insurance, and taxes, among other things. They are also responsible for maintaining
compliance with the Federal Motor Carrier Administration regulations. We believe that utilizing owner-operators
complements our recruiting efforts and offers greater flexibility in responding to fluctuations in customer demand. At
December 31, 2008, the Company had 33 owner-operators under contract.

During 1999, the U.S. Environmental Protection Agency (“EPA”) proposed a three-phase strategy to reduce engine
emissions from heavy-duty vehicles through a combination of advanced emissions control technologies and diesel fuel
with a reduced sulfur content. Each phase and its effect on the Company’s operations, if known, are described below.

The first phase (Phase I) mandated new engine emission standards for all model year 2004 heavy-duty trucks; however,
through agreements with heavy-duty diesel engine manufacturers, the effective date was accelerated to October 1, 2002.
Therefore, effective October 1, 2002, all newly manufactured truck engines had to comply with the new engine emission
standards. All truck engines manufactured prior to October 1, 2002 were not subject to these new standards. As of
December 31, 2008, the majority of our Company-owned truck fleet consisted of trucks with engines that comply with these
emission standards. The Company has experienced a reduction in fuel efficiency and increased depreciation expense due
to the higher cost of trucks with these new engines.

In the second phase (Phase II), effective January 1, 2007, the EPA mandated a new set of more stringent emission
standards for vehicles powered by diesel fuel engines manufactured in 2007 through 2009. These new engines have been
designed for and require the use of a more costly type of fuel known as ultra-low-sulfur-diesel (“ULSD”) which, according to
EPA estimates, cost from $0.04 to $0.05 more per gallon due to increased refining costs. The EPA also mandated that
refiners and importers nationwide must ensure that at least 80% of the volume of the highway diesel fuel they produce or
import is ULSD-compliant by June 1, 2006. However, the EPA does not require service stations and truck stops to sell
ULSD fuel. Therefore, it is possible that ULSD fuel might not be available in a particular area in which the Company
operates. A majority of the Company’s current truck fleet can be fueled with either ULSD or low-sulfur diesel (“LSD”), but
additional future purchases of trucks which contain 2007 or later diesel engines will require the use of ULSD fuel which
may result in lower fuel economy as the process that removes sulfur can also reduce the energy content of the fuel. As of
December 31, 2008, 640 trucks in our Company-owned truck fleet consisted of trucks with engines that comply with the
Phase II emission standards and require the use of ULSD. During 2009, the Company expects to take delivery of 38 new
trucks, all of which will contain engines compliant with the Phase II emission standards requiring the use of ULSD. As
compared to our current Company-owned truck fleet which contain primarily Phase I diesel engines, trucks powered by the
Phase II compliant diesel engines have a higher purchase price and as a result, we expect that our depreciation expense
will increase as we continue to replace older trucks with trucks powered by the Phase II diesel engines. We also expect that
these Phase II diesel engines will result in higher maintenance costs. To the extent we are unable to offset these
anticipated increased costs with rate increases charged to customers or offsetting cost savings in other areas, our results
of operations would be adversely affected.

During the third phase (Phase III), effective in 2010, final emission standards become effective and LSD fuel will no longer
be available for highway use. The EPA requires that by June 1, 2010 all diesel fuel imported or produced must be ULSD-
compliant as it phases out LSD fuel availability by December 1, 2010 when all highway diesel fuel must be ULSD fuel. We
are unable at this time to determine the increase in acquisition and operating costs of trucks powered by the Phase III
compliant engines, but we expect that the engines produced under the final standards will be less fuel-efficient and have
higher acquisition and maintenance costs than either the Phase I or Phase II compliant engines.

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Technology

We have installed Qualcomm Omnitracs™ display units in all of our trucks. 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 system which increases 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 optimize our truck-to-trailer ratio, we have also installed Qualcomm
TrailerTracs™ tracking units in all of our trailers. The TrailerTracs system is a trailer tracking product that enables us to
more efficiently track the location of trailers in our inventory.

Our computer system manages the information provided by the Qualcomm devices to provide us with 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
real-time information electronically to our customers 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 trucks and trailers. Inspections and
various levels of preventive maintenance are performed at set mileage intervals on both trucks and trailers. A maintenance
and safety inspection is performed on all vehicles each time they return to a terminal.

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

Employees

At December 31, 2008, we employed 2,931 persons, of whom 2,493 were drivers, 151 were maintenance personnel, 156
were employed in operations, 12 were employed in marketing, 61 were employed in safety and personnel, and 58 were
employed in general administration and accounting. None of our employees are represented by a collective bargaining unit
and we believe that our employee relations are good.

Drivers

At December 31, 2008, we utilized 2,493 company drivers in our operations. We also had 33 owner-operators under
contract compensated on a per mile basis. 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. 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 several of our terminals. At December 31,
2008, we employed 61 persons on a full-time basis in our driver recruiting, training and safety instruction programs.

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Historically, intense competition in the trucking industry for qualified drivers has resulted in additional expense to recruit
and retain an adequate supply of drivers, and has had a negative impact on the industry. In prior years, 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. During 2008, the general economic downturn reduced the trucking industry’s demand for
drivers and we did not experience decreases in utilization resulting from a driver shortage. However, we continue to place
a high priority on the recruitment and retention of an adequate supply of qualified drivers.

Executive Officers of the Registrant

Our executive officers are as follows:

Name

Robert W. Weaver
W. Clif Lawson
Larry J. Goddard

Age
59
55
50

Position

President and Chief Executive Officer
Executive Vice President and Chief Operating Officer
Vice President - Finance, Chief Financial Officer, Secretary

and Treasurer

Years of service
26
24
21

Each of our executive officers has held his present position with the Company for at least the last five years. The Company
has entered into an employment agreement with Robert W. Weaver that expires on July 10, 2009. The Company has the
option to extend the employment agreement for two consecutive years following the July 10, 2009 expiration date for an
additional one year at a time. The Company has also entered into employment agreements with both W. Clif Lawson and
Larry J. Goddard each of which expire on June 1, 2010. The Company has the option to extend these employment
agreements for one additional year following the June 1, 2010 expiration date.

Internet Web Site

The Company maintains a web site where additional information concerning its business can be found. The address of that
web site is www.pamt.com. The Company makes available free of charge on its Internet web site its Annual Report on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) as soon as
reasonably practicable after it electronically files or furnishes such materials to the Securities and Exchange Commission.

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.

Regulation

We are a common and contract motor carrier regulated by various federal and state agencies. We are subject to safety
requirements prescribed by the U.S. Department of Transportation (“DOT”). Such matters as weight and dimension of
equipment are also subject to federal and state regulations. All of our drivers are required to obtain national driver’s
licenses pursuant to the regulations promulgated by the DOT. Also, DOT regulations impose mandatory drug and alcohol
testing of our drivers. We believe that we are in compliance in all material respects with applicable regulatory requirements
relating to our trucking business and operate with a “satisfactory” rating (the highest of three grading categories) from the
DOT.

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The Federal Motor Carrier Safety Administration (“FMCSA”), a separate administration within the DOT charged with
regulating motor carrier safety, issued a final rule on April 24, 2003 (“2003 rule”) that made several changes to the
regulations that govern truck drivers' hours-of-service (“HOS”). These new federal regulations became effective on January
4, 2004. On July 16, 2004, the U.S. Circuit Court of Appeals for the District of Columbia (the “Court”) rejected these new
hours of service rules for truck drivers that had been in place since January 2004 because it agreed that the FMCSA had
failed to address the impact of the rules on the health of drivers as required by Congress. In addition, the Court’s ruling
noted other areas of concern including the increase in driving hours from 10 hours to 11 hours, the exception that allows
drivers in trucks with sleeper berths to split their required rest periods, the new rule allowing drivers to reset their 70-hour
clock to 0 hours after 34 consecutive hours off duty, and the decision by the FMCSA not to require the use of electronic
onboard recorders to monitor driver compliance. However, to avoid industry disruption and burden on the state
enforcement, Congress enacted section 7(f) of the Surface Transportation Extension Act of 2004. This section provided
that the 2003 rule would remain in effect until a new rule addressed the Court’s issues or until September 30, 2005,
whichever occurred first. On January 24, 2005, the FMCSA re-proposed its April 2003 HOS rules, adding references to
how the rules would affect driver health, but made no other changes to the regulations. The FMCSA sought public
comments by March 10, 2005 on what changes to the rule, if any, were necessary to respond to the concerns raised by the
Court, and to provide data or studies that would support changes to, or continued use of, the 2003 rule. On August 25,
2005, the FMCSA published a final HOS rule (“2005 rule”) that retained most of the provisions of the 2003 rule with the
most significant exception being that of requiring drivers that utilize the sleeper berth provision to take at least eight
consecutive hours in the sleeper berth during their ten hours off-duty. Under the 2003 rule, drivers were allowed to split
their ten hour off-duty time in the sleeper berth into two periods, provided neither period was less than two hours.

The 2005 rule was later challenged in court on several grounds and in July 2007 the Court vacated the 11-hour driving time
and 34-hour restart provisions, stating that the FMCSA methodologies, used in the studies regarding how the 2003 rules
affected driver health, were not disclosed in time for public comment and that the explanation for some of its critical
elements were not provided. In an order filed on September 28, 2007, the Court granted a 90-day stay of the mandate and
directed that issuance of the mandate be withheld until December 27, 2007. In an effort to prevent disruption to
enforcement and compliance with HOS rules when the stay expires, as well as possible effects on timely delivery of
essential goods and services, the FMCSA issued an interim final rule (“IFR”) effective December 27, 2007 which allows
commercial motor vehicle drivers up to 11 hours of driving time within a 14-hour, non-extendable window from the start of
the workday, following 10 consecutive hours off duty (11-hour limit). This IFR also allows motor carriers and drivers to
restart calculations of the weekly on-duty time limits after the driver has at least 34 consecutive hours off duty (34-hour
restart provision). During November 2008, the FMCSA announced its final HOS rule and the rule remains unchanged from
the previous IFR. This final rule became effective on January 19, 2009.

In general, more restrictive sleeper berth provisions may impact multiple-stop shipments and those shipments incurring
delays in loading or unloading. Improper planning on such shipments could result in delivery delays and equipment
utilization inefficiencies.

Our motor carrier operations are also subject to environmental laws and regulations, including laws and regulations dealing
with underground fuel storage tanks, the transportation of hazardous materials and other environmental matters, and our
operations involve certain inherent environmental risks. We maintain three bulk fuel storage and fuel islands. Our
operations involve the risks of fuel spillage or seepage, environmental damage, and hazardous waste disposal, among
others. We have instituted programs to monitor and control environmental risks and assure compliance with applicable
environmental laws. As part of our safety and risk management program, we periodically perform internal environmental
reviews so that we can achieve environmental compliance and avoid environmental risk. We transport a minimum amount
of environmentally hazardous substances and, to date, have experienced no significant claims for hazardous materials
shipments. If we should fail to comply with applicable regulations, we could be subject to substantial fines or penalties and
to civil and criminal liability.

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Company operations conducted in industrial areas, where truck terminals and other industrial activities are conducted, and
where groundwater or other forms of environmental contamination have occurred, potentially expose us to claims that we
contributed to the environmental contamination.

We believe we are currently in material compliance with applicable laws and regulations and that the cost of compliance
has not materially affected results of operations.

In addition to environmental regulations directly affecting our business, we are also subject to the effects of new truck
engine design requirements implemented by the EPA. See "Revenue Equipment" above.

Item 1A. Risk Factors.

Set forth below and elsewhere in this Report and in other documents we file with the SEC are risks and uncertainties that
could cause our actual results to differ materially from the results contemplated by the forward-looking statements
contained in this Report.

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

These factors include significant increases or rapid fluctuations in fuel prices, 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.

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 operate at an acceptable profit. These factors include, but are not
limited to, the following:

w e 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;

t h e 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;

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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 2008, our top five customers, based on
revenue, accounted for approximately 49% of our revenue, and our largest customer, General Motors Corporation,
accounted for approximately 31% of our revenue. We also provide transportation services to other manufacturers who are
suppliers for automobile manufacturers. As a result, the concentration of our business within the automobile industry is
greater than the concentration in a single customer. Approximately 40% of our revenues for 2008 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 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.

Ongoing insurance and claims expenses could significantly reduce our earnings.

Our future insurance and claims expenses might exceed historical levels, which could reduce our earnings. The Company
is self insured for health and workers compensation insurance coverage up to certain limits. If medical costs continue to
increase, or if the severity or number of claims increase, and if we are unable to offset the resulting increases in expenses
with higher freight rates, our earnings could be materially and adversely affected.

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.

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 attract drivers when needed
or contract with independent contractors when needed, we could be required to further adjust our driver compensation
packages or let trucks sit idle, which could adversely affect our growth and profitability.

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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 that we will be able to do so.

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 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 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 storm-water. 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 DOT 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.

The EPA adopted new emission control regulations, which require progressive reductions in exhaust emissions from diesel
engines through 2010. In part to offset the costs of compliance with the new EPA engine design requirements, some
manufacturers have increased new equipment prices and eliminated or sharply reduced the price of repurchase or trade-in
commitments. If new equipment prices were to increase, or if the price of repurchase commitments by equipment
manufacturers were to decrease more than anticipated, we may be required to increase our depreciation and financing
costs and/or retain some of our equipment longer, which may result in an increase in maintenance expenses. To the extent
we are unable to offset any such increases in expenses with rate increases or cost savings, our results of operations would
be adversely affected. If our fuel or maintenance expenses were to increase as a result of our use of the new, EPA-
compliant engines, and we are unable to offset such increases with fuel surcharges or higher freight rates, our results of
operations would be adversely affected. Further, our business and operations could be adversely impacted if we
experience problems with the reliability of the new engines. Although we have not experienced any significant reliability
issues with these engines to date, the expenses associated with the trucks containing these engines have been slightly
elevated, primarily as a result of lower fuel efficiency and higher depreciation.

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Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our executive offices and primary terminal facilities, which we own, are located in Tontitown, Arkansas. These facilities are
located on approximately 49.3 acres and consist of 114,403 square feet of office space and maintenance and storage
facilities.

Our subsidiaries lease facilities in Jacksonville, Florida; Breese and Effingham, Illinois; Paulsboro, New Jersey; North
Jackson, Ohio; Oklahoma City, Oklahoma; and El Paso, Texas. Our terminal facilities in Columbia, Mississippi; Irving and
Laredo, Texas; North Little Rock, Arkansas; and Willard, Ohio are owned. The leased facilities are leased primarily on
contractual terms typically ranging from one to five years. As of December 31, 2008, the following provides a summary of
the ownership and types of activities conducted at each location:

Location

Tontitown, Arkansas
North Little Rock, Arkansas
Jacksonville, Florida
Breese, Illinois
Effingham, Illinois
Columbia, Mississippi
Paulsboro, New Jersey
North Jackson, Ohio
Willard, Ohio
Oklahoma City, Oklahoma
El Paso, Texas
Irving, Texas
Laredo, Texas

Own/
Lease

Own
Own
Lease
Lease
Lease
Own
Lease
Lease
Own
Lease
Lease
Own
Own

Dispatch
Office

Maintenance
Facility

Safety
Training

Yes
No
Yes
Yes
No
No
Yes
Yes
Yes
Yes
No
Yes
Yes

Yes
Yes
Yes
No
Yes
No
No
Yes
Yes
Yes
No
Yes
Yes

Yes
No
Yes
No
No
No
No
Yes
Yes
Yes
No
Yes
No

We also have access to trailer drop and relay stations in various other locations across the country. We lease certain of
these facilities on a month-to-month basis from an affiliate of our largest shareholder.

We believe that all of the properties that we own or lease are suitable for their purposes and adequate to meet our needs.

Item 3. Legal Proceedings.

The nature of our business routinely results in litigation, primarily involving claims for personal injuries and property
damage incurred in the transportation of freight. We believe that all such routine litigation is adequately covered by
insurance and that adverse results in one or more of those cases would not have a material adverse effect on our financial
condition.

Item 4. Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of our security holders during the fourth quarter ended December 31, 2008.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.

Our common stock is traded on the NASDAQ Global Market under the symbol PTSI. The following table sets forth, for the
quarters indicated, the range of the high and low sales prices per share for our common stock as reported on the NASDAQ
Global Market.

Fiscal Year Ended December 31, 2008

First Quarter
Second Quarter
Third Quarter
Fourth Quarter

Fiscal Year Ended December 31, 2007

First Quarter
Second Quarter
Third Quarter
Fourth Quarter

High

Low

16.85 $
16.90
15.82
11.08

13.82
9.22
9.82
3.15

High

Low

25.19 $
22.48
19.31
18.69

19.29
16.98
17.43
13.80

As of February 27, 2009, there were approximately 148 holders of record of our common stock.

Dividends

We have never declared or paid any cash dividends on our common stock. The policy of our Board of Directors is to retain
earnings for the expansion and development of our business and the payment of our debt service obligations. Future
dividend policy and the payment of dividends, if any, will be determined by the Board of Directors in light of circumstances
then existing, including our earnings, financial condition and other factors deemed relevant by the Board of Directors.

Repurchases of Common Stock

On April 11, 2005, the Company announced that its Board of Directors had authorized the Company to repurchase up to
600,000 shares of its common stock during the six month period ending October 11, 2005. These 600,000 shares were all
repurchased by September 30, 2005. On September 6, 2005, the Company announced that its Board of Directors had
authorized the Company to extend the stock repurchase program until September 6, 2006 and to include up to an
additional 900,000 shares of its common stock. The Company repurchased 458,600 shares of these additional shares
prior to the September 6, 2006 program expiration date.

On May 30, 2007, the Company announced that its Board of Directors had authorized the Company to repurchase up to
600,000 shares of its common stock during the twelve month period following the announcement. Subsequent to the date
of the announcement and through the remainder of 2007, the Company repurchased 471,500 shares of its common stock.
The remaining 128,500 shares authorized were repurchased during the first three months of 2008.

On June 13, 2008, the Company announced that its Board of Directors had authorized the Company to repurchase up to
300,000 shares of its common stock during the twelve month period following the announcement. Subsequent to the date
of the announcement and through the remainder of 2008, the Company repurchased 300,000 shares of its common stock,
with 254,200 shares being repurchased during the fourth quarter of 2008.

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The following table summarizes the Company's common stock repurchases during the fourth quarter of 2008. No shares
were purchased during the quarter other than through this program, and all purchases were made by or on behalf of the
Company and not by any “affiliated purchaser”.

Total
number of
shares
purchased
as part of
publicly
announced
plans or
programs

Total
number of
shares

purchased

Average
price paid
per share

49,700 $
17,300
187,200
254,200 $

9.78
6.77
4.81
5.91

49,700
17,300
187,200
254,200

Maximum
number of
shares that
may yet be
purchased
under the
plans or
programs
204,500
187,200
-
-

Period
October 1-31, 2008
November 1-30, 2008
December 1-31, 2008
Total

Securities Authorized for Issuance Under Equity Compensation Plans

See Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters”
of this Annual Report for a presentation of compensation plans under which equity securities of the Company are
authorized for issuance.

Performance Graph

Set forth below is a line graph comparing the yearly percentage change in the cumulative total stockholder return on our
common stock against the cumulative total return of the CRSP Total Return Index for the Nasdaq Stock Market (U.S.
companies) and the CRSP Total Return Index for the Nasdaq Trucking and Transportation Stocks for the period of five
years commencing December 31, 2003 and ending December 31, 2008. The graph assumes that the value of the
investment in our common stock and in each index was $100 on December 31, 2003 and that all dividends were
reinvested.

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Item 6. Selected Financial Data.

The following selected financial and operating data should be read in conjunction with the Consolidated Financial
Statements and notes thereto included elsewhere in this Report.

2008

Year Ended December 31,
2006
(in thousands, except per share amounts)

2005

2007

2004

Statement of Operations Data:
Operating revenues:
Operating revenues, before fuel surcharge
Fuel surcharge
Total operating revenues

Operating expenses:
Salaries, wages and benefits
Fuel expense
Rent and purchased transportation
Depreciation and amortization
Goodwill impairment charge
Operating supplies
Operating taxes and licenses
Insurance and claims
Communications and utilities
Other
Loss (gain) on sale or disposal of property
Total operating expenses
Operating (loss) income
Non-operating (loss) income
Interest expense
(Loss) income before income taxes
Income tax (benefit) expense
Net (loss) income

(Loss) earnings per common share:
Basic

Diluted

323,272 $
83,451
406,723

351,701 $
57,140
408,841

351,373 $
48,896
400,269

326,353 $
34,527
360,880

309,475
15,591
325,066

123,961
140,531
39,887
37,477
15,413
30,514
15,937
16,018
2,869
5,119
952
428,678
(21,955)
(4,996)
(2,429)
(29,380)
(10,615)
(18,765) $

135,606
114,242
38,718
38,759
-
30,845
17,520
17,591
3,113
7,130
(48)
403,476
5,365
1,707
(2,453)
4,619
1,966
2,653 $

127,539
97,286
43,844
33,929
-
25,682
16,421
16,389
2,642
5,426
47
369,205
31,064
448
(1,475)
30,037
12,073
17,964 $

122,005
81,017
39,074
31,376
-
23,114
15,776
15,992
2,648
6,205
147
337,354
23,526
477
(1,881)
22,122
8,983
13,139 $

119,519
55,645
38,938
30,016
-
21,718
15,488
15,820
2,690
5,131
915
305,880
19,186
464
(1,758)
17,892
7,304
10,588

(1.94) $

0.26 $

1.74 $

1.20 $

0.94

Average common shares outstanding – Basic

9,683

10,238

10,296

10,966

11,298

Average common shares outstanding –
Diluted(1)

9,683

10,239

10,302

10,976

11,324

__________
(1) Diluted income per share for 2008, 2007, 2006, 2005 and 2004 assumes the exercise of stock options to

purchase an aggregate of 0, 19,213, 55,738, 22,297 and 62,224 shares of common stock, respectively.

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Balance Sheet Data:
Total assets
Long-term debt, excluding current portion
Stockholders' equity

$ 290,361
35,492
155,477

$ 319,904
44,172
179,377

2008

2007

At December 31,
2006
(in thousands)
$ 314,246
21,205
185,028

2005

2004

$ 293,441
39,693
164,762

285,349
23,225
168,543

2008

Year Ended December 31,
2006

2005

2007

2004

Operating Data:
Operating ratio (1)
Average number of truckloads per week
Average miles per trip
Total miles traveled (in thousands)
Average miles per truck
Average revenue, before fuel surcharge per
truck per day
Average revenue, before fuel surcharge per
loaded mile
Empty mile factor

106.8%
7,559
598
221,450
111,114

98.5%

91.2%

92.8%

93.8%

7,849
647
246,801
118,483

7,200
659
229,810
123,156

6,946
680
228,624
125,479

7,278
664
235,894
127,124

662

695

778

740

684

1.41

$
7.3%

1.38

$
6.5%

1.43

$
5.9%

1.33

$
5.5%

1.19

4.7%

At end of period:
Total company-owned/leased trucks
Average age of trucks (in years)
Total trailers
Average age of trailers (in years)
Number of employees

1,839(2)

2,055(3)

1,998(4)

1,792(5)

1.90
4,809
4.43
2,931

1.75
4,882
4.44
3,181

1.55
4,540
4.16
3,062

1.43
4,406
3.92
3,035

1,857(6)
1.70
4,257
4.69
2,736

__________
(1) Total operating expenses, net of fuel surcharge as a percentage of operating revenues, before fuel surcharge.
(2) Includes 33 owner operator trucks; (3) Includes 55 owner operator trucks; (4) Includes 49 owner operator

trucks.

(5) Includes 50 owner operator trucks; (6) Includes 85 owner operator trucks.

The Company has not declared or paid any cash dividends during any of the periods presented above.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Business Overview

The Company's administrative headquarters are in Tontitown, Arkansas. From this location we manage operations
conducted through our wholly owned subsidiaries based in various locations around the United States and Canada. The
operations of these subsidiaries can generally be classified into either truckload services or brokerage and logistics
services. Truckload services include those transportation services in which we utilize company owned trucks or owner-
operator owned trucks. Brokerage and logistics services consist of services such as transportation scheduling, routing,
mode selection, transloading and other value added services related to the transportation of freight which may or may not
involve the usage of company owned or owner-operator owned equipment. Both our truckload operations and our
brokerage/logistics operations have similar economic characteristics and are impacted by virtually the same economic
factors as discussed elsewhere in this Report. All of the Company's operations are in the motor carrier segment.

For both operations, substantially all of our revenue is generated by transporting freight for customers and is predominantly
affected by the rates per mile received from our customers, equipment utilization, and our percentage of non-compensated
miles. These aspects of our business are carefully managed and efforts are continuously underway to achieve favorable
results. Truckload services revenues, excluding fuel surcharges, represented 89.6%, 90.4%, and 87.8% of total revenues,
excluding fuel surcharges for the twelve months ended December 31, 2008, 2007, and 2006, respectively.

The main factors that impact our profitability on the expense side are costs incurred in transporting freight for our
customers. Currently, our most challenging costs include fuel, driver recruitment, training, wage and benefit costs,

independent broker costs (which we record as purchased transportation), insurance, and maintenance and capital
equipment costs.

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In discussing our results of operations we use revenue, before fuel surcharge, (and fuel expense, net of surcharge),
because management believes that eliminating the impact of this sometimes volatile source of revenue allows a more
consistent basis for comparing our results of operations from period to period. During 2008, 2007 and 2006, approximately
$83.5 million, $57.1 million and $48.9 million, respectively, of the Company's total revenue was generated from fuel
surcharges. We also discuss certain changes in our expenses as a percentage of revenue, before fuel surcharge, rather
than absolute dollar changes. We do this because we believe the high variable cost nature of certain expenses makes a
comparison of changes in expenses as a percentage of revenue more meaningful than absolute dollar changes.

Results of Operations - Truckload Services

The following table sets forth, for truckload services, the percentage relationship of expense items to operating revenues,
before fuel surcharges, for the periods indicated. Fuel costs are shown net of fuel surcharges.

Years Ended December 31,
2007

2008

2006

Operating revenues, before fuel surcharge
Operating expenses:
Salaries, wages and benefits
Fuel expense, net of fuel surcharge
Rent and purchased transportation
Depreciation and amortization
Goodwill impairment
Operating supplies and expenses
Operating taxes and licenses
Insurance and claims
Communications and utilities
Other
Loss on sale or disposal of property
Total operating expenses
Operating (loss) income
Non-operating (loss) income
Interest expense
(Loss) income before income taxes

2008 Compared to 2007

100.0%

42.1
19.9
3.2
12.9
2.9
10.5
5.5
5.5
1.0
1.7
0.3
105.5
(5.5)
(1.7)
(0.8)
(8.0)%

42.0
18.2
2.5
12.2
0.0
9.7
5.5
5.5
0.9
2.0
0.0
98.5
1.5
0.5
(0.7)
1.3%

40.6
16.0
1.7
11.0
0.0
8.3
5.3
5.3
0.8
1.6
0.0
90.6
9.4
0.1
(0.4)
9.1%

For the year ended December 31, 2008, truckload services revenue, before fuel surcharges, decreased 8.9% to $289.6
million as compared to $317.9 million for the year ended December 31, 2007. The decrease relates primarily to a decrease
in the number of trucks utilized during 2008 as compared to 2007 and to a decrease in equipment utilization for the periods
compared. During 2008 the number of trucks utilized decreased to an average count of 1,993 units compared to 2,083 units
during 2007 as the Company has reduced its fleet size in response to current freight demand. During 2008, the Company
also experienced a decrease in the average number of miles traveled per unit each work day from 488 miles during 2007
to 454 miles during 2008. Partially offsetting these decreases in revenue was an increase in the average rate charged per
total mile. During 2008, the average rate charged to customers per total mile increased by $0.02 as compared to the
average rate charged during 2007.

Salaries, wages and benefits increased from 42.0% of revenues, before fuel surcharges, during 2007 to 42.1% of
revenues, before fuel surcharges, during 2008, however, based on a dollar comparison, salaries, wages and benefits
decreased from $133.5 million during 2007 to $121.9 million during 2008 as the number of driver compensated miles
decreased from 246.8 million miles during 2007 to 221.4 million miles during 2008. The increase, as a percentage of
revenues, resulted primarily from the fixed cost characteristics of wages which do not fluctuate with changes in revenue,
such as general and administrative, maintenance, and operations wages. Partially offsetting the increase was a decrease
in driver lease expense and a decrease in amounts recorded for employee health insurance expense. Driver lease
expense, which is a component of salaries, wages and benefits,

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decreased from $7.8 million in 2007 to $6.2 million in 2008, as the average number of owner operators under contract
decreased from 57 during 2007 to 44 during 2008. Employee health insurance expense decreased from $6.3 million in
2007 to $5.0 million in 2008 as a result of a decrease in the total number of covered employees and a decrease in the
number and severity of health claims reported during 2008 as compared to 2007.

Fuel expense, net of fuel surcharge, increased from 18.2% of revenues, before fuel surcharges, during 2007 to 19.9% of
revenues, before fuel surcharges, during 2008. On a dollar basis, fuel expense decreased from $57.8 million during 2007
to $57.5 million during 2008 as the number of gallons of diesel fuel purchased during 2008 were significantly lower than the
number of gallons purchased during 2007 due to the decrease in miles traveled for the periods compared. The increase, as
a percentage of revenue, was related to an increase in the average price paid per gallon of diesel fuel from $2.75 during
2007 to an average cost of $3.59 during 2008. Partially offsetting the increase related to the increase in average price paid
per gallon of diesel fuel was an increase in amounts collected from customers in the form of fuel surcharges from an
average of $1.24 per gallon of diesel fuel during 2007 to $1.98 per gallon during 2008. Fuel surcharge collections vary from
period to period as they are generally based on changes in fuel prices from period to period so that during periods of rising
fuel prices fuel surcharge collections increase while fuel surcharge collections decrease during periods of declining fuel
prices.

Rent and purchased transportation increased from 2.5% of revenues, before fuel surcharges, in 2007 to 3.2% of revenues,
before fuel surcharges, in 2008. The increase relates primarily to an increase in amounts paid to third party transportation
service providers for intermodal services.

Depreciation and amortization increased from 12.2% of revenues, before fuel surcharges, in 2007 to 12.9% of revenues,
before fuel surcharges, in 2008. The increase, as a percentage of revenue, relates primarily to the effect of lower revenues
during 2008 as compared to 2007 and the fixed cost nature of depreciation expense. On a dollar basis, depreciation and
amortization expense decreased from $38.7 million during 2007 to $37.5 million during 2008 as the average size of the
Company-owned truck fleet decreased from 2,027 trucks during 2007 to 1,949 trucks during 2008.

Goodwill impairment was recorded during the Company’s annual test of goodwill impairment as required by Generally
Accepted Accounting Principles. The impairment of our goodwill was triggered by the sustained decline of our market
capitalization caused by a decrease in our stock price during 2008. In the fourth quarter of 2008, we determined that our
market capitalization compared to the carrying amount of the Company indicated that impairment was probable and that
the second step of impairment testing was necessary. The second step of our impairment test required the calculation of
the fair value of the Company and the subsequent allocation of the fair value to the assets and liabilities of the Company.
The excess fair value after this allocation is performed represents the implied goodwill of the Company, if any, and was
zero at December 31, 2008. As a result we incurred an impairment expense of $15.4 million which represented the entire
balance of our goodwill.

Operating supplies and expenses increased from 9.7% of revenues, before fuel surcharges, during 2007 to 10.5% of
revenues, before fuel surcharges, during 2008. The increase relates primarily to an increase in amounts paid for tolls, new
tire amortization, driver layovers, and miscellaneous operations expense. The increase was partially offset by a decrease in
amounts paid to third party driver training schools which the Company uses to recruit new truck drivers.

Operating taxes and licenses remained constant at 5.5% of revenues, before fuel surcharges, for both 2007 and 2008. On
a dollar basis however, operating taxes and licenses, which consists primarily of fuel taxes, decreased from $17.5 million
during 2007 to $15.9 million during 2008. Fuel tax expense is primarily affected by the number of gallons of diesel fuel
purchased which is directly related to the number of miles traveled. During 2008, a decrease in the number of miles
traveled to 221.4 million in 2008 from 246.8 million miles in 2007, resulted in a decrease in the number of diesel fuel
gallons purchased.

Insurance and claims expense remained constant at 5.5% of revenues, before fuel surcharges, for both 2007 and 2008. On
a dollar basis however, insurance and claims expense decreased from $17.6 million during 2007 to $16.0 million during
2008. The decrease relates primarily to a decrease in auto liability insurance premiums which

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are determined based on a negotiated rate-per-mile (“NRPM”) with the Company’s insurance carrier. During 2008, the
number of miles used to calculate the premiums decreased to 221.4 million miles as compared to 2007 miles of 246.8
million and translated into a decrease in auto liability insurance expense. During October 2008, the Company’s auto
liability insurance policy was renewed at a rate which represented a 2.6% reduction in the NRPM and this lower rate-per-
mile has also contributed to the dollar-based decrease for the periods compared.

Other expenses decreased from 2.0% of revenues, before fuel surcharges, during 2007 to 1.7% of revenues, before fuel
surcharges, during 2008. The decrease relates primarily to a decrease in various expenses such as advertising,
miscellaneous operating supplies, uncollectible revenue, and rents.

The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to
operating revenues, before fuel surcharges, increased to 105.5% for 2008 from 98.5% for 2007.

Non-operating income and expenses increased from income of 0.5% of revenues, before fuel surcharges, during 2007 to
expense of 1.7% of revenues, before fuel surcharges, during 2008. During 2008, certain of the Company’s investments in
marketable equity securities were determined by management to be other-than-temporarily impaired and were therefore
written down to fair market value. The amount of the year-to-date write-downs approximated $5.2 million and was
determined based on the difference between recorded cost and quoted market prices at the end of the period.

2007 Compared to 2006

For the year ended December 31, 2007, truckload services revenue, before fuel surcharges, increased 3.0% to $317.9
million as compared to $308.7 million for the year ended December 31, 2006. The increase was primarily due to an 11.6%
increase in the average size of the Company’s truck fleet from 1,866 units in 2006 to 2,083 units in 2007. However, a 4.1%
decrease in the average rate per total mile charged to customers from approximately $1.34 during 2006 to approximately
$1.29 during 2007 and a decrease in the average daily miles traveled per unit from 509 miles in 2006 to 488 miles in 2007
partially offset revenue growth attributable to fleet growth.

Salaries, wages and benefits increased from 40.6% of revenues, before fuel surcharges, in 2006 to 42.0% of revenues,
before fuel surcharges, in 2007 which represents an increase from $125.4 million in 2006 to $133.5 million in 2007. The
increase relates primarily to an increase in driver wages as the number of company driver compensated miles increased
from 229.8 million miles in 2006 to 246.8 million miles in 2007. Also contributing to the increase was an increase in driver
lease expense and amounts recorded for employee health insurance expense. Driver lease expense, which is a
component of salaries, wages and benefits, increased from $6.2 million in 2006 to $7.8 million in 2007, as the average
number of owner operators under contract increased from 45 during 2006 to 57 during 2007. Employee health insurance
expense increased from $4.3 million in 2006 to $6.3 million in 2007 as a result of healthcare cost increases, in general, and
to an increase in the number and severity of health claims reported during 2007 as compared to 2006. Partially offsetting
the increases discussed above was a decrease in amounts accrued for employee bonus plans during 2007 as compared to
2006.

Fuel expense increased from 16.0% of revenues, before fuel surcharges, in 2006 to 18.2% of revenues, before fuel
surcharges, in 2007 which represents an increase from $49.4 million during 2006 to $57.8 million during 2007. The
increase was primarily due to higher fuel prices as the average price paid per gallon of diesel fuel increased from $2.55 per
gallon during 2006 to $2.76 per gallon during 2007. During periods of rising fuel prices the Company is often able to
partially offset fuel cost increases through the use of fuel surcharges charged to customers. The Company collected fuel
surcharges of approximately $47.8 million during 2006 compared to fuel surcharge collections of $56.4 million during 2007.

Rent and purchased transportation increased from 1.7% of revenues, before fuel surcharges, in 2006 to 2.5% of revenues,
before fuel surcharges, in 2007. The increase relates primarily to an increase in amounts paid to third party transportation
service providers for intermodal services.

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Depreciation and amortization increased from 11.0% of revenues, before fuel surcharges, in 2006 to 12.2% of revenues,
before fuel surcharges, in 2007 representing an increase from $33.9 million during 2006 to $38.7 million during 2007.
Depreciation expense increased primarily due to an increase in the average size of the Company-owned truck fleet from
1,820 trucks during 2006 to 2,027 trucks during 2007. To a lesser extent, a larger trailer fleet and higher new trailer prices
also contributed to the increase.

Operating supplies and expenses increased from 8.3% of revenues, before fuel surcharges, in 2006 to 9.7% of revenues,
before fuel surcharges, in 2007. The increase relates primarily to an increase in amounts paid to third party driver training
schools, driver layover pay, and for truck repairs expense.

Operating taxes and licenses increased from 5.3% of revenues, before fuel surcharges, in 2006 to 5.5% of revenues,
before fuel surcharges, in 2007. Operating taxes and licenses, which consists primarily of fuel taxes, increased from $16.4
million during 2006 to $17.5 million during 2007. Fuel tax expense is primarily affected by the number of gallons of diesel
fuel purchased which is primarily a factor of the number of miles traveled and the miles-per-gallon (“mpg”) achieved. During
2007, a decrease in the average mpg to 5.91 from an average mpg of 5.94 during 2006 combined with an increase in the
number of miles traveled to 246.8 million in 2007 from 229.8 million miles in 2006, resulted in an increase in the number of
diesel fuel gallons purchased.

Insurance and claims expense increased from 5.3% of revenues, before fuel surcharges, in 2006 to 5.5% of revenues,
before fuel surcharges, in 2007. The increase represents an increase from $16.4 million during 2006 to $17.6 million during
2007. The increase relates primarily to an increase in auto liability insurance premiums which are determined based on a
negotiated rate-per-mile (“NRPM”) with the Company’s insurance carrier. During 2007, the number of miles used to
calculate the premiums increased to 246.8 million miles from 229.8 million miles which translated into increased auto
liability insurance expense. During October 2007 the Company’s auto liability insurance policy was renewed at a rate which
represented a 5.5% reduction in the NRPM and since that time this lower rate-per-mile has helped to partially offset the
increase in auto liability insurance expense associated with the increase in miles traveled during 2007 as compared to
2006.

Other expenses increased from 1.6% of revenues, before fuel surcharges, in 2006 to 2.0% of revenues, before fuel
surcharges, in 2007. The increase relates primarily to an increase in amounts paid for outsourcing shop employees at the
Company’s terminals during 2007 as compared to 2006. Also contributing to the increase was a one-time expense accrual
of approximately $300,000 during December 2007 to settle a 1986 environmental remediation claim in which the Company
was found partly liable for remediation.

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Results of Operations - Logistics and Brokerage Services

The following table sets forth, for logistics and brokerage services, the percentage relationship of expense items to
operating revenues, before fuel surcharges, for the periods indicated. Brokerage service operations occur specifically in
certain divisions; however, brokerage operations occur throughout the Company in similar operations having substantially
similar economic characteristics. Rent and purchased transportation, which includes costs paid to third party carriers, are
shown net of fuel surcharges.

Years Ended December 31,
2007

2008

2006

Operating revenues, before fuel surcharge
Operating expenses:
Salaries, wages and benefits
Fuel expense
Rent and purchased transportation, net of fuel surcharge
Depreciation and amortization
Goodwill impairment
Operating supplies and expenses
Operating taxes and licenses
Insurance and claims
Communications and utilities
Other
Loss on sale or disposal of property
Total operating expenses
Operating (loss) income
Non-operating (loss) income
Interest expense
(Loss) income before income taxes

2008 Compared to 2007

100.0%

6.2
0.0
89.5
0.0
20.6
0.0
0.0
0.1
0.3
1.0
0.0
117.7
(17.7)
0.0
(0.2)

(17.9)%

6.3
0.0
88.9
0.0
0.0
0.0
0.0
0.1
0.3
2.1
0.0
97.7
2.3
0.0
(0.4)
1.9%

5.0
0.0
88.3
0.0
0.0
0.0
0.0
0.0
0.3
1.4
0.0
95.0
5.0
0.0
(0.4)
4.6%

For the year ended December 31, 2008, logistics and brokerage services revenues, before fuel surcharges, decreased
0.2% to $33.7 million as compared to $33.8 million for the year ended December 31, 2007. The decrease was primarily the
result of a slight decrease in the number of loads brokered during 2008 as compared to 2007.

Rent and purchased transportation increased from 88.9% of revenues, before fuel surcharges, in 2007 to 89.5% of
revenues, before fuel surcharges, in 2008. The increase relates to an increase in amounts charged by third party logistics
and brokerage service providers primarily as a result of higher fuel costs.

Goodwill impairment was discovered during the Company’s annual test of goodwill impairment as required by Generally
Accepted Accounting Principles. The impairment of our goodwill was triggered by the sustained decline of our market
capitalization caused by a decrease in our stock price during 2008. In the fourth quarter of 2008, we determined that our
market capitalization compared to the carrying amount of the Company indicated that impairment was probable and that
the second step of impairment testing was necessary. The second step of our impairment test required the calculation of
the fair value of the Company and the subsequent allocation of the fair value to the assets and liabilities of the Company.
The excess fair value after this allocation is performed represents the implied goodwill of the Company, if any, and was
zero at December 31, 2008. As a result we incurred an impairment expense of $15.4 million which represented the entire
balance of our goodwill.

Other expenses decreased from 2.1% of revenues, before fuel surcharges, during 2007 to 1.0% of revenues, before fuel
surcharges during 2008. The decrease relates to a decrease in non-compete amortization expense as the non-compete
agreement with the former owner of East Coast Transport, LLC expired in January 2008.

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The logistics and brokerage services division operating ratio, which measures the ratio of operating expenses, net of fuel
surcharges, to operating revenues, before fuel surcharges, increased to 117.7% for 2008 from 97.7% for 2007.

2007 Compared to 2006

For the year ended December 31, 2007, logistics and brokerage services revenues, before fuel surcharges, decreased
20.9% to $33.8 million as compared to $42.7 million for the year ended December 31, 2006. The decrease was primarily
the result of a 22.2% decrease in the number of loads brokered during 2007 as compared to 2006.

Rent and purchased transportation increased from 88.3% of revenues, before fuel surcharges, in 2006 to 88.9% of
revenues, before fuel surcharges, in 2007. The increase relates to an increase in amounts charged by third party logistics
and brokerage service providers primarily as a result of higher fuel costs.

Other expenses increased from 1.4% of revenues, before fuel surcharges, in 2006 to 2.1% of revenues, before fuel
surcharges, in 2007. The increase relates primarily to an increase in amounts considered as uncollectible revenue during
2007 as compared to 2006.

Results of Operations - Combined Services

2008 Compared to 2007

Income tax benefit was approximately $10.6 million in 2008 resulting in an effective rate of 36.1%, as compared to income
tax expense of approximately $2.0 million in 2007 which resulted in an effective rate of 42.6%. The effective tax rate differs
from the statutory rate primarily due to the existence of partially non-deductible meal and incidental expense per-diem
payments to company drivers. These per-diem payments may cause a significant difference in the Company’s effective tax
rate from period-to-period as the proportion of non-deductible expenses to pre-tax net income increases or decreases.

We have determined, based on significant judgment, that a valuation allowance against our deferred tax assets has not
been necessary. Management evaluates the realizability of its deferred tax assets based upon negative and positive
evidence available and, based on the evidence available at this time, management concludes that it is "more likely than
not" that we will be able to realize the benefit of our deferred tax assets in the near future.

As of December 31, 2008, there were no unrecognized tax benefits and an adjustment to the Company’s consolidated
financial statements for uncertain tax positions was not required as management believes that the Company’s significant
tax positions taken in income tax returns filed or to be filed are supported by clear and unambiguous income tax laws.

The Company and its subsidiaries are subject to U.S. and Canadian federal income tax laws as well as the income tax laws
of multiple state jurisdictions. The major tax jurisdictions in which we operate generally provide for a deficiency assessment
statute of limitation period of three years and as a result, the Company’s tax years 2005 through 2007 remain open to
examination in those jurisdictions. During 2008, the Company has not recognized or accrued any interest or penalties
related to uncertain income tax positions and does not believe it is reasonably possible that our unrecognized tax benefits
will significantly change within the next twelve months.

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The combined net loss for all divisions was $18.8 million, or 5.8% of revenues, before fuel surcharge, for 2008 as
compared to combined net income for all divisions of $2.7 million or 0.8% of revenues, before fuel surcharge, for 2007. The
decrease in income combined with the effect of treasury stock repurchases resulted in a decrease in diluted earnings per
share from $0.26 for 2007 to a diluted loss per share of $1.94 for 2008.

2007 Compared to 2006

Income tax expense was approximately $2.0 million in 2007 resulting in an effective rate of 42.6% as compared to income
tax expense of approximately $12.1 million in 2006 which resulted in an effective rate of 40.2%. The effective tax rate
differs from the statutory rate primarily due to the existence of partially non-deductible meal and incidental expense per-
diem payments to company drivers. These per-diem payments may cause a significant difference in the Company’s
effective tax rate from period-to-period as the proportion of non-deductible expenses to pre-tax net income increases or
decreases.

We have determined, based on significant judgment, that a valuation allowance against our deferred tax assets has not
been necessary. Management evaluates the realizability of its deferred tax assets based upon negative and positive
evidence available and based on the evidence available at this time, management concludes that it is "more likely than not"
that we will be able to realize the benefit of our deferred tax assets in the near future.

The Company adopted the provisions of Financial Accounting Standards Board (“FASB”) Interpretation 48, Accounting for
Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109 (“FIN 48”), on January 1, 2007. FIN 48
addressed the determination of how tax benefits claimed or expected to be claimed on a tax return should be recorded in
the financial statements. Under FIN 48, the Company may recognize the tax benefit from an uncertain tax position only if it
is more likely than not that the position will be sustained on examination by taxing authorities, based on the technical merits
of the position. Upon adoption and as of December 31, 2007, there were no unrecognized tax benefits and an adjustment
to the Company’s consolidated financial statements for uncertain tax positions was not required as management believes
that the Company’s significant tax positions taken in income tax returns filed or to be filed are supported by clear and
unambiguous income tax laws.

The Company and its subsidiaries are subject to U.S. and Canadian federal income tax laws as well as the income tax laws
of multiple state jurisdictions. The major tax jurisdictions in which we operate generally provide for a deficiency assessment
statute of limitation period of three years and as a result, during 2007, the Company’s tax years 2004 through 2006
remained open to examination in those jurisdictions. During 2007, the Company did not recognize or accrue any interest or
penalties related to uncertain income tax positions and did not believe it was reasonably possible that our unrecognized tax
benefits would significantly change within the next twelve months.

Net income for all divisions was $2.7 million, or 0.8% of revenues, before fuel surcharge, for 2007 as compared to $18.0
million or 5.1% of revenues, before fuel surcharge, for 2006. The decrease in net income combined with the effect of
treasury stock repurchases resulted in a decrease in diluted earnings per share to $0.26 for 2007 compared to $1.74 for
2006.

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Quarterly Results of Operations

The following table presents selected consolidated financial information for each of our last eight fiscal quarters through
December 31, 2008. 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.

Mar. 31,
2008

June 30,

Sept. 30,

Dec. 31,

Mar. 31,

June 30,

Sept. 30,

Dec. 31,

2008

2007

Quarter Ended

(unaudited)
(in thousands, except earnings per share data)

$ 110,930 $ 105,958 $ 84,014 $ 98,809 $ 106,700 $ 101,171 $ 102,162

$ 105,820

109,786

112,460 107,240 99,190 96,475 102,528 100,688 103,785
(1,623)
(840)

(1,282) (15,176)
(3,181) (11,424)

(1,530)
(1,332)

4,172
2,192

2,334
1,265

483
36

(3,966)
(2,828)

Operating revenues
Total operating
expenses
Operating (loss) income
Net (loss) income
(Loss) earnings per
common share:
Basic

(0.29) $

(0.14) $

(0.33) $

(1.19) $

0.12 $

0.21 $

0.00 $

(0.08)

Diluted

(0.29) $

(0.14) $

(0.33) $

(1.19) $

0.12 $

0.21 $

0.00 $

(0.08)

Liquidity and Capital Resources

The growth of our business has required, and will continue to require, a significant investment in new revenue equipment.
Our primary sources of liquidity have been funds provided by operations, proceeds from the sales of revenue equipment,
issuances of equity securities, and borrowings under our lines of credit and installment notes.

During 2008, we generated $40.6 million in cash from operating activities compared to $45.2 million and $60.7 million in
2007 and 2006, respectively. Investing activities used $48.3 million in cash during 2008 compared to $61.7 million and
$42.7 million in 2007 and 2006, respectively. The cash used in all three years related primarily to the purchase of revenue
equipment (trucks and trailers) used in our operations. Financing activities provided $8.1 million in cash during 2008
compared to financing activities in 2007 and 2006 which provided $15.9 million and used $18.1 million, respectively. See
the Consolidated Statements of Cash Flows in Item 8 of this Report.

Our primary use of funds is for the purchase of revenue equipment. We typically use installment notes, our existing lines of
credit on an interim basis, proceeds from the sale or trade of equipment, and cash flows from operations, to finance capital
expenditures and repay long-term debt. During 2008 and 2007, we utilized cash on hand, installment notes, and our lines of
credit to finance revenue equipment purchases of approximately $53.5 million and $72.6 million, respectively.

Occasionally we finance the acquisition of revenue equipment through installment notes with fixed interest rates and terms
ranging from 12 to 48 months. At December 31, 2008, the Company’s subsidiaries had combined outstanding
indebtedness under such installment notes of $45.7 million. These installment notes are payable in monthly installments
ranging from 12 months to 36 months at a weighted average interest rate of 4.80%. At December 31, 2007, no such
outstanding indebtedness existed under installment notes.

In order to maintain our truck and trailer fleet count it is often necessary to purchase replacement units and place them in
service before trade units are removed from service. The timing of this process often requires the Company to pay for new
units without any reduction in price for trade units. In this situation, the Company later receives payment for the trade units
as they are delivered to the equipment vendor and have passed vendor inspection. During the twelve months ended
December 31, 2008 and 2007, the Company received approximately $4.3 million and $5.9 million, respectively, for units
delivered for trade.

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During the first six months of 2008 we maintained two $30.0 million revolving lines of credit (Line A and Line B,
respectively) with separate financial institutions. Amounts outstanding under Line B were paid in full on it’s maturity date of
June 30, 2008 and was not renewed by the Company. Amounts outstanding under Line A bear interest at LIBOR
(determined as of the first day of each month) plus 1.25% (3.15% at December 31, 2008), are secured by our accounts
receivable and mature on May 31, 2009. However the Company has the intent and ability to extend the terms of this line of
credit for an additional one year period until May 31, 2010. At December 31, 2008, outstanding advances on Line A were
approximately $5.7 million, including $2.0 million in letters of credit, with availability to borrow $24.3 million.

Trade accounts receivable at December 31, 2008 decreased approximately $14.6 million as compared to December 31,
2007. The decrease was related to a general decrease in revenues, which flow through the trade accounts receivable
account, during the quarter ending December 31, 2008 as compared to the revenues generated during the quarter ending
December 31, 2007.

Accounts receivable-other at December 31, 2008 decreased approximately $4.3 million as compared to December 31,
2007. The decrease relates primarily to a decrease in amounts receivable from the Company’s third-party qualified
intermediary. During 2007, the Company contracted with a third-party qualified intermediary in order to implement a like-
kind exchange tax program. Under the program, dispositions of eligible trucks or trailers and acquisitions of replacement
trucks or trailers are made in a form whereby any associated tax gains related to the disposal are deferred. To qualify for
like-kind exchange treatment, we exchange, through our qualified intermediary, eligible trucks or trailers being disposed
with trucks or trailers being acquired. Amounts held by the Company’s third-party qualified intermediary are dependant on
the timing and extent of the Company’s revenue equipment sales and/or purchase activities which can fluctuate
significantly from period to period. At December 31, 2008 approximately $31,000 of sales proceeds were being held by the
third-party qualified intermediary as compared to $4.1 million held by the third-party qualified intermediary at December 31,
2007. The Company intends to use these sales proceeds during 2009 for the purchase of qualified replacement tractors or
trailers.

Prepaid expenses and deposits at December 31, 2008 decreased approximately $5.5 million as compared to December
31, 2007. The primary reason for the decrease relates to the amortization of prepaid tractor and trailer license fees and
auto liability insurance premiums. In December 2007, approximately $3.0 million of the 2008 license fees and
approximately $3.0 million of the 2008 auto liability insurance premiums were paid in advance. There were no
corresponding prepayments made during December 2008 for auto liability insurance premiums or license fees related to
2009.

Marketable equity securities available for sale at December 31, 2008 decreased approximately $4.7 million as compared to
December 31, 2007. During the year ended December 31, 2008, the Company purchased approximately $4.3 million of
equity securities with the remaining increase or decrease attributable to changes in the market value of the investments,
net of sales and other-than-temporary write-downs. These securities, combined with equity securities purchased in prior
periods, have a combined cost basis of approximately $11.6 million and a combined fair market value of approximately
$12.5 million. The Company has developed a strategy to invest in securities from which it expects to receive dividends that
qualify for favorable tax treatment, as well as appreciate in value. The Company anticipates that increases in the market
value of the investments combined with dividend payments will exceed interest rates paid on borrowings for the same
period. During 2008 the Company had net unrealized pre-tax losses of approximately $2.4 million and received dividends of
approximately $818,000. The holding term of these securities depends largely on the general economic environment, the
equity markets, borrowing rates and the Company's cash requirements.

Land at December 31, 2008 increased approximately $2.2 million as compared to December 31, 2007. The increase is
primarily related to the purchase of terminal facilities in Laredo, Texas which were previously leased by the Company from
a related party. The purchase price was based on an appraisal performed by an independent third party.

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Structures and improvements at December 31, 2008 increased approximately $3.8 million as compared to December 31,
2007. The increase is primarily related to the purchase of terminal facilities in Laredo, Texas which were previously leased
by the Company from a related party. The purchase price was based on an appraisal performed by an independent third
party.

Revenue equipment, which generally consists of trucks, trailers, and revenue equipment accessories such as Qualcomm™
satellite tracking units and auxiliary power units, at December 31, 2008 increased approximately $28.1 million as compared
to December 31, 2007. The increase is primarily related to the net effect of purchasing approximately 490 trucks and 460
trailers during 2008 while only disposing of approximately 320 trucks and 365 trailers during 2008. Also contributing to the
increase was an increase in the cost of new truck and trailer units as compared to the units they replaced and to the
acquisition of Qualcomm™ satellite tracking units and auxiliary power units. At December 31, 2008, approximately 200
trucks included in revenue equipment had been placed in inactive status as they were prepared for sale or trade. The sale
or trade of these trucks in 2009 will reduce the carrying amount of the Company’s revenue equipment and accumulated
depreciation at the time of sale or trade.

Goodwill at December 31, 2008 decreased approximately $15.4 million as compared to December 31, 2007. The decrease
relates to the results of our annual goodwill impairment test in which goodwill was determined to be fully impaired. The
impairment was triggered by the sustained decline of our market capitalization caused by a decrease in our stock price
during 2008. In the fourth quarter of 2008, we determined that our market capitalization compared to the carrying amount of
the Company indicated that impairment was probable and that the second step of impairment testing was necessary. The
second step of our impairment test required the calculation of the fair value of the Company and the subsequent allocation
of the fair value to the assets and liabilities of the Company. The excess fair value after this allocation is performed
represents the implied goodwill of the Company, if any, and was zero at December 31, 2008. As a result we incurred an
impairment expense for the entire balance of our goodwill or $15.4 million in the fourth quarter of 2008.

Accounts payable at December 31, 2008 decreased approximately $5.1 million as compared to December 31, 2007. The
decrease is primarily related to a decrease in the amount of bank drafts outstanding in excess of bank balance as
compared to bank drafts outstanding at December 31, 2007. As of December 31, 2008 bank drafts of approximately $5.3
million were reclassified to accounts payable as compared to approximately $11.1 million reclassified as of December 31,
2007.

Accrued expenses and other liabilities at December 31, 2008 increased approximately $5.4 million as compared to
December 31, 2007. The increase is primarily related to $6.9 million of margin account borrowings secured by the
Company’s investments in marketable equity securities. Partially offsetting the increase related to margin account
borrowings is a decrease in amounts accrued at the end of the period for employee wages and benefits which can vary
significantly throughout the year depending on many factors, including the timing of the actual date employees are paid in
relation to the last day of the reporting period.

Current maturities of long-term debt at December 31, 2008 increased approximately $13.9 million as compared to
December 31, 2007. The increase is primarily related to monthly payments due within the next twelve months resulting
from installment note borrowings of approximately $51.7 million during 2008 for the purchase of revenue equipment.

Long-term debt at December 31, 2008 decreased approximately $8.7 million as compared to December 31, 2007. The
decrease is primarily related to a decrease in amounts payable on the Company’s lines of credit as of December 31, 2008
when compared to amounts payable as of December 31, 2007. During 2008, the Company began to finance revenue
equipment purchases primarily with installment notes instead of line of credit borrowings. Also, one of the Company’s credit
lines matured in June 2008 and was not renewed by the Company.

Treasury stock at December 31, 2008 increased approximately $3.9 million as the Company purchased 428,500 shares of
its common stock at various times throughout 2008 as part of stock repurchase plans approved by the Company’s Board of
Directors.

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For 2009, we expect to purchase approximately 38 new trucks and approximately 58 trailers while continuing to sell or trade
older equipment. During 2008, and continuing through 2009, the Company began purchasing and installing auxiliary power
units in order to minimize fuel consumption by trucks that are running at idle. During 2009, we expect to purchase
approximately 700 of these auxiliary power units. Management expects that proceeds from the sale or trade of older
equipment during 2009 will exceed capital expenditures during 2009 by approximately $1.0 million. Management believes
we will be able to finance our near term needs for working capital over the next twelve months, as well as acquisitions of
revenue equipment during such period, with cash balances, cash flows from operations, and borrowings believed to be
available from financing sources. We will continue to have significant capital requirements over the long-term, which may
require us to incur debt or seek additional equity capital. The availability of additional capital will depend upon prevailing
market conditions, the market price of our common stock and several other factors over which we have limited control, as
well as our financial condition and results of operations. Nevertheless, based on our anticipated future cash flows and
sources of financing that we expect will be available to us, we do not expect that we will experience any significant liquidity
constraints in the foreseeable future.

Contractual Obligations and Commercial Commitments

The following table sets forth the Company's contractual obligations and commercial commitments as of December 31,
2008:

Payments due by period
(in thousands)

Total

Less than
1 year

1 to 3
Years

3 to 5
Years

More than
5 Years

Long-term debt (1)
Operating leases (2)
Total

55,505 $
917
56,422 $

18,079 $
256
18,335 $

33,473 $
389
33,862 $

3,953 $
272
4,225 $

-
-
-

(1) Including interest.
(2) Represents building, facilities, and drop yard operating leases.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements as defined in Regulation S-K 303 (a)(4)(ii) issued by the Securities
and Exchange Commission.

Insurance

With respect to physical damage for trucks, cargo loss and auto liability, the Company maintains insurance coverage to
protect it from certain business risks. These policies are with various carriers and have per occurrence deductibles of
$2,500, $10,000 and $2,500 respectively. The Company maintains workers’ compensation coverage in Arkansas, Ohio,
Oklahoma, Mississippi, and Florida with a $500,000 self-insured retention and a $500,000 per occurrence excess policy.
The Company has elected to opt out of workers' compensation coverage in Texas and is providing coverage through the
P.A.M. Texas Injury Plan. The Company has reserved for estimated losses to pay such claims as well as claims incurred
but not yet reported. The Company has not experienced any adverse trends involving differences in claims experienced
versus claims estimates for workers’ compensation claims. Letters of credit aggregating $353,000 and certificates of
deposit totaling $200,000 are held by banks as security for workers’ compensation claims. The Company self insures for
employee health claims with a stop loss of $225,000 per covered employee per year and estimates its liability for claims
incurred but not reported.

Inflation

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

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Adoption of Accounting Policies

See “Item 8. Financial Statements and Supplementary Data, Note 1 to the Consolidated Financial Statements - Recent
Accounting Pronouncements.”

Critical Accounting Policies

The Company's significant accounting policies are described in Note 1 to the Consolidated Financial Statements. The
policies described below represent those that are broadly applicable to the Company's operations and involve additional
management judgment due to the sensitivity of the methods, assumptions and estimates necessary in determining the
related amounts.

Accounts Receivable. We continuously monitor collections and payments from our customers, third parties and vendors
and maintain a provision for estimated credit losses based upon our historical experience and any specific collection issues
that we have identified. While such credit losses have historically been within our expectations and the provisions
established, we cannot guarantee that we will continue to experience the same credit loss rates that we have in the past.

Property and equipment . Management must use its judgment in the selection of estimated useful lives and salvage values
for purposes of depreciating trucks and trailers which in some cases do not have guaranteed residual values. Estimates of
salvage value at the expected date of trade-in or sale are based on the expected market values of equipment at the time of
disposal which, in many cases include guaranteed residual values by the manufacturers.

Self Insurance. The Company is self-insured for health and workers' compensation benefits up to certain stop-loss limits.
Such costs are accrued based on known claims and an estimate of incurred, but not reported (IBNR) claims. IBNR claims
are estimated using historical lag information and other data either provided by outside claims administrators or developed
internally. This estimation process is subjective, and to the extent that future actual results differ from original estimates,
adjustments to recorded accruals may be necessary.

Revenue Recognition. Revenue is recognized in full upon completion of delivery to the receiver's location. For freight in
transit at the end of a reporting period, the Company recognizes revenue prorata based on relative transit time completed
as a portion of the estimated total transit time. Expenses are recognized as incurred.

Prepaid Tires. Tires purchased with revenue equipment are capitalized as a cost of the related equipment. Replacement
tires are included in prepaid expenses and deposits and are amortized over a 24-month period. Costs related to tire
recapping are expensed when incurred.

Income Taxes. Significant management judgment is required to determine the provision for income taxes and to determine
whether deferred income tax assets will be realized in full or in part. Deferred income tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. When it is more likely that all or some portion of specific deferred income tax
assets will not be realized, a valuation allowance must be established for the amount of deferred income tax assets that
are determined not to be realizable. A valuation allowance for deferred income tax assets has not been deemed to be
necessary. Accordingly, if the facts or financial circumstances were to change, thereby impacting the likelihood of realizing
the deferred income tax assets, judgment would need to be applied to determine the amount of valuation allowance
required in any given period.

Effective January 1, 2007, the Company adopted the provisions of FIN 48. FIN 48 contains a two-step approach to
recognizing and measuring uncertain tax positions accounted for in accordance with SFAS No. 109. The first step is to
evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not
that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second
step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate
settlement. We consider many factors when evaluating and estimating

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our tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual
outcomes.

Business Combinations and Goodwill . Upon acquisition of an entity, the cost of the acquired entity must be allocated to
assets and liabilities acquired. Identification of intangible assets, if any, that meet certain recognition criteria is necessary.
This identification and subsequent valuation requires significant judgments. The carrying value of goodwill is tested
annually and as of December 31, 2008 the Company determined that the recorded amount of goodwill was fully impaired.
The impairment testing requires an estimate of the value of the Company as a whole, as the Company has determined it
only has one reporting unit as defined in Statement of Financial Accounting Standards No. 142, “Goodwill and Other
Intangible Assets.”

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

Our primary market risk exposures include equity price risk, interest rate risk, and commodity price risk (the price paid to
obtain diesel fuel for our trucks). The potential adverse impact of these 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.

Equity Price Risk

We hold certain actively traded marketable equity securities which subjects the Company to fluctuations in the fair market
value of its investment portfolio based on current market price. The recorded value of marketable equity securities
decreased to $12.5 million at December 31, 2008 from $17.3 million at December 31, 2007. The decrease includes
additional purchases, net of sales or write-downs, of approximately $2.4 million during 2008 and a decrease in the fair
market value of approximately $2.4 million during 2008. A 10% decrease in the market price of our marketable equity
securities would cause a corresponding 10% decrease in the carrying amounts of these securities, or approximately $1.3
million. For additional information with respect to the marketable equity securities, see Note 3 to our consolidated financial
statements.

Interest Rate Risk

Our line of credit bears interest at a floating rate equal to LIBOR plus a fixed percentage. Accordingly, changes in LIBOR,
which are effected by changes in interest rates, will affect the interest rate on, and therefore our costs under, the line of
credit. Assuming $5.0 million of variable rate debt was outstanding under our line of credit for a full fiscal year, a
hypothetical 100 basis point increase in LIBOR would result in approximately $50,000 of additional interest expense.

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. Based upon our 2008 fuel consumption, a
10% increase in the average annual price per gallon of diesel fuel would increase our annual fuel expenses by $14.1
million.

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Item 8. Financial Statements and Supplementary Data.

The following statements are filed with this report:

Report of Independent Registered Public Accounting Firm – Grant Thornton LLP
Consolidated Balance Sheets - December 31, 2008 and 2007
Consolidated Statements of Operations - Years ended December 31, 2008, 2007 and 2006
Consolidated Statements of Shareholders’ Equity and Other Comprehensive Income (Loss) - Years ended

December 31, 2008, 2007 and 2006

Consolidated Statements of Cash Flows - Years ended December 31, 2008, 2007 and 2006
Notes to Consolidated Financial Statements

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders
P.A.M. Transportation Services, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of P.A.M. Transportation Services, Inc. (a Delaware
corporation) and subsidiaries (collectively the Company) as of December 31, 2008 and 2007, and the related consolidated
statements of operations, stockholders’ equity and other comprehensive income (loss), and cash flows for each of the three
years in the period ended December 31, 2008. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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, 2008 and 2007, and the results of
their operations and their cash flows for each of the three years in the period ended December 31, 2008 in conformity with
accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), P.A.M. Transportation Services, Inc. and subsidiaries’ internal control over financial reporting as of December 31,
2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) and our report dated March 6, 2009 expressed an unqualified opinion
thereon.

/s/ GRANT THORNTON LLP

Tulsa, Oklahoma
March 6, 2009

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P.A.M. TRANSPORTATION SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2008 AND 2007
(in thousands, except share and per share data)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents
Accounts receivable—net:

Trade
Other
Inventories
Prepaid expenses and deposits
Marketable equity securities
Income taxes refundable

Total current assets

PROPERTY AND EQUIPMENT:

Land
Structures and improvements
Revenue equipment
Office furniture and equipment

Total property and equipment

Accumulated depreciation

Net property and equipment

OTHER ASSETS:

Goodwill
Non-compete agreements, net
Other

Total other assets

TOTAL ASSETS

See notes to consolidated financial statements.

2008

2007

858 $

407

43,815
1,088
858
9,443
12,540
524

58,397
5,349
905
14,978
17,269
2,199

69,126

99,504

4,916
13,596
320,188
7,606

2,674
9,795
292,133
7,482

346,306

312,084

(125,742)

(107,841)

220,564

204,243

-
-
671

15,413
17
727

671

16,157

290,361 $

319,904

(Continued)

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CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2008 AND 2007
(in thousands, except share and per share data)

LIABILITIES AND SHAREHOLDERS' EQUITY

2008

2007

CURRENT LIABILITIES:

Accounts payable
Accrued expenses and other liabilities
Current maturities of long—term debt
Deferred income taxes—current

Total current liabilities

Long-term debt—less current portion
Deferred income taxes—less current portion

Total liabilities

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, 10,000,000 shares
authorized; none issued
Common stock, $.01 par value, 40,000,000 shares
authorized; 11,368,207 and 11,368,207 shares issued;
9,409,607 and 9,838,107 shares outstanding at
December 31, 2008 and December 31, 2007, respectively
Additional paid-in capital
Accumulated other comprehensive income
Treasury stock, at cost; 1,958,600 and 1,530,100
shares, respectively
Retained earnings

Total shareholders’ equity

20,269 $
15,684
15,928
157

25,346
10,323
2,065
5,117

52,038

42,851

35,492
47,354

44,172
53,504

134,884

140,527

114
77,659
611

114
77,557
1,921

(29,127)
106,220

(25,200)
124,985

155,477

179,377

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

290,361 $

319,904

See notes to consolidated financial statements.

(Concluded)

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P.A.M. TRANSPORTATION SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
(in thousands, except per share data)

OPERATING REVENUES:

Revenue, before fuel surcharge
Fuel surcharge

2008

2007

2006

323,272 $
83,451

351,701 $
57,140

351,373
48,896

Total operating revenues

406,723

408,841

400,269

OPERATING EXPENSES AND COSTS:

Salaries, wages and benefits
Fuel expense
Rents and purchased transportation
Depreciation and amortization
Goodwill impairment charge
Operating supplies and expenses
Operating taxes and licenses
Insurance and claims
Communications and utilities
Other
Loss (gain) on disposition of equipment

123,961
140,531
39,887
37,477
15,413
30,514
15,937
16,018
2,869
5,119
952

135,606
114,242
38,718
38,759
-
30,845
17,520
17,591
3,113
7,130
(48)

127,539
97,286
43,844
33,929
-
25,682
16,421
16,389
2,642
5,426
47

Total operating expenses and costs

428,678

403,476

369,205

OPERATING (LOSS) INCOME

(21,955)

5,365

31,064

NON-OPERATING (EXPENSE) INCOME
INTEREST EXPENSE

(4,996)
(2,429)

1,707
(2,453)

448
(1,475)

(LOSS) INCOME BEFORE INCOME TAXES

(29,380)

4,619

30,037

FEDERAL & STATE INCOME TAX (BENEFIT) EXPENSE:

Current
Deferred

314
(10,929)

217
1,749

9,768
2,305

Total federal & state income tax (benefit) expense

(10,615)

1,966

12,073

NET (LOSS) INCOME

(18,765) $

2,653 $

17,964

(LOSS) EARNINGS PER COMMON SHARE:

Basic

Diluted

AVERAGE COMMON SHARES OUTSTANDING:

Basic

Diluted

See notes to consolidated financial statements.

(1.94) $

0.26 $

1.74

9,683

10,238

10,296

9,683

10,239

10,302

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P.A.M. TRANSPORTATION SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND OTHER COMPREHENSIVE INCOME (LOSS)
YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
(in thousands)

Common Stock
Shares /
Amount

Additional
Paid-In
Capital

Other
Comprehensive
Income (Loss)

Accumulated
Other
Comprehensive
Income

Treasury

Stock

Retained
Earnings Total

BALANCE—
January 1, 2006

Components of

comprehensive
income:
Net earnings
Other
comprehensive
gain:

10,285 $ 113 $

76,429

1,721 $ (17,869) $ 104,368 $164,762

17,964

17,964 17,964

Unrealized gain
on hedge,
net of tax of $13
Unrealized gain
on marketable
securities, net
of tax of $923

Total
comprehensive
income

Exercise of stock
options-shares

issued including
tax benefits
Share-based
compensation

1,402

19,385

369

1,402

370

511

BALANCE—
December 31, 2006 10,303 114

Components of

comprehensive
income:
Net earnings
Other
comprehensive
gain:

Realized gain
on marketable
securities, net
of tax of $241
Unrealized loss
on marketable
securities, net
of tax of $(448)

Total
comprehensive
income

511

77,309

3,142 (17,869) 122,332 185,028

2,653

(359)

(862)

(359)

(862)

1,432

Treasury stock
repurchases
Exercise of stock
options-shares

issued including
tax benefits
Share-based
compensation

(471)

125

123

(7,331)

125

123

BALANCE—
December 31, 2007 9,838 114

77,557

1,921 (25,200) 124,985 179,377

Components of

comprehensive
income:

Net loss
Other
comprehensive
gain:

Realized loss
on marketable
securities, net
of tax of $(6)
Unrealized loss
on marketable
securities, net
of tax of
$(1,072)

Total
comprehensive
income (loss)

Treasury stock
repurchases
Share-based
compensation

(18,765)

(18,765) (18,765)

(1,321)

(20,075)

(428)

(3,927)

BALANCE—
December 31, 2008 9,410 $ 114 $

102

77,659

611 $ (29,127) $ 106,220 $155,477

102

See notes to consolidated financial statements.

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P.A.M. TRANSPORTATION SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
(in thousands)

OPERATING ACTIVITIES:
Net (loss) income
Adjustments to reconcile net (loss) income to net cash provided by operating
activities:

Depreciation and amortization
Goodwill impairment charge
Bad debt expense
Stock compensation—net of excess tax benefits
Non-compete agreement amortization—net of payments
Provision for deferred income taxes
Reclassification of unrealized loss on marketable equity securities
Gain (loss) on sale of marketable equity securities
(Gain) loss on sale or disposal of equipment
Changes in operating assets and liabilities:

Accounts receivable
Prepaid expenses, inventories, and other assets
Income taxes refundable (payable)
Trade accounts payable
Accrued expenses

Net cash provided by operating activities

INVESTING ACTIVITIES:

Purchases of property and equipment
Proceeds from disposition of equipment
Changes in restricted cash
Sales of marketable equity securities
Purchases of marketable equity securities
Net cash used in investing activities

FINANCING ACTIVITIES:

Borrowings under line of credit
Repayments under line of credit
Borrowings of long-term debt
Repayments of long-term debt
Borrowings under margin account
Repayments under margin account
Repurchases of common stock
Stock compensation excess tax benefits
Exercise of stock options

Net cash provided by (used in) financing activities

2008

2007

2006

(18,765) $

2,653 $

17,964

37,477
15,413
295
102
(17)
(10,929)
5,227
656
952

14,505
5,639
2,574
(11,007)
(1,477)
40,645

38,759
-
573
118
-
1,749
95
(1,071)
(48)

2,585
(113)
(1,696)
1,089
496
45,189

33,929
-
310
441
-
2,305
120
(30)
47

3,685
440
(202)
2,219
(525)
60,703

(60,218)
11,398
4,042
611
(4,154)
(48,321)

(76,166)
22,273
(4,073)
1,622
(5,389)
(61,733)

(53,514)
11,987
-
85
(1,288)
(42,730)

546,144
(585,592)
53,470
(8,839)
19,800
(12,929)
(3,927)
-
-
8,127

508,076
(484,322)
2,067
(2,704)
-
-
(7,331)
5
120
15,911

446,221
(463,967)
1,996
(2,682)
-
-
-
70
300
(18,062)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

451

(633)

(89)

CASH AND CASH EQUIVALENTS—Beginning of year

407

1,040

1,129

CASH AND CASH EQUIVALENTS—End of year

858 $

407 $

1,040

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION—

Cash paid during the period for:

Interest

2,430 $

2,410 $

1,481

Income taxes

303 $

1,976 $

10,061

NONCASH INVESTING AND FINANCING ACTIVITIES—

Purchases of revenue equipment included in accounts payable

5,951 $

- $

14,276

See notes to consolidated financial statements.

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P.A.M. TRANSPORTATION SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2008, 2007, AND 2006

1. ACCOUNTING POLICIES

Description of Business and Principles of Consolidation –P.A.M. Transportation Services, Inc. (the “Company”),
through its subsidiaries, operates as a truckload transportation and logistics company.

The consolidated financial statements include the accounts of the Company and its wholly owned operating
subsidiaries: P.A.M. Transport, Inc., P.A.M. Dedicated Services, Inc., Choctaw Express, Inc., Allen Freight Services,
Inc., Decker Transport Co., Inc., McNeill Express, Inc., T.T.X., Inc., Transcend Logistics, Inc., and East Coast
Transport and Logistics, LLC. The following subsidiaries were inactive during all periods presented: P.A.M.
International, Inc., P.A.M. Logistics Services, Inc., Choctaw Brokerage, Inc., P.A.M. Canada, Inc. and S & L
Logistics, Inc. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates–The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of any contingent assets and liabilities at the financial statement
date and reported amounts of revenue and expenses during the reporting period. The Company periodically reviews
these estimates and assumptions. The Company's estimates were based on its historical experience and various
other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ
from those estimates.

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.

Restricted Cash– Restricted cash consists of cash proceeds from the sale of trucks and trailers under our like-kind
exchange (“LKE”) tax program. See Note 11, “Federal and State Income Taxes,” for a discussion of the Company’s
LKE tax program. We classify restricted cash as a current asset within “Accounts receivable-other” as the exchange
process must be completed within 180 days in order to qualify for income tax deferral treatment. The changes in
restricted cash balances are reflected as an investing activity in our Consolidated Statements of Cash Flows as they
relate to the sales and purchases of revenue equipment.

Bank Overdrafts–The Company classifies bank overdrafts in current liabilities as an accounts payable and does not
offset other positive bank account balances located at the same or other financial institutions. Bank overdrafts
generally represent checks written that have not yet cleared the Company’s bank accounts. The majority of the
Company’s bank accounts are zero balance accounts that are funded at the time items clear against the account by
drawings against a line of credit, therefore the outstanding checks represent bank overdrafts. Because the recipients
of these checks have generally not yet received payment, the Company continues to classify bank overdrafts as
accounts payable. Bank overdrafts are classified as changes in accounts payable in the cash flows from operating
activities section of the Company’s Consolidated Statement of Cash Flows. Bank overdrafts as of December 31,
2008 and 2007 were approximately $5,312,000 and $11,088,000, respectively.

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Accounts Receivable Other–The components of accounts receivable other consist primarily of amounts held by a
third-party qualified intermediary that the Company uses to effectuate deferral of income taxes on gains from sales of
trucks and trailers under the Company’s LKE tax program. Also included are amounts representing company driver
advances, owner operator advances and equipment manufacturer warranties. Advances receivable from company
drivers as of December 31, 2008 and 2007, were approximately $345,000 and $483,000, respectively.

Accounts Receivable Allowance–An allowance is provided for accounts receivable based on historical collection
experience. Additionally, management considers any accounts individually known to exhibit characteristics indicating
a collection problem.

Marketable Equity Securities–Marketable equity securities are classified by the Company as either available for
sale or trading. Securities classified as available for sale are carried at market value with unrealized gains and losses
recognized in accumulated other comprehensive income in the statements of stockholders’ equity. Securities
classified as trading are carried at market value with unrealized gains and losses recognized in the statements of
operations. Realized gains and losses are computed utilizing the specific identification method.

Impairment of Long-Lived Assets –The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. An
impairment loss would be recognized if the carrying amount of the long-lived asset is not recoverable, and it exceeds
its fair value. For long-lived assets classified as held and used, if the carrying value of the long-lived asset exceeds
the sum of the future net cash flows, it is not recoverable. The Company does not separately identify assets by
subsidiary, as trucks and trailers are routinely transferred from one division to another. As a result, none of the
Company's long-lived assets have identifiable cash flows from use that are largely independent of the cash flows of
other assets and liabilities. Thus, the asset group used to assess impairment would include all assets and liabilities
of the Company.

Property and Equipment–Property and equipment is recorded at cost, less accumulated depreciation. 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. Depreciation is recognized over
the estimated asset life, considering the estimated salvage value of the asset. Such salvage values are based on
estimates using expected market values for used equipment and the estimated time of disposal which, in many
cases include guaranteed residual values by the manufacturers. Gains and losses are reflected in the year of
disposal. The following is a table reflecting estimated ranges of asset useful lives by major class of depreciable
assets:

Asset Class

Service vehicles
Office furniture and equipment
Revenue equipment
Structure and improvements

Estimated Asset Life

3-5 years
3-7 years
3-10 years
5-40 years

Prepaid Tires–Tires purchased with revenue equipment are capitalized as a cost of the related equipment.
Replacement tires are included in prepaid expenses and deposits and are amortized over a 24-month period.
Amounts paid for the recapping of tires are expensed when incurred.

Advertising Expense–Advertising costs are expensed as incurred and totaled approximately $307,000, $605,000
and $550,000 for the years ended December 31, 2008, 2007, and 2006, respectively.

Repairs and Maintenance –Repairs and maintenance costs are expensed as incurred.

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Goodwill–The Company follows the provisions of Statement of Financial Accounting Standards No. 142, Goodwill
and Other Intangible Assets, (“SFAS No. 142”), which requires the Company to assess acquired goodwill for
impairment at least annually in the absence of an indicator of possible impairment, and immediately upon an
indicator of possible impairment. The Company has selected December 31 for its annual impairment testing and
determined as of December 31, 2008 that there was impairment.

Self Insurance Liability—A liability is recognized for known health, workers’ compensation, cargo damage, property
damage and auto liability damage. An estimate of the incurred but not reported claims for each type of liability is
made based on historical claims made, estimated frequency of occurrence, and considering changing factors that
contribute to the overall cost of insurance.

Income Taxes–The Company applies the provisions of Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (“SFAS No. 109”). Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial reporting basis and the tax reporting basis of assets and
liabilities using enacted tax rates. In June 2006, the Financial Accounting Standards Board (“FASB”) issued
Interpretation 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109 (“FIN
48”), which became effective for the Company on January 1, 2007. FIN 48 addressed the determination of how tax
benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN
48, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the
position will be sustained on examination by taxing authorities, based on the technical merits of the position. The
application of income tax law to multi-jurisdictional operations such as those performed by the Company, are
inherently complex. Laws and regulations in this area are voluminous and often ambiguous. As such, we may be
required to make subjective assumptions and judgments regarding our income tax exposures. Interpretations of and
guidance surrounding income tax laws and regulations may change over time which could cause changes in our
assumptions and judgments that could materially affect amounts recognized in the consolidated financial statements.

Revenue Recognition–Revenue is recognized in full upon completion of delivery to the receiver’s location. For
freight in transit at the end of a reporting period, the Company recognizes revenue pro rata based on relative transit
miles completed as a portion of the estimated total transit miles. Expenses are recognized as incurred.

Share-Based Compensation–The Company adopted Statement of Financial Accounting Standards No. 123(R),
Share-Based Payments, effective January 1, 2006, utilizing the “modified prospective” method as described in the
standard. Under the “modified prospective” method, compensation cost is recognized for all share-based payments
granted after the effective date and for all unvested awards granted prior to the effective date. Prior to adoption, the
Company accounted for share-based payments under the recognition and measurement principles of Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. The
Company uses historical volatility when estimating the expected volatility of its share price. For additional information
with respect to share-based compensation, see Note 12 to our consolidated financial statements.

Earnings Per Share–The Company computes and presents earnings per share (“EPS”) in accordance with
Statement of Financial Accounting Standards No. 128, Earnings per Share (“SFAS No. 128”). The difference
between the Company's weighted-average shares outstanding and diluted shares outstanding is due to the dilutive
effect of stock options for all periods presented. See Note 13 for computation of diluted EPS.

Fair Value Measurements –The Company adopted the provisions of Statement of Financial Accounting Standards
No. 157, Fair Value Measurements (“SFAS No. 157”) effective January 1, 2008 for financial assets and liabilities that
are measured at fair value within the financial statements on a recurring basis. SFAS No. 157 defines fair value as
the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or
most advantageous market for the asset or liability in an orderly

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transaction between market participants on the measurement date. SFAS No. 157 also establishes a fair value
hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. For additional information with respect to fair value measurements, see Note 16 to
our consolidated financial statements.

Business Segment and Concentrations of Credit Risk –The Company operates in one business segment, motor
carrier operations. The Company provides truckload transportation services as well as brokerage and logistics
services to customers throughout the United States and portions of Canada and Mexico. Truckload transportation
services revenues, excluding fuel surcharges, represented 89.6%, 90.4%, and 87.8% of total revenues, excluding
fuel surcharges, for the twelve months ended December 31, 2008, 2007, and 2006, respectively. Remaining
revenues, excluding fuel surcharges, for each respective year were generated by brokerage and logistics services.
The Company performs ongoing credit evaluations and generally does not require collateral from its customers. The
Company maintains reserves for potential credit losses. In view of the concentration of the Company’s revenues and
accounts receivable among a limited number of customers within the automobile industry, the financial health of this
industry is a factor in the Company’s overall evaluation of accounts receivable.

Recent Accounting Pronouncements–In May 2008, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards No. 162, The Hierarchy of Generally Accepted Accounting Principles
(“GAAP”) (“SFAS No. 162”). SFAS No. 162 provides a consistent framework for determining what accounting
principles should be used when preparing U.S. GAAP financial statements. Previous guidance did not properly rank
the accounting literature. The new standard is effective 60 days following the Securities and Exchange Commission’s
(“SEC”) approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning
of Present Fairly in Conformity With Generally Accepted Accounting Principles. The adoption of SFAS No. 162 did
not have a material impact on the Company’s financial condition, results of operations, or cash flow.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about
Derivative Instruments and Hedging Activities – an amendment to FASB Statement No. 133 (“SFAS No. 161”).
SFAS No. 161 is intended to improve financial standards for derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position,
financial performance, and cash flows. Entities are required to provide enhanced disclosures about: (a) how and why
an entity uses derivative instruments; (b) how derivative instruments and related hedged items are accounted for
under Statement 133 and its related interpretations; and (c) how derivative instruments and related hedged items
affect an entity’s financial position, financial performance, and cash flows. It is effective for financial statements
issued for fiscal years beginning after November 15, 2008, with early adoption encouraged. The adoption of SFAS
No. 161 on January 1, 2009 did not have a material impact on the Company’s financial condition, results of
operations, or cash flow as the Company presently has no derivative instruments or hedging activities.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests
in Consolidated Financial Statements (“SFAS No. 160”). SFAS No. 160 re-characterizes minority interests in
consolidated subsidiaries as non-controlling interests and requires the classification of minority interests as a
component of equity. Under SFAS No. 160, a change in control will be measured at fair value, with any gain or loss
recognized in earnings. The effective date for SFAS No. 160 is for annual periods beginning on or after
December 15, 2008. Early adoption and retroactive application of SFAS No. 160 to fiscal years preceding the
effective date are not permitted. The adoption of SFAS No. 160 on January 1, 2009 did not have a material impact
on the Company’s financial condition, results of operations, or cash flow.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R), Business
Combinations (“SFAS No. 141(R)”). SFAS No. 141(R) expands the definition of transactions and events that qualify
as business combinations; requires that the acquired assets and liabilities, including contingencies, be recorded at
the fair value determined on the acquisition date and changes thereafter reflected in earnings, not goodwill; changes
the recognition timing for restructuring costs; and requires acquisition costs to be

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expensed as incurred. Adoption of SFAS No. 141(R) is required for combinations occurring in fiscal years beginning
after December 15, 2008. Early adoption and retroactive application of SFAS 141(R) to fiscal years preceding the
effective date are not permitted. The adoption of SFAS No. 141(R) on January 1, 2009 did not have a material
impact on the Company’s financial condition, results of operations, or cash flow.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option
for Financial Assets and Financial Liabilities— Including an Amendment of FASB Statement No. 115 (“SFAS No.
159”). SFAS No. 159 permits an entity the option to measure many financial instruments and certain other items at
fair value on specified election dates. Unrealized gains and losses on items for which the fair value option has been
elected will be recognized in earnings at each subsequent reporting date. The fair value option: (a) may be applied
instrument by instrument, with few exceptions, such as investments otherwise accounted for by the equity method;
(b) is irrevocable (unless a new election date occurs); and (c) is applied only to entire instruments and not to portions
of instruments. Most of the provisions in SFAS No. 159 are elective; however, the amendment to FASB Statement
No. 115, Accounting for Certain Investments in Debt and Equity Securities, applies to all entities with available-for-
sale and trading securities. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins
after November 15, 2007 and was adopted by the Company on January 1, 2008. Adoption of this statement had no
impact on the Company’s financial condition, results of operations, or cash flow, as the Company has not elected to
apply the fair value option to any of its financial instruments.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value
Measurements (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value
and expands the related disclosure requirements. This statement applies under other accounting pronouncements
that require or permit fair value measurements. On February 6, 2008, the FASB deferred the effective date of SFAS
157 until January 1, 2009 for all non-financial assets and non-financial liabilities, except those that are recognized or
disclosed at fair value in the financial statements on a recurring basis. SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007 and was adopted by the Company on
January 1, 2008. The adoption of SFAS No. 157 had no impact on the Company’s financial condition, results of
operations, or cash flow.

2. TRADE ACCOUNTS RECEIVABLE

The Company's receivables result primarily from the sale of transportation and logistics services. The Company
performs ongoing credit evaluations of its customers and generally does not require collateral for accounts
receivable. Accounts receivable which consist of both billed and unbilled receivables are recorded at their invoiced
amount and are presented net of an allowance for doubtful accounts. Accounts outstanding longer than contractual
payment terms are considered past due and are reviewed individually for collectibility. Accounts receivable balances
consist of the following components as of December 31, 2008 and 2007:

Billed
Unbilled
Allowance for doubtful accounts

Total accounts receivable—net

2008

2007

(in thousands)

41,247 $
4,724
(2,156)

53,439
6,849
(1,891)

43,815 $

58,397

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An analysis of changes in the allowance for doubtful accounts for the years ended December 31, 2008, 2007, and
2006 follows:

Balance—beginning of year
Provision for bad debts
Charge-offs
Recoveries
Balance—end of year

3. MARKETABLE EQUITY SECURITIES

2008

2007
(in thousands)

2006

1,891 $
353
(104)
16
2,156 $

1,457 $
607
(361)
188
1,891 $

2,030
354
(960)
33
1,457

The Company accounts for its marketable securities in accordance with Statement of Financial Accounting
Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities (“SFAS No. 115”). SFAS No.
115 requires companies to classify their investments as trading, available-for-sale or held-to-maturity. The
Company’s investments in marketable securities are classified as either trading or available-for-sale and consist of
equity securities. Management determines the appropriate classification of these securities at the time of purchase
and re-evaluates such designation as of each balance sheet date. During 2008, the Company sold certain securities
which were held as available-for-sale and had a cost basis of approximately $718,000. The proceeds on these sales
totaled approximately $625,000 which resulted in a realized loss of approximately $93,000. Also during 2008, three
securities were transferred from available-for-sale to trading. These securities were transferred because, historically,
they have significantly underperformed in relation to their benchmarks. The resulting loss recognized was $55,000.
Also during 2008, two securities were transferred from trading to available-for-sale. These securities were transferred
at their market value at the time of transfer. During 2007, the Company sold certain securities which were held as
available-for-sale and had a cost basis of approximately $550,000. The proceeds on these sales totaled
approximately $1,622,000 which resulted in a realized gain of approximately $1,071,000. Also during 2007, two
securities were transferred from available-for-sale to trading. These securities were transferred because, historically,
they have significantly underperformed in relation to their benchmarks. The resulting gain recognized was not
material.

Marketable equity securities are carried at fair value, with the unrealized gains and losses, net of tax, included as a
component of accumulated other comprehensive income in shareholders’ equity. Realized gains and losses,
declines in value judged to be other-than-temporary on available-for-sale securities, and increases or decreases in
value on trading securities, if any, are included in the determination of net income. A quarterly evaluation is
performed in order to judge whether declines in value below cost should be considered temporary and when losses
are deemed to be other-than-temporary. Several factors are considered in this evaluation process including the
severity and duration of the decline in value, the financial condition and near-term outlook for the specific issuer and
the Company’s ability to hold the securities. There were no securities in a cumulative loss position for twelve months
or longer at December 31, 2008. However, based on the severity of declines in certain securities during 2008 and
the fact that the Company has no evidence that indicates these securities will regain a value equal to or greater than
their cost basis, their declines in value have been determined to be other-than-temporary. As a result of this
evaluation, the Company recorded an impairment charge of approximately $5.2 million in its statement of operations
for the year ending December 31, 2008. These declines came primarily from our equity securities in the financial and
insurance sectors, which have experienced severe declines recently in their respective stock prices. The cost of
securities sold is based on the specific identification method and interest and dividends on securities are included in
non-operating income.

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As of December 31, 2008, equity securities classified as available-for-sale and equity securities classified as trading
had a cost basis of approximately $11,134,000 and $505,000, respectively and fair market values of approximately
$12,090,000 and $450,000, respectively. For the year ended December 31, 2008, the Company had net unrealized
losses in market value on securities classified as available-for-sale of approximately $1,310,000, net of deferred
income taxes. These securities had gross unrealized gains of approximately $2,193,000 and gross unrealized losses
of approximately $1,237,000. As of December 31, 2008, the total unrealized gain, net of deferred income taxes, in
accumulated other comprehensive income was approximately $611,000.

As of December 31, 2007, equity securities classified as available-for-sale and equity securities classified as trading
had a cost basis of approximately $13,272,000 and $661,000, respectively and fair market values of approximately
$16,608,000 and $661,000, respectively. For the year ended December 31, 2007, the Company had net unrealized
losses in market value on securities classified as available-for-sale of approximately $1,221,000, net of deferred
income taxes. These securities had gross unrealized gains of approximately $4,916,000 and gross unrealized losses
of approximately $1,572,000. As of December 31, 2007, the total unrealized gain, net of deferred income taxes, in
accumulated other comprehensive income was approximately $1,921,000.

The following table shows the Company’s investments’ approximate gross unrealized losses and fair value at
December 31, 2008 and 2007. These investments consist of equity securities. As of December 31, 2008 and 2007
there were no investments that had been in a continuous unrealized loss position for twelve months or longer.

2008

2007

(in thousands)

Fair Value

Unrealized
Losses

Equity securities – Available for sale
Equity securities – Trading

4,775 $
372

1,237 $
67

5,308 $
409

1,541
31

Totals

5,147 $

1,304 $

5,717 $

1,572

The market value of the Company’s equity securities are used as collateral against any outstanding margin account
borrowings. As of December 31, 2008, the Company had borrowed approximately $6.9 million under its margin
account for the purchase of marketable equity securities and as a source of short-term liquidity.

INTANGIBLE ASSETS

The Company has tested goodwill for impairment annually in accordance with the provisions of Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets , since the adoption of the standard in
January of 2002. In addition to the annual test performed on December 31 of each year, goodwill is monitored for
changes in events or circumstances that indicate that impairment might exist in interim periods. Our test for
impairment of goodwill is performed on the Company as a whole, as we determined at adoption of the standard that
our reporting units can be aggregated, and facts and circumstances subsequent to adoption have not changed this
assessment. The annual assessment of impairment was completed on December 31, 2008 and the Company
determined that there was impairment as of that date.

The impairment of our goodwill was triggered by the sustained decline of our market capitalization caused by a
decrease in our stock price during 2008. In the fourth quarter of 2008 we determined that our market capitalization
compared to the carrying amount of the Company indicated that impairment was probable and that the second step
of impairment testing was necessary. The second step of our impairment test required

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the calculation of the fair value of the Company and the subsequent allocation of the fair value to the assets and
liabilities of the Company. The excess fair value after this allocation is performed represents the implied goodwill of
the Company, if any, and was zero at December 31, 2008. As a result we incurred an impairment expense for the
entire balance of our goodwill or $15.4 million in the fourth quarter of 2008.

Goodwill at December 31 is summarized as follows:

Goodwill, beginning of year
Goodwill acquired
Goodwill impairment

Goodwill—end of year

2008

2007
(in thousands)

2006

15,413 $
-
(15,413)

15,413 $
-
-

15,413
-
-

- $

15,413 $

15,413

Non-compete agreements are amortized on a straight-line basis over the contractual term of the related agreement.
Amortization expense associated with non-compete agreements was approximately $17,000, $200,000 and
$200,000, for the years ending December 31, 2008, 2007 and 2006. The Company's non-compete agreements at
December 31 are summarized as follows:

Non-compete agreements, original cost
Accumulated amortization

Non-compete agreements—net

5. ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities at December 31 are summarized as follows:

Payroll
Accrued vacation
Taxes—other than income
Interest
Driver escrows
Margin account borrowings
Self-insurance claims reserves

2008

2007

(in thousands)

1,000 $
(1,000)

1,000
(983)

- $

2008

2007

(in thousands)

1,039 $
1,932
2,174
122
938
6,871
2,608

1,818
1,966
2,598
123
1,023
-
2,795

Total accrued expenses and other liabilities

15,684 $

10,323

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6. CLAIMS LIABILITIES

With respect to physical damage for trucks, cargo loss and auto liability, the Company maintains insurance coverage
to protect it from certain business risks. These policies are with various carriers and have per occurrence deductibles
of $2,500, $10,000 and $2,500 respectively. Since 2002, the Company has elected to self insure itself for physical
damage to trailers. The Company maintains workers’ compensation coverage in Arkansas, Ohio, Oklahoma,
Mississippi, and Florida with a $500,000 self-insured retention and a $500,000 per occurrence excess policy. The
Company has elected to opt out of workers' compensation coverage in Texas and is providing coverage through the
P.A.M. Texas Injury Plan. The Company has reserved for estimated losses to pay such claims as well as claims
incurred but not yet reported. The Company has not experienced any adverse trends involving differences in claims
experienced versus claims estimates for workers’ compensation claims. Letters of credit aggregating $353,000 and
certificates of deposit totaling $200,000 are held by banks as security for workers’ compensation claims. The
Company self insures for employee health claims with a stop loss of $225,000 per covered employee per year and
estimates its liability for claims incurred but not reported.

7. LONG-TERM DEBT

Long-term debt at December 31, consists of the following:

Line of credit with a bank—due May 31, 2009, and

collateralized by accounts receivable (1)

Line of credit with a bank—due June 30, 2008, and

collateralized by revenue equipment (2)

Equipment financing (3)
Note payable (4)
Other (5)
Other (6)

Total long-term debt

Less current maturities

Long-term debt—net of current maturities

2008

2007

(in thousands)

3,744 $

28,192

-
45,676
980
1,020
-
51,420 $
(15,928)

15,000
-
1,767
1,124
154
46,237
(2,065)

35,492 $

44,172

(1) Line of credit agreement with a bank provides for maximum borrowings of $30.0 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 1.25% (3.15% at
December 31, 2008). Monthly payments of interest are required under this agreement. Also, under the terms
of the agreement the Company must have (a) a debt to equity ratio of no more than 2:1, and (b) maintain a
tangible net worth of at least $125 million. The Company was in compliance with all provisions of the
agreement at December 31, 2008.

(2) Matured line of credit agreement with a bank which provided for maximum borrowings of $30.0 million through

the maturity date of June 30, 2008. The Company did not renew the line of credit.

(3) Equipment financings consist of installment obligations for revenue equipment purchases, payable in various
monthly installments with various maturity dates through January 2012, at a weighted average interest rate of
4.80% and collateralized by revenue equipment.

(4) 6.0% note to the former owner of an acquired entity with an original face amount of $4,974,612, payable in

monthly installments of $72,672 through March 2010 and secured by a letter of credit held by a bank.

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(5) 3.85% note to insurance premium finance company at December 31, 2008 with an original face amount of

$1,740,528, payable in monthly installments of $147,615 through August 2009.

(6) 5.23% note to insurance premium finance company at December 31, 2007 with an original face amount of

$154,023, payable in monthly installments of $19,547 through August 2008.

The Company has provided letters of credit to third parties totaling approximately $1,640,000 at December 31, 2008.
The letters are held by these third parties to assist such parties in collection of any amounts due by the Company
should the Company default in its commitments to the parties.

Scheduled annual maturities on long-term debt outstanding at December 31, 2008, are:

2009
2010
2011
2012
2013

Total

8. CAPITAL STOCK

(in
thousands)

15,928
12,688
18,868
3,936
-

51,420

The Company's authorized capital stock consists of 40,000,000 shares of common stock, par value $.01 per share,
and 10,000,000 shares of preferred stock, par value $.01 per share. At December 31, 2008, there were 11,368,207
shares of our common stock issued and 9,409,607 shares outstanding. No shares of our preferred stock were issued
or outstanding at December 31, 2008.

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. As of
December 31, 2008, we have no agreements or understandings for the issuance of any shares of preferred stock.

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Treasury Stock

In April 2005, our Board of Directors authorized the repurchase of up to 600,000 shares of our common stock during
the six month period ending October 11, 2005. These 600,000 shares were all repurchased by September 30, 2005.
On September 6, 2005 our Board of Directors authorized an extension of the stock repurchase program until
September 2006 and the repurchase of up to an additional 900,000 shares of our common stock. The Company
repurchased 458,600 of these additional shares prior to December 31, 2005 and made no additional purchases
during 2006.

In May 2007, our Board of Directors authorized the repurchase of up to 600,000 shares of our common stock during
the twelve month period following the announcement. Subsequent to the date of the announcement and through the
remainder of 2007, the Company repurchased 471,500 shares of its common stock. The remaining 128,500 shares
authorized were repurchased during the first three months of 2008.

In June 2008, our Board of Directors authorized the repurchase of up to 300,000 shares of our common stock during
the twelve month period following the announcement. Subsequent to the date of the announcement and through the
remainder of 2008, the Company repurchased 300,000 shares of its common stock.

The Company accounts for Treasury stock using the cost method and as of December 31, 2008, 1,958,600 shares
were held in the treasury at an aggregate cost of approximately $29,127,000.

9. COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) was comprised of net income (loss) plus or minus market value adjustments related to
fuel hedges, interest rate swap agreements and marketable securities. The components of comprehensive income
(loss) were as follows:

Net (loss) income

(18,765) $

2,653 $

17,964

2008

2007
(in thousands)

2006

Other comprehensive income (loss):

Reclassification adjustment for realized losses
(gains) on marketable securities, included

in net income, net of income taxes
Reclassification adjustment for losses on

derivative instruments included in net income

accounted for as hedges, net of income taxes

Reclassification adjustment for unrealized

losses on marketable securities, included in

net income, net of income taxes
Change in fair value of interest rate

swap agreements, net of income taxes

Change in fair value of marketable
securities, net of income taxes

(359)

3,214

(4,535)

(917)

1,349

Total comprehensive (loss) income

(20,075) $

1,432 $

19,385

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10.

SIGNIFICANT CUSTOMERS AND INDUSTRY CONCENTRATION

In 2008, 2007, and 2006, one customer, who is in the automobile manufacturing industry, accounted for 31%, 38%
and 41% of revenues, respectively. The Company also provides transportation services to other manufacturers who
are suppliers for automobile manufacturers including suppliers for the Company’s largest customer. As a result,
concentration of the Company’s business within the automobile industry is significant. Of the Company’s revenues
for 2008, 2007, and 2006, 40%, 49%, and 52%, respectively, were derived from transportation services provided to
the automobile manufacturing industry. Accounts receivable from the largest customer totaled approximately
$17,628,000 and $25,830,000 at December 31, 2008 and 2007, respectively.

11.

FEDERAL AND STATE 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 for income tax reporting purposes.

Significant components of the Company’s deferred tax liabilities and assets at December 31 are as follows:

Deferred tax liabilities:

Property and equipment
Unrealized gains on securities
Prepaid expenses and other

2008

2007

(in thousands)

Current

Long-Term Current

Long-Term

- $
345
3,584

60,011 $
-
-

- $
1,423
5,650

52,062
-
3,428

Total deferred tax liabilities

3,929

60,011

7,073

55,490

Deferred tax assets:

Allowance for doubtful accounts
Alternative minimum tax credit
Compensated absences
Self-insurance allowances
Share-based compensation
Goodwill
Marketable equity securities
Net operating loss carryover
Non-competition agreement
Other

801
-
597
248
-
-
2,101
-
-
25

-
447
-
-
328
1,161
-
10,279
412
30

718
-
630
492
-
-
-
-
-
116

-
481
-
-
289
-
-
722
494
-

Total deferred tax assets

3,772

12,657

1,956

1,986

Net deferred tax liability

157 $

47,354 $

5,117 $

53,504

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The reconciliation between the effective income tax rate and the statutory Federal income tax rate for the years
ended December 31, 2008, 2007 and 2006 is presented in the following table:

2008

2007
(in thousands)

2006

Amount

Percent

Amount

Percent

Amount

Percent

Income tax at the

statutory federal rate
Nondeductible expense
State income taxes—net

of federal benefit
Total income taxes

(9,989)
923

34.0 $
(3.1)

1,571
381

34.0 $
8.3

10,513
378

(1,549)
(10,615)

5.2
36.1 $

14
1,966

0.3
42.6 $

1,182
12,073

35.0
1.3

3.9
40.2

The provision for income taxes consisted of the following:

Current:
Federal
State

Deferred:
Federal
State

2008

2007
(in thousands)

2006

(26) $
340
314

305 $
(88)
217

(8,865)
(2,064)
(10,929)

1,295
454
1,749

8,397
1,371
9,768

1,768
537
2,305

Total income tax expense

(10,615) $

1,966 $

12,073

The Company has alternative minimum tax credits of approximately $450,000 at December 31, 2008, which have no
expiration date under the current federal income tax laws. The Company also has a net operating loss carryover for
federal income purposes of approximately $10.3 million which will expire after the year 2029.

The Company does not have any material accrued interest or penalties associated with any unrecognized tax
benefits. The Company's policy is to account for interest and penalties related to uncertain tax positions, if any, in
income tax expense. There was no change in total gross unrecognized tax benefit liabilities for the year ended
December 31, 2008.

During 2007, the Company contracted with a third-party qualified intermediary in order to implement a like-kind
exchange tax program. Under the program, dispositions of eligible trucks or trailers and acquisitions of replacement
trucks or trailers are made in a form whereby any associated tax gains related to the disposal are deferred. To
qualify for like-kind exchange treatment, we exchange, through our qualified intermediary, eligible trucks or trailers
being disposed with trucks or trailers being acquired that allows us to generally carryover the tax basis of the trucks
or trailers sold. The program is expected to result in a significant deferral of federal and state income taxes. Under
the program, the proceeds from the sale of eligible trucks or trailers carry a Company-imposed restriction for the
acquisition of replacement trucks or trailers. These

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proceeds may be disqualified under the program at any time and at the Company’s sole discretion, however income
tax deferral would not be available on any sale for which the Company disqualifies the related proceeds. At
December 31, 2008, the Company had $31,000 of restricted cash held by the third-party qualified intermediary. At
December 31, 2007, the Company had $4.1 million of restricted cash held by the third-party qualified intermediary.
There were no cash restrictions for any periods prior to the program implementation occurring during 2007.

12.

SHARE-BASED COMPENSATION

The Company maintains a stock option plan under which incentive stock options and nonqualified stock options may
be granted. On March 2, 2006, the Company’s Board of Director’s adopted, and shareholders later approved, the
2006 Stock Option Plan (the “2006 Plan”). The 2006 Plan replaces the expired 1995 Stock Option Plan which had
263,500 options remaining which were never issued. Under the 2006 Plan 750,000 shares are reserved for the
issuance of stock options to directors, officers, key employees and others. The option exercise price under the 2006
Plan is the fair market value of the stock on the date the option is granted. The fair market value is determined by
the average of the highest and lowest sales prices for a share of the Company’s common stock, on its primary
exchange, on the same date that the option is granted. During 2008, options for 16,000 shares were issued under
the 2006 Plan at an option exercise price of $14.98 per share and at December 31, 2008, 702,000 shares were
available for granting future options.

Outstanding incentive stock options at December 31, 2008, 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, 2008, must be
exercised within five to ten years from the date of grant.

In August 2002, the Company granted performance-based variable stock options for 300,000 shares to certain key
executives. The exercise price for these awards was fixed at the grant date and was equal to the fair market value of
the stock on that date. On the date of grant, options for 60,000 shares vested immediately and vesting of the options
for the remaining 240,000 shares was scheduled to occur on a straight-line basis each year from March 15, 2003
through March 15, 2008 upon meeting performance criteria. In order to meet the performance criteria, net income for
each fiscal year must be at least equal to 1.05 times net income for the preceding fiscal year, unless net income for
the preceding fiscal year was zero or negative, in which case net income for the fiscal year must be at least 90% of
net income for the most recent year with positive income. As of December 31, 2008, options for 180,000 shares
have vested under this 300,000 share option grant (including those options which immediately vested upon grant)
while options for 120,000 shares have been forfeited as the performance criteria were not met for the fiscal years
2003, 2004 and 2007.

The total fair value of options vested during 2008, 2007, and 2006 was approximately $102,000, $501,000, and
$511,000, respectively. As of December 31, 2008, the Company did not have any stock-based compensation plans
with unrecognized stock-based compensation expense. Total pre-tax stock-based compensation expense,
recognized in Salaries, wages and benefits was approximately $102,000 during 2008 and includes approximately
$80,000 recognized as a result of the annual grant of 2,000 shares to each non-employee director during the first
quarter of 2008. The Company recognized a total income tax benefit of approximately $29,000 related to stock-based
compensation expense during 2008. The recognition of stock-based compensation expense decreased diluted and
basic earnings per common share by approximately $0.01 during 2008. Total pre-tax stock-based compensation
expense, recognized in Salaries, wages and benefits during 2007 was approximately $123,000 and includes
approximately $101,000 recognized as a result of the annual grant of 2,000 shares to each non-employee director
during the second quarter of 2007. The Company recognized a total income tax benefit of approximately $43,000
related to stock-based compensation expense during 2007. The recognition of stock-based compensation expense
decreased diluted and basic earnings per common share by approximately $0.01 during 2007. Total pre-tax stock-
based compensation expense, recognized in Salaries, wages and benefits during 2006 was approximately $511,000
and includes approximately $111,000 recognized as a result of the annual grant of 2,000 shares to each non-
employee director during the second quarter of 2006. The Company recognized a total income tax benefit of
approximately $197,000 related to stock-based compensation expense during 2006. The recognition of stock-

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based compensation expense decreased diluted and basic earnings per common share by approximately $0.03
during 2006.

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

Outstanding—January 1, 2006:

Granted
Exercised

Outstanding—December 31, 2006:

Granted
Exercised
Canceled

Outstanding—December 31, 2007:

Granted
Canceled

Outstanding—December 31, 2008:

Options exercisable—December 31, 2008:

Shares
Under
Option

Weighted-
Average
Exercise
Price

286,500 $
16,000
(18,000)

284,500 $
16,000
(6,000)
(46,000)

248,500 $
16,000
(10,000)

22.22
26.73
16.67

22.83
22.92
19.95
23.34

22.81
14.98
22.68

254,500 $

22.32

254,500 $

22.32

The fair value of the Company’s employee stock options was estimated at the date of grant using a Black-Scholes-
Merton (“BSM”) option-pricing model using the following assumptions:

2008

2007

2006

Dividend yield
Volatility range
Risk-free rate range
Expected life
Fair value of options (per share)

0%
36.67%—38.54%
2.50%—4.38%
4.3 years—5 years
$4.98—$8.89

0%
37.34%—38.54%
4.38%—4.48%
2.5 years—5 years
$6.32—$9.45

0%
33.34%—38.54%
4.38%—5.02%
2.5 years—5 years
$6.93—$9.45

The Company has never paid any cash dividends on its common stock and we do not anticipate paying any cash
dividends in the foreseeable future. The estimated volatility is based on the historical volatility of our stock. The risk
free rate for the periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the
time of grant. The expected life of the options was calculated based on the historical exercise behavior. Prior to
2008, the expected life of the options was calculated using temporary guidance provided by the SEC which allowed
companies to elect a “simplified method” where the expected life is the average of the vesting period and the original
contractual term. This simplified method is generally not available for share option grants after December 31, 2007.

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Information related to the Company’s option activity as of December 31, 2008, and changes during the year then
ended is presented below:

Shares
Under
Option

Weighted-
Average
Exercise
Price
(per share)

Weighted-
Average
Remaining
Contractual

Term

(in years)

Aggregate
Intrinsic Value*

Outstanding at January 1, 2008
Granted
Canceled/forfeited/expired
Outstanding at December 31, 2008

248,500 $
16,000
(10,000)
254,500 $

22.81
14.98
22.68
22.32

3.4 $

Fully vested and exercisable at December 31, 2008

254,500 $

22.32

3.4 $

___________________________
* The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the
exercise price of the option. The per share market value of our common stock, as determined by the closing price on
December 31, 2008, was $7.00.

The weighted-average grant-date fair value of options granted during the years 2008, 2007, and 2006 was $4.98,
$6.32, and $6.93 per share, respectively. The total intrinsic value of options exercised during the years ended
December 31, 2008, 2007, and 2006, was approximately $0, $11,000, and $175,000, respectively.

A summary of the status of the Company’s nonvested options as of December 31, 2008 and changes during the
year ended December 31, 2008, is presented below:

Nonvested at January 1, 2008
Granted
Vested
Nonvested at December 31, 2008

Weighted-
Average
Grant Date
Fair Value

Number of

Options

- $
16,000
(16,000)
- $

-
4.98
4.98
-

The number, weighted average exercise price and weighted average remaining contractual life of options
outstanding as of December 31, 2008 and the number and weighted average exercise price of options exercisable
as of December 31, 2008 is as follows:

Exercise Price

Shares Under
Outstanding Options

$14.98
$16.99
$18.27
$19.88
$22.92
$23.22
$26.73

16,000
8,000
10,000
12,500
14,000
180,000
14,000
254,500

Weighted-Average Remaining
Contractual Term
(in years)
4.2
0.2
1.2
3.8
3.2
3.7
2.5
3.4

Shares Under
Exercisable Options

16,000
8,000
10,000
12,500
14,000
180,000
14,000
254,500

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Cash received from option exercises totaled approximately $0, $120,000, and $300,000 during the years ended
December 31, 2008, 2007, and 2006, respectively. The Company issues new shares upon option exercise.

13.

EARNINGS PER SHARE

The Company applies SFAS No. 128 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,
2006
2007
2008
(in thousands, except per share data)

Net (loss) income

(18,765) $

2,653 $

17,964

Basic weighted average common shares outstanding
Dilutive effect of common stock equivalents

9,683
-

10,238
1

10,296
6

Diluted weighted average common shares outstanding

9,683

10,239

10,302

Basic (loss) earnings per share

Diluted (loss) earnings per share

(1.94) $

0.26 $

1.74

(1.94) $

0.26 $

1.74

Options to purchase 253,484, 234,456, and 229,337 shares of common stock were outstanding as of December 31,
2008, 2007, and 2006, respectively, but were not included in the computation of diluted earnings per share because
to do so would have an anti-dilutive effect.

14.

BENEFIT PLAN

The Company sponsors a benefit 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 and vests at the rate of 20% each year until fully vested after five years. Total
employer matching contributions to the plan totaled approximately $305,000, $340,000 and $330,000 in 2008, 2007
and 2006, respectively.

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15.

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.

The Company leases certain premises under noncancelable operating lease agreements. Future minimum annual
lease payments under these leases are as follows:

2009
2010
2011
2012
2013

Total

255,765
202,400
187,000
192,000
80,000

917,165

Total rental expense, net of amounts reimbursed for the years ended December 31, 2008, 2007 and 2006 was
approximately $2,243,000, $3,035,000, and $2,369,000, respectively.

16.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Our financial instruments consist of cash and cash equivalents, marketable equity securities, accounts receivable,
trade accounts payable, and borrowings.

The Company adopted SFAS No. 157 effective January 1, 2008 for financial assets and liabilities measured on a
recurring basis. SFAS No. 157 defines fair value as the exchange price that would be received for an asset or paid
to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. SFAS No. 157 also establishes a fair value
hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair
value:

Level 1:

Quoted market prices in active markets for identical assets or liabilities.

Level 2:

Inputs other than Level 1 inputs that are either directly or indirectly observable such as quoted prices for

similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets
that are not active; inputs other than quoted prices that are observable; or other inputs not directly observable,
but derived principally from, or corroborated by, observable market data.

Level 3:

Unobservable inputs that are supported by little or no market activity.

The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market
approach uses prices and other relevant information generated by market transactions involving identical or
comparable assets or liabilities.

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The following items are measured at fair value on a recurring basis and therefore subject to the disclosure
requirements of SFAS No. 157 at December 31, 2008:

Marketable equity securities

12,540 $

12,540

Total

Level 1

Level 2

Level 3

(in thousands)

The Company’s investments in marketable equity securities are recorded at fair value based on quoted market
prices. The carrying value of cash and cash equivalents, accounts receivable, trade accounts payable, and accrued
liabilities approximate fair value due to their short maturities.

The carrying amount for the line of credit approximates fair value because the line of credit interest rate is adjusted
frequently.

For long-term debt other than the lines of credit, the fair values are estimated using discounted cash flow analyses,
based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The
carrying values and estimated fair values of this other long-term debt at December 31, 2008 and 2007 are
summarized as follows:

2008

2007

Carrying
Value

Estimated
Fair Value

Carrying
Value

Estimated
Fair Value

(in thousands)

Long-term debt

47,676 $

47,432 $

3,045 $

3,032

The Company adopted SFAS No. 159 effective January 1, 2008 and have not elected the fair value option for our
financial instruments.

17.

RELATED PARTY TRANSACTIONS

In the normal course of business, the Company provides and receives transportation, repair and other services for
and from companies affiliated with a major stockholder, and recognized $114,112, $1,861,773, and $46,576 in
operating revenue and $1,749,955, $1,909,585, and $1,558,371 in operating expenses in 2008, 2007, and 2006,
respectively. In addition, also in the normal course of business, the Company purchased a terminal in Laredo, TX
from an affiliate of a major stockholder for $5,920,969, of which $4,500,000 was paid as of December 31,
2008. The remaining $1,420,969 was paid in February 2009, subsequent to the completion of an independent
appraisal, and is included in amounts payable to affiliates described below.

The Company purchased physical damage insurance through an unaffiliated insurance broker which was written by
an insurance company affiliated with a major stockholder. Annual premiums were $2,232,309, $1,927,964 and
$1,816,759 for 2008, 2007 and 2006, respectively.

Amounts owed to the Company by these affiliates were $851,471 and $1,183,266 at December 31, 2008 and 2007
respectively. Of the accounts receivable at December 31, 2008, $76,441 represents revenue resulting from
maintenance performed in the Company’s maintenance facilities and maintenance charges paid by the Company to
third parties on behalf of their affiliate and charged back at the amount paid, $86,358 represents freight
transportation and $688,672 represents a prepayment of physical damage insurance premiums. Amounts payable to
affiliates at December 31, 2008 and 2007 were $1,526,428 and $198,416 respectively.

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18.

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The tables below present quarterly financial information for 2008 and 2007:

Operating revenues
Operating expenses

Operating (loss) income
Non-operating (expense) income
Interest expense
Income tax (benefit) expense

2008
Three Months Ended

March 31

June 30

September
30

December
31

(in thousands, except per share data)

105,820 $
109,786

110,930 $
112,460

105,958 $
107,240

84,014
99,190

(3,966)
(206)
568
(1,912)

(1,530)
(14)
532
(744)

(1,282)
(3,377)
614
(2,092)

(15,176)
(1,400)
714
(5,866)

Net (loss) income

(2,828) $

(1,332) $

(3,181) $

(11,424)

Net (loss) income per common share:
Basic

Diluted

Average common shares outstanding:
Basic

Diluted

Operating revenues
Operating expenses

Operating income
Non-operating income
Interest expense
Income tax expense (benefit)

(0.29) $

(0.14) $

(0.33) $

(1.19)

9,795

9,708

9,665

9,564

2007
Three Months Ended

March 31

June 30

September
30

December
31

(in thousands, except per share data)

98,809 $
96,475

106,700 $
102,528

101,171 $
100,688

102,162
103,785

2,334
241
487
823

4,172
167
676
1,471

483
199
620
26

(1,623)
1,099
670
(354)

Net income (loss)

1,265 $

2,192 $

36 $

(840)

Net income (loss) per common share:
Basic

Diluted

Average common shares outstanding:
Basic

Diluted

0.12 $

0.21 $

0.00 $

(0.08)

10,305

10,306

10,265

10,308

10,307

10,266

10,077

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness
of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). In designing and evaluating the disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must
reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the
benefits of possible controls and procedures relative to their costs.

Based on management’s evaluation, our chief executive officer and chief financial officer concluded that, as of December
31, 2008, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide
reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act
is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange
Commission rules and forms, and that such information is accumulated and communicated to our management, including
our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

We regularly review our system of internal control over financial reporting and make changes to our processes and systems
to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment.
Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating
processes.

There were no changes in our internal control over financial reporting that occurred during the period covered by this
Annual Report on Form 10-K that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as
defined in Exchange Act Rule 13a-15(f). Management conducted an evaluation of the effectiveness of our internal control
over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our
internal control over financial reporting was effective as of December 31, 2008. Management reviewed the results of its
assessment with our Audit Committee. The effectiveness of our internal control over financial reporting as of December 31,
2008 has been audited by Grant Thornton LLP, an independent registered public accounting firm, as stated in its report
which is included below.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders
P.A.M. Transportation Services, Inc. and Subsidiaries

We have audited P.A.M. Transportation Services, Inc. (a Delaware Corporation) and subsidiaries’ (collectively, the
Company) internal control over financial reporting as of December 31, 2008, based on criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway

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Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control Over Financial Reporting . Our responsibility is to express an
opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for
our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated balance sheets of P.A.M. Transportation Services, Inc. and subsidiaries as of December 31, 2008
and 2007, and the related consolidated statements of operations, stockholders’ equity and other comprehensive income
(loss), and cash flows for each of the three years in the period ended December 31, 2008, and our report dated March 6,
2009 expressed an unqualified opinion on those consolidated financial statements.

/s/ GRANT THORNTON LLP

Tulsa, Oklahoma
March 6, 2009

Item 9B. Other Information.

None.

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PART III

Portions of the information required by Part III of Form 10-K are, pursuant to General Instruction G (3) of Form 10-K,
incorporated by reference from our definitive proxy statement to be filed pursuant to Regulation 14A for our Annual Meeting
of Stockholders to be held on May 28, 2009. We will, within 120 days of the end of our fiscal year, file with the Securities
and Exchange Commission a definitive proxy statement pursuant to Regulation 14A.

Item 10. Directors, Executive Officers and Corporate Governance.

Information concerning our executive officers is set forth in Item 1 of this Form 10-K under the caption “Executive Officers
of the Registrant.”

The information presented under the captions “Election of Directors,” “Section 16(a) Beneficial Ownership Compliance,”
“Corporate Governance - Code of Ethics” and “Corporate Governance–Audit Committee,” in the proxy statement is
incorporated here by reference.

We have a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934. The members of the Audit Committee consist of Frank L. Conner, Christopher L. Ellis,
and Charles F. Wilkins.

Item 11. Executive Compensation.

The information presented under the captions “Executive Compensation,” “Corporate Governance–Compensation
Committee Interlocks and Insider Participation,” and “Compensation Committee Report” in the proxy statement is
incorporated here by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information presented under the caption “Security Ownership of Certain Beneficial Owners and Management” in the
proxy statement is incorporated here by reference.

Equity Compensation Plan Information

The following table summarizes, as of December 31, 2008, information about compensation plans under which equity
securities of the Company are authorized for issuance:

Number of
securities to
be issued
upon
exercise of
outstanding
options,
warrants
and rights

Weighted-
average
exercise
price of
outstanding
options,
warrants and
rights

Number of
securities
remaining
available for
future
issuance
under equity
compensation
plans

Plan Category

Equity Compensation Plans approved by Security Holders

254,500 $

22.32

702,000

Equity Compensation Plans not approved by Security Holders

-0-

Total

254,500 $

22.32

702,000

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Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information presented under the captions (i) “Transactions with Related Persons,” including the information referenced
there that is set forth under the caption “Corporate Governance – Compensation Committee Interlocks and Insider
Participation” and (ii) “Corporate Governance – Director Independence” in the proxy statement is incorporated here by
reference.

Item 14. Principal Accounting Fees and Services.

The information presented under the caption “Independent Public Accountants – Principal Accountant Fees and Services”
in the proxy statement is incorporated here by reference.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a)Financial Statements and Schedules.

(1)

Financial Statements: See Part II, Item 8 hereof.

Report of Independent Registered Public Accounting Firm - Grant Thornton LLP
Consolidated Balance Sheets - December 31, 2008 and 2007
Consolidated Statements of Operations - Years ended December 31, 2008, 2007 and 2006
Consolidated Statements of Shareholders’ Equity and Other Comprehensive
ended December 31, 2008, 2007 and 2006
Consolidated Statements of Cash Flows - Years ended December 31, 2008, 2007 and 2006
Notes to Consolidated Financial Statements

Income (Loss) - Years

(2)

Financial Statement Schedules.

All schedules for which provision is made in the applicable accounting regulations of the SEC are omitted as the
requiredinformation is inapplicable, or because the information is presented in the consolidated financial
statements or related notes.

(3) Exhibits.

The following exhibits are filed with or incorporated by reference into this Report. The exhibits which are
denominated by an asterisk (*) were previously filed as a part of, and are hereby incorporated by reference from
either (i) the Form S-1 Registration Statement under the Securities Act of 1933, as filed with the Securities and
Exchange Commission on July 30, 1986, Registration No. 33-7618, as amended on August 8, 1986, September 3,
1986 and September 10, 1986 (“1986 S-1”); (ii) the Quarterly Report on Form 10-Q for the quarter ended June 30,
1994 (“6/30/94 10-Q”); (iii) the Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 (“6/30/95 10-
Q”); (iv) the Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 (“9/30/96 10-Q”); (v) the
Form S-8 Registration Statement filed on June 11, 1999 (“6/11/99 S-8”); (vi) the Annual Report on Form 10-K for
the year ended December 31, 2001 (“2001 10-K”); (vii) the Quarterly Report on Form 10-Q for the quarter ended
March 31, 2002 (“3/31/02 10-Q”); (viii) the Quarterly Report on Form 10-Q for the quarter ended September 30,
2004 (“9/30/2004 10-Q”); (ix) Form 8-K filed on March 7, 2005 (“3/07/2005 8-K”); (x) Form 8-K filed on May 31,
2006 (“5/31/2006 8-K”); (xi) Form 8-K filed on July 28, 2006 (“7/28/2006 8-K”); (xii) the Form 8-K filed on
December 11, 2007 (“12/11/2007 8-K”); or (xiii) the Quarterly Report on Form 10-Q for the quarter ended June 30,
2006 (“6/30/06 10-Q”); (xiv) the Annual Report on Form 10-K for the year ended December 31, 2007 (“2007 10-
K”).

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Exhibit #
*3.1

Description of Exhibit
Amended and Restated Certificate of Incorporation of the Registrant (Exh. 3.1, 3/31/02 10-Q)

*3.2

*4.1

*4.2

*4.2.1

*4.3

*4.3.1

*4.3.2

*4.3.3

*4.4

*4.4.1

*4.4.2

*4.4.3

*4.5.1

*4.5.2

*4.5.3

*4.5.4

*4.6

Amended and Restated By-Laws of the Registrant (Exh. 3.2, 12/11/07 8-K)

Specimen Stock Certificate (Exh. 4.1, 1986 S-1)

Loan Agreement dated July 26, 1994 among First Tennessee Bank National Association, Registrant and
P.A.M. Transport, Inc. together with Promissory Note (Exh. 4.1, 6/30/94 10-Q)

Security Agreement dated July 26, 1994 between First Tennessee Bank National Association and P.A.M.
Transport, Inc. (Exh. 4.2, 6/30/94 10-Q)

First Amendment to Loan Agreement dated June 27, 1995 by and among P.A.M. Transport, Inc., First
Tennessee Bank National Association and P.A.M. Transportation Services, Inc., together with Promissory
Note in the principal amount of $2,500,000 (Exh. 4.1.1, 6/30/95 10-Q)

First Amendment to Security Agreement dated June 28, 1995 by and between P.A.M. Transport, Inc. and
First Tennessee Bank National Association (Exh. 4.2.2, 6/30/95 10-Q)

Security Agreement dated June 27, 1995 by and between Choctaw Express, Inc. and First Tennessee
Bank National Association (Exh. 4.1.3, 6/30/95 10-Q)

Guaranty Agreement of P.A.M. Transportation Services, Inc. dated June 27, 1995 in favor of First
Tennessee Bank National Association $10,000,000 line of credit (Exh. 4.1.4, 6/30/95 10-Q)

Second Amendment to Loan Agreement dated July 3, 1996 by P.A.M. Transport, Inc., First Tennessee
Bank National Association and P.A.M. Transportation Services, Inc., together with Promissory Note in the
principal amount of $5,000,000 (Exh. 4.1.1, 9/30/96 10-Q)

Second Amendment to Security Agreement dated July 3, 1996 by and between P.A.M. Transport, Inc. and
First Tennessee National Bank Association (Exh. 4.1.2, 9/30/96 10-Q)

First Amendment to Security Agreement dated July 3, 1996 by and between Choctaw Express, Inc. and
First Tennessee Bank National Association (Exh. 4.1.3, 9/30/96 10-Q)

Security Agreement dated July 3, 1996 by and between Allen Freight Services, Inc. and First Tennessee
Bank National Association (Exh. 4.1.4, 9/30/96 10-Q)

Loan Agreement dated as of November 22, 2000 by and between P.A.M. Transport, Inc. and SunTrust
Bank (Exh. 4.5.1, 2001 10-K)

Revolving Credit Note dated November 22, 2000 (Exh. 4.5.2, 2001 10-K)

Security Agreement by and between P.A.M. Transport, Inc. and SunTrust Bank (Exh. 4.5.3, 2001 10-K)

First Amendment to Loan Agreement, Revolving Credit Note and Security Deposit (Exh. 4.5.4, 2001 10-K)

Fourth Amendment to Loan Agreement dated July 26, 1994 among First Tennessee Bank National
Association, Registrant and P.A.M. Transport, Inc. together with Promissory Note (Exh. 4.6, 2007 10-K)

*10.1

(1) Employment Agreement between the Registrant and Robert W. Weaver, dated July 10, 2006 (Exh. 10.1,

7/28/2006 8-K)

*10.2

(1) Employment Agreement between the Registrant and W. Clif Lawson, dated June 1, 2006 (Exh. 10.2,

7/28/2006 8-K)

*10.3

(1) Employment Agreement between the Registrant and Larry J. Goddard, dated June 1, 2006 (Exh. 10.3,

7/28/2006 8-K)

Table of contents

*10.4

(1) 1995 Stock Option Plan, as Amended and Restated (Exh. 4.1, 6/11/99 S-8)

*10.4.1

(1) Amendment to 1995 Stock Option Plan (Exh. 10.1, 3/07/2005 8-K)

*10.4.2

(1) 2006 Stock Option Plan (Exh. 10.1, 5/31/2006 8-K)

*10.5

*10.6

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

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

*10.7

(1) Employee Non-Qualified Stock Option Agreement (Exh. 10.1, 9/30/2004 10-Q)

*10.8

(1) Director Non-Qualified Stock Option Agreement (Exh. 10.2, 9/30/2004 10-Q)

*10.8.1

(1) Form of Non-Qualified Stock option Agreement for Non-Employee Director stock options that are granted

under the 2006 Stock Option Plan (Exh. 10.2, 5/31/2006 8-K)

*10.9

(1) Executive Incentive Plan (Exh. 10.2, 6/30/2006 10-Q)

*10.10

(1) Consulting Agreement between the Registrant and Manuel J. Moroun, dated December 6, 2007 (Exh.

10.10, 2007 10-K)

Subsidiaries of the Registrant

Consent of Grant Thornton LLP

Rule 13a-14(a) Certification of Principal Executive Officer

Rule 13a-14(a) Certification of Principal Financial Officer

Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer

21.1

23.1

31.1

31.2

32.1

(1) Management contract or compensatory plan or arrangement.

Table of contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March 13, 2009

By:/s/ Robert W. Weaver

P.A.M. TRANSPORTATION SERVICES, INC.

ROBERT W. WEAVER
President and Chief Executive Officer
(principal executive officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.

Dated: March 13, 2009

By:/s/ Frederick P. Calderone

FREDERICK P. CALDERONE, Director

Dated: March 13, 2009

By:/s/ Frank L. Conner

FRANK L. CONNER, Director

By:/s/ W. Scott Davis

W. SCOTT DAVIS, Director

By:/s/ Christopher L. Ellis

CHRISTOPHER L. ELLIS, Director

Dated: March 13, 2009

By:/s/ Larry J. Goddard

LARRY J. GODDARD
Vice President-Finance, Chief Financial Officer,
Secretary and Treasurer
(principal financial and accounting officer)

Dated: March 13, 2009

By:/s/ Manuel J. Moroun

MANUEL J. MOROUN, Director

Dated: March 13, 2009

By:/s/ Matthew T. Moroun

MATTHEW T. MOROUN, Director and Chairman of
the Board

Dated: March 13, 2009

By:/s/ Daniel C. Sullivan

DANIEL C. SULLIVAN, Director

Dated: March 13, 2009

By:/s/ Robert W. Weaver

ROBERT W. WEAVER,
President and Chief Executive Officer, Director
(principal executive officer)

Dated: March 13, 2009

By:/s/ Charles F. Wilkins

CHARLES F. WILKINS, Director

Table of contents

EXHIBIT INDEX

The following exhibits are filed with or incorporated by reference into this Report. The exhibits which are denominated by
an asterisk (*) were previously filed as a part of, and are hereby incorporated by reference from either (i) the Form S-1
Registration Statement under the Securities Act of 1933, as filed with the Securities and Exchange Commission on July 30,
1986, Registration No. 33-7618, as amended on August 8, 1986, September 3, 1986 and September 10, 1986 (“1986 S-1”);
(ii) the Quarterly Report on Form 10-Q for the quarter ended June 30, 1994 (“6/30/94 10-Q”); (iii) the Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995 (“6/30/95 10-Q”); (iv) the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996 (“9/30/96 10-Q”); (v) the Form S-8 Registration Statement filed on June 11, 1999 (“6/11/99 S-
8”); (vi) the Annual Report on Form 10-K for the year ended December 31, 2001 (“2001 10-K”); (vii) the Quarterly Report
on Form 10-Q for the quarter ended March 31, 2002 (“3/31/02 10-Q”); (viii) the Quarterly Report on Form 10-Q for the
quarter ended September 30, 2004 (“9/30/2004 10-Q”); (ix) Form 8-K filed on March 7, 2005 (“3/07/2005 8-K”); (x) Form 8-
K filed on May 31, 2006 (“5/31/2006 8-K”); (xi) Form 8-K filed on July 28, 2006 (“7/28/2006 8-K”); (xii) the Form 8-K filed on
December 11, 2007 (“12/11/2007 8-K”); or (xiii) the Quarterly Report on Form 10-Q for the quarter ended June 30, 2006
(“6/30/06 10-Q”); (xiv) the Annual Report on Form 10-K for the year ended December 31, 2007 (“2007 10-K”).

Exhibit #

Description of Exhibit

*3.1

*3.2

*4.1

*4.2

*4.2.1

*4.3

*4.3.1

*4.3.2

*4.3.3

*4.4

*4.4.1

*4.4.2

*4.4.3

Amended and Restated Certificate of Incorporation of the Registrant (Exh. 3.1, 3/31/02 10-Q)

Amended and Restated By-Laws of the Registrant (Exh. 3.2, 12/11/07 8-K)

Specimen Stock Certificate (Exh. 4.1, 1986 S-1)

Loan Agreement dated July 26, 1994 among First Tennessee Bank National Association, Registrant and
P.A.M. Transport, Inc. together with Promissory Note (Exh. 4.1, 6/30/94 10-Q)

Security Agreement dated July 26, 1994 between First Tennessee Bank National Association and P.A.M.
Transport, Inc. (Exh. 4.2, 6/30/94 10-Q)

First Amendment to Security Agreement dated June 28, 1995 by and between P.A.M. Transport, Inc. and
First Tennessee Bank National Association (Exh. 4.2.2, 6/30/95 10-Q)

Security Agreement dated June 27, 1995 by and between Choctaw Express, Inc. and First Tennessee Bank
National Association (Exh. 4.1.3, 6/30/95 10-Q)

Guaranty Agreement of P.A.M. Transportation Services, Inc. dated June 27, 1995 in favor of First
Tennessee Bank National Association $10,000,000 line of credit (Exh. 4.1.4, 6/30/95 10-Q)

Second Amendment to Loan Agreement dated July 3, 1996 by P.A.M. Transport, Inc., First Tennessee Bank
National Association and P.A.M. Transportation Services, Inc., together with Promissory Note in the
principal amount of $5,000,000 (Exh. 4.1.1, 9/30/96 10-Q)

Second Amendment to Security Agreement dated July 3, 1996 by and between P.A.M. Transport, Inc. and
First Tennessee National Bank Association (Exh. 4.1.2, 9/30/96 10-Q)

First Amendment to Security Agreement dated July 3, 1996 by and between Choctaw Express, Inc. and First
Tennessee Bank National Association (Exh. 4.1.3, 9/30/96 10-Q)

Security Agreement dated July 3, 1996 by and between Allen Freight Services, Inc. and First Tennessee
Bank National Association (Exh. 4.1.4, 9/30/96 10-Q)

Table of contents

*4.5.1

Loan Agreement dated as of November 22, 2000 by and between P.A.M. Transport, Inc. and SunTrust Bank
(Exh. 4.5.1, 2001 10-K)

*4.5.2

Revolving Credit Note dated November 22, 2000 (Exh. 4.5.2, 2001 10-K)

*4.5.3

Security Agreement by and between P.A.M. Transport, Inc. and SunTrust Bank (Exh. 4.5.3, 2001 10-K)

*4.5.4

First Amendment to Loan Agreement, Revolving Credit Note and Security Deposit (Exh. 4.5.4, 2001 10-K)

*4.6

Fourth Amendment to Loan Agreement dated July 26, 1994 among First Tennessee Bank National
Association, Registrant and P.A.M. Transport, Inc. together with Promissory Note (Exh. 4.6, 2007 10-K)

*10.1

(1) Employment Agreement between the Registrant and Robert W. Weaver, dated July 10, 2006 (Exh. 10.1,

7/28/2006 8-K)

*10.2

(1) Employment Agreement between the Registrant and W. Clif Lawson, dated June 1, 2006 (Exh. 10.2,

7/28/2006 8-K)

*10.3

(1) Employment Agreement between the Registrant and Larry J. Goddard, dated June 1, 2006 (Exh. 10.3,

7/28/2006 8-K)

*10.4

(1) 1995 Stock Option Plan, as Amended and Restated (Exh. 4.1, 6/11/99 S-8)

*10.4.1

(1) Amendment to 1995 Stock Option Plan (Exh. 10.1, 3/07/2005 8-K)

*10.4.2

(1) 2006 Stock Option Plan (Exh. 10.1, 5/31/2006 8-K)

*10.5

*10.6

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

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

*10.7

(1) Employee Non-Qualified Stock Option Agreement (Exh. 10.1, 9/30/2004 10-Q)

*10.8

(1) Director Non-Qualified Stock Option Agreement (Exh. 10.2, 9/30/2004 10-Q)

*10.8.1

(1) Form of Non-Qualified Stock option Agreement for Non-Employee Director stock options that are granted

under the 2006 Stock Option Plan (Exh. 10.2, 5/31/2006 8-K)

*10.9

(1) Executive Incentive Plan (Exh. 10.2, 6/30/2006 10-Q)

*10.10

(1) Consulting Agreement between the Registrant and Manuel J. Moroun, dated December 6, 2007 (Exh.

10.10, 2007 10-K)

21.1

Subsidiaries of the Registrant

23.1

Consent of Grant Thornton LLP

31.1

Rule 13a-14(a) Certification of Principal Executive Officer

31.2

Rule 13a-14(a) Certification of Principal Financial Officer

32.1

Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer

(1) Management contract or compensatory plan or arrangement.