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<SEC-DOCUMENT>0000931763-02-000542.txt : 20020415
<SEC-HEADER>0000931763-02-000542.hdr.sgml : 20020415
ACCESSION NUMBER:		0000931763-02-000542
CONFORMED SUBMISSION TYPE:	S-2/A
PUBLIC DOCUMENT COUNT:		4
FILED AS OF DATE:		20020301

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PAM TRANSPORTATION SERVICES INC
		CENTRAL INDEX KEY:			0000798287
		STANDARD INDUSTRIAL CLASSIFICATION:	TRUCKING (NO LOCAL) [4213]
		IRS NUMBER:				710633135
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		S-2/A
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-83084
		FILM NUMBER:		02563720

	BUSINESS ADDRESS:	
		STREET 1:		P O BOX 188
		CITY:			TONTITOWN
		STATE:			AR
		ZIP:			72770
		BUSINESS PHONE:		5013619111

	MAIL ADDRESS:	
		STREET 1:		P O BOX 188
		CITY:			TONTITOWN
		STATE:			AR
		ZIP:			72770
</SEC-HEADER>
<DOCUMENT>
<TYPE>S-2/A
<SEQUENCE>1
<FILENAME>ds2a.txt
<DESCRIPTION>AMENDMENT #1 TO FORM S-2
<TEXT>
<PAGE>


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

                                                     Registration No. 333-83084
================================================================================
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                               -----------------

                                AMENDMENT NO. 1


                                      TO

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

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



   The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
================================================================================

<PAGE>

The information in this preliminary prospectus is not complete and may be
changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This
preliminary prospectus is not an offer to sell these securities and it is not a
solicitation of an offer to buy these securities in any jurisdiction where such
an offer or sale is not permitted.



                  Subject to Completion, dated March 1, 2002


PROSPECTUS

                               3,475,000 Shares




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



                                 Common Stock

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

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


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



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


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

<TABLE>
<CAPTION>
                                                               Per
                                                              Share Total
                                                              ----- -----
       <S>                                                    <C>   <C>
       Public offering price.................................   $     $
       Underwriting discount.................................   $     $
       Proceeds, before expenses, to us......................   $     $
       Proceeds, before expenses, to the selling stockholders   $     $
</TABLE>

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

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

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

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

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

              The date of this prospectus is              , 2002.

<PAGE>

                               TABLE OF CONTENTS


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


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

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


<PAGE>

                              PROSPECTUS SUMMARY


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


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

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

Our Business

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

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

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

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

  .  maintain consistent equipment capacity;

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

  .  attract and retain drivers; and

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


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


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

                                      1

<PAGE>

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


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



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



Recent Development



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


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


<TABLE>
<CAPTION>
                                              The Offering
<S>                                               <C>

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

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

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

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

Nasdaq National Market symbol....................
                                                  PTSI
</TABLE>

- --------

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


                                      2

<PAGE>

                      Summary Consolidated Financial Data


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



<TABLE>
<CAPTION>
                                                  Year Ended December 31,
                                   ----------------------------------------------------
                                     1997      1998       1999       2000       2001
                                   --------  --------  ----------  --------  ----------
                                    (in thousands, except per share amounts and ratios)
<S>                                <C>       <C>       <C>         <C>       <C>
Statement of Operations Data:
Operating revenues................ $127,211  $143,164  $  207,381  $205,245   $225,794
Operating expenses................  113,596   126,104     182,926   185,845    204,525
                                   --------  --------  ----------  --------   --------
Operating income..................   13,615    17,060      24,455    19,400     21,269
Interest expense..................   (3,423)   (3,830)     (5,650)   (5,048)    (4,477)
Income before income taxes........   10,192    13,231      18,805    14,352     16,792
Income taxes......................    3,892     5,158       7,536     5,694      6,721
Net income........................ $  6,300  $  8,073  $   11,269  $  8,658   $ 10,071
                                   ========  ========  ==========  ========   ========
Earnings per common share:
   Basic.......................... $   0.77  $   0.97  $     1.34  $   1.02   $   1.18
                                   ========  ========  ==========  ========   ========
   Diluted........................ $   0.76  $   0.96  $     1.33  $   1.02   $   1.18
                                   ========  ========  ==========  ========   ========
Average common shares outstanding:
   Basic..........................    8,192     8,306       8,393     8,455      8,522
   Diluted........................    8,290     8,444       8,488     8,518      8,550

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

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

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

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

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

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


                                      3

<PAGE>

                                 RISK FACTORS

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

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


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


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

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

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

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

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

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

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

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

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

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

                                      4

<PAGE>

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

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

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


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


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

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

Ongoing insurance and claims expenses could significantly reduce our earnings.


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


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

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

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

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


                                      5

<PAGE>

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


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


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

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

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

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

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

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

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

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

                                      6

<PAGE>

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

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

                DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

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

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

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

                                      7

<PAGE>

                                USE OF PROCEEDS


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



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


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

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

                                DIVIDEND POLICY

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

                           COMMON STOCK PRICE RANGE

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


<TABLE>
<CAPTION>
                                                        Common Stock
                                                            Price
                                                        -------------
                                                         High   Low
          -                                             ------ ------
          <S>                                           <C>    <C>
          Year ending December 31, 2002
             First Quarter (through February 28, 2002). $20.54 $12.75
          Year ended December 31, 2001
             Fourth Quarter............................ $12.85 $ 8.60
             Third Quarter.............................  12.00   9.10
             Second Quarter............................  10.00   5.88
             First Quarter.............................   9.84   7.00
          Year ended December 31, 2000
             Fourth Quarter............................ $10.00 $ 7.63
             Third Quarter.............................  10.63   8.25
             Second Quarter............................  11.00   8.00
             First Quarter.............................  11.44   8.50
</TABLE>



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


                                      8

<PAGE>

                                CAPITALIZATION


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


  .  an actual basis; and

  .  an adjusted basis, giving effect to:


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



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



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



<TABLE>
<CAPTION>
                                                                                       December 31, 2001
                                                                                      -------------------
<S>                                                                                   <C>       <C>
                                                                                                    As
                                                                                       Actual    Adjusted
                                                                                      --------  ---------
                                                                                         (in thousands)
Current portion of long-term debt.................................................... $ 17,692         --
                                                                                      ========  =========
Long-term debt, less current portion................................................. $ 47,023  $  25,100
Stockholders' equity:
 Common stock, $0.01 par value: 20,000,000 shares authorized; 8,611,957 shares issued
   and outstanding; 10,711,957 shares issued and outstanding, as adjusted............       86        107
 Preferred stock, $0.01 par value: 10,000,000 shares authorized; no shares issued and
   outstanding.......................................................................       --         --
 Additional paid-in capital..........................................................   20,461     60,055
 Accumulated other comprehensive income (loss).......................................     (508)      (508)
 Retained earnings...................................................................   52,558     52,558
                                                                                      --------  ---------
Total stockholders' equity...........................................................   72,597    112,212
                                                                                      --------  ---------
Total capitalization................................................................. $119,620  $ 137,312
                                                                                      ========  =========
</TABLE>


                                      9

<PAGE>

              SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA


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



<TABLE>
<CAPTION>
                                                           Year Ended December 31,
                                             --------------------------------------------------
<S>                                          <C>        <C>       <C>       <C>       <C>
                                               1997       1998      1999      2000      2001
                                             --------   --------  --------  --------  --------
                                             (in thousands, except per share amounts and ratios
Statement of Operations Data:
Operating revenues.......................... $127,211   $143,164  $207,381  $205,245  $225,794
Operating expenses:
 Salaries, wages and benefits...............   57,662     65,169    90,248    90,680   100,359
 Operating supplies.........................   24,666     26,511    35,246    37,728    43,289
 Rent and purchased transportation..........    1,655      1,082    13,309    12,542    10,526
 Depreciation and amortization..............   12,995     14,003    18,392    18,806    20,300
 Operating taxes and licenses...............    7,581      8,388    11,334    11,140    11,936
 Insurance and claims.......................    5,571      6,069     7,945     8,674    10,202
 Communications and utilities...............    1,001      1,583     2,365     2,234     2,320
 Other(1)...................................    2,394      3,131     4,388     3,756     4,707
 (Gain) loss on sale or disposal of property       71        168      (301)      285       886
                                             --------   --------  --------  --------  --------
Total operating expenses....................  113,596    126,104   182,926   185,845   204,525
                                             --------   --------  --------  --------  --------
Operating income............................   13,615     17,060    24,455    19,400    21,269
Interest expense............................   (3,423)    (3,830)   (5,650)   (5,048)   (4,477)
Other.......................................       --          1        --        --        --
                                             --------   --------  --------  --------  --------
Income before income taxes..................   10,192     13,231    18,805    14,352    16,792
Income taxes................................    3,892      5,158     7,536     5,694     6,721
                                             --------   --------  --------  --------  --------
Net income.................................. $  6,300   $  8,073  $ 11,269  $  8,658  $ 10,071
                                             ========   ========  ========  ========  ========
Earnings per common share:..................
 Basic...................................... $   0.77   $   0.97  $   1.34  $   1.02  $   1.18
                                             ========   ========  ========  ========  ========
 Diluted.................................... $   0.76   $   0.96  $   1.33  $   1.02  $   1.18
                                             ========   ========  ========  ========  ========
Average common shares outstanding--Basic....    8,192      8,306     8,393     8,455     8,522
Average common shares outstanding--Diluted..    8,290      8,444     8,488     8,518     8,550

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


Footnotes on following page

                                      10

<PAGE>


<TABLE>
<CAPTION>
                                                       Year Ended December 31,
                                          ------------------------------------------------
<S>                   <C>                 <C>       <C>       <C>       <C>       <C>
                                            1997      1998      1999      2000      2001
                                          --------  --------  --------  --------  --------
Operating Data:
Average number of truckloads per week....    2,874     3,425     4,885     5,169     5,399
Average miles per trip...................      786       767       734       713       769
Average miles per tractor................  125,404   125,569   128,966   128,936   131,554
Average revenue per tractor per day...... $    539  $    543  $    570  $    579  $    591
Average revenue per loaded mile.......... $   1.17  $   1.15  $   1.18  $   1.18  $   1.17
Empty mile factor........................      5.8%      5.5%      5.4%      5.6%      5.5%

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

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

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

- --------

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

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

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

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

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


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


                                      11

<PAGE>

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

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

Results of Operations

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


<TABLE>
<CAPTION>
                                                       Year Ended December 31,
                                                       ----------------------
     <S>                                               <C>       <C>    <C>
                                                        1999      2000   2001
                                                       -----     -----  -----
     Operating revenues............................... 100.0%    100.0% 100.0%
     Operating expenses:
        Salaries, wages and benefits..................  43.5      44.2   44.4
        Operating supplies............................  17.0      18.4   19.2
        Rent and purchased transportation.............   6.4       6.1    4.7
        Depreciation and amortization.................   8.9       9.2    9.0
        Operating taxes and licenses..................   5.5       5.4    5.3
        Insurance and claims..........................   3.8       4.2    4.5
        Communications and utilities..................   1.1       1.1    1.0
        Other.........................................   2.1       1.8    2.1
        (Gain) loss on sale or disposal of property...  (0.1)      0.1    0.4
                                                       -----     -----  -----
     Total operating expenses.........................  88.2      90.5   90.6
                                                       -----     -----  -----
     Operating income.................................  11.8       9.5    9.4
     Interest expense.................................  (2.7)     (2.5)  (2.0)
                                                       -----     -----  -----
     Income before income taxes.......................   9.1       7.0    7.4
     Federal and state income taxes...................   3.6       2.8    3.0
                                                       -----     -----  -----
     Net income.......................................   5.5%      4.2%   4.4%
                                                       =====     =====  =====
</TABLE>



2001 Compared to 2000



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



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



   Rent and purchased transportation decreased from 6.1% of revenues in 2000 to
4.7% of revenues in 2001. The decrease relates primarily to a decrease in
amounts paid to other transportation companies in the form of brokerage fees.



   Insurance and claims increased from 4.2% of revenues in 2000 to 4.5% of
revenues in 2001. The increase relates primarily to an increase in rates for
auto liability insurance coverage.





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


                                      12

<PAGE>


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



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



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


2000 Compared to 1999

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

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

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

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

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

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

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



Quarterly Results of Operations


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



<TABLE>
<CAPTION>
                                                           Quarter Ended
                         ---------------------------------------------------------------------------------
                         Mar. 31,  June 30,  Sept. 30,  Dec. 31,  Mar. 31,  June 30,  Sept. 30,  Dec. 31,
                           2000      2000       2000      2000      2001      2001       2001      2001
                         --------- --------- ---------- --------- --------- --------- ---------- ---------
                                                            (unaudited)
                                          (in thousands, except earnings per share data)
<S>                      <C>          <C>        <C>       <C>       <C>       <C>        <C>     <C>

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


                                      13

<PAGE>

Liquidity and Capital Resources


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



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



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



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



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



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



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


Insurance


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


                                      14

<PAGE>

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

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

Seasonality

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

Inflation

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

Market Risk


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



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



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



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


                                      15

<PAGE>


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



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




New Accounting Pronouncements

   In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS No. 133), which was amended by Statement of
Financial Accounting Standards No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities--an Amendment of FASB Statement No.
133" (SFAS No. 138). SFAS No. 133 establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value. SFAS No. 133
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Companies must
formally document, designate, and assess the effectiveness of transactions that
receive hedge accounting. SFAS No. 138 amends the accounting and reporting
standards for certain derivative instruments and certain hedging activities,
including the normal purchases and normal sales exception.

   SFAS No. 133 is effective for fiscal years beginning after June 15, 2000 and
must be applied to (a) derivative instruments and (b) certain derivative
instruments embedded in hybrid contracts that were issued, acquired, or
substantively modified after December 31, 1997 (and, at the company's election,
before January 1, 1998).

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

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

   SFAS No. 143 provides accounting requirements for retirement obligations
associated with tangible long-lived assets, including: (i) the timing of
liability recognition; (ii) initial measurement of the liability;
(iii) allocation of asset retirement cost to expense; (iv) subsequent
measurement of the liability; and (v) financial

                                      16

<PAGE>

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

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

                                      17

<PAGE>

                                   BUSINESS

Overview

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

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

Business Strategy


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


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

  .  maintain consistent equipment capacity;

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

  .  attract and retain drivers; and

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

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

   Providing Superior and Flexible Customer Service.  We believe our
service-oriented operation provides a base for long-term customer retention and
sources of recurring revenue. In addition, we believe that as consolidation
continues to be a trend in our industry, shippers will seek higher quality
providers. Our wide range of services includes dedicated fleet services,
just-in-time delivery, two-man driving teams, cross-docking and consolidation
programs, specialized trailers, and Internet-based customer access to delivery
status. These services combined with a decentralized regional operating
strategy allow us to quickly and reliably respond to the diverse needs of our
customers, and provide an advantage in securing new business. We also maintain
ISO 9002 certification, which is required by many of our larger customers to
ensure that their truckload carriers operate in accordance with approved
quality assurance standards.


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


                                      18

<PAGE>

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


   Making Strategic Acquisitions.  We continually evaluate strategic
acquisition opportunities, focusing on those that complement our existing
business or that could profitably expand our business or services. Since 1995,
approximately 48% of our revenue growth has been attributable to acquisitions,
while approximately 52% has been attributable to internal growth. We believe
economic trends are driving further consolidation in our industry.


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

<TABLE>
<CAPTION>
                                                                        Target's Annual
Acquisition Date Acquired Business                                Revenue Prior to Acquisition
- ---------------- -----------------                                ----------------------------
<S>              <C>                                              <C>
 February 1995   Choctaw Express, Inc. and Choctaw Brokerage, Inc         $ 8 million
 March 1996      Allen Freight Services, Inc.                             $16 million
 January 1999    Decker Transport Co. Inc. and Van Houten Ltd.            $48 million
</TABLE>

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

Industry


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



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


   The current operating environment is characterized by the following:


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


                                      19

<PAGE>

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

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


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


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

Marketing and Major Customers


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



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


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


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


                                      20

<PAGE>

Revenue Equipment


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


<TABLE>
<CAPTION>
                                                    1999  2000  2001
                                                    ----- ----- -----
          <S>                                       <C>   <C>   <C>
          Tractors
             Purchased.............................   748   304   505
             Disposed..............................   407   359   258
             End of year total..................... 1,468 1,413 1,660
             Average age at end of year (in years).   1.6   1.7   1.8
          Trailers
             Purchased............................. 1,191    51   228
             Disposed..............................   129   138    55
             End of year total..................... 3,846 3,759 3,932
             Average age at end of year (in years).   4.0   4.7   5.3
</TABLE>

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

Technology

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

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

Maintenance

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

                                      21

<PAGE>

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

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

Drivers

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

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

   Our drivers are compensated on the basis of miles driven, loading and
unloading, extra stops and layovers in transit. Drivers can earn bonuses by
recruiting other qualified drivers who become employed by us and both cash and
non-cash prizes are awarded for consecutive periods of safe, accident-free
driving.

   Intense competition in the trucking industry for qualified drivers over the
last several years, along with difficulties and added expense in recruiting and
retaining qualified drivers, has had a negative impact on the industry. Our
operations have also been impacted and from time to time we have experienced
under-utilization and increased expenses due to a shortage of qualified
drivers. However, due to the significant number of trucking company failures,
drivers' wages have stabilized and availability has increased somewhat in
recent months. We place a high priority on the recruitment and retention of an
adequate supply of qualified drivers.

Facilities

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

Employees


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


                                      22

<PAGE>

                                  MANAGEMENT

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


<TABLE>
<CAPTION>
                                                             Years of Service
   Name                   Age Position                         with P.A.M.
   ----                   --- --------                       ----------------
   <S>                    <C> <C>                            <C>
   Robert W. Weaver...... 51  President and Chief Executive         19
                                Officer
   W. Clif Lawson........ 48  Executive Vice President and          17
                                Chief Operating Officer
   Larry J. Goddard...... 43  Vice President--Finance, Chief        14
                                Financial Officer, Secretary
                                and Treasurer
   Daniel C. Sullivan.... 61  Director                              15
   Matthew T. Moroun..... 29  Director                               9
   Charles F. Wilkins.... 63  Director                               6
   Frederick P. Calderone 51  Director                               3
</TABLE>



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


                                      23

<PAGE>

                      PRINCIPAL AND SELLING STOCKHOLDERS

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

  .  our directors;

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

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

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


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



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

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

                                      24

<PAGE>

                         DESCRIPTION OF CAPITAL STOCK


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


Common Stock

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

Preferred Stock

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

Anti-Takeover Provisions of Delaware Law and Charter Provisions

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

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

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

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

   Section 203 defines "business combination" to include:

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

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

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

                                      25

<PAGE>

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

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

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

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

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

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

Limitation of Liability and Indemnification Agreements

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

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

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

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

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

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

Transfer Agent and Registrar

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


                                      26

<PAGE>

                        SHARES ELIGIBLE FOR FUTURE SALE

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

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

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

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

                                      27

<PAGE>

                                 UNDERWRITING

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

<TABLE>
<CAPTION>
                                                                   Number of
    Underwriters                                                    Shares
    ------------                                                   ---------
    <S>                                                            <C>
    Stephens Inc..................................................
    BB&T Capital Markets, a division of Scott & Stringfellow, Inc.
    A.G. Edwards & Sons, Inc......................................
                                                                   ---------
       Total...................................................... 3,475,000
                                                                   =========
</TABLE>

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


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


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


<TABLE>
<CAPTION>
                                                                 Aggregate Aggregate
                                                            Per   Without    With
                                                           Share  Option    Option
                                                           ----- --------- ---------
<S>                                                        <C>   <C>       <C>
Underwriting discounts payable by us......................   $       $         $
Underwriting discounts payable by the selling stockholders   $       $         $
Expenses payable by us....................................   $       $         $
</TABLE>


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

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

                                      28

<PAGE>

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

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

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

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

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

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

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

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

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

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

                                      29

<PAGE>

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

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

                                 LEGAL MATTERS

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

                                    EXPERTS


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


                      WHERE YOU CAN FIND MORE INFORMATION

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

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

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

                                      30

<PAGE>

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


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





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


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

                                      31

<PAGE>

                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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

                                      F-1

<PAGE>

                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders of
P.A.M. Transportation Services, Inc.:

   We have audited the accompanying consolidated balance sheets of P.A.M.
Transportation Services, Inc. (a Delaware corporation) and subsidiaries as of
December 31, 2001 and 2000, and the related consolidated statements of income,
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 2001. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

   We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

   In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of P.A.M.
Transportation Services, Inc. and subsidiaries as of December 31, 2001 and
2000, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States.

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

                                          Arthur Andersen LLP
Tulsa, Oklahoma
February 21, 2002

                                      F-2

<PAGE>

                     P.A.M. TRANSPORTATION SERVICES, INC.

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

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

                            See accompanying notes.

                                      F-3

<PAGE>

                     P.A.M. TRANSPORTATION SERVICES, INC.

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

<TABLE>
<CAPTION>
                                                 Year ended December 31,
                                              ----------------------------
                                                2001      2000      1999
                                              --------  --------  --------
     <S>                                      <C>       <C>       <C>
     Operating revenues...................... $225,794  $205,245  $207,381
     Operating expenses and costs:
        Salaries, wages and benefits.........  100,359    90,680    90,248
        Operating supplies and expenses......   43,289    37,728    35,246
        Rents and purchased transportation...   10,526    12,542    13,309
        Depreciation and amortization........   20,300    18,806    18,392
        Operating taxes and licenses.........   11,936    11,140    11,334
        Insurance and claims.................   10,202     8,674     7,945
        Communications and utilities.........    2,320     2,234     2,365
        Other................................    4,707     3,756     4,388
        (Gain) loss on sale or disposal of
          equipment..........................      886       285      (301)
                                              --------  --------  --------
                                               204,525   185,845   182,926
                                              --------  --------  --------
     Operating income........................   21,269    19,400    24,455
     Interest expense........................   (4,477)   (5,048)   (5,650)
                                              --------  --------  --------
     Income before income taxes..............   16,792    14,352    18,805
     Federal and state income taxes:
        Current..............................    1,301     1,056     2,107
        Deferred.............................    5,420     4,638     5,429
                                              --------  --------  --------
                                                 6,721     5,694     7,536
                                              --------  --------  --------
     Net income.............................. $ 10,071  $  8,658  $ 11,269
                                              ========  ========  ========
     Earnings per common share:
        Basic................................ $   1.18  $   1.02  $   1.34
                                              ========  ========  ========
        Diluted.............................. $   1.18  $   1.02  $   1.33
                                              ========  ========  ========
     Average common shares outstanding:
        Basic................................    8,522     8,455     8,393
                                              ========  ========  ========
        Diluted..............................    8,550     8,518     8,488
                                              ========  ========  ========
</TABLE>


                            See accompanying notes.

                                      F-4

<PAGE>

                     P.A.M. TRANSPORTATION SERVICES, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                  (thousands)
<TABLE>
<CAPTION>
                                                Additional           Accumulated
                                         Common  Paid-In   Retained     Other
                                         Stock   Capital   Earnings Comprehensive  Total
                                         ------ ---------- -------- ------------- -------
<S>                                      <C>    <C>        <C>      <C>           <C>
Balances at December 31, 1998...........  $83    $18,814   $22,560      $  --     $41,457
   Net income...........................   --         --    11,269         --      11,269
   Exercise of stock options--shares
     issued.............................    1        488        --         --         489
   Tax benefits of stock options........   --        150        --         --         150
                                          ---    -------   -------      -----     -------
Balances at December 31, 1999...........   84     19,452    33,829         --      53,365
   Net income...........................   --         --     8,658         --       8,658
   Exercise of stock options--shares
     issued.............................    1        186        --         --         187
                                          ---    -------   -------      -----     -------
Balances at December 31, 2000...........   85     19,638    42,487         --      62,210
   Components of comprehensive income:
   Net earnings.........................   --         --    10,071         --      10,071
   Unrealized loss on hedge, net of tax
     of $339............................   --         --        --       (508)       (508)
                                          ---    -------   -------      -----     -------
   Total comprehensive income...........   --         --        --         --       9,563
                                          ---    -------   -------      -----     -------
   Exercise of stock options--shares
     issued.............................    1        823        --         --         824
                                          ---    -------   -------      -----     -------
Balances at December 31, 2001...........  $86    $20,461   $52,558      $(508)    $72,597
                                          ===    =======   =======      =====     =======
</TABLE>


                            See accompanying notes.

                                      F-5

<PAGE>

                     P.A.M. TRANSPORTATION SERVICES, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                  (thousands)

<TABLE>
<CAPTION>
                                                                          Year ended December 31,
                                                                      -------------------------------
                                                                        2001       2000       1999
                                                                      ---------  ---------  ---------
<S>                                                                   <C>        <C>        <C>
Operating activities
Net income........................................................... $  10,071  $   8,658  $  11,269
Adjustments to reconcile net income to net cash provided by operating
  activities:
   Depreciation and amortization.....................................    20,300     18,806     18,392
   Non-competition agreement amortization............................       131        131        427
   Provision for deferred income taxes...............................     5,420      4,638      5,429
   (Gain) loss on sale or disposal of equipment......................       886        285       (301)
   Changes in operating assets and liabilities, net of acquisition:
       Accounts receivable...........................................    (1,556)      (242)     2,322
       Prepaid expenses and other assets.............................      (763)       592        563
       Income taxes refundable.......................................       235       (516)       (75)
       Trade accounts payable........................................    (3,927)      (295)       920
       Accrued expenses..............................................       648        400        609
                                                                      ---------  ---------  ---------
Net cash provided by operating activities............................    31,445     32,457     39,555
                                                                      ---------  ---------  ---------
Investing activities
Purchases of property and equipment..................................   (47,515)   (30,732)   (51,480)
Proceeds from sale or disposal of equipment..........................    10,536     12,842     12,668
Lease payments received on direct financing leases...................       232        231        670
Acquisition of business, net of cash acquired........................        --         --     (9,642)
                                                                      ---------  ---------  ---------
Net cash used in investing activities................................   (36,747)   (17,659)   (47,784)
                                                                      ---------  ---------  ---------
Financing activities
Borrowings under line of credit......................................   278,147    196,472    199,508
Repayments under line of credit......................................  (258,197)  (191,295)  (195,559)
Borrowings of long-term debt.........................................     7,943      4,384     24,179
Repayments of long-term debt.........................................   (23,004)   (27,158)   (22,589)
Other................................................................       824       (273)       284
                                                                      ---------  ---------  ---------
Net cash provided by (used in) financing activities..................     5,713    (17,870)     5,823
                                                                      ---------  ---------  ---------
Net increase (decrease) in cash and cash equivalents.................       411     (3,072)    (2,406)
Cash and cash equivalents at beginning of year.......................       485      3,557      5,963
                                                                      ---------  ---------  ---------
Cash and cash equivalents at end of year............................. $     896  $     485  $   3,557
                                                                      =========  =========  =========
</TABLE>

                            See accompanying notes.

                                      F-6

<PAGE>

                     P.A.M. TRANSPORTATION SERVICES, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  ACCOUNTING POLICIES

Description of Business and Consolidation

   P.A.M. Transportation Services, Inc. (the Company), through its
subsidiaries, operates as a truckload motor carrier.

   The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries: P.A.M. Transport, Inc., P.A.M. Dedicated
Services, Inc., Choctaw Express, Inc., Allen Freight Services, Inc., T.T.X.,
Inc., and Decker Transport Co., Inc. All significant intercompany accounts and
transactions have been eliminated.

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

Cash and Cash Equivalents

   The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.

Accounts Receivable

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

Tire Purchases

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

Excess of Cost Over Net Assets Acquired

   The excess of cost over net assets acquired, or goodwill, is being amortized
on a straight-line basis over 25 years. The carrying value of goodwill will be
reviewed if the facts and circumstances suggest that it may be impaired. No
reduction of goodwill was required in 2001, 2000, or 1999. See "Recent
Accounting Pronouncements".

Claims Liabilities

   With respect to cargo loss, physical damage and auto liability, the Company
maintains insurance coverage to protect it from certain business risks. These
policies are with various carriers and have deductibles of $2,500 per
occurrence. During 1998 the Company changed from being self-insured for
workers' compensation coverage in Arkansas, Oklahoma, Mississippi and Florida
with excess coverage maintained for claims exceeding $250,000, to being
fully-insured for workers' compensation coverage in those states. The Company
continues to be self-insured for workers' compensation coverage in Ohio with
excess coverage maintained for claims exceeding $350,000. The Company has
reserved for estimated losses to pay such claims as incurred as well as claims
incurred but not reported. The Company has not experienced any adverse trends
involving differences in

                                      F-7

<PAGE>

                     P.A.M. TRANSPORTATION SERVICES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

claims experienced versus claims estimates for workers' compensation reserves.
Letters of credit in the amounts of $100,000, $200,000, $250,000, and $100,000
are held by a bank as security for workers' compensation claims in Arkansas,
Oklahoma, Mississippi, and Florida, respectively, and letters of credit
aggregating $569,500 are held by a bank for auto liability claims.

Revenue Recognition Policy

   The Company recognizes revenue based upon relative transit time in each
reporting period.

Repairs and Maintenance

   Repairs and maintenance costs are expensed as incurred.

Property and Equipment

   Property and equipment is recorded at cost. For financial reporting
purposes, the cost of such property is depreciated principally by the
straight-line method. For tax reporting purposes, accelerated depreciation or
applicable cost recovery methods are used. Gains and losses are reflected in
the year of disposal. The following is a table reflecting estimated ranges of
asset lives by major class of depreciable assets:

<TABLE>
<CAPTION>
                                                 Estimated
                    Asset Class                  Asset Life
                    -----------                  ----------
                    <S>                          <C>
                    Revenue Equipment........... 3-7 years
                    Service Vehicles............ 3-5 years
                    Office Furniture & Equipment 3-7 years
                    Structures & Improvements... 5-30 years
</TABLE>

Income Taxes

   The Company applies the provisions of Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes (SFAS No. 109). SFAS No. 109
requires recognition of deferred tax liabilities and assets for expected future
consequences of events that have been included in a company's financial
statements or tax return. Under this method, deferred tax liabilities and
assets are determined based on the difference between the financial statements
and the tax basis of assets and liabilities using enacted tax rates.

Business Segment and Concentrations of Credit Risk

   The Company operates in one business segment, motor carrier operations. The
Company provides transportation services to customers throughout the United
States and portions of Canada and Mexico. The Company performs ongoing credit
evaluations and generally does not require collateral. The Company maintains
reserves for potential credit losses and such losses have been within
management's expectations.

   In 2001, 2000 and 1999, one customer accounted for 40%, 33% and 30% of
revenues, respectively. A second customer accounted for 8%, 10% and 9% of
revenues in 2001, 2000 and 1999, respectively. The Company's largest customer
is an automobile manufacturer. The Company also provides transportation
services to other manufacturers who are suppliers for automobile manufacturers
including the Company's largest customer. As a result, concentration of the
Company's business within the automobile industry is greater than the
concentration in a single customer. Of the Company's revenues for 2001, 2000
and 1999, 55%, 50% and 46%, respectively, were derived from transportation
services provided to the automobile manufacturing industry.

                                      F-8

<PAGE>

                     P.A.M. TRANSPORTATION SERVICES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Compensation to Employees

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

Recent Accounting Pronouncements

   In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities, (SFAS No. 133), which was amended by Statement of
Financial Accounting Standards No. 138, Accounting for Certain Derivative
Instruments and Certain Hedging Activities--an Amendment of FASB Statement No.
133 (SFAS No. 138). SFAS No. 133 establishes accounting and reporting standards
requiring that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the balance sheet as
either an asset or liability measured at its fair value. SFAS No. 133 requires
that changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Companies must formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting. SFAS No. 138 amends the accounting and reporting standards
for certain derivative instruments and certain hedging activities, including
the normal purchases and normal sales exception.

   SFAS No. 133 is effective for fiscal years beginning after June 15, 2000 and
must be applied to (a) derivative instruments and (b) certain derivative
instruments embedded in hybrid contracts that were issued, acquired, or
substantively modified after December 31, 1997 (and, at the company's election,
before January 1, 1998).

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

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

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

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

                                      F-9

<PAGE>

                     P.A.M. TRANSPORTATION SERVICES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

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

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

Reclassifications

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

Use of Estimates

   The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

2.  ACCRUED EXPENSES

<TABLE>
<CAPTION>
                                                        December 31,
                                                        -------------
                                                         2001   2000
                                                        ------ ------
                                                         (thousands)
          <S>                                           <C>    <C>
          Payroll...................................... $1,607 $1,266
          Accrued vacation.............................    911    784
          Taxes........................................  1,575  1,654
          Interest.....................................    159    195
          Driver escrows...............................    803    818
          Insurance....................................  1,852  1,652
          Current portion of non-competition agreements     --    131
          Self-insurance claims reserves...............  1,815  1,574
                                                        ------ ------
                                                        $8,722 $8,074
                                                        ====== ======
</TABLE>

                                     F-10

<PAGE>

                     P.A.M. TRANSPORTATION SERVICES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


3.  LONG-TERM DEBT

   Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                                 December 31,
                                                                                ---------------
                                                                                 2001    2000
                                                                                ------- -------
                                                                                  (thousands)
<S>                                                                             <C>     <C>
Equipment financings (1)....................................................... $32,883 $47,496
Line of credit with a bank, due May 31, 2003 and collateralized by accounts
  receivable (2)...............................................................   9,076   4,127
Line of credit with a bank, due November 30, 2003 and collateralized by revenue
  equipment (3)................................................................  20,000   5,000
Note payable (4)...............................................................   1,810   2,602
Other (5)......................................................................     946     601
                                                                                ------- -------
                                                                                 64,715  59,826
Less current maturities........................................................  17,692  17,753
                                                                                ------- -------
                                                                                $47,023 $42,073
                                                                                ======= =======
</TABLE>
- --------
(1) Equipment financings consist of installment obligations for revenue and
    service equipment purchases, payable in various monthly installments
    through 2005, at a weighted average interest rate of 6.32% and
    collateralized by equipment with a net book value of approximately $41.9
    million at December 31, 2001.
(2) The line of credit agreement with a bank provides for maximum borrowings of
    $20.0 million and contains certain restrictive covenants that must be
    maintained by the Company on a consolidated basis. Borrowings on the line
    of credit are at an interest rate of LIBOR as of the first day of the month
    plus 1.40%. The Company was in compliance with all provisions of the
    agreement at December 31, 2001.
(3) The line of credit agreement with a bank provides for maximum borrowings of
    $20.0 million and contains certain restrictive covenants that must be
    maintained by the Company on a consolidated basis. Borrowings on the line
    of credit are at an interest rate of LIBOR as of the last day of the
    previous month plus 1.15%. The Company was in compliance with all
    provisions of the agreement at December 31, 2001.
(4) 6.0% note to the former owner of Decker Transport Company, Inc., payable in
    monthly installments of $77,216 through January 2004 and secured by a
    letter of credit from a bank in the amount of $1,300,000.
(5) Various notes with interest rates ranging from 6.0% to 8.0% payable in
    monthly installments through December 2005.

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

<TABLE>
<CAPTION>
                                     (thousands)
                                <S>  <C>
                                2002   $17,692
                                2003    40,379
                                2004     4,140
                                2005     2,504
                                2006        --
                                       -------
                                       $64,715
                                       =======
</TABLE>

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


                                     F-11

<PAGE>

                     P.A.M. TRANSPORTATION SERVICES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


4.  INCOME TAXES

   Under SFAS No. 109, deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the carrying amounts for income tax
purposes.

   Significant components of the Company's deferred tax liabilities and assets
are as follows:

<TABLE>
<CAPTION>
                                                       December 31,
                                                      ---------------
                                                       2001    2000
                                                      ------- -------
                                                        (thousands)
           <S>                                        <C>     <C>
           Deferred tax liabilities:
              Property and equipment................. $32,863 $29,301
              Prepaid expenses.......................   1,975   1,722
                                                      ------- -------
                  Total deferred tax liabilities.....  34,838  31,023
           Deferred tax assets:
              Alternative minimum tax credit.........   3,345   4,785
              Investment credit carryovers...........      --     355
              Allowance for doubtful accounts........     575     249
              Vacation reserves......................     346     297
              Self-insurance reserves................   1,396   1,225
              Non-competition agreement..............     505     515
              Other..................................     461     200
                                                      ------- -------
                  Total deferred tax assets..........   6,628   7,626
                                                      ------- -------
           Net deferred tax liabilities.............. $28,210 $23,397
                                                      ======= =======
</TABLE>

   The reconciliation between the effective income tax rate and the statutory
Federal income tax rate is presented in the following table:

<TABLE>
<CAPTION>
                                                    Year ended December 31,
                                                    ----------------------
                                                     2001    2000    1999
                                                    ------  ------  ------
                                                          (thousands)
    <S>                                             <C>     <C>     <C>
    Income tax at the statutory Federal rate of 34% $5,709  $4,879  $6,394
    Nondeductible expenses.........................    338     311     330
    State income taxes.............................    (98)   (195)    (82)
    Other..........................................   (130)   (336)   (255)
                                                    ------  ------  ------
    Federal income taxes...........................  5,819   4,659   6,387
    State income taxes.............................    902   1,035   1,149
                                                    ------  ------  ------
    Total income taxes............................. $6,721  $5,694  $7,536
                                                    ======  ======  ======
    Effective tax rate.............................   40.0%   39.7%   40.1%
                                                    ======  ======  ======
</TABLE>

                                     F-12

<PAGE>

                     P.A.M. TRANSPORTATION SERVICES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The current income tax provision consists of the following:

<TABLE>
<CAPTION>
                                2001     2000     1999
                               ------   ------   ------
                                   (thousands)
                       <S>     <C>      <C>      <C>
                       Federal $  951   $  656   $1,866
                       State..    350      400      241
                               ------   ------   ------
                               $1,301   $1,056   $2,107
                               ======   ======   ======
</TABLE>

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

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

5.  SHAREHOLDERS' EQUITY

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

   Outstanding incentive stock options at December 31, 2001, must be exercised
within six years from the date of grant and vest in increments of 20% each
year. Outstanding nonqualified stock options at December 31, 2001 must be
exercised within five to six years and certain nonqualified options may not be
exercised within one year of the date of grant.

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

<TABLE>
<CAPTION>
                                                   Shares
                                                Under Option Price Range
                                                ------------ ------------
       <S>                                      <C>          <C>
       Outstanding at December 31, 1998........    326,050   $2.38-$10.63
          Granted..............................     55,000   $8.63-$10.25
          Exercised............................   (115,000)  $2.38-$6.00
          Canceled.............................     (1,050)  $2.38
                                                  --------   ------------
       Outstanding at December 31, 1999........    265,000   $5.75-$10.63
          Granted..............................     10,000   $9.13
          Exercised............................    (29,700)  $5.75-$6.75
          Canceled.............................     (5,000)  $7.38-$9.13
                                                  --------   ------------
       Outstanding at December 31, 2000........    240,300   $5.75-$10.63
          Granted..............................      8,000   $8.25
          Exercised............................   (142,300)  $5.75-$7.38
          Canceled.............................     (1,000)  $7.38
                                                  --------   ------------
       Outstanding at December 31, 2001........    105,000   $6.00-$10.63
                                                  ========   ============
       Options exercisable at December 31, 2001     81,000
                                                  ========
</TABLE>

                                     F-13

<PAGE>

                     P.A.M. TRANSPORTATION SERVICES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


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

<TABLE>
<CAPTION>
                                        Weighted
                                Option   Average
                     Options   Exercise Remaining   Options
                   Outstanding  Price     Years   Exercisable
                   ----------- -------- --------- -----------
                   <S>         <C>      <C>       <C>
                      2,000     $ 6.50      .4       2,000
                      1,000     $ 6.00     1.2       1,000
                      3,000     $10.63     2.2       3,000
                     30,000     $ 9.25     2.5      24,000
                      8,000     $ 8.63     3.2       8,000
                     45,000     $10.25     3.6      27,000
                      8,000     $ 9.13     4.2       8,000
                      8,000     $ 8.25     5.2       8,000
                     -------                        ------
                    105,000                         81,000
                     =======                        ======
</TABLE>

   The Company adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation ("SFAS
No. 123"). Accordingly, no compensation cost has been recognized for the stock
option plans. Had compensation cost for the Company's stock option plans been
determined consistent with the provisions of SFAS No. 123, the Company's net
income and earnings per share would have been reduced to the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
                                              2001    2000   1999
             -                               ------- ------ -------
                                                  (thousands)
             <S>                             <C>     <C>    <C>
             Net income:
                As reported................. $10,071 $8,658 $11,269
                Pro forma................... $10,023 $8,542 $11,076
             Earnings per share as reported:
                Basic....................... $  1.18 $ 1.02 $  1.34
                Diluted..................... $  1.18 $ 1.02 $  1.33
             Pro forma earnings per share:
                Basic....................... $  1.18 $ 1.01 $  1.32
                Diluted..................... $  1.18 $ 1.00 $  1.31
</TABLE>

   The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted average
assumptions used during the periods above: dividend yield of 0%; expected
volatility range of 31.63% to 76.64%; risk-free interest rate range of 4.74% to
7.02%; and expected lives of five years.

                                     F-14

<PAGE>

                     P.A.M. TRANSPORTATION SERVICES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


6.  EARNINGS PER SHARE

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

<TABLE>
<CAPTION>
                                            For the Year Ended
                                            December 31, 2001
                                         ------------------------
                                                        Per Share
                                         Income  Shares  Amount
                                         ------- ------ ---------
                                            (thousands, except
                                             per share data)
              <S>                        <C>     <C>    <C>
              Basic earnings per share
                 Net income............. $10,071 8,522    $1.18
                 Options issued.........            28
              Diluted earnings per share
                 Net income............. $10,071 8,550    $1.18
</TABLE>

<TABLE>
<CAPTION>
                                            For the Year Ended
                                             December 31, 2000
                                          -----------------------
                                                        Per Share
                                          Income Shares  Amount
                                          ------ ------ ---------
                                            (thousands, except
                                              per share data)
               <S>                        <C>    <C>    <C>
               Basic earnings per share
                  Net income............. $8,658 8,455    $1.02
                  Options issued.........           63
               Diluted earnings per share
                  Net income............. $8,658 8,518    $1.02
</TABLE>

<TABLE>
<CAPTION>
                                            For the Year Ended
                                            December 31, 1999
                                         ------------------------
                                                        Per Share
                                         Income  Shares  Amount
                                         ------- ------ ---------
                                            (thousands, except
                                             per share data)
              <S>                        <C>     <C>    <C>
              Basic earnings per share
                 Net income............. $11,269 8,393    $1.34
                 Options issued.........            95
              Diluted earnings per share
                 Net income............. $11,269 8,488    $1.33
</TABLE>

7.  PROFIT SHARING PLAN

   P.A.M. Transport, Inc. sponsors a profit sharing plan for the benefit of all
eligible employees. The plan qualifies under Section 401(k) of the Internal
Revenue Code thereby allowing eligible employees to make tax deductible
contributions to the plan. The plan provides for employer matching
contributions of 50% of each participant's voluntary contribution up to 3% of
the participant's compensation. Total employer matching contributions to the
plan totaled approximately $225,000, $255,000 and $200,000 in 2001, 2000 and
1999, respectively.

                                     F-15

<PAGE>

                     P.A.M. TRANSPORTATION SERVICES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


8.  COMMITMENTS AND CONTINGENCIES

   The Company is not a party to any pending legal proceedings which management
believes to be material to the financial position or results of operations of
the Company. The Company maintains liability insurance against risks arising
out of the normal course of its business.

9.  FAIR VALUE OF FINANCIAL INSTRUMENTS

   The following methods and assumptions were used by the Company in estimating
fair value disclosures for financial instruments:

   Cash and cash equivalents--The carrying amount reported in the balance sheet
for cash and cash equivalents approximates fair value.

   Long-term debt--The fair values of the Company's long-term debt are
estimated using discounted cash flow analyses, based on the Company's current
incremental borrowing rates for similar types of borrowing arrangements.

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

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

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

<TABLE>
<CAPTION>
                                          2001             2000
                                    ---------------- ----------------
                                    Carrying  Fair   Carrying  Fair
                                     Amount   Value   Amount   Value
                                    -------- ------- -------- -------
          <S>                       <C>      <C>     <C>      <C>
          Cash and cash equivalents $   896  $   896 $   485  $   485
          Long-term debt...........  35,639   35,583  50,699   50,305
          Lines of credit..........  29,076   29,076   9,127    9,127
          Interest hedges..........     847      847      --       --
</TABLE>

10.  DERIVATIVES AND HEDGING ACTIVITIES

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

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

                                     F-16

<PAGE>

                     P.A.M. TRANSPORTATION SERVICES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

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

11.  SUBSEQUENT EVENTS

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

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

12.  QUARTERLY RESULTS OF OPERATIONS (Unaudited)

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

<TABLE>
<CAPTION>
                                                       2001
                                                Three Months Ended
                                     -----------------------------------------
                                     March 31 June 30 September 30 December 31
                                     -------- ------- ------------ -----------
                                        (thousands, except per share data)
  <S>                                <C>      <C>     <C>          <C>
  Operating revenues................ $58,406  $57,462   $53,662      $56,264
  Operating expenses................  52,861   51,502    49,192       50,970
                                     -------  -------   -------      -------
  Operating income..................   5,545    5,960     4,470        5,294
  Other expenses--net...............   1,147    1,159     1,148        1,023
  Income taxes......................   1,759    1,916     1,320        1,726
                                     -------  -------   -------      -------
  Net income........................ $ 2,639  $ 2,885   $ 2,002      $ 2,545
                                     =======  =======   =======      =======
  Net income per common share:
     Basic.......................... $   .31  $   .34   $   .23      $   .30
                                     =======  =======   =======      =======
     Diluted........................ $   .31  $   .34   $   .23      $   .30
                                     =======  =======   =======      =======
  Average common shares outstanding:
     Basic..........................   8,474    8,484     8,525        8,607
                                     =======  =======   =======      =======
     Diluted........................   8,519    8,526     8,537        8,617
                                     =======  =======   =======      =======
</TABLE>

                                     F-17

<PAGE>

                     P.A.M. TRANSPORTATION SERVICES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


<TABLE>
<CAPTION>
                                                       2000
                                                Three Months Ended
                                     -----------------------------------------
                                     March 31 June 30 September 30 December 31
                                     -------- ------- ------------ -----------
                                        (thousands, except per share data)
  <S>                                <C>      <C>     <C>          <C>
  Operating revenues................ $54,147  $53,034   $47,100      $50,964
  Operating expenses................  49,253   46,965    43,749       45,878
                                     -------  -------   -------      -------
  Operating income..................   4,894    6,069     3,351        5,086
  Other expenses--net...............   1,354    1,368     1,184        1,142
  Income taxes......................   1,412    1,881       823        1,578
                                     -------  -------   -------      -------
  Net income........................ $ 2,128  $ 2,820   $ 1,344      $ 2,366
                                     =======  =======   =======      =======
  Net income per common share:
     Basic.......................... $   .25  $   .33   $   .16      $   .28
                                     =======  =======   =======      =======
     Diluted........................ $   .25  $   .33   $   .16      $   .28
                                     =======  =======   =======      =======
  Average common shares outstanding:
     Basic..........................   8,440    8,444     8,465        8,470
                                     =======  =======   =======      =======
     Diluted........................   8,515    8,515     8,525        8,520
                                     =======  =======   =======      =======
</TABLE>

                                     F-18

<PAGE>

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

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

                                  PROSPECTUS

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



                                 Stephens Inc.


                             BB&T Capital Markets


                           A.G. Edwards & Sons, Inc.



                                         , 2002


<PAGE>

                                    PART II

                    INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.  Other Expenses of Issuance and Distribution

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


<TABLE>
<CAPTION>
                     SEC Registration Fee........ $  6,101
                     <S>                          <C>
                     NASD Filing Fee............. $  7,132
                     Accounting Fees and Expenses $ 40,000
                     Legal Fees and Expenses..... $150,000
                     Printing Expenses........... $ 60,000
                     Miscellaneous............... $ 21,767
                                                  --------
                          Total.................. $285,000
                                                  ========
</TABLE>


Item 15.   Indemnification of Directors and Officers

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

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

Item 16.  Exhibits

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

Item 17.  Undertakings

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

                                     II-1

<PAGE>

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

   The undersigned registrant hereby undertakes that:

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

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


                                     II-2

<PAGE>

                                  SIGNATURES


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


                                          P.A.M. TRANSPORTATION SERVICES, INC.

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

                                                  /s/  LARRY J. GODDARD
                                          By: _______________________________
                                                    Larry J. Goddard
                                             Vice President--Finance, Chief
                                                   Financial Officer,
                                                 Secretary and Treasurer
                                           (principal financial and accounting
                                                        officer)




   Pursuant to the requirements of the Securities Exchange Act of 1934, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant in the capacities and on the dates indicated:

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

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

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

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

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

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

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



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


<PAGE>

                                 EXHIBIT INDEX

   The following exhibits are filed with or incorporated by reference into this
report. The exhibits denominated by an asterisk (*) were previously filed as a
part of, and are hereby incorporated by reference from either:

      (i) the Form S-1 Registration Statement under the Securities Act of 1933,
   as filed with the Securities and Exchange Commission on July 30, 1986,
   Registration No. 33-7618, as amended on August 8, 1986, September 3, 1986
   and September 10, 1986 ("S-1");

      (ii) the Annual Report on Form 10-K for the year ended December 31, 1987
   ("1987 10-K");

      (iii) the Annual Report on Form 10-K for the year ended December 31, 1992
   ("1992 10-K");


      (iv) the Annual Report on Form 10-K for the year ended December 31, 1996
   ("1996 10-K");



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



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



<TABLE>
<CAPTION>
Exhibit #                                     Description of Exhibit
- --------- ----------------------------------------------------------------------------------------------
<C>       <S>

       1  Form of Underwriting Agreement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    23.1  Consent of Arthur Andersen LLP

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

    24.1  Powers of Attorney (previously filed)
</TABLE>


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-1
<SEQUENCE>3
<FILENAME>dex1.txt
<DESCRIPTION>FORM OF UNDERWRITING AGREEMENT
<TEXT>
<PAGE>


                                                                      EXHIBIT 1


                      P.A.M. TRANSPORTATION SERVICES, INC.

                               3,475,000 SHARES*
                                  Common Stock

                                ($0.01 par value)

                             UNDERWRITING AGREEMENT

                                                               ___________, 2002

STEPHENS INC., BB&T CAPITAL MARKETS
  and A. G. EDWARDS & SONS, INC.
  As Representatives of the several
  Underwriters named in Schedule II hereto.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas  72201

Gentlemen:

         P.A.M. Transportation Services, Inc., a Delaware corporation (the
"Company"), and the individuals whose names appear on Schedule I hereto,
designated as selling stockholders (collectively, the "Selling Stockholders"),
severally and not jointly, confirm their agreement with the several underwriters
(the "Underwriters") for whom you are acting as representatives (the
"Representatives") as follows:

         The Company proposes to issue and sell 2,100,000 shares of its
authorized and unissued shares of common stock, par value $0.01 per share, to
the several Underwriters (the "Company Shares"), and the Selling Stockholders,
acting severally and not jointly, propose to sell an aggregate of 1,375,000
shares of the authorized and outstanding shares of the Company's common stock,
par value $0.01 per share, to the several Underwriters (the "Selling
Stockholders Shares"). The Company Shares and the Selling Stockholders Shares
are hereinafter collectively referred to as the "Underwritten Shares." The
Company and the Selling Stockholders are sometimes referred to collectively
herein as "Sellers." The respective amounts of Underwritten Shares to be
initially sold by each of the Sellers is set forth on Schedule I attached
hereto. The Company's common stock is more fully described in the Registration
Statement and the Prospectus hereinafter mentioned.

         For the sole purpose of covering over-allotments in connection with the
sale of the Underwritten Shares, the Company shall grant to the Underwriters the
option (the "Option") described in Section 2 hereof to purchase all or any part
of an additional 521,250 shares of the Company's common stock (the "Option
Shares"). The Underwritten Shares and the Option Shares purchased pursuant to
this Underwriting


- -------------------------
*Plus up to 521,250 additional shares of common stock to cover over-allotments.

<PAGE>

Agreement (this "Agreement") are herein called the "Shares" and the proposed
offering of the Shares by the Underwriters is hereinafter referred to as the
"Public Offering."

         The Company has filed with the Securities and Exchange Commission (the
"Commission"), pursuant to the Securities Act of 1933, as amended (the "Act"),
and published rules and regulations adopted by the Commission under the Act (the
"Rules"), a registration statement on Form S-2 ("Form S-2") (File No.
333-83084), including a Preliminary Prospectus, relating to the Shares, and such
amendments to such registration statement as may have been filed with the
Commission to the date of this Agreement. The Company will also file with the
Commission one of the following: (A) prior to effectiveness of such registration
statement, a further amendment to such registration statement, including the
form of final prospectus, and/or (B) after effectiveness of such registration
statement, a final prospectus in accordance with Rules 430A and 424(b). The
Company has furnished to the Representatives copies of such registration
statement, each amendment to it filed by the Company with the Commission, and
each Preliminary Prospectus filed by the Company with the Commission. The
registration statement as amended at the time it becomes or became effective
(the "Effective Date"), including financial statements and all exhibits and any
information deemed to be included by Rule 430A, is called the "Registration
Statement." The term "Preliminary Prospectus" means any Preliminary Prospectus
(as referred to in Rule 430 or Rule 430A of the Rules) included at any time as a
part of the registration statement and the term "Prospectus" means the
prospectus relating to the Shares that is first filed pursuant to Rule 424(b)
after the date hereof.

         Any reference herein to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any
documents incorporated by reference therein on or before the Effective Date or
the date of such Preliminary Prospectus or the Prospectus, as the case may be
(the "Incorporated Documents"), and shall be deemed to refer to and include any
documents incorporated by reference therein filed after the date of such
Registration Statement, any Preliminary Prospectus or the Prospectus.

         As the Representatives, you have advised the Company that (a) you are
authorized to enter into this Agreement on behalf of the several Underwriters
and (b) the Underwriters are willing, acting severally and not jointly, to
purchase the amounts of the Underwritten Shares set forth opposite their
respective names in Schedule II hereto, plus their pro rata portion of the
Option Shares if you elect to exercise the over-allotment Option in whole or in
part for the accounts of the several Underwriters.

         In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the Company,
the Selling Stockholders and the Underwriters hereby agree as follows:

         1.   Representations, Warranties and Agreements

              (a) The Company represents and warrants to, and agrees with, each
         Underwriter as follows:

              (i) The Company has been duly organized, is in compliance with
         its Certificate of Incorporation, and is validly existing as a
         corporation in good standing under the laws of the State of Delaware,
         with full corporate power and authority to own its properties and
         conduct its business as described in the Prospectus. Each significant
         subsidiary (as defined by the Act) of the Company (each a "Subsidiary"
         and collectively, the "Subsidiaries") has been duly incorporated and is
         validly existing as a corporation, in good standing under the laws of
         the jurisdiction of its organization, with full corporate power and
         authority to own or lease its properties, and conduct its business. The
         Company and the Subsidiaries are duly qualified to transact business in
         all jurisdictions in which the



                                       2

<PAGE>

         conduct of their business or the ownership or lease of their
         properties requires such qualifications except where the failure to be
         so qualified would not reasonably be expected to have a Material
         Adverse Effect (as defined below). The Company owns all of the
         outstanding capital stock of its Subsidiaries free and clear of any
         pledge, lien, security interest, encumbrance, claim or equitable
         interest.

                  (ii) The outstanding shares of common stock of the Company,
         including the Selling Stockholders Shares, have been duly and validly
         authorized and issued and are fully paid and non-assessable; the Shares
         are duly and validly authorized, and, if not now issued, when issued
         and paid for as contemplated herein, will be fully paid and
         non-assessable. There are no preemptive or other similar rights to
         subscribe for or to purchase, or any restriction upon the voting or
         transfer of the Shares pursuant to the Company's Certificate of
         Incorporation, bylaws, or other governing documents or any agreement or
         other instrument to which the Company or any of its Subsidiaries is a
         party or by which any of them may be bound. Neither the filing of the
         Registration Statement nor the offering of the Shares as contemplated
         by this Agreement gives rise to any rights, other than those which have
         been waived or satisfied, for or relating to the registration of any
         shares of any class of the Company's capital stock. The Company Shares
         have been approved for listing on the Nasdaq National Market, subject
         to official notice of issuance.

                  (iii) The Shares conform in all material respects with the
         statements concerning them in the Prospectus. As of the Closing Date
         (as defined below) and any Option Closing Date (as defined below), if
         applicable, the Company will have the authorized capital stock set
         forth under the caption "Description of Capital Stock" in the
         Prospectus. No further corporate approval or authority on behalf of the
         Company will be required for the issuance and sale of the Shares to be
         sold by the Company as contemplated herein.

                  (iv) Any Preliminary Prospectus, the Prospectus and the
         Registration Statement comply as to form with the requirements of the
         Act and the Rules, including Form S-2. The Company meets the
         requirements of, and is entitled to use, Form S-2 for the Public
         Offering.

                  (v) Neither the Commission nor any other agency, body,
         authority, court or arbitrator of competent jurisdiction has, by order
         or otherwise, prohibited or suspended the use of any Preliminary
         Prospectus or the Prospectus relating to the proposed offering of the
         Shares or, to the Company's knowledge, instituted proceedings for that
         purpose. The Registration Statement, the Prospectus and any amendments
         or supplements thereto at the time they became or become effective or
         were filed or are filed with the Commission contained or will contain
         all statements which are required to be stated therein by, and in all
         material respects conformed or will conform to the requirements of, the
         Act and the Rules. Neither the Registration Statement nor any amendment
         thereto, and neither the Prospectus nor any supplement thereto, as of
         its date and while effective, contained any untrue statement of a
         material fact or omitted to state any material fact required to be
         stated therein or necessary to make the statements therein, in light of
         the circumstances under which they were made, not misleading; provided,
                                                                       --------
         however, that the Company does not make any representations or
         -------
         warranties as to information contained in or omitted from the
         Registration Statement or the Prospectus, or any such amendment or
         supplement, in reliance upon, and in conformity with, written
         information furnished to the Company by or on behalf of any Underwriter
         through the Representatives, expressly for use in the preparation
         thereof as hereinafter set forth in Section 13.



                                       3


<PAGE>

                  (vi) The documents which are incorporated by reference in the
         Registration Statement, any Preliminary Prospectus or the Prospectus or
         from which information is so incorporated by reference, when they were
         filed (or, if any amendment with respect to such document was filed,
         when such amendment was filed) with the Commission complied in all
         material respects with the requirements of the Exchange Act, and the
         rules and regulations thereunder and any documents so filed and
         incorporated by reference subsequent to the Effective Date shall, when
         they are so filed with the Commission, conform in all material respects
         with the requirements of the Exchange Act and the rules and regulations
         thereunder.

                  (vii) The consolidated financial statements of the Company and
         the Subsidiaries, together with related notes and schedules, as set
         forth or incorporated by reference in the Registration Statement,
         present fairly the consolidated financial condition and the results of
         operations of the Company and the Subsidiaries, at the indicated dates
         and for the indicated periods. Such financial statements have been
         prepared in accordance with generally accepted accounting principles
         ("GAAP"), consistently applied throughout the periods involved, and all
         adjustments necessary for a fair presentation of results for such
         periods have been made. The summary financial information and the
         selected financial data included in the Prospectus present fairly in
         accordance with GAAP the information shown therein and have been
         compiled on a basis consistent with that of the audited and unaudited
         financial statements from which they were derived.

                  (viii) Except as is disclosed in the Prospectus, there is no
         action or proceeding pending or, to the knowledge of the Company,
         threatened against the Company, any of its Subsidiaries or any of their
         respective officers or any of their properties, assets or rights before
         any court or administrative or governmental agency or other body which
         reasonably would be expected to (A) result in any material adverse
         change in the financial condition, or in the earnings, business,
         affairs, properties, business prospects or results of operations of the
         Company and its Subsidiaries taken as a whole ("Material Adverse
         Change" or "Material Adverse Effect," as the case may be), whether or
         not arising in the ordinary course of business, (B) adversely affect
         the performance of this Agreement or the consummation of the
         transactions herein contemplated, except as disclosed in the Prospectus
         and for which the Company maintains a reserve in an amount which it
         believes is adequate to cover potential liabilities, or (C) be required
         to be disclosed in the Registration Statement.

                  (ix) The Company and each of its Subsidiaries are not in
         violation of any law, ordinance, governmental rule or regulation or
         court decree to which they may be subject which violation reasonably
         would be expected to have a Material Adverse Effect.

                  (x) The Company and its Subsidiaries have (A) to the best of
         the Company's knowledge, good and marketable title to all of the real
         properties and (B) valid title to all other assets reflected in the
         consolidated financial statements hereinabove described or as described
         in the Prospectus as being owned by them, subject to no lien, mortgage,
         pledge, charge or encumbrance of any kind except those securing
         indebtedness described in such financial statements or as described in
         the Prospectus or which do not materially affect the present or
         proposed use of such properties or assets or would not cause a Material
         Adverse Effect. The Company and its Subsidiaries occupy their leased
         properties under valid, subsisting and binding leases with only such
         exceptions as in the aggregate are not material and do not interfere
         with the conduct of the business of the Company and its Subsidiaries.
         There exists no default by the Company, or to the Company's knowledge,
         of any other

                                       4


<PAGE>

         party, under the provisions of any lease, contract or other
         obligation to which the Company is a party which may result in a
         Material Adverse Change.

                  (xi) The Company and its Subsidiaries have filed all federal,
         state and other tax returns and reports which have been required to be
         filed and have paid all taxes indicated by said returns and all
         assessments received by them to the extent that such taxes have become
         due and there is no tax deficiency that has been or, to the Company's
         knowledge, might be asserted against the Company or any of its
         Subsidiaries that might have a Material Adverse Effect. All material
         tax liabilities are adequately provided for on the books of the Company
         and its Subsidiaries.

                  (xii) Since the respective dates as of which information is
         given in the Registration Statement and the Prospectus, as they may be
         amended or supplemented, and except as set forth in the Registration
         Statement, (A) there has not been any Material Adverse Change nor, to
         the knowledge of the Company, is any such change threatened, (B) there
         has not been any transaction entered into by the Company or its
         Subsidiaries that is material to the earnings, business, affairs,
         properties, business prospects or operations of the Company and its
         Subsidiaries taken as a whole, other than transactions in the ordinary
         course of business and changes and transactions contemplated by the
         Registration Statement and the Prospectus, as they may be amended or
         supplemented, (C) other than changes in the amounts outstanding under
         the Company's and its Subsidiaries' revolving credit facilities, there
         has not been any material change in the capital stock, long-term debt
         or material liabilities of the Company or its Subsidiaries, and (D)
         there has not been any dividend or distribution of any kind declared,
         paid or made on the capital stock of the Company. Neither the Company
         nor any Subsidiary has any contingent obligations or liabilities which
         are required to be but are not disclosed in the Registration Statement
         and the Prospectus.

                  (xiii) The filing of the Registration Statement and related
         Prospectus and the execution and delivery of this Agreement have been
         duly authorized by the Board of Directors of the Company; this
         Agreement constitutes a valid and binding obligation of the Company
         enforceable in accordance with its terms except as enforceability may
         be limited by bankruptcy, insolvency, fraudulent conveyance,
         reorganization, moratorium and other laws affecting creditors' rights
         generally and by general principles of equity and federal and state
         securities laws. Neither the Company nor any of its Subsidiaries is in
         breach or violation of or default under any indenture, mortgage, deed
         of trust, lease, contract, note or other agreement or instrument to
         which it is a party or by which it or any of its properties is bound
         and which breach, violation or default would reasonably be expected to
         have a Material Adverse Effect. The consummation of the transactions
         herein contemplated and the fulfillment of the terms hereof will not
         result in a breach or violation of any of the material terms and
         provisions of, or constitute a default under, any indenture, mortgage,
         deed of trust, lease, contract, note or other agreement or instrument
         to which the Company or any Subsidiary is a party, or of the Company's
         or any Subsidiary's Certificate of Incorporation or bylaws or any law,
         decree, order, rule, writ, injunction or regulation applicable to the
         Company or any Subsidiary of a court or of any regulatory body or
         administrative agency or other governmental body having jurisdiction
         over the Company and its Subsidiaries except for such breaches,
         violations or defaults as would not reasonably be expected to have a
         Material Adverse Effect.

                  (xiv) Each approval, consent, order, authorization,
         designation, declaration or filing by or with any regulatory,
         administrative or other governmental body necessary in

                                       5


<PAGE>

         connection with the execution and delivery by the Company of this
         Agreement and performance of its obligations hereunder (except such
         additional steps as may be necessary to qualify the Shares for public
         offering by the Underwriters under state securities or Blue Sky laws,
         and filing the Prospectus under Rule 424(b)) has been obtained or made
         and is in full force and effect.

                  (xv) The Company and each Subsidiary hold all material
         licenses, authorizations, charters, certificates and permits from
         governmental authorities which are necessary to the conduct of their
         businesses, except where the failure to hold any such licenses,
         authorizations, charters, certificates or permits would not reasonably
         be expected to result in a Material Adverse Effect, and neither the
         Company nor any Subsidiary has received notice of any proceeding
         relating to the revocation or modification of any of such licenses,
         authorizations, charters, certificates or permits. The Company and its
         Subsidiaries own or otherwise possess rights to the patents, patent
         rights, licenses, inventions, copyrights, trademarks, service marks and
         trade names presently employed by them in connection with the
         businesses now operated by them as described in the Prospectus, and
         neither the Company nor any of its Subsidiaries has infringed or
         received any notice of infringements of or conflict with asserted
         rights of others with respect to any of the foregoing, except where
         such infringement or conflict would not reasonably be expected to
         result in a Material Adverse Effect.

                  (xvi) Arthur Andersen, LLP, independent auditors, who have
         certified certain of the financial statements filed with the Commission
         and incorporated by reference in the Registration Statement and
         Prospectus, are independent public accountants within the meaning of
         the Act, the Rules and Regulation S-X of the Commission and Rule 101 of
         the Code of Professional Ethics of the American Institute of Certified
         Public Accountants.

                  (xvii) There are no agreements, contracts or other documents
         of a character required to be described in the Registration Statement
         or the Prospectus or required by Form S-2 to be filed as exhibits to
         the Registration Statement or incorporated by reference in the
         Registration Statement which are not described, filed or incorporated
         as required.

                  (xviii) No labor dispute is pending or, to the knowledge of
         the Company, threatened by the Company's or any Subsidiary's employees
         which could result in a Material Adverse Effect. No collective
         bargaining agreement exists with any of the Company's employees and, to
         the Company's knowledge, no agreement is imminent.

                  (xix) Except as contemplated by Section 2 hereof and as
         disclosed in the Prospectus and permitted by the Rules, the Company has
         not (itself or through any person) taken and will not take, directly or
         indirectly, any action designed to or which might reasonably be
         expected to, cause or result in a violation of Section 5 of the Act or
         Regulation M under the Act or in stabilization or manipulation of the
         price of the Company's common stock.

                  (xx) Without limiting the generality of any of the foregoing
         representations and warranties and except to the extent no Material
         Adverse Effect would reasonably be expected to occur, (a) none of the
         operations of the Company or its Subsidiaries is in violation of any
         material environmental law, regulation or any permit; (b) neither the
         Company nor any of its Subsidiaries has been notified that it is under
         investigation or under review by any governmental agency with respect
         to compliance therewith or with respect to the generation, use,
         treatment, storage or release of hazardous material; (c) neither the

                                       6


<PAGE>

         Company nor any of its Subsidiaries have any material liability in
         connection with the past generation, use, treatment, storage, disposal
         or release of any hazardous material; (d) there is no hazardous
         material that may reasonably be expected to pose any material risk to
         safety, health, or the environment, on, under or about any property
         owned, leased or operated by the Company or any of its Subsidiaries or,
         to the knowledge of the Company, any property adjacent to any such
         property; and (e) there has heretofore been no release of any hazardous
         material on, under or about such property, or, to the knowledge of the
         Company, any such adjacent property. None of the present or, to the
         knowledge of the Company, past property of the Company or any of its
         Subsidiaries is listed or proposed for listing on the National
         Priorities List pursuant to the Comprehensive Environmental Response,
         Compensation and Liability Act of 1980, as amended ("CERCLA"), or on
         the Comprehensive Environmental Response Compensation Liability
         Information System List ("CERCLIS") or any similar state list of sites
         requiring remedial action. Neither the Company nor any of its
         Subsidiaries is subject to any state Environmental Property Transfer
         Act, or to the extent that any such statute is applicable to any
         property, the Company and its Subsidiaries have fully complied with
         their obligations under such statute(s), and neither has any
         outstanding obligations or liabilities under any state Environmental
         Property Transfer Act.

                  (xxi) The Company and its Subsidiaries maintain insurance of
         the types and in the amounts customary for their businesses, including,
         but not limited to, insurance covering liability and real and personal
         property owned or leased by the Company against theft, damage,
         destruction, acts of vandalism and all other risks customarily insured
         against, all of which insurance is in full force and effect.

                  (xxii) Neither the Company nor any Subsidiary has at any time
         during the last five years (a) made any unlawful contribution to any
         candidate for foreign office, or failed to disclose fully any
         contribution in violation of law, or (b) made any payment to any
         federal or state governmental officer or official, or other person
         charged with similar public or quasi-public duties, other than payments
         required or permitted by the laws of the United States or any
         jurisdiction thereof.

                  (xxiii) Each executive officer or director of the Company who
         is not a Selling Stockholder has executed a lock-up agreement, a form
         of which is attached hereto as Exhibit "A" (the "Lock-Up Agreement").

                  (b)  Each Selling Stockholder, severally and not jointly,
         represents and warrants as follows:

                  (i) Such Selling Stockholder has duly executed and delivered a
         power of attorney (individually, a "Power of Attorney" and with all
         other powers of attorney, collectively the "Powers of Attorney"), in
         the form heretofore delivered to the Representatives, appointing the
         person named therein as such Selling Stockholder's attorney-in-fact
         (the "Attorney-in-Fact") with authority to perform this Agreement on
         behalf of such Selling Stockholder. Certificates in negotiable form for
         the Shares to be sold by such Selling Stockholder hereunder have been
         delivered to the Company's transfer agent for the purpose of delivery
         pursuant to this Agreement. All authorizations, orders and consents
         necessary for the execution and delivery by such Selling Stockholder of
         this Agreement and the Power of Attorney have been duly and validly
         given, and such Selling Stockholder has full legal right, power and
         authority to enter into this Agreement and the Power of Attorney and to
         sell, assign, transfer and deliver to the several Underwriters the

                                       7


<PAGE>

         Shares to be sold by such Selling Stockholder hereunder. Such Selling
         Stockholder agrees that the Shares to be sold by such Selling
         Stockholder that are represented by the certificates delivered to the
         transfer agent are for the benefit of, coupled with and subject to the
         interests of the Underwriters hereunder, that the arrangements made for
         the appointment of the Attorney-in-Fact are to that extent irrevocable,
         and that the obligations of such Selling Stockholder hereunder shall
         not be terminated except as provided in this Agreement or the Power of
         Attorney, by any act of such Selling Stockholder, by operation of law
         or otherwise, whether by death or incapacity or by the occurrence of
         any other event. If such Selling Stockholder should die or become
         incapacitated or if any other event shall occur before delivery of
         Shares to be sold by such Selling Stockholder hereunder, the
         certificates for such Shares delivered to the transfer agent shall be
         delivered by the transfer agent in accordance with this Agreement as if
         such death, incapacity or other event had not occurred, regardless of
         whether the transfer agent or the Attorney-in-Fact shall have received
         notice thereof.

                  (ii) Such Selling Stockholder will have at the Closing (as
         such date is hereinafter defined) good and valid title to the portion
         of the Shares to be sold by such Selling Stockholder, free of any
         liens, encumbrances, equities and claims, and full right, power and
         authority to effect the sale and delivery of such Shares; and upon the
         delivery of and payment for such Shares pursuant to this Agreement,
         good and valid title thereto, free of any liens, encumbrances, equities
         and claims, will be transferred to the several Underwriters.

                  (iii) The consummation by such Selling Stockholder of the
         transactions herein contemplated and the fulfillment of the terms
         hereof will not result in a breach of any of the terms and provisions
         of, or constitute a default under, any indenture, mortgage, deed of
         trust or other agreement or instrument to which such Selling
         Stockholder is a party, or of any order, rule or regulation applicable
         to such Selling Stockholder of any court, or of any regulatory body or
         administrative agency or other governmental body having jurisdiction.

                  (iv) Such Selling Stockholder has not taken and will not take
         for a period of 180 days following the date hereof, directly or
         indirectly, any action designed to, or which has constituted, or which
         might reasonably be expected to cause or result in stabilization or
         manipulation of the price of the common stock of the Company.

                  (v) Such Selling Stockholder has not distributed and will not
         distribute any prospectus or other offering material in connection with
         the offering and sale of the Shares other than the Preliminary
         Prospectus and the Prospectus or other material permitted by the Act.

                  (vi) All information furnished to the Company by such Selling
         Stockholder or on such Selling Stockholder's behalf for use in
         connection with the preparation of the Registration Statement and
         Prospectus (including, without limiting the foregoing, all
         representations and warranties of such Selling Stockholder in such
         Selling Stockholder's Power of Attorney) is true and correct and does
         not omit to state any material fact necessary to be stated therein in
         order to make such information not misleading.

                  (vii) Such Selling Stockholder has no reason to believe that
         the representations and warranties of the Company contained in this
         Section 1 are not true and correct, is familiar with the Registration
         Statement and has no knowledge of any material fact, condition or
         information not disclosed in the Prospectus which has adversely
         affected or

                                       8


<PAGE>

         may adversely affect the business of the Company or the Subsidiaries,
         and the sale of the portion of the Shares to by sold by such Selling
         Stockholder pursuant hereto is not prompted by any information
         concerning the Company or the Subsidiaries which is not set forth in
         the Prospectus.

                  (c)  Any certificate signed by any officer of the Company and
         delivered to you or counsel for the Underwriters shall be deemed a
         representation and warranty by the Company to the Underwriters as to
         the matters covered thereby.

         2. Purchase, Sale and Delivery of the Underwritten Shares. On the basis
of the representations, warranties and covenants herein contained, and subject
to the terms and conditions herein set forth, the Company and the Selling
Stockholders, severally and not jointly, agree to sell to each Underwriter, and
each Underwriter agrees, severally and not jointly, to purchase, at a price of
$______ per share, the respective number of the Underwritten Shares set forth
opposite the name of the Company and each Selling Stockholder on Schedule II
attached hereto. The obligation of each Underwriter to the Company and to each
Selling Stockholder shall be to purchase from the Company or such Selling
Stockholder that number of Company Shares or Selling Stockholders Shares, as the
case may be, which (as nearly as practicable, as determined by you) is in the
same proportion to the number of Company Shares or Selling Stockholders Shares,
as the case may be, set forth opposite the name of the Company or such Selling
Stockholder in Schedule I hereto as the number of Underwritten Shares which is
set forth opposite the name of such Underwriter in Schedule II hereto (subject
to adjustment as provided as provided in Section 10 hereof) is to the total
number of Underwritten Shares to be purchased by all of the Underwriters under
this Agreement.

         Payment for the Underwritten Shares shall be made by wire transfer of
immediately available U.S. Funds to designated accounts, to the order of the
Sellers, against delivery of certificates for the Shares to the Representatives
for the accounts of the several Underwriters. Delivery of certificates shall be
to the Representatives c/o Stephens Inc. ("Stephens"), 111 Center Street, Little
Rock, Arkansas 72201, or at such other address as Stephens may designate in
writing. Payment will be made at the offices of Stephens, or at such other place
as shall be agreed upon by Stephens and the Sellers, at approximately 9:00 a.m.,
central time, on ____________, 2002, such time and date being herein referred to
as the "Closing Date." The certificates for the Underwritten Shares will be
delivered in such denominations and in such registrations as Stephens reasonably
requests in writing and will be made available for inspection at such locations
as Stephens may reasonably request at least one full business day prior to the
Closing Date.

         In addition, on the basis of the representations, warranties,
agreements and covenants herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants the Option to the several
Underwriters to purchase the Option Shares at the price per share as set forth
in the first paragraph of this Section 2. The Option may be exercised in whole
or in part on one occasion upon written notice (or oral notice, subsequently
confirmed in writing) given not more than thirty (30) days following the date of
this Agreement, by Stephens, on behalf of the Representatives of the several
Underwriters, to the Company setting forth the number of Option Shares as to
which the several Underwriters are exercising the Option and the names and
denominations in which the Option Shares are to be registered. Closing on the
purchase of the Option Shares (the "Option Closing Date"), if any, shall occur
no later than three (3) business days following the date upon which notice of
exercise of the Option is given to the Company, and shall take place at the
offices of Stephens, or at such other place as shall be agreed upon by Stephens
and the Company. Subject to Section 10, the number of Option Shares to be
purchased by each Underwriter shall be in the same proportion to the total
number of shares of the common stock being purchased by such Underwriter bears
to 3,475,000 shares, adjusted by you in such manner as to avoid fractional
shares. The Option may be exercised only to cover over-allotments in the sale of
the Underwritten Shares by the

                                       9

<PAGE>


Underwriters. Stephens, on behalf of the Representatives of the several
Underwriters, may cancel such Option at any time prior to its expiration by
giving written notice (or oral notice, subsequently confirmed in writing) of
such cancellation to the Company. To the extent, if any, that the Option is
exercised, payment for the Option Shares shall be made by wire transfer of
immediately available U.S. Funds to a designated account of the Company, to the
order of the Company. Certificates for the Option Shares shall be delivered in
the same manner and upon the same terms as the Underwritten Shares.

        3. Offering by the Underwriters. It is understood that the Public
Offering of the Underwritten Shares is to be made as soon as the Representatives
deem it advisable to do so after the Registration Statement has become
effective. The Underwritten Shares are to be initially offered to the public at
the public offering price set forth in the Prospectus. The Representatives may
from time to time thereafter change the public offering price and other selling
terms. To the extent, if at all, that any Option Shares are purchased pursuant
to Section 2 hereof, the Underwriters will offer them to the public on the
foregoing terms.

         It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Shares, in accordance with an
Agreement Among Underwriters which has been entered into by you and the several
other Underwriters.

         4. Covenants of the Company and the Selling Stockholders. The Company
covenants and agrees, and the Selling Stockholders covenant and agree, each for
himself and with respect only to paragraphs (j) and (l), with each of the
several Underwriters that:

                (a)  The Company will use its best efforts to cause the
         Registration Statement to become effective and will not, either before
         or after effectiveness, file any amendment thereto or supplement to the
         Prospectus (including a prospectus filed pursuant to Rule 424(b) which
         differs from the Prospectus on file at the time the Registration
         Statement becomes effective) or file any documents under the Exchange
         Act before the earlier to occur of (A) the 35th day following the
         Effective Date or (B) the closing date of the Underwriters' purchase of
         the Option Shares if such document would be deemed to be incorporated
         by reference into the Registration Statement, the Preliminary
         Prospectus or the Prospectus of which the Representatives shall not
         previously have been advised and furnished with a copy or to which the
         Representatives shall have reasonably objected in writing or which is
         not in compliance with the Act or Rules or the Exchange Act or the
         rules and regulations thereunder.

                (b) The Company will advise the Representatives promptly of any
         request of the Commission or other securities regulatory agency ("Other
         Securities Regulator") for amendment of the Registration Statement or
         for supplement to the Prospectus or for any additional information, or
         of the issuance by the Commission of any stop order suspending the
         effectiveness of the Registration Statement or the use of the
         Prospectus or of the institution of any proceedings for that purpose,
         or comparable action taken or initiated by any Other Securities
         Regulator, and the Company will use its reasonable efforts to prevent
         the issuance of any such stop order preventing or suspending the use of
         the Prospectus and to obtain as soon as possible the lifting thereof,
         if issued.

                (c) The Company will use its reasonable efforts with the
         Representatives in endeavoring to qualify the Shares for sale under the
         securities laws of such jurisdictions (including foreign jurisdictions)
         as the Representatives may reasonably designate, and will make such
         applications, file such documents, and furnish such information as may
         be reasonably required for that purpose; provided, however, the Company
                                                  --------  -------
         shall not be required to qualify as a foreign corporation or to file a
         general consent to service of process in any jurisdiction where it is
         not so qualified or required to file such a consent. The Company will,
         from time to time, prepare and file


                                       10

<PAGE>

         such statements, reports, and other documents, as are or may be
         required to continue such qualifications in effect for so long a period
         as the Representatives may reasonably request for distribution of the
         Shares.

                (d) The Company will deliver to, or upon the order of, the
         Representatives, from time to time, as many copies of any Preliminary
         Prospectus or the Prospectus as the Representatives may reasonably
         request. The Company will deliver to, or upon the order of, the
         Representatives, on the Effective Date and thereafter from time to time
         during the period necessary to effect the distribution of the Shares as
         many copies of the Prospectus in final form, or as thereafter amended
         or supplemented, as the Representatives may reasonably request. The
         Company will deliver to each of the Representatives at or before the
         Closing Date, one (1) manually signed copy of the Registration
         Statement and all amendments thereto including all exhibits filed
         therewith and will deliver to the Representatives such number of copies
         of the Registration Statement, but without exhibits, and of all
         amendments thereto, as the Representatives may reasonably request.

                (e) During the time necessary to effect the distribution of the
         Shares, the Company shall comply with all requirements imposed upon it
         by the Act, as now and hereafter amended, and by the Rules, as from
         time to time in force, so far as is necessary to permit the continuance
         of sales of or dealings in the Shares as contemplated by the provisions
         hereof and the Prospectus. If, during the period necessary to effect
         the distribution of the Shares, any event shall occur as a result of
         which, in the judgment of the Company or in the opinion of counsel for
         the Underwriters, it becomes necessary to amend or supplement the
         Prospectus in order to make the statements therein, in the light of the
         circumstances existing at the time the Prospectus is delivered to a
         purchaser, not misleading, or, if it is necessary at any time to amend
         or supplement the Prospectus to comply with any law or to file under
         the Exchange Act any document which would be deemed to be incorporated
         by reference in the Prospectus in order to comply with the Act or the
         Exchange Act, the Company promptly will notify the Representatives and,
         subject to the Representatives' prior review, prepare and file with the
         Commission and any appropriate Other Securities Regulator an
         appropriate amendment or supplement to the Prospectus or file such
         document (at the expense of the Company) so that the Prospectus as so
         amended or supplemented will not, in light of the circumstances when it
         is so delivered, be misleading, or so that the Prospectus will comply
         with the law.

                (f) The Company will make generally available to its security
         holders in the manner contemplated by Rule 158(b) under the Act, as
         soon as it is practicable to do so, but in any event not later than the
         90th day after the end of the fiscal quarter first occurring one year
         after the Effective Date, an earnings statement in reasonable detail,
         covering a period of at least twelve consecutive months beginning after
         the Effective Date, which earnings statement shall satisfy the
         requirements of Section 11(a) of the Act and will advise you in writing
         when such statement has been so made available.

                (g) For a period of three years from the date of this Agreement,
         the Company will furnish to the Representatives (a) concurrently with
         furnishing of such reports to its stockholders, statements of income of
         the Company for each quarter in the form furnished to the Company's
         stockholders; (b) concurrently with furnishing to its stockholders, a
         balance sheet of the Company as at the end of such fiscal year,
         together with statements of earnings, stockholders' equity and cash
         flow of the Company for such fiscal year, all in reasonable detail and
         accompanied by a copy of the certificate or report thereon of
         independent public accountants; (c) as soon as they are available,
         copies of all reports (financial or other) mailed to stockholders; (d)
         as soon as they are available, copies of all reports and financial
         statements furnished to or filed with the Commission; (e) every press
         release which was released or prepared by the Company; and (f) any
         additional information of


                                       11

<PAGE>

         a public nature concerning the Company or its business which you may
         reasonably request. During such period, if the Company shall have
         active subsidiaries the foregoing financial statements shall be on a
         consolidated basis to the extent that the accounts of the Company and
         its subsidiaries are consolidated, and shall be accompanied by similar
         financial statements for any significant subsidiary (as defined by the
         Act) which is not so consolidated.

                (h) Promptly after the Company is advised thereof, it will
         advise the Representatives, and confirm in writing, that the
         Registration Statement and any amendments shall have become effective.

                (i) The Company will use the net proceeds from the sale of the
         Shares substantially in the manner set forth in the Prospectus under
         the caption "Use of Proceeds."

                (j) Other than as permitted by the Act and the Rules, the
         Company and the Selling Stockholders will not distribute any prospectus
         or offering materials in connection with the offering and sale of the
         Shares and prior to the Closing Date or, if applicable, the Option
         Closing Date will not issue any press releases or other communications
         directly or indirectly and will hold no press conferences with respect
         to the Company, the financial condition, results of operations,
         business, properties, assets or liabilities of the Company, or the
         offering of the Shares, without the prior written consent of the
         Representatives.

                (k) The Company will maintain a transfer agent and, if necessary
         under the jurisdiction of incorporation of the Company, a registrar for
         its common stock and will use its best efforts to maintain the listing
         of the Shares on the Nasdaq National Market.

                (l) Except pursuant to the exercise of stock options existing
         prior to the execution of this Agreement or as contemplated hereby or
         by the Prospectus, the Company and the Selling Stockholders will not,
         for a period of ninety (90) days after the Effective Date of the
         Registration Statement, offer to sell, contract to sell, sell or
         otherwise dispose of any shares of the Company's common stock or
         securities convertible into shares of the Company's common stock
         without the prior written consent of the Representatives, which consent
         will not be unreasonably withheld.

         The foregoing covenants and agreements shall apply to any successor of
the Company, including without limitation, any entity into which the Company
might consolidate or merge.

         5. Costs and Expenses. Whether or not the Registration Statement
becomes effective, the Company and the Selling Stockholders will pay all costs,
expenses and fees incident to the performance of the obligations of the Company
and the Selling Stockholders under this Agreement, including, without limiting
the generality of the foregoing, the following: accounting fees of the Company;
the fees and disbursements of counsel for the Company; the cost of printing and
delivering to Underwriters copies of the Registration Statement, any Preliminary
Prospectus, the Prospectus, this Agreement, the Agreement Among Underwriters,
the Selected Dealer Agreement, Underwriters' Questionnaire and Power of
Attorney, and the Blue Sky Survey and any supplements thereto; the filing fees
of the Commission; the filing fees incident to securing any required review by
the NASD of the terms of the sale of the Shares on behalf of, and any
disbursements made by, the Representatives; any applicable listing fees; the
cost of printing certificates representing the Shares; and the cost and charges
of any transfer agent or registrar. Any transfer taxes imposed on the sale of
the Shares to the Underwriters will be paid by the Company or the Selling
Stockholders, as appropriate. Neither the Company nor the Selling Stockholders
shall, however, be required to pay for any of the Underwriters' expenses (other
than those related to qualification under State securities or Blue Sky laws)
except that, if the Public Offering shall not be consummated because the
conditions in


                                       12

<PAGE>

Section 7 hereof are not satisfied, or because this Agreement is terminated by
the Representatives pursuant to Section 6 hereof, or by reason of any failure,
refusal or inability on the part of the Company to perform any undertaking or
satisfy any condition of this Agreement or to comply with any of the terms
hereof on their part to be performed, unless such failure to satisfy said
condition or to comply with said terms is due to the default or omission of any
Underwriter, then the Company shall reimburse the several Underwriters for all
costs and expenses, including attorney fees and out-of-pocket expenses,
reasonably incurred in connection with investigating, marketing and proposing to
market the Shares or in contemplation of performing their obligations hereunder,
but the Company shall not in any event be liable to any of the several
Underwriters for damages on account of loss of anticipated profits from the sale
by them of the Shares. The Company and the Selling Stockholders may agree, as
among themselves and without limiting the rights of the Underwriters under this
Agreement, as to the respective amounts of such costs for which they each shall
be responsible.

         6. Conditions of Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Shares as provided herein
are subject to the accuracy, as of the Closing Date and as of the Option Closing
Date, of the representations and warranties and agreements of the Company and
the Selling Stockholders contained herein and to the performance by the Company
and the Selling Stockholders of their obligations hereunder and to the following
additional conditions:

                (a) The  Registration  Statement shall have become effective not
         later than 10:00 a.m., central time, on the day immediately following
         the date of this Agreement, unless a later time and date is agreed to
         by the Representatives, and no stop order or other order suspending the
         effectiveness thereof or the qualification of the Shares under the
         State securities or Blue Sky laws of any jurisdiction shall have been
         issued and no proceeding for that purpose shall have been taken or, to
         the knowledge of the Company or the Selling Stockholders, shall be
         contemplated or threatened by the Commission or any Other Securities
         Regulator. If the Company has elected to rely upon Rule 430A of the
         Rules, the price of the Shares and any price-related information
         previously omitted from the effective Registration Statement pursuant
         to such Rule 430A shall have been transmitted to the Commission for
         filing pursuant to Rule 424(b) of the Act within the prescribed time
         period, and prior to the Closing Date the Company shall have provided
         evidence satisfactory to the Representatives of such timely filing, or
         a post-effective amendment providing such information shall have been
         promptly filed and declared effective in accordance with the
         requirements of Rule 430A under the Act. All requests for additional
         information on the part of the Commission or any other government or
         regulatory authority with jurisdiction (to be included in the
         Registration Statement or Prospectus or otherwise) shall be complied
         with to the satisfaction of the Commission or such authorities.

                (b) The Representatives shall have received on the Closing Date
         and on the Option Closing Date the opinion of Smith, Gambrell &
         Russell, LLP, counsel for the Company and the Selling Stockholders,
         with respect to the Company and the Selling Stockholders as to the
         matters set forth below in subparagraphs (i) through (x), and opinions
         of _________ counsel to the Company with respect to the Subsidiaries,
         as to matters set forth below in subparagraphs (i) and (vi), each dated
         the Closing Date and, if applicable, the Option Closing Date, addressed
         to the Underwriters in form and substance satisfactory to Wright,
         Lindsey & Jennings LLP, counsel to the Underwriters, to the effect
         that:

                       (i) The Company and the Subsidiaries have been duly
                organized and are validly existing in good standing under the
                laws of the state(s) or similar foreign jurisdictions (with
                respect to the Subsidiaries) of their organization with
                corporate power to own their properties and conduct their
                business as described in the Registration Statement and
                Prospectus; and to such counsel's knowledge, except as set forth
                in the Prospectus and


                                       13

<PAGE>

                the Registration Statement, no options, warrants or other
                rights to purchase, agreements or other obligations to issue or
                other rights to convert any obligations into any shares of
                capital stock of the Company are outstanding.

                       (ii) The Company has authorized capital stock as set
                forth under the caption "Description of Capital Stock" in the
                Registration Statement and Prospectus, except for issuances
                subsequent to the date of the Prospectus, if any, pursuant to
                reservations, commitments, employee benefit plans, or other
                existing agreements; all of the Shares conform to the
                description thereof contained in the Prospectus; the Company
                Shares and the Option Shares, if any, have been duly authorized
                by all necessary corporate action on the part of the Company
                and, upon payment for and delivery of the Shares in accordance
                with this Agreement and the countersigning of the certificates
                representing the Shares by a duly authorized signatory, the
                Shares will be validly issued, fully paid and non-assessable;
                holders of the capital stock of the Company are not entitled to
                any preemptive right to subscribe to any additional shares of
                the Company's capital stock under the Company's Certificate of
                Incorporation or bylaws, or, to such counsel's knowledge, any
                agreement or other instrument filed as an exhibit to the
                Registration Statement.

                       (iii) The Registration Statement has been declared
                effective under the Act and to such counsel's knowledge, no stop
                order suspending the effectiveness of the Registration Statement
                has been issued or threatened by the Commission.

                       (iv) The Registration Statement and each amendment or
                supplement thereto on the dates they were filed appeared on
                their face to comply as to form in all material respects with
                the requirements as to form for registration statements on Form
                S-2 under the Act and the Rules, except that such counsel need
                express no opinion as to the information supplied by the
                Underwriters or the financial statements, schedules and other
                financial or statistical information included or incorporated
                by reference therein. The Incorporated Documents, on the
                respective dates they were filed, appeared on their face to
                comply in all material respects with the requirements as to
                form for reports on Form 10-K, Form 10-Q and Form 8-K, as the
                case may be, under the Exchange Act and the rules and
                regulations thereunder in effect at the respective dates of
                their filing, except that such counsel need express no opinion
                as to the financial statements, schedules and other financial
                or statistical information included or incorporated by
                reference therein.

                       (v) Except as set forth in the Registration Statement and
                the Prospectus, to such counsel's knowledge, there are no
                contracts, agreements or understandings between the Company and
                any person granting such person the right to require the
                Company to file a registration statement under the Act with
                respect to any securities of the Company owned or to be owned
                by such person or to require the Company to include such
                securities in the securities being registered pursuant to a
                registration statement filed by the Company under the Act.

                       (vi) To such counsel's knowledge, the Company's execution
                and delivery of, and performance of its obligations under, this
                Agreement do not (A) violate the Company's and its
                Subsidiaries' respective charter or bylaws, or (B) breach or
                otherwise violate any existing obligation of or restriction on
                the Company or its Subsidiaries under any order, judgment or
                decree of any federal or Delaware court or government authority
                binding on the Company or its Subsidiaries that such counsel
                has, in the exercise of customary professional diligence,
                recognized as applicable to the Company or its Subsidiaries or
                to transactions of the type contemplated by this Agreement,
                except that such counsel need not


                                       14

<PAGE>

                express an opinion regarding any federal securities laws or Blue
                Sky or state securities laws. The execution and delivery by the
                Company of, and performance of its obligations under, this
                Agreement, do not violate any Delaware or federal statute or
                regulation that such counsel has, in the exercise of customary
                professional diligence, recognized as applicable to the Company
                or its Subsidiaries or to transactions of the type contemplated
                by this Agreement, except that such counsel need not express an
                opinion regarding any federal securities laws or Blue Sky or
                state securities laws.

                       (vii) This Agreement has been duly authorized, executed
                and delivered by the Company.

                       (viii) No approval, consent, order or permit of Delaware
                or any U.S. Federal governmental authority is required on the
                part of the Company for the execution and delivery of this
                Agreement or for the issuance and sale of the Shares by the
                Company herein contemplated (other than required by NASD
                regulation or state securities and Blue Sky laws, as to which
                such counsel need express no opinion) except such as have been
                obtained or made, specifying the same.

                       (ix) This Agreement has been duly executed and delivered
                on behalf of each of the Selling Stockholders.

                       (x) Upon the delivery of and payment for the Selling
                Stockholders Shares as contemplated in this Agreement, each of
                the Underwriters will receive such Shares purchased by it from
                such Selling Stockholder, free and clear of any adverse claim.
                In rendering such opinion, such counsel may assume that the
                Underwriters are acquiring such Shares in good faith, without
                notice of any adverse claim.

         In addition to the matters set forth above, such counsel shall also
include a statement to the effect that such counsel has participated in the
preparation of the Registration Statement and the Prospectus and, based on such
participation, no facts have come to the attention of such counsel which
appeared on their face to cause such counsel to believe that any part of the
Registration Statement or any amendment thereto (other than the financial
statements and other financial and statistical data contained therein, as to
which such counsel may express no belief), as of its effective date, contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any amendment or supplement thereto (other
than the financial statements and other financial data contained therein, as to
which such counsel may express no belief), contains any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Such counsel does not know of any legal or governmental
proceedings required to be described in the Registration Statement or the
Prospectus which are not described as required or of any contracts or documents
of a character required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement which are
not described and filed as required; it being understood that such counsel need
express no opinion as to the financial statements or other financial data
contained in the Registration Statement or the Prospectus. Such counsel may
state that its opinion is limited to the applicable law of the United States of
America, the Delaware General Corporation Law and the general corporate law of
jurisdictions under which the Subsidiaries are organized, and that such counsel
renders no opinion with respect to the law of any other jurisdiction. Such
opinion may state further that whenever such opinion is based on factual matters
to such counsel's knowledge or known to such counsel, such counsel has relied
exclusively on certificates of officers (after discussion of the contents
thereof with such officers) of the

                                       15

<PAGE>


Company or certificates of others as to the existence or nonexistence of factual
matters on which such opinion is predicated but has no reason to believe that
any such certificate is untrue or inaccurate in any material respect.

          Such opinion shall contain only those qualifications as  Wright,
Lindsey & Jennings LLP, counsel to the Underwriters, may reasonably request or
allow.

               (c) The Representatives shall have received from Wright, Lindsey
          & Jennings LLP, counsel to the Underwriters, an opinion dated the
          Closing Date, substantially to the effects specified in subparagraph
          (iii) and (iv) of paragraph (b) of this Section 6, and that the
          Company is a validly organized and existing corporation under the laws
          of the State of Delaware. In rendering such opinion, Wright, Lindsey &
          Jennings LLP may rely as to all matters governed other than by Federal
          law on the opinions of counsel referred to in paragraph (b) of this
          Section 6. In addition to the matters set forth above, such opinion
          shall also include a statement to the effect that nothing has come
          to the attention of such counsel which leads them to believe that the
          Registration Statement or any amendment thereto at the time the
          Registration Statement or amendment became effective or the
          Preliminary Prospectus or the Prospectus or any amendment or
          supplement thereto as of their respective dates contain an untrue
          statement of a material fact or omit to state a material fact required
          to be stated therein or necessary to make the statements therein, not
          misleading (except that such counsel need express no view as to
          financial statements, schedules and other financial or statistical
          information included therein).

               (d) The Representatives shall have received at or prior to the
          Closing Date from Wright, Lindsey & Jennings LLP a memorandum or
          summary, in form and substance satisfactory to the Representatives,
          with respect to the qualification or exemption therefrom for offering
          and sale by the Underwriters of the Shares under the State securities
          or Blue Sky laws of such jurisdictions as the Representatives may
          reasonably have designated.

               (e) The Representatives shall have received on the Closing Date
          and on the Option Closing Date, as the case may be, signed letters
          from Arthur Andersen, LLP, addressed to the Underwriters dated as of
          the Effective Date and again dated as of the Closing Date and as of
          the Option Closing Date, as the case may be, with respect to the
          financial statements and certain financial and statistical information
          contained in the Registration Statement and the Prospectus. All such
          letters shall be in form and substance satisfactory to the
          Representatives and Wright, Lindsey & Jennings LLP, counsel to the
          Underwriters.

               (f) The Representatives shall have received on the Closing Date
          and on the Option Closing Date, as the case may be, a certificate or
          certificates of the Company, executed by the President and Chief
          Executive Officer and the Chief Financial Officer of the Company to
          the effect that, on and as of the Closing Date and on and as of the
          Option Closing Date, as the case may be, each of them severally
          represents as follows:

                       (i) (A) the representations and warranties of the Company
               in this Agreement are true and correct on and as of the Closing
               Date and on and as of the Option Closing Date, as the case may
               be, and (B) the Company has complied with all of its agreements
               and covenants and has satisfied all of the conditions on its part
               to be performed or satisfied at or prior to the Closing Date and
               at or prior to the Option Closing Date, as the case may be.


                                       16

<PAGE>


                  (ii) They have carefully examined the Registration Statement
              and the Prospectus and, in their opinion, such Registration
              Statement and Prospectus did not omit to state a material fact
              necessary in order to make the statements therein not misleading.

             (g)  The Company shall have furnished to the Representatives
         evidence of the due qualification of the Company and the Subsidiaries
         to transact business in all jurisdictions in which the conduct of their
         business or ownership or lease of their properties requires such
         qualifications, except where the failure to be so qualified would not
         reasonably be expected to have a Material Adverse Effect.

             (h)  Since the respective dates as of which information is given in
         the Prospectus, there shall not have been any Material Adverse Change.

             (i)  The Company Shares shall have been approved for listing on the
         Nasdaq National Market, subject to official notice of issuance.

         The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and Wright, Lindsey &
Jennings LLP, counsel for the Underwriters.

         If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company of such termination in writing or
by confirmed telefax at or prior to the Closing Date. In such event, the
Company, the Selling Stockholders and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 8
hereof).

         7. Conditions of the Obligations of the Sellers. The obligations of the
Sellers to sell and deliver the Shares are subject to the conditions that (a) at
or before 10:00 a.m., central time, on the day immediately following the date of
this Agreement, or such later time and date as the Company and the
Representatives may from time to time consent to in writing or by confirmed
telefax, the Registration Statement shall have become effective, and (b) at the
Closing Date no stop order suspending the effectiveness of the Registration
Statement shall have been issued or proceedings therefor initiated or
threatened. If either of the conditions hereinabove provided for in this Section
7 shall not have been fulfilled when and as required by this Agreement to be
fulfilled, this Agreement may be terminated by the Company by notifying the
Representatives of such termination in writing or by confirmed telefax at or
prior to the Closing Date.

         8. Indemnification.

            (a) The Company agrees to indemnify and hold harmless each
         Underwriter and each person, if any, who controls any Underwriter
         within the meaning of the Act, the Rules and the Exchange Act from and
         against any and all losses, claims, damages, liabilities, joint or
         several, to which such Underwriter or such controlling person may
         become subject under the Act or otherwise, insofar as such losses,
         claims, damages or liabilities (or actions or proceedings in respect
         thereof) arise out of or are based upon any breach of any
         representation, warranty, agreement, or covenant of the Company, or any
         untrue statement or alleged untrue statement of any material fact
         contained in the Registration Statement, any Preliminary Prospectus,
         the Prospectus or any amendment or supplement thereto, or arise out of
         or are based upon the omission or alleged omission to state therein a
         material fact required to be stated therein or necessary to make the
         statements therein not misleading; and the Company will reimburse each
         Underwriter and each such controlling person for

                                        17




<PAGE>

         legal and other expenses reasonably incurred in connection with
         investigating or defending any such loss, claim, damage, liability,
         action or proceeding; provided, however, that the Company will not be
                               --------  -------
         liable in any such case to the extent that any such loss, claim, damage
         or liability arises out of or is based upon an untrue statement or
         alleged untrue statement made in, or omission or alleged omission from,
         the Registration Statement, any Preliminary Prospectus, the Prospectus,
         or such amendment or supplement, in reliance upon and in conformity
         with written information furnished to the Company by or through the
         Representatives specifically for use in the preparation thereof, it
         being understood and agreed that the only such information furnished by
         any Underwriter consists of the information described as such in
         Section 13 below; and provided further, that with respect to any untrue
                               -------- -------
         statement or alleged untrue statement in or omission or alleged
         omission from any Preliminary Prospectus, the indemnity agreement
         contained in this Section 8(a) shall not inure to the benefit of any
         Underwriter from whom the person asserting any such losses, claims,
         damages or liabilities purchased the Shares concerned, to the extent
         that a prospectus relating to such Shares was required to be delivered
         by such Underwriter under the Act in connection with such purchase and
         any such loss, claim, damage or liability of such Underwriter, results
         from the fact that there was not sent or given to such person, at or
         prior to the written confirmation of the sale of such Shares to such
         person, a copy of the Prospectus as then amended or supplemented
         (excluding any documents incorporated by reference therein) if the
         Company had previously furnished copies thereof to such Underwriter.
         This indemnity agreement will be in addition to any liability which the
         Company may otherwise have.

               (b) Each Selling Stockholder severally and not jointly agrees to
         indemnify and hold harmless each Underwriter and each person, if any,
         who controls any Underwriter, within the meaning of the Act, the Rules
         and the Exchange Act, from and against any losses, claims, damages, or
         liabilities, joint or several (or actions or proceedings in respect
         thereof) and all expenses (including costs of investigation and legal
         expenses) to which such Underwriters or such controlling person may
         become subject under the Act or otherwise, insofar as such losses,
         claims, liabilities or expenses arise out of or are based upon any
         breach of any representation, warranty, agreement, or covenant of such
         Selling Stockholder contained in this Agreement or any untrue statement
         or alleged untrue statement of any material fact contained in the
         Registration Statement, any Preliminary Prospectus, the Prospectus or
         any amendment or supplement thereto, or arise out of or are based upon
         the omission or alleged omission to state therein a material fact
         required to be stated therein or necessary to make the statements
         therein not misleading, in each case to the extent, but only to the
         extent, that such untrue statement or alleged untrue statement or
         omission or alleged omission was made in the Registration Statement,
         any Preliminary Prospectus, the Prospectus, or any amendment or
         supplement thereto, in conformity with written information furnished to
         the Company by or on behalf of such Selling Stockholder specifically
         for use therein; provided, however, that such Selling Stockholder
                          --------  -------
         will not be liable in any such case to the extent that such statement
         or omission was contained or made in any Preliminary Prospectus and
         corrected in the Prospectus and (A) any such loss, claim, damage or
         liability suffered or incurred by any Underwriter (or any person who
         controls any Underwriter) resulted from any action, claim or suit by
         any person who purchased Shares which are the subject thereof from such
         Underwriter in the offering and (B) such Underwriter failed to deliver
         or provide a copy of the Prospectus to such person at or prior to the
         confirmation of the sale of such Shares, in the case where such
         delivery is required by the Act. This indemnity agreement will be in
         addition to any liability which the Selling Stockholders may otherwise
         have.

               Each Selling Stockholder shall be liable to all persons under
         the indemnity agreements contained in this paragraph (b) and for
         breaches of its representations contained in Section 1 hereof only for
         an amount not exceeding the net proceeds received by such Selling
         Stockholder from the sale of Shares hereunder.

                                         18

<PAGE>

               (c) Each Underwriter severally, but not jointly, will
         indemnify and hold harmless the Selling Stockholders and the Company,
         each of its directors, each of its officers who have signed the
         Registration Statement, and each person, if any, who controls the
         Company, within the meaning of the Act, the Rules and the Exchange Act
         from and against any losses, claims, damages or liabilities to which
         the Company, or any such director, officer, or controlling person may
         become subject, under the Act or otherwise, insofar as such losses,
         claims, damages or liabilities (or actions or proceedings in respect
         thereof) arise out of or are based upon any untrue statement or alleged
         untrue statement of any material fact contained in the Registration
         Statement, any Preliminary Prospectus, the Prospectus or any amendment
         or supplement thereto, or arise out of or are based upon the omission
         or alleged omission to state therein a material fact required to be
         stated therein or necessary to make the statements therein not
         misleading in light of the circumstances under which they were made;
         and will reimburse any legal or other expenses reasonably incurred by
         the Selling Stockholders or the Company, or any such director, officer,
         or controlling person in connection with investigating or defending any
         such loss, claim, damage, liability, action or proceeding; provided,
                                                                    --------
         however, that each Underwriter will be liable in such case only to the
         -------
         extent that such untrue statement, or alleged untrue statement or
         omission or alleged omission has been made in the Registration
         Statement, any Preliminary Prospectus, the Prospectus, or such
         amendment or supplement, in reliance upon and in conformity with
         information furnished to the Company by or through the Representatives
         expressly for use in the preparation thereof, which information is
         described in Section 13. This indemnity agreement will be in addition
         to any liability which such Underwriter may otherwise have.

               (d) Promptly after receipt by an indemnified party under this
         Section 8 of notice of the commencement of any action or proceeding,
         such indemnified party will, if a claim in respect thereof is to be
         made against an indemnifying party under this Section 8, notify the
         indemnifying party of the commencement thereof; but the omission so to
         notify the indemnifying party will not relieve it from any liability
         which it may have to any indemnified party otherwise than under this
         Section 8, except to the extent that the indemnifying party is
         substantially prejudiced by the omission of such notification. In case
         any such action or proceeding is brought against any party, and it
         notifies an indemnifying party of the commencement thereof, the
         indemnifying party will be entitled to participate therein, and, to the
         extent that it may wish, jointly with any other indemnifying party
         similarly notified, to assume the defense thereof with counsel
         reasonably satisfactory to such indemnified party, and after notice
         from the indemnifying party to such indemnified party of its election
         so to assume the defense thereof, the indemnifying party will not be
         liable to such indemnified party under this Section 8 for any legal or
         other expenses subsequently incurred by such indemnified party in
         connection with the defense thereof other than reasonable costs of
         investigation. No indemnifying party shall, without the prior written
         consent of the indemnified party, effect any settlement of any pending
         or threatened proceeding in respect of which any indemnified party is
         or could have been a party and indemnity could have been sought
         hereunder by such indemnified party, unless such settlement includes an
         unconditional release of such indemnified party from all liability on
         claims that are the subject matter of such proceeding. Any indemnified
         party shall have the right to employ separate counsel in any such
         action and participate in the defense thereof, but the fees and
         expenses of such counsel shall be at the expense of such indemnified
         party unless (i) the employment of such counsel has been specifically
         authorized in writing by the indemnifying party, (ii) the indemnifying
         party has failed to assume the defense and employ counsel, or (iii) the
         named parties to any such action (including any impleaded parties)
         include such indemnified party and the indemnifying party, as the case
         may be, and such indemnified party shall have been advised in writing
         by such counsel that there may be one or more legal defenses available
         to it which are different from or additional to those available to the
         indemnifying party, in which case the indemnifying party shall not have
         the right to assume the

                                        19

<PAGE>

         defense of such action on behalf of such indemnified party, it being
         understood, however, that (A) the indemnifying party shall not, in
         connection with any one such action or separate but substantially
         similar or related actions in the same jurisdiction arising out of the
         same general allegations or circumstances, be liable for the fees and
         expenses of more than one separate firm of attorneys (in addition to
         any local counsel) for all such indemnified parties, which firm shall
         be designated in writing by the indemnified parties, and that (B) all
         such fees and expenses shall be reimbursed as they are incurred.
         Subject to the foregoing provisions of this Section 8(d), the
         indemnifying party shall not be liable for the costs and expenses of
         any settlement of any action without the consent of the indemnifying
         party.

              (e) In order to provide for just and equitable contribution in
         circumstances in which the indemnification provided for in this Section
         8 is for any reason held to be unavailable to an indemnified party
         under subsection (a), (b) or (c) above in respect to any losses,
         claims, damages, liabilities or expenses referred to therein, then each
         applicable indemnifying party, in lieu of indemnifying such indemnified
         party, shall contribute to the amount paid or payable by such
         indemnified party as a result of such losses, claims, damages,
         liabilities and expenses (i) in such proportion as is appropriate to
         reflect the relative benefits received by the Sellers on the one hand
         and the Underwriters on the other hand from the offering of the Shares
         or (ii) if the allocation provided by clause (i) above is not permitted
         by applicable law, in such proportion as is appropriate to reflect not
         only the relative benefits referred to in clause (i) above but also the
         relative fault of the parties in connection with the statements or
         omissions which resulted in such losses, claims, damages, liabilities
         or expenses, as well as any other relevant equitable considerations.
         The relative benefits received by the Sellers on the one hand and the
         Underwriters on the other hand shall be deemed to be in the same
         proportion as the total proceeds from the offering (net of underwriting
         discounts and commissions but before deducting expenses) received by
         the Sellers bears to the underwriting discounts and commissions
         received by the Underwriters. The relative fault of a party shall be
         determined by reference to, among other things, whether the untrue or
         alleged untrue statement of a material fact or the omission or alleged
         omission to state a material fact relates to information supplied by
         each party and the parties' relative intent, knowledge, access to
         information and opportunity to correct or prevent such statement or
         omission. The amount paid or payable by a party as a result of the
         losses, claims, damages, liabilities and expenses referred to above
         shall be deemed to include any legal or other fees or expenses
         reasonably incurred by such party in connection with investigating or
         defending any such action or claim.

               The Sellers and the Underwriters agree that it would not be
         just and equitable if contribution pursuant to this Section 8 were
         determined by pro rata allocation (even if the Underwriters were
         treated as one entity for such purpose) or by any other method of
         allocation which does not take account of the equitable considerations
         referred to in the immediately preceding paragraph. Notwithstanding the
         provisions of this Section 8, no Underwriter shall be required to
         contribute any amount in excess of the amount by which the total price
         at which the Shares underwritten by it and distributed to the public
         were offered to the public exceeds the amount of any damages that such
         Underwriters have otherwise been required to pay by reason of such
         untrue or alleged untrue statement or omission or alleged omission. No
         person guilty of fraudulent misrepresentation (within the meaning of
         Section 11(f) of the Act) shall be entitled to contribution from any
         person who was not guilty of such fraudulent misrepresentation. The
         Underwriters' obligations in this subsection (e) to contribute shall be
         several in proportion to their respective underwriting obligations and
         not joint.

               (f) In any proceeding relating to the Registration Statement,
         any Preliminary Prospectus, the Prospectus or any supplement or
         amendment thereto, each party against whom contribution may be sought
         under this Section 8 hereby consents to the jurisdiction of any court

                                        20

<PAGE>

         having jurisdiction over any other contributing party, agrees that
         process issuing from such court may be served upon him or it by any
         other contributing party and consents to the service of such process
         and agrees that any other contributing party may join him or it as an
         additional defendant in any such proceeding in which such other
         contributing party is a party.

         9. Representations, Warranties and Agreements to Survive Delivery. All
representations, warranties and agreements of the Selling Stockholders, the
Company, and the officers of the Company herein or in certificates delivered
pursuant hereto, and the indemnity and contribution agreements contained in
Section 8 hereof, shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Underwriters or any controlling
person, or by or on behalf of the Company or any of its officers, directors or
controlling persons, and shall survive delivery of the Underwritten Shares and,
if appropriate, the Option Shares to the Representatives or termination of this
Agreement.

        10. Default by Underwriters. If any Underwriter shall fail to purchase
and pay for the Shares which such Underwriter has agreed to purchase and pay for
hereunder (otherwise than by reason of any default on the part of the Company or
any of the Selling Stockholders), you, as the Representatives of the
Underwriters, shall use your best efforts to procure within twenty-four hours
thereafter one or more of the other Underwriters, or any others, to purchase
from the Company and the Selling Stockholders such amounts as may be agreed upon
and upon the terms set forth herein, the Shares which the defaulting Underwriter
or Underwriters failed to purchase. If during such twenty-four hours you, as
such Representatives, shall not have procured such other Underwriters, or any
others, to purchase the Shares agreed to be purchased by the defaulting
Underwriter or Underwriters, then (a) if the aggregate number of Shares with
respect to which such default shall occur does not exceed 10% of the Shares
which the Underwriters are obligated to purchase hereby, the other Underwriters
shall be obligated, severally, in proportion to the respective number of Shares
which they are obligated to purchase hereunder, to purchase the Shares which
such defaulting Underwriter or Underwriters failed to purchase, or (b) if the
aggregate number of Shares with respect to which such default shall occur
exceeds 10% of the Shares covered hereby, the Company or you, as the
Representatives of the Underwriters, will have the right, by written notice
given within the next twenty-four hour period to the parties to this Agreement,
to terminate this Agreement without liability on the part of the non-defaulting
Underwriters or the Company or the Selling Stockholders except to the extent
provided in Section 8 hereof. In the event of a default by any Underwriter or
Underwriters, as set forth in this Section 10, the time of closing may be
postponed for such period, not to exceed seven days, as you, as the
Representatives, may determine in order that the required changes in the
Registration Statement, the Prospectus or in any other documents or arrangements
may be effected. The term "Underwriters" includes any person substituted for a
defaulting Underwriter. Any action taken under Section 11 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.

       11. Notices. All communications hereunder shall be in writing and, except
as otherwise provided in, will be mailed, delivered or telefaxed and confirmed
as follows: if to the Underwriters, c/o the Representatives as follows: to
Stephens Inc., 111 Center Street, Little Rock, Arkansas 72201, Attention: Sandra
Farmer, with a copy to C. Douglas Buford, Jr., Wright, Lindsey & Jennings LLP,
200 West Capitol Avenue, Suite 2200, Little Rock, Arkansas 72201; if to the
Company or the Selling Stockholders, to P.A.M. Transportation Services, Inc.,
Highway 412 West, Tonitown, Arkansas 72770, Attention: Robert W. Weaver, with a
copy to Marlon F. Starr, Smith, Gambrell & Russell, LLP, 1230 Peachtree Street,
N.E., Suite 3100, Atlanta, Georgia 30309-3592.

       12.  Termination.  This Agreement may be terminated by notice to the
Sellers as follows:

            (a)  at any time prior to the Closing Date or the obligations of
     the Underwriters to purchase the Option Shares at any time prior to the
     Option Closing Date, as the case may be, if

                                     21

<PAGE>

     (A) any domestic or international event or act or occurrence has
     materially disrupted, or in your opinion will in the immediate future
     materially disrupt, the market for the Company's securities or securities
     in general; or (B) if trading on the New York Stock Exchange or on the
     Nasdaq National Market shall have been suspended, or minimum or maximum
     prices for trading shall have been fixed, or maximum ranges for prices for
     securities shall have been required, on the New York Stock Exchange or on
     the Nasdaq National Market by the New York Stock Exchange or by the Nasdaq
     National Market or by order of the Commission or any other governmental
     authority having jurisdiction; or (C) if a banking moratorium has been
     declared by any state or federal authority or if any material disruption in
     commercial banking or securities settlement or clearance services shall
     have occurred; or (D) any downgrading shall have occurred in the Company's
     corporate credit rating or the rating accorded the Company's debt
     securities by any "nationally recognized statistical rating organization"
     as that term is defined by the Commission for purposes of Rule 436(g)(2)
     under the Act or if any such organization shall have publicly announced
     that it has under surveillance or review, with possible negative
     implications, its rating of any of the Company's debt securities; or (E)
     (i) if there shall have occurred any outbreak or escalation of hostilities
     or acts of terrorism involving the United States or there is a declaration
     of a national emergency or war by the United States or (ii) if there shall
     have been any other calamity or crisis or any change in political,
     financial or economic conditions if the effect of any such event in (i) or
     (ii) as in your judgment makes it impracticable or inadvisable to proceed
     with the offering, sale and delivery of the Underwritten Shares or the
     Option Shares, as the case may be, on the terms and in the manner
     contemplated by the Prospectus; or (F) since the respective dates as of
     which information is given in the Registration Statement and the
     Prospectus, any Material Adverse Change has occurred which would, in your
     reasonable judgment, materially make it impracticable to market the Shares
     in the manner contemplated by the Prospectus, or (G) the enactment,
     publication, decree or other promulgation of any federal or state statute,
     regulation, rule or order of any court or other governmental authority
     which in your reasonable opinion materially and adversely affects or will
     materially or adversely affect the business or operations of the Company;
     or

          (b)  as provided in Sections 6 and 10 of this Agreement.

     13. Information Furnished by Underwriters. The information set forth in the
Prospectus: (a) in the final paragraph on the cover page, (b) in the table under
the caption "Underwriting" on page ___, listing the Underwriters and the number
of shares each has agreed to purchase, (b) in the fifth paragraph under the
caption "Underwriting," relating to the concession to dealers and the
re-allowance to certain other dealers and the delivery of the Shares, (d) in the
eighth paragraph under the caption "Underwriting," relating to penalty bids, and
(e) in ninth paragraph under the caption "Underwriting," relating to
stabilization activities, constitute the written information furnished by or on
behalf of any Underwriters referred to in paragraph (a) (v) of Section 1 hereof
and in paragraphs (a) and (c) of Section 8 hereof.

     14. Successors. This Agreement has been and is made solely for the benefit
of the Underwriters, the Company, the Selling Stockholders and their respective
successors, executors, administrators, heirs, and assigns, and the officers,
directors and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. The term "successors" shall not include
any purchaser of the Shares merely because of such purchase.

     15. Miscellaneous.  The  Representatives  will act for the several
Underwriters in connection with this offering,  and any action under this
Agreement taken by the Representatives jointly or by Stephens Inc. will be
binding upon all of the Underwriters.

                                     22

<PAGE>


         This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

         This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Arkansas, without giving effect to the choice of law or
conflict of law principles thereof.

         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, the Selling
Stockholders and the several Underwriters in accordance with its terms.

                                Very truly yours,

                                P.A.M. TRANSPORTATION SERVICES, INC.


                                By:
                                   --------------------------------------------
                                   Robert W. Weaver
                                   President and Chief Executive Officer

                                SELLING STOCKHOLDERS

                                By:
                                   --------------------------------------------
                                   Attorney-in-Fact for the Selling Stockholders

The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.

STEPHENS INC., BB&T CAPITAL MARKETS
  and A.G. EDWARDS & SONS, INC.

By:
   --------------------------------------------------
         Stephens Inc., Senior Manager
         By:    W. Scott Davis
                Head of Syndicate and Capital Markets

As Representatives of the several Underwriters
named in Schedule II hereto



                                       23

<PAGE>

                                   SCHEDULE I

Seller                                               No. of Underwritten Shares
- ------                                               --------------------------
P.A.M. Transportation Services, Inc.                       2,100,000
Matthew T. Moroun                                          1,200,000
Robert W. Weaver                                              50,000
W. Clif Lawson                                                30,000
Larry J. Goddard                                              20,000
Paula Weaver                                                  75,000
                                                            --------

Total                                                      3,475,000
                                                           =========






                                       24

<PAGE>

                                   SCHEDULE II

Name                                                 No. of Underwritten Shares
- ----                                                 --------------------------
Stephens Inc.
BB&T Capital Markets
A.G. Edwards & Sons, Inc.

                                                           ---------

Total                                                      3,475,000
                                                           =========





                                       25

<PAGE>

                                    EXHIBIT A

                              _______________, 2002

Stephens Inc., BB&T Capital Markets, and

A.G. Edwards & Sons, Inc., as Representatives of the Several Underwriters
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas  72201

Re: Agreement Not to Sell P.A.M. Transportation Services, Inc. Stock

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

Ladies and Gentlemen:

     This letter is provided, at the request of P.A.M. Transportation
Services, Inc. (the "Company"), for the benefit of the Company and the
Underwriters in connection with the proposed public offering of 3,475,000 shares
of P.A.M. Transportation Services, Inc. Common Stock (plus an additional 521,250
shares if the Underwriters choose to exercise their over-allotment option)
pursuant to a Registration Statement on Form S-2 (File No. 333-83084). As an
inducement to the Underwriters to (a) enter into an Underwriting Agreement with
the Company and (b) consummate the transactions contemplated in such
Underwriting Agreement, the undersigned hereby represents and agrees as follows:

     1. Upon the closing of the Company's public offering, the undersigned will
beneficially own the number of shares of the Company's Common Stock set forth
below opposite the signature of the undersigned (the "Shares"), and no others.

     2. The undersigned agrees that, for a period of 90 days from the effective
date of the Registration Statement, except for bona fide gifts to persons who
agree with you in writing to be bound by this letter, the undersigned will not
offer, sell or otherwise dispose of any of the Shares, directly or indirectly,
without written consent of Stephens Inc., on behalf of the Representatives of
the Underwriters, which consent will not be unreasonably withheld; except that
(a) such Shares may be pledged as collateral against loans of the undersigned
without such written consent, and (b) if loans secured by Shares are called, the
undersigned and any applicable pledgee will have the right to sell the shares
pledged on such loans to the extent necessary to satisfy such loans.


Shares of Common Stock:                        Very truly yours,




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



                                       26

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>4
<FILENAME>dex51.txt
<DESCRIPTION>OPINION OF SMITH, GAMBRELL & RUSSELL, LLP
<TEXT>
<PAGE>

                                                                     Exhibit 5.1

                 [Letterhead of Smith, Gambrell & Russell, LLP]

                                  March 1, 2002

Board of Directors
P.A.M. Transportation Services, Inc.
Highway 412 West
Tontitown, Arkansas 72770

      Re: Registration Statement on Form S-2

Gentlemen:

     This firm has acted as counsel to P.A.M. Transportation Services, Inc., a
Delaware corporation (the "Company"), in connection with its registration,
pursuant to the Company's registration statement on Form S-2, File No. 333-83084
(as amended, the "Registration Statement"), of (i) 2,621,250 shares (the
"Company Shares") of the Company's common stock, $0.01 par value per share,
including 521,250 shares that may be offered and sold by the Company upon
exercise of an underwriters' over-allotment option described in the Registration
Statement, and (ii) 1,375,000 shares (the "Selling Stockholder Shares") of the
Company's common stock to be offered and sold by the holders thereof disclosed
in the "Principal and Selling Stockholders" section of the Registration
Statement. This opinion letter is furnished to you at your request to enable you
to fulfill the requirements of Item 601(b)(5) of Regulation S-K, 17 C.F.R.
Section 229.601(b)(5), in connection with the Registration Statement.

     For purposes of this opinion letter, we have examined copies of the
following documents:

     1. A copy of the Registration Statement.

     2. The Certificate of Incorporation of the Company, as currently in effect.

     3. The Bylaws of the Company, as currently in effect.

     4. Minutes and/or resolutions of the Board of Directors of the Company
        certified by the Secretary of the Company as then being complete,
        accurate and then in effect.

     5. Such other documents or instruments as we have deemed necessary to the
        opinions expressed herein.

     In our examination of the aforesaid documents, we have assumed the
genuineness of all signatures, the legal capacity of all natural persons, the
authenticity, accuracy and completeness of all documents submitted to us, and
the conformity with the original documents of all documents submitted to us as
certified, telecopied, photostatic, or reproduced copies. We have also assumed
the accuracy, completeness and authenticity of certifications of corporate
officials which we have examined. This opinion letter is given, and all
statements herein are made, in the context of the foregoing.

<PAGE>

Board of Directors
P.A.M. Transportation Services, Inc.
March 1, 2002
Page 2

     Based upon, subject to and limited by the foregoing, we are of the opinion
that (i) the Company Shares have been legally authorized and, when issued and
sold in accordance with the terms described in the Registration Statement, will
be legally issued, fully paid and non-assessable; and (ii) the Selling
Stockholder Shares have been legally issued and are fully paid and
non-assessable.

     This opinion letter has been prepared solely for your use in connection
with the filing of the Registration Statement and, except as set forth in the
following paragraph, is not to be quoted in whole or in part or otherwise be
referred to, or filed with or furnished to any governmental agency or other
person or entity, without the prior written consent of this firm.

     We hereby consent to the filing of this opinion letter as Exhibit 5.1 to
the Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the prospectus constituting a part of the Registration
Statement. In giving this consent, we do not hereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rule and regulations of the
Securities and Exchange Commission thereunder.

                                        Very truly yours,

                                        SMITH, GAMBRELL & RUSSELL, LLP

                                        By: /s/ Marlon F. Starr
                                           ---------------------------
                                           Marlon F. Starr

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>5
<FILENAME>dex231.txt
<DESCRIPTION>CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
<TEXT>
<PAGE>

                                                                   EXHIBIT 23.1

                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


   As independent public accountants, we hereby consent to the use of our
report included in this registration statement and to the incorporation by
reference in this registration statement of our report dated February 21, 2002
included in P.A.M. Transportation Services, Inc.'s Form 10-K for the year ended
December 31, 2001 and to all references to our Firm included in this
registration statement.


                                          /s/  ARTHUR ANDERSEN LLP

Tulsa, Oklahoma

February 28, 2002


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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