<PAGE>   1





                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                   FORM 10-K

[ X ]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
          EXCHANGE ACT OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996]

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

                                       or

[ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
          EXCHANGE ACT OF 1934

                          COMMISSION FILE NO. 0-15057

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

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

                                Highway 412 West
                                  P.O. Box 188
                           Tontitown, Arkansas  72770
                                 (501) 361-9111
          (Address of principal executive offices, including zip code,
                   and telephone number, including area code)


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

Securities registered pursuant to section 12(g) of the Act:  Common Stock, $.01
par value

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

                            Yes   X        No
                                 ----         ----

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

The aggregate market value of the common stock of the registrant held by
non-affiliates of the registrant on March 21, 1997 was $10,730,829.  Solely for
the purposes of this response, executive officers, directors and beneficial
owners of more than five percent of the Company's common stock are considered
the affiliates of the Company at that date.

The number of shares outstanding of the issuer's common stock, as of March 21,
1997: 8,128,157 shares of $.01 par value common stock.

                      DOCUMENTS INCORPORATED BY REFERENCE

     The Registrant's definitive Proxy Statement for its Annual Meeting of
Shareholders to be held in 1997 is incorporated by reference in answer to Part
III of this report, with the exception of information regarding executive
officers required under Item 10 of Part III, which information is included in
Part I, Item 1.
<PAGE>   2

Certain statements contained in this filing are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995,
such as statements relating to financial results and plans for future business
development activities, and are thus prospective.  Such forward-looking
statements are subject to risks, uncertainties and other factors which could
cause actual results to differ materially from future results expressed or
implied by such forward-looking statements. Potential risks and uncertainties
include, but are not limited to, economic conditions, competition and other
uncertainties detailed from time to time in the Company's Securities and
Exchange Commission filings.


                                     PART I

ITEM 1.  BUSINESS.

      P.A.M. Transportation Services, Inc. (the "Company"), operating through
its wholly-owned subsidiaries, is an irregular route, common and contract motor
carrier authorized to transport general commodities throughout the continental
United States and the Canadian provinces of Ontario and Quebec, pursuant to
operating authorities granted by the former Interstate Commerce Commission
("ICC"), various state regulatory agencies and Canadian regulatory agencies.
Under its operating authorities, the Company may transport all types of freight
(except household goods, commodities in bulk and certain explosives) intrastate
within any state, and from any point in the continental United States, Ontario
or Quebec to any other point in the continental United States or in Ontario or
Quebec over any route selected by the Company.  The Company transports dry
freight commodities ("freight") in 48-foot and 53-foot long, high cube
conventional and specialized freight vans ("trailers").  The freight consists
primarily of automotive parts, consumer goods, such as general retail store
merchandise and products from the manufacturing sector, such as heating and air
conditioning units, and industrial glass.  All freight is transported as
truckload quantities.

      The Company is a holding company organized under the laws of the State of
Delaware in June 1986 and conducts its operations through its wholly-owned
subsidiaries, P.A.M. Transport, Inc. ("P.A.M. Transport"), P.A.M. Special
Services, Inc., T.T.X., Inc., P.A.M. Dedicated Services, Inc., P.A.M. Logistics
Services, Inc., Choctaw Express, Inc., Choctaw Brokerage, Inc. and Allen
Freight Services, Inc. (see below).  The Company's operating authorities are
held by P.A.M. Transport, P.A.M. Dedicated Services, Inc., Choctaw Express,
Inc., Choctaw Brokerage, Inc. and Allen Freight Services, Inc.  Although not
organized until June 1986, the Company is, for financial accounting purposes,
the successor to P.A.M. Transport, which was organized under the laws of the
State of Arkansas in 1980.  Unless the context otherwise requires, all
references to the Company in this Annual Report on Form 10-K include P.A.M.
Transportation Services, Inc. and its subsidiaries.  At December 31, 1996, the
Company operated a transport fleet consisting of 912 over-the-road tractors
("tractors") and 2,398 trailers.

      The Company is headquartered and maintains its primary terminal,
maintenance facilities and corporate and administrative offices in Tontitown in
the northwest corner of Arkansas, a major center for the trucking industry and
where the support services (including warranty repair services) of most major
tractor and trailer equipment manufacturers are readily available.

1996 ACQUISITION

      On March 11, 1996, the Company closed the purchase of all of the
outstanding capital stock (the "Shares") of Allen Freight Services, Inc., a
Missouri corporation ("AFS").  The total purchase price for the Shares was
$200,000, which was negotiated by the parties at arms-length. The Company paid
the purchase price by utilizing its existing line of credit.


<PAGE>   3


      AFS is engaged in the truckload common and contract motor carrier
business, and is headquartered in Jacksonville, Florida.  AFS's operations
consist primarily of providing over-the-road trucking services, contract
loading services and dedicated regional distribution services, using 53-foot
conventional trailer equipment.  AFS operated a fleet of 162 tractors and 357
trailers at December 31, 1996.

MARKETING/MAJOR CUSTOMERS

      The Company's marketing emphasis is directed to that segment of the
truckload market which is generally service-sensitive, as opposed to being
solely price competitive.  Since 1990, the Company has diversified its
marketing efforts to gain access to non-traditional freight traffic, including
international (Mexico and Canada), domestic regional short-haul, dedicated
fleet services and intermodal transportation.  The Company also participates in
various "core carrier" partnerships with its larger customers.  The Company
estimates that approximately 65% of its deliveries to customers are made on a
JIT ("just in time") basis, whereby products and raw materials are scheduled
for delivery as they are needed on the retail customer's shelves or in the
manufacturing customer's production line.  Such requirements place a premium on
the freight carrier's delivery performance and reliability.  With respect to
these JIT deliveries, approximately 50% require the use of two-man driver teams
to meet the customer's schedule.  The need for this service is a product of
modern manufacturing and assembly methods which are designed to drastically
decrease inventory levels and handling costs.

      The Company's marketing efforts are conducted by six outside sales
persons domiciled within the Company's major markets.  Field personnel are
supervised from Company headquarters, emphasizing an even flow of freight
traffic (balance between originations and destinations in a given geographical
area) and minimization of movement of empty equipment.

      During 1996, the Company's five largest customers, for which the Company
provides carrier services covering a number of geographic locations, accounted
for approximately 48% of total revenues.  General Motors Corporation accounted
for approximately 22% of 1996 revenues and Packard Electric accounted for
approximately 12% of 1996 revenues.  A total loss of General Motors or Packard
Electric business, however unlikely, would have an adverse impact on the
Company's operations, at least over the short term.

      The Company also provides transportation services to other manufacturers
who are suppliers for automobile manufacturers including General Motors.  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 1996 which were attributable to its top ten customers,
approximately 37% were derived from transportation services provided to the
automobile industry.

      The Company is no longer required to file tariffs with the Interstate
Commerce Commission ("ICC") or any successor agency.  See "Regulation" section.

OPERATIONS

      The Company's operations department is generally divided into two groups
- fleet operations and customer service.  Fleet operations personnel maintain
daily contact with drivers and dispatch the predesignated computerized load
assignments to the drivers.  Dispatchers also control and oversee the




                                       2
<PAGE>   4

movement of equipment and drivers and update the computer system as to their
location and status after each contact.  Customer service personnel handle
day-to-day solicitation of freight from the Company's customers.

      The Company maintains 24-hour dispatch offices at its headquarters, as
well as its offices in Oklahoma City and Warren, Ohio, with a toll free WATS
line to facilitate communications with both customers and drivers.  The
location, status and contact assignment of all of the Company's equipment are
available on an up-to-date basis through the Company's computer system, which
permits the Company to better meet delivery schedules, respond to customer
inquiries and match equipment with the next available load.

      In early 1996 the Company began installing Qualcomm Omnitracs(TM) display
units in its 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 the customer's computer, saving telephone usage cost, lost productivity, and
inconvenience.  The Omnitracs system provides customer service with accurate
estimated time of arrival information which optimizes load selection and
service levels to the Company's customers.  During 1996, the Company installed
display units in 381 tractors.

      Each Customer Service Representative ("CSR") has an assigned geographic
region for which he or she has responsibility for efficiently matching the
customer's freight pickup origins with available equipment in the area.  The
CSR obtains all relevant information from the customer regarding the service
needs of the freight shipment and enters the data into the Company's computer,
assigning the most practical tractor to the load and scheduling the delivery
appointment.  A substantial majority of customers' orders require freight
pickup within 24 hours of such order, making responsiveness and availability of
equipment another major component of customer service.

      The Company communicates through electronic data interchange with many of
its customers, providing live status reports of freight shipments and arrival
time information.  This system provides the Company's customers flexibility and
convenience by allowing the customer to tender freight electronically.

      The Company has contractual arrangements with customers to move freight
in dedicated lanes within the United States, primarily in the Midwest and
between the Midwest and Southwest.  A majority of this freight is moved on a
round-trip basis, and due to the volume involved, the Company has agreed to
dedicate equipment and personnel to handle this part of its business.  The
Company has found that dedicated service promotes increased utilization of
equipment and greater driver satisfaction due to the greater regularity of the
routes and schedules, which allows the drivers to be at home more often.  There
exists a large volume of dedicated-type business throughout the continental
United States.  The Company has enjoyed considerable success in entering this
market, and is aggressively seeking to expand its share of the dedicated
services market.

INTERMODAL SERVICE

      The Company entered the intermodal transportation business in 1992, and
has contractual arrangements with Consolidated Rail Corporation (Conrail),
Norfolk Southern, the Atchison, Topeka and Santa Fe Railway Company (Santa Fe),
Burlington Northern, Union Pacific and CSX Intermodal ("CSX").  Intermodal
service provides customers with an alternative to highway long-hauls.




                                       3
<PAGE>   5

Management expects to take advantage of opportunities to expand this business
and views the intermodal market as a mechanism to realize non-asset based
revenue growth.

OVER-THE-ROAD EQUIPMENT

      The Company operated a fleet of 912 tractors and 2,398 trailers at
December 31, 1996.  All of the trailers and all except 126 tractors are owned
or leased by the Company.  The trailer fleet is made up of 1,150 48' by 102"
dry vans and 1,248 53' by 102" dry vans.  In 1993, the Company began its
trailer fleet conversion to air ride equipment and the Company intends to
purchase only air ride trailers in the future.  The Company also has certain
specialized drop-frame trailers.  The tractors that are not Company owned are
leased from owner/operators on a per mile basis.

      At the end of the respective years, the average age of the Company's
tractors was 1.70 in 1994, 1.26 in 1995 and 1.85 in 1996.  The average age of
the Company's trailer fleet was 2.09, 2.34 and 2.60 at the end of 1994, 1995
and 1996, respectively.

      During 1996, the Company purchased 218 new tractors and 214 new trailers
and disposed of 80 tractors and 83 trailers.  During 1997, the Company expects
to purchase 230 new tractors and 500 new trailers while continuing to sell or
trade older equipment.

MAINTENANCE

      The Company has a strictly enforced comprehensive preventive maintenance
program for the tractors and trailers it operates.  Inspections and various
levels of repair and preventive maintenance are performed at set mileage
intervals on both tractors and trailers.  Although a significant portion of
maintenance is performed at the Company's maintenance facility in Tontitown,
Arkansas, the Company's subsidiaries have additional maintenance facilities in
Warren, Ohio; Springfield, Missouri; Dallas, Laredo and El Paso, Texas;
Oklahoma City, Oklahoma; and Columbia, Mississippi.  These facilities enhance
the Company's preventive and routine maintenance operations and are
strategically located on major transportation routes where a majority of the
Company's freight originates and terminates.  A maintenance and safety
inspection is performed on all vehicles each time they return to a terminal.
The Company's primary maintenance facilities consist of thirteen mechanical
repair bays, four bodyshop bays and three safety and maintenance inspection
bays.  The Company believes that its current maintenance facilities will be
adequate to accommodate its fleet for the foreseeable future.

      The Company's tractors carry full warranty coverages of at least 100,000
miles.  Extended warranties are negotiated with the manufacturer and major
component manufacturer (i.e., engine, transmission, differential) for up to
1,000,000 miles.  Trailers are also warranted by the manufacturer and major
component manufacturer for up to five years.

      Manufacturers of tractors are required to certify that new tractors meet
federal emission standards and the Company receives such certifications on each
new tractor it acquires.  Certain governmental regulations require the Company
to adhere to a fuel and oil spillage prevention plan and to comply with
regulations concerning the discharge and disposal of waste oil.  The Company
believes it is in compliance with applicable waste disposal and emission
regulations.  The Company also maintains insurance to cover clean up expense in
the event of a spill.




                                       4
<PAGE>   6


DRIVERS

      At December 31, 1996, the Company utilized 1,125 drivers in its
operations.  All drivers are recruited, screened, drug tested and trained and
are subject to the control and supervision of the Company's operations and
safety departments.  The Company's driver training program stresses the
importance of safety and reliable, on-time delivery.  Drivers are required to
report to their dispatchers daily and at the earliest possible moment when any
condition en route occurs which might delay their scheduled delivery time.

      The Company has established a relationship with a recruiting and training
school in Indiana to enhance its ability to secure the services of qualified
drivers.  The Company agrees to pay a student's costs for attending the
training school so long as the student fulfills a commitment to work for the
Company for at least nine months.  Drivers who fail to complete their nine
month commitment are required to reimburse all or a portion of the Company's
costs in training the driver, depending upon the date of termination of
employment.

      The Company's drivers are selected only after strict application
screening and drug testing.  Before being permitted to operate a vehicle for
the Company, drivers must undergo classroom instruction on Company policies and
procedures, safety techniques and proper operation of equipment and then must
pass both written and road tests.  Instruction in defensive driving and safety
techniques continues after hiring, with the Company holding seminars at its
terminals in Tontitown, Oklahoma City, Jacksonville, Florida, and Warren, Ohio.
The Company currently employs approximately 28 persons on a full-time basis in
its driver recruiting, training and safety instruction programs.

      The Company's drivers are compensated on the basis of miles driven,
loading and unloading, extra stop pay and layovers in transit.  Drivers can
earn bonuses by recruiting other qualified drivers who are employed by the
Company 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.
The Company's operations have also been impacted and from time to time the
Company has experienced under-utilization and increased expenses due to a
shortage of qualified drivers.  Management places the highest of priorities on
the recruitment and retention of an adequate supply of qualified drivers.

EMPLOYEES

      At December 31, 1996, the Company employed 1,438 persons, of which 1,125
are drivers, 95 are maintenance personnel, 105 are employed in operations, 31
are employed in marketing, 28 are employed in safety and personnel, and 54 are
employed in general administration and accounting.  Of the total number of
employees, 190 of the Company's employees are salaried, and the remainder are
employed on an hourly or mileage basis.  The Company also has 126
owner/operators under contract who are compensated on a per mile basis.  None
of these employees are represented by a collective bargaining unit and the
Company believes that its employee relations are good.





                                       5
<PAGE>   7

REGULATION

      The Company is a common and contract motor carrier that is regulated by
certain state and Canadian regulatory agencies.  Prior to January 1, 1996, the
Company was also regulated by the ICC.  The ICC governed such activities as the
authority to engage in motor carrier operations, rates and charges, accounting
systems, certain mergers, consolidations, acquisitions and periodic financial
reporting.  On January 1, 1996, however, the ICC Termination Act of 1995 (the
"Termination Act") was enacted, terminating the ICC and substantially
deregulating the rail and motor carrier industries.

      The Termination Act substantially revises the Motor Carrier Act of 1980,
eliminating numerous unnecessary provisions and streamlining many of the ICC's
functions regarding the regulation of the motor carrier industry.  The majority
of the remaining ICC functions are transferred to the Department of
Transportation ("DOT"), with limited responsibilities transferred to a newly
formed Surface Transportation Board.  Some of the ICC functions that have been
eliminated include: tariff filings, except for non-contiguous domestic trade;
rate regulation, except for non-contiguous domestic trade and individual
household goods movements; federal grants of operating authority; price
regulation and tariff filing requirements for office and exhibit moves; the
possibility of future undercharge claims; restrictions on intermodal ownership;
review of motor carrier mergers; and state regulation of transportation
intermediaries.  In addition,  registration and insurance filings under the
Motor Carrier Act are streamlined into a single federal registration and
insurance system to eliminate duplicative and burdensome filing requirements.
Exemption authority to permit administrative deregulation has also been
substantially broadened, with restrictions remaining on only cargo loss and
damage, insurance, safety fitness and antitrust immunity.

      Prior to the enactment of the Termination Act, most of the ICC's
authority to oversee the commercial operation of the motor carrier industry had
already been transferred to the DOT.  The primary remaining functions which are
transferred to the DOT by the Termination Act are motor carrier registration
and the setting and maintenance of minimum levels of liability insurance.  In
addition, the maintenance of nationwide motor carrier industry commercial rules
(such as leasing rules, uniform cargo loss and damage rules, rules for shipper
payment, and perfecting security interests) are transferred to the DOT.

      Currently, the ICC and the DOT operate separate registration systems.
The ICC requires that interstate, for hire carriers receive a license
(operating authority) with the standards for granting of authority limited to a
showing of safety and fitness and insurance coverage at a specified level.  The
DOT registration system extends to all carriers, including private and exempt
carriers not regulated by the ICC.  DOT assigns each carrier an identification
number.  Carriers are not required to show proof of insurance at the time of
DOT registration, nor is any fee currently charged.  The Termination Act
continues the two registration systems for a period of twenty-four months,
during which time the Secretary of Transportation shall conduct a rule-making
and implement changes to consolidate these two registration systems into one
system.  The new system will serve as a clearing house and depository of
information on and identification of all domestic and foreign motor carriers,
brokers, freight forwarders and others required to register.  The DOT will
utilize the information in overseeing safety fitness and compliance with
required levels of insurance.  Registrations will be renewed periodically and
the on-line system will be available to state authorities and the public.

      The Termination Act also continues antitrust immunity granted by the ICC
but contains reforms intended to prevent any potential market abuses.



                                       6
<PAGE>   8


      On January 1, 1995, federal legislation went into effect eliminating
intrastate regulation of motor carrier operations.  This action allows the
Company to better compete for intrastate business, possibly reducing empty
miles, and should result in more comprehensive service to the Company's
existing customers.

      Motor carrier operations are also subject to safety requirements
prescribed by the United States Department of Transportation governing
interstate operation.  Such matters as weight and dimensions of equipment are
also subject to federal and state regulations.

      The Company believes that it is in compliance in all material respects
with applicable regulatory requirements relating to its trucking business and
operates with a satisfactory rating from the United States Department of
Transportation.

COMPETITION

      The trucking industry is highly competitive.  The Company competes
primarily with other irregular route long-haul truckload carriers, with private
carriage conducted by its existing and potential customers, and, to a lesser
extent, with the railroads. Increased competition has resulted from
deregulation of the trucking industry and has generally exerted downward
pressure on prices.  The Company competes on the basis of its quality of
service and delivery performance as well as price.  Many of the other irregular
route long-haul truckload carriers have substantially greater financial
resources, own more equipment or carry a larger total volume of freight than
the Company.

EXECUTIVE OFFICERS

      The executive officers of the Company are as follows:

<TABLE>
<CAPTION>
            Name                                Position with Company
    --------------------              -----------------------------------------
    <S>                               <C>
    Robert W. Weaver                  President and Chief Executive Officer

    W. Clif Lawson                    Executive Vice President and Chief
                                      Operating Officer

    Larry J. Goddard                  Vice President-Finance, Chief Financial
                                      Officer, Secretary and Treasurer
</TABLE>

      ROBERT W. WEAVER, age 47, is a co-founder of the Company and served as
its Vice President from March 1980 to June 1986.  He was President and Chief
Operating Officer from June 1986 until he resigned in February 1987.  Between
February 1987 and September 1989, he was self-employed as a transportation
consultant.  In September 1989, Mr. Weaver returned to the Company as President
and Chief Operating Officer and a director.  On February 22, 1990, he was
appointed Chief Executive Officer.

      W. CLIF LAWSON, age 43, has been Executive Vice President of the Company
since August 1989 and Chief Operating Officer since March 1992.  He joined the
Company in June 1984 and served in various operations and sales capacities
until August 1989.

      LARRY J. GODDARD, age 38, has been Vice President-Finance and Chief
Financial Officer since January 1991 and served as Controller of the Company
from May 1989 to January 1991.  In addition,





                                       7
<PAGE>   9


he has served as Secretary since September 1989, and Treasurer since May 1991.
From November 1987 to May 1989, he served as General Accounting Manager of the
Company.

ITEM 2.  PROPERTIES.

      The Company's executive offices and primary terminal facilities are
located in Tontitown, Arkansas.  The Company's facilities are located on
approximately 45 acres and consist of 79,193 square feet of office space and
maintenance and storage facilities.  The Company's facilities in Tontitown are
owned by the Company.

      The Company's subsidiaries also lease terminal facilities in Warren,
Ohio; Springfield, Missouri; Laredo, El Paso, and Dallas, Texas; and Oklahoma
City, Oklahoma; the terminal facilities in Columbia, Mississippi are owned.
These facilities are leased primarily on a month-to-month basis, and provide
on-the-road maintenance and trailer drop and relay stations.  The Company's
subsidiaries also lease an aggregate of 17 other locations as trailer drop and
relay stations only.

      The Company has access to trailer drop and relay stations in various
locations across the country.  Certain of these facilities are leased by the
Company on a month-to-month basis from an affiliate of its majority
shareholder.

      The Company believes that all of the properties owned or leased by the
Company are suitable for their purposes and adequate to meet the Company's
needs.

ITEM 3.  LEGAL PROCEEDINGS.

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

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

      No matters were submitted to a vote of security holders of the Company
during the fourth quarter ended December 31, 1996.




                                       8
<PAGE>   10
                                    PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.


       The Company's Common Stock is traded on the Nasdaq National Market
System under the Nasdaq symbol PTSI.  The following table sets forth, for the
fiscal quarters indicated, the range of the high and low sales price per share
for the Common Stock as quoted on the Nasdaq National Market System.


Fiscal Year Ended December 31, 1996
<TABLE>
<CAPTION>
                        High                      Low
                        ----                      ---
<S>                     <C>                      <C>
First Quarter           $8 1/8                   $6 5/8

Second Quarter           7 7/8                    6 1/4

Third Quarter            7                        6 1/8

Fourth Quarter           6 1/4                    4
</TABLE>


Fiscal Year Ended December 31, 1995
<TABLE>
<CAPTION>
                          High                      Low
                          ----                      ---
<S>                     <C>                        <C>
First Quarter           $ 7 1/2                    $ 5 1/2

Second Quarter            6 5/8                      5 1/2

Third Quarter             8 1/4                      5 3/4

Fourth Quarter            8 3/4                      6 3/4
</TABLE>


       As of March 21, 1997, the number of stockholders of record was
approximately 460.  The Company has not declared or paid any cash dividend on
its common stock.  The policy of the Board of Directors of the Company is to
retain earnings for the expansion and development of the Company's business.
Future dividend policy and the payment of dividends, if any, will be determined
by the Board of Directors in light of circumstances then existing, including
the Company's earnings, financial condition and other factors deemed relevant
by the Board.




                                       9
<PAGE>   11

ITEM 6.  SELECTED FINANCIAL DATA.

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


<TABLE>
<CAPTION>
                                                                  Years ended December 31,
                                                        1996         1995         1994        1993         1992
                                                        ---------------------------------------------------------
                                                                (in thousands, except per share amounts)
<S>                                                   <C>           <C>          <C>          <C>         <C>
Statements of Operations:

Operating revenues                                    $113,021      $91,595      $76,147      $70,238     $66,687
                                                      --------      -------      -------      -------     -------
Operating Expenses:
  Salaries, wages and benefits                          52,444       40,020       33,647       31,850      30,745
  Operating supplies                                    21,909       16,719       14,688       16,393      16,248
  Rent and purchased transportation                      1,824        1,538          991        1,599       3,409
  Depreciation and amortization                         11,999        9,428        7,142        4,683       3,131
  Operating taxes and licenses                           6,734        5,608        5,078        4,680       4,410
  Insurance and claims  5,004                            4,163        3,816        3,686        3,822
  Communications and utilities                           1,090          852          868          864         914
  Other                                                  2,077        1,666        1,279        1,430       1,168
  (Gain) loss on sale or disposal of
      property and equipment                               375          159         (334)        (246)        (87)
                                                      --------      -------      -------      -------     -------

             Total operating expenses                  103,456       80,153       67,175       64,939      63,760
                                                      --------      -------      -------       ------     -------

Operating income (loss)                                  9,565       11,442        8,972        5,299       2,927
Interest expense                                        (4,137)      (3,521)      (2,926)      (1,972)       (985)
Other                                                       31          166          217          122         (70)
                                                      --------      -------      -------      -------     -------
Income (loss) before income taxes and
  dividends on redeemable preferred stock                5,459        8,087        6,263        3,449       1,872

Income taxes                                             2,147        3,073        2,493          321          70
                                                      --------      -------      -------      -------     -------
Income (loss) before dividends on
  redeemable preferred stock                             3,312        5,014        3,770        3,128       1,802

Accrued dividends on redeemable preferred stock              0            0           30          360         360
                                                      --------      -------      -------      -------     -------

Net income (loss)                                     $  3,312      $ 5,014      $ 3,740      $ 2,768     $ 1,442
                                                      ========      =======      =======      =======     =======
Earnings per common share
  Primary:
     Net income (loss) per share                      $    .44      $   .65      $   .50      $   .39     $   .23
                                                      ========      =======      =======      =======     =======
     Average common and common
        equivalent shares outstanding                    7,578(1)     7,661(1)     7,520(1)     7,335(1)    7,020(1)
                                                      ========      =======      =======      =======     =======
</TABLE>


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

(1)    Income per share for 1996, 1995, 1994, 1993 and 1992 assumes the
       exercise of stock purchase warrants and stock options to purchase an
       aggregate of 3,271,280, 3,529,278, 3,454,549, 3,434,429 and 3,125,250
       shares of Common Stock, respectively.





                                       10
<PAGE>   12

<TABLE>
<CAPTION>
                                                                          Balance Sheet Data
                                                                           At December 31,
                                                         1996        1995         1994        1993         1992
                                                    ---------------------------------------------------------------

                                                                            (in thousands)
<S>                                                    <C>          <C>          <C>          <C>         <C>
Total assets                                           $94,895      $86,808      $65,324      $56,140     $30,676

Long-term debt, excluding current maturities            34,938       37,966       32,206       28,650       4,068

Redeemable preferred stock                                   0            0            0        4,397       4,037

Shareholders' equity                                    26,312       18,232       13,034        9,155       6,312
</TABLE>


<TABLE>
<CAPTION>
                                                                            Operating Data
                                                                   For the Year Ended December 31,
                                                         1996        1995         1994        1993         1992
                                                    ---------------------------------------------------------------

                                                                            (in thousands)
<S>                                                   <C>          <C>          <C>          <C>         <C>
Operating ratio(1)                                        91.5%        87.5%        88.2%        92.5%       95.6%

Average number of truckloads per week                    2,437        1,913        1,617        1,633       1,555

Average miles per trip                                     845          899          859          794         809

Total miles traveled (in thousands)                    102,946       85,588       69,128       64,879      63,423

Average miles per tractor                              122,250      118,424      116,181      114,830     110,879

Average revenue per tractor per week                  $  2,684     $  2,711     $  2,668     $  2,462    $  2,313

Average revenue per loaded mile                       $   1.17     $   1.14     $   1.18     $   1.16    $   1.13

Empty mile factor                                          6.1%         6.2%         6.8%         6.9%        7.3%


AT END OF PERIOD:

Total Company-owned/leased tractors                        912(2)       716(3)       595(4)       565(5)      572(6)

Average age of all tractors (in years)                    1.85         1.26         1.70         3.04        3.66

Total trailers                                           2,398(8)     1,638(7)     1,434(8)     1,512(9)    1,519(10)

Average age of trailers (in years)                        2.60         2.34         2.09         3.84        5.28

Number of employees                                      1,438        1,192          859          945         927
</TABLE>


(1)  Total operating expenses as a percentage of total operating revenues.
(2)  Includes 126 owner operator tractors.
(3)  Includes 45 owner operator tractors.
(4)  Includes 40 owner operator tractors.
(5)  Includes 34 owner operator tractors.
(6)  Includes 19 tractors leased to an affiliate of the Company's majority
     shareholder and 40 owner operator tractors.
(7)  Includes 82 trailers leased from an affiliate of the Company's majority
     shareholder.
(8)  Includes 74 trailers leased from an affiliate of the Company's majority
     shareholder.
(9)  Includes 266 trailers leased from an affiliate of the Company's majority
     shareholder.
(10) Includes 493 trailers leased from an affiliate of the Company's majority
     shareholder.



                                       11
<PAGE>   13

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND 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>
                                                         Percentage of Operating Revenues

                                                             Years ended December 31,
                                                      --------------------------------------
                                                        1996            1995            1994
                                                        ----          --------        --------
<S>                                                     <C>            <C>              <C>
Operating revenues                                        100%          100.0%           100.0%
                                                        -----          ------           ------
Operating expenses:
  Salaries, wages and benefits                           46.4            43.7             44.2
  Operating supplies                                     19.4            18.3             19.3
  Rent and purchased transportation                       1.6             1.7              1.3
  Depreciation and amortization                          10.6            10.3              9.4
  Operating taxes and licenses                            6.0             6.1              6.7
  Insurance and claims                                    4.4             4.5              5.0

  Communications and utilities                            1.0             0.9              1.1
  Other                                                   1.8             1.8              1.6
  (Gain) loss on sale or disposal
  of property and equipment                               0.3             0.2              (.4)
                                                        -----          ------           ------
        Total operating expenses                         91.5            87.5             88.2
                                                        -----          ------           ------
Operating income                                          8.5            12.5             11.8
Interest expense                                         (3.6)           (3.8)            (3.8)
Other, net                                                  0              .2               .2
                                                        -----          ------           ------
Income before income taxes and dividends
  on redeemable preferred stock                           4.9             8.9              8.2
Federal and state income taxes                           (1.9)           (3.4)            (3.3)
                                                        -----          ------           ------
Income before dividends on redeemable
  preferred stock                                         3.0             5.5              4.9
Accrued dividends on redeemable preferred
  stock                                                    --              --               --
                                                        -----          ------           ------
Net income                                                3.0             5.5              4.9
                                                        =====          ======           ======
</TABLE>


RESULTS OF OPERATIONS

1996 COMPARED TO 1995

       For the year ended December 31, 1996, revenues increased 23.4% to $113.0
million as compared to $91.6 million for the year ended December 31, 1995.  The
main factor for the increase in revenues was an increase in average tractors
from 658 in 1995 to 843 in 1996, of which 162 were added in connection with the
acquisition of Allen Freight Services, Inc. (AFS).  AFS produced revenues of
$15.0 million from the acquisition date to December 31, 1996.

       The Company's operating ratio was 91.5% of revenues in 1996 compared to
87.5% in 1995.




                                       12
<PAGE>   14

       Salaries, wages and benefits increased from 43.7% of revenues in 1995 to
46.4% in 1996.  The major factor for the increase was a 2.6% increase in
expense attributable to wages paid to AFS fleet owners, which are higher than
wages paid to Company drivers.

       Operating supplies and expenses increased from 18.3% of revenues in 1995
to 19.3% of revenues in 1996, reflecting increased fuel costs for 1996.

       Interest expense increased approximately $616,000 in 1996 when compared
to 1995, primarily as a result of borrowings associated with new equipment
purchases and an increased line of credit balance throughout the year.

       The Company's effective tax rate increased from 38% in 1995 to 39.3% in
1996, as a result of AFS' practice of paying per diem expenses to its drivers,
a portion of which is a nondeductible permanent difference in the calculation
of income tax expense.  Per diems are no longer paid to AFS drivers effective
July 1, 1996.

       In 1994, management concluded that the benefits of all net operating
losses and credits would be recorded and that no valuation allowance against
the deferred tax assets was necessary at December 31, 1994.

       At December 31, 1996, the Company's deferred tax assets were $6.9
million and deferred tax liabilities were $13.5 million.  In assessing the need
for a valuation allowance against deferred tax assets at December 31, 1996,
management considered the following factors: 1) the Company has recorded $6.6
million in deferred tax liabilities for future taxable temporary differences
(primarily depreciation related) which will result in additional taxable income
for future periods; 2) the Company's recent operating results have produced a
total of more than $19.7 million of pretax accounting income for 1996, 1995 and
1994 and net operating loss carryovers have offset all taxable income (total of
$1.3 million) in these years; 3) the Company has various alternatives, such as
equipment leasing, to utilize net operating losses which might otherwise
expire; and 4) the Company's carryover periods for its deferred tax assets are
extensive, with expiration beginning in 2003 for net operating losses and 1999
for investment credits.

1995 COMPARED TO 1994

       For the year ended December 31, 1995, revenues increased 20.3% to $91.6
million as compared to $76.1 million for the year ended December 31, 1994.  The
Company's utilization (revenue per tractor per work day) increased 1.6% from
$534 in 1994 to $542 in 1995.  The two main factors contributing to the
increase in utilization were (1) the continued replacement of a majority of
older equipment in 1995, reducing the down time related to maintenance problems
with older equipment, and (2) the increase in revenues in the dedicated
services division, due in part as a result of the acquisition of Choctaw
Express, Inc. on January 31, 1995.  Choctaw Express, Inc. produced revenues of
$8.1 million in 1995.

  The Company's operating ratio improved from 88.2% in 1994 to 87.5% in 1995.

       Salaries, wages and benefits increased in absolute dollars, but
decreased as a percentage of revenues from 44.2% in 1994 to 43.7% in 1995.  The
largest savings were realized in the areas of maintenance wages where a
decrease of .6% was recorded.




                                       13
<PAGE>   15


       Operating supplies and expenses decreased from 19.3% of revenues in 1994
to 18.3% of revenues in 1995, as the Company continues to modernize its fleet.
The largest savings were realized in the area of equipment maintenance where a
1.0% reduction was realized.

       Operating taxes and licenses expenses decreased from 6.7% of revenues in
1994 to 6.1% of revenues in 1995.  The .4% decrease was attributable to lower
accruals of state fuel tax expenses.

       The Company incurred an increase in depreciation expense of .9% as a
result of new equipment being placed into service in 1995.  For the period, as
a percentage of revenues, depreciation expense increased from 9.4% in 1994 to
10.3% in 1995.  This increase in depreciation expense was offset by reductions
in operating costs combined with increased utilization of equipment.

       Interest expense as a percentage of revenues in 1995 remained consistent
with 1994.  Interest expense increased in absolute dollars by $.6 million,
which is attributable to additional long-term debt incurred on equipment
purchased during 1995.

       The Company's effective tax rate decreased slightly from 40% in 1994 to
38% in 1995.  The Company's effective tax rate reflects the statutory federal
tax rate and the weighted average tax rate of the states in which the Company
conducts business.  The 1995 tax rate is slightly lower than the effective tax
rate in 1994 due to a change in the Company's policy relating to driver per
diem in 1995.

       In 1994, management concluded that the benefits of all net operating
losses and credits would be recorded and that no valuation allowance against
the deferred tax assets was necessary at December 31, 1994.

       At December 31, 1995, the Company's deferred tax assets were $5.9
million and deferred tax liabilities were $10.8 million.  In assessing the need
for a valuation allowance against deferred tax assets at December 31, 1995,
management considered the following factors:  1) the Company has recorded $4.9
million of deferred tax liabilities for future taxable temporary differences
(primarily depreciation related) which will result in additional taxable income
in future periods; 2) the Company's recent operating results have produced a
total of more than $17.4 million of pretax accounting income for 1995, 1994 and
1993 and net operating loss carryovers have offset all taxable income (total of
$4.6 million) in these years; 3) the Company has various alternatives, such as
equipment leasing to utilize net operating losses, which might otherwise
expire; and 4) the Company's carryover periods for its deferred tax assets are
extensive, with expiration beginning in 2003 for net operating losses and 1999
for investment credits.

LIQUIDITY AND CAPITAL RESOURCES

       During 1996, the Company generated $13.0 million in cash from operating
activities.  The ratio of current assets to current liabilities was 1.0 at the
end of 1996, compared to 1.1 and 1.0 at the end of 1995 and 1994, respectively.

       Investing activities used $16.8 million in cash in 1996 compared to
$22.1 million and $10.3 million in 1995 and 1994, respectively.  The cash used
in all three years related primarily to the purchase of revenue equipment used
in the Company's operations.

       Financing activities provided $2.1 million in cash in 1996 primarily
from the warrants exercised in 1996.




                                       14
<PAGE>   16

       The Company's principal subsidiary, P.A.M. Transport, Inc., has a $15.0
million secured line of credit from a bank subject to borrowing limitations.
Outstanding advances on this line of credit were approximately $8.7 million (at
an interest rate of 8.07%) at December 31, 1996, including $1.5 million in
letters of credit.  The Company's borrowing limitation at December 31, 1996 was
$9.2 million.  This line of credit is guaranteed by the Company and matures May
31, 1998.  The line of credit agreement contains restrictive covenants which
require the Company to maintain a net worth of $12.5 million and a debt service
coverage ratio of not less than 1.0 to 1.0.  The line of credit agreement also
includes restrictions on dividend payments and certain corporate acts such as
mergers and consolidations.  At December 31, 1996, the Company was in
compliance with all such covenants.

       In addition to cash flow from operations, the Company uses its existing
line of credit on an interim basis to finance capital expenditures and repay
long-term debt.  Longer-term transactions, such as installment notes (generally
three and four year terms at fixed rates) are entered into for the purchase of
revenue equipment.  Two subsidiaries of the Company, P.A.M. Transport and
P.A.M. Dedicated Services, Inc., entered into installment obligations in 1996
for the purchase of replacement revenue equipment which totaled approximately
$17.5 million.  The Company's weighted average interest rates on all borrowings
were 7.67%, 7.9% and 7.9% for 1996, 1995 and 1994, respectively.

       During 1996, the Company disposed of certain revenue equipment for
approximately $2.0 million.  The Company plans to replace 360 trailers and 130
tractors, and to add 100 additional new tractors and 140 additional new
trailers during 1997, which would result in additional debt of approximately
$19.0 million.  However, the Company intends to structure a portion of these
equipment expenditures in the form of operating leases.  Management expects
that the Company's existing working capital and its available line of credit
will be sufficient to meet the Company's capital commitments as of December 31,
1996, to repay indebtedness coming due in the current year, and to fund its
operating needs during fiscal 1997.

INSURANCE

       With respect to cargo loss, physical damage and auto liability, the
Company generally maintains insurance policies covering these risks with an
aggregate deductible of $5,000 per occurrence.  The Company maintains a reserve
for estimated losses for claims incurred, and maintains a reserve for claims
incurred but not reported (based on the Company's historical experience). As of
July 1, 1994, the Company became self-insured for workers' compensation, with
excess coverage maintained for claims exceeding $250,000 in Arkansas, Oklahoma,
Ohio, Mississippi and Florida. Prior to July 1, 1994, the Company maintained an
insurance policy for worker's compensation with a deductible of $350,000 per
occurrence.  The Company has reserved for estimated losses to pay such claims
as incurred.  Additionally, a reserve has been estimated for those claims
incurred but not reported.  The Company has not experienced any adverse trends
involving differences in claims experienced versus claims estimates for
workers' compensation reserves.  The Company contracts a third-party licensed
associate of risk management and a certified Hazard Control Manager to develop
its workers' compensation reserves using the Company's historical data of past
injuries.  Letters of credit in the amounts of $300,000, $200,000, $250,000,
and $500,000 are held by a bank as security for workers' compensation claims in
Arkansas, Oklahoma, Mississippi, and Florida, respectively, and letters of
credit in the amounts of $100,000 and $150,000 are held by a bank for auto
liability claims.




                                       15
<PAGE>   17




SEASONALITY

       The Company's revenues do not exhibit a seasonal pattern, due primarily
to its varied customer mix.  Operating expenses are generally somewhat higher
in the winter months, primarily due to decreased fuel efficiency and increased
maintenance costs in cold weather.

OTHER MATTERS

       In October 1995, the Financial Accounting Standards Board issued
Statement No. 123, Accounting for Stock Based Compensation, which becomes
effective in 1996.  The Company has disclosed in its 1995 financial statements
that it elects to continue following the existing accounting rules (the
intrinsic value method).

ENVIRONMENTAL

       The Company has no outstanding inquiries with any federal or state
environmental agency at December 31, 1996.

INFLATION

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

       Competition for drivers has increased in recent years, leading to
increased labor costs.  While increases in fuel and driver costs affect the
Company's operating costs, the effects of such increases are not greater for
the Company than for other trucking concerns.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                  The following statements are filed with this report:

                  Report of Independent Auditors

                  Consolidated Balance Sheets - December 31, 1996 and 1995

                  Consolidated Statements of Income - Years ended December 31,
                  1996, 1995 and 1994

                  Consolidated Statements of Shareholders' Equity - Years ended
                  December 31, 1996, 1995 and 1994

                  Consolidated Statements of Cash Flows - Years ended December
                  31, 1996, 1995 and 1994

                  Notes to Consolidated Financial Statements



                                       16
<PAGE>   18


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

      On November 19, 1996, the Company dismissed its independent auditors,
Ernst & Young LLP, and on the same date engaged the firm of Arthur Andersen LLP
as its independent auditors for the fiscal year ending December 31, 1996.  Each
of these actions was approved by the Board of Directors of the Company.

      The reports of Ernst & Young LLP on the financial statements of the
Company for the past two fiscal years did not contain an adverse opinion or a
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope, or accounting principles.

      In connection with the audits of the Company's financial statements for
each of the two fiscal years ended December 31, 1995 and 1994, and in the
subsequent interim period prior to the dismissal of Ernst & Young LLP, there
were no disagreements with Ernst & Young LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreement, if not resolved to the satisfaction of Ernst &
Young LLP, would have caused it to make reference to the subject matter of the
disagreement in its report.

      Ernst & Young LLP has furnished the Company with a letter addressed to
the Securities and Exchange Commission stating that it agrees with the above
statements, a copy of which has been filed as an exhibit to the Current Report
on Form 8-K dated November 19, 1996.




                                       17
<PAGE>   19






                       CONSOLIDATED FINANCIAL STATEMENTS


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


                  Years ended December 31, 1996, 1995 and 1994
                      with Report of Independent Auditors





                                      18
<PAGE>   20

             P.A.M. Transportation Services, Inc. and Subsidiaries

                       Consolidated Financial Statements

                  Years ended December 31, 1996, 1995 and 1994




                                    CONTENTS



Audited Consolidated Financial Statements:

<TABLE>
<S>                                                                                                   <C>
      Consolidated Balance Sheets   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     20
      Consolidated Statements of Income   . . . . . . . . . . . . . . . . . . . . . . . . . . . .     22
      Consolidated Statements of Shareholders' Equity   . . . . . . . . . . . . . . . . . . . . .     23
      Consolidated Statements of Cash Flows   . . . . . . . . . . . . . . . . . . . . . . . . . .     24
      Notes to Consolidated Financial Statements  . . . . . . . . . . . . . . . . . . . . . . . .     25

Report of Independent Public Accountants  . . . . . . . . . . . . . . . . . . . . . . . . . . . .     40
</TABLE>



                                       19
<PAGE>   21

                      P.A.M. Transportation Services, Inc.

                          Consolidated Balance Sheets

              (thousands, except par value and share information)


<TABLE>
<CAPTION>
                                                                DECEMBER 31
                                                             1996         1995
                                                           ---------------------
<S>                                                       <C>          <C>
ASSETS (NOTE 4)
Current assets:
    Cash and cash equivalents                             $  5,941     $  7,629
    Accounts receivable (Note 4):
         Trade, net of allowance for doubtful accounts
             (1996--$579; 1995--$324)                       16,072       12,517
         Other                                               1,030          307
    Equipment held for sale (Note 1)                         1,264        1,223
    Operating supplies and inventories                         382          468
    Prepaid expenses and deposits                            2,816        3,341
    Investment in direct financing lease (Note 8)               --          691
    Income taxes refundable (Note 5)                            --           95
Total current assets                                        27,505       26,271

Property and equipment (Notes 4, 8 and 9):
    Land                                                       956          956
    Structures and improvements                              2,611        2,395
    Revenue equipment                                       84,059       71,885
    Service vehicles                                         1,804        1,037
    Office furniture and equipment                           3,164        2,556
                                                          ---------------------
                                                            92,594       78,829
    Allowances for depreciation and amortization           (29,714)     (21,540)
                                                          ---------------------
                                                            62,880       57,289
Other assets:
    Investment in direct financing lease,
         less current portion (Note 8)                          --          548
    Excess of cost over net assets acquired, net of
         accumulated amortization (1996--$615;
         1995--$502)                                         2,511        1,140
    Noncompetition agreements, net of accumulated
         amortization (1996--$668; 1995--$261)               1,178        1,059
    Other                                                      821          501
                                                          ---------------------
                                                             4,510        3,248
                                                          ---------------------
Total assets                                              $ 94,895     $ 86,808
                                                          =====================
</TABLE>




                                       20


<PAGE>   22





<TABLE>
<CAPTION>
                                                                DECEMBER 31
                                                             1996        1995
                                                           ---------------------
<S>                                                        <C>          <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Trade accounts payable                                 $ 5,583      $ 6,729
    Accrued expenses (Note 3)                                3,817        3,048
    Deferred income taxes (Note 5)                              65          409
    Current portion of long-term debt (Notes 4 and 9)       16,849       15,120
                                                           --------------------
Total current liabilities                                   26,314       25,306


Long-term debt, less current portion (Notes 4 and 9)        34,938       37,966


Deferred income taxes (Note 5)                               6,569        4,489


Noncompetition agreements (Note 2)                             762          815


Shareholders' equity (Note 6):
    Common stock, $.01 par value:
         Authorized shares--20,000,000
         Issued and outstanding shares:
             1996--8,123,557; 1995--4,990,968                   81           50
    Additional paid-in capital                              18,044       13,307
    Retained earnings                                        8,187        4,875
                                                           --------------------
Total shareholders' equity                                  26,312       18,232
                                                           --------------------
Total liabilities and shareholders' equity                 $94,895      $86,808
                                                           ====================
</TABLE>

See accompanying notes.



                                       21

<PAGE>   23

                      P.A.M. Transportation Services, Inc.

                       Consolidated Statements of Income

                       (thousands, except per share data)

<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31
                                                        1996          1995           1994
                                                      ----------------------------------------
<S>                                                   <C>            <C>             <C>
Operating revenues (Notes 1, 2 and 8)                 $113,021       $  91,595       $  76,147
Operating expenses and costs:
    Salaries, wages and benefits                        52,444          40,020          33,647
    Operating supplies and expenses                     21,909          16,719          14,688
    Rents and purchased transportation                   1,824           1,538             991
    Depreciation and amortization                       11,999           9,428           7,142
    Operating taxes and licenses                         6,734           5,608           5,078
    Insurance and claims                                 5,004           4,163           3,816
    Communications and utilities                         1,090             852             868
    Other                                                2,077           1,666           1,279
    Loss (gain) on sale or disposal of property
         and equipment                                     375             159            (334)
                                                      ----------------------------------------
                                                       103,456          80,153          67,175
                                                      ----------------------------------------
Operating income                                         9,565          11,442           8,972
Other income (expense):
    Interest expense                                    (4,137)         (3,521)         (2,926)
    Other (Note 8)                                          31             166             217
                                                      ----------------------------------------
                                                        (4,106)         (3,355)         (2,709)
                                                      ----------------------------------------
Income before income taxes and dividends on
    redeemable preferred stock                           5,459           8,087           6,263
Federal and state income taxes:
    Current                                                259             528           1,160
    Deferred                                             1,888           2,545           1,333
                                                       ---------------------------------------
                                                         2,147           3,073           2,493
                                                       ---------------------------------------
Income before dividends on redeemable
    preferred stock                                      3,312           5,014           3,770
Accrued dividends on redeemable preferred stock             --              --              30
                                                       ---------------------------------------

Net income                                             $ 3,312       $   5,014       $   3,740
                                                       =======================================

Earnings per common share (Note 7)                     $   .44       $     .65       $     .50
                                                       =======================================

Average common and common equivalent
    shares outstanding                                 $ 7,578           7,661           7,520
                                                       =======================================
</TABLE>

See accompanying notes.


                                       22



<PAGE>   24

                      P.A.M. Transportation Services, Inc.

                Consolidated Statements of Shareholders' Equity

                                  (thousands)



<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
                                                              ADDITIONAL    RETAINED
                                                    COMMON      PAID-IN     EARNINGS
                                                     STOCK      CAPITAL     (DEFICIT)      TOTAL
--------------------------------------------------------------------------------------------------
<S>                                               <C>          <C>          <C>           <C>
Balances at January 1, 1994                       $    49      $12,986      $(3,879)      $ 9,156
    Net income                                         --           --        3,740         3,740
    Exercise of stock options--
         42,700 shares issued (Note 6)                 --          101           --           101
    Tax benefits of stock options (Note 6)             --           36           --            36
--------------------------------------------------------------------------------------------------
Balances at December 31, 1994                          49       13,123         (139)       13,033
    Net income                                         --           --        5,014         5,014
    Exercise of stock options--
         56,700 shares issued (Note 6)                  1          142           --           143
Tax benefits of stock options (Note 6)                 --           42           --            42
--------------------------------------------------------------------------------------------------
Balances at December 31, 1995                          50       13,307        4,875        18,232
    Net income                                         --           --        3,312         3,312
    Exercise of stock options and warrants--
         3,128,600 shares issued (Note 6)              31        4,695           --         4,726
    Tax benefits of stock options (Note 6)             --           42           --            42
--------------------------------------------------------------------------------------------------
Balances at December 31,1996                      $    81      $18,044      $ 8,187       $26,312
--------------------------------------------------------------------------------------------------

</TABLE>


See accompanying notes.





                                       23

<PAGE>   25

                      P.A.M. Transportation Services, Inc.

                     Consolidated Statements of Cash Flows

                       (thousands, except per share data)

<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31
                                                          1996         1995         1994
                                                  --------------------------------------------
<S>                                                  <C>             <C>             <C>
OPERATING ACTIVITIES
Net income                                           $   3,312       $   5,014       $   3,740
Adjustments to reconcile net income to net cash
   provided by operating activities:
      Depreciation and amortization                     11,999           9,428           7,142
      Noncompetition agreement amortization                408             261              --
      Provision for doubtful accounts                      140              89             113
      Provision for deferred income taxes                1,888           2,545           1,333
      Loss (gain) on sale or disposal of property
          and equipment                                    375             159            (334)
      Accrued dividends on redeemable preferred stock       --              --              30
      Changes in operating assets and liabilities:
          Accounts receivable                           (2,047)         (3,013)           (937)
          Prepaid expenses and other assets                749            (798)           (452)
          Income taxes refundable                           --             187            (154)
          Trade accounts payable                        (2,934)          1,652           2,166
          Accrued expenses                                (831)           (246)            241
                                                     -----------------------------------------
Net cash provided by operating activities               13,059          15,278          12,888
                                                     -----------------------------------------

INVESTING ACTIVITIES
Purchases of property and equipment                    (19,921)        (25,307)        (15,111)
Proceeds from sale or disposal of property and
  equipment                                              2,020           3,841           4,224
Lease payments received on direct financing lease        1,240             624             561
Choctaw acquisition less cash acquired                      --          (1,323)             --
AFS acquisition (Note 2)                                  (200)             --              --
                                                     -----------------------------------------
Net cash used in investing activities                  (16,861)        (22,165)        (10,326)
                                                     -----------------------------------------

FINANCING ACTIVITIES
Redemption of preferred stock                               --              --          (4,426
Borrowings under line of credit                        127,766          99,884          58,835
Repayments under line of credit                       (128,445)        (97,518)        (59,920)
Borrowings of long-term debt                            17,527          21,239          14,835
Repayments of long-term debt                           (19,093)        (13,083)        (11,566)
Payments under noncompetition agreement                   (407)           (269)             --
Proceeds from exercise of stock options and warrants     4,724             143             101
Tax benefits of stock options                               42              42              36
                                                     -----------------------------------------
Net cash provided by (used in) financing activities      2,114          10,438          (2,105
                                                     -----------------------------------------
Net increase (decrease) in cash and cash equivalents    (1,688)          3,551             457
Cash and cash equivalents at beginning of year           7,629           4,078           3,621
                                                     -----------------------------------------
Cash and cash equivalents at end of year             $   5,941       $   7,629       $   4,078
                                                     =========================================
</TABLE>

See accompanying notes.



                                       24


<PAGE>   26

                     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 subsidiaries.  All significant intercompany accounts and transactions have
been eliminated.

Majority ownership of the Company is held by an affiliate of another
transportation company, with whom the Company has certain business
relationships.  See Note 8.

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.

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.  If
this review indicates that goodwill will not be recoverable, as determined
based on undiscounted cash flows acquired over the remaining amortization
period, the Company's carrying value of the goodwill would be reduced by the
estimated shortfall of cash flows.  No reduction of goodwill was required as of
December 31, 1996.

CLAIMS LIABILITIES

The Company maintains insurance policies covering cargo loss and auto liability
claims.  The Company, generally, maintains an aggregate deductible of $5,000 on
cargo, physical damage and liability loss claims.  As of July 1, 1994, the
Company became self-insured for worker's compensation.  Excess coverage is
maintained for claims exceeding $250,000 (Arkansas, Oklahoma, Ohio, Mississippi
and Florida).  Prior to July 1, 1994, the Company maintained an insurance for




                                       25



<PAGE>   27

                     P.A.M. Transportation Services, Inc.

                   Notes to Consolidated Financial Statements





1.  ACCOUNTING POLICIES (CONTINUED)

worker's compensation with a deductible of $350,000 per occurrence.  The
Company has reserved for estimated losses to pay such claims as incurred.
Additionally, a reserve has been estimated for those claims incurred but not
reported.  The Company has not experienced any adverse trends involving
differences in claims experienced versus claims estimated for worker's
compensation reserves.  The Company contracts with a third-party licensed
associate of risk management and a certified Hazard Control Manager to develop
its worker's compensation reserves using the Company's historical data of past
injuries.  Letters of credit in the amounts of $300,000, $200,000, $250,000 and
$500,000 are held by a bank as security for worker's compensation claims in
Arkansas, Oklahoma, Mississippi and Florida, respectively, and letters of
credit in the amounts of $100,000 and $150,000 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 with expenses recognized 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 asset for financial reporting purposes:

<TABLE>
<CAPTION>
                              ASSET CLASS                   ESTIMATED ASSET LIFE
                          ------------------                --------------------
                          <S>                                     <C>
                          Tractors                                3-4 years
                          Trailers                                5 years
                          Service Vehicles                        3-5 years
                          Office Furniture                        3-7 years
                          Buildings                               5-30 years
</TABLE>

EQUIPMENT HELD FOR SALE

Equipment held for sale consists of revenue equipment no longer in service,
that is expected to be sold within the next year.  This equipment is recorded
at its estimated net realizable value.



                                       26





<PAGE>   28

                     P.A.M. Transportation Services, Inc.

                   Notes to Consolidated Financial Statements





1.  ACCOUNTING POLICIES (CONTINUED)

INCOME TAXES

In February 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No.  109, Accounting for Income Taxes (FAS 109).
The Company adopted this statement in the first quarter of 1994.  Adoption of
FAS 109 had no material effect on the Company's financial position or results
of operations.

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.  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.  At December 31, 1996, one customer accounted for 16% of the
consolidated trade accounts receivable balance.  At December 31, 1995, two
separate customers accounted for 14% and 12%, respectively, of the consolidated
trade accounts receivable balance.

In 1996, 1995 and 1994, one customer accounted for 22%, 19% and 12% of
revenues, respectively.  A second customer accounted for 12% of revenues in
1996 and 1995.  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 major customers' revenues for 1996 and 1995, 36.6% and 39.8%,
respectively, were derived from transportation services provided to the
automobile manufacturing industry.

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 1995, the Financial Accounting Standards Board issued Statement No.  121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of.  This statement was adopted in the first quarter of 1996.  The
adoption of Statement No. 121 did not  have a significant impact on the
Company's financial position or results of operations.





                                       27


<PAGE>   29

                     P.A.M. Transportation Services, Inc.

                   Notes to Consolidated Financial Statements





1.  ACCOUNTING POLICIES (CONTINUED)

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles 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.  ACQUISITIONS

On March 11, 1996, the Company acquired all of the outstanding capital stock
(the "Shares") of Allen Freight Services, Inc., a Missouri corporation ("AFS").
The total purchase price for the shares was $200,000, which was negotiated by
the parties at arms length.  Assets of approximately $2.2 million were acquired
and liabilities of approximately $3.5 million were assumed.  The Company paid
the purchase price by utilizing its existing line of credit.

The acquisition has been accounted for under the purchase method, effective
March 11, 1996, with the operations of AFS included in the Company's financial
statements since that date.  If the acquisition had occurred at the beginning
of fiscal 1996, the effect on consolidated operating revenues, net income and
net income per share would not have been material.  The purchase price has been
allocated to assets and liabilities based on their estimated fair values as of
the date of the acquisition.  Approximately $1.5 million in goodwill was
recorded as a result of the purchase allocation and it is being amortized over
a 25-year period.  The Company also entered into three-year noncompetition
agreements with four former shareholders and officers/employees of AFS.

On January 31, 1995, the Company acquired all the outstanding stock of Choctaw
Express, Inc. and Choctaw Brokerage, Inc., based in Oklahoma, (collectively
"Choctaw").  Assets of approximately $2.7 million were acquired and liabilities
of approximately $.8 million were assumed.  The total purchase price for
Choctaw was approximately $2.5 million.

The acquisition has been accounted for using the purchase method, effective
January 31, 1995, with operations included in the Company's financial
statements beginning on the acquisition date.  The purchase price has been
allocated to assets and liabilities based on their estimated fair values as of
the date of acquisition.  Goodwill in the amount of $600,000 was recorded as a
result of the purchase allocation and it is being amortized over a 25-year
period.  The Company entered into a five-year noncompetition agreement with the
former shareholder of Choctaw which provides for payments of approximately
$300,000 per year.



                                       28

<PAGE>   30

                     P.A.M. Transportation Services, Inc.

                   Notes to Consolidated Financial Statements





2.  ACQUISITIONS (CONTINUED)

Proforma unaudited financial information (as if the Choctaw acquisition was
completed at the beginning of the respective periods) for 1995 and 1994 is
provided below:

<TABLE>
<CAPTION>
                                                          YEAR ENDED DECEMBER 31,
                                                            1995          1994
                                                   ---------------------------------
                                                   (thousands except per share data)
                                                                (Unaudited)
         <S>                                               <C>          <C>
         Operating revenues                                $92,462      $88,287
         Operating expenses                                 80,917       78,797
                                                           -------      -------
         Operating income                                  $11,545      $ 9,490
         Other expenses, net                                 3,373        2,890
         Income taxes                                        3,105        2,624
                                                           -------      -------
         Income before dividends on preferred stock          5,067        3,976
         Accrued dividends on preferred stock                   --           30
                                                           -------      -------
         Net income                                        $ 5,067      $ 3,946
                                                           =======      =======
         Net income per common share (primary)             $   .66      $   .53
                                                           =======      =======
         Average common and common equivalent
            shares outstanding                               7,661        7,520
                                                           =======      =======
</TABLE>

The above pro forma unaudited financial information does not purport to be
indicative of the results which actually would have occurred had the
acquisition been made at the beginning of the respective periods.

3.  ACCRUED EXPENSES

<TABLE>
<CAPTION>
                                                                          DECEMBER 31
                                                                   1996                 1995
                                                               -------------------------------
                                                                          (thousands)
             <S>                                               <C>                  <C>
             Payroll                                           $    1,591           $    1,051
             Taxes                                                    217                  613
             Interest                                                 280                  207
             Driver escrows                                           340                  237
             Insurance                                                263                    -
             Current portion of noncompete agreements                 371                  236
             Self insurance claims reserves                           755                  704
                                                               -------------------------------
                                                               $    3,817           $    3,048
                                                               ===============================
</TABLE>


                                       29



<PAGE>   31

                     P.A.M. Transportation Services, Inc.

                   Notes to Consolidated Financial Statements





4.  LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                            DECEMBER 31
                                                                    1996                  1995
                                                                 --------------------------------
                                                                            (thousands)
         <S>                                                     <C>                  <C>
         Equipment financings (1)                                $   40,757           $   40,365
         Line of credit with a bank, with interest at the
             LIBOR rate plus 2.35% (8.069% at
             December 31, 1996) due May 31, 1998 and
             collateralized by accounts receivable (2)                7,229                7,909
         Note payable (3)                                               418                  466
         Capitalized lease obligations (4)                            3,383                4,346
                                                                     51,787               53,086
         Less current maturities                                     16,849               15,120
                                                                 --------------------------------
                                                                 $   34,938           $   37,966
                                                                 ================================
</TABLE>

(1)  Equipment financings consist of installment obligations for revenue and
     service equipment purchases, payable in various monthly installments
     through 2001, at a weighted average interest rate of 7.67% and
     collateralized by equipment with a net book value of approximately $58
     million at December 31, 1996.

(2)  The line of credit agreement with a bank provides for maximum borrowings
     of $15.0 million and contains restrictive covenants which requires the
     Company to maintain a net worth of $12.5 million and a debt service
     coverage ratio of not less than 1.0 to 1.0.  The line of credit agreement
     also includes restrictions on dividend payments and certain corporate acts
     such as mergers and consolidations.

(3)  8% real estate note to the former majority shareholder, payable in monthly
     installments through March 2003.

(4)  Capitalized lease obligations to a financial services organization for
     revenue equipment are payable in various monthly installments through
     December 1999 at rates of 8.15% and 8.49%, collateralized by equipment
     with a net book value of approximately $3.75 million, as of December 31,
     1996 (Note 9).


                                       30


<PAGE>   32

                     P.A.M. Transportation Services, Inc.

                   Notes to Consolidated Financial Statements





4.  LONG-TERM DEBT (CONTINUED)


Scheduled annual maturities on long-term debt outstanding, excluding capital
lease obligations, at December 31, 1996 are: (thousands)
<TABLE>
<CAPTION>

                                  <S>                     <C>
                                  1997                    $    15,802
                                  1998                         20,784
                                  1999                          8,331
                                  2000                          2,899
                                  2001                            448
                                  Thereafter                      140
                                                          -----------
                                                          $    48,404
                                                          ===========
</TABLE>

Interest payments of approximately $4.0 million, $3.5 million, and $2.9 million
were made during 1996, 1995 and 1994, respectively.

5.  INCOME TAXES

Under FAS 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 amounts used for income tax purposes.

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

<TABLE>
<CAPTION>
                                                             DECEMBER 31
                                                         1996           1995
                                                    ----------------------------
                                                             (thousands)
         <S>                                        <C>             <C>
         Deferred tax liabilities:
             Property and equipment                 $    12,615     $     9,766
             Prepaid expenses                               896           1,072
                                                    ----------------------------
         Total deferred tax liabilities                  13,511          10,838

         Deferred tax assets:
             Net operating loss carryover                 2,981           2,440
             Alternative minimum tax credit               1,851           1,672
             Investment credit carryovers                 1,096           1,095
             Allowance for doubtful accounts                220             123
             Vacation reserves                              220             163
             Self-insurance reserves                        235             285
             Noncompetition agreement                       182              70
             Revenue recognition                             92              92
                                                    ----------------------------
         Total deferred tax assets                        6,877           5,940
                                                    ----------------------------
         Net deferred tax liabilities               $     6,634     $     4,898
                                                    ============================
</TABLE>


                                       31



<PAGE>   33

                     P.A.M. Transportation Services, Inc.

                   Notes to Consolidated Financial Statements



5. INCOME TAXES (CONTINUED)

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
                                                        1996           1995           1994
                                                     ----------------------------------------
                                                                    (thousands)
<S>                                                  <C>             <C>            <C>
Income tax at the statutory federal rate of 34%      $  1,856        $  2,750       $  2,130
Nondeductible expenses                                    108              39            230
Decrease in valuation allowance                             -               -            (96)
State income taxes                                       (118)           (167)          (142)
Other                                                     (46)            (41)           (45)
                                                     ----------------------------------------
Federal income taxes                                    1,800           2,581          2,077
State income taxes                                        347             492            417
Total income taxes                                   $  2,147        $  3,073       $  2,494
                                                     ========================================
Effective tax rate                                       39.3%           38.0%          40.0%
                                                     ========================================
</TABLE>

The current income tax provision consists of the following:

<TABLE>
<CAPTION>
                                    1996          1995           1994
                                  ---------------------------------------
                                                (thousands)
                <S>               <C>           <C>            <C>
                Federal           $    179      $    406       $    1,080
                State                   80           122               80
                                  ---------------------------------------
                                       259           528            1,160
                                  =======================================

</TABLE>


As of December 31, 1996, the Company has federal net operating loss and
investment tax credit carryovers of approximately $7.8 million and $1.0
million, respectively.  The net operating loss carryovers expire beginning in
2003 and the investment credit carryovers begin to expire in 1999.  Net
operating loss carryovers are available to offset 1994 and 1995 estimated
taxable income for regular income tax purposes.  The current taxes provided in
1994, 1995 and 1996 result from alternative minimum taxable income which is
only partially offset by net operating loss carryovers in 1994.  All net
operating losses for alternative minimum taxes were fully utilized as of
December 31, 1994 and there are no remaining net operating loss carryovers to
offset against 1995 and 1996 alternative minimum taxable income.  The Company
has alternative minimum tax credits of approximately $1.9 million at December
31, 1996, which carryover indefinitely.

In February 1990, a stock transaction occurred whereby the Company's then
majority shareholder sold his stock to the current majority shareholder.  This
transaction constituted an ownership change under Internal Revenue Code Section
382.  As a result of the ownership change, the amount of federal taxable income
which may be offset by net operating loss carryovers ("NOLs") which existed as
of


                                       32
<PAGE>   34

                     P.A.M. Transportation Services, Inc.

                   Notes to Consolidated Financial Statements





5.  INCOME TAXES (CONTINUED)

the ownership change date (estimated at $10.4 million) is limited to
approximately $500,000 per year.  The annual limitation may be increased, under
certain circumstances, by realization of tax "built-in gains" which existed at
the time of the ownership change.  Substantial tax built-in gains have been
realized since the ownership change date including gains recognized during 1993
and 1994.

Taxes paid totaled approximately $400,000, $400,000 and $1.3 million for the
years ended December 31, 1996, 1995 and 1994, respectively.

6.  SHAREHOLDER'S EQUITY

On January 30, 1994, the Company redeemed 100% of the 12% Series A cumulative
redeemable preferred stock (Series A preferred stock) plus accrued dividends
for cash of $4,425,205.  The redemption was funded through a combination of
cash on hand and borrowings under the Company's line of credit arrangements.

The Company maintains an incentive stock option plan, a nonqualified stock
option plan, and an employee 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 $2.375 to $7.375 as of December 31, 1996.

Outstanding incentive stock options and employee stock options at December 31,
1996 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, 1996 must be exercised within five to six years and certain
nonqualified options may not be exercised within one year of the date of grant.




                                       33


<PAGE>   35

                     P.A.M. Transportation Services, Inc.

                   Notes to Consolidated Financial Statements





6.  SHAREHOLDER'S EQUITY (CONTINUED)

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

<TABLE>
<CAPTION>
                                                            SHARES
                                                            UNDER         PRICE
                                                            OPTION        RANGE
                                                         ---------------------------
                <S>                                        <C>          <C>
                Outstanding at January 1, 1994             388,700      $2.38-$ 5.50
                          Granted                           15,000      $4.38-$ 6.00
                          Exercised                        (42,700)     $2.38-$ 6.00
                          Canceled                          (8,800)     $2.38-$ 6.00
                                                          --------------------------
                Outstanding at December 31, 1994           352,200      $2.38-$ 6.00
                          Granted                          260,000      $5.75-$ 6.75
                          Exercised                        (56,700)     $2.38-$ 6.00
                          Canceled                         (23,400)     $2.38-$ 6.75
                                                                        ------------
                Outstanding at December 31, 1995           532,100      $2.38-$ 6.75
                          Granted                           10,000      $6.50-$7.375
                          Exercised                        (36,600)     $2.38-$ 6.00
                          Canceled                         (13,900)     $2.38-$ 6.75
                                                          --------------------------
                Outstanding at December 31, 1996           491,600      $2.38-$7.375
                                                          ==========================

                Options exercisable at December 31, 1996   308,100
                                                          ========
</TABLE>
The Company adopted the disclosure-only provisions of SFAS 123, "Accounting for
Stock-Based Compensation."  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 123,
the Company's net income and earnings per share would have been reduced to the
pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                              1996             1995
                                                       ---------------------------------
                                                                   (thousands)
                          <S>                               <C>              <C>
                          Net income:
                              As reported                   $   3,312        $   5,014
                              Pro forma                     $   3,172        $   4,940

                          Earnings per share:
                              As reported                   $     .44        $     .65
                              Pro Forma                     $     .42        $     .64
</TABLE>


                                       34



<PAGE>   36

                     P.A.M. Transportation Services, Inc.

                   Notes to Consolidated Financial Statements





6.  SHAREHOLDER'S EQUITY (CONTINUED)

Because the SFAS 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation cost may
not be representative of that to be expected in future years.

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: dividend yield of 0%; expected volatility of 65.15% to 76.64%;
risk-free interest rate of 5.73% to 7.02%; and expected lives of five years.

The majority shareholder exercised stock warrants to purchase an aggregate of
3,092,000 shares of the Company's common stock at $1.50 per warrant on December
30, 1996.

7.  EARNINGS PER SHARE

Earnings per share assumes the exercise of stock warrants and options to
purchase a total of 3.5 million, 3.5 million, and 3.4 million shares of common
stock for 1996, 1995 and 1994, respectively.  Under the treasury stock method
of computing earnings per share, the number of shares of treasury stock assumed
repurchased is limited to 20% of common stock outstanding, with the remaining
shares assumed to be newly issued, and the excess proceeds assumed to have
reduced long-term borrowings outstanding for the year.  Earnings per share,
assuming full dilution, would not be materially different than primary earnings
per share.

8.  RELATED PARTY TRANSACTIONS

The Company provides motor carrier services to an affiliate of its majority
shareholder.  Revenues from these transactions totaled approximately $.4
million, $5.3 million and $4.9 million for 1996, 1995 and 1994, respectively.

During 1993, the Company began leasing certain revenue equipment with an
original cost of $2.7 million to an affiliate of the majority shareholder under
a direct financing lease arrangement.  The Company earned interest income of
$31,000, $200,000 and $200,000 in 1996, 1995 and 1994, respectively, relating
to this lease which is included in other income in the accompanying
consolidated financial statements.  The Company received full payment of the
remaining balance on the lease agreement during 1996 in the amount of $1.1
million.

Payments made by the Company to an affiliate of the majority shareholder for
the reimbursement of operating and other expenses paid on behalf of the
Company, and debt repayments made on notes payable to the affiliate aggregated
approximately $6.4 million, $6.8 million and $14.1 million in 1996, 1995 and
1994, respectively.


                                       35




<PAGE>   37

                     P.A.M. Transportation Services, Inc.

                   Notes to Consolidated Financial Statements





8.  RELATED PARTY TRANSACTIONS (CONTINUED)

The Company has entered into noncancelable operating leases for revenue
equipment with an affiliate of the majority shareholder.  The leases are
payable monthly and are currently under a month-to-month leasing arrangement.
Rent expense under these leases was approximately $200,000, $200,000 and
$400,000 in 1996, 1995 and 1994, respectively.

Trade accounts payable at December 31, 1996 includes a payable to an affiliate
of the majority shareholder of approximately $500,000.

9.  LEASES AND COMMITMENTS

The Company leases certain revenue equipment under capital leases.  The
scheduled future minimum payments under these leases (see Note 4) at December
31, 1996 were as follows:

<TABLE>
<CAPTION>
                                                                 (thousands)
                 <S>                                             <C>
                 1997                                            $   1,293
                 1998                                                1,293
                 1999                                                1,293
                 Total minimum lease payments                        3,879
                 Amounts representing interest                         496
                                                                 ---------
                 Present value of net minimum lease payments     $   3,383
                                                                 =========
</TABLE>

Assets held under capitalized leases are included in property and equipment as
of December 31, 1996 as follows:

<TABLE>
<CAPTION>
                                                                   (thousands)
                 <S>                                                 <C>
                 Revenue equipment                                   $   5,273
                 Accumulated amortization                               (1,521)
                                                                     ---------
                                                                     $   3,752
                                                                     =========
</TABLE>

No capital lease obligations were entered into in 1996.  Capital lease
obligations incurred in 1995 totaled $1.5 million.  Lease amortization is
included in depreciation expense.

10.  PROFIT SHARING PLAN

P.A.M. Transport, Inc., a subsidiary of the Company, 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 annual
employer matching contributions of 25% of each participant's voluntary
contribution up to $400.


                                       36




<PAGE>   38

                     P.A.M. Transportation Services, Inc.

                   Notes to Consolidated Financial Statements





10.  PROFIT SHARING PLAN (CONTINUED)

Choctaw Express, Inc., a subsidiary of the Company sponsored 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 all 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.

The Choctaw Express, Inc. profit sharing plan was merged into the P.A.M.
Transport, Inc. profit sharing plan effective December 31, 1995.

Allen Freight Services, Inc., a subsidiary of the Company, sponsored 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 all 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.

P.A.M. Transport, Inc.'s matching contributions to the plan totaled
approximately $48,000, $46,000, and $40,000 in 1996, 1995 and 1994,
respectively.

Choctaw Express, Inc.'s matching contribution to its plan totaled approximately
$14,000 for 1995.

Allen Freight Services, Inc.'s matching contribution to its plan totaled
approximately $52,000 for the period from the acquisition date of March 11,
1996 to December 31, 1996.

11.  LITIGATION

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



                                       37


<PAGE>   39

                     P.A.M. Transportation Services, Inc.

                   Notes to Consolidated Financial Statements





12.  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The tables below presents quarterly financial information for 1996 and 1995:

<TABLE>
<CAPTION>
                                                                 1996
                                                          THREE MONTHS ENDED
                                           MARCH 31   JUNE 30   SEPTEMBER 30   DECEMBER 31
                                           ----------------------------------------------
                                                  (thousands, except per share data)
<S>                                        <C>          <C>          <C>          <C>
Operating revenues                         $23,532      $30,169      $29,618      $29,701
Operating expenses                          21,390       27,089       26,892       28,086
                                           ----------------------------------------------
Operating income                             2,142        3,080        2,726        1,615
Other expenses - net                           917        1,083        1,088        1,017
Income taxes                                   465          799          655          227
                                           ----------------------------------------------
Net income                                 $   760      $ 1,198      $   983      $   371
                                           ==============================================
Net income per common share (primary)      $   .10      $   .16      $   .13      $   .05
                                           ==============================================
Average common and common equivalent
    shares outstanding                       7,724        7,643        7,610        7,312
                                           ==============================================
</TABLE>

<TABLE>
<CAPTION>
                                                              1995
                                                       THREE MONTHS ENDED
                                          MARCH 31   JUNE 30   SEPTEMBER 30   DECEMBER 31
                                           ----------------------------------------------
                                                 (thousands, except per share data)
<S>                                        <C>          <C>          <C>          <C>
Operating revenues                         $22,084      $23,833      $22,241      $23,437
Operating expenses                          19,713       20,421       19,365       20,654
                                           ----------------------------------------------
Operating income                             2,371        3,412        2,876        2,783
Other expenses - net                           740          828          882          905
Income taxes                                   620          982          758          713
                                           ----------------------------------------------
Net income                                 $ 1,011      $ 1,602      $ 1,236      $ 1,165
                                           ==============================================
Net income per common share (primary)      $   .13      $   .21      $   .16      $   .15
                                           ==============================================
Average common and common equivalent
    shares outstanding                       7,648        7,605        7,674        7,708
                                           ==============================================
</TABLE>


13.  FAIR VALUES 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.



                                       38


<PAGE>   40

                     P.A.M. Transportation Services, Inc.

                   Notes to Consolidated Financial Statements





13.  FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)

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.

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

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

<TABLE>
<CAPTION>
                                                           1996                             1995
                                             -----------------------------    ------------------------------
                                               CARRYING            FAIR         CARRYING            FAIR
                                                AMOUNT            VALUE          AMOUNT            VALUE
                                             -----------------------------    ------------------------------
    <S>                                        <C>             <C>              <C>             <C>
    Cash and cash equivalent                   $    5,941      $    5,941       $    7,629      $    7,629
    Long-term debt                                 44,558          45,512           45,177          46,257
    Line of credit                                  7,229           7,229            7,909           7,909
    Direct financing lease                            N/A             N/A            1,239           1,283
</TABLE>





                                       39



<PAGE>   41





                    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 sheet of P.A.M.
Transportation Services, Inc. and subsidiaries as of December 31, 1996, and the
related consolidated statements of income, shareholders' equity, and cash flows
for the year then ended. These consolidated financial statements and the
schedule referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and schedule based on our audit.  The consolidated financial
statements of P.A.M. Transportation Services, Inc. and subsidiaries as of and
for the years ended December 31, 1995 and 1994, were audited by other auditors
whose report dated February 14, 1996, expressed an unqualified opinion on those
statements.

We conducted our audit in accordance with generally accepted auditing
standards. 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 audit provides 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, 1996, and the
results of their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole.  The schedule listed in the index as item 14(a) is
presented for purposes of additional analysis and is not a required part of the
basic financial statements. This information has been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

                                                            ARTHUR ANDERSEN LLP

Fayetteville, Arkansas
March 5, 1997



                                       40



<PAGE>   42






               Report of Ernst & Young LLP, Independent Auditors


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


We have audited the accompanying consolidated balance sheet of P.A.M.
Transportation Services, Inc. and subsidiaries as of December 31, 1995, and the
related consolidated statements of income, shareholders' equity, and cash flows
for the two years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 consolidated financial position of P.A.M.
Transportation Services, Inc. and subsidiaries as of December 31, 1995, and the
consolidated results of their operations and their cash flows for the two years
in the period ended December 31, 1995, in conformity with generally accepted
accounting principles.

                                                            ERNST & YOUNG LLP

Little Rock, Arkansas
February 14, 1996






<PAGE>   43

                                    PART III

       Except as to information with respect to executive officers which is
contained in a separate heading under Item 1 to this Form 10-K, the information
required by Part III of Form 10-K is, pursuant to General Instruction G(3) of
Form 10-K, incorporated by reference from the Company's definitive proxy
statement to be filed pursuant to Regulation 14A for the Company's Annual
Meeting of Shareholders to be held on May 16, 1997.  The Company will, within
120 days of the end of its fiscal year, file with the Securities and Exchange
Commission a definitive proxy statement pursuant to Regulation 14A.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

       The information responsive to this item is incorporated by reference
from the section entitled "Election of Directors" contained in the proxy
statement.

ITEM 11.  EXECUTIVE COMPENSATION.

       The information responsive to this item is incorporated by reference
from the section entitled "Executive Compensation" contained in the proxy
statement.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

        The information responsive to this item is incorporated by reference
from the section entitled "Security Ownership of Certain Beneficial Owners and
Management" contained in the proxy statement.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

       The information responsive to this item is incorporated by reference
from the section entitled "Certain Relationships and Related Transactions"
contained in the proxy statement.



                                       42


<PAGE>   44

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) 1.    Financial Statements and Auditors' Report.

       The following financial statements and auditors' report have been filed
as Item 8 in Part II of this report:

                  Report of Independent Auditors

                  Consolidated Balance Sheets - December 31, 1996 and 1995

                  Consolidated Statements of Income - Years ended December 31,
                  1996, 1995 and 1994

                  Consolidated Statements of Shareholders' Equity - Years ended
                  December 31, 1996, 1995 and 1994

                  Consolidated Statements of Cash Flows - Years ended December
                  31, 1996, 1995 and 1994

                  Notes to Consolidated Financial Statements

(a)  2.    Financial Statement Schedules.

       The following supporting financial statement schedule is filed with this
report:

             II     -   Valuation and Qualifying Accounts - Years Ended
                        December 31, 1996, 1995 and 1994


       All other schedules are omitted as the required information is
inapplicable, or the information is presented in the consolidated financial
statements or related notes.



                                       43

<PAGE>   45

(a) 3.   Exhibits.

         The following exhibits are filed with or incorporated by reference
into this report.  The exhibits which are denominated by an asterisk (*) were
previously filed as a part of, and are hereby incorporated by reference from
either (i) the Form S-1 Registration Statement under the Securities Act of
1933, as filed with the Securities and Exchange Commission on July 30, 1986,
Registration No. 33-7618, as amended on August 8, 1986, September 3, 1986 and
September 10, 1986 ("1986 S-1"); (ii) the 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, 1993 ("1993 10-K"); (v) the
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994 ("6/30/94
10-Q"); (vi) the Quarterly Report on Form 10-Q for the quarter ended June 30,
1995 ("6/30/95 10-Q"); (vii) the Annual Report on Form 10-K dated December 31,
1995 ("1995 10-K"); or (viii) the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996 (9/30/96 10-Q).

<TABLE>
<CAPTION>
Exhibit #                                         Description of Exhibit
---------        --------------------------------------------------------------------------------------------------
<S>         <C>  <C>
*3.1        -    Amended and Restated Certificate of Incorporation of the Registrant (Exh. 3.1, 1986 S-1)

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

*3.2        -    Amended and Restated By-Laws of the Registrant (Exh. 3.2, 1986 S-1)

*3.2.1      -    Amendment to Article I, Section 3 of Bylaws of Registrant (Exh. 3.2.1, 1986 S-1)

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

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

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

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

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

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

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

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

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

 *4.4       -    Second Amendment to Loan Agreement dated July 3, 1996 by and among P.A.M. Transport, Inc., First
                 Tennessee Bank National Association and P.A.M. Transportation
</TABLE>


                                       44



<PAGE>   46

<TABLE>
<S>         <C>  <C>
                 Services, Inc., together with Promissory Note in the principal amount of $5,000,000 (Exh. 4.1.1,
                 9/30/96 10-Q)

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

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

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

            -    No other long-term debt instrument of the Registrant or its subsidiaries authorizes indebtedness
                 exceeding 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis and
                 the Registrant hereby undertakes to provide the Commission upon request with any long-term debt
                 instrument not filed herewith.

*10.1       -    Incentive Stock Option Plan, dated July 25, 1986 (Exh. 10.2, 1986 S-1)

*10.1.1     -    Amendment to 1986 Incentive Stock Option Plan, dated June 2, 1987 (Exh. 10.2.1, 1987 10-K)

*10.2       -    Non-Qualified Stock Option Plan, dated July 25, 1986 (Exh. 10.3, 1986 S-1)

*10.2.1     -    Amendment No. 1 to Non-Qualified Stock Option Plan (Exh. 10.2.1, 1993 10-K)

*10.3       -    Employment Agreement between the Registrant and Robert W. Weaver dated January 1, 1995 (Exh. 10.3, 1995
                 10-K)

*10.4       -    Non-Competition Agreement dated January 31, 1995 between Registrant and Joe M. Bussell (Exh. 10.1,
                 1/31/95 8-K)

 10.5       -    Incentive Compensation Plan of Registrant adopted February 28, 1996 for fiscal years 1996 and 1997

 10.6       -    1995 Stock Option Plan, effective June 29, 1995

 21.1       -    Subsidiaries of the Registrant

 23.1       -    Consent of Arthur Andersen LLP

 23.2       -    Consent of Ernst & Young LLP

 27         -    Financial Data Schedule
</TABLE>


 (b)  Reports on Form 8-K.

      During the fourth quarter ended December 31, 1996, the Company filed a
Current Report on Form 8-K (Event Date: November 19, 1996) to report a change
in its independent auditors.  See Item 9. herein.



                                       45


<PAGE>   47

                                  SCHEDULE II



                      P.A.M. TRANSPORTATION SERVICES, INC.

                       VALUATION AND QUALIFYING ACCOUNTS


                  Years Ended December 31, 1996, 1995 and 1994




                                  ADDITIONS

<TABLE>
<CAPTION>
                                                                         Charged to
                                            Balance at    Charged to       Other                        Balance
                                            Beginning     Costs and       Accounts     Deductions       at End
               Description                  of Period      Expenses      (Describe)    (Describe)      of Period
               -----------                 -----------   -----------   -------------  ------------    -----------
<S>                                          <C>           <C>          <C>               <C>           <C>
1996 - Allowance for doubtful accounts       $323,887      $140,446     $115,000(A)        --           $579,333

1995 - Allowance for doubtful accounts        239,343        88,692          --           4,148(B)       323,887

1994 - Allowance for doubtful accounts        135,275       114,014          --           9,946(B)       239,343
</TABLE>




Note A - Allen Freight Services, Inc. Allowance for Bad Debts.

Note B -  Accounts written off.
<PAGE>   48

                                   SIGNATURES

         Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Registrant has caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                        P.A.M. TRANSPORTATION SERVICES, INC.




Dated:  March 25, 1997                  By: /s/ Robert W. Weaver
                                           ------------------------------------
                                           ROBERT W. WEAVER
                                           President and Chief Executive Officer
                                           (principal executive officer)



Dated:  March 25, 1997                  By: /s/ Larry J. Goddard
                                           ------------------------------------
                                           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 report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:

                                        P.A.M. TRANSPORTATION SERVICES, INC.



Dated:  March 25, 1997               By:   /s/ Robert W. Weaver
                                         --------------------------------------
                                          ROBERT W. WEAVER, President and
                                          Chief Executive Officer, Director



Dated:  March 25, 1997               By:    /s/ Matthew T. Moroun
                                          -------------------------------------
                                          MATTHEW T. MOROUN, Director



Dated:  March 25, 1997               By:    /s/ Daniel C. Sullivan
                                          -------------------------------------
                                          DANIEL C. SULLIVAN, Director



Dated:  March 25, 1997               By:    /s/ Charles F. Wilkins
                                          -------------------------------------
                                          CHARLES F. WILKINS, Director

<PAGE>   49

                                 EXHIBIT INDEX



<TABLE>
<CAPTION>
         Exhibit No.                           Description
         -----------        --------------------------------------------------
            <S>             <C>
            10.5            Incentive Compensation Plan of Registrant adopted
                            February 28, 1996 for fiscal years 1996
                            and 1997

            10.6            1995 Stock Option Plan, effective June 29, 1995

            21.1            Subsidiaries of the Registrant

            23.1            Consent of Arthur Andersen LLP

            23.2            Consent of Ernst & Young LLP

            27              Financial Data Schedule (for SEC use only)
</TABLE>