UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~2019

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to__________

Commission File Number: 0-15057

P.A.M. TRANSPORTATION SERVICES, INC.

(Exact name of registrant as specified in its charter)

Delaware		71-0633135
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification no.)

297 West Henri De Tonti, Tontitown, Arkansas 72770

(Address of principal executive offices) (Zip Code)

~~Registrant~~’sRegistrant’s telephone number, including area code: (479) 361-9111

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	PTSI	NASDAQ Global Market

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 the filing requirements for the past 90 days.

~~Yes~~ ☑ No ☐

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

~~Yes~~ ☑ No ☐

Yes ☑ No ☐

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

Large accelerated filer ☐		Accelerated filer ☐ ☑
Non-accelerated filer ☐ ~~(Do not check if a smaller reporting company)~~		Smaller reporting company ☑
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

~~Yes~~ ☐ No ☑

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

Yes ☐ No ☑

Indicate the number of shares outstanding of each of the ~~issuer~~’sissuer’s classes of common stock, as of the latest practicable date:

Class		Outstanding at October 25, ~~2017~~2019
Common Stock, $.01 Par Value		~~6,303,035~~5,753,982

Table of Contents

P.A.M. TRANSPORTATION SERVICES, INC.

Form 10-Q

For The Quarter Ended September 30, ~~2017~~2019

Table of Contents

Part I.I. Financial Information

Item 1.	Financial Statements (unaudited).	3

	Condensed Consolidated Balance Sheets as of September 30, ~~2017~~2019 and December 31, ~~2016~~2018	3

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, ~~2017~~2019 and ~~2016~~2018	4

	Condensed Consolidated Statements of ~~Comprehensive Income~~Cash Flows for the ~~Three and~~ Nine Months Ended September 30, ~~2017~~2019 and ~~2016~~2018	5

	~~Condensed Consolidated Statements of Cash Flows for the~~ ~~Nine Months Ended September 30, 2017 and 2016~~	6

	Condensed Consolidated ~~Statements~~Statement of ~~Shareholders~~’Stockholders’ Equity for the Nine Months Ended September 30, ~~2017~~2019 and 2018	76

	Notes to Condensed Consolidated Financial Statements as of September 30, ~~2017~~2019	8

Item 2.	~~Management~~’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations.	17

Item 3.	Quantitative and Qualitative Disclosures ~~About~~about Market Risk.	2322

Item 4.	Controls and Procedures.	23


Part II.II. Other Information

Item 1.	Legal Proceedings.	2524

Item 1A.	Risk Factors	24

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	25

Item 6.	Exhibits.	26

Signatures		27

~~Exhibits~~		28

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

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

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

	September 30,			December 31,			September 30,			December 31,
	2017			2016			2019			2018
	(unaudited)			(audited)			(unaudited)			(audited)
ASSETS
Current assets:
Cash and cash equivalents	$	207		$	137		$	305		$	282
Accounts receivable-net:
Trade, less allowance of $1,181 and $994, respectively		58,640			56,143
Trade, less allowance of $2,918 and $2,224, respectively								60,584			63,350
Other		9,490			4,982			3,576			3,814
Inventories		1,607			1,900			1,446			1,461
Prepaid expenses and deposits		9,000			8,777			8,250			10,393
Marketable equity securities		24,994			27,621			28,759			27,549
Income taxes refundable		639			738			2,178			1,876
Total current assets		104,577			100,298			105,098			108,725

Property and equipment:
Land		5,374			5,374			7,246			5,596
Structures and improvements		18,914			18,861			20,095			19,547
Revenue equipment		353,736			355,339			514,497			457,142
Office furniture and equipment		10,744			10,402			10,823			10,040
Total property and equipment		388,768			389,976			552,661			492,325
Accumulated depreciation		(116,376	)		(112,600	)		(163,950	)		(137,738	)
Net property and equipment		272,392			277,376			388,711			354,587

Other assets		2,393			2,392			4,142			2,754

TOTAL ASSETS	$	379,362		$	380,066		$	497,951		$	466,066

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	29,691		$	16,088		$	27,334		$	20,002
Accrued expenses and other liabilities		19,975			22,330			22,871			23,497
Current maturities of long-term debt		59,224			42,806			61,332			63,908
Total current liabilities		108,890			81,224			111,537			107,407

Long-term debt-less current portion		88,931			124,391			169,254			157,315
Deferred income taxes		83,253			80,293			67,978			61,897
Other long-term liabilities								1,078			-
Total liabilities		281,074			285,908			349,847			326,619

SHAREHOLDERS' EQUITY
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 10,000,000 shares authorized; none issued		-			-			-			-
Common stock, $.01 par value, 40,000,000 shares authorized; 11,527,411 and 11,510,863 shares issued; 6,303,035 and 6,396,803 shares outstanding at September 30, 2017 and December 31, 2016, respectively		115			115
Common stock, $.01 par value, 40,000,000 shares authorized; 11,648,785 and 11,612,144 shares issued; 5,753,982 and 5,956,558 shares outstanding at September 30, 2019 and December 31, 2018, respectively								116			116
Additional paid-in capital		81,390			80,822			83,512			82,776
Accumulated other comprehensive income		5,471			7,476
Treasury stock, at cost; 5,224,376 and 5,114,060 shares at September 30, 2017 and December 31, 2016, respectively		(124,796	)		(122,835	)
Treasury stock, at cost; 5,894,803 and 5,655,586 shares at September 30, 2019 and December 31, 2018, respectively								(156,167	)		(142,552	)
Retained earnings		136,108			128,580			220,643			199,107
Total shareholders’ equity		98,288			94,158
Total stockholders’ equity								148,104			139,447

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	379,362		$	380,066
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY							$	497,951		$	466,066

See notes to condensed consolidated financial statements.

Table of Contents

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

~~Condensed Consolidated Statements of Operations~~

~~(unaudited)~~

~~(in thousands, except per share data)~~

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

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

OPERATING REVENUES:

Revenue, before fuel surcharge
$ 93,457 $ 95,926 $ 280,157 $ 288,496
Fuel surcharge
15,442 13,467 46,792 36,002
Total operating revenues
108,899 109,393 326,949 324,498

OPERATING EXPENSES AND COSTS:

Salaries, wages and benefits
24,718 28,167 75,885 83,490
Operating supplies and expenses
19,502 21,155 59,144 61,315
Rent and purchased transportation
44,000 40,013 130,840 118,119
Depreciation
10,177 10,166 31,333 29,011
Insurance and claims
4,232 3,609 13,367 12,158
Other
2,371 1,937 6,791 6,121
Loss (gain) on disposition of equipment
131 (949 ) 261 (3,951 )
Total operating expenses and costs
105,131 104,098 317,621 306,263

OPERATING INCOME
3,768 5,295 9,328 18,235

NON-OPERATING INCOME
2,767 1,235 5,469 1,203
INTEREST EXPENSE
(920 ) (927 ) (2,832 ) (2,659 )

INCOME BEFORE INCOME TAXES
5,615 5,603 11,965 16,779

FEDERAL AND STATE INCOME TAX EXPENSE:

Current
116 115 249 168
Deferred
2,053 2,037 4,378 6,233
Total federal and state income tax expense
2,169 2,152 4,627 6,401

NET INCOME
$ 3,446 $ 3,451 $ 7,338 $ 10,378

INCOME PER COMMON SHARE:

Basic
$ 0.54 $ 0.54 $ 1.15 $ 1.55
Diluted
$ 0.54 $ 0.53 $ 1.14 $ 1.54

AVERAGE COMMON SHARES OUTSTANDING:

Basic
6,326 6,439 6,368 6,703
Diluted
6,373 6,458 6,413 6,725

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
OPERATING REVENUES:
Revenue, before fuel surcharge	$	110,149		$	117,259		$	332,846		$	329,244
Fuel surcharge		18,845			23,066			57,834			65,842
Total operating revenues		128,994			140,325			390,680			395,086

OPERATING EXPENSES AND COSTS:
Salaries, wages and benefits		32,920			30,389			94,586			88,999
Operating supplies and expenses		25,455			24,026			73,487			70,203
Rent and purchased transportation		40,740			53,108			128,647			151,100
Depreciation		14,173			12,168			40,974			36,526
Insurance and claims		3,697			4,310			11,872			13,029
Other		3,788			3,262			10,321			8,910
Loss (gain) on sale or disposition of equipment		688			(91	)		362			(607	)
Total operating expenses and costs		121,461			127,172			360,249			368,160

OPERATING INCOME		7,533			13,153			30,431			26,926

NON-OPERATING INCOME		490			935			3,765			688
INTEREST EXPENSE		(2,178	)		(1,711	)		(6,277	)		(4,226	)

INCOME BEFORE INCOME TAXES		5,845			12,377			27,919			23,388

FEDERAL AND STATE INCOME TAX EXPENSE:
Current		106			142			302			319
Deferred		1,158			2,987			6,081			5,145
Total federal and state income tax expense		1,264			3,129			6,383			5,464

NET INCOME	$	4,581		$	9,248		$	21,536		$	17,924

INCOME PER COMMON SHARE:
Basic	$	0.80		$	1.53		$	3.68		$	2.93
Diluted	$	0.79		$	1.52		$	3.65		$	2.89

AVERAGE COMMON SHARES OUTSTANDING:
Basic		5,756			6,034			5,859			6,120
Diluted		5,799			6,088			5,907			6,203

See notes to ~~condensed consolidated financial statements.~~ Condensed Consolidated Financial Statements.

Table of Contents

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

~~Condensed Consolidated Statements of Comprehensive Income~~

~~(unaudited)~~

~~(in thousands)~~

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

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

NET INCOME
$ 3,446 $ 3,451 $ 7,338 $ 10,378

Other comprehensive income, net of tax:

Reclassification adjustment for realized gains on marketable equity securities included in net income (1)
(1,265 ) (594 ) (2,308 ) (543 )

Reclassification adjustment for unrealized losses on marketable securities included in net income, net of income taxes (2)
9 109 26 440

Changes in fair value of marketable securities (3)
437 (376 ) 277 1,009

COMPREHENSIVE INCOME
$ 2,627 $ 2,590 $ 5,333 $ 11,284

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

~~(1)~~

~~Net of deferred income taxes of $(774), $(364), $(1,412), and $(333), respectively.~~

(2)	~~Net of deferred income taxes of $6, $67, $16, and $269, respectively.~~

(3)	~~Net of deferred income taxes of $ 266, $(230), $ 168, and $618, respectively.~~

	Nine Months Ended
	September 30,
	2019			2018
OPERATING ACTIVITIES:
Net income	$	21,536		$	17,924
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		40,974			36,526
Bad debt expense		694			677
Stock compensation-net of excess tax benefits		736			557
Provision for deferred income taxes		6,081			5,145
Recognized (gain) loss on marketable equity securities		(2,728	)		223
Loss (gain) on sale or disposition of equipment		362			(607	)
Changes in operating assets and liabilities:
Accounts receivable		2,312			(18,547	)
Prepaid expenses, deposits, inventories, and other assets		2,169			1,020
Income taxes refundable		(299	)		231
Trade accounts payable		3,218			11,790
Accrued expenses and other liabilities		1,340			2,564
Net cash provided by operating activities		76,395			57,503

INVESTING ACTIVITIES:
Purchases of property and equipment		(68,046	)		(51,365	)
Proceeds from disposition of equipment		12,714			13,043
Sales of marketable equity securities		1,645			-
Purchases of marketable equity securities, net of return of capital		(128	)		(2,269	)
Net cash used in investing activities		(53,815	)		(40,591	)

FINANCING ACTIVITIES:
Borrowings under line of credit		444,362			447,523
Repayments under line of credit		(445,318	)		(429,402	)
Borrowings of long-term debt		45,557			35,146
Repayments of long-term debt		(51,253	)		(62,012	)
Borrowings under margin account		387			2,512
Repayments under margin account		(2,676	)		(863	)
Repurchases of common stock		(13,616	)		(10,251	)
Exercise of stock options		-			486
Net cash used in financing activities		(22,557	)		(16,861	)

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		23			51

CASH, CASH EQUIVALENTS AND RESTRICTED CASH -Beginning of period		282			224

CASH, CASH EQUIVALENTS AND RESTRICTED CASH -End of period	$	305		$	275

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION-
Cash paid during the period for:
Interest	$	6,258		$	4,104
Income taxes	$	601		$	88

NONCASH INVESTING AND FINANCING ACTIVITIES-
Purchases of property and equipment included in accounts payable	$	5,711		$	13,680

See notes to ~~condensed consolidated financial statements.~~Condensed Consolidated Financial Statements.

Table of Contents

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

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(in thousands)


	Common Stock Shares / Amount					Additional Paid-In Capital		Treasury Stock			Retained Earnings		Total

Balance at January 1, 2019		5,957		$	116	$	82,776	$	(142,552	)	$	199,107	$	139,447

Net Income		-			-		-		-			8,301		8,301

Stock awards-shares issued including tax benefits		1			-		-		-			-		-

Treasury stock repurchases		(40	)		-		-		(1,618	)		-		(1,618	)

Stock based compensation (1)		-			-		216		-			-		216

Balance at March 31, 2019		5,918		$	116	$	82,992	$	(144,170	)	$	207,408	$	146,346

Net Income		-			-		-		-			8,654		8,654

Stock awards-shares issued including tax benefits		35			-		-		-			-		-

Treasury stock repurchases		(196	)		-		-		(11,823	)		-		(11,823	)

Stock based compensation		-			-		310		-			-		310

Balance at June 30, 2019		5,757		$	116	$	83,302	$	(155,993	)	$	216,062	$	143,487

Net Income		-			-		-		-			4,581		4,581

Stock awards-shares issued including tax benefits		-			-		-		-			-		-

Treasury stock repurchases		(3	)		-		-		(174	)		-		(174	)

Stock based compensation		-			-		210		-			-		210

Balance at September 30, 2019		5,754		$	116	$	83,512	$	(156,167	)	$	220,643	$	148,104

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

~~Condensed Consolidated Statements of Cash Flows~~

~~(unaudited)~~

~~(in thousands)~~

(1)

Approximately $90,000 was accrued as stock-based compensation at March 31, 2019 for restricted stock earned by non-employee directors but for which shares were not issued until April 2019.

Nine Months Ended

September 30,

2017

2016

OPERATING ACTIVITIES:

Net income
$ 7,338 $ 10,378
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation
31,333 29,011
Bad debt expense
186 354
Sale leaseback deferred gain amortization
- (131 )
Stock compensation-net of excess tax benefits
446 251
Provision for deferred income taxes
4,378 6,233
Reclassification of unrealized loss on marketable equity securities
42 709
Recognized gain on marketable equity securities
(4,669 ) (1,003 )
Loss (gain) on sale or disposition of equipment
261 (3,951 )
Changes in operating assets and liabilities:

Accounts receivable
(1,683 ) (10,354 )
Prepaid expenses, deposits, inventories, and other assets
70 100
Income taxes refundable
99 2,308
Trade accounts payable
9,086 10,195
Accrued expenses and other liabilities
2,296 (1,917 )
Net cash provided by operating activities
49,183 42,183

INVESTING ACTIVITIES:

Purchases of property and equipment
(38,578 ) (55,948 )
Proceeds from disposition of equipment
16,485 24,479
Change in restricted cash
(5,508 ) (5,461 )
Sales of marketable equity securities
6,007 1,550
Purchases of marketable equity securities, net of return of capital
(1,988 ) (836 )
Net cash used in investing activities
(23,582 ) (36,216 )

FINANCING ACTIVITIES:

Borrowings under line of credit
341,106 375,930
Repayments under line of credit
(342,190 ) (379,043 )
Borrowings of long-term debt
17,598 52,224
Repayments of long-term debt
(35,554 ) (33,092 )
Borrowings under margin account
2,133 1,040
Repayments under margin account
(6,785 ) (2,392 )
Repurchases of common stock
(1,961 ) (20,726 )
Exercise of stock options
122 74
Net cash used in financing activities
(25,531 ) (5,985 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
70 (18 )

CASH AND CASH EQUIVALENTS-Beginning of period
137 157

CASH AND CASH EQUIVALENTS-End of period
$ 207 $ 139

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION-

Cash paid during the period for:

Interest
$ 2,860 $ 2,643
Income taxes
$ 151 $ 260

NONCASH INVESTING AND FINANCING ACTIVITIES-

Purchases of property and equipment included in accounts payable
$ 7,819 $ 2,788

~~See notes to condensed consolidated financial statements.~~

Table of Contents

	Common Stock Shares / Amount					Additional Paid-In Capital		Accumulated Other Comprehensive Income			Treasury Stock			Retained Earnings		Total

Balance at January 1, 2018		6,161		$	115	$	81,559	$	7,444		$	(129,183	)	$	167,669	$	127,604

Net Income		-			-		-		-			-			1,387		1,387

Exercise of stock options and vesting of stock awards-shares issued including tax benefits		17			-		168		-			-			-		168

Treasury stock repurchases		(1	)		-		-		-			(36	)		-		(36	)

Stock based compensation (1)		-			-		162		-			-			-		162

Cumulative effect adjustment – ASU 2016-01		-			-		-		(7,444	)		-			7,444		-

Balance at March 31, 2018		6,177		$	115	$	81,889		-		$	(129,219	)	$	176,500	$	129,285

Net Income		-			-		-		-			-			7,289		7,289

Exercise of stock options and vesting of stock awards-shares issued including tax benefits		63			1		299		-			-			-		300

Treasury stock repurchases		(186	)		-		-		-			(7,495	)		-		(7,495	)

Stock based compensation		-			-		233		-			-			-		233

Balance at June 30, 2018		6,054		$	116	$	82,421		-		$	(136,714	)	$	183,789	$	129,612

Net Income		-			-		-		-			-			9,248		9,248

Exercise of stock options and vesting of stock awards-shares issued including tax benefits		1			-		18		-			-			-		18

Treasury stock repurchases		(43	)		-		-		-			(2,720	)		-		(2,720	)

Stock based compensation		-			-		162		-			-			-		162

Balance at September 30, 2018		6,012		$	116	$	82,601		-		$	(139,434	)	$	193,037	$	136,320

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

~~Condensed Consolidated Statement of Shareholders’ Equity~~

~~(unaudited)~~

~~(in thousands)~~

(1)

Approximately $70,000 was accrued as stock-based compensation at March 31, 2018 for restricted stock earned by non-employee directors but for which shares were not issued until April 2018.

Common Stock
Shares / Amount

Additional
Paid-In Capital

Accumulated
Other
Comprehensive
Income

Treasury
Stock

Retained
Earnings

Total

Balance at January 1, 2017
6,397 $ 115 $ 80,822 $ 7,476 $ (122,835 ) $ 128,580 $ 94,158

Net Income
7,338 7,338

Other comprehensive income, net of tax of $(1,228)
(2,005 ) (2,005 )

Exercise of stock options and stock awards-shares issued including tax benefits
16 - 122 122

Treasury stock repurchases
(110 ) (1,961 ) (1,961 )

Share-based compensation
446 446

Cumulative effect adjustment – ASU 2016-09
190 190

Balance at September 30, 2017
6,303 $ 115 $ 81,390 $ 5,471 $ (124,796 ) $ 136,108 $ 98,288

See notes to ~~condensed consolidated financial statements.~~Condensed Consolidated Financial Statements.

Table of Contents

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

Notes to Condensed Consolidated Financial Statements (unaudited)

September 30, 2019, ~~2017~~

NOTE A:A: BASIS OF PRESENTATION

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

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In ~~management~~’smanagement’s opinion, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included. The consolidated balance sheet at December 31, ~~2016~~2018 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Operating results for the three and nine-month period ended September 30, ~~2017~~2019 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017.~~2019. For further information, refer to the consolidated financial statements and the footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, ~~2016.~~2018.

NOTE B:B: RECENT ACCOUNTING PRONOUNCEMENTS

In ~~May 2014,~~July 2018, the Financial Accounting Standards Board, (“FASB”), issued Accounting Standards Update, (“ASU”) No. ~~2014-09,~~ 2018-09, (“ASU ~~2014-09”~~2018-09”), ~~Revenue from Contracts with Customers~~~~. The objective of~~Codification Improvements. ASU ~~2014-09~~2018-09 was issued to update codification on multiple topics, and ~~subsequent amendments is to establish a single comprehensive model~~includes updates for ~~entities to use in accounting for revenue arising from contracts with customers~~technical corrections, clarifications and ~~will supersede most of the existing revenue recognition guidance, including industry-specific guidance. The core principle of~~other minor improvements. ASU 2014-09 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the new guidance, an entity will (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the contract’s performance obligations; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 applies to all contracts with customers except those that are within the scope of other topics in the FASB Accounting Standards Codification, (“ASC”). The new guidance, as amended,2018-09 is effective for ~~annual reporting periods (including~~fiscal years, and interim periods within those ~~periods)~~years, beginning after December 15, ~~2017 for public companies. Early~~2018, with early adoption ~~is not permitted prior to annual periods beginning after December 31, 2016. Entities have the option of using either a full retrospective or modified approach to adopt ASU 2014-09.~~

permitted. The ~~Company has performed an analysis of the effects of adopting this guidance. The analysis included the following items:~~

~~● identifying what constitutes a contract within the Company’s business practices,~~

~~● identifying performance obligations within our contracts,~~

~~● determining transaction prices,~~

~~● allocating the transaction price to performance obligations,~~

~~● determination of when performance obligations are satisfied and revenue is earned,~~

~~● disaggregation of revenue by source within segments, and~~

~~● principal versus agent considerations.~~

~~Based upon~~ our evaluation, the adoption of ASU No. 2014-09 and subsequent amendments will result in additional note disclosures regarding the nature of the Company’s contracts with customers and the Company’s significant judgments regarding the application of these standards. However, the adoption of this guidance ison January 1, 2019 did not ~~expected to~~ have a ~~significant~~material impact on the Company’s financial condition, results of operations, or cash flows.

In ~~January 2016,~~July 2018, the FASB issued ASU ~~2016-01,~~No. 2018-10, (“ASU ~~2016-01”~~2018-10”), ~~Financial Instruments - Overall (Subtopic 825-10): Recognition~~Codification Improvements to Topic 842, Leases. ASU 2018-10 was issued to update codification specific to Topic 842, and ~~Measurement of Financial Assets~~includes updates for technical corrections, clarifications and ~~Financial Liabilities. The updated guidance enhances the reporting model for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation and disclosure.~~other minor improvements. ASU ~~2016-01~~2018-10 is effective for ~~annual~~fiscal years, and interim periods within those years, beginning after December 15, ~~2017. With certain exceptions,~~2018, with early adoption ~~is not~~ permitted.

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The ~~Company has performed a preliminary analysis of the effects of adopting this guidance. This analysis consisted of the following items:~~

●

~~categorize securities as either equity securities or debt securities,~~

●

~~determine which securities held by the Company have readily determinable fair values,~~

●

~~determine that the exit price notion will be used when measuring the fair value of financial instruments for disclosure purposes,~~

●

~~consider the need for a valuation allowance related to a deferred tax asset on available-for-sale securities in combination with the Company’s other deferred tax assets.~~

~~Based upon this evaluation, the~~ adoption of this guidance ison January 1, 2019 did not ~~expected to~~ have a ~~significant~~material impact on the Company’s financial condition, results of operations, or cash ~~flows, but~~flows.

In June 2016, the FASB issued ASU No. 2016-13, (“ASU 2016-13”), Accounting for Credit Losses (Topic 326). ASU 2016-13 requires the use of an “expected loss” model on certain types of financial instruments. The standard also amends the impairment model for available-for-sale debt securities and requires estimated credit losses to be recorded as allowances instead of reductions to amortized cost of the securities. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted. The Company has evaluated the new guidance and does not expect it ~~is expected~~ to have a ~~significant~~material impact on ~~the Company’s~~its financial condition, results of operations, ~~through the recognition of changes in market value each reporting period rather than recognizing them through comprehensive income.~~or cash flows.

In February 2016, the FASB issued ASU No. 2016-02, ~~(“ASU 2016-02”),~~ Leases (Topic 842). This update seeks to increase the transparency and comparability among public entities by requiring ~~public entities~~filers to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that companies may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. The new standard was effective for public companies for annual periods beginning after December 15, 2018, and interim periods within those years, with early adoption permitted.

To satisfy the standard’s objective, a lessee will recognize a right-of-use asset representing its right to use the underlying asset for the lease term and a lease liability for the obligation to make lease payments. Both the right-of-use asset and lease liability will initially be measured at the present value of the lease payments, with subsequent measurement dependent on the classification of the lease as either a finance or an operating lease. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset to not recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. Accounting by lessors will remain mostly unchanged from current U.S. GAAP.

~~In transition, lessees and lessors will be required to recognize and measure leases at the beginning~~

Table of ~~the earliest period presented using a modified retrospective approach.~~ Contents

The ~~modified retrospective approach includes a number~~adoption of optional practical expedients that companies may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. The transitionthis guidance also provides specific guidance for sale and leaseback transactions, build-to-suit leases, leveraged leases, and amounts previously recognized in accordance with the business combinations guidance for leases. The new standard is effective for public companies for annual periods beginning after December ~~15, 2018, and interim periods within those years, with early adoption permitted. The Company has evaluated the new guidance and does~~on January 1, 2019 did not ~~expect it to~~ have a material impact on ~~its~~the Company’s financial condition, results of operations, or cash ~~flows since the Company’s current leases will expire prior to the effective date of this guidance.~~flows. See Note M - Leases for additional adoption information and disclosures required by Accounting Standards Codification (“ASC”) Topic 842.

In ~~March~~January 2016, the FASB issued ASU ~~No. 2016-09,~~2016-01, (“ASU ~~2016-09”~~2016-01”), ~~Compensation – Stock Compensation (Topic 718)~~Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ~~ASU 2016-09 identifies areas~~The updated guidance enhances the reporting model for ~~simplification involving several~~financial instruments, which includes amendments to address aspects of ~~accounting for share-based payment transactions, including~~recognition, measurement, presentation and disclosure.

The provisions of ASU 2016-01 require, among other things, that the income tax consequences, classification of awards as either equity or liability, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. Company:

●

Categorize securities as equity securities or debt securities

●

Eliminate the classification of equity securities as trading or available for sale

●

Determine which securities have readily determinable fair values

●

Use the exit price notion when measuring the fair value of financial instruments for disclosure purposes

●

Consider the need for a valuation allowance related to a deferred tax asset on available-for-sale securities in combination with the Company’s other deferred tax assets, and

●

Recognize changes in the fair market value of equity securities in net income

ASU ~~2016-09~~2016-01 is effective for annual and interim periods beginning after December 15, ~~2017, with~~2017. With certain exceptions, early adoption was not permitted. The adoption of this guidance on January 1, ~~2017,~~2018, did not have a significant impact on the Company’s financial condition or cash flows, but did impact the Company’s results of operations, ~~or cash flows.~~

~~In June 2016,~~as the ~~FASB issued ASU No. 2016-13, (“ASU 2016-13”),~~ ~~Accounting for Credit Losses (Topic 326)~~~~. ASU 2016-13~~current guidance requires ~~the use of an “expected loss” model on certain types of financial instruments. The standard also amends the impairment model for available-for-sale debt~~changes in market value related to equity securities ~~and requires estimated credit losses~~ to be ~~recorded~~recognized in net income, rather than being recognized as ~~allowances instead of reductions to amortized cost~~other comprehensive income. Upon adoption, approximately $7.4 million in accumulated changes in the fair market value of the ~~securities. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after~~Company’s equity securities, net of deferred tax, that were presented at December ~~15, 2019, with early adoption permitted. The Company is evaluating the new guidance, but does not expect it~~31, 2017 as Accumulated Other Comprehensive Income were reclassified to ~~have a material impact on its financial condition, results of operations, or cash flows.~~

~~In August 2016, the FASB issued ASU~~ ~~No. 2016-15, (“ASU 2016-15”),~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~. ASU 2016-15 amends the guidance in ASC 230, Statement of Cash Flows, and clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows with the objective of reducing the existing diversity in practice related to eight specific cash flow issues. The amendments in this update are effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company has evaluated the effects of adopting ASU 2016-15 and does not expect it to have a material impact on its financial condition, results of operations, or cash flows.

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~~In November 2016, the FASB issued ASU No. 2016-18, (“ASU 2016-18”),~~ ~~Statement of Cash Flows (Topic 230)~~. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This standard is intended to reduce diversity in practice in how restricted cash or restricted cash equivalents are presented and classified in the statement of cash flows. ASU No. 2016-18 is effective for fiscal years and interim periods, beginning after December 15, 2017, with early adoption permitted. The standard requires application using a retrospective transition method. The adoption of ASU No. 2016-18 will change the presentation and classification of restricted cash and restricted cash equivalents in our consolidated statements of cash flows but is not expected to have a material impact on our financial condition, results of operations, or cash flows.

~~In May 2017, the FASB issued ASU No. 2017-09, ("ASU 2017-09"),~~ ~~Compensation – Stock Compensation (Topic 718)~~ which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, and early adoption is permitted, including in an interim period. ASU 2017-09 is to be applied on a prospective basis to an award modified on or after the adoption date. The Company has evaluated the effects of adopting ASU 2017-09 and does not expect it to have a material impact on its financial condition, results of operations, or cash flows.Retained Earnings.

With the exception of the new standards discussed above, there have been no recent accounting pronouncements or changes in accounting pronouncements during the nine months ended September 30, ~~2017,~~2019, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2018, that are of significance or potential significance to the Company.

NOTE C: REVENUE RECOGNITION

The Company has a single performance obligation, to transport our customer’s freight from a specified origin to a specified destination. The Company has the discretion to choose to self-transport or to arrange for alternate transportation to fulfill the performance obligation. Where the Company decides to self-transport the freight, the Company classifies the service as truckload services, and where the Company arranges for alternate transportation of the freight, the Company classifies the service as brokerage and logistics services. In either case, the Company is paid a rate to transport freight from its origin location to a specified destination. Because the primary factors influencing revenue recognition, including performance obligation, customer base, and timing of revenue recognition, are the same for both of its service categories, the Company utilizes the same revenue recognition method throughout its operations.

Company revenue is generated from freight transportation services performed utilizing heavy truck trailer combinations. While various ownership arrangements may exist for the equipment utilized to perform these services, including Company owned or leased, owner-operator owned, and third party carriers, revenue is generated from the same base of customers. Contracts with these customers establish rates for services performed, which are predominantly rates that will be paid to pick up, transport and drop off freight at various locations. In addition to transportation, revenue is also awarded for various accessorial services performed in conjunction with the base transportation service. The Company also has other revenue categories that are not discussed in this note or broken out in our Condensed Consolidated Statements of Operations due to their immaterial amounts.

In fulfilling the Company’s obligation to transport freight from a specified origin to a specified destination, control of freight is transferred to us at the point it has been loaded into the driver’s trailer, the doors are sealed and the driver has signed a bill of lading, which is the basic transportation agreement that establishes the nature, quantity and condition of the freight loaded, responsibility for invoice payment, and pickup and delivery locations. Our revenue is generated, and our customer receives benefit, as the freight progresses towards delivery locations. In the event our customer cancels the shipment at some point prior to the final delivery location and re-consigns the shipment to an alternate delivery location, we are entitled to receive payment for services performed for the partial shipment. Shipments are generally conducted over a relatively short time span, generally one to three days; however, freight is sometimes stored temporarily in our trailer at one of our drop yard locations or at a location designated by a customer. Our revenue is categorized as either Freight Revenue or Fuel Surcharge Revenue, and both are earned by performing the same freight transportation services, as discussed further below.

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Freight Revenue – revenue generated by the performance of the freight transportation service, including any accessorial service, provided to customers.

Fuel Surcharge Revenue – revenue designed to adjust freight revenue rates to an agreed upon base cost for diesel fuel. Diesel fuel prices can fluctuate widely during the term of a contract with a customer. At the point that freight revenue rates are negotiated with customers, a sliding scale is agreed upon that approximately adjusts diesel fuel costs to an agreed upon base amount. In general, as fuel prices increase, revenue from fuel surcharge increases, so that diesel fuel cost is adjusted to the approximate base amount agreed upon.

Revenue is recognized over time as the freight progresses towards its destination and the transportation service obligation is fulfilled. For loads picked up during the reporting period, but delivered in a subsequent reporting period, revenue is allocated to each period based on the transit time in each period as a percentage of total transit time. There are no assets or liabilities recorded in conjunction with revenue recognized, other than Accounts Receivable and Allowance for doubtful accounts.

NOTE C:D: MARKETABLE EQUITY SECURITIES

~~The Company accounts for its marketable securities in accordance with ASC Topic 320, (“ASC Topic 320”),~~ ~~Investments-Debt and Equity Securities~~~~. ASC Topic 320 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 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. There were no reclassifications of marketable securities between trading and available-for-sale categories during the first nine months of 2017 or 2016.with readily determinable fair values. The cost of securities sold is based on the specific identification method, and interest and dividends on securities are included in ~~non-operating income (expense).~~Non-operating income.

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 and declines in~~fair market value ~~judged to be other-than-temporary on available-for-sale securities, if any, are~~ included in the determination of net income. ~~A quarterly evaluation~~The fair value of marketable equity securities is ~~performed~~determined based on quoted market prices in ~~order to judge whether declines~~active markets, as described 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.

~~For the quarter ended~~ September 30, 2017, the evaluation resulted in an impairment charge of approximately $15,000 in the Company’s non-operating income (expense) in its statement of operations. For the quarter ended September 30, 2016, the evaluation resulted in an impairment charge of approximately $176,000 in the Company’s non-operating income (expense) in its statement of operations.

~~For the~~ nine-month period ended September 30, 2017, the evaluation resulted in an impairment charge of approximately $42,000 in the Company’s non-operating income (expense) in its statement of operations. For the nine-month period ended September 30, 2016, the evaluation resulted in an impairment charge of approximately $709,000 in the Company’s non-operating income (expense) in its statement of operations.

Note J below.

The following table sets forth market value, cost, and unrealized gains on equity securities as of September 30, ~~2017~~2019 and December 31, ~~2016.~~2018.

September 30, 2017

December 31, 2016

(in thousands)

Fair market value
$ 24,994 $ 27,621
Cost
16,175 15,569
Unrealized gain
$ 8,819 $ 12,052

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	September 30, 2019		December 31, 2018
	(in thousands)
Fair market value	$	28,759	$	27,549
Cost		25,198		25,602
Unrealized gain	$	3,561	$	1,947

The following table sets forth the gross unrealized gains and losses on the ~~Company~~’sCompany’s marketable securities as of September 30, ~~2017~~2019 and December 31, ~~2016.~~2018.

September 30, 2017

December 31, 2016

(in thousands)

Gross unrealized gains
$ 9,062 $ 12,161
Gross unrealized losses
243 109
Net unrealized gains
$ 8,819 $ 12,052

~~As of~~ September 30, 2017 and December 31, 2016, the total net unrealized gain, net of deferred income taxes, in accumulated other comprehensive income was approximately $5,471,000 and $7,476,000, respectively.

~~For the~~ nine months ended September 30, 2017, the Company had net unrealized losses in market value on its marketable equity securities of approximately $2,005,000, net of deferred income taxes. For the year ended December 31, 2016, the Company had net unrealized losses in market value on securities classified as available-for-sale of approximately $2,166,000, net of deferred income taxes.

At September 30, 2017, the Company’s investments’ approximate fair value of securities in a loss position and related gross unrealized losses were $2,414,000 and $243,000, respectively. At December 31, 2016, the Company’s investments’ approximate fair value of securities in a loss position and related gross unrealized losses were $1,340,000 and $109,000, respectively. As of September 30, 2017 and December 31, 2016, there were no investments that had been in a continuous unrealized loss position for twelve months or longer.

	September 30, 2019		December 31, 2018
	(in thousands)
Gross unrealized gains	$	7,023	$	5,668
Gross unrealized losses		3,462		3,721
Net unrealized gains	$	3,561	$	1,947

The following table shows the ~~Company~~’sCompany’s net realized gains during the ~~first~~three and nine months ending on September 30 of ~~2017~~2019 and ~~2016~~2018, respectively, on certain marketable equity securities.

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2017		2016		2017		2016		2019		2018		2019		2018
	(in thousands, except per share data)								(in thousands, except per share data)
Sales proceeds	$	2,928	$	1,271	$	6,007	$	1,550	$	883	$	-	$	1,645	$	-
Cost of securities sold		405		178		1,338		547		557		-		805		-
Realized gain	$	2,523	$	1,093	$	4,669	$	1,003	$	326	$	-	$	840	$	-

Realized gain, net of taxes	$	1,546	$	676	$	2,862	$	621	$	252	$	-	$	651	$	-

For the quarter ended September 30, ~~2017,~~2019, the Company recognized dividends received of approximately ~~$225,000~~$348,000 in non-operating income in its statements of operations. For the quarter ended September 30, ~~2016,~~2018, the Company recognized dividends received of approximately ~~$279,000~~$308,000 in non-operating income in its statements of operations.

For the nine months ended September 30, ~~2017,~~2019, the Company recognized dividends received of approximately ~~$718,000~~$931,000 in non-operating income in its statements of operations. For the nine months ended September 30, ~~2016,~~2018, the Company recognized dividends received of approximately ~~$781,000~~$780,000 in non-operating income in its statements of operations.

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The market value of the ~~Company~~’sCompany’s equity securities are periodically used as collateral against any outstanding margin account borrowings. As of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, the Company had outstanding borrowings of approximately ~~$5,707,000~~$8,992,000 and ~~$10,358,000,~~$11,281,000, respectively, under its margin account. Margin account borrowings are used for the purchase of marketable equity securities and as a source of short-term liquidity and are included in Accrued expenses and other liabilities on our balance sheets.

Our marketable equity securities portfolio had a net unrealized pre-tax gain in market value of approximately $133,000 during the third quarter of 2019, and a net unrealized pre-tax gain in market value of approximately $586,000 during the third quarter of 2018, which were reported as Non-operating income for the respective periods.

NOTE DE: STOCK BASED COMPENSATION

The Company maintains a stock incentive plan (the “Plan”) under which incentive and nonqualified stock options and other stock awards may be granted. ~~On March 2, 2006, the Company’s Board of Directors (the “Board”) adopted, and shareholders later approved, the 2006 Stock Option Plan (the “2006 Plan”).~~ Under the ~~2006~~ Plan, 750,000 shares were 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. On March 13, 2014, the Board adopted, and on May 29, 2014 our shareholders approved, the 2014 Amended and Restated Stock Option and Incentive Plan (the “2014 Plan”) which replaced the 2006 Plan. The shares which remained reserved under the 2006 Plan were carried over to the 2014 Plan and are reserved for the issuance of stock awards to directors, officers, key employees, and others. The stock option exercise price and the restricted stock ~~purchase price~~value under the ~~2014~~ Plan shall not be less than 85% of the fair market value of the Company’s common stock on the date the award is granted. The fair market value is determined by the closing price of the Company’s common stock, on its primary exchange, on the same date that the option or award is granted.

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~~Outstanding nonqualified stock options at~~ September 30, 2017, must be exercised within either five or ten years from the date of grant. Outstanding nonqualified stock options granted to members of the Board vested immediately while outstanding nonqualified stock options issued to employees vest in increments of 20% to 33% each year.

During the first nine months of ~~2017, 4,298~~2019, 2,058 shares of ~~common~~restricted stock were granted to non-employee directors under the ~~2014 Plan and 100,000 shares of common stock were granted to the Company’s Chief Executive Officer.~~Plan. The stock awarded to non-employee directors had a grant date weighted average fair value of ~~$16.29~~$48.75 per share, based on the closing price of the Company’s stock on the date of grant, and vested immediately. The stock awarded to the Chief Executive Officer had a grant date fair value of $16.38 per share, based on the closing price of the Company’s stock on the date of grant, with 33% of the award vesting on each anniversary of the date of grant for the next three years.

The total grant date fair value of stock ~~and stock options~~ vested during the first nine months of ~~2017~~2019 was approximately ~~$186,000.~~$685,000. Total pre-tax ~~stock-based~~stock based compensation expense, recognized in Salaries, wages and benefits during the first nine months of ~~2017~~2019 was approximately ~~$446,000~~$736,000 and includes approximately ~~$70,000~~$100,000 recognized as a result of the grant of ~~614~~ shares to each non-employee director during the first ~~quarter~~nine months of ~~2017.~~2019. The recognition of stock-based compensation expense decreased both diluted and basic earnings per common share by approximately ~~$0.02~~$0.09 during the ~~third quarter of 2017. The recognition of stock-based compensation expense decreased both diluted and basic earnings per common share by approximately $0.05 during the~~first nine months ~~ended September 30, 2017.~~of 2019. As of September 30, ~~2017,~~2019, the Company had ~~stock-based~~stock based compensation plans with total unvested stock-based compensation expense of approximately ~~$1,501,000~~$1,228,000 which is being amortized on a straight-line basis over the remaining vesting period. As a result, the Company expects to recognize approximately ~~$168,000~~$210,000 in additional compensation expense related to unvested option awards during the remainder of ~~2017~~2019 and to recognize approximately ~~$644,000, $552,000,~~$430,000, $294,000 and ~~$137,000~~$294,000 in additional compensation expense related to unvested option awards during the years ~~2018, 2019,~~2020, 2021 and ~~2020,~~2022, respectively.

The total grant date fair value of stock ~~and stock options~~ vested during the first nine months of ~~2016~~2018 was approximately ~~$202,000. Total pre-tax stock-based compensation expense, recognized in Salaries, wages and benefits during the third quarter of 2016 was approximately $56,000.~~$655,000. Total pre-tax stock-based compensation expense, recognized in Salaries, wages and benefits during the first nine months of ~~2016~~2018 was approximately ~~$251,000~~$557,000, and ~~includes~~included approximately $70,000 recognized as a result of the grant of ~~325~~276 shares to each non-employee director during the first ~~quarter~~nine months of ~~2016.~~2018. The recognition of stock-based compensation expense decreased ~~basic earnings per common share by approximately $0.01 during the third quarter ended September 30, 2016. The recognition of stock-based compensation expense decreased~~both diluted and basic earnings per common share by approximately ~~$0.02 and $0.03, respectively,~~$0.07 during the first nine months ~~ended September 30, 2016.~~2018. As of September 30, ~~2016,~~2018, the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately ~~$290,000~~$846,000 which iswas being amortized on a straight-line basis over the remaining vesting period.

~~Information related to stock option activity for the~~ ~~nine months ended September 30, 2017 is as follows:~~

Shares
Under
Options

Weighted-
Average
Exercise Price

Weighted-
Average
Remaining Contractual
Term

Aggregate
Intrinsic
Value*

(per share)

(in years)

Outstanding-January 1, 2017
56,131 $ 10.85
Granted
- -
Exercised
(11,000 ) 11.13
Cancelled/forfeited/expired
- -
Outstanding at September 30, 2017
45,131 $ 10.79 3.1 $ 593,187

Exercisable at September 30, 2017
45,131 $ 10.79 3.1 $ 593,187

* 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 ~~September 29, 2017, was $23.93.~~

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A summary of the status of the ~~Company~~’sCompany’s non-vested ~~options and~~ restricted stock as of September 30, ~~2017~~2019 and changes during the nine months ended September 30, ~~2017,~~2019, is as follows:

Stock Options

Restricted Stock

Number of
Options

Weighted-
Average Grant
Date Fair Value

Number of
Shares

Weighted-
Average Grant
Date Fair Value*

Non-vested at January 1, 2017
12,800 $ 6.06 7,050 $ 36.35
Granted
- - 104,298 16.38
Canceled/forfeited/expired
- - - -
Vested
(12,800 ) 6.06 (5,548 ) 19.56
Non-vested at September 30, 2017
- $ - 105,800 $ 17.54

* The weighted-average grant date fair value was based on the closing price of the Company~~’s stock on the date of the grant.~~

~~The number, weighted average exercise price, and weighted average remaining contractual life of options outstanding as of~~ ~~September 30, 2017 and the number and weighted average exercise price of options exercisable as of September 30, 2017 are as follows:~~

Exercise Price

Shares Under
Outstanding
Options

Weighted-Average
Remaining Contractual
Term

Shares Under
Exercisable
Options

(in years)

$ 10.44 15,000 0.4 15,000
$ 10.90 24,600 4.7 24,600
$ 11.22 5,531 3.2 5,531
45,131 3.1 45,131

	Restricted Stock
	Number of Shares			Weighted- Average Grant Date Fair Value
Non-vested at January 1, 2019		100,917		$	23.09
Granted		2,058			48.75
Canceled/forfeited/expired		-			-
Vested		(36,641	)		18.69
Non-vested at September 30, 2019		66,334		$	26.31
__________________________

Cash received from option exercises totaled approximately $~~122,000~~$0 and ~~$74,000~~$486,000 during the nine months ended September 30, ~~2017~~2019 and September 30, ~~2016,~~2018, respectively. ~~The Company issues new shares upon option exercise.~~

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NOTE E:F: SEGMENT INFORMATION

The Company follows the guidance provided by ASC Topic 280, Segment Reporting, in its identification of operating segments. The Company has determined that it has a total of two operating segments whose primary operations can be characterized as either Truckload Services or Brokerage and Logistics Services; however, in accordance with the aggregation criteria provided by FASB ASC Topic 280, the Company has determined that the operations of the two operating segments can be aggregated into a single reporting segment, motor carrier operations. Truckload Services revenues and Brokerage and Logistics Services revenues, each before fuel surcharges, were as follows:

																	Three Months Ended September 30,								Nine Months ended September 30,
	Three Months Ended September 30,								Nine Months Ended September 30,								2019				2018				2019				2018
	2017				2016				2017				2016				Amount		%		Amount		%		Amount		%		Amount		%
	Amount		%		Amount		%		Amount		%		Amount		%		(in thousands, except percentage data)
	(in thousands, except percentage data)
Truckload Services revenue	$	79,736		85.3	$	85,286		88.9	$	244,311		87.2	$	254,262		88.1	$	92,443		83.9	$	92,842		79.2	$	275,322		82.7	$	262,497		79.7
Brokerage and Logistics Services revenue		13,721		14.7		10,640		11.1		35,846		12.8		34,234		11.9		17,706		16.1		24,417		20.8		57,523		17.3		66,747		20.3
Total revenues	$	93,457		100.0	$	95,926		100.0	$	280,157		100.0	$	288,496		100.0	$	110,149		100.0	$	117,259		100.0	$	332,845		100.0	$	329,244		100.0

NOTE FG: TREASURY STOCK

The ~~Company~~’sCompany’s stock repurchase program has been extended and expanded several times, most recently in April 2017, when the Board of Directors reauthorized 500,000 shares of common stock for repurchase under the initial September 2011 authorization. During the nine months ended September 30, ~~2017,~~2019, the Company repurchased ~~110,316~~46,474 shares of its common stock at an aggregate cost of approximately ~~$1,961,000~~$1,974,000 under this program.

On May 13, 2019, the Company commenced a tender offer to repurchase up to 200,000 shares of the Company’s outstanding common stock at a price of not greater than $60.00 nor less than $55.00 per share. Following the expiration of the tender offer on June 11, 2019, the Company accepted 192,743 shares of its common stock for purchase at $60.00 per share, at an aggregate purchase price of approximately $11.6 million, excluding fees and expenses related to the offer. The Company funded the purchase of the accepted shares tendered with available cash, cash equivalents and borrowings available under our existing line of credit and accounted for the repurchase of these shares as treasury stock on the Company’s Condensed Consolidated Balance Sheet as of September 30, 2019.

The Company accounts for Treasury stock using the cost method, and as of September 30, ~~2017, 5,224,376~~2019, 5,894,803 shares were held in the treasury at an aggregate cost of approximately ~~$124,796,000.~~$156,167,000.

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~~NOTE G: ACCUMULATED OTHER COMPREH~~E~~NSIVE INCOME~~

~~The following table summarizes the changes in accumulated balances of other comprehensive income for the three and~~ ~~nine months ended September 30, 2017:~~

Unrealized gains and
losses on available-
for-sale securities

(in thousands)

Balance at June 30, 2017, net of tax of $3,851
$ 6,290

Other comprehensive income before reclassifications, net of tax of $266
437
Amounts reclassified from accumulated other comprehensive income, net of tax of $(768)
(1,256 )
Net current-period other comprehensive income
(819 )

Balance at September 30, 2017, net of tax of $3,349
$ 5,471

Balance at December 31, 2016, net of tax of $4,576
$ 7,476

Other comprehensive income before reclassifications, net of tax benefit of $169
277
Amounts reclassified from accumulated other comprehensive income, net of tax of $(1,396)
(2,282 )
Net current-period other comprehensive income
(2,005 )

Balance at September 30, 2017, net of tax of $3,349
$ 5,471

~~The following table provides details about reclassifications out of accumulated other comprehensive income for the~~ ~~nine months ended September 30, 2017:~~

Amounts Reclassified from
Accumulated
Other Comprehensive
Income (a)

Details about Accumulated Other Comprehensive Income
Component

Nine Months Ended
September 30, 2017

Statement of Operations Classification

(in thousands)

Unrealized gains and losses on available-for-sale securities:

Prior period unrealized gain (loss) on securities sold
$ 3,720
Non-operating income (expense)
Impairment expense
(42 )
Non-operating income (expense)
Total before tax
3,678
Income before income taxes
Tax expense
(1,396 )
Income tax expense
Total after tax
$ 2,282
Net income

~~(a) Amounts in parentheses indicate debits to profit/loss~~

NOTE H: ~~EARNINGS~~INCOME PER SHARE

Basic earnings per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by adjusting the weighted average number of shares of common stock outstanding by common stock equivalents attributable to dilutive ~~stock options.~~restricted stock. The computation of diluted earnings per share does not assume conversion, exercise, or contingent issuance of securities that would have an anti-dilutive effect on earnings per share. The computations of basic and diluted earnings per share were as follows:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

(in thousands, except per share data)

Net income
$ 3,446 $ 3,451 $ 7,338 $ 10,378

Basic weighted average common shares outstanding
6,326 6,439 6,368 6,703
Dilutive effect of common stock equivalents
47 19 45 22
Diluted weighted average common shares outstanding
6,373 6,458 6,413 6,725

Basic earnings per share
$ 0.54 $ 0.54 $ 1.15 $ 1.55
Diluted earnings per share
$ 0.54 $ 0.53 $ 1.14 $ 1.54

~~As of~~ ~~September 30, 2017 and September 30, 2016, there were no options outstanding to purchase shares of common stock that had an anti-dilutive effect on the computation of diluted earnings per share.~~

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	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
	(in thousands, except per share data)

Net income	$	4,581	$	9,248	$	21,536	$	17,924

Basic weighted average common shares outstanding		5,756		6,034		5,859		6,120
Dilutive effect of common stock equivalents		43		54		48		83
Diluted weighted average common shares outstanding		5,799		6,088		5,907		6,203

Basic earnings per share	$	0.80	$	1.53	$	3.68	$	2.93
Diluted earnings per share	$	0.79	$	1.52	$	3.65	$	2.89

NOTE I: INCOME TAXES

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 the Company operates generally provide for a deficiency assessment statute of limitation period of three years, and as a result, the Company’s tax years ~~2013~~2015 and forward remain open to examination in those jurisdictions.

In determining whether a tax asset valuation allowance is necessary, management, in accordance with the provisions of ASC 740-10-30, weighs all available evidence, both positive and negative,, to determine whether, based on the weight of that evidence, a valuation allowance is necessary. If negative conditions exist which indicate a valuation allowance might be necessary, consideration is then given to what effect the future reversals of existing taxable temporary differences and the availability of tax strategies might have on future taxable income to determine the amount, if any, of the required valuation allowance. As of September 30, ~~2017,~~2019, management determined that the future reversals of existing taxable temporary differences and available tax strategies would generate sufficient future taxable income to realize its tax assets and therefore a valuation allowance was not necessary.

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The

The Company recognizes a 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. As of September 30, ~~2017,~~2019, an adjustment to the Company’s ~~consolidated financial statements~~Condensed Consolidated Financial Statements for uncertain tax positions has not been required as management believes that the Company’s tax positions taken in income tax returns filed or to be filed are supported by clear and unambiguous income tax laws. The Company recognizes interest and penalties related to uncertain income tax positions, if any, in income tax expense. During the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, the Company has not recognized or accrued any interest or penalties related to uncertain income tax positions.

The ~~Company~~’sCompany’s effective income tax rates were ~~38.6%~~22.9% and ~~38.4% for the three months ended September 30, 2017 and 2016, respectively, and 38.7% and 38.1%~~23.4% for the nine months ended September 30, ~~2017~~2019 and ~~2016~~2018, respectively. Our effective tax rate for the ~~three and~~ nine months ended September 30, ~~2017 differ~~2019 differs from amounts computed by applying the United States federal statutory rates to pre-tax income primarily due to ~~the impact of~~ state income ~~taxes.~~taxes and the tax benefits related to stock compensation.

NOTE J:J: FAIR VALUE OF FINANCIAL INSTRUMENTS

The ~~Company~~’sCompany’s financial instruments consist of cash and cash equivalents, marketable equity securities, accounts receivable, trade accounts payable, and borrowings.

The Company follows the guidance for financial assets and liabilities measured on a recurring basis. This guidance 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 and 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.

At September 30, ~~2017,~~2019, the following items are measured at fair value on a recurring basis:

Total

Level 1

Level 2

Level 3

(in thousands)

Marketable equity securities
$ 24,994 $ 24,994 - -

	Total		Level 1		Level 2		Level 3
	(in thousands)

Marketable equity securities	$	28,759	$	28,759		-		-

The ~~Company~~’sCompany’s investments in marketable securities are recorded at fair value based on quoted market prices. The carrying value of other financial instruments, including cash, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short maturities.

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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~~’sCompany’s current incremental borrowing rates for similar types of borrowing arrangements. The carrying value and estimated fair value of this other long-term debt at September 30, ~~2017~~2019 was as follows:

Carrying
Value

Estimated
Fair Value

(in thousands)

Long-term debt
$ 147,376 $ 146,414

	Carrying Value		Estimated Fair Value
	(in thousands)

Long-term debt	$	221,350	$	225,329

The Company has not elected the fair value option for any of its financial instruments.

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NOTE K: NOTES PAYABLE

During the first nine months of ~~2017,~~2019, the Company’s subsidiaries entered into installment obligations totaling approximately ~~$17.6~~$61.6 million for the purpose of purchasing revenue equipment. These obligations are payable in monthly ~~installments.~~installments and are recorded in long term debt and current maturities on the Condensed Consolidated Balance Sheets. The term of these obligations ranges from 36 months for trucks to 84 months for trailers.

NOTE L: OFF-B~~ALANCE~~ S~~HEET~~ A~~RRANGEME~~NTS

~~As of~~ September 30, 2017, the Company’s subsidiaries operated revenue equipment under various operating lease arrangements. Revenue equipment held under operating leases is not carried on our balance sheets and the respective lease payments are reflected in our statements of operations as a component of the Rent and purchased transportation category.

R~~ent expense related to revenue equipment under these leases was as follows:~~

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

(in thousands)

Rent expense related to revenue equipment
$ 1,502 $ 2,332 $ 4,960 $ 7,401

~~Leases for revenue equipment under non-cancellable operating leases expire at various dates through~~ ~~2017 and 2018. Future minimum lease payments related to non-cancellable leases for revenue equipment at September 30, 2017 are:~~

(in thousands)

2017
$ 316
2018
177
Total future minimum lease payments
$ 493

~~NOTE M:~~ LITIGATION

Other than the ~~lawsuit~~lawsuits discussed below, the Company is not a party to any pending legal proceeding which management believes to be material to the financial statements of the Company. The Company maintains liability insurance against risks arising out of the normal course of its business.

We are a defendant in a collective-action lawsuit which was re-filed on December 9, 2016, in the United States District Court for the Western District of Arkansas. The plaintiffs, who are former drivers who worked for the Company during the period of December 6, 2013, through the date of the filing, allege violations under the Fair Labor Standards Act and the Arkansas Minimum Wage Law. The plaintiffs, through their attorneys, have filed causes of action alleging “Failure to pay minimum wage during orientation, failure to pay minimum wage to team drivers after initial orientation, failure to pay minimum wage to solo-drivers after initial orientation, failure to pay for compensable travel time, Comdata card fees, unlawful deductions, and breach of contract.” The plaintiffs are seeking actual and liquidated damages to include court costs and legal fees. The lawsuit is ~~currently under preliminary review. We~~being vigorously defended and we cannot reasonably estimate, at this time, the possible loss or range of loss, if any, that may arise from this lawsuit. Management has determined that any losses under this claim will not be covered by existing insurance policies.

We are a defendant in a collective-action lawsuit which was filed on May 29, 2019, in the United States District Court for the Western District of Arkansas. The plaintiffs, who are independent contractors who have been under contract with the Company during the period of May 29, 2016, through the date of filing, allege violations under the Fair Labor Standards Act and the Arkansas Minimum Wage Law. The plaintiffs, through their attorneys, have filed causes of action alleging “misclassification as independent contractors, payment on the basis of miles without regard to the number of hours worked, improper deductions, and failure to pay minimum wage.” The plaintiffs are seeking actual and liquidated damages to include court costs and legal fees. The lawsuit is in preliminary stages and we cannot reasonably estimate, at this time, the possible loss or range of loss, if any, that may arise from this lawsuit. Management has determined that any losses under this claim will not be covered by existing insurance policies.

NOTE M: LEASESN~~: SUBSEQUENT EVENTS~~

Adoption of ASU 2016-02

The Company currently leases shop, office and parking spaces in various locations in the United States and Mexico. The initial term for the majority of these leases is one year or less, with an option for early cancellation and an option to renew for subsequent one month periods. These leases can be terminated by either party by providing notice to the other party of the intent to cancel or to not extend. Relatively short lease durations for these properties are intended to provide flexibility to the Company as changing operational needs and shifting opportunities often result in cancellation or non-renewal of these leases by the Company or the lessor.

The initial lease term for certain shop and office locations is for periods ranging from one to five years with early cancellation options. The Company prefers that leases include early cancellation provisions to prevent becoming locked into long term leases that become operationally unjustified and to allow the flexibility to pursue more cost effective options for similar properties if they become available. These leases often include the option to extend for additional periods, which may or may not be exercised. Based on historical experience, the Company does not always extend these leases, sometimes exercises the option to cancel leases early and sometimes lessors choose to cancel leases or not extend.

The Company adopted ASU 2016-02 and related amendments on January 1, 2019 utilizing the modified retrospective approach and elected to apply the practical expedients outlined above. This election allowed the Company to continue to recognize lease expense for operating leases for which the initial term was twelve months or less, or for which it is reasonably likely that early cancellation provisions will be exercised, on a straight-line basis over the remaining term of the leases.

The Company leases trucks to owner-operators under our lease-to-own program. We also lease dock space to a related party at our Laredo, Texas terminal. We have reviewed these operating leases and determined that the adoption of ASU 2016-02 did not require a change to our financial statements, as our method of accounting for related assets and lease revenue is consistent with the provisions of the new standard.

Because the Company’s historical method of accounting for leases is consistent with the provisions of ASU 2016-02, the adoption of ASU 2016-02 on January 1, 2019 did not have a material impact on the Company’s financial condition, results of operations, or cash flows.

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2019 Leases

During 2019, the Company entered into operating leases which include initial terms of approximately five years and which do not include an option for early cancellation. In ~~October 2017,~~accordance with the provisions of ASC Topic 842, these lease resulted in the recognition of right-of-use assets and corresponding operating lease liability, respectively valued at $1.4 million as of September 30, 2019. These assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date, using the Company’s incremental borrowing rate as of the respective dates of lease inception, as the rate implicit in each lease is not readily determinable. The right-of-use assets are recorded in other assets, and the lease liability is recorded in accrued expenses and other liabilities and in other long-term liabilities on our ~~Board~~Condensed Consolidated Balance Sheet. Lease expense is recorded on a straight-line basis over the lease term and is recorded in rent and purchased transportation in our Condensed Consolidated Statements of ~~Directors authorized~~Operations. While the ~~repurchase~~lease agreements contain provisions to extend after the initial term for an additional five years, the Company is not reasonably certain these extension options will be exercised. Therefore, potential lease payments that might occur under this extension period are not included in amounts recorded in our Condensed Consolidated Balance Sheets as of September 30, 2019.

Scheduled amounts and timing of cash flows arising from operating lease payments at September 30, 2019, are:

	(In thousands)
Maturity of Lease Liabilities
2019 (remaining)	$	80
2020		325
2021		330
2022		335
2023		340
Thereafter		114
Total undiscounted operating lease payments	$	1,524
Less: Imputed interest		(122	)
Present value of operating lease liabilities	$	1,402

Balance Sheet Classification
Right-of-use assets (recorded in other non-current assets)	$	1,402

Current lease liabilities (recorded in other current liabilities)	$	324
Long-term lease liabilities (recorded in other long-term liabilities)		1,078
Total operating lease liabilities	$	1,402

Other Information
Weighted-average remaining lease term for operating leases (years)	4.58
Weighted-average discount rate for operating leases		3.74	%

Cash Flows

A right-of-use asset of $0.2 million was recognized as a non-cash asset addition that resulted from new operating lease liabilities during the three months ended September 30, 2019. Cash paid for amounts included in the present value of operating lease liabilities was $0.1 million during the three months ended September 30, 2019 and is included in operating cash flows.

Operating Lease Costs

	Three Months Ended				Nine months Ended
	September 30,				September 30,
	2019		2018		2019		2018
	(in thousands)

Long term	$	67	$	-	$	106	$	-
Short term		563		572		1,649		1,579
Total	$	630	$	572	$	1,755	$	1,579

Lessor Disclosures under ASC Topic 842

The Company leases trucks to owner-operators under operating leases, which generally have a term of up to ~~400,000 shares~~five years, and include options to purchase the truck at the end of ~~our common stock through a Dutch auction tender offer (the “2017 tender offer”). Subject to certain limitations and legal requirements,~~the lease. In the event that an independent contractor defaults on their lease, the Company ~~could repurchase up~~generally leases the truck to another independent contractor.

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As of September 30, 2019, the gross carrying value of trucks underlying these leases was $53.8 million and accumulated depreciation was $25.4 million. Depreciation is calculated on a straight-line basis over the estimated useful life of the equipment, down to an ~~additional 2%~~estimated salvage value. In most cases, the Company has agreements in place with certain manufacturers whereby salvage values are guaranteed by the manufacturer. In other cases, where salvage values are not guaranteed, estimates of ~~its outstanding shares which totals 126,060 shares.~~ salvage value are based on the expected market values of equipment at the time of disposal. During the quarter ended September 30, 2019, the Company incurred $1.6 million of depreciation expense for these assets.

The ~~2017 tender offer commenced~~Company leases dock space to a related party at our Laredo, Texas terminal. The dock space leased to the related party is depreciated in conjunction with the structures and improvements for the entire Laredo terminal on ~~October 10, 2017~~a straight-line basis over the estimated useful life of the assets. Lease income is recorded as a component of Non-operating income in our Condensed Consolidated Statements of Operations.

Lease Revenue

The Company's operating lease revenue is disclosed in the table below.

	Three Months Ended				Nine months Ended
	September 30,				September 30,
	2019		2018		2019		2018
	(in thousands)

Leased truck revenue (recorded in revenue, before fuel surcharge)	$	2,244	$	1,936	$	7,024	$	5,563
Leased dock space revenue (recorded in non-operating income)		39		39		116		116
Total lease revenue	$	2,283	$	1,975	$	7,140	$	5,679

Lease Receivables

Future minimum operating lease payments receivable at September 30, 2019:

	(in thousands)

2019 (remaining)	$	2,479
2020		6,879
2021		3,042
2022		2,657
2023		1,645
Thereafter		-
Total future minimum lease payments receivable	$	16,702

NOTE N: SUBSEQUENT EVENTS

Management has evaluated subsequent events for recognition and ~~expires on November 7, 2017, unless~~disclosure through the ~~offer is extended. Through this tender offer,~~date these financial statements were filed with the ~~Company’s shareholders~~United States Securities and Exchange Commission and concluded that no subsequent event or transactions have occurred that required recognition or disclosure in our consolidated financial statements.

NOTE O: NONCASH INVESTING AND FINANCING ACTIVITIES

The Company financed approximately $16.0 million in equipment purchases during the ~~opportunity to tender some or all~~first nine months of ~~their shares at a price within the range of $27.00 to $30.00 per share.~~2019 utilizing noncash financing.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

FORWARD-LOOKING INFORMATION

Certain information included in this Quarterly Report on Form 10-Q constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may relate to expected future financial and operating results or events, and are thus prospective. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, excess capacity in the trucking industry; surplus inventories; recessionary economic cycles and downturns in ~~customers~~’customers’ business cycles; increases or rapid fluctuations in fuel prices, interest rates, fuel taxes, tolls, license and registration fees; the resale value of the Company’s used equipment and the price of new equipment; increases in compensation for and difficulty in attracting and retaining qualified drivers and owner-operators; increases in insurance premiums and deductible amounts relating to accident, cargo, workers' compensation, health, and other claims; unanticipated increases in the number or amount of claims for which the Company is self-insured; inability of the Company to continue to secure acceptable financing arrangements; seasonal factors such as harsh weather conditions that increase operating costs; competition from trucking, rail, and intermodal competitors including reductions in rates resulting from competitive bidding; the ability to identify acceptable acquisition candidates, consummate acquisitions, and integrate acquired operations; our ability to develop and implement suitable information technology systems and prevent failures in or breaches of such systems; litigation, including litigation related to alleged violations under the Fair Labor Standards Act and the Arkansas Minimum Wage Law; general risks associated with doing business in Mexico, including, without limitation, exchange rate fluctuations, inflation, import duties, tariffs, quotas, political and economic instability and terrorism; the potential impact of new laws, regulations or policy, including, without limitation, tariffs, import/export, trade and immigration regulations or policies; a significant reduction in or termination of the Company's trucking service by a key customer; losses or fluctuations in the value of our marketable equity securities portfolio; and other factors, including risk factors, included from time to time in filings made by the Company with the Securities and Exchange Commission (“SEC”). The Company undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

CRITICAL ACCOUNTING POLICIES

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Form 10-K for the fiscal year ended December 31, ~~2016.~~2018.

BUSINESS OVERVIEW

The ~~Company~~’sCompany’s administrative headquarters are in Tontitown, Arkansas. From this location we manage operations conducted through wholly-owned subsidiaries based in various locations around the United States and in Mexico and Canada. The operations of these subsidiaries can generally be classified into either truckload services or brokerage and logistics services. This designation is based primarily on the ownership of the asset that performed the freight transportation service. Truckload services ~~include those transportation services in which we~~are performed by Company divisions that generally utilize ~~company~~Company owned trucks, long-term contractors, or ~~owner-operator owned trucks. Brokerage~~single-trip contractors to transport loads of freight for customers, while brokerage and logistics services ~~consist~~coordinate or facilitate the transport of ~~services such as transportation scheduling, routing, mode selection, transloading and other value added services related to the transportation~~loads of freight ~~which may or may not~~for customers and generally involve the ~~usage~~utilization of ~~company owned or owner-operator owned equipment.~~single-trip contractors. Both our truckload operations and our ~~brokerage/~~brokerage and 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.~~Report.

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 ~~85.3%~~83.9% and ~~88.9%~~79.2% of total revenues, excluding fuel surcharges, for the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively. Truckload services revenues, excluding fuel surcharges, represented ~~87.2%~~79.2% and ~~88.1%~~79.7% of total revenues, excluding fuel surcharges, for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively. The remaining revenues, excluding fuel surcharges, were generated from brokerage and logistics services.

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

In discussing our results of operations,, we use revenue, before fuel surcharge (and fuel expense, net of fuel 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 the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, approximately ~~$15.4~~$18.8 million and ~~$13.5~~$23.1 million, respectively, of the Company’s total revenue was generated from fuel surcharges. During the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, approximately ~~$46.8~~$57.8 million and ~~$36.0~~$65.8 million, respectively, of the ~~Company’s~~Company��s total revenue was generated from fuel surcharges. We may 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 variable cost nature of certain expenses makes a comparison of changes in expenses as a percentage of revenue more meaningful than absolute dollar changes.

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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 reported net of fuel surcharges.

													Three Months Ended						Nine Months Ended
	Three Months Ended						Nine Months Ended						September 30,						September 30,
	September 30,						September 30,						2019			2018			2019			2018
	2017			2016			2017			2016			(percentages)
	(percentages)
Operating revenues, before fuel surcharge		100.0			100.0			100.0			100.0			100.0			100.0			100.0			100.0

Operating expenses:
Salaries, wages and benefits		30.1			32.4			30.3			32.2			34.5			31.5			33.2			32.8
Operating supplies and expenses		5.1			9.0			5.1			10.0			7.1			1.0			5.6			1.6
Rent and purchased transportation		39.8			35.3			40.3			34.1			27.3			34.1			28.8			35.0
Depreciation		12.7			11.9			12.8			11.4			15.2			13.0			14.8			13.9
Insurance and claims		5.3			4.2			5.5			4.8			4.0			4.6			4.3			4.9
Other		2.8			2.2			2.6			2.3			3.8			3.3			3.4			3.1
Loss (gain) on sale or disposal of property		0.2			(1.1	)		0.1			(1.6	)
Loss (gain) on sale or disposal of property														0.7			(0.1	)		0.1			(0.2	)
Total operating expenses		96.0			93.9			96.7			93.2			92.6			87.4			90.2			91.1
Operating income		4.0			6.1			3.3			6.8			7.4			12.6			9.8			8.9
Non-operating income		3.2			1.3			2.1			0.5			0.5			0.9			1.2			0.3
Interest expense		(1.1	)		(1.0	)		(1.1	)		(1.0	)		(2.2	)		(1.6	)		(2.0	)		(1.5	)
Income before income taxes		6.1			6.4			4.3			6.3			5.7			11.9			9.0			7.7

THREE MONTHS ENDED SEPTEMBER 30, ~~201~~72019 VS. THREE MONTHS ENDED SEPTEMBER ~~30, 2016~~30, 2018

During the third quarter of ~~2017,~~2019, truckload services revenue, before fuel surcharges, decreased ~~6.5%~~0.4% to ~~$79.7~~$92.4 million as compared to ~~$85.3~~$92.8 million during the third quarter of ~~2016.~~2018. The decrease in revenue was primarily the ~~net~~ result of a ~~1% increase in our rate per total mile combined with an 8%~~ decrease in ~~the number of~~ miles ~~traveled from 60.8 million miles~~driven during the third quarter of 2016 to 56.4 million during the third quarter of 2017. The decrease in miles resulted from decreases in the number of trucks operated, equipment utilization and work days. The average number of trucks operating in the fleet decreased from 1,882 trucks during the third quarter of 2016 to 1,808 trucks during the third quarter of 2017, while the average miles traveled per truck each workday decreased from 505 miles during the third quarter of 2016 to 495 miles during the third quarter of 2017. The decreases in truck count and average daily utilization resulted in a 3.5 million decrease in the total number of miles traveled during the third quarter of 20172019 compared to the third quarter of ~~2016. One less revenue day~~2018, primarily resulting from a labor strike during the period by the United Auto Workers against General Motors, who is the Company’s largest customer. The decrease in miles was partially offset by an increase in our average fleet size and average rate per mile charged to our customers during the third quarter ~~of 2017~~2019 compared to the third quarter ~~of 2016 accounted for an approximate 0.9 million reduction in miles.~~2018.

Salaries, wages and benefits ~~decreased~~increased from ~~32.4%~~ 31.5% of revenues, before fuel surcharges, in the third quarter of ~~2016~~2018 to ~~30.1%~~34.5% of revenues, before fuel surcharges, during the third quarter of ~~2017. The decrease relates~~2019. This increase is primarily attributable to ~~a decrease~~an increase in the average number of company ~~driver wages paid~~drivers employed during the third quarter of ~~2017 as~~2019 compared to ~~company driver wages paid during~~ the third quarter of ~~2016. Our driver pool consists of both company drivers~~2018 and third-party owner operator drivers. Company drivers are employees of the Company and perform services in company-owned equipment while owner-operator drivers provide services, under contract, using their own equipment. While each group is generally compensated onto a per-mile basis, owner-operator payments are classified in the Company’s financial statements under Rent and purchased transportation. The decrease in Salaries, wages and benefits primarily resulted from a decreasecorresponding increase in the proportion of total miles driven by company drivers ~~during~~for the third quarter of 2017 in comparison to the proportion of total miles driven by company drivers during the third quarter of 2016. This proportional decrease was the result of an increase in the average number of owner-operators under contract from 567 during the third quarter of 2016 to 648 during the third quarter of 2017.periods compared. Also contributing to the ~~decrease was a decrease~~increase are increases in ~~group health insurance claims expensed under~~ the ~~Company’s self-insured health plan during the third quarter of 2017 as compared~~average rate per mile paid to ~~the third quarter of 2016.~~company drivers on certain freight lanes.

Operating supplies and expenses ~~decreased~~increased from 9.0%1.0% of revenues, before fuel surcharges, during the third quarter of ~~2016~~2018 to ~~5.1%~~7.1% of revenues, before fuel surcharges, during the third quarter of ~~2017.~~2019. The ~~decrease~~increase relates primarily to ~~a decrease~~an increase in the average surcharge-adjusted fuel price paid per gallon of diesel ~~fuel.~~fuel and to an increase in the average number of company owned trucks during the third quarter 2019 compared to the third quarter 2018. The average surcharge-adjusted fuel price paid per gallon of diesel fuel ~~decreased~~increased as a result of ~~increased~~lower fuel surcharge collections from ~~customers and to an increase in the number of owner-operators in our fleet from 567 during the third quarter of 2016 to 648 during the third quarter of 2017.~~customers. Fuel surcharge collections can fluctuate significantly 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 falling fuel prices. Fuel surcharge revenue generated from transportation services performed by owner-operators is reflected as a reduction in net operating supplies and expenses, while fuel surcharges paid to owner-operators for their services is reported along with their base rate of pay in the

Rent and purchased transportation ~~category. These categorizations have~~decreased from 34.1% of revenues, before fuel surcharges, during the ~~effect~~third quarter of ~~reducing~~2018 to 27.3% of revenues, before fuel surcharges, during the third quarter of 2019. The decrease was primarily due to a decrease in the number of loads transported by third party carriers during the third quarter 2019 compared to the third quarter 2018. This decrease occurred as the average number of company owned trucks increased for the third quarter 2019 compared to the third quarter 2018, providing additional company-owned capacity and diminishing some of the need to utilize third party carriers.

Depreciation increased from 13.0% of revenues, before fuel surcharges, during the third quarter of 2018 to 15.2% of revenues, before fuel surcharges, during the third quarter of 2019. This increase is primarily the result of an increase in the average number of trucks and trailers within our ~~net operating supplies~~fleet for the third quarter of 2019 compared to the third quarter of 2018.

Insurance and ~~expenses while increasing~~claims expense decreased from 4.6% of revenues, before fuel surcharges, during the ~~Rent and purchased transportation category, as discussed below.~~third quarter of 2018 to 4.0% of revenues before fuel surcharges, during the third quarter of 2019. This decrease primarily resulted from our decision to become self-insured for property damage on company owned trucks. The Company was insured for property damage insurance coverage for company owned trucks through a third party insurance carrier through August 31, 2018. Effective September 1, 2018, the Company became self-insured for property damage. Also contributing to the decrease was a ~~decrease in amounts~~reduction of auto-liability premiums paid for ~~driver recruiting and driver training schools during the third quarter of 2017 as~~September 2019 compared to ~~amounts paid during third quarter~~September 2018. Beginning September 1, 2019 the Company became self-insured for certain layers of ~~2016.~~auto-liability claims exposure, resulting in a reduction of insurance premiums expense, but with the potential for increased claims expense in future periods.

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~~Rent and purchased transportation~~Interest expense increased from ~~35.3%~~1.6% of revenues, before fuel surcharges, during the third quarter ~~of 2016~~2018 to ~~39.8%~~2.2% of revenues, before fuel surcharges during the third quarter ~~of 2017. The~~2019. This increase ~~was primarily due~~is attributable to market increases in interest rates and to an increase in ~~driver lease expense as the average number of owner-operators~~amounts financed under contract increased from 567 during the third quarter of 2016 to 648 during the third quarter of 2017. The increase in costs in this category, as it relates to the increase in owner-operators, is partially offset by a decrease in other cost categories, such as repairs and fuel, which are generally borne by the owner-operator. A decrease in amounts paid for equipment leases offset a portion of the increase from owner operators. This decrease resulted from the scheduled expiration of several leases during the third quarter of 2017. The remaining operating leases expire during the fourth quarter 2017 and the first quarter 2018.

~~Depreciation increased from 11.~~9% of revenues, before fuel surcharges, during the third quarter of 2016 to 12.7% of revenues, before fuel surcharges, during the third quarter of 2017. The percentage-based increase relates to the interaction of the fixed-cost characteristic of depreciation expense with a decrease in revenues for the periods compared.

~~Gains~~ and losses on sale or disposal of property decreased from a net gain of 1.1% of revenues, before fuel surcharges, during the third quarter of 2016 to a net loss of 0.2% of revenues, before fuel surcharges, during the third quarter of 2017. The decrease relates primarily to fewer trailers being sold during the third quarter of 2017 as compared to the third quarter of 2016.

~~Non-operating income increased from 1.3% of revenues, before fuel surcharges, during the third quarter of 2016 to 3.2% of revenues, before~~ fuel surcharges, during the third quarter of 2017. This increase resulted from an increase in gains on sales of marketable equity securities from $1.1 million during the third quarter of 2016 to $2.5 million during the third quarter of 2017.installment notes.

The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, increased from ~~93.9%~~87.4% for the third quarter of ~~2016~~2018 to ~~96.0%~~92.6% for the third quarter of ~~2017.~~2019.

NINE MONTHS ENDED SEPTEMBER 30, ~~201~~72019 VS. NINE MONTHS ENDED SEPTEMBER 30, ~~SEPTEMBER~~2018 ~~30, 201~~6

For the nine months ended September 30, ~~2017,~~2019, truckload services revenue, before fuel surcharges, ~~decreased 3.9%~~increased 4.9% to ~~$244.3~~$275.3 million as compared to ~~$254.3~~$262.5 million for the nine months ended September 30, ~~2016.~~2018. The ~~decrease~~increase in revenue was primarily ~~related to a decrease~~the result of increases in ~~the~~our average fleet size and average rate per mile charged to ~~customers for~~ our ~~services, to a decrease in the number of trucks operated, and to one less work day in the 2017 period. The average rate charged to~~ customers per total mile during the first nine months of 2017 decreased 2.0% as compared to the average rate charged during the first nine months of 2016. The average number of trucks operating in the fleet decreased from 1,897 trucks in the 2016 period to 1,869 trucks in the 2017 period and decreased revenue by approximately $3.7 million during the nine months ended September 30, ~~2017. The loss~~2019 compared to the nine months ended September 30, 2018. These increases were partially offset by a decrease in the total number of ~~one business day in~~miles driven during the first nine months of ~~2017~~2019 compared to the first nine months of ~~2016 resulted in an approximate $1.3 million decrease in revenue.~~2018.

Salaries, wages and benefits ~~decreased~~increased from ~~32.2%~~32.8% of revenues, before fuel surcharges, in the first nine months of ~~2016~~2018 to ~~30.3%~~33.2% of revenues, before fuel surcharges, during the first nine months of ~~2017. The decrease relates~~2019. This increase is primarily attributable to an increase in the average number of company drivers employed during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 and to a decrease in company driver wages paid during the first nine months of 2017 as compared to company driver wages paid during the first nine months of 2016. Our driver pool consists of both company drivers and third-party owner operator drivers. Company drivers are employees of the Company and perform services in company-owned equipment while owner-operator drivers provide services, under contract, using their own equipment. While each group is generally compensated on a per-mile basis, owner-operator payments are classified in the Company’s financial statements under Rent and purchased transportation. The decrease in Salaries, wages and benefits primarily resulted from a decreasecorresponding increase in the proportion of total miles driven by company drivers ~~during~~for the first nine months of 2017 in comparison to the proportion of total miles driven by company drivers during the first nine months of 2016. This proportional decrease was the result of an increase in the average number of owner-operators under contract from 546 during the first nine months of 2016 to 650 during the first nine months of 2017.periods compared. Also contributing to the ~~decrease was a decrease~~increase are increases in ~~group health insurance claims expensed under~~ the ~~Company’s self-insured health plan during the first nine months of 2017 as compared~~average rate per mile paid to ~~the first nine months of 2016.~~company drivers on certain freight lanes.

Operating supplies and expenses ~~decreased~~increased from ~~10.0%~~1.6% of revenues, before fuel surcharges, during the first nine months of ~~2016~~2018 to ~~5.1%~~5.6% of revenues, before fuel surcharges, during the first nine months of ~~2017.~~2019. The ~~decrease~~increase relates primarily to ~~a decrease~~an increase in the average surcharge-adjusted fuel price paid per gallon of diesel ~~fuel.~~fuel and to an increase in the average number of company owned trucks during the first nine months of 2019 compared to the first nine months of 2018. The average surcharge-adjusted fuel price paid per gallon of diesel fuel ~~decreased~~increased as a result of ~~increased~~lower fuel surcharge collections from ~~customers and to an increase in the number of owner-operators in our fleet from 546 during the first nine months of 2016 to 650 during the first nine months of 2017.~~customers. Fuel surcharge collections can fluctuate significantly 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 falling fuel prices. Fuel surcharge revenue generated from transportation services performed by owner-operators is reflected as a reduction in net operating supplies and expenses, while fuel surcharges paid to owner-operators for their services is reported along with their base rate of pay in the

Rent and purchased transportation ~~category. These categorizations have~~decreased from 35.0% of revenues, before fuel surcharges, during the ~~effect~~first nine months of ~~reducing~~2018 to 28.8% of revenues, before fuel surcharges, during the first nine months of 2019. The decrease was primarily due to a decrease in the number of loads transported by third party carriers during the first nine months 2019 compared to the first nine months 2018. This decrease occurred as the average number of company owned trucks increased for the first nine months 2019 compared to the first nine months 2018, providing additional company-owned capacity and diminishing some of the need to utilize third party carriers.

Depreciation increased from 13.9% of revenues, before fuel surcharges, during the first nine months of 2018 to 14.8% of revenues, before fuel surcharges, during the first nine months of 2019. This increase is primarily the result of an increase in the average number of trucks and trailers within our ~~net operating supplies~~fleet for the first nine months of 2019 compared to the first nine months of 2018.

Insurance and ~~expenses while increasing~~claims expense decreased from 4.9% of revenues, before fuel surcharges, during the ~~Rent and purchased transportation category, as discussed below.~~first nine months of 2018 to 4.3% of revenues before fuel surcharges, during the first nine months of 2019. This decrease primarily resulted from our decision to become self-insured for property damage on company owned trucks. The Company was insured for property damage insurance coverage for company owned trucks through a third party insurance carrier through August 31, 2018. Effective September 1, 2018, the Company became self-insured for property damage. Also contributing to the decrease was a ~~decrease in amounts~~reduction of auto-liability premiums paid for ~~driver recruiting and driver training schools~~September 2019 compared to September 2018. Beginning September 1, 2019 the Company became self-insured for certain layers of auto-liability claims exposure, resulting in a reduction of insurance premiums expense, but with the potential for increased claims expense in future periods.

Non-operating income increased from 0.3% of revenues, before fuel surcharges, during the first nine months of ~~2017 as compared~~2018 to ~~amounts paid~~1.2% of revenues, before fuel surcharges, during the first nine months of ~~2016.~~2019. This increase primarily resulted from an increase in income related to the change in market values of equity securities. An approximate $2.7 million increase in the market value of our marketable equity securities was recorded in non-operating income during the first nine months of 2019, compared to an approximate $0.3 million decrease in the market value of our equity securities recorded in non-operating income during the first nine months of 2018.

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~~Rent and purchased transportation~~Interest expense increased from ~~34.1%~~1.5% of revenues, before fuel surcharges, during the first nine months of ~~2016~~2018 to ~~40.3%~~2.0% of revenues, before fuel surcharges during the first nine months of ~~2017. The~~2019. This increase ~~was primarily due~~is attributable to ~~an increase~~market increases in driver lease expense as the average number of owner-operators under contract increased from 546 during the first nine months of 2016 to 650 during the first nine months of 2017. The increase in costs in this category, as it relates to the increase in owner-operators, is partially offset by a decrease in other cost categories, such as repairs and fuel, which are generally borne by the owner-operator. A decrease in amounts paid for equipment leases offset a portion of the increase from owner operators. This decrease resulted from the scheduled expiration of several leases during the first nine months of 2017. The remaining operating leases expire during the fourth quarter 2017 and the first quarter 2018.

~~Depreciation increased from~~ 11.4% of revenues, before fuel surcharges, during the first nine months of 2016 to 12.8% of revenues, before fuel surcharges, during the first nine months of 2017. The increase relates primarily to a change in the estimated residual values of certain equipmentinterest rates and to an increase in amounts financed under equipment purchase costs. During the third quarter of 2016, the Company reduced the expected residual values of certain groups of trucks due to a prolonged depressed used truck market. The reduction in expected residual values resulted in additional depreciation expense of approximately $2.0 million during the first nine months of 2017. The Company’s replacement cycle for trucks is between three and five years and its replacement cycle for trailers is seven years. The cost of new trucks and trailers has increased significantly over the previous three to seven-year replacement cycles. Depreciating higher cost equipment over the same length of time will result in an increase in depreciation expense during the respective period.

~~Gains and losses on sale or disposal of property decreased~~ from a net gain of 1.6% of revenues, before fuel surcharges, during the first nine months of 2016 to a net loss of 0.1% of revenues, before fuel surcharges, during the first nine months of 2017. The decrease relates primarily to fewer trailers being sold during the first nine months of 2017 as compared to the first nine months of 2016.

~~Non-operating~~ income increased from 0.5% of revenues, before fuel surcharges, during the first nine months of 2016 to 2.1% of revenues, before fuel surcharges, during the first nine months of 2017. This increase resulted from an increase in gains on sales of marketable equity securities from $1.0 million during the first nine months of 2016 to $4.7 million during the first nine months of 2017.installment notes.

The truckload services division operating ratio, which measures the ratio of operating expenses, net of fuel surcharges, to operating revenues, before fuel surcharges, ~~increased~~improved from ~~93.2%~~91.1% for the first nine months of ~~2016~~2018 to ~~96.7%~~90.2% for the first nine months of ~~2017.~~2019.

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.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

(percentages)

Operating revenues, before fuel surcharge
100.0 100.0 100.0 100.0

Operating expenses:

Salaries, wages and benefits
4.6 5.0 4.9 4.5
Rent and purchased transportation
90.1 93.4 90.6 92.2
Other
1.1 0.6 1.0 0.6
Total operating expenses
95.8 99.0 96.5 97.3
Operating income
4.2 1.0 3.5 2.7
Non-operating income
1.5 0.7 1.1 0.2
Interest expense
(0.5 ) (0.5 ) (0.6 ) (0.5 )
Income before income taxes
5.2 1.2 4.0 2.4

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

(percentages)

Operating revenues, before fuel surcharge
100.0 100.0 100.0 100.0

Operating expenses:

Salaries, wages and benefits
5.9 4.6 5.6 4.3
Rent and purchased transportation
88.5 88.4 87.0 89.3
Other
1.6 1.1 1.4 1.0
Total operating expenses
96.0 94.1 94.0 94.6
Operating income
4.0 5.9 6.0 5.4
Non-operating income
0.3 0.5 0.7 0.1
Interest expense
(1.1 ) (0.8 ) (1.1 ) (0.6 )
Income before income taxes
3.2 5.6 5.6 4.9

THREE MONTHS ENDED SEPTEMBER 30, ~~201~~72019 VS. THREE MONTHS ENDED SEPTEMBER ~~30, 2~~~~016~~30, 2018

During the third quarter of ~~2017,~~2019, logistics and brokerage services revenue, before fuel surcharges, ~~increased 28.9%~~decreased 27.5% to ~~$13.7~~$17.7 million as compared to ~~$10.6~~$24.4 million during the third quarter of ~~2016.~~2018. The ~~increase~~decrease relates to ~~an increase~~a decrease in ~~our~~the number of loads and to a decrease in average rates charged ~~and to an increase in the average length of haul for brokered loads~~ during the third quarter of ~~2017~~2019 as compared to the third quarter of ~~2016.~~2018.
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Salaries, wages and benefits ~~decreased~~increased from ~~5.0%~~4.6% of revenues, before fuel surcharges, in the third quarter of ~~2016~~2018 to ~~4.6%~~5.9% of revenues, before fuel surcharges, during the third quarter of ~~2017.~~2019. The ~~decrease~~increase relates primarily to ~~an increase~~the effect of lower revenues without a corresponding decrease in brokerage revenue, partially offset by an increase in the amount paid to employees assigned to the logistics and brokerage division during the third quarter of 2017 as compared to the third quarter of 2016. To a lesser extent, the percentage-based decrease relates to the interaction of expensesthose wages with ~~fixed-cost~~fixed cost characteristics, such as general and administrative ~~wages, operations wages, and payroll taxes with an increase in revenues for the periods compared.~~wages.

~~Rents and purchased transportation~~ ~~decreased~~Other operating expenses increased from ~~93.4%~~1.1% of revenues, before fuel surcharges, in the third quarter of 2018 to 1.6% of revenues, before fuel surcharges, during the third quarter of ~~2016~~2019. The increase related primarily to ~~90.1%~~the effect of lower revenues ~~before fuel surcharges, during the third quarter of 2017. The~~without a corresponding decrease ~~results from paying third party carriers a smaller percentage of customer revenue.~~
~~The logistics and brokerage services division operating ratio, which measures the ratio of~~in operating expenses ~~net of fuel surcharges, to operating revenues, before~~ ~~fuel surcharges, improved from 99.0% for the third quarter of 2016 to 95.8% for the third quarter of 2017.~~
~~NINE~~ ~~MONTHS ENDED~~ ~~SEPTEMBER~~ ~~30, 201~~7 ~~VS.~~ ~~NINE~~ ~~MONTHS ENDED~~ ~~SEPTEMBER~~ ~~30, 201~~6
~~During the first~~ ~~nine months of 2017, logistics~~with fixed cost characteristics, such as depreciation and brokerage services revenue, before fuel surcharges, increased 4.7% to $35.8 million as compared to $34.2 million during the first nine months of 2016. The increase relates to an increase in our average rates charged and to an increase in the average length of haul for brokered loads during the first nine months of 2017, as compared to the first nine months of 2016.
~~Salaries, wages and benefits~~ increased from 4.5% of revenues, before fuel surcharges, during the first nine months of 2016 to 4.9% of revenues, before fuel surcharges, during the first nine months of 2017. The increase relates to an increase in the number of employees assigned to the logistics and brokerage division during the first nine months of 2017 as compared to the first nine months of 2016.
~~Rents and purchased transportation~~ decreased from 92.2% of revenues, before fuel surcharges, during the first nine months of 2016 to 90.6% of revenues, before fuel surcharges during the first nine months of 2017. The decrease results from paying third party carriers a smaller percentage of customer revenue.software subscriptions.

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 from 94.1% for the third quarter of 2018 to 96.0% for the third quarter of 2019.
NINE MONTHS ENDED SEPTEMBER 30, 2019 VS. NINE MONTHS ENDED SEPTEMBER 30, 2018
During the first nine months of 2019, logistics and brokerage services revenue, before fuel surcharges, decreased 13.8% to $57.5 million as compared to $66.7 million during the first nine months of 2018. The decrease relates to a decrease in average rates charged during the first nine months of 2019 as compared to the first nine months of 2018.
Salaries, wages and benefits increased from 4.3% of revenues, before fuel surcharges, in the first nine months of 2018 to 5.6% of revenues, before fuel surcharges, during the first nine months of 2019. The increase relates primarily to an increase in the average number of employees utilized by logistics and brokerage service operations and to the effect of lower revenues without a corresponding decrease in those wages with fixed cost characteristics, such as general and administrative wages.
Rents and purchased transportation decreased from 89.3% of revenues, before fuel surcharges, during the first nine months of 2018 to 87.0% of revenues, before fuel surcharges, during the first nine months of 2019. The decrease results from paying third party carriers a smaller percentage of customer revenue.
Non-operating income increased from 0.1% of revenues, before fuel surcharges, during the first nine months of 2018 to 0.7% of revenues, before fuel surcharges, during the first nine months of 2019. This increase primarily resulted from an increase in income related to the change in market values of equity securities. An approximate $2.7 million increase in the market value of our marketable equity securities was recorded in non-operating income during the first nine months of 2019, compared to an approximate $0.3 million decrease in the market value of our equity securities recorded in non-operating income during the first nine months of 2018.
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Interest expense increased from 0.6% of revenues, before fuel surcharges, during the first nine months of 2018 to 1.1% of revenues, before fuel surcharges during the first nine months of 2019. This increase is attributable to market increases in interest rates.
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, improved from ~~97.3%~~94.6% for the first nine months of ~~2016~~2018 to ~~96.5%~~94.0% for the first nine months of ~~2017.~~2019.

RESULTS OF OPERATIONS – COMBINED SERVICES

THREE MONTHS ENDED SEPTEMBER 30, ~~201~~72019 VS. THREE MONTHS ENDED SEPTEMBER 30 ~~201~~6, 2018

Net income for all divisions was approximately $~~3.4~~$4.6 million, or ~~3.7%~~4.2% of revenues, before fuel surcharges for the third quarter of ~~2017~~2019 as compared to net income of ~~$3.5~~$9.2 million, or ~~3.6%~~7.9% of revenues, before fuel surcharges for the third quarter of ~~2016.~~2018. The decrease in net income resulted in diluted earnings per share of ~~$0.54~~$0.79 for the third quarter of ~~2017~~2019 as compared to diluted earnings per share of ~~$0.53~~$1.52 for the third quarter of ~~2016.~~2018.

NINE MONTHS ENDED SEPTEMBER 30, ~~201~~72019 VS. NINE MONTHS ENDED SEPTEMBER 30, ~~201~~62018

Net income for all divisions was approximately $~~7.3~~$21.5 million, or ~~2.6%~~6.5% of revenues, before fuel surcharges for the first nine months of ~~2017~~2019 as compared to net income of ~~$10.4~~$17.9 million, or ~~3.6%~~5.4% of revenues, before fuel surcharges for the first nine months of ~~2016.~~2018. The ~~decrease~~increase in net income resulted in diluted earnings per share of ~~$1.14~~$3.65 for the first nine months of ~~2017~~2019 as compared to diluted earnings per share of ~~$1.54~~$2.89 for the first nine months of ~~2016.~~2018.

LIQUIDITY AND CAPITAL RESOURCES
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, installment notes, and our investment margin account.

During the first nine months of ~~2017,~~2019, we generated ~~$49.2~~$76.4 million in cash from operating activities. Investing activities used ~~$23.6~~$53.8 million in cash in the first nine months of ~~2017.~~2019. Financing activities used ~~$25.5~~$22.6 million in cash in the first nine months of ~~2017.~~2019.
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Our primary use of funds is for the purchase of revenue equipment. We typically use installment notes, our existing line 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~~long-term debt. During the first nine months of ~~2017,~~2019, we utilized cash on hand, installment notes, and our ~~lines~~line of credit to finance purchases of revenue equipment and other assets of approximately ~~$38.6~~$84.1 million.

~~Occasionally, we~~We commonly finance the acquisition of revenue equipment through installment notes with fixed interest rates and terms ranging from 36 to ~~60 months~~.84 months. During the first nine months of ~~2017,~~2019, the Company’s subsidiary, P.A.M. Transport, Inc., entered into installment obligations totaling approximately ~~$17.6~~$61.6 million for the purpose of purchasing revenue equipment. These obligations are payable in monthly installments.

During the remainder of ~~201~~7,2019, we expect to purchase approximately ~~183~~125 new trucks and ~~443~~60 new trailers while continuing to sell or trade older equipment, which we expect to result in net capital expenditures of approximately ~~$27.9~~$13.0 million. In addition, on October 10, 2017, we commenced a Dutch auction tender offer to repurchase of up to 400,000 shares of our common stock at a price within the range of $27.00 to $30.00 per share. Subject to certain limitations and legal requirements, we could repurchase up to an additional 2% of our outstanding shares, which totals 126,060 shares. The offer will expire on November 7, 2017, unless the offer is extended. Assuming that the maximum of 400,000 shares are tendered in the offer at the maximum purchase price of $30.00 per share, the aggregate purchase price will be approximately $12.0 million. Assuming that an additional amount of shares above the maximum 400,000 shares are tendered in the offer at the maximum purchase price of $30.00 per share and we exercise our right to purchase an additional number of shares up to 2% of our outstanding shares (or approximately 126,060 additional shares), the aggregate purchase price will be approximately $15.8 million.
Management believes we will be able to finance our near term needs for working capital over the next twelve months, as well as any planned capital expenditures 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 recent operating results, current cash position, 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.

We currently intend to retain our future earnings to finance our growth and do not anticipate paying cash dividends in the foreseeable future.

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During the first nine months of ~~2017,~~2019, we maintained a ~~$40.0 million~~ revolving line of credit. ~~Amounts~~On January 25, 2019, certain terms of this revolving line of credit were amended to increase the borrowing limit from $40.0 million to $60.0 million, extend the term by one year, reduce the interest rate by 25 basis points and make certain other changes. See “Item 8. Financial Statements and Supplementary Data, Note 1 to the Consolidated Financial Statements – Subsequent Events” in our Annual Report on Form 10K for the year ended December 31, 2018, for additional information. Under the amended credit facility, amounts outstanding under the line ~~of credit~~ bear interest at LIBOR (determined as of the first day of each month) plus ~~1.50% (2.74%~~1.25% (3.35% at September 30, ~~2017)~~2019), are secured by our trade accounts receivable and mature on July 1, ~~2019.~~2022. The amended credit facility also establishes an “unused fee” of 0.25% if average borrowings are less than $18.0 million. At September 30, ~~2017~~2019 outstanding advances on the line of credit were approximately ~~$1.5~~$9.8 million, including approximately ~~$0.7~~$0.5 million in letters of credit, with availability to borrow ~~$38.5~~$50.2 million.

Trade accounts receivable ~~increased~~decreased from ~~$56.1~~$63.4 million at December 31, ~~2016~~2018 to ~~$58.6~~$60.6 million at September 30, ~~2017.~~2019. The ~~increase relates to~~decrease resulted from a ~~general increase~~decrease in freight revenues, which ~~flows~~flow through ~~the~~ accounts receivable, ~~account, at the end of~~during the third quarter of ~~2017~~2019 as compared to the ~~end of the last~~fourth quarter of ~~2016.~~
~~Other accounts receivable increased from $~~5.0 million at December 31, 2016 to $9.5 million at September 30, 2017 primarily due to the timing of proceeds received from the sale of used equipment. These proceeds are held as restricted cash, and will be used to fund future new equipment purchases.2018.

Prepaid expenses and deposits ~~increased~~decreased from ~~$8.8~~$10.4 million at December 31, ~~2016~~2018 to ~~$9.0~~$8.3 million at September 30, ~~2017.~~2019. The ~~increase~~decrease relates to the normal amortization of items prepaid as of December 31, 2018, partially offset by the annual prepayment of insurance premiums for various policies that renew on September 1^st each year. ~~This prepayment~~Insurance prepayments will be amortized over the life of the insurance policies, which is generally September ~~2017~~2019 to August ~~2018. The increase in prepaid expenses was partially offset by the amortization of items that were prepaid as of December 31, 2016.~~2020.

Marketable equity securities ~~decreased~~increased from $27.6 million at December 31, ~~2016~~2018 to ~~$25.0~~$28.8 million at September 30, ~~2017.~~2019. The ~~$2.6~~$1.2 million ~~decrease~~increase was due to an increase in the ~~sale~~market value of held marketable equity securities ~~with a combined market value~~ of ~~approximately $6.0~~$2.7 million, to the purchase of marketable equity securities with a combined market value of approximately ~~$2.0~~$0.1 million ~~and to~~partially offset by sales of marketable equity securities with a ~~net increase in~~combined market value of ~~approximately $1.4~~$1.6 million during the first nine months of ~~2017.~~2019.

Accounts payable increased ~~by approximately $13.6~~from $20.0 million~~. The majority of the Company’s insurance policies renew in September each year and there was approximately $4.1~~ at December 31, 2018 to $27.3 million ~~accrued as of~~at September 30, ~~2017 for premiums related~~2019. This increase was primarily attributable to ~~these renewals. There was~~ an increase ~~of approximately $6.0~~in accrued equipment purchases from $1.6 million ~~for new equipment invoices as of~~at December 31, 2018 to $5.7 million at September 30, ~~2017 compared~~2019 and to an increase in bank overdrafts from $3.7 million at December 31, ~~2016. Bank overdrafts, or outstanding checks, increased by approximately $2.9~~2018 to $5.8 million ~~during the first nine months of 2017, and included approximately $1.7 million of new equipment purchases.~~at September 30, 2019.
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Long-term debt and current maturities of long term-debt are reviewed on an aggregate basis,, as the classification of amounts in each category are typically affected merely by the passage of time. Long-term debt and current maturities of long-term debt, on an aggregate basis, ~~decreased~~increased from ~~$167.2~~$221.2 million at December 31, ~~2016~~2018 to ~~$148.2~~$230.6 million at September 30, ~~2017.~~2019. The ~~decrease~~increase was primarily related to the ~~net effect~~addition of $61.6 million in equipment installment notes, partially offset by note payments made during the first nine months of ~~2017 and additional borrowings received during the first nine months of 2017.~~2019.

~~Treasury stock increased from $122.8 million at December 31, 2016 to $124.8 million at September 30, 2017.~~ ~~The increase relates primarily to the repurchase of 110,316 shares of the Company’s common stock under its stock repurchase program during the first nine months of 2017.~~
NEW ACCOUNTING PRONOUNCEMENTS
See Note B to the ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements for a description of the most recent accounting pronouncements and their impact, if any, on the Company.

Item 3. 3. Quantitative and Qualitative Disclosures about Market ~~Risk~~Risk..

Our primary market risk exposures include equity price risk, interest rate risk, commodity price risk (the price paid to obtain diesel fuel for our trucks), and foreign currency exchange rate risk. The potential adverse impact of these risks ~~and~~is discussed below. While the ~~general strategies we employ~~Company has used derivative financial instruments in the past to manage its interest rate and commodity price risks, the Company does not currently enter into such ~~risks are discussed below.~~instruments for risk management purposes or for speculation or trading.

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 the current market price of such securities. The recorded value of marketable equity securities ~~decreased~~increased to ~~$25.0~~$28.8 million at September 30, ~~2017~~2019 from ~~$27.6~~$27.5 million at December 31, ~~2016.~~2018. 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 ~~$2.5~~$2.9 million. For additional information with respect to the marketable equity securities, see Note CD to our ~~condensed consolidated financial statements.~~Condensed 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 affected by changes in interest rates, will affect the interest rate on, and therefore our costs under, the line of credit. Assuming ~~$1.0~~$9.2 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 ~~for a one year period~~ would result in approximately ~~$10,000~~$92,000 of additional interest expense.
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Table of Contents
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 ~~2016~~2018 fuel consumption, a 10% increase in the average annual price per gallon of diesel fuel would increase our annual fuel expenses by ~~$3.9~~$5.2 million.

Foreign Currency Exchange Rate Risk
We are exposed to foreign currency exchange rate risk related to the activities of our branch office located in Mexico. Currently, we do not hedge our exchange rate exposure through any currency forward contracts, currency options, or currency swaps as all of our revenues, and substantially all of our expenses and capital expenditures, are transacted in U.S. dollars. However, certain operating expenditures and capital purchases related to our Mexico branch office are incurred in or exposed to fluctuations in the exchange rate between the U.S. dollar and the Mexican peso. Based on ~~2016~~2018 expenditures denominated in pesos, a 10% increase in the exchange rate would increase our annual operating expenses by ~~$52,000.~~$267,000.

Item 4. 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.

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~~Table of Contents~~
Based on ~~management~~’smanagement’s evaluation, our chief executive officer and chief financial officer concluded that, as of September 30, ~~2017,~~2019, 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 controls 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 quarter ended September 30, ~~2017~~2019 that have materially affected, or are reasonably likely to materially affect, the ~~Company's~~Company’s internal control over financial reporting.

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PART II.II. OTHER INFORMATION

Item 1. 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.

We are a defendant in a collective-action lawsuit which was re-filed on December 9, 2016, in the United States District Court for the Western District of Arkansas. The plaintiffs, who are former drivers who worked for the Company during the period of December 6, 2013, through the date of the filing, allege violations under the Fair Labor Standards Act and the Arkansas Minimum Wage Law. The plaintiffs, through their attorneys, have filed causes of action alleging “Failure to pay minimum wage during orientation, failure to pay minimum wage to team drivers after initial orientation, failure to pay minimum wage to solo-drivers after initial orientation, failure to pay for compensable travel time, Comdata card fees, unlawful deductions, and breach of contract.” The plaintiffs are seeking actual and liquidated damages to include court costs and legal fees. The lawsuit is ~~currently under preliminary review. We~~being vigorously defended and we cannot reasonably estimate, at this time, the possible loss or range of loss, if any, that may arise from this lawsuit. Management has determined that any losses under this claim will not be covered by existing insurance policies.
We are a defendant in a collective-action lawsuit which was filed on May 29, 2019, in the United States District Court for the Western District of Arkansas. The plaintiffs, who are independent contractors who have been under contract with the Company during the period of May 29, 2016, through the date of filing, allege violations under the Fair Labor Standards Act and the Arkansas Minimum Wage Law. The plaintiffs, through their attorneys, have filed causes of action alleging “misclassification as independent contractors, payment on the basis of miles without regard to the number of hours worked, improper deductions, and failure to pay minimum wage.” The plaintiffs are seeking actual and liquidated damages to include court costs and legal fees. The lawsuit is in preliminary stages and we cannot reasonably estimate, at this time, the possible loss or range of loss, if any, that may arise from this lawsuit. Management has determined that any losses under this claim will not be covered by existing insurance policies.
Item 1A. Risk Factors.
Other than the risk factors set forth below, there were no material changes during the period ended September 30, 2019 from the risk factors previously discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019.
We are highly dependent on our major customers, the loss of or a reduction in services from 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 2018, our top five customers, based on revenue, accounted for approximately 42% of our revenue, and our three largest customers, Fiat Chrysler Automobiles, General Motors Company, and Ford Motor Company, accounted for approximately 16%, 13% and 8% of our revenue, respectively. 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 46% of our revenues for 2018 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. Further, a continuation of the recent labor strike affecting General Motors or a labor strike affecting another major customer could significantly disrupt our business from that customer and adversely impact our operations and profitability.
A determination by regulators or judicial process that independent contractors are employees could expose us to various liabilities and additional costs.
Tax and other regulatory authorities, as well as independent contractors themselves, have increasingly asserted that independent contractors in the transportation service industry are employees rather than independent contractors. There can be no assurance that interpretations and laws that support the independent contractor status will not change or that regulatory authorities or independent contractors will not successfully assert a position that re-classifies independent contractors to be employees. If our independent contractors are determined to be our employees, that determination could materially increase our exposure under a variety of federal and state tax, workers’ compensation, unemployment benefits, labor, employment and tort laws, as well as our potential liability for employee benefits. In addition, such changes may be applied retroactively, and if so, we may be required to pay additional amounts to compensate for prior periods. Any of the above increased costs would adversely affect our business and operating results.
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Table of Contents

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The ~~Company~~’sCompany’s stock repurchase program has been extended and expanded several times, most recently in April 2017, when the Board of Directors reauthorized 500,000 shares of common stock for repurchase under the initial September 2011 authorization. Since the reauthorization, the Company has repurchased ~~110,316~~255,208 shares of its common stock under this repurchase program.

The following table summarizes the ~~Company~~’sCompany’s common stock repurchases during the third quarter of ~~2017 made pursuant to the stock repurchase program.~~2019. 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”.~~purchaser.”

Issuer Purchases of Equity Securities

Period
Total number
of shares
purchased

Average
price paid
per share

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

Maximum number
of shares that may
yet be purchased
under the plans or
programs (1)

Total number
of shares
purchased

Average
price paid
per share

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

Maximum number
of shares that may
yet be purchased
under the plans or
programs⁽¹⁾

July 1-31, 2017
6,154 $ 17.81 6,154 424,074
August 1-31, 2017
19,430 17.39 19,430 404,644
September 1-30, 2017
14,960 21.33 14,960 389,684
July 1-31, 2019
-- -- -- 244,792
August 1-31, 2019
1,911 $ 50.71 1,911 242,881
September 1-30, 2019
1,425 54.42 1,425 241,456
Total
40,544 $ 18.91 40,544 3,336 $ 52.30 3,336

(1)
The ~~Company~~’sCompany’s stock repurchase program does not have an expiration date.

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Table of Contents

Item 6. Exhibits.

Exhibit
Number
Exhibit Description

3.1
Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of the Company's Form 10-Q filed on May 15, 2002.)
3.2
Amended and Restated By-Laws of the Registrant (incorporated by reference to Exhibit 3.2 of the Company's Form 8-K filed on December 11, 2007.)
4.1
Amended and Restated Loan Agreement, dated March 28, 2016, by and among P.A.M. Transport, Inc., First Tennessee Bank National Association and the Company (incorporated by reference to Exhibit 4.1 of the ~~Company~~’sCompany’s Form 8-K filed on April 1, 2016.)
4.2
~~Fourth~~Amendment to Amended and Restated Loan Agreement, dated July 27, 2017, by and among P.A.M. Transport, Inc., First Tennessee Bank National Association and the Company (incorporated by reference to Exhibit 4.2 of the Company’s Form 8-K filed on January 31, 2019.)
4.3
Second Amendment to Amended and Restated Loan Agreement, dated January 25, 2019 by and among P.A.M. Transport, Inc., First Tennessee Bank National Association and the Company (incorporated by reference to Exhibit 4.3 of the Company’s Form 8-K filed on January 31, 2019.)
4.4
Fifth Amended and Restated Consolidated Revolving Credit Note, dated ~~March 28, 2016,~~January 25, 2019, by P.A.M. Transport, Inc. in favor of First Tennessee Bank National Association (incorporated by reference to Exhibit ~~4.2~~4.4 of the ~~Company~~’sCompany’s Form 8-K filed on ~~April 1, 2016.~~January 31, 2019.)
~~4.3~~4.5
Amended and Restated Security Agreement, dated March 28, 2016, by and between P.A.M. Transport, Inc. and First Tennessee Bank National Association (incorporated by reference to Exhibit 4.3 of the ~~Company~~’sCompany’s Form 8-K filed on April 1, 2016.)
~~4.4~~4.6
~~Fourth~~First Amendment to Amended and Restated Security Agreement, dated January 25, 2019, by and between P.A.M. Transport, Inc. and First Tennessee Bank National Association (incorporated by reference to Exhibit 4.6 of the Company’s Form 8-k filed on January 31, 2019.)
4.7
Fifth Amended and Restated Guaranty Agreement of the Company, dated ~~March 28, 2016,~~January 25, 2019, in favor of First Tennessee Bank National Association (incorporated by reference to Exhibit ~~4.4~~4.7 of the ~~Company~~’sCompany’s Form 8-K filed on ~~April 1, 2016.~~January 31, 2019.)
31.1
Rule 13a-14(a) Certification of Principal Executive Officer
31.2
Rule 13a-14(a) Certification of Principal Financial Officer
32.1
Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
XBRL Taxonomy Extension Labels Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document

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Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

P.A.M. TRANSPORTATION SERVICES, INC.

Dated: November 1, ~~2017~~2019
By: /s/ Daniel H. Cushman

Daniel H. Cushman

President and Chief Executive Officer

(principal executive officer)

Dated: November 1, ~~2017~~2019
By: /s/ Allen W. West

Allen W. West

Vice President-Finance, Chief Financial

Officer, Secretary and Treasurer

(principal accounting and financial officer)

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~~Table of Contents~~
~~P.A.M. TRANSPORTATION SERVICES, INC.~~
~~Index to Exhibits to Form 10-Q~~
~~Exhibit~~
~~Number~~
~~Exhibit Description~~
~~3.1~~
~~Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of the Company's Form 10-Q filed on May 15, 2002.)~~
~~3.2~~
~~Amended and Restated By-Laws of the Registrant~~ ~~(incorporated by reference to Exhibit 3.2 of the Company's Form 8-K filed on December 11, 2007.)~~
~~4.1~~
Amended and Restated Loan Agreement, dated March 28, 2016, by and among P.A.M. Transport, Inc., First Tennessee Bank National Association and the Company (incorporated by reference to Exhibit 4.1 of the Company~~’s Form 8-K filed on April 1, 2016.)~~
~~4.2~~
Fourth Amended and Restated Consolidated Revolving Credit Note, dated March 28, 2016, by P.A.M. Transport, Inc. in favor of First Tennessee Bank National Association (incorporated by reference to Exhibit 4.2 of the Company~~’s Form 8-K filed on April 1, 2016.)~~
~~4.3~~
Amended and Restated Security Agreement, dated March 28, 2016, by and between P.A.M. Transport, Inc. and First Tennessee Bank National Association (incorporated by reference to Exhibit 4.3 of the Company~~’s Form 8-K filed on April 1, 2016.)~~
~~4.4~~
~~Fourth Amended and Restated Guaranty Agreement of the Company, dated March 28, 2016, in favor of First Tennessee Bank National Association (incorporated by reference to Exhibit 4.4 of the Company’s Form 8-K filed on April 1, 2016.)~~
~~31.1~~
~~Rule 13a-14(a) Certification of Principal Executive Officer~~
~~31.2~~
~~Rule 13a-14(a) Certification of Principal Financial Officer~~
~~32.1~~
~~Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
~~101.INS~~
~~XBRL Instance Document~~
~~101.SCH~~
~~XBRL Taxonomy Extension Schema Document~~
~~101.CAL~~
~~XBRL Taxonomy Extension Calculation Linkbase Document~~
~~101.DEF~~
~~XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.LAB~~
~~XBRL Taxonomy Extension Labels Linkbase Document~~
~~101.PRE~~
~~XBRL Taxonomy Extension Presentation Linkbase Document~~
28

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016

NET INCOME	$	3,446		$	3,451		$	7,338		$	10,378

Other comprehensive income, net of tax:

Reclassification adjustment for realized gains on marketable equity securities included in net income (1)		(1,265	)		(594	)		(2,308	)		(543	)

Reclassification adjustment for unrealized losses on marketable securities included in net income, net of income taxes (2)		9			109			26			440

Changes in fair value of marketable securities (3)		437			(376	)		277			1,009

COMPREHENSIVE INCOME	$	2,627		$	2,590		$	5,333		$	11,284

	September 30, 2017		December 31, 2016
	(in thousands)
Fair market value	$	24,994	$	27,621
Cost		16,175		15,569
Unrealized gain	$	8,819	$	12,052

	Shares Under Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value*
				(per share)		(in years)
Outstanding-January 1, 2017		56,131		$	10.85
Granted		-			-
Exercised		(11,000	)		11.13
Cancelled/forfeited/expired		-			-
Outstanding at September 30, 2017		45,131		$	10.79		3.1	$	593,187

Exercisable at September 30, 2017		45,131		$	10.79		3.1	$	593,187

	Stock Options					Restricted Stock
	Number of Options			Weighted- Average Grant Date Fair Value		Number of Shares			Weighted- Average Grant Date Fair Value*
Non-vested at January 1, 2017		12,800		$	6.06		7,050		$	36.35
Granted		-			-		104,298			16.38
Canceled/forfeited/expired		-			-		-			-
Vested		(12,800	)		6.06		(5,548	)		19.56
Non-vested at September 30, 2017		-		$	-		105,800		$	17.54

Exercise Price		Shares Under Outstanding Options		Weighted-Average Remaining Contractual Term		Shares Under Exercisable Options
				(in years)
$	10.44		15,000		0.4		15,000
$	10.90		24,600		4.7		24,600
$	11.22		5,531		3.2		5,531
			45,131		3.1		45,131

	Unrealized gains and losses on available- for-sale securities
	(in thousands)
Balance at June 30, 2017, net of tax of $3,851	$	6,290

Other comprehensive income before reclassifications, net of tax of $266		437
Amounts reclassified from accumulated other comprehensive income, net of tax of $(768)		(1,256	)
Net current-period other comprehensive income		(819	)

Balance at September 30, 2017, net of tax of $3,349	$	5,471

Balance at December 31, 2016, net of tax of $4,576	$	7,476

Other comprehensive income before reclassifications, net of tax benefit of $169		277
Amounts reclassified from accumulated other comprehensive income, net of tax of $(1,396)		(2,282	)
Net current-period other comprehensive income		(2,005	)

Balance at September 30, 2017, net of tax of $3,349	$	5,471

	Amounts Reclassified from Accumulated Other Comprehensive Income (a)
Details about Accumulated Other Comprehensive Income Component	Nine Months Ended September 30, 2017			Statement of Operations Classification
	(in thousands)
Unrealized gains and losses on available-for-sale securities:
Prior period unrealized gain (loss) on securities sold	$	3,720		Non-operating income (expense)
Impairment expense		(42	)	Non-operating income (expense)
Total before tax		3,678		Income before income taxes
Tax expense		(1,396	)	Income tax expense
Total after tax	$	2,282		Net income

Issuer Purchases of Equity Securities
Period	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs		Maximum number of shares that may yet be purchased under the plans or programs (1)		Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs		Maximum number of shares that may yet be purchased under the plans or programs⁽¹⁾
July 1-31, 2017		6,154	$	17.81		6,154		424,074
August 1-31, 2017		19,430		17.39		19,430		404,644
September 1-30, 2017		14,960		21.33		14,960		389,684
July 1-31, 2019										--		--		--		244,792
August 1-31, 2019										1,911	$	50.71		1,911		242,881
September 1-30, 2019										1,425		54.42		1,425		241,456
Total		40,544	$	18.91		40,544				3,336	$	52.30		3,336

	Exhibit Number		Exhibit Description

	3.1		Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of the Company's Form 10-Q filed on May 15, 2002.)
	3.2		Amended and Restated By-Laws of the Registrant (incorporated by reference to Exhibit 3.2 of the Company's Form 8-K filed on December 11, 2007.)
	4.1		Amended and Restated Loan Agreement, dated March 28, 2016, by and among P.A.M. Transport, Inc., First Tennessee Bank National Association and the Company (incorporated by reference to Exhibit 4.1 of the ~~Company~~’sCompany’s Form 8-K filed on April 1, 2016.)
	4.2		~~Fourth~~Amendment to Amended and Restated Loan Agreement, dated July 27, 2017, by and among P.A.M. Transport, Inc., First Tennessee Bank National Association and the Company (incorporated by reference to Exhibit 4.2 of the Company’s Form 8-K filed on January 31, 2019.)
	4.3		Second Amendment to Amended and Restated Loan Agreement, dated January 25, 2019 by and among P.A.M. Transport, Inc., First Tennessee Bank National Association and the Company (incorporated by reference to Exhibit 4.3 of the Company’s Form 8-K filed on January 31, 2019.)
	4.4		Fifth Amended and Restated Consolidated Revolving Credit Note, dated ~~March 28, 2016,~~January 25, 2019, by P.A.M. Transport, Inc. in favor of First Tennessee Bank National Association (incorporated by reference to Exhibit ~~4.2~~4.4 of the ~~Company~~’sCompany’s Form 8-K filed on ~~April 1, 2016.~~January 31, 2019.)
	~~4.3~~4.5		Amended and Restated Security Agreement, dated March 28, 2016, by and between P.A.M. Transport, Inc. and First Tennessee Bank National Association (incorporated by reference to Exhibit 4.3 of the ~~Company~~’sCompany’s Form 8-K filed on April 1, 2016.)
	~~4.4~~4.6		~~Fourth~~First Amendment to Amended and Restated Security Agreement, dated January 25, 2019, by and between P.A.M. Transport, Inc. and First Tennessee Bank National Association (incorporated by reference to Exhibit 4.6 of the Company’s Form 8-k filed on January 31, 2019.)
	4.7		Fifth Amended and Restated Guaranty Agreement of the Company, dated ~~March 28, 2016,~~January 25, 2019, in favor of First Tennessee Bank National Association (incorporated by reference to Exhibit ~~4.4~~4.7 of the ~~Company~~’sCompany’s Form 8-K filed on ~~April 1, 2016.~~January 31, 2019.)
	31.1		Rule 13a-14(a) Certification of Principal Executive Officer
	31.2		Rule 13a-14(a) Certification of Principal Financial Officer
	32.1		Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	101.INS		XBRL Instance Document
	101.SCH		XBRL Taxonomy Extension Schema Document
	101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
	101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
	101.LAB		XBRL Taxonomy Extension Labels Linkbase Document
	101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

	P.A.M. TRANSPORTATION SERVICES, INC.


Dated: November 1, ~~2017~~2019	By: /s/ Daniel H. Cushman
	Daniel H. Cushman
	President and Chief Executive Officer
	(principal executive officer)

Dated: November 1, ~~2017~~2019	By: /s/ Allen W. West
	Allen W. West
	Vice President-Finance, Chief Financial
	Officer, Secretary and Treasurer
	(principal accounting and financial officer)

~~Exhibit~~ ~~Number~~		~~Exhibit Description~~

~~3.1~~		~~Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of the Company's Form 10-Q filed on May 15, 2002.)~~
~~3.2~~		~~Amended and Restated By-Laws of the Registrant~~ ~~(incorporated by reference to Exhibit 3.2 of the Company's Form 8-K filed on December 11, 2007.)~~
~~4.1~~		Amended and Restated Loan Agreement, dated March 28, 2016, by and among P.A.M. Transport, Inc., First Tennessee Bank National Association and the Company (incorporated by reference to Exhibit 4.1 of the Company~~’s Form 8-K filed on April 1, 2016.)~~
~~4.2~~		Fourth Amended and Restated Consolidated Revolving Credit Note, dated March 28, 2016, by P.A.M. Transport, Inc. in favor of First Tennessee Bank National Association (incorporated by reference to Exhibit 4.2 of the Company~~’s Form 8-K filed on April 1, 2016.)~~
~~4.3~~		Amended and Restated Security Agreement, dated March 28, 2016, by and between P.A.M. Transport, Inc. and First Tennessee Bank National Association (incorporated by reference to Exhibit 4.3 of the Company~~’s Form 8-K filed on April 1, 2016.)~~
~~4.4~~		~~Fourth Amended and Restated Guaranty Agreement of the Company, dated March 28, 2016, in favor of First Tennessee Bank National Association (incorporated by reference to Exhibit 4.4 of the Company’s Form 8-K filed on April 1, 2016.)~~
~~31.1~~		~~Rule 13a-14(a) Certification of Principal Executive Officer~~
~~31.2~~		~~Rule 13a-14(a) Certification of Principal Financial Officer~~
~~32.1~~		~~Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
~~101.INS~~		~~XBRL Instance Document~~
~~101.SCH~~		~~XBRL Taxonomy Extension Schema Document~~
~~101.CAL~~		~~XBRL Taxonomy Extension Calculation Linkbase Document~~
~~101.DEF~~		~~XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.LAB~~		~~XBRL Taxonomy Extension Labels Linkbase Document~~
~~101.PRE~~		~~XBRL Taxonomy Extension Presentation Linkbase Document~~