SecProbe.io

<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>

                               [GRAPHIC OMITED]

Jean Yu
Staff Accountant
United States Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

RE:  P.A.M. Transportation Services, Inc. (the "Company")
     Form 10-K for the fiscal year ended December 31, 2004
     File No. 0-15057

Dear Ms. Yu,

We  appreciate your comments regarding our Form 10-K for the year ended December
31,  2004  and  welcome  any  opportunity  to enhance the quality of information
provided  to  users.  In  accordance with your request we have addressed each of
your  comments  individually  and  have  either  provided information confirming
agreement  to  revise  future  filings,  or have provided additional information
which  we  believe  supports  our  position  that  the  current  presentation is
appropriate.

FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004
-----------------------------------------------------

ITEM 6 - SELECTED FINANCIAL DATA, PAGE 11
-----------------------------------------

1.     PLEASE NOTE THAT IN ACCORDANCE WITH ITEM 301(B)(2) OF REGULATION S-K, YOU
SHOULD  DESCRIBE  (BY  FOOTNOTE OR OTHERWISE) ANY FACTORS THAT MATERIALLY AFFECT
THE  COMPARABILITY  OF INFORMATION INCLUDED IN SELECTED FINANCIAL DATA.  IN THIS
REGARD,  WE  NOTE  THAT  DURING FISCAL 2002 YOU RECEIVED $54 MILLION IN PROCEEDS
FROM YOUR SALE OF EQUITY SECURITIES IN WHICH YOU PAID DOWN A SIGNIFICANT PORTION
OF  YOUR  LONG-TERM  DEBT  AND  IN  FISCAL  2003,  YOU  ACQUIRED  THE ASSETS AND
BUSINESSES  OF  EAST  COAST TRANSPORT AND MCNEILL TRUCKING, INC.  TO THE EXTENT,
THESE  AND  OTHER  TRANSACTION  ARE  MATERIAL  TO  AND AFFECT THE TRENDS OF YOUR
FINANCIAL  CONDITION  AND  RESULTS  OF  OPERATIONS, YOU SHOULD CONSIDER REVISING
FUTURE FILINGS TO BRIEFLY DESCRIBE OR CROSS-REFERENCE TO A DISCUSSION THEREOF.

RESPONSE
--------
The  Company  agrees  that  future  filings  will  be revised to include a cross
reference  in  Item 6 - Selected Financial Data to a discussion of the affect on
financial  condition  and  results  of  operations  of  material  transactions,
including  the  $54  million  in proceeds from the sale of equity securities and
the acquisitions of East Coast Transport, Inc. and McNeill Trucking, Inc.

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
--------------------------------------------------------------------------------
OF OPERATIONS
--------------
TRUCKLOAD SERVICES, PAGE 13
---------------------------
LOGISTICS AND BROKERAGE SERVICES, PAGE 15
-----------------------------------------

2.     WE  NOTE  FROM  THE  DISCUSSION  INCLUDED  IN  MD&A  THAT  THE  COMPANY'S
OPERATIONS  INVOLVE  BOTH  PROVIDING  TRUCKING  FREIGHT  SERVICES  AND PROVIDING
BROKERAGE  AND  LOGISTICS SERVICES.  WE ALSO NOTE FROM THE DISCUSSION ON PAGE 12
THAT  THE  COMPANY  BELIEVES IT CONDUCTS ITS OPERATIONS IN ONLY ONE SEGMENT, THE
MOTOR CARRIER SEGMENT.

PLEASE  EXPLAIN  IN  FURTHER  DETAIL  WHY MANAGEMENT BELIEVES THAT THE COMPANY'S
TRUCKLOAD FREIGHT AND BROKERAGE AND LOGISTICS SERVICES DO NOT REPRESENT SEPARATE
REPORTABLE SEGMENTS FOR WHICH THE DISCLOSURES OUTLINED IN SFAS NO. 131 SHOULD BE
PROVIDED.  AS  PART OF YOUR RESPONSE, PLEASE EXPLAIN IN DETAIL HOW THE COMPANY'S
CHIEF OPERATING DECISION MAKER REVIEWS AND ANALYZES THE COMPANY'S OPERATIONS FOR
PURPOSES  OF  ASSESSING  PERFORMANCE  AND  ALLOCATING  RESOURCES.  ALSO,  IF THE
COMPANY  DOES BELIEVE THAT THESE OPERATIONS ARE SEPARATE SEGMENTS, BUT THAT THEY
MEET  THE  CRITERIA  FOR  AGGREGATION  OUTLINED IN PARAGRAPH 17 OF SFAS NO. 131,
PLEASE EXPLAIN IN DETAIL THE BASIS FOR THIS CONCLUSION.

IN THE EVENT THAT THESE OPERATIONS DO NOT MEET THE REQUIREMENTS OUTLINED IN SFAS
NO.  131  FOR  PRESENTATION AS SEPARATE SEGMENTS, PLEASE REVISE THE NOTES TO THE
COMPANY'S  FINANCIAL  STATEMENTS TO DISCLOSE THE AMOUNT OF REVENUES ATTRIBUTABLE
TO  THE COMPANY'S TRUCKLOAD FREIGHT AND BROKERAGE AND LOGISTICS SERVICES.  REFER
TO THE REQUIREMENTS OF PARAGRAPH 37 OF SFAS NO. 131.

RESPONSE
--------
IDENTIFICATION OF OPERATING SEGMENTS
------------------------------------
The  Company  considers  SFAS  No.  131  guidance each period in accordance with
documented  and  tested  closing  and disclosure processes.  The conclusions the
Company has consistently reached pertaining to this matter follow.

The  Company's  chief  operating  decision  maker,  the Chief Executive Officer,
evaluates  the  Company's  operations  each  month  and  quarter  by examining a
standard  reporting  package  consisting  of  an  income statement for our eight
operating legal subsidiaries.

Each of these subsidiaries represent operating segments, as defined by the three
criteria  in  paragraph  10  of  SFAS  No.  131.  Several  inactive  operating
subsidiaries  are  listed  in  our  December 31, 2004 Form 10-K, Page 1, Item 1.
Business.  However,  none  of  these  inactive  operating  subsidiaries  had any
operations, nor do any fulfill any of the criteria found in paragraph 10 of SFAS
No. 131.

The  eight  operating  segments represent wholly owned operating subsidiaries of
P.A.M. Transportation Services, Inc.

-     P.A.M. Transport, Inc.
-     P.A.M. Dedicated Services, Inc.
-     Choctaw Express, Inc.
-     Allen Freight Services, Inc.
-     Decker Transport Co., Inc.
-     McNeill Express, Inc.
-     S&L Logistics
-     East Coast Transport & Logistics, LLC.

A  "Corporate" overhead income statement is also provided to the chief operating
decision  maker  that  represents  a  repository  for expenses that apply to the
entity  as a whole, such as income taxes.  This repository does not represent an
operating segment under the guidance in paragraph 11 of SFAS No. 131.

The  Company  has determined that each of these eight components of our business
represent operating segments because each is a component of our enterprise:

a.    That engages in business activities from which it may earn revenues and
      incur  expenses  (including revenues and expenses relating to transactions
      with other components of our enterprise),

b.    Whose operating results are regularly reviewed by the enterprise's chief
      operating decision maker to make decisions about resources to be allocated
      to the segment and assess its performance, and

c.    For which discrete financial information is available.

Each  of the eight operating segments discussed above is then summarized into an
income statement for "Truckload Services" or "Logistics and Brokerage Services",
based  on the type of operation that constitutes the majority of their business.
P.A.M.  Transport, Inc., P.A.M. Dedicated Services, Inc., Choctaw Express, Inc.,
Allen Freight Services, Inc., Decker Transport Co., Inc., McNeill Express, Inc.,
and  S&L  Logistics  are  summarized  into  Truckload  Services.  The  logistics
operations of Decker Transport Co., Inc. and East Coast Transport and Logistics,
LLC  are summarized into Brokerage and Logistics Services.  The resulting income
statement  for  Truckload Services and Logistics and Brokerage Services are then
summarized  into  a consolidated income statement for the entire Company, P.A.M.
Transportation Services, Inc.

Truckload  and  Brokerage  and  Logistics  services  do  not  represent separate
operating segments under paragraph 10 of SFAS 131. As discussed above, our eight
operating  subsidiaries  represent  operating  segments  and  we  have chosen to
provide  detailed MD&A disclosure of our operating segments grouped as Truckload
Services  and  Brokerage and Logistics Services to facilitate our discussion. We
currently  provide  the  revenues  attributable  to  the  Truckload Services and
Brokerage  and  Logistics Services in the MD&A section of Form 10-K, as well as,
other  information  that we feel is useful to readers. This disclosure was added
for  the  first quarter of 2004, in response to the December 19, 2003 Securities
and  Exchange  interpretive  guidance  regarding  MD&A  disclosures. The Company
determined that this grouping of operations is helpful to users of its financial
statements because it provides detail of income statement line items between the
two  types of operations. For example, certain expense lines that are present in
the  truckload  services  income  statement  are  included  in  one expense line
(purchased  transportation)  in  the Logistics and Brokerage Services operation.
Also,  the operating segments grouped into Truckload Services own trucks used to
haul  loads  in  addition  to contracting with owner operators to haul loads and
brokering  loads  with  other  carriers.  The  operating  segments  grouped into
Brokerage  and  Logistics  Services  broker  loads  with  the Truckload Services
companies  in  addition to brokering loads with other carriers. This distinction
represents  different ways of doing business and appears helpful and informative
but,  nevertheless,  all  segments  have  similar  economic  characteristics  as
demonstrated in the accompanying paragraphs in this response.

AGGREGATION CRITERIA
--------------------
The  eight  operating  segments  meet  all  of the aggregation criteria found in
paragraph  17  of  SFAS  No.  131  and therefore we believe it is appropriate to
aggregate  them  into  one  reportable  segment.  The nature of the products and
services,  the  production  process, type of customer and regulatory environment
are similar.

As  an  example  of the similarity, the Company utilizes various combinations of
the  operating  segments  to  facilitate  a  particular  shipment  with  each
participating operating segment earning revenue.  An example of this arrangement
would  be  if  P.A.M. Transport, Inc. had a contract with a customer, but had no
truck  available in the pickup area.  However, McNeill Express, Inc. had a truck
and  hauled  the  load  half way to the destination.  At this point, the McNeill
driver drops the load at a terminal leased by Allen Freight Services where it is
picked  up  and  hauled to its destination by a carrier contracted to East Coast
Transport  and  Logistics.  In  these  cases revenue is allocated to each of the
operating  segments  based on miles driven.  This arrangement happens many times
each day in the regular course of our business.

A)   THE  NATURE OF THE PRODUCTS AND SERVICES - for all segments the service is
     freight  transportation.  These  segments compete for business in the same
     economic environment, and compete against the same external competition.

B)   THE  NATURE  OF  THE  PRODUCTION  PROCESS - the  nature  of  the process is
     movement  of  freight  from  one  point  to  another  by  tractor / trailer
     combinations registered for 80,000 lb. gross weight.

C)   THE  TYPE  OR  CLASS OF CUSTOMER FOR THEIR PRODUCTS AND SERVICES - customer
     base  is  homogenous; many segments share common customers (such as General
     Motors,  Proctor  and  Gamble,  Trane Co., Inc. among others). In addition,
     operating segments often share in the earning of the revenue stream.

D)   THE  METHODS  USED TO DISTRIBUTE THEIR PRODUCTS OR PROVIDE THEIR SERVICES -
     The  service  provided  by  all  operating  segments  is  truckload freight
     transportation  and  involves  the  use  of  tractor / trailer combinations
     registered for 80,000 lb. gross weight.

E)   IF  APPLICABLE, THE NATURE OF THE REGULATORY ENVIRONMENT - all segments are
     regulated  by  the  Federal  Highway  Administration,  U.S.  Department  of
     Transportation, and various other Federal and state regulatory bodies.

SIMILAR  ECONOMIC CHARACTERISTICS - For the qualitative and quantitative reasons
below  the  Company  concluded  that  all  eight  segments have similar economic
characteristics.  They compete in the same economic environment and are affected
in  similar  ways  by  changes  in  this  environment.  Further  evidence of the
similarity in economic conditions is noted in the very similar operating margins
of the segments (see Schedule A).  The Company expects the trend of similar long
term economic characteristics to continue into the future.  We have provided the
detail for these conclusions below.

QUALITATIVE CONSIDERATIONS
--------------------------
All eight operating segments:

1)  receive revenue for performing the same service - the movement of freight
    for customers from one point to another

2)  Compete for revenue from customers in the same market (truckload freight)

3)  Compete  against  the  same competition, truckload carriers and logistics
    providers

4)  Are regulated by the same government agencies

5)  Receive payment in US dollars for all services performed

6)  Are  affected  in  similar ways by changes in the economic environment in
    which  they compete (for example if the cost of diesel fuel increases, the
    costs for all operating segments increase with substantially the same
    operating ratio effect)

QUANTITATIVE CHARACTERISTICS
----------------------------
The  Company  considers the similarity of operating ratios and operating margins
in  reaching its conclusion that economic characteristics are similar.  Schedule
A  presents  two  and five year average operating ratios and margins for each of
the  eight operating segments.  The better indication of long term similarity in
economic  characteristics  is the two year average found in schedule A.  This is
because  the  two  year  average  represents  a  period  of  time reflecting the
operations  of  all eight operating segments. The five year table includes three
years for which East Coast and McNeill had not yet been acquired.

As illustrated in Schedule A, seven of the eight operating segments operate in a
narrow  operating ratio range from .89 to .94, with a resulting operating margin
range  from  6%  to  11%.  These  seven operating segments are P.A.M. Transport,
Inc.,  P.A.M.  Dedicated  Services,  Inc.,  Choctaw Express, Inc., Allen Freight
Services,  Inc.,  Decker  Transport  Co.,  Inc,  S&L  Logistics,  and East Coast
Transport and Logistics, LLC.

One  segment  currently operates outside of this narrow range.  McNeill Express,
Inc. has a two year operating ratio of 1.01.  McNeill Express, Inc. was acquired
in April of 2004 and we expect its performance to become increasingly similar to
the  other  seven operating segments as its operations continue to be integrated
into  the  entity  as  a  whole,  resulting  in  similar  long-term  economic
characteristics  for  McNeill  Express,  Inc.   Therefore,  based  on  the above
guidance, we believe it is appropriate to aggregate McNeill with the other seven
operating  segments.  In  addition,  we note that McNeill Express, Inc. provided
only  approximately  4%  of Company wide revenue for the year ended December 31,
2004.

We note that the guidance in the FASB Implementation Guide on SFAS 131, Question
#8, indicates that

"  the  similarity  of the economic characteristics should be evaluated based on
future  prospects  and not necessarily on the current indicators only.  In other
words,  if  the  segments  do not currently have similar gross margins and sales
trends  but the economic characteristics and the other five criteria are met and
the  segments are expected to again have similar long-term average gross margins
and sales trends, the two segments may be aggregated."

CONCLUSION
----------
We  believe  that  based  on  the above consideration of segment identification,
aggregation  criteria,  and  finally  the  qualitative and quantitative economic
characteristics  our  conclusion  to aggregate the eight operating segments into
one  reporting  segment  is  appropriate  and  in  conformance with the guidance
provided  in  SFAS  No.  131.  However,  we  will  revise notes to the Company's
financial  statements  in  future  filings  to  disclose  the amount of revenues
attributable  to  the  Company's  Truckload  Freight and Logistics a